“The same deal as in 1969 at the end of the day” Why Newfoundland and Labrador Must Question the Gull Island MOU
As Newfoundland and Labrador prepares for a provincial election, voters face an important decision that will guide the future of the Gull Island hydro project on the Lower Churchill River. Right now, there is no issue that is more important to our province’s future. A memorandum of understanding (MOU) has been signed with Quebec, but many citizens - likely most - are unsure whether what’s on the table will deliver maximum benefit to our province over the long term.
We’ve been told by the government that we’ll get $225 billion over the life of the agreement. No doubt a big number. We’ve been told we’ll get 5.9 cents per kilowatt (kWh) hour instead of the 0.2 cents we get under the ill-advised 1969 agreement. We weren’t told in the Liberal government’s press release that the current average market price in Quebec averages 7.8 cents, that Newfoundland and Labrador pays twice that at 14.8 cents, or that the average current price in the United States, where Hydro Quebec sells a great deal of our hydro power, goes for 15.22 cents per kilowatt hour. That could explain why Hydro Quebec’s lead negotiator said in an incautious moment that this is “the same deal as in 1969 at the end of the day”.
The Churchill Falls contract of 1969 remains a cautionary tale of how one-sided energy agreements can lock Newfoundland and Labrador into decades of disadvantage. We cannot afford to repeat that mistake, and we cannot afford to make a decision on this MOU based on the faith attached to politics and in the absence of evidence that this is the best possible deal that could be struck. I’ll remind you we cheered in 1969 too.
The MOU with Hydro Quebec is not a binding contract, but it does more than just set the framework for negotiations that will define our economic future for generations. It’s a stake in the ground, yet key questions remain unanswered. What safeguards exist to protect our interests? Does the agreement ensure fair long-term value for our province in a world hungry for clean energy? Is our province the first to benefit from rising energy prices for our own resource or will we be the last again? Why must we consider Hydro Quebec as our only option for a partner or customer? Have all reasonable scenarios and alternatives been considered?
These questions are not partisan, they are patriotic. This decision impacts our children and their children too. That is why we need a non-partisan, fully independent assessment of the current MOU or any other framework, and its potential benefits before any binding commitments are made.
The comment from the Hydro Quebec lead negotiator that this is “the same deal as in 1969 at the end of the day” should at a minimum make us nervous about repeating a colossal mistake. A truly impartial review by energy experts, economists, legal specialists, and hard-nosed negotiators, would give citizens the facts they need to judge whether this path forward is fair, sustainable and right. Without solid evidence and independent analysis, the public risks being asked to support a project of enormous consequence without full information or understanding, and without consideration of other options in a rapidly changing energy market.
Let’s also not forget that Hydro Quebec owns now and forever 34.2% of the Upper Churchill Falls hydro-electric project - even after 2041 when the current electricity pricing contract ends. The Gull Island MOU grants Hydro Quebec an astounding 40% ownership. Have we learned nothing? For those unaware, Hydro-Quebec is 100% owned by the Government of Quebec. To his full credit, former Premier Danny Williams didn’t give up one iota of Muskrat Falls ownership to anyone. That’s ours. Forever.
Hydroelectric power is one of Newfoundland and Labrador’s greatest assets. Goldman Sachs Research reported that the needs for powering data centers will increase by as much as 165% by the end of the decade compared to 2023 levels. I was informed last week by a global artificial intelligence leader, that AI companies like Google, Nvidia, OpenAI, Meta and Microsoft, if given additional electricity, would fill the supply. AI facilities also need massive capacity to cool their data centres. The Churchill River can do that too. These companies have the money and the need to invest in such critical infrastructure for their own growth.
Managed wisely, our electricity can fuel growth, create jobs, and supply clean energy for our own value-added projects and well beyond our borders. Managed poorly, it would do all of that for Quebec. We cannot allow ourselves to be put in a fool-me-twice position.
We will surely move ahead with a Gull Island hydro-electric project, but before we do, let’s take a deep breath, assess this properly, and ensure that any agreement delivers the prosperity Newfoundlanders and Labradorians deserve. History reminds us to tread carefully.
The Honourable David Wells is a senator and has represented Newfoundland and Labrador in the Senate of Canada since 2013. He served as Deputy CEO of the CNLOPB, Director of Policy and Chief of Staff to Federal Ministers, sits on the Senate Energy and Environment Committee and wrote the Terms of Reference for and is the founding Chair of the Senate Audit and Oversight Committee. He lives in Newfoundland and Labrador.