Cathy Beehan is former executive assistant to The Hon. John Crosbie and founding CEO of Action Canada, Gabe Gregory is a business consultant and Des Sullivan is an entrepreneur and blogger.
The Churchill Falls Memorandum of Understanding (MOU), a proposed 51-year agreement with Hydro-Quebec (HQ) that replaces a 1969 contract widely seen as unfair, will be a major issue when Newfoundlanders and Labradorians go to the polls on October 14.
Premier John Hogan is running on this MOU. But it is not a good deal. If he gets a mandate and our provincial government, once again, signs away the greatest resource we have—one of the mightiest hydro resources in the world—we will have no one to blame but ourselves.
To paraphrase the adage, “Fool us once shame on you, fool us twice, shame on us.” Don’t be fooled twice.
The MOU repeats the mistakes of the infamous 1969 agreement.
First, it is a deal that for more than a half-century maintains HQ’s control over NL hydroelectricity and makes HQ the main beneficiary of our resource.
It is a deal that for more than a half-century gives us no transmission rights.
It is a deal that for more than a half-century restricts our ability to sell power to other buyers.
It is a deal that for more than a half-century does not include solid price escalation terms for the proposed Gull Island project, which means that HQ receives all the benefit of price increases for the next 51 years.
And it is a deal that for more than a half-century sets an unfairly low price to be paid by HQ for Churchill Falls power. Almost identical failings are why the 1969 agreement was also such a bad deal.
Mike Wilson, who resigned from the government’s Independent Churchill River Negotiation Oversight Panel, has published detailed analysis of the MOU’s price provisions. He notes that the CEO of Newfoundland and Labrador Hydro said Churchill Falls power is worth 11 to 13 cents per kilowatt hour to HQ, while the power will be sold to HQ for an agreed average price of just 5.9 cents/kWh over 51 years. Other analysts have written that the average price is even lower, at 2.5 cents/kWh, and that the worth to HQ is much higher, up to 16 cents/kWh.
Many experts agree the selling price compared with the current replacement cost is egregiously low. Newfoundlanders and Labradorians can seize the opportunity on election day to tell the premier he does not have a mandate to sell our power for a pittance.
The government is dangling a $1-billion-a-year payout for the first 14 years of the agreement. Where is it getting this number? Reputable analysts can’t find it. In addition, whatever the correct number, the amount we will have received up to 2041 must be repaid. It’s a simple high-interest loan.
North America is clamouring for hydro. Think about the campus-size data centres needed by the exploding AI sector, which pays current market prices. Under this deal, we are denied market prices for our power, and we can’t sell it to others. Is this the government’s vision for economic development? A better vision should include bringing businesses to our province that will buy our power directly.
The MOU has been described by experts as unnecessarily complicated. Much has been said about the value of the additional projects like the Gull Island one. Such improvements make sense if NL is insulated from excessive risk and has development control, if our workers and contractors are engaged and if the price paid for our power is fair and includes price escalation related to market conditions and inflation. All four of these crucial factors appear doubtful in this MOU. To make matters worse, the government is using these additional projects in a complicated proposal that obscures the great giveaway of our crown jewel, the existing Churchill Falls plant.
The government, hand-in-glove with Hydro-Quebec, is working to speed up the finalization of this agreement before the April 2026 deadline. We can’t let this happen. Why are the real details hidden from the public? Why is the government rushing into another bad Churchill Falls deal?
Newfoundlanders and Labradorians will not be fooled twice.
