• More jobs: Thousands of construction jobs will be created, along with new employment opportunities related to industrial development in Labrador.
• More flexibility: The increased revenue will support things like healthcare, education, infrastructure, and help manage public debt.
• More power: New industrial development in Labrador will further boost our economy and create a more prosperous future for our province.

WATCH: Listen to Jennifer Williams, president and CEO of Newfoundland and Labrador Hydro, answer this question during our Community Webinars.

WATCH: Listen to Jennifer Williams, president and CEO of Newfoundland and Labrador Hydro, answer this question during our Community Webinars.

WATCH: Listen to Jennifer Williams, president and CEO of Newfoundland and Labrador Hydro, answer this question during our Community Webinars.

This new deal terminates and replaces a 50-year-old contract, securing significant financial benefits and future opportunities for our province. It delivers:

• Money: An immediate boost in annual revenue from Churchill Falls, averaging $1 billion per year over the first 17 years and increasing every year after that – a substantial increase from the previous average of $20 million a year. Together with the new developments, this equates to approximately $225 billion in total revenue over the life of the agreements.
• Growth: The deal unlocks access to more electricity, attracting new industries to Labrador and creating jobs across the province. Over $33 billion in construction projects are anticipated, generating thousands of jobs and further economic benefits.
• Development: Quebec will pay Newfoundland and Labrador $3.5 billion (in today’s dollars) for the right to co-develop Labrador projects, absorbing the financial risks and potential cost overruns.

The old contract locked us into a fixed low price for our electricity. This new agreement:

• Increases the Price of Power: The price paid by Hydro-Québec for Churchill Falls power will increase from 0.2 cents to an effective price of 5.9 cents per kilowatt-hour — thirty times the current price. Prices paid throughout the agreement will continue to rise with market prices.
• Unlocks Early Revenue: We gain seventeen years of revenue that would not have been realized if we let the old deal run its course. If we do nothing, we gain nothing until 2041.
• Lessons Learned from 1969 Applied to New Developments: Gull Island power purchase agreement covers all costs to develop, construct, operate, and maintain the facility including a return on equity ranging between 8-9%, set every five years. The price paid for Gull Island power is also projected to increase at 2% annually.

There are two ways that the value is being expressed and both are accurate.

1. Over the first 17 years, which is the remaining time in the existing contract, the province would receive $17 billion from dividends, water rentals, and royalties from the existing Churchill Falls plant. In 2025 this is approximately $0.4 billion, and by 2041 it approaches $2 billion. This averages $1 billion per year.
2. For year one (2025), the province would receive approximately $1 billion. That is made up of two aspects: approximately $0.5 billion from the option payment for Gull Island, and approximately $0.4 billion from dividends, water rentals, and royalties from the new Power Purchase Agreement (PPA) for the existing Churchill Falls plant. The dividends will increase over the duration of the PPA.

Quebec’s urgent need for clean energy created an opportunity for us to renegotiate the outdated contract. This allows us to capitalize on the current high value of electricity, now and into the future, securing a much better deal for Newfoundland and Labrador. It gains us 17 years of significant additional revenue.

Quebec’s urgent need for clean energy created an opportunity for us to renegotiate the outdated contract. This allows us to capitalize on the current high value of electricity, now and into the future, securing a much better deal for Newfoundland and Labrador. It gains us 17 years of significant additional revenue.

The right thing to do is put this deal in the public domain.

This agreement is being brought to the House of Assembly at the earliest possible opportunity in an effort towards transparency and public education. The questions that will be asked this week are important early input as the work toward definitive agreements continues.

Immediately following this special sitting, public webinars are scheduled from Jan. 12-14 to provide the opportunity for questions directly from the homes of Newfoundlanders and Labradorians. There will be ongoing opportunities for information sharing and discussion of the details of the MOU in the weeks and months to come.

The process to reach definitive agreements in commercial negotiations such as these are rightly time consuming. In the context of the energy sector today, and the timely certainty required by partners, delays to this process may endanger the deal itself.

We are still in an active negotiation, and if this proceeds towards definitive agreements, we will also bring this back in a way that is transparent but will not harm the negotiating position and commercial sensitivity of our province’s interests, which may include enabling legislation.

Gull Island is a $24.9 billion project. We currently lack the internal demand for electricity to justify such a large investment and the associated transmission infrastructure costs. The $3.5 Billion payment from Hydro-Quebec, covering Newfoundland and Labrador’s equity in these projects, allows us to develop the resource in conjunction with Quebec without placing a financial burden on the people of Newfoundland and Labrador. And it gives us increased capacity to attract more jobs, more industrial development, and more prosperity for this province.

Quebec would mitigate their rates to keep electricity prices stable, as this province had to do with Muskrat Falls. Hydro-Quebec will achieve this by directing dividends from its ownership share in CF(L)Co. to reduce the impact on its customers.

This is within their right to do, after they buy power from CF(L)Co. for the agreed upon amounts. That’s why sometimes Hydro-Quebec will cite lower prices than they will actually pay CF(L)Co., because they are stating the net amount after mitigation.

The joint news release can be found here.