Long held tensions over the Churchill Falls hydroelectric project could
soon be laid to rest.
Quebec and Newfoundland and Labrador have been sparring over the
contentious energy project for decades.
An agreement of understanding is due to be signed tomorrow.
It's raising the possibility of more investments and a hefty
economic windfall for Newfoundlanders.
And the CB CS David Cochran is the host of
Power Politics, and he joins us now from Ottawa.
And David, we know that a lot of people know,
especially people from Newfoundland, the Labrador, know that this rift
runs deep.
What do we know about this agreement?
Well, we know high level what what is going to
happen tomorrow.
We know that today Quebec Premier Francois Legault is on
his way to St.
John's and he will be meeting with Premier Andrew Fury
at some point this evening to finalize things before the
official announcement tomorrow.
And it's a memorandum of understanding as I understand it,
Andrew, on on two key things that are going to
be announced tomorrow.
1 is a renegotiation of the terms of the existing
Upper Churchill Hydro project, A deal that was signed in
1969 between Newfoundland and the Labrador and and with an
incredibly lopsidedly price of 0.2 cents per kWh is what
Quebec pays for Upper Churchill Falls power.
At this point in time that has been enormously lucrative
and profitable for the government and the people of Quebec
and the precise opposite for the people of Newfoundland and
Labrador.
So the deal on that part is going to be
a new price that Quebec will pay for the remainder
of the agreement that expires in 2041 and then an
extension of a certain amount of time beyond that at
at another more market based price.
The other component of the arrangement that will be announced
tomorrow is a commitment to work together on possible future
energy developments in Labrador.
There is at least one more major hydro project on
the Churchill River River, it's called Gull Island.
It has been talked about and there have been some
aborted attempts to develop it in the past, but it's
never really gone anywhere.
The So what is happening right now is there is
an agreement to look at that and and maybe other
developments in Labrador between the two provinces.
Obviously Newfoundland and Labrador has these hydro assets.
Quebec, through its powerhouse economic development organization Hydro Quebec, has
the capacity and the money and the transmission and the
customers to make such a project viable.
Should have be able to go ahead.
But the one thing we know for sure is that
this agreement that has existed since 1969 with the Upper
Churchill Agreement, that has seen $28 billion in profit by
one estimate for Quebec and just $2 billion for Newfoundland
and Labrador in the 65 years that that agreement has
been in place.
That's going to be renegotiated in some way that will
see the people of Newfoundland and Labrador financially better off
for the remainder of that contract and then an extension
in a whole new commercial arrangement beyond its expiration date
in 2041.
And many people in in Newfoundland and Labrador have long
argued that it got a raw deal.
What could this agreement mean for the province?
And what does it say that they're suddenly, I mean,
months in the making?
But with Premier Francois Lago, a new openness around this?
Yeah, it's interesting.
Like, growing up there, Andrew, like, this has been a
story my whole life and I've covered up my whole
career and it's never had a happy ending.
The hope for a lot of people is there is
a happy ending for the people of Newfoundland and Labrador
tomorrow.
And while it has seemed impossible that this would get
fixed, it has seemed somewhat inevitable since Francois Lago went
to Newfoundland, went to Saint John's in February of 2003
and acknowledged in English to local media that the deal
became unfair and became a bad one for Newfoundland and
Labrador.
That was a signal then to a lot of people
that the premium of Quebec was willing to put money
on the table to, to you can't rewrite history, but
to fix things going forward, to sort of start fresh
and look at a whole new commercial arrangement going forward.
So the meaning of this for the province really depends
on the math between now and 2041.
It it, it depends how much money the province gets
in that period of time and what they can do
with it will tell the story of the value of
this.
It doesn't take a tremendous amount of cash in the
Canadian context to help fix a provincial government's budget like
the one in New Flying Lever.
It's a $10 billion annual budget.
They run a deficit of between two, $250 million.
So that's a lot of money for a population of
500,000.
For Quebec, it's not necessarily a lot of money and
certainly nationally it's not.
So if that price moves in a significant way, you
could be looking at a consistent period of financial surpluses,
maybe debt reduction and some economic development, even savings for
Newfoundland and Labrador.
So the math is really going to matter.
But this is also a big deal for Quebec.
To Andrew, there's 5000 megawatts of electricity produced at the
Churchill Falls power plant.
Now it's going to need some upgrades and refurbishing in
2041.
But the big thing for Quebec is that they want
to be able to do long term power arrangements for
their industrial base and their residential customers.
That they cannot do without an extension of disagreement because
of the 15 years, 16 years that are left.
It's just not a long enough period of time for
long term industrial customers.
And if you look at the transition of the North
American economy moving towards net zero on a global scale,
the rise of electric vehicles, things like artificial intelligence needing
massive amounts of energy, the necessity of 0 emission, reliable
long term clean energy is paramount.
So this matters to Quebec and its long term economic
security.
There's no rivers that are easy to dam in Quebec
right now that would replace the loss of this energy
if there was no agreement in 2041 and maybe Newfoundland
Labrador decided had to go another way with it.
So it is a cash now and economic development potential
now for Newfoundland Labrador and a long term security for
Francois Lago for Hydro Quebec and the people of Quebec.
So ideally it is a mutually beneficial agreement after decades
of this being completely one sided with all the benefit
on the Quebec side of the border.
I know it's a story you'll cover on power and
politics tonight and obviously with the announcement tomorrow.
David, thank you.
David Cochran, the host of CB CS Power and Politics
in Ottawa.