Newfoundland and Labrador Hydro’s president and CEO, Jennifer Williams, emphasized that the recently signed memorandum of understanding regarding Churchill River power does not pave the way for agreements similar to the controversial 1969 power purchase deal signed by the Churchill Falls (Labrador) Corporation (CFLCo). Williams expressed confidence in the new agreement during an interview with CBC’s Carolyn Stokes.
The 1969 contract, which remains in effect, locked in low power rates for Hydro-Québec for an extended period, providing minimal benefits to CFLCo when electricity market prices surged. In contrast, the new three-way MOU, involving the province’s utilities and jointly-owned CFLCo, was unveiled on Aug. 17. This agreement outlines the framework for a potential new sales contract, along with significant capital projects and power sales linked to the river.
The announcement, hailed as a milestone, featured Prime Minister Mark Carney, former Quebec premier Christine Fréchette, and N.L. Premier Tony Wakeham. Carney described the agreement as “the biggest green energy initiative in North American history.”
Williams clarified that the electricity generated at the Churchill Falls power plant will not be sold at a fixed rate, contrary to public discussions. Instead, a proposed 50-year sales contract for Churchill Falls power will see a substantial escalation in pricing, reaching 11.5 cents per kilowatt-hour by 2041. The agreement outlines an average annual price escalation of 14% until 2041, with further increases thereafter tied to the Consumer Price Index.
The revised deal reflects Hydro-Québec’s willingness to terminate the existing contract prematurely, resulting in a higher price and an extended sales agreement. Williams stressed that the agreement presents essential opportunities for additional power generation on the river, crucial for N.L. Hydro to fulfill its objectives and support industrial growth in Labrador.
In a notable shift from previous policies, the MOU focuses on selling additional electricity produced in Newfoundland and Labrador to Hydro-Québec for resale outside the province. This strategy includes structured returns to N.L. Hydro, acknowledging the logistical challenges associated with transmission infrastructure development.
Overall, Williams views the current agreement as an improvement over the 2024 MOU, offering increased power capacity and federal support for projects like Gull Island development. The agreement is set for further discussions in the House of Assembly, aiming to finalize terms by year-end.