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ST. JOHN’S, N.L. — A dramatic vote on Thursday night ended with the Newfoundland and Labrador government deciding to move forward with a draft energy deal with Quebec heralded as a game-changer for the indebted Atlantic province.
The Opposition Progressive Conservatives walked out of the legislature in protest, without casting a vote. The party had repeatedly called for the tentative agreement to be reviewed before a decision, but their demands were denied.
“People are demanding more than just rhetoric that this agreement changes everything,” Tory Leader Tony Wakeham said before his 13 fellow party members stood up and left.
Meanwhile, Liberal Premier Andrew Furey got a standing ovation from his caucus as he gave a speech before the vote.
“We have waited over 50 years,” he told the legislature. “Our position has never been stronger. We know it. Quebec knows it.”
The government opened the House of Assembly on Monday for four days of debate about the memorandum of understanding unveiled Dec. 12 between Hydro-Québec and Newfoundland and Labrador Hydro. The agreement promises about $227 billion in revenue to the Newfoundland and Labrador treasury, much of it coming from 50 years of new rates Hydro-Québec will pay for power from the Churchill Falls plant in Labrador.
The tentative agreement doesn’t just promise new revenue, it promises an end to a bitterness and sense of injustice stemming from a 1969 contract that heavily favoured Quebec. Under the old agreement, Hydro-Québec purchased about 15 per cent of its energy from the Churchill Falls plant at prices far below market value.
Under the new scenario, Hydro-Québec will pay about 30 times more for power, netting Newfoundland and Labrador an average of $1 billion a year until 2041, and $4 billion a year after 2056.
Quebec’s provincially owned hydro utility will also pay Newfoundland and Labrador Hydro a $3.5-billion fee for the right to co-develop two more energy projects on the Churchill River. Newfoundland and Labrador Hydro will be the majority owner of these developments, and Hydro-Québec will absorb any cost overruns.
Newfoundland and Labrador Hydro gets to keep more than one-third of the $3.5-billion fee, whether the projects go ahead or not.
The province’s total budget this year is about $10.4 billion, and the province is carrying a net debt of about $17.7 billion.
Jennifer Williams, CEO of Newfoundland and Labrador Hydro, received a standing ovation after reading out a long list of benefits offered in the deal.
“Fairness. Which did not exist in the original contract,” she said. “We are taking back control of that river. And this is the best deal.”
Sean Cadigan, a history professor at Memorial University in St. John’s, said he was “flabbergasted” when the two provinces announced they’d worked together to come to a new arrangement.
“The perceived sense of grievance over the 1969 Churchill Falls development has been profound in Newfoundland and Labrador,” Cadigan said in an interview.
“This is a historic occasion.”
The provincial NDP threw their support behind the arrangement Thursday, alongside the province’s two Independents. They made the decision after the Liberals announced an independent panel led by the province’s consumer advocate will review the memorandum of understanding and subsequent negotiations.
Firms including JP Morgan and Power Advisory have also provided advice, and their representatives testified on Wednesday.
The Progressive Conservatives asked several times throughout debate for the vote to be delayed until that scrutiny is complete. The party occupies 14 of the legislature’s 40 seats.
The Tories brought up historical friction with Quebec. On Tuesday, Wakeham held up a map from the Quebec government showing that the boundary between the provinces in Labrador was disputed. Quebec has never recognized the 1927 border ruling by the British Privy Council, which says the southern border of Labrador lies at the 52nd parallel north of the equator.
“That boundary is final, non-negotiable and it will be forever,” Furey responded.
That night, Wakeham sent out a fundraising email asking, “Is Quebec in the driver’s seat?”
“Did Quebec get the better deal — again?” it said.
The Progressive Conservatives have also pointed to comments from Hydro-Québec officials that the tentative deal gives the utility decades of energy at “remarkable” rates.
Compared to the cost of energy from other sources, the rates are indeed cheaper, Furey told reporters on Wednesday. “If it wasn’t a good alternative for them, why would they do a deal with us?”
Jason Chee-Aloy, managing director with the Toronto-based Power Advisory, said the tentative deal is “very good” for Newfoundland and Labrador, and it reflects lessons learned from past wrongs.
Most people in the Canadian energy sector know the hydroelectric history of Newfoundland and Labrador and Quebec, he told reporters on Wednesday. “They understand how complex and how big this deal is,” he said. “They’re very impressed that it actually got to the point of a memorandum of understanding.”
Thursday’s vote enabled Newfoundland and Labrador Hydro to continue negotiating final, binding agreements with Hydro-Québec, which are expected in 2026.
The Churchill Falls facility has a generating capacity of around 5,400 megawatts and produces about 34 billion kilowatt-hours annually — roughly enough to power Denmark, according to the U.S. Energy Information Administration.
This report by The Canadian Press was first published Jan. 9, 2025.
Sarah Smellie, The Canadian Press
