‘Historic’ resolution reached on multi-billion dollar deal over Churchill Falls hydro plant

A sitting of the House of Assembly to handle the Memorandum of Understanding (MOU) between Newfoundland and Labrador Hydro and Hydro-Québec concluded with all members in the House voting in support of the resolution to move forward with negotiations.

All Government of Newfoundland and Labrador Members of the House of Assembly, Members of the Third Party, and Independent Members voted in favor of the resolution. The official opposition left the Chamber before the vote.

A new, independent, expert panel led by the Consumer Advocate will be created to add an additional level of oversight to the negotiations toward definitive agreements, and it will report quarterly to the House of Assembly and the public. The creation of this panel is a result of an agreement between the Government of Newfoundland and Labrador, third party, and independent members.

What’s in the deal?

At a packed press conference last month in its capital of St. John’s, Newfoundland and Labrador Premier Andrew Furey ripped up a piece of paper signifying the end of a 65-year-old contract with fellow Canadian province Québec that many argue unfairly compensated N.L. for power generated from the Churchill Falls hydroelectric plant.

In its place, Furey and Québec Premier François Legault signed a long-discussed memorandum of understanding, expected to be finalized in 2026, that would mean a staggering $200 billion for each province over the next five decades. It includes plans to develop Gull Island, recognized as one of the few remaining prime locales for hydroelectric development in North America.

For Newfoundland and Labrador, it means at least 30 times more money from power generated at the 5,428-megawatt (MW) Churchill Falls underground power station in Labrador, the second-largest hydro facility in Canada. Under the old deal, N.L. received just 0.2 cents per kilowatt-hour (kWh). The new proposal kicks back at least 5.9 cents/kWh.

According to CBC, N.L. will earn $1 billion per year for the next 17 years. Starting in 2041, that will double to $2 billion, then double again to $4 billion in 2056, and could increase even further pending escalation clauses in the agreement.

The agreement will guarantee access to 7,200 MW for the next 50 years at a lower price than any other renewable option in North America, according to government-owned electric utility Hydro-Québec. The agreement not only renews Québec’s access to existing Churchill Falls generation but also adds new production through increased capacity at the existing facility, the development of a new generation station on the Churchill Falls site, as well as the new proposed facility at Gull Island.

In total, the utility expects to generate 9,190 MW, 7,200 MW of which will be purchased by Hydro-Québec and 1,990 by Newfoundland and Labrador Hydro. That includes a proposed increase of hydroelectric production at Churchill Falls via a second powerhouse built near the existing reservoir that would generate 1,110 MW.

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