Newfoundland and Labrador Energy Minister Lloyd Parrot, left, and Premier Tony Wakeham in St. John's on Tuesday.Paul Daly/The Canadian Press
Newfoundland and Labrador Premier Tony Wakeham began his Tuesday news conference on his government’s demands for a revised hydroelectric deal with Quebec by paying tribute to Alex Newhook.
The St. John’s native scored Monday’s winning overtime goal against the Buffalo Sabres, thus sending the Montreal Canadiens to the NHL Eastern Conference final.
Mr. Newhook’s outstanding performance so far in the Stanley Cup playoffs – he also scored the winning goal in Game 7 against the Tampa Bay Lightning – has united Quebeckers and Newfoundlanders on at least something.
Unfortunately, Mr. Wakeham’s release of a provincial review committee’s report on the massive energy deal between the two provinces that was signed by his predecessor – and his demands for major changes to the agreement – threatens to divide them once again.
Newfoundland Premier seeks new deal with Quebec on Churchill River energy
The late-2024 memorandum of understanding signed by then-Newfoundland Liberal premier Andrew Furey and his then-Coalition Avenir Quebec counterpart François Legault aimed to end the enmity between their provinces stemming from a 1969 deal that has seen Hydro-Québec buy electricity from the 5,400-megawatt Churchill Falls hydro development in Labrador at a fraction of its market value. Under the MOU, Hydro-Québec agreed to pay billions more for that power in exchange for the right to take the lead on 3,900 megawatts of future joint developments on the Churchill River, including a 2,250-megawatt hydro plant at Gull Island.
Mr. Wakeham, whose Progressive Conservatives campaigned in last year’s election on a promise to submit the MOU to an independent review committee, ended months of speculation by demanding “material improvements” to the 2024 agreement.
But what Mr. Wakeham described as “a window of opportunity” to amend the deal could instead derail it altogether, as the Newfoundland Premier revives decades-old demands to “wheel” some Churchill Falls power through Quebec to customers in other provinces and the United States. He even suggested Prime Minister Mark Carney, who last week unveiled an ambitious plan to increase interprovincial power connections, could assist Newfoundland in building new transmission lines from Churchill Falls and Gull Island.
Ottawa could assist in Churchill Falls negotiations between Quebec and Newfoundland
Mr. Wakeham summed up his demands this way: “More power, more transmission, more value.”
While he did not offer specifics, Newfoundland appears to be demanding that the province retain more electricity from Churchill Falls and Gull Island to power potential future mining projects in Labrador, which is rich in critical minerals, including iron, nickel, cobalt manganese and copper.
Newfoundland and Labrador Hydro (NLH) currently has access to 525 megawatts of power from Churchill Falls, but does not use all of it. Under the MOU, NLH was already set to gain access to an additional 1,465 megawatts of power in coming decades to use for domestic economic development.
The question of what happens if Newfoundland does not use its allotment of power could be a sticking point. The review committee’s report and Mr. Wakeham’s comments suggest Newfoundland wants to sell its surplus allotment directly to customers beyond Quebec at market prices. This would mean bypassing Hydro-Québec and require the Quebec utility to provide access to its grid to NLH. Hydro-Québec has always insisted Newfoundland bear the cost of line-capacity upgrades.
Any offer by Mr. Carney’s government now to subsidize Newfoundland’s costs would be politically explosive in Quebec. Parti Québécois energy critic, Pascal Paradis, said Ottawa’s involvement was “out of the question” and a threat to Quebec’s “energy sovereignty.”
Konrad Yakabuski: Without Churchill Falls deal, Newfoundland faces a dire fiscal future
Mr. Wakeham may be counting on new Quebec Premier Christine Fréchette’s eagerness to finalize a deal with Newfoundland before Quebeckers go to the polls in October. But she has limited room to manoeuvre.
The 2024 MOU was a finely calibrated agreement in which Hydro-Québec sought to offset the increased price it agreed to pay for power from Churchill Falls by gaining future access to electricity from Gull Island and other developments in Labrador at a cost well below alternative sources in Quebec.
“If Newfoundland and Labrador asks to revisit certain elements, we will have demands of our own,” Ms. Fréchette insisted. “The overall balance has to be maintained.”
The previous Newfoundland government prioritized the province’s near- and medium-term fiscal needs in its negotiations with Quebec. The MOU would see the province pocket about $17-billion alone by 2041 from higher fees for Churchill Falls power. Quebec would likely demand a reduction in that sum in exchange for other concessions now. Mr. Wakeham is hence taking a big risk by demanding changes to the overall deal.
With goodwill and hard work, an amended deal is possible. But the history of negotiations between these two provinces also suggests that a lot could go wrong.
The signing of the MOU was an exception in an otherwise poisonous relationship dating back to 1927, when British authorities granted control over Labrador to Newfoundland.
It will take more than Mr. Newhook’s goals to heal it.