Quebec, Newfoundland and Labrador announce energy deal to resolve decades-old dispute

Quebec and Newfoundland and Labrador have reached a broad agreement to develop new energy projects in Labrador, ending a decades-old contract that has plagued the eastern Canadian province.

The new agreement means that Hydro-Québec will pay 30 times more for electricity generated from Labrador than the lower contract price set in 1969 for electricity from the Churchill Falls plant. Quebec will also pay $3.5 billion for the right to work with Hydro Newfoundland and Labrador on new energy projects.

"Today, everything changes for Newfoundland and Labrador," Newfoundland and Labrador Premier Andrew Fury said in remarks that drew the audience to a standing ovation. "Today, after more than 50 years of an unfair agreement that has always been a point of contention for Newfoundland and Labrador, we finally have a new contract for the Churchill Falls power plant with Quebec."

Quebec Premier Francois Lugo also considered the agreement a "win-win" for the two provinces and said: "Newfoundlanders will get a better price starting in 2025." He expressed his goal as follows: "I want our grandchildren to be satisfied with this agreement in 50 years."

Under the current contract, Newfoundland and Labrador owns most of the plant, but Quebec reaps most of the profits and pays just 0.2 cents per kilowatt-hour for Churchill Falls' electricity.

The new agreement, which effectively cancels the 1969 contract as of Jan. 1, 2025, allows Hydro-Quebec to pay an average of 5.9 cents per kilowatt-hour of electricity from Churchill Falls, and Newfoundland and Labrador Hydro about $1 billion annually. The dollar will earn from this.

The agreement also provides for a partnership between Hydro-Québec and Hydro Newfoundland and Labrador to upgrade and expand the current Churchill Falls power plant and build a new hydroelectric plant on Gull Island, which has been earmarked for development for years. This contract will continue until 2075.

The final agreement is supposed to be concluded by April 30, 2026 at the latest, and Lugo has said that he wants to close this agreement as soon as possible. After that, Quebec will pay higher prices for Churchill Falls electricity beginning in January 2025.

"This is our moment," Fury said. It has no political color. Its only purpose is to correct a historical mistake." And he added: "We have shown that we have been able to overcome 55 years of bad contracts, we have the power to negotiate for our interests, and now we have the courage to act."

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