Churchill Falls – Guess Who Came to Dinner?

At last, Newfoundland and Labrador has a fighting chance to wrest its fair share of revenue from the Churchill Falls hydroelectric project.

In 1969, Premier Joey Smallwood’s government signed the infamous Churchill Falls agreement, under which Hydro Quebec buys very cheap power from the massive hydro project in Labrador until 2041.  

Quebec pays Newfoundland 0.2 cents per kilowatt hour (KWH), with no price escalations under the contract. The resale price into US markets was 8.2 cents per KWH last year – not a bad markup for any business, anywhere.

Newfoundlanders and Labradorians have been fighting mad about Joey’s Churchill contract for half a century now, and who can blame them?

From the CrowsNest, though, we’re charting a way through dangerous waters by suggesting Quebec has its own views on the whole dam matter.

To enable Churchill Falls to go forward, La Belle Province guaranteed debt for cost overruns of a risky megaproject located in a remote part of another province. It took financial risk and reaped financial rewards.

As for Smallwood, he knew the 1969 deal wasn’t a great one for his province, but it was the deal he could get, and it dovetailed with his plan to supply cheap power to resource projects in remote areas.

Since Joey left office, successive provincial governments have attempted to bury his agreement in unsanctified land. Righteous anger didn’t do the job. Nor did moral suasion. Nor did two references to the Supreme Court of Canada.

Newfoundlanders and Labradorians finally have an ally, though – time. The Churchill Falls agreement expires in 2041 – a nano-second away in utility time. And Quebec badly needs continuous access to Churchill Falls power.

No wonder Quebec Premier Francois Legault showed up in St. John’s last week to dine with Premier Andrew Furey.  After the two had chatted amiably over the white linen, Legault conceded the Churchill Falls agreement was a ‘bad deal.’

That concession is a good indication that Newfoundlanders and Labradorians should get a better one. Who knows? A new deal may even satisfy an appetite for vengeance – the ‘dish best served cold’.