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Quebec, Newfoundland and Labrador announce energy deal to resolve decades-old dispute

ST. JOHN'S, N.L. — Quebec and Newfoundland and Labrador have reached a sweeping deal to develop new energy projects in Labrador and end a decades-old contract that has long been a thorn in the side of Canada's easternmost province.

ST. JOHN'S, N.L. — Quebec and Newfoundland and Labrador have reached a sweeping deal to develop new energy projects in Labrador and end a decades-old contract that has long been a thorn in the side of Canada's easternmost province.

The new agreement in principle will see Hydro-Québec pay 30 times more for electricity from Labrador compared with the bargain-basement price negotiated in 1969 for Churchill Falls power. Quebec will also shell out $3.5 billion for the right to partner with Newfoundland and Labrador Hydro on the new installations.

"Today, everything changes for Newfoundland and Labrador," Premier Andrew Furey said during a speech that received several standing ovations. "Today, after more than 50 years of a lopsided agreement that has been such a contentious point for Newfoundland and Labrador, we finally have a new deal on the table for Churchill Falls with Quebec."

Quebec Premier François Legault said the agreement represents a "win-win" for the provinces.

"Newfoundlanders will get a better price ... starting in 2025," he said in speech before the official signing ceremony in St. John's, N.L. "I want in 50 years that our grandchildren will be happy about this deal. That's the target."

Under the current contract, Newfoundland and Labrador has owned the majority of the power plant, but Quebec has pocketed most of the profits, paying just 0.2 cents per kilowatt hour for Churchill Falls power.

"We are ripping up the 1969 contract," Furey said. "I will not allow our province to ever repeat the mistakes of previous megaprojects. Hard lessons were learned from the 1969 contract."

The current arrangement had been set to run until 2041, but the new plan effectively ends it as of Jan. 1. In the new scenario, Hydro-Québec will pay an average price of 5.9 cents per kilowatt hour, netting Newfoundland and Labrador Hydro about $1 billion per year until 2041.

It also lays out a partnership between Hydro-Québec and Newfoundland and Labrador Hydro to upgrade and expand the current Churchill Falls facility, and to build a new hydroelectric plant further down the Churchill River at Gull Island, a spot long eyed for development. The new deal is set to run until 2075.

The provinces plan to have a binding agreement in place no later than April 30, 2026, and Legault said he wants to "close the deal" as soon as possible. Once that happens, Quebec will pay the higher rates for Churchill Falls power retroactive to Jan. 1, 2025.

"This is our moment," Furey said. "It wears no political stripe. Its only agenda is to right a historic wrong."

"We have shown the strength to persevere through 55 years of a bad deal, the fortitude to negotiate for our benefit, and now the courage to act."

This report by The Canadian Press was first published Dec. 12, 2024.

Sarah Smellie, The Canadian Press

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