PCs walk before vote, but Churchill Falls MOU gets support of most MHAs following four-day debate
N.L. Hydro will now move ahead with negotiations to secure formal contracts with Hydro-Quebec
Four days of extraordinary debate in the Newfoundland and Labrador legislature concluded in dramatic fashion Thursday night with most politicians voting in favour of the Churchill Falls memorandum of understanding.
In doing so, they also gave the green light for further negotiations with Hydro-Quebec in an effort to reach formal contracts for new long-term energy deals on the Churchill River.
Despite the 14 members of the PC caucus dramatically walking out of the legislature as the vote was taking place due to concerns over the level of independent oversight of the non-binding MOU, the motion passed 25-0 with 21 Liberals, two NDP, and two independent members supporting the motion. As speaker, Liberal Derek Bennett did not vote.
PC Leader Tony Wakeham defended his party's decision to abstain, saying they could not support the motion because the MOU had not undergone sufficient independent review.
"We're not against the MOU. What we are is for making sure we get the best deal possible for Newfoundland and Labrador," Wakeham, flanked by his entire caucus, told reporters after the vote.
Energy Minister Andrew Parsons ridiculed the PCs, calling their decision to abstain "a coward's move."
He called the decision disrespectful to the legislature and the constituents represented by the PC MHAs.
"I would be appalled to be a part of that," said Andrews.
Four days of debate
The vote marked the conclusion of a unique session of the legislature, with politicians questioning top officials from N.L. Hydro and expert consultants from two international firms who advised Hydro's negotiating team in the lead-up to the MOU, which was signed on Dec. 12.
MHAs were told by negotiators like N.L. Hydro CEO Jennifer Williams that the MOU sets the stage for the best possible deal with Hydro-Quebec, rights an historic injustice by reopening 16 years early what's been described as one of the worst business deals in Canadian history, and offers guardrails to ensure the mistakes of previous deals are not repeated.
In her concluding remarks, Williams gave a long list of reasons why the MOU should be supported, and in her final point said "this is the best deal."
Premier Andrew Furey called it a "massive economic opportunity" that will deliver an estimated $227 billion to the provincial treasury over the next 50 to 60 years.
"Take this moment in. This will start potentially the most significant transaction in our history since Confederation," said Furey.
"This is an amazing opportunity for all of us to share in," Liberal MHA and Justice Minister Bernard Davis said ahead of the vote.
"I think it's a good deal for Newfoundland and Labrador and a good deal for my children and hopefully my grandchildren," added Transportation and Infrastructure Minister Fred Hutton.
PC MHAs, however, pressed hard for an independent review, preferably by the province's utility regulator, the PUB, and to delay a vote until that review was complete. But the Liberal majority, along with support from the NDP and independent MHAs Paul Lane and Eddie Joyce, was more than enough to carry the vote.
"I am not sure why we appear to be rushing this MOU through the House of Assembly after only four days of debate," said Wakeham.
"We've had lots of questions answered but I would suggest there are a lot more and there will continue to be more. The fact of taking this document and allowing another set of eyes to review it, I see no downside to that."
The Liberals countered that there's been independent oversight at every stage of the process, and there will continue to be going forward. MHAs will also have many more opportunities to debate the issue in future sessions of the House of Assembly.
And Furey has also promised that any definitive contracts with Hydro-Quebec will be debated in the legislature.
"There's still plenty of time to stop if we find out there is other information," Furey said in his closing comments.
On Thursday morning, the NDP and the two independent MHAs agreed to support the vote after the Liberals agreed to create an independent panel chaired by the province's consumer advocate, Dennis Browne, to review the MOU and future negotiations.
"I couldn't vote for this without an independent review," said NDP Leader Jim Dinn.
The PCs said such a review falls short of of the recommendations contained in the Muskrat Falls inquiry.
WATCH | MHAs describe how it felt when the PC caucus walked out:
Hoping to sign formal contracts in 2026
With political approval to move forward with formal negotiations, the goal is to formalize a suite of 10 contracts with Hydro-Quebec by the spring of 2026. Those contracts have the potential to rewrite a dark chapter of history that has seen Quebec profit billions from the Churchill Falls generating station, while Newfoundland and Labrador has received a pittance under a lopsided contract that was signed in 1969.
If formal contracts can be reached, the existing Churchill Falls agreement will be replaced with a new power purchase agreement that will see Hydro-Quebec pay 30 times more — 5.9 cents per kilowatt hour in nominal, or today's dollars — for electricity from the existing powerhouse, and the province will rake in $17 billion in new revenue between 2025 and 2041, which is the expiry date of the original contract.
In addition, the MOU envisions the construction of the Gull Island project, a second power station at Churchill Falls, an expansion to the existing station, and construction of hundreds of kilometres of new transmission lines.
In total, the projects will increase capacity on the Churchill River from 5,400 megawatts to 9,190 megawatts, with most of it being sold to Hydro-Quebec at escalating prices, unlike the fixed 0.2 cent price in the existing contract.
Hydro-Quebec will finance and build the Gull Island the Churchill Falls expansion projects, and pay $3.5 billion to N.L. Hydro for the right to do so. N.L. Hydro will use that money to pay for its equity in the projects, will retain 60 per cent ownership, operate the new assets, and be protected from cost overruns.
N.L.. Hydro will will receive a rate of return from the new projects at between 8 and 9 per cent.
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