Debate over Churchill Falls MOU begins with government on defensive
Terry Roberts | CBC News | Posted: January 6, 2025 8:18 PM | Last Updated: January 6
Opposition wants independent review of historic deal; Liberals says there is 'significant oversight'
The Liberals were on the defensive Monday, as a unique debate on the Churchill Falls memorandum of understanding kicked off with Premier Andrew Furey rebutting claims his government is sidestepping proper scrutiny of the historic framework agreement with Quebec.
"Completely not true," Furey replied when asked about the criticism, adding there is "significant independent oversight."
As MHAs debated the rules of the four-day session Monday morning in Newfoundland and Labrador's House of Assembly, opposition politicians hammered the government with demands for an independent review — perhaps led by the public utilities board, the province's utility regulator — of the MOU, which was signed Dec. 12.
"You should not be afraid to open it up for review," PC Leader Tony Wakeham said during a scrum with reporters. "The premier should be open and say, absolutely, let's bring the MOU before an independent panel. It's exactly what I would be doing."
"This project demands an independent, regulated review. It can be done concurrently with negotiations," NDP Leader Jim Dinn said in the legislature.
But Furey said there's been extensive input by expert independent advisors from firms such as JP Morgan and Power Advisory, and several firms that specialize in business law.
"They're staking their reputations on this. They're independent and will provide their independent advice," he said.
Furey also revealed plans for a new expert advisory committee — separate from the province's negotiating team — to advise his cabinet before signing any formal agreements. It's not yet known who will be on the committee, but Furey said they will have expertise in areas such as energy sales, finance and business law.
"That's yet an additional level of independent expert analysis," said Furey.
Comments like those set the tone Monday as MHAs assembled in the legislature for what's being called an extraordinary debate, with N.L. Hydro CEO Jennifer Williams and other top officials in the hot seat, fielding questions about the MOU.
Single issue up for debate
The sole issue? A tentative deal that could see the lopsided 1969 Churchill Falls agreement with Hydro-Quebec ripped up 16 years ahead of schedule, and billions spent over the next decade to develop more hydroelectric capacity on the Churchill River, including the Gull Island project.
MHAs are expected to vote on Thursday evening on a motion that will allow Crown-owned Newfoundland and Labrador Hydro to continue negotiating toward formal agreements with Hydro-Quebec.
If the two sides can reach an agreement by April 2026, the province stands to receive more than $225 billion in revenue over the next 50 to 60 years, said the premier.
Roughly $17 billion of that revenue, or an average of $1 billion annually, will flow to the provincial treasury by 2041 from the new power-purchase agreement for Churchill Falls. The first instalment, which will be retroactive to 2025, is estimated at roughly $450 million.
Under the existing agreement, the province receives a roughly $20 million dividend annually from CFLco, the company that operates Churchill Falls.
MOU 'corrects historic wrong'
Furey said the MOU "corrects an historic wrong" that saw Quebec receive roughly 15 per cent of its electricity supply at just 0.2 cents per kilowatt hour, and selling it at big profits. Under the new agreement, Hydro-Quebec will pay 1.63 cents in 2025, increasing to 37 cents by 2075, according to information released by N.L. Hydro.
"We tore up 50 years of hurt and imbalance," Furey stated.
But there's a long history of embarrassing and unfavourable hydro deals related to the Churchill River, with the troubled Muskrat Falls project, which was billions over budget, years behind schedule and required a multi-billion-dollar scheme to prevent power rates in Newfoundland from skyrocketing, as the latest example.
There's a healthy amount of scepticism about this latest attempt to rectify a Churchill Falls agreement that has long stoked deep anger and resentment in the province.
WATCH | The CBC's Heather Gillis reports on Day 1 of the debate in the House of Assembly:
Critics have been lining up, trying to poke holes in the numbers and questioning whether the province is getting the most for this valuable resource, or whether Quebec is once again muscling its way into a deal that locks up low-cost, renewable energy for the next half-century.
It's with this as a backdrop that opposition MHAs are demanding the highest possible level of scrutiny, and criticizing the government for holding a debate so soon after the Christmas holidays.
"If rushed, it will be a bad deal," said independent MHA Eddie Joyce.
Another independent MHA, Paul Lane, said the debate feels like "ticking a box" and said it's "mind boggling" that there's not more independent oversight of the MOU.
"I"m not for this deal, as of today," said Lane.
Wakeham told reporters he will likely vote against the motion on Thursday, unless he can get clearer answers on how the province stands to gain from another long-term partnership with Hydro-Quebec.
"There's more questions than answers," said Wakeham.
Furey, meanwhile, said it's important to move on a deal with Quebec because of the growing demand for renewable energy.
"If we wait 17 years, we see nothing. Quebec would have moved on and found a differently energy supply. If we act now, we will see hundreds of billions."
Furey also promised this his government will not repeat the mistakes of the past.
"This is not Muskrat Falls," he said.
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