Newfoundland and Labrador has reached a tentative deal with Quebec over power flowing from the Churchill Falls hydroelectric plant that could reap hundreds of billions of dollars over the next five decades.
Newfoundland and Labrador Premier Andrew Furey and Quebec Premier François Legault are announcing the terms of a memorandum of understanding at a news conference in St. John’s this afternoon.
In a sweeping agreement that not only replaces a contentious 65-year contract that generations of N.L. politicians have loathed, Furey and Legault also announced plans to develop Gull Island, one of the last great hydroelectric projects in North America.
“Today, everything changes for Newfoundland and Labrador,” Furey told a crowded audience.
”We are ripping up the 1969 contract. Not in 2041, when it expires, but today.”
The MOU is expected to be formalized by 2026.
Under the current contract, which would have had 17 years left until its expiration, N.L. received 0.2 cents/kWh. Under the new proposed agreement, that’s increased by no less than 30 times to 5.9 cents/kWh.
Over the next of 50 years, N.L. is expecting to reap billions of dollars.
In the next 17 years, it will earn $1 billion a year. Starting in 2041, that will double to $2 billion a year, then double again to $4 billion per year in 2056. Escalating clauses will mean increases beyond that point.
New Labrador hydro developments
The second part of the MOU relates to hydro developments that will significantly boost Labrador’s power capacity up to 1,990 megawatts.
The long-discussed Gull Island hydroelectric project — a separate undeveloped project downstream on the Churchill River — is also on the table.
The project, which received an environmental assessment in 2012, could generate 2,250 MW.
Hydro-Québec would be the project lead and manage its construction, which would also mean it will have to absorb any cost overrun. N.L. Hydro would operate the facility and get access to 225 MW.
The Gull Island project would be a new entity, owned 60 per cent by N.L. Hydro and 40 per cent by Hydro-Québec.
The target date for commissioning Gull Island is 2035, 11 years from now.
N.L. Hydro and Hydro-Québec also want to partner in boosting hydro electric production at the Churchill Falls plant with a second underground powerhouse built near the existing reservoir. It would generate 1,110 MW.
An environmental assessment will still need to be done. Hydro-Québec would manage the construction, with N.L. Hydro operating it once it is completed. N.L. Hydro would also get access to 135 MW.
This expansion will be owned by the Churchill Falls (Labrador) Corporation, with 65.8 per cent owned by N.L. Hydro and 34.2 per cent Hydro-Québec.
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