quebec locks in low-cost power from churchill falls for next 50 years
reaches agreement in principle with newfoundland and labrador to replace current contentious deal.
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the transmission line that takes power from churchill falls into quebec.
quebec and newfoundland and labrador have agreed on a new agreement in principle that will replace the contentious churchill falls deal and promises to guarantee quebec low-cost hydro electric power for the next 50 years. the new deal, signed in newfoundland and labrador thursday by the premiers of the two provinces, will see quebec continue to obtain power from the churchill falls dam and increase the overall energy imported from labrador by 50 per cent through investments in three new hydro-electric developments in labrador. if the agreement goes through, it will be the second largest hydroelectric complex in north america after baie-james.
hydro-québec said it expects to sign a final contract within a year as negotiations continue with newfoundland and with indigenous groups affected in the regions.
the agreement comes months after hydro-québec announced it plans to invest $185 billion by 2035 to meet the province’s coming energy needs, which are expected to double by 2050 as it transitions to greater reliance on sustainable energy and woos corporations involved in energy transition. the province said it will run out of energy surpluses by 2027.
“in an increasingly uncertain world, it’s an advantage for quebec to have greater certainty over its energy security,” hydro-québec ceo michael sabia said at a news conference at the crown corporation’s montreal offices thursday. “for the next 50 years, we are assured of a realistic financial structure that guarantees the affordability of electricity and the profitablility of hydro-québec.
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the contracts will allow quebec to lock in a price of six cents per kilowatt hour for the next 50 years. prices for a similar hydroelectric project built in quebec would cost a minimum of 13 cents/kwh, sabia said.
the three new projects are:
— the construction of a new power plant near the existing churchill falls plant, for $3.5 billion, ready in 2035, generating 1,100 mw.
— increase capacity at the existing power plant, creating an additional 550 mw, for $1.5 billion
— build a new run-of-river generating station at gull island in labrador, on the churchill falls river, that will generate 2,250 mw, at a cost of $20 billion.
hydro-quebec will be the project leader on the new projects, and will assume the cost of any cost overruns.
the new agreement also seeks to repair, in part, a historical grievance between the two provinces that has endured for more than half a century. with infrastructure and other costs factored in, newfoundland and labrador will now be paid roughly 10 times what they had made over the more than 50 years of the original contract, hydro-québec said. sabia said that province’s contention that it has been severely shortchanged for decades did not factor in to the costs of the new agreement for quebec.
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the churchill falls power supply contract, signed in 1969, expires in 2041 and has for years been perceived as a major injustice in newfoundland, as quebec pays low rates for power it can later sell for much higher prices. according to the former terms of the deal, hydro-québec pays 0.2 cents per kilowatt hour of electricity produced by churchill falls, which in 2022 it was able to resell at 40 times that price.
a 2019 newfoundland study estimated that while newfoundland had made $2 billion off the churchill falls deal, quebec had pocketed $28 billion. talks between the two provinces have been going on for the past four years.
under the new deal, quebec will pay progressively more for energy, at 1 cent/kwh in 2025, 2 cents from 2025 to 2041, and 4 cents over the life of the contract up to 2075.
the churchill falls complex is strategic for hydro-québec, allowing the utility to cover 15 per cent of its energy needs and accounting for a third of its profits. the deal also allows hydro-québec to purchase 85 per cent of the output of churchill falls. the remaining 15 per cent is used to supply clients of the newfound-labrador power grid or sold on export markets. the deal, while controversial, has nevertheless managed to survive multiple legal challenges over the years, going all the way to the supreme court.
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francois legault, has a new pressing agenda. to meet quebec’s increasing demand for power as it weans itself off fossil fuels, he would like to finalize this new deal with newfoundland and labrador to develop another asset: gull island. that project alone could add as much as 2,250 megawatts of power to quebec’s grid and spare the province the arduous process of building more dams.
more details to come.
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