The time has come for Quebec to put more money on the table if it wants to renew the Churchill Falls electricity supply contract with Newfoundland and Labrador.
This is what Newfoundland and Labrador Premier Andrew Furey suggested on Wednesday, the day after a meeting with his Quebec counterpart, François Legault, to discuss the matter.
The two men met on the sidelines of the Council of the Federation summer summit, which brings together all provincial and territorial premiers in Halifax for three days.
The Churchill Falls electricity supply contract expires in 2041 and is seen as a serious injustice by Newfoundland and Labrador, because Hydro-Québec buys electricity at a very low rate which it then resells at a very high price.
Talks have been going on for about four years now, but Newfoundland and Labrador is still waiting for Quebec to table a more generous proposal.
“I hope he can put more money on the table for us,” Furey said in a media scrum Wednesday morning, the final day of the Federation Council meeting.
“We have made reasonable progress,” he said, adding that it is still premature to talk about an agreement in sight.
He issued a warning to his Quebec interlocutor to put pressure on: the countdown is on.
“Now is the time to see if there is space for an agreement,” he said.
The Churchill Falls power plant is strategic for Hydro-Québec. It meets 15% of the state-owned company’s energy needs… and generates a third of its profits.
Hydro-Québec pays a fixed rate for the electricity produced by Churchill Falls, or 0.2 cents per kilowatt-hour, but resold it on average at 8.2 cents per kilowatt-hour in 2022.
According to data from a Newfoundland committee study, in 2019, the agreement had brought in nearly $28 billion in benefits to Quebec, compared to only $2 billion in Newfoundland and Labrador. The committee recommended that N.L. renew the contract.
The agreement allows Hydro-Québec to buy 85% of the electricity produced at Churchill Falls and therefore reap the bulk of the profits. The remaining 15% block is used to supply customers on the Newfoundland grid in Labrador, or is sold on export markets.
Over the years, several court judgments have confirmed the validity of this commercial agreement.