Newfoundland and Labrador Premier Tony Wakeham in St. John's in March.Paul Daly/The Canadian Press
If all had gone according to plan, Newfoundland and Labrador would soon be pocketing the first $1-billion of a projected $225-billion in additional payments from Hydro-Québec for power from existing and future developments on the Churchill River.
Under a memorandum of understanding signed in late 2024 by the then-premiers of Newfoundland and Quebec, Hydro-Québec agreed to pay an average of 20 times more for the 5,000 megawatts of electricity it currently buys from Churchill Falls under a 1969 contract, and extend the contract for 50 years.
In exchange, the Quebec utility would gain the exclusive right to take the lead on $25-billion worth of new hydro developments on the Labrador river.
At the time, both premiers called it a win-win deal, one that would allow their long-feuding provinces to bury the hatchet and help cash-strapped Newfoundland alleviate budgetary woes that are projected to balloon as its population ages and offshore oil revenues decline.
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Quebec’s then-premier François Legault and his Newfoundland counterpart at the time, Andrew Furey, aimed to translate the MOU into a definitive agreement by this month. The first payments under the deal were scheduled to begin flowing immediately.
Instead, politics has once again got in the way of a major Canadian energy infrastructure project.
Mr. Furey resigned in mid-2025 and his successor as Liberal leader and premier, John Hogan, was defeated in last fall’s provincial election by Tony Wakeham’s Progressive Conservatives. Mr. Wakeham promised to undertake an independent review of the MOU and hold a referendum on any revised deal with Hydro-Québec.
Mr. Wakeham’s review panel is set to table its report by April 30. The panel’s composition – one of its members had previously voiced opposition to the MOU, while another served as the head of the Nova Scotia utility that agreed to buy power from Newfoundland Hydro’s ill-fated Muskrat Falls hydro project – suggests it will recommend major changes to the deal.
Mr. Legault, meanwhile, announced his resignation in January. His successor as Coalition Avenir Québec Leader, Christine Fréchette, was sworn in as Premier this week. But the clock is ticking fast on Ms. Fréchette’s plan to seal the deal with Newfoundland before Quebeckers go to the polls on Oct. 5. Her CAQ is trailing badly in the polls and the prospect of a Parti Québécois election victory becomes more real by the day. The PQ has called for its own review of the MOU.
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Mr. Wakeham has insisted he has not made up his mind on the MOU and is waiting for the panel’s recommendations before determining the next step. Former PC premier Danny Williams, however, is already taking credit for halting the MOU amid revelations that he donated $46,000 to Mr. Wakeham’s party in advance of last year’s election – which was perfectly legal under Newfoundland’s antiquated election finance laws.
“I’m quite proud of the fact that, actually, I stepped in,” Mr. Williams said last week. “And I’ll be honest with you and say it’s probably the single biggest achievement I’ve had since I’ve been in politics, which was stopping that MOU.”
Liberal energy critic Fred Hutton countered that Mr. Williams’s record – he championed the province’s decision to go it alone on Muskrat Falls, which went massively overbudget and led to two federal bailouts that have left Canadian taxpayers on the hook for most of the $14-billion project’s debt – “makes him the last person who should be offering advice.”
Mr. Wakeham’s government has still not tabled its first budget. In December, PC Finance Minister Craig Pardy revised the province’s projected deficit upward to $948-million for the fiscal year that ended on Mar. 31. The previous Liberal government had been projecting a $626-million shortfall, up from the $372-million it had forecast in the 2025 budget.
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Mr. Wakeham’s government maintains high hopes that Norway’s Equinor will proceed with its proposed Bay du Nord offshore oil project by 2031, which would add billions of dollars to provincial coffers over its lifespan. But Bay du Nord remains on hold while royalties from the province’s existing offshore oil developments are projected to dry up entirely by 2050.
At around 44 per cent, Newfoundland already has the highest net-debt-to-GDP ratio of any province. The debt could spiral out of control in the next few years without significant new revenues or spending cuts. Another federal bailout might be necessary.
Newfoundlanders widely believe their province got fleeced by Hydro-Québec in 1969 and are naturally suspicious of any deal it supports. But as opponents of the MOU entertain fantasies about negotiating a much better deal with Hydro-Québec or another partner, Newfoundland risks losing its best chance at righting its fiscal ship altogether.