quebec reaches deal for low-cost power from churchill falls for next 50 years
premier françois legault qualified the deal with newfoundland and labrador as “the agreement that i am most proud of.”
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quebec premier françois legault, left, and newfoundland and labrador premier andrew furey react after signing a memorandum of understanding on hydroelectricity in st. john's on thursday, dec. 12, 2024. the agreement addresses the termination and replacement of the 1969 churchill falls contract and the co-development of the gull island hydroelectric project.
paul daly/the canadian press
quebec and newfoundland and labrador have settled on a new agreement in principle that will replace the contentious churchill falls deal and promises to guarantee quebec low-cost hydroelectric 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 churchill falls and increase the overall energy imported from labrador by 50 per cent through investments in three new hydroelectric developments there. if the deal is ratified, the developments will become the second-largest hydroelectric complex in north america after james bay.
it will also see quebec pay newfoundland and labrador 10 times more than it had in the past for energy produced by churchill falls under the current contract, which was scheduled to continue until 2041. the new deal essentially tears up the old one, and with it much of the bitterness felt by newfoundlanders over the last decades, premier andrew furey said.
“today, everything changes for newfoundland and labrador,” furey said. “after more than 50 years of such a lopsided agreement that’s been so contentious … we finally have a new deal with quebec. we are ripping up the 1969 contract,” he said, at which point the audience broke into cheers. “not in 2041 when it expires, but today.”
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the new deal will bring $200 billion in revenue and thousands of jobs to the province over the next 50 years, furey said.
premier françois legault qualified the deal, which has been in the works for the last four years, as “the agreement that i am most proud of.” quebec will also see the equivalent of $200 billion in benefits due to reduced energy costs, electricity revenues and because it would cost much more to build equivalent hydroelectric structures in quebec, he said.
“we want that in 50 years our children or grandchildren will say, ‘you did a good job, both of you,’” legault said. “it was really a win-win.”
hydro-québec said it expects to sign the final contract within a year as negotiations continue with newfoundland and indigenous groups.
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 green energy corporations. the province said it will run out of energy surpluses by 2027, and still intends to build other hydroelectric dams in quebec.
“in an increasingly uncertain world, where demands for electricity are exploding, 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 profitability of hydro-québec.”
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the contract will allow quebec to lock in an average price of six cents per kilowatt hour for the next 50 years, the lowest in north america, sabia said. prices for a similar hydroelectric project built in quebec would cost a minimum of 13 cents/kwh, sabia said. prices for a nuclear power plant cost 17 cents/kwh.
it will also mean electricity rates will continue to be capped at three per cent a year for households in quebec, the utility said. commercial and industrial rates will be capped at between four and five per cent.
the three new projects to be developed in labrador and financed by hydro-québec 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.
- increasing capacity at the existing churchill falls power plant, creating an additional 550 mw, for $1.5 billion.
- a new run-of-river generating station at gull island in labrador, on the churchill river, that will generate 2,250 mw, at a cost of $20 billion, to be built by 2035. ownership will be 40 per cent hydro-québec and 60 per cent newfoundland and labrador hydro.
hydro-québec will be the project leader on the new developments, and will assume any cost overruns. the muskrat falls hydroelectric dam built by newfoundland and labrador hydro on the churchill river has been plagued by billions of dollars in cost overruns and technical issues.
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the new agreement seeks to repair a historical grievance 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 more than the rates they had earned in the original contract, hydro-québec said. annual payments from quebec to newfoundland will jump from $100 million annually to $1 billion a year until 2041, when they could increase further.
according to the former terms of the churchill falls power supply contract, 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. the original deal didn’t include a clause that would see newfoundland’s income increase if electricity rates went up. quebec argued as well that as project leader it had taken all the risks for cost overruns.
a 2019 newfoundland study estimated that while newfoundland had made $2 billion off the churchill falls deal, quebec had pocketed $28 billion.
under the new deal, quebec will pay progressively more for energy, at one cent/kwh in 2025, two cents from 2025 to 2041, and four cents over the remainder of the contract up to 2075.
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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 new agreement will also include costs of $2 billion to $3 billion for new transmission lines in quebec and labrador, which will involve negotiations with local indigenous communities. sabia promised hydro-québec will make it a priority to listen to the concerns of local populations, in contrast to its past dealings with indigenous groups.
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