After decades of resentment over Churchill Falls, N.L. hopes for a 'fair deal'

Like many of his neighbours in downtown St. John's, Dan Hickey says he's followed the much-maligned Churchill Falls deal for years.  (Patrick Butler/Radio-Canada - image credit)
Like many of his neighbours in downtown St. John's, Dan Hickey says he's followed the much-maligned Churchill Falls deal for years. (Patrick Butler/Radio-Canada - image credit)

When Dan Hickey was growing up in St. John's, the Churchill Falls deal — an infamous, ironclad contract bemoaned by many Newfoundlanders and Labradorians — came up more than once around the kitchen table at home.

So, too, did the many billions of dollars Quebec has made reselling Labrador power purchased at a fraction of the price.

Naturally enough, when Quebec's premier, François Legault, announced he'd soon be negotiating the future of the notorious 1969 hydroelectric contract with Newfoundland and Labrador — and do it soon — Hickey took an interest.

"There is a lot at stake.… I just hope we get a fair deal," said Hickey earlier this month, shovel in hand, after a winter blizzard blanketed the province's capital in half a metre of snow. Hickey had a big cleanup job on his hands. As things turn out, so does the Newfoundland and Labrador government.

Low price, long term

For generations, many Newfoundlanders and Labradorians have resented the Churchill Falls agreement for a simple reason: they feel it isn't fair.

John Samms, a lawyer and adviser to former Liberal premier Dwight Ball, said the deal didn't start out bad, but as the market price for electricity rose, the 1969 contract didn't keep pace. In fact, the price for Churchill Falls power actually went down over time.

Patrick Butler/Radio-Canada
Patrick Butler/Radio-Canada

"The deal is incredibly long term," said Samms. It lasted 40 years, then automatically renewed for another 25, with no chance of renegotiating. "Beyond that is the fact that the price was fixed at such a very low amount," Samms added.

Hydro-Québec currently pays 0.2 cents per kilowatt-hour for electricity produced at Churchill Falls, a price that has actually decreased since 1969. By comparison, in the third quarter of 2022, Hydro-Québec made on average 8.2 cents per kilowatt-hour — 41 times more — on its electricity exports.

Premier after premier in Newfoundland and Labrador has tried — and failed — to reopen the Churchill Falls deal. After decades of legal battles, the provincial government lost once and for all at the country's top court in 2018.

"Whatever deal they come up with now in the near future, it couldn't be worse than what we've lived through in the last 50 years," said Jack Foley, another downtown St. John's resident — one of several pedestrians who spoke to CBC/Radio-Canada and had well-formed opinions about a power deal many Canadians might consider esoteric.

"I always hoped I'd live long enough to see it through, to see the end of it."

High expectations

The Churchill Falls contract expires in 2041, but Legault is set on beginning as soon as possible. On Tuesday he announced a two-day trip to St. John's starting Thursday. Hydro-Québec's energy surplus is projected to evaporate by 2026, and Legault's province needs Churchill Falls electricity more than ever. At present, Churchill Falls power equals about 15 per cent of Quebec's electricity needs.

Legault has also made plain his interest in expanding the existing 5,248-megawatt dam at Churchill Falls and building a new 2,200-megawatt plant at Gull Island, another site on the Churchill River. Construction would take years. Any new development would inevitably require buy-in from Newfoundland and Labrador.

Although negotiations haven't begun, Ron Penney, one of many former civil servants to try to force a better deal with Quebec, said negotiating the dam's future will be a perilous task for Newfoundland and Labrador Premier Andrew Furey.

With many still "extremely bitter" over the Churchill Falls contract, expectations will be high, said Penney, and selling any new partnership with Quebec to the public will be difficult.

Patrick Butler/Radio-Canada
Patrick Butler/Radio-Canada

Penney, a former deputy justice minister, said under any post-2041 scenario, Newfoundland and Labrador will make more money from Churchill Falls than it does today. That "perpetual" boost in revenue will be welcome news, he said, given the provincial government's continued reliance on volatile oil revenues to pay basic services.

But Furey must grapple with a harsh reality: Hydro-Québec owns the only transmission lines leading south and has historically refused to transmit power on to other markets on Newfoundland and Labrador's behalf.

"If things remain as they are, we really have no bargaining position at all because we only have one customer that we can deal with and that's going to be Hydro-Québec," Penney said.

Thawing relations

Samms said Furey has already started things on the right foot, showing a willingness to co-operate with Quebec and meeting with Legault several times since coming to power in 2021.

The Canadian Press
The Canadian Press

"We feel the need for vengeance or we feel the need for revenge when 2041 comes around, which by definition I think is irrational," Samms said. "I think that job one is normalizing that relationship and looking at it with rationality rather than emotionality."

The rapprochement between Quebec and Newfoundland and Labrador would have been anathema to previous premiers. Former premier Danny Williams frequently launched salvos at the Quebec government for its "greed and arrogance" and announced the Muskrat Falls project in 2010 in an effort to export electricity without going through Quebec.

'Fair deal' on the horizon?

Michel Savard, a Quebecer who moved to Newfoundland in the 1980s, fell in love with the province — and a Newfoundlander — and never left, said there's no reason why the relationship between his home and adopted province can't be based on friendship and mutual respect.

Patrick Butler/Radio-Canada
Patrick Butler/Radio-Canada

"Quebec has done very well, and good for them," said Savard, who learned of the Churchill Falls contract from Newfoundland friends incensed by the deal. "But it seems to me there's enough of a pie to go around and share equitably."

Hickey said he feels the same. He said he has no ill will toward Quebec. He's a Habs fan, after all.

"Let's have a fair deal and probably all that foolish animosity will go away," Hickey said. "Let's just make sure we both benefit from it."

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