Any attempt to develop the Gull Island hydroelectric project is dead on arrival without first resolving a billion-dollar dispute over Muskrat Falls revenues, says a lead negotiator for Labrador's Innu Nation.
Peter Penashue, the former Innu Nation grand chief, said while the Innu signed on to developing dams at both Muskrat Falls and Gull Island in 2011, construction was conditional on a benefits agreement brokered "in good faith" that he believes governments in Ottawa and St. John's have since trampled on.
In recent weeks, Quebec Premier François Legault has openly mused about building the 2,250-megawatt Gull Island dam on the Churchill River, as his province grapples with a shrinking electricity surplus. But Penashue said the Innu are prepared to fight the project, whether in court or by protesting.
"You can safely say that Gull Island is dead. It's not coming back on stream, ever, as long as this [Muskrat Falls dispute] is outstanding," said Peter Penashue from his home in Sheshatshiu, last week, in an interview with CBC/Radio-Canada.
According to Penashue, in 2021, when the province and federal government renegotiated the financing of the 824-megawatt Muskrat Falls dam — an agreement that limits the burden borne by Newfoundland ratepayers due to the project's monumental cost overruns — it did so at the expense of the Innu.
While limiting a rate hike for customers on the island, the deal drastically reduced the revenues promised to the Innu, Penashue said.
A 'New Dawn' turns into a historic 'insult'
Under the terms of the Tshash Petapen or "New Dawn" agreement — the impact benefits deal reached with the Innu in 2011 that paved the way for hydroelectric development on the Lower Churchill — during construction, the Innu receive $5 million a year, indexed to inflation and maxing out at around $6 million.
Once the beleaguered project finally crosses the finish line, the Innu are also guaranteed five per cent of annual net cash flow or $6 million, whichever is greater. The latter scenario never seemed realistic, as revenues should have skyrocketed shortly after construction.
However, due to the terms of the rate mitigation deal, once commissioned, the dam will struggle to turn a profit for about 30 years, leaving the Innu with a fraction of the revenues they expected. Penashue said over the first 50 years of the project, the Innu Nation, representing just 3,000 people in Sheshatshiu and Natuashish, will end up with about $1 billion less than initially projected.
"It's insulting to the communities, to the elders of this community, to the people that ratified that agreement," Penashue said. "Are we losing $1 billion because of the realities of the circumstances or are we losing $1 billion because of who we are?
"It's just so revolting when I hear them [the provincial and federal governments] talking about reconciliation and having to do the right thing for Indigenous Peoples in this province. When they talk about Beothuk, about 'monument this' … I can't sit in that room and talk about those things because I know they are not being serious."
Both Premier Andrew Furey and the province's federal regional minister Seamus O'Regan declined interview requests.
In a statement, a spokesperson for the province wrote that the Innu will receive a "significant benefit" from the Muskrat Falls project and the government will honour the impact benefits agreement, or IBA.
"The rate structure which supports the Muskrat Falls Project must be realistic and sustainable," reads the statement. "The structure not only supports ratepayers, it ensures financial stability for the Muskrat Falls project so that the Innu will receive IBA benefits."
'All we're doing is spinning our wheels'
The Innu Nation attempted to block the agreement in court but dropped the suit in September 2021 when the federal and provincial governments announced fresh talks with the Innu Nation.
Penashue says those "frustrating" consultations have gone nowhere.
"All we're doing is spinning our wheels," he said.
In recent weeks, Quebec's premier has openly salivated over the Gull Island project, given Hydro-Québec's current electricity surplus is projected to dry up by 2026.
As the Quebec and Newfoundland and Labrador governments prepare to reopen the Churchill Falls deal, a much maligned agreement that expires in 2041, the Gull Island project is certain to play a major role in negotiations.