N.L. has to be ready to seize new Churchill Falls opportunities, Hydro CEO says
Difficult and detailed negotiations led to good deal for both sides, Jennifer Williams said
Newfoundland and Labrador Hydro CEO Jennifer Williams says Newfoundland and Labrador squeezed all the value it could out of the rewritten Churchill Falls deal with Quebec, and that it needs to be ready for the opportunities that follow out of expanded hydroelectric capacity.
"That hangover that we've had for decades is going to change," Williams told CBC News Thursday.
"How that affects everyone directly? I think it will be determined over time. But that will be felt. I can feel it now. I think people have been feeling it since the announcement last week."
N.L. Premier Andrew Furey and Quebec Premier François Legault unveiled a tentative agreement last week in St. John's that not only would overwrite a contentious 65-year contract, but would mean more than $200 billion each over the coming five decades.
Under the original terms of the contact, which does not have an escalator clause, Hydro-Québec has been able to buy Churchill Falls power at bargain basement prices and resell it dramatically on export markets. Its most recent annual report said the average sale price for exported electricity was 10.3 cents/kWh, or about 51 times what it paid for Churchill Falls.
Williams said negotiating the tentative deal — which will see the province bring in an additional $1 billion per year on average between now and 2041, a figure that will then double and later double again — was difficult and detailed. There were times she feared it wouldn't happen, but said she's now optimistic for the future.
While risk is engineered into both sides as part of the agreement, Williams said she believes both Newfoundland and Labrador and Quebec can deliver.
"Obtaining or receiving the full benefits of what is ahead of us for the next 10 to 15 years will be dependent on a very small province having the right people ready to avail of all of the benefits," she said.
"We really do need, as a province, to embrace the opportunity and to get ourselves ready for that opportunity. The longer we wait... I think we're going to miss the opportunity to avail of as many of the benefits as possible."
Value of Churchill Falls power will gradually increase
Quebec will go from paying 0.2 cents per kilowatt hour to an average of 5.9 cents per kilowatt hour over 50 years, but that will change over time.
"I fundamentally believe that this is a good deal for both us and for Quebec. It has to be in order for it to proceed," she said, adding Quebec is in desperate need of additional power to fuel future endeavours.
"In 2025, we expect it to be about 1.6 cents a kilowatt hour. So about eight times [the] current. In about 10 years on, it will be almost 4.5 cents a kilowatt hour. Ten years after that, about nine cents a kilowatt hour, and it continues to increase. I think at the end of the contract, it's forecast to be about 37 cents a kilowatt hour."
She says the price of power will be linked to a number of different indicators for the future, and that the province won't be locked into a fixed price for power as in the previous contract.
Those changes won't affect rate payers in Newfoundland, Williams said, while the province has committed that power bills won't change for residents of Labrador.
The memorandum of understanding signed between the two provinces, which is intended to be finalized into an agreement around April 2026, also comes with multiple megaprojects under tight timelines. That includes Gull Island, deemed one of the last great undeveloped hydroelectric projects in North America.
Williams said engineering work to inform definitive agreements could start in the coming months, and construction on Gull Island would ideally start before the end of the decade for a commissioning target year of 2035.
Hydro has brought in independent experts for input on the agreement, she added. PC Leader Tony Wakeham had asked the province to bring the Public Utilities Board for a review, but Williams said she isn't sure if they would have the expertise to examine it fully.
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With files from Heather Gillis
