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Before moving forward with new dams, wouldn’t it be time to talk to our Newfoundland neighbors who are over-indebted and who have a lot of energy?
Pierre Laporte
Go to Newfoundland and utter the words “Churchill Falls contract” and you will undoubtedly provoke the same mixture of fury and bitterness as if you evoke the disallowed goal of Alain Côté of the Nordiques in 1987 in the heart of Quebec City.
This is the kind of bad memory capable of galvanizing a population.
These words, François Legault nevertheless pronounced them during his opening speech last Wednesday. He said that the renegotiation of the Churchill Falls contract was a “very, very, very important” file.
He is absolutely right. The fact that the Prime Minister has this on his radar to the point of mentioning it as soon as Parliament returns is excellent news.
Under this contract, signed in 1969, Quebec buys hydroelectricity from Newfoundland at the price of 0.25 cents per kilowatt hour. It’s more than a bargain: it’s been the year-round holiday mega-liquidation for decades. By comparison, we sell our kilowatt-hours to New York State for 13.32 US cents, or about… 72 times more.
This derisory price stems from the fact that it was Hydro-Québec that assumed the risks of building Churchill Falls. But Newfoundlanders have had this contract stuck in their throats for a long time. They fought all the way to the Supreme Court to try to overturn it. In vain.
The famous agreement ends in 2041. That may seem far away. But given the time it takes to develop new electrical infrastructure (François Legault spoke of 15 years for a new dam in his speech), it’s tomorrow morning.
The issue is important. The 5,400 megawatts that reach us from Newfoundland represent approximately 15% of the electricity that Quebec consumes and exports.
With the electrification of transportation and industrial processes, we know that Quebec will soon face significant electricity needs. Mr. Legault affirms that it will be necessary to build a “half-Hydro-Québec” by 2050 – a way of saying that our capacities must grow by half.
In this context, losing the energy of Churchill Falls would be really counterproductive.
In principle, the negotiations should not be so complex. Newfoundland has every interest in selling its electricity to Quebec. But when negotiating with a frustrated and humiliated interlocutor, logic does not necessarily prevail.
To be convinced of this, one need only look at how dogged Newfoundland was with the construction of the Muskrat Falls hydroelectric plant. Designed specifically to compete with Hydro-Quebec on export markets, the project turned into such a technical and financial fiasco that it almost bankrupted the province.
If relations between the two provinces do not improve, Newfoundland may well choose to sulk and use Churchill Falls hydroelectricity to try to attract industries to Newfoundland or to produce green hydrogen, even if this is not the most profitable solution for her.
To bury the hatchet, Quebec should send the signal that it is ready not only to immediately renegotiate the rest of the Churchill Falls contract, as François Legault asserts, but to reopen it and pay a fairer price as soon as now in order to secure the extension of the contract after 2041. In the long term, this could prove to be less costly for Quebec.
This is all the more true since good relations with Newfoundland could have other benefits.
Newfoundland & Labrador Hydro confirms that it would be possible to increase the capacity of the Churchill Falls power station by 1600 MW by adding additional units and upgrading the current units.
And there is another project in Labrador, Gull Island, which Quebec and Newfoundland have been discussing for many years. The expert Pierre-Olivier Pineau, at HEC Montreal, believes that this is a better hydroelectric project than all those considered in Quebec.
In short, you are right, Mr. Laporte: an important piece of the puzzle of our energy supply is found in Newfoundland.
Before embarking on the construction of new dams in Quebec, François Legault would do well to give a call to his Newfoundland counterpart Andrew Furey.