Newfoundland and Labrador to develop Lower Churchill alone

The government of Newfoundland and Labradorplans to move ahead on its own to develop the Lower Churchill River hydroelectric generating project, Premier Danny Williams announced Monday.

Last year, the province accepted proposals from three potential developers, but Williams said none of them would yield sufficient benefits for the people of the province.

Instead, he said it is time for the province to get the lion's share of the profits by selling the power over transmission lines across Quebec.

The government's aim is to avoid a repeat of its ruinous 65-year contract with Hydro-Québec on the Upper Churchill mega-project contract.

Thatdeal, which was negotiated in the late 1960s,did not include escalator clauses.Hydro-Québec has been buyinghydroelectric power from Newfoundland and Labrador at cheap rates and haspocketed increasingly larger profits by selling the energyto other markets.

The Upper Churchill deal, which Newfoundland and Labrador says has cost it billions of dollars over the years, has been a political sore spot between the two provinces for more than three decades.

As proposed, the Lower Churchill project would generate more than 2,800 megawatts of power, or enough energy to supply about 1.5 million households.

However, the government's announcement on Monday doesn't mean the project will move forward anytime soon.

Newfoundland and Labrador Hydro will now have to prepare an environmental impact statement, decide where it will sell its power, figure out the best project configuration and work out an impact and benefits agreement with local Innu.

The government also needs to ensure Prime Minister Stephen Harper will come through with a loan guarantee to help the province develop the project.

If all goes well, the province could decide on the feasibility of the project by 2009, with first power being produced in 2015.