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More than Churchill Falls could be on the table in a new N.L. power deal with Quebec

If or when Andrew Furey and François Legault sit down to work out a deal on Churchill Falls, a lot more will be on the table than just what price Quebec is willing to pay for power.

The Quebec premier has already made it clear in interviews he’s interested in Gull Island, and the 2,250 megawatts of power that could be produced.

“It’s probably the most attractive remaining hydroelectric project in North America,” said Tom Adams, an Ontario energy analyst.

“The good hydroelectric across North America is tapped out.”

For Quebec’s last premier, Philippe Cuillard, the focus for Hydro-Québec was export, signing deals to sell power to the United States.

But the current premier has different plans.

Legault sees the demand for electricity in his province climbing as households and industry shift away from fossil fuels to clean hydro power.

more than churchill falls could be on the table in a new n l power deal with quebec
Energy consultant Tom Adams says Gull Island is a very attractive energy project. (CBC)

A report estimates that by 2050, Quebec will need an additional 100 terawatt-hours.

Gull Island would cover 10 per cent of that need, if Quebec could convince Newfoundland and Labrador to develop the project and give it access to the power.

Gull Island has benefits over Quebec alternatives

Legault is pushing Hydro-Québec to develop plans for other dams, but so far none are on the books.

Adams says the projects with cheap power close to customers have already been developed, leaving only projects that are farther away or provide less power for more money than Gull Island could.

Gull Island also has two things Quebec projects don’t: a completed environmental assessment and Indigenous signoff, from the Innu.

When Newfoundland and Labrador did the deals and approvals for the Muskrat Falls power project it included Gull Island, giving that project a head start.

But development could still face some turbulence; the Innu Nation recently said it will block development of Gull Island over concerns that it will see reduced Muskrat Falls payments after the province and federal government restructured the project.

Quebec has had its eye on Gull Island for decades; it even had a deal in 1998 with then premier Brian Tobin to develop the project, but the plan fell apart amid Indigenous opposition and a lack of investment in transmission lines from the federal government. 

A woman in a white shirt smiles for the camera
Energy researcher Éloïse Edom says Quebec should look at ways to save power before it builds more dams. (Émilie Ferguson/Submitted by Éloïse Edom)

“Gull Island, when looking for a new source of energy is a good option,” said Éloïse Edom, a researcher at a Quebec energy institute.

“It’s a big potential there.”

She says Quebec should first look at ways to save energy before it looks at developing new hydro projects that, while not producing large-scale greenhouse gas emissions, would still have an environmental and social impact from the flooding caused by a dam.

One of the questions would be who owns and develops the project, with the recent memory of a mismanaged and over-budget Muskrat Falls project likely to make Newfoundland and Labrador wary of taking on the risk.

More power from the Churchill

Even without building a full new project, Newfoundland and Labrador Hydro is looking at ways to get more energy out of Churchill Falls.

It says upgrades could increase the output by 1,200 megawatts, about one-fifth more power than the current capacity.

Since Quebec and Newfoundland and Labrador jointly own the dam, both would likely need to be on board with plans to upgrade, but there’s a potential to give Quebec more power and generate more revenue for Newfoundland and Labrador.

Does Quebec owe reparations for the last contract?

Newfoundland and Labrador has spent most of its current contract for Churchill Falls power trying to get out of it.
Political negotiations, and numerous court skirmishes haven’t managed to change the existing contract, which sees Quebec receive incredibly cheap power until 2041.

The issue of reparations was raised in meetings between Legault and former N.L. premier Dwight Ball.

Two men sit on leather chairs spaced 2m apart. Behind them are the Quebec and Newfoundland and Labrador flags
Newfoundland and Labrador Premier Andrew Furey said it would be important that a new deal recognize the ‘punitive nature’ of the last contract for Churchill Falls. (The Canadian Press)

And the current premier is hinting that if he does sit down with Quebec, he’ll be looking for them in a new agreement.

“If there is a path forward that is reasonable, with some recognition by the way of the punitive nature of this contract in the past, that is important politically, it’s important socially and it will be an important part of any fiscal arrangement should we decide to do it,” Furey told podcaster David Herle in an interview last month.

It’s a recognition from the premier that the Newfoundland and Labrador public is going to be skeptical of any deal with Quebec.

It’s too early to know what form reparations could take, but options include a lump sum payment, coming from the $28 billion, by one estimate, of profits Quebec has earned from this deal.

Another would be to increase the power rates for the remaining 18 years of the contract, allowing Newfoundland and Labrador to not have to wait another 18 years to start receiving financial benefits.

“I try to urge my friends in Newfoundland Labrador to not get stuck in the ancient history,” said Adams.

“The benefit of the of Labrador resources needs to be considered from a forward-looking perspective, not this rearview mirror stuff that’s really caused a lot of … headaches, really, for Newfoundland.”

Read more from CBC Newfoundland and Labrador

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