ST. JOHN’S, N.L. — Newfoundland and Labrador Premier Andrew Furey promised Monday that an independent panel of experts will monitor negotiations ahead of a final energy agreement with Quebec’s electric utility — but he wouldn’t commit to a review of the deal as it stands now.
The Liberal government of Canada’s easternmost province opened its legislature this week for four days of debate about a memorandum of understanding between Hydro-Québec and Newfoundland and Labrador promising thousands of jobs and billions of dollars in revenue.
Opposition politicians spent much of the first day repeating their calls for an arm’s-length review of the tentative agreement, pointing to the province’s past megaproject failures.
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“I just don’t understand the reluctance to take this (contract), which has such a significant impact on the opportunities for the people in Newfoundland and Labrador, and allow it to be reviewed,” said Tony Wakeham, leader of the Opposition Progressive Conservatives.
“Will you commit to an independent review of this (memorandum of understanding)?” he asked Furey.
In response, the premier said there has already been independent firms advising during negotiations. His government will provide “outside and independent advice to cabinet” at the final stages of the agreement. Until then, he said, the government “will commit to continued independent oversight, to regular updates to cabinet … and to independent oversight of the negotiating team.”
“To say that there’s been no independent assessment and inputs into this thus far is disingenuous.”
The tentative deal would see Hydro-Québec pay significantly more than it currently does for electricity from the Churchill Falls hydroelectric plant in Labrador, and develop additional projects with Newfoundland and Labrador Hydro along the Churchill River. Furey presented the agreement on Dec. 12 at a press conference in St. John’s, N.L.
The provinces have had tense relations since 1969, when a contract was signed allowing Hydro-Québec to buy most of the power from Churchill Falls at prices far below market value. Newfoundland and Labrador tried unsuccessfully to overturn the deal, in a fight that wound up in the Supreme Court of Canada in 2017.
The arrangement was set to expire in 2041, but Hydro-Québec has agreed to end it now. Under the new agreement, the provincially owned utility will pay about 30 times more for Churchill Falls power, resulting in an increase of about $17 billion to the Newfoundland and Labrador treasury between now and 2041. It will also pay Newfoundland and Labrador Hydro $3.5 billion for the right to partner on an expansion to the plant and a new hydroelectric installation further down the Churchill River.
Newfoundland and Labrador’s total budget this year is about $10.4 billion, and the province is carrying a net debt of about $17.7 billion. In 2022, it had the second-highest net debt per capita in the country, behind Ontario, according to Statistics Canada.
Part of the province’s financial burden comes from the Muskrat Falls hydroelectric project, which is also in the Churchill River. It limped over the finish line in 2023, after years of delay and billions of dollars in cost overruns. A lengthy public inquiry into the development’s failures resulted in a final report in 2020 with a long list of recommendations.
They included a call for government to contract “independent external experts” to assess and analyze any projects with budgets greater than $50 million. That recommendation, however, does not specify at which point of the project’s genesis such experts should be engaged.
Officials with Newfoundland and Labrador Hydro have said several independent firms, including JP Morgan, advised during the negotiations of the contract, and representatives are scheduled to be part of the debate this week.
Furey said the agreement was preliminary and non-binding, and that he had brought it for debate in the legislature to be transparent and to include the public even at early stages. That didn’t happen with Muskrat Falls, other Liberals noted on Monday.
“We will continue with oversight, with an independent expert panel that will provide advice to cabinet on negotiations and definitive agreements,” Furey said, drawing applause from his caucus. After that analysis, those final agreements will return to the legislature for another vote, he promised.
The Churchill Falls facility has a generating capacity of around 5,400 megawatts and produces about 34 billion kilowatt-hours annually — roughly enough to power Denmark, according to the U.S. Energy Information Administration.
This report by The Canadian Press was first published Jan. 6, 2025.
Sarah Smellie, The Canadian Press
