Newfoundland and Labrador Hydro’s President and CEO, Jennifer Williams, emphasized that the newly established memorandum of understanding concerning Churchill River power does not pave the way for agreements similar to the long-standing power purchase contract signed in 1969 by the Churchill Falls (Labrador) Corporation (CFLCo).
Williams expressed confidence in the current arrangement, stating, “What we have now is something I feel very good about,” during an interview with CBC’s Carolyn Stokes.
The 1969 contract, which remains in force, locked in favorable power rates for Hydro-Québec over the years, providing limited benefits to the seller CFLCo when electricity prices surged. In contrast, the recent three-way MOU among the province’s utilities and CFLCo sets the groundwork for a potential new sales contract, along with significant capital projects and power sales linked to the river.
Prime Minister Mark Carney, along with then-Quebec Premier Christine Fréchette and N.L. Premier Tony Wakeham, celebrated the landmark agreement on August 17 in St. John’s. Carney described the text as outlining “the biggest green energy initiative in North American history.”
Williams clarified that despite public discussions sometimes referring to a “fixed rate,” the electricity generated at the Churchill Falls power plant will not be sold at a flat rate. She highlighted that the proposed 50-year sales contract for Churchill Falls power includes a significant price escalation compared to the 1969 agreement.
Under the new terms, Newfoundland and Labrador will sell a maximum amount of power to Quebec at a premium rate, reaching 11.5 cents per kilowatt-hour until 2041, with an average annual escalation of 14 percent. The price will continue to rise post-2041 at a slower pace, adjusted by the Consumer Price Index.
Williams underscored that without a new agreement, Hydro-Québec would continue paying a nominal rate of 0.2 cents per kilowatt-hour until 2041. She mentioned that the extended contract duration and pricing reflect Hydro-Québec’s agreement to end the existing contract ahead of schedule.
The updated deal offers opportunities for additional power generation on the river to meet N.L. Hydro’s objectives and support industrial growth in Labrador.
The recent MOU also sets the stage for potential contracts related to Gull Island development, a new transmission line in Labrador, and exploring further energy projects. Notably, the agreement illustrates a shift in Newfoundland and Labrador’s power policy, emphasizing direct sales to Hydro-Québec for resale in other markets.
Williams stressed the importance of considering the power’s location in the negotiation process to avoid costly infrastructure investments. She highlighted the benefits of selling excess power to Hydro-Québec for resale, citing more favorable returns compared to spot market prices.
Overall, Williams described the current agreement as a significant advancement from previous arrangements, with increased federal involvement and commitments for energy developments. The MOU is set for a special debate in the House of Assembly on September 14, aiming to finalize terms by the end of the year.