How to judge Newfoundland’s next Churchill Falls deal with Quebec

Two prominent critics of the rejected 2024 Churchill Falls power agreement between Newfoundland and Labrador and Quebec say Newfoundlanders should not judge any revised deal by the headline numbers, but by focusing on the details that will determine how much value the province ultimately captures from its hydro resources.

Doug May, a retired economics professor at Memorial University in St. John’s, NL, and David Vardy, a former chair of Newfoundland and Labrador’s Public Utilities Board, both formally opposed the 2024 memorandum of understanding (MOU) between the two provinces and have closely followed the negotiations since.

With a revised agreement potentially coming as early as next week, they say the public should focus on how much electricity Newfoundland and Labrador keeps, whether it gains the right to sell power to other markets and how much of the project’s economic value ultimately stays in the province.

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Reports earlier this week suggested the revised agreement could include substantially more generating capacity than was considered in the original MOU, nearly 1,000 megawatts of guaranteed transmission access through Quebec and federal financing for the proposed hydroelectric developments.

The details have not been made public and Newfoundland and Labrador Premier Tony Wakeham has said negotiations are continuing.

May said the rejected agreement should not be used as a benchmark for whatever comes next, comparing it to a student receiving a grade of 30 on an exam, rewriting it and receiving 45.

Talks between the two provinces are unfolding less than two months before Quebec’s Oct. 5 election. Quebec Premier Christine Fréchette has said the agreement could be jeopardized by a change of government and that she raised the election deadline directly with Wakeham, who has said his province should not be rushed into an agreement.

The negotiations seek to replace the 2024 MOU, which proposed an early end to the 1969 Churchill Falls contract that gives Hydro-Québec access to most of the plant’s electricity at about 0.2 cents per kilowatt-hour until 2041. The deal has long been viewed in Newfoundland and Labrador as one of the worst resource deals in the province’s history.