Hydro-Québec and Newfoundland and Labrador Hydro have reached an agreement in principle that could turn the page on decades of bad blood over the massive Churchill Falls hydropower project.

The new deal gives Newfoundland and Labrador 760 megawatts more power than a 2024 memorandum of understanding later rejected by the province’s Progressive Conservative government, and leaves it free to use its share of the project’s electricity at home or sell it at a premium.

The agreement also lays out how prices will rise in the coming decades. Newfoundland and Labrador currently receives about 1.8 cents per kilowatt hour for Churchill Falls power — a rate that has long been a major source of grievance. Under the new deal, that price would climb 14 per cent a year to reach 11.5 cents by 2041, then rise 2.6 per cent annually to 32.6 cents by 2077, with a mechanism to adjust for inflation.

Under the agreement, Hydro-Québec would also let its neighbour use its transmission lines to reach key markets, including New York and Massachusetts, though the amount of power that can be sent is capped depending on the route. Until now, N.L. has been shut out of those lines because it did not help pay for them. It would pay the same transmission rates as Hydro-Québec itself.

Transmission rights were set to be an important part of any new deal between the two provinces, as Newfoundlanders own the resource but cannot realize its value without Quebec’s infrastructure. 

Under a 1969 deal that runs until 2041, Newfoundland and Labrador sells almost all of Churchill Falls’ output to Hydro-Québec at a price fixed decades ago and never adjusted for inflation. Hydro-Québec’s guaranteed purchase is what allowed the project to be financed at the time, but as power prices rose over the decades, the arrangement left Québec with the vast majority of the profits from one of North America’s largest hydro plants.

N.L. Premier Tony Wakeham said the deal “finally turns the page on one of the darkest chapters of our past” and represents a rare “win-win-win.” 

Wakeham had promised a referendum on any deal when he rejected the 2024 MOU, but the premier now says a special session of the House of Assembly will be convened instead.

More to come…