June 24th, 2024

Quebec and N.L. premiers hold energy talks, plan to review Churchill Falls ‘bad deal’

By Sarah Smellie, The Canadian Press on February 24, 2023.

As Quebec Premier François Legault seeks an energy deal with Newfoundland and Labrador, some say he faces a public hardened and scarred by the legacy of one dam failure after another. Legault responds during question period, Thursday, Feb. 16, 2023, at the legislature in Quebec City. THE CANADIAN PRESS/Jacques Boissinot

ST. JOHN’S, N.L. – Quebec Premier François Legault admitted Friday that a decades-old hydroelectricity deal that has made his province billions of dollars has become “a bad deal” for Newfoundland and Labrador – but he stopped short of calling it an injustice.

The premier was in St. John’s to discuss what comes after the notorious 1969 Churchill Falls agreement between Quebec and Canada’s easternmost province ends in 2041. The lopsided arrangement heavily favours Quebec, and has left a lasting bitterness in Newfoundland and Labrador.

“I don’t want to judge Mr. Smallwood or the people who signed this contract,” Legault told reporters, referring to Joey Smallwood, Newfoundland and Labrador’s first premier and the man who signed the agreement. “But today, when you look at the price and you look at the market price, it became a bad deal for Newfoundland and Labrador.”

When pressed about whether he would call the deal “unjust,” Legault reiterated, “It’s a bad deal.”

The arrangement allows Quebec’s provincially owned hydroelectric utility, Hydro-Québec, to purchase most of the electricity generated by the Churchill Falls hydroelectric dam in Labrador, and therefore reap most of the profits. As of 2019, the deal had yielded close to $28 billion in profits to Quebec, and about $2 billion for Newfoundland and Labrador.

Hydro-Québec pays just 0.2 cents per kilowatt hour for Churchill Falls power. By comparison, the utility made an average of 8.2 cents per kilowatt hour on power it sold outside the province in 2022, it said in a news release Wednesday. The rates helped Hydro-Québec make a record-breaking income of $4.6 billion last year.

Earlier this week, Legault said he wanted a “win-win” deal for Quebec and Newfoundland and Labrador – and even suggested paying the province more for electricity before the current deal ends in 2041.

Furey told reporters Friday that he and Legault agreed to assemble teams for “high-level discussions” about what could be changed in the existing contract and what may replace it in 18 years.

Their talks on Friday morning, Furey said, included a discussion about “the injustice that is perceived throughout society in Newfoundland and Labrador because of that contract.”

“The premier is here to recognize the punitive nature of the contract toward Newfoundlanders and Labradorians, and we wouldn’t be here today if there wasn’t the potential to discuss the current state of that contract,” Furey added.

Jeff Webb, a historian at Memorial University, says some residents of Newfoundland and Labrador think the province wouldn’t have endured the “humiliation” of needing equalization payments from the federal government if the Churchill Falls agreement had more evenly served both provinces.

“It does speak to people’s sense that this is something that’s always been rightly ours, and it’s been stolen,” Webb said in a recent interview.

The Innu of Uashat mak Mani-utenam in Quebec filed a $2.2-billion lawsuit against Hydro-Québec earlier this year, claiming the Churchill Falls hydroelectric station has destroyed a significant part of their traditional territory. In 2020, the Innu Nation in Labrador launched a $4-billion lawsuit against Hydro-Québec and Churchill Falls (Labrador) Corp., a subsidiary of Newfoundland and Labrador Hydro, for the ecological and cultural damage caused by the damming of the upper Churchill River in the early 1970s.

Furey said he had spoken with Grand Chief Etienne Rich about Legault’s visit and that he has an in-person meeting with him scheduled for Monday.

Though he emphasized discussions were beginning and far from approaching any kind of a deal, Furey said that anything agreed to between Quebec and his province would take into consideration “existing agreements and a potential to work together with our Indigenous partners.”

This report by The Canadian Press was first published Feb. 24, 2023.

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