Newfoundland and Labrador Hydro’s CEO, Jennifer Williams, emphasized that the recent memorandum of understanding regarding Churchill River power is not paving the way for contracts similar to the 1969 power purchase agreement signed by the Churchill Falls (Labrador) Corporation (CFLCo). Williams expressed her confidence in the current agreement during an interview with CBC’s Carolyn Stokes.
The 1969 contract, which remains in effect, secured low power rates for Hydro-Québec for an extended period, providing minimal benefits to the CFLCo as electricity prices surged. The new three-party MOU, involving the province’s utilities and jointly-owned CFLCo, was unveiled on August 17. This MOU outlines the framework 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, announced this significant agreement in St. John’s. Carney described the text as the most significant green energy initiative in North American history.
Regarding the proposed 50-year sales contract for Churchill Falls power, Williams clarified that the electricity would not be sold at a fixed rate, despite public discussions sometimes referring to it as such. The price to be charged to Hydro-Québec until 2041 will amount to 11.5 cents per kilowatt-hour, with an average yearly escalation of 14% until then and subsequent adjustments based on the Consumer Price Index.
Williams highlighted that the new agreement reflects Hydro-Québec’s willingness to terminate the existing contract ahead of schedule, resulting in a higher price and an extended contract term. This revised deal also opens opportunities for additional power generation on the river, which is crucial for N.L. Hydro to fulfill its objectives and support industrial growth in Labrador.
The latest MOU sets the stage not only for Churchill Falls power sales but also for potential developments at Gull Island and a new transmission line in Labrador. Moreover, it includes commitments for exploring additional energy projects.
In terms of direct power sales, N.L. Hydro is restricted from selling electricity directly to customers outside Quebec. Instead, the MOU outlines arrangements for selling excess electricity to Hydro-Québec for resale, with returns incorporated for N.L. Hydro. Williams underscored the complexities of leveraging existing transmission infrastructure or building new costly ones to facilitate direct sales.
The ongoing negotiations aim to enhance the 2024 agreement, focusing on increased power capacity and federal support for projects like Gull Island. Williams emphasized that the current deal aims for mutual benefits and involves the federal government in financing and oversight. A special debate on the MOU is scheduled in the House of Assembly on September 14, with efforts to finalize terms by year-end.
