Did Quebec get a better deal? Hydro-Quebec comments spook critics in Newfoundland

Comments from Quebec's hydro utility have some critics in Newfoundland and Labrador, including a former premier, worried that Canada's easternmost province has once again signed an unfavourable energy deal.

Former Progressive Conservative premier Danny Williams is among those who've said they are concerned about reported comments from Hydro-Quebec officials that suggest a tentative agreement between the two provinces' public utility companies will give Quebec decades more energy at rock-bottom prices. But the draft deal has also been under fire in Quebec, where the popular Parti Quebecois maintains it is not good for the province.

"They're trying to sell it to the population in Quebec," Daniel Beland, a political science professor at McGill University, said about Hydro-Quebec. "When you have the leader of the party who's ahead in the polls saying, 'This is really awful,' then you can understand why they want to do that."

The deal unveiled last month between Hydro-Quebec and Newfoundland and Labrador Hydro has faced intense scrutiny in the Atlantic Canadian province. It ends a contract struck in 1969 that allowed Hydro-Quebec to buy most of the energy from the Churchill Falls plant in Labrador at prices well below market value.

Under the new arrangement, to be finalized in 2026, Hydro-Quebec will pay about 30 times more for that power. The draft deal also lays ground for the utility to develop new hydroelectric installations along the Churchill River, in partnership with Newfoundland and Labrador Hydro.

The 1969 contract has long been a source of bitterness in Newfoundland and Labrador. It was supposed to expire in 2041, but the new deal would see it end now.

That hasn't gone over well with opposition parties in Quebec, who think the province shouldn't be giving up all those years of dirt-cheap power, Beland said, noting that Marc Tanguay, interim leader of the Quebec Liberal Party, accused Premier François Legault of being a bad negotiator.

Meanwhile, officials with Hydro-Quebec have been quoted in the media praising the new arrangement. Press materials from Hydro-Quebec claimed the new rates are lower than "any other renewable option in North America."

Michael Sabia, the utility's chief executive, told Radio-Canada that the agreement afforded Quebec 50 years of energy at "remarkable" prices.

Last week, Montreal's La Presse quoted Hydro-Quebec vice-president Dave Rheaume saying provisions in the new agreement to build additional hydro projects in Labrador are similar to the 1969 deal. The comments set off alarm bells for Williams, who said Newfoundland and Labrador Hydro should be asking for more money.

"I'm basically urging the province, and the people of the province, to be very, very careful as they proceed with a final agreement," Williams said in a recent interview.

"My concern is — and with the greatest respect to the officials of Hydro-Quebec — is that they're very, very good at what they do."

Members of the Progressive Conservatives in Newfoundland and Labrador also brought up Hydro-Quebec comments last week, during a four-day debate in the legislature about the draft deal.

Hydro-Quebec is indeed saving money with the new agreement, compared to the cost of energy from other sources, said Walter Parsons, a vice-president with Newfoundland and Labrador Hydro — but the utility wouldn't agree to a new contract if it didn't benefit Quebec, he added.

There are stark differences between the new deal and the 1969 contract, Parsons said, including a $3.5-billion payment from Hydro-Quebec for the right to co-develop new dams in Labrador, particularly at Gull Island, where the utilities have long sought to build a plant. Newfoundland and Labrador Hydro will use that payment to cover its equity share in the development, on which it will get a guaranteed return, Parsons said.

And while Hydro-Quebec will pay rates for Gull Island power that are tied to the cost of building a new plant, rather than at the market price, those rates will be indexed annually at two per cent, he said.

Meanwhile, Quebec's utility will pay rates from Churchill Falls that are tied to the market, he said. They weren't before.

"We don't get too fussed when, you know, Dave Rheaume is saying, 'Oh man, this is going to be so good,"' Parsons said. "They would not give up 17 years of free power out of the goodness of their heart. This is about them saving money. But we are doing exceedingly well on this."

The new deal promises about $227 billion to Newfoundland and Labrador treasury between now and 2075, if all projects are completed. The new rates for Churchill Falls will be in place even if the additional developments don't go ahead, officials said.

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