Quebec and Newfoundland and Labrador have significantly altered their long-standing power arrangement, finally addressing grievances stemming from the Churchill Falls hydroelectric deal originally struck back in 1969. This new memorandum of agreement is hailed by both provinces as a "win-win" situation, recalibrated to provide Newfoundland and Labrador with over $1 billion annually, which is light years away from the measly compensation of 0.2 cents per kilowatt hour they had been receiving for what was often termed one of Canada's most one-sided energy agreements.
During the announcement, Quebec Premier François Legault articulated the importance of this new deal, saying it will allow Quebec to secure low-cost energy for generations. "This allows us to secure a major energy block for several generations," he emphasized, indicating how the new arrangement would also aid Quebecers by keeping their electricity rates low. Indeed, starting January 1, 2025, Hydro-Québec will begin paying 5.9 cents per kilowatt hour for the electricity it purchases from Churchill Falls. This dramatic price increase greatly enhances the revenue flowing to Newfoundland and Labrador Hydro, marking what many view as a historic turnaround.
Under the previous agreement, Newfoundland and Labrador were receiving about $100 million annually, barely covering their operational costs. The renegotiated pact now ensures they will see their revenue soar to about $1 billion per year, with projections indicating this could climb to as high as $4 billion by 2056. This newfound financial muscle is expected to help the province recover from previous projects like the ill-fated Muskrat Falls, which came with much higher price tags and numerous technical challenges.
Adding to this new energy partnership is Hydro-Québec's commitment to invest $3.5 billion to co-develop new hydroelectric projects, including the much-anticipated Gull Island project, which aims to produce 2,250 megawatts of power. Also included is the expansion of the existing Churchill Falls facility itself, with plans to add another 1,100 megawatts of generating capacity and improve the site with new turbines set to increase output by 550 megawatts by as early as 2028. Legault highlighted the lasting impact of this deal, projecting savings for Quebec power consumers estimated to be around $200 billion over the next 50 years.
For Newfoundland and Labrador, the new agreement certainly changes the narrative. Premier Andrew Furey celebrated the deal as the beginning of new opportunities for his province, stating, "Today, everything changes for Newfoundland and Labrador." He literally tore the old agreement document to symbolize shedding the burdens of the past, indicating the end of years of discontent and ushering in what many hope will be productive collaboration.
Though both premiers sound optimistic, their excitement is tempered by the need for consensus among various stakeholders, including the Indigenous communities across Newfoundland and Labrador. The deal has made it imperative to involve these groups, with Hydro-Québec committing to opening dialogues about upcoming projects and the impact they may have on the land. Grand Chief Simon Pokue of the Labrador's Inuit Nation expressed trust in the current government leadership, showcasing how the new agreement aims to rectify past oversights.
There are certainly fewer roadblocks affecting this deal compared to the previous attempts made over the decades, particularly the previous government’s mistrust of Quebec and the political upheaval derailings of earlier negotiation attempts. Former Newfoundland Premier Roger Grimes attested to this increased trust, saying Hydro-Québec is now seen as perhaps the best utility partner due to its established reputation for efficient hydroelectric infrastructure.
Despite the apparent positives, some skepticism remains, especially from opposition leaders wondering if the current administration is motivated by forthcoming electoral ambitions, with the possibility of elections being called as early as next October. Escaping the clutches of the historic agreement will need sharp scrutiny to avoid falling back on past mistakes. "It cannot simply be about elections or getting deals finalized for the sake of timing; it should prioritize the long-term future of Newfoundland and Labrador,” warned Tony Wakeham, leader of the opposition.
On the whole, the new energy deal between Quebec and Newfoundland and Labrador stands as significant progress, illuminating the path toward transformative changes for both provinces. With both sides committed to collaborating and capitalizing on their hydroelectric resources, the eyes of many Canadians are watching closely to see the fruits of this partnership will bear. The hope is to establish sustainable practices and mutually beneficial terms inciting growth opportunities and securing clean energy for generations to come.
