Fierce Muskrat Falls critic says N.L. did not get 'its fair share' in new Churchill Falls deal

A long-time civil servant with his eye on hydro projects says he wants to see a referendum on the newly announced Churchill Falls hydro deal — and has words of caution about what the deal could actually mean for Newfoundland and Labrador's finances.

Ron Penney, a former deputy minister of justice for Newfoundland and Labrador and a fierce critic of the costly Muskrat Falls megaproject, says he'd like the newly announced memorandum of understanding with Quebec to face scrutiny by the Public Utilities Board.

"If they're not going to do that, then I think a better way of dealing with it — from the point of view of the electorate — is to have a referendum on this subject, not mix it up with everything else," Penney told CBC Radio's The St. John's Morning Show.

The next provincial election has to be called by the scheduled fixed-date vote on Oct. 14, 2025, though he believes it will be much sooner than that.

Penney said he's glad that Premier Andrew Furey is committed to a debate on details of the MOU in the House of Assembly during a special sitting. Government House leader John Hogan said Monday the legislature will open Jan. 6.

"But that's likely not to shed much light on this. What we need to have is an independent review," he said.

LISTEN | CBC's Heather Barett chats with Ron Penney on the newly announced Churchill Falls deal:

Churchill Falls deal needs independent review, not ‘rushed’ House debate in January: former deputy minister

5 days ago

Duration 1:33

Ron Penney, a critic of the Muskrat Falls megaproject, says the Public Utilities Board should review the new deal between N.L. and Quebec, not only politicians. He believes the Liberals want to get the deal done, in part for political gain.

"What I would like to see is the Public Utilities Board brought in to examine the MOU and then follow the whole course of the negotiations and have the agreement subject to the approval of the Public Utilities Board."

While the MOU has to be finalized by 2026, Penney said the government shouldn't rush to get it completed by that deadline.

"I think we really need to be careful about this and not be driven by artificial deadlines," he said.

"We need to make sure that we don't repeat the mistakes of the past, particularly Muskrat Falls."

'It's probably not our fair share'

For the past couple of days, Penney said he's been thinking about 2041 — when the contract, negotiated in 1969 and which took effect in 1976, is set to expire — and how this new contract will benefit Hydro-Québec by guaranteeing low prices for a long period of time.

He added that Hydro-Québec will be able to keep any increase to its residential rates below 3 per cent, adding that its rates are half that of N.L.

WATCH: What's the rush for pushing through Churchill Falls deal, says Ron Penney:

St John's Morning Show10:43Ron Penney has been a long-time critic of the Muskrat Falls project. He gave us his take on Churchill Falls

Ron Penney, former provincial deputy minister of justice, is cautiously optimistic that the new Churchill Falls contract would be beneficial for the province, but he wants more details made public so we know we're getting the best deal.

"When I read that, I realized, 'Gee, Hydro-Québec is really getting a wonderful deal on this.' And what I'm wondering and concerned about is that they've had the better of us," he said. 

Under the proposed new terms, Quebec will be paying considerably more for electricity generated at Churchill Falls than the notorious current price, but Penney said it will still be very cheap even with an escalator clause for prices.

"We're going to be getting a tremendous amount of revenue — at least projected that we're about getting — [but] it's probably not our fair share."

WATCH | Terry Roberts recaps the highlights of the tentative deal announced last week: 

Breaking down the details — and risks, rewards — of a new Churchill Falls agreement

10 days ago

Duration 3:10

There was applause, hugs and almost too many politicians to count in St. John’s Thursday, when the premiers of Quebec and Newfoundland and Labrador announced a memorandum of understanding to end the notorious Churchill Falls agreement 17 years early. A new deal, if sanctioned, scores of billions of dollars flow in N.L. coffers for decades to come. The CBC’s Terry Roberts explains.

According to Thursday's announcement at The Rooms, N.L. is expected to receive about $17 billion over the first 17 years but Penney has reservations about that amount as well.

"It's obviously significant," he said. "I don't think it's as significant as the premier says."

He also pointed to the Muskrat Falls rate mitigation plan that goes until 2030 — estimated to cost $3.5 billion in that period.

"So we have to find billions and billions of dollars over the next 30 or 40 years to keep our own rates. So that's going to cost us a lot," said Penney.

Moreover, he said ensuring power to the island is also going to cost billions of dollars for the generating units at Bay d'Espoir and the Holyrood thermal generating station.

N.L.'s financial situation "is not that great," he said, and there are plans to build new hospitals and other types of infrastructure.

"So I'm not sure it's the saviour that the premier says it is," said Penney.

Positives in deal

Penney said he welcomes the plan for Hydro-Québec to be responsible for building two of the newly announced projects — the massive Gull Island hydroelectric development and the Churchill Falls plant expansion — because the Quebec corporation has a good record.

"I think we're in safe hands there. Now there I do have a caveat with that, because they're going to own 40 per cent of the projects, which means that 40 per cent of the profits are going to go to them," he said.

"And whether or not the people of the province are agreeable to that, I don't know."

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