Good morning. I want to talk to you about Churchill Falls. It is the story of the outsized ambition of the visionary leaders who built up the country’s postwar economy, of the gargantuan sums involved in that endeavour, but also of the sense of betrayal that Newfoundlanders have felt to this day. I’ll dive into the saga below, but first:
In the news
Trade: Canada to limit some foreign steel imports by imposing quotas to help producers reeling from U.S. President Donald Trump’s 50-per-cent tariffs
Transport: Watchdog says Ottawa should allow foreign-owned airlines to fly domestic routes to boost competition and phase out restrictions on foreign ownership.
The FDA: Job cuts at the U.S. Food and Drug Administration raise red flags over safety of food imports to Canada
Taxes: The U.S. Senate’s proposed amendments to Trump’s revenge tax offer little relief to Canadian investors, Chamber of Commerce says
On our radar
- Today: April retail sales data to be released along with raw materials prices and the new housing price index. CMHC has just given up on its goal to return to 2004 housing affordability levels.
- Notable earnings include Accenture PLC.
Quebec Premier Francois Legault and Andrew Furey, Premier of Newfoundland and Labrador shake hands after signing a memorandum of understandin in St. John's, Dec. 12, 2024.Paul Daly/The Canadian Press
In focus
How Quebec and Newfoundland overcame a century of hurt
Hi, I’m Globe columnist Konrad Yakabuski. I wrote my first story on Churchill Falls shortly after joining The Globe and Mail as its Report on Business correspondent in Montreal. That was in 1996! Back then I could never have imagined that a massive hydroelectric generating station in Labrador would come to occupy such an important place in my professional life.
But the saga of Churchill Falls, and the deep bitterness it caused between Quebec and Newfoundland and Labrador, ensured I never lost interest in the topic. How could I? Churchill Falls remains one of Canada’s best business stories, ever.
My business cover story in the weekend paper on the deal between Quebec and Newfoundland to rework the terms of the original, 1969 contract under which Hydro-Québec has purchased almost all of the 5,400 megawatts of power produced by Churchill Falls for a pittance of its market value is the culmination of months of efforts to trace the tortured history of that contract – and the myths surrounding it – and interview all the players who made a new deal possible.
At a time when Canada is striving to once again build big things, and break the sorry pattern that has seen one major infrastructure project after another get mired in red tape and opposition, Quebec Premier François Legault and his former Newfoundland counterpart Andrew Furey showed what is possible with determination, trust and compromise.
Premier Joseph Smallwood of Newfoundland, right, is joined by Baron Edmund Leopold de Rothschild at the official sod-turning ceremony of the Churchill Falls power development project in 1967.The Canadian Press
In agreeing to pay substantially more for power from Churchill Falls between now and 2075, Hydro-Québec will get exclusive rights to develop almost 4,000 megawatts of new power projects on the lower Churchill River at an estimated cost of $25-billion. A big deal, indeed.
The memorandum of understanding (MOU) between Hydro-Québec and Churchill Falls (Labrador) Corp. that was struck in December could never have been achieved without the tireless work of Hydro-Québec CEO Michael Sabia and his Newfoundland and Labrador Hydro counterpart, Jennifer Williams. Legault and Furey set the conditions for the negotiations, and ultimately had to sign off on the MOU, but they relied on Sabia and Williams to work out the details of the new Churchill Falls contract and the terms of an agreement to expand the capacity of Churchill Falls by 500 megawatts, build a new 1,100-megawatt generating station on a nearby site and construct a 2,250-megawatt hydro dam downriver at Gull Island. The MOU is mind-bogglingly complex, but if the plan is realized, it promises to generate tens of billions of dollars in new revenues for Newfoundland and provide Quebec with tens of billions in energy-cost savings in coming decades.
The two provinces aim to reach a definitive agreement by next spring, though it will fall to Sabia’s successor at Hydro-Québec to negotiate the final details with NL Hydro. Sabia is leaving the Quebec government-owned utility next month to become clerk of the privy council in Ottawa. Still, any final deal is likely to bear his imprint. His 2023 arrival at Hydro-Québec injected the momentum into the talks that was critical to reaching the MOU.
In my nearly three decades following the Churchill Falls saga, I had witnessed several false starts as previous premiers of Quebec and Newfoundland tried and failed to overcome the bad blood between their provinces. I was naturally skeptical that things would be any different between Legault and Furey.
My story seeks to explain why that proved not to be the case. And why this should serve as an example for the rest of Canada. I hope you enjoy it.
Charted
Canada’s short end of the stick
It’s often said that no one wins in a trade war, but not everyone loses equally, either, writes Jason Kirby. And as Trump hammers his country’s two closest trading partners with tariffs, the blows are landing much harder on Canada than Mexico.
Bookmarked
On our reading list
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Not sure: What happens to mortgage rates if the Canada-U.S. trade war ends?
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Morning update
World markets are keeping an eye on oil prices, which fell Friday but remained on course for a third consecutive weekly rise, as tensions continue to flare in the Middle East. TSX futures edged up. U.S. futures edged lower after major U.S. markets were closed yesterday for the Juneteenth holiday.
Overseas, the pan-European STOXX 600 was up 0.59 per cent at 539.01 points. Britain’s FTSE 100 was 0.4 per cent higher at 8,827.43 and the CAC-40 in Paris gained 0.74 per cent to 7,609.43. Germany’s DAX rose 1.02 per cent at 23,292.02.
Stocks were mixed in Asia on Friday. Japan’s Nikkei 225 index edged 0.22 per cent lower to 38,403.23, while Hong Kong’s Hang Seng rose 1.26 per cent to 23,530.48.
The Canadian dollar traded at 72.97 U.S. cents.