Quebec, Newfoundland and Labrador ready to sign Churchill Falls energy deal

Quebec Premier Francois Legault and Newfoundland and Labrador Premier Andrew Furey hold a joint news conference outside the legislature in the Confederation Building in St. John's on Friday, Feb. 24, 2023. (Paul Daly / The Canadian Press)

Quebec Premier François Legault and Newfoundland and Labrador Premier Andrew Furey are scheduled to announce an energy agreement Thursday that could end decades of friction between the two provinces.

Officials from both provinces have been working to negotiate a new deal surrounding the Churchill Falls hydroelectric plant in Labrador. The current agreement, signed in 1969, is widely seen as lopsided in Quebec's favour.

Legault told reporters in Quebec City Wednesday that he would be flying to St. John's to take part in what his office bills as "an important announcement for Quebec's energy future." His finance minister, Eric Girard, told reporters that he could not comment on specifics but added: "It's certain that if there were an agreement, that would be extremely positive for Quebec."

The current agreement has left lasting bitterness in Newfoundland and Labrador, and Furey has vowed to fight for a new arrangement that will better serve the province.

On Wednesday, the Newfoundland and Labrador government touted Legault and Furey's joint press conference in St. John's the next day as a "historic partnership announcement."

Under the 1969 contract, Quebec assumed most of the financial risk of building the Churchill Falls dam in exchange for the right to buy power at a fixed price. The existing agreement allows provincially owned Hydro-Québec to purchase 85 per cent of the electricity generated at the station for 0.2 cents per kilowatt hour — a price Furey has described as “essentially free.”

As of 2019, the partnership had yielded close to $28 billion in profits to Quebec, and about $2 billion for Newfoundland and Labrador.

The agreement officially ends in 2041, though Legault said last year that he was open to making “adjustments” to the arrangement before it expires.

He was in St. John's in February 2023 to announce alongside Furey that they were assembling teams to discuss what could be changed in the existing contract and what might replace it in 17 years. Legault acknowledged during the visit that the agreement was a "bad deal" for Canada's easternmost province, but he stopped short of agreeing with Furey that it was "an injustice."

Quebec gets about 15 per cent of its energy from the Churchill Falls plant. Hydro-Québec will maintain its 34.2 per cent share of Churchill Falls (Labrador) Corp., the entity that operates the generating station and transmission equipment, when the contract expires. The rest is owned by Newfoundland and Labrador Hydro, the province's Crown energy corporation.

It's not yet clear to what extent Innu groups in Labrador and Quebec have been included in the negotiations.

The Innu of Uashat mak Mani-utenam in Quebec filed a $2.2-billion lawsuit against Hydro-Québec in 2023, claiming the Churchill Falls hydroelectric station had destroyed a significant part of their traditional territory. In Labrador, the Innu Nation sued Hydro-Québec and Churchill Falls (Labrador) Corp. in 2020 for $4 billion, claiming that damming of the upper Churchill River in the early 1970s caused extensive ecological and cultural damage. Hydro-Québec did not immediately respond to a question about the status of the lawsuits.

Grand Chief Simon Pokue of the Innu Nation in Labrador said last year that he felt he had been left out of the discussions for a new Churchill Falls deal. Pokue was not listed among the expected guests at the announcement in St. John's on Thursday, and he was not available for comment on Wednesday.

The Churchill Falls facility has a generating capacity of 5,400 megawatts and produces about 34 billion kilowatt-hours annually — roughly enough to power Denmark, according to the U.S. Energy Information Administration.

The long-awaited deal comes as Furey heads into an election year: the province must go to the polls in 2025. The next general election in Quebec is slated for October 2026.

This report by The Canadian Press was first published Dec. 11, 2024.