It was not the bad faith of Hydro-Québec and the Government of Quebec that made the Churchill Falls contract, signed in 1969, so bad for Newfoundland and Labrador. At the time, BRINCO, the private company that owned the rights to exploit the river, was experiencing serious difficulties, and the huge project presented significant financial risks that the Quebec state company agreed to assume. For the rest, the Quebec negotiators demonstrated opportunism in the circumstances, just a few years before the cost of energy exploded in the early 1970s, which no one could have foreseen.
If this were a normal contract, the negotiations that are now being considered by François Legault and Newfoundland Premier Andrew Furey would be essentially commercial in nature. They would be based on a cold rationality and on the economic advantages that a new agreement would present for the two partners. A bit like the contracts that were signed with the states of New York and Massachusetts.
But this is not a normal contract: resentment, resentment, humiliation are irremediably linked to this agreement hated by Newfoundlanders. During his visit to Saint-Jean, François Legault recognized in their language the “frustration and anger” they feel. For his part, Andrew Furey underlined “the deep feeling of hurt that exists in the cultural fabric of Newfoundlanders because of this contract”.
Credit must be given to Andrew Furey: he is striving to establish a rational basis for the negotiations to come. It has mandated a committee, the Churchill River Expert Panel, to assess the options available with a view to the end of the contract in 2041. In a summary of the report made public this week, the committee presents three avenues: to increase the sales of electricity locally by decarbonizing the economy and attracting energy-intensive businesses; increase electricity exports; and finally, sign another agreement with Hydro-Quebec. A mix of these options may be required.
Exporting electricity in huge quantities without going through Quebec is not viable. Attracting aluminum smelters and producers of hydrogen or green steel is a possibility, but this path is marked by uncertainty and presents risks. And, above all, it will take time. Agreeing with Hydro-Quebec appears to be the most logical solution. Newfoundland could count on additional revenues before the 2041 deadline and, above all, the partners could agree to develop hydroelectric potential equivalent to nearly double the capacity of the current power station.
“It has to be a win-win,” said François Legault. In fact, it has to be more advantageous for Newfoundland than for Quebec, at least in terms of collection. Negotiations should not appear easy and end with the cry of scissors. There is a heavy price to pay to heal this deep wound and ensure that Newfoundlanders overcome their sense of humiliation.