On January 6, 2025 in the House of Assembly there is clear evidence of the lack of transparency in communications from Government officials in respect to the MOU.
The Government Fact Sheet as part of “Our Chapter” quotes as follows: “Hydro-Québec will pay CF(L)Co. $33.8 Billion in today’s dollars, which is $180 Billion to Newfoundland and Labrador in nominal dollars.”
During the debate of yesterday, MHA John Hogan, Minister of Health and Community Services of Newfoundland and Labrador, asks the CEO of NL Hydro to explain the $180 billion to the NL treasury. The excerpt from the debate is as follows from Hansard:
“J. HOGAN: Thank you, Speaker.
Ms. Williams, just to provide some more clarity with regards to NL Hydro versus the Newfoundland and Labrador Treasury – obviously, they’re not one and the same. The government is a shareholder in the utility. I’ve seen some numbers talking about a breakdown of about $180 billion to Newfoundland and Labrador, the Treasury, I guess. And the dividends that will be received from CF(L)Co, versus preferred dividends paid only to NL Hydro, and then also about water rentals and royalties which we pay to GNL.
So if you could just take a couple of minutes to discuss those numbers, very large numbers, what it means to NL Hydro versus what it means to the Treasury of GNL?
SPEAKER: Chief Executive Officer, Newfoundland and Labrador Hydro.
J. WILLIAMS: Thank you, Mr. Speaker.
I will start on Schedule G and I will get to the answer. So Schedule G says: “Annual schedule of forecasted payments from HQ to CF(L)Co” for the existing generation only. That total, all of that totalled up is $195 billion.
So what happens then is Hydro-Québec will pay for the energy it takes, $195 billion, over the next 51 years. Also, Newfoundland and Labrador Hydro will pay CF(L)Co for the energy it will also use from Churchill Falls. As we said earlier that amount is going to go up over time. We are actually going to use more and more from the existing generation. So all of that together becomes the revenue stream for CF(L)Co.
What CF(L)Co does then is it pays its operating costs. It pays its people, pays its system equipment and maintenance. It’s going to continue to do capital upgrades, all of those things. So all of those costs get taken off, just like any normal business would. Part of those operating costs are water rentals and royalties. So before anybody takes their dividends – and this is normal across the country – any hydroelectric utility has to pay for the use of the water. So CF(L)Co will take from its operating costs and they will pay direct to the Treasury of the Government of Newfoundland and Labrador for use of the water.
After you pay all your operating costs, your revenue stream, what’s left is going to be essentially a profit to be divvied up between Hydro-Québec and Newfoundland and Labrador Hydro. So that’s where the $180 billion comes in.
The $180 billion is going to be Newfoundland and Labrador Hydro’s and therefore, government’s dividends, arising from – actually, I mixed in the water rentals here that comes in. But the $180 billion – and I’ll say them in case anyone wants to make a note of them, and this will also be on the website ourchapter.ca, so folks can query this themselves.
There’s $179.2 billion over the next 51 years, of which $131.8 billion is common dividends because of our let’s call it two-thirds ownership of Churchill Falls. There are preferred dividends which is $35.6 billion – I’m getting a little specific but we’ll post this – that is paid only to Newfoundland and Labrador Hydro. The water rentals and royalties that would go to government would be almost $12 billion.
So all of those three numbers together is what adds up to $180 billion over the 51 years. I’m going to repeat: That is after CF(L)Co operating costs are paid and after also Hydro-Québec gets paid its dividends. Because that is some of the confusion that seems to be out in the public, is that folks are saying well no, no, you’re not going to $180 billion because Hydro-Québec gets a third of that. Absolutely not. That is after Hydro-Québec gets its dividends.”
The response clearly contradicts the statement from the “Fact Sheet” and if the response is accurate then the “Fact Sheet” should be changed. It also indicates that the so-called $180 billion to the NL treasury comes from NL Hydro’s share of the payments from HQ to CF(L)co and the payments for CF power allocated to NL Hydro (NLH), less CF(L)co costs. This indicates that NLH is planning to realize significant profits from its purchases of power from CF(L)co.
The MOU indicates that NLH will pay the same price for CF power as HQ pays. These NLH profits are substantial but they remain undisclosed. It is important that NLH be open and transparent about how this profit will be realized. NLH is earning this profit from what it intends to charge the ratepayers in Labrador, or from the resale of power to HQ, which is it, or is it both? The people deserve to know what NLH intentions are. How much profit is intending to be made from ratepayers in Labrador and /or how much profit is being made from reselling the power to HQ without it being used in Labrador. It is one or the other, or a combination of both.
NLH representatives are more open about communicating what HQ is going to pay and the profit derived therefrom then they are to disclose or be forthright in respect to what they intend to earn from residents and businesses in Newfoundland and Labrador. Why? This is yet another example of why the PUB needs to be engaged to review the details of what is transpiring with the MOU.
There is much that NLH and our Government are not disclosing and are deliberately withholding from the people of Newfoundland and Labrador, particularly in respect to the pricing for power. We have a right to know and we have a right to know before there are long legal binding contracts that cannot and will not be changed. The Government must change its disclosure intentions on the MOU and that can only be done through an independent review as was recommended by Justice Leblanc following the inquiry on Muskrat Falls.