Churchill Falls: PLQ more favourable to the agreement than when it was signed

The official Liberal opposition is changing its position on the Churchill Falls agreement with Newfoundland and Labrador, as the deal comes under fire in the neighbouring province, which is immersed in an election campaign.

When Premier François Legault signed a memorandum of understanding with his then Newfoundland counterpart Andrew Furey last December, interim PLQ leader Marc Tanguay argued that “it doesn’t seem like a good deal at all” and, according to him, the CAQ leader was a “bad negotiator.”

But the new Liberal leader, Pablo Rodriguez, is more lenient and supportive.

“It’s an agreement that is correct, that is in a certain way win-win, not necessarily the agreement of the century, but win-win, but which above all meets a significant need” for energy, he declared Wednesday in a press briefing.

Tanguay stated in December that Hydro-Québec’s $25 billion investment in three new hydroelectric projects in Labrador was far too high a price to pay for the benefits that Quebecers would gain. 

On Wednesday, however, Rodriguez was keen to add that it was not “the agreement of the century,” because “an agreement can always be improved,” to use his words. 

“We are following this very closely.”

Rodriguez admitted that he was following the evolution of the debate in Newfoundland on the agreement, which seems to be taking an unfavourable turn, under fire from critics and the province’s Conservative Party – its leader clearly says he wants to obtain better conditions if he becomes premier.

“We’re obviously following this very closely,” said Rodriguez. An official Hydro-Québec source also indicated that the government-owned company was monitoring the ongoing campaign in Newfoundland.  

“There is some concern because there are energy needs” that Quebec must meet, acknowledged the leader of the PLQ. 

The Legault government aims to obtain an additional electricity supply for decades to come with this agreement.

After two years of negotiations, the Quebec government agreed to terminate the 1969 agreement, which ran until 2041, but which Newfoundlanders considered unfair: Hydro-Québec buys electricity at 0.2 cents per kWh, but then resells it at a high price. The royalty paid to Newfoundland would gradually increase to 6 cents per kWh, a 30-fold increase. 

If the draft agreement is officially ratified by April 2026, Hydro-Québec will pay higher royalties to Newfoundland for electricity from the Churchill Falls complex, but will also be the project manager for three projects.

These include increasing the capacity of the current plant, a second plant at Churchill Falls, and a plant downstream on the Churchill River at Gull Island, projects valued at a total of $25 billion.

Quebec would thus have access to an additional 7,200 MW. 

In total, with the royalty increases in Newfoundland and Labrador, Hydro-Québec will pay $33.8 billion to the Churchill Falls consortium until the end of 2075.

A Hydro official said on condition of anonymity on Tuesday that negotiations are continuing with a view to reaching a final agreement.    

Currently, Churchill Falls has a capacity of 5,400 MW and provides 15 per cent of Hydro-Québec’s electricity. 

–This report by La Presse Canadienne was translated by CityNews