WHAT WE NEED TO KNOW BEFORE WE VOTE

David Vardy is an economist trained at Memorial, the University of Toronto and Princeton University who taught economics at Princeton, Queen’s University and at Memorial University. He worked as an economist in the federal departments of fisheries and finance, both in Ottawa and in St. John’s. He served in a number of senior executive positions including President of the Institute of Fisheries and Marine Technology, Deputy Minister of Fisheries and Aquaculture, Chair of the  Public Utilities Board and Clerk of the Executive Council/Secretary to the Cabinet of the province of Newfoundland and Labrador. He was a member of the team which negotiated the 1985 Atlantic Accord. More recently he served as a member of the Premier’s Economic Recovery Team (PERT), chaired by Dame Moya Greene, and as a member of the Churchill River Management Expert Panel. He is a Paul Harris Fellow and a recipient of the True Rotarian award from Rotary International. He holds an honorary doctorate from Memorial University.

If people want access to information concerning the Churchill Falls MOU, they can seek it under Access to Information (ATIPP) legislation, but they will have to wait for 30 days. The public should be able to access information immediately from NL Hydro. I suggested yesterday to the Hydro CEO that she give an undertaking to respond where possible within 24 hours and post the information.

We must ultimately have a full independent public hearing before long term commitments are made under the MOU or the Definitive Agreements which are targeted for completion at the end of April 2026. The Premier refused to commit last night to such an independent review and offered instead another debate in the House of Assembly. The information will not be given under oath, nor will it be challenged by independent experts through cross examination of witnesses. This is not acceptable.

If the MOU is good it should be verified in a public forum. Ronald Reagan, referring to a nuclear pact with Russian President Mikhail Gorbachev, said he would trust but verify. What is the basis for us to trust a government which withholds transparency? Sunlight is the best disinfectant, and sunlight is being blatantly and egregiously being withheld. We are operating in the miasma of a typical Newfoundland fog, the Fog of Partisan Warfare.

The PUB has been denied jurisdiction over the Lower Churchill. This denial was in the first instance predicated on the argument that local ratepayers will not be affected because all the power would be exported. Such is not the case with the MOU where power from each project is reserved for local ratepayers and  PUB has a duty to protect them by ensuring that power is supplied on a reliable, environmentally friendly basis, at least cost.

I have asked NL Hydro to introduce an expedited information process to improve public understanding of the issues that are at stake. This is no substitute for an independent review by the PUB or a Supreme Court Judge but it can assist voters, as October 14 approaches, and citizens must decide among the competing platforms.

The public needs to know how much money will flow into the Treasury on average and in 2025 $ over the next 51 years and how it will compare in present value with the revenues generated for our province over the past 54 years since Churchill Falls power first came on stream in 1971, two years after signing of the 1969 power contract.

How much will we receive in present $ for power from the existing plant and from each of the four Development Projects under the MOU?

Will our share reflect our ownership of the resource and our 65.8% share ownership in CFLCo? Over the past 54 years we received less than 10%. How much will we receive under the MOU? Will it be more than two thirds or simply a rollover of the 1969 agreement, less than 10%?

What is the present value of the revenues for each project individually and collectively? What is the present value of the unit revenues? Is it 5.9 cents/kWh as claimed by the Hydro CEO or is it 2.7 cents/kWh as calculated by Michael Wilson and by other independent experts?

I submitted the following questions in writing to Jennifer Williams on October 8, 2025 and copied them to Paddy Daley of VOCM Open Line, on which Jennifer was interviewed yesterday, as well as to other news media. In my questions I take some issue with the responses she gave on Open Line. I invite you to support my request for greater transparency first through Jennifer’s agreement to respond to all questions on an expedited basis and secondly through agreement of the party which forms the government after next Tuesday to commit to a full independent review through an unfettered PUB, with removal of all exemptions, and with a mandate to conduct an independent assessment as to whether the MOU meets the policy objectives of the province.

This is what I wrote to Jennifer Williams:

I heard part of your interview with Paddy Daley this morning. You referred to the rate differential between our province and Quebec on a system wide basis. You spoke about generation, transmission and distribution costs. Please disclose the unit costs (per KWh) incurred by Quebec and compare those with each of generation, transmission and distribution costs in this province.

Please provide the public with the unit cost of generation from the existing Churchill Falls plant in 2024, along with the unit distribution and transmission costs for energy purchased from CFLCo by Hydro Quebec. What is the average present value of these costs over the period 2025-2075 for energy purchased from CFLCo by Hydro Quebec?

Under ATIPPA, Hydro has 30 days or more to respond to an information request. In light of the fact that the MOU is an election issue for the provincial election in six days are you prepared to accept questions and answer them within a 24-hour timeframe, immediately posting all questions and answers so that the public is aware of concerns being expressed? If information is unavailable within that time frame, please advise within 24 hours.

I subsequently sent the following 29 questions:

1. Do you and your colleagues at NL Hydro consider yourselves to be public servants, with a duty to speak truth to power?
2. Can you confirm that the testimony you gave to the House of Assembly was presented without oath or affirmation?
3. As a public servant presenting to the highest governmental body in the province is it not your duty to present not only the benefits of the MOU but also the risks and cost?
4. Do you believe that the unsworn evidence you presented to the House of Assembly gave a balanced perspective on benefits vs. risks?
5. How much additional revenue does the MOU supply to the province before September 1, 2041, over and above its entitlement under agreements prior to December 12, 2025?
6. Do the increased revenues prior to September 1, 2041, come at the cost of reduced revenues after that date?

The financial benefits table discloses $36 billion in preferred dividends to NL Hydro.

7. Please disclose the common and preferred dividends paid by CFLCo to NL Hydro for each year from 2016 to 2024?
8. How is the value of future preferred dividends calculated?
9. Is it correct that the payment of preferred dividends was a decision of the province and that it was put in place in lieu of provincial corporate income tax?
10. Does that mean that as a shareholder the preferred dividends enable the province to increase its entitlement to a higher level than our equity share, namely 65.8%?
11. What is our appropriate share of net profits as a shareholder?
12. What is our appropriate share as resource owner?
13. The financial benefits table discloses $36 billion in preferred dividends associated with the existing plant, but no preferred dividends for the New Developments. Does that mean that they will pay provincial corporate income tax?
14. If so, how much will they pay in CIT, compared with what they would have paid if they paid preferred dividends commensurate with their share of net revenues from the existing plant?
15. During your interview on VOCM Open Line with Paddy Daley on October 8, 2025, you said the present value of revenues to CFLCo from sale of power to Hydro Quebec from the existing plant would be, on average, 5.9 cents/kWh. Am I correct in understanding that the imagined, or counterfactual, revenue stream, which begins at 5.9 cents/kWh and escalates at 2%, also discounts at 5.822% for a present value of $33.8 billion, prior to deduction for “operations, maintenance, interest etc.,” and prior to distributions to shareholders?
16. The total energy sales associated with this value measure is 1,268 TWh (billions of kWh) over 51 years and, when divided into the $33.8 billion shown in Schedule G, the average present value is 2.67 cents/kWh, which is identical to the present value of the factual revenue stream associated with Schedule G. Does this not prove that the present value of the annual revenue stream is indeed 2.67 cent/kWh and not 5.9 cents/kWh?
17. Please confirm that this proof is accurate.
18. What is the present value of average revenues to NL Hydro (removing HQ’s share) over the 51-year term of the MOU for each of: the existing plant, the upgrades, CF2 and Gull Island as well as the total? Please remove the revenues which would accrue under existing agreements (the renewal agreement up to August 31, 2041, as well as any operating expenses which need to be deducted to calculate net revenues and net profits.
19. We understand that Hydro Quebec has received 90% of the revenues from 1969 up to the present. What share of revenues will NL Hydro receive as calculated in 18 above? What share of market prices will NL Hydro receive based on those same calculations?
20. In calculating the NL Hydro share of net revenues as a share of market prices is it necessary to adjust market prices to reflect transmission costs and/or distribution cost incurred by Hydro Quebec?
21. If so, what is the appropriate estimate of Hydro Quebec’s transmission and/or distribution costs attributable to the existing Churchill Falls plant?
22. Cost recovery for the Muskrat Falls project takes place under two models. The Labrador Island Link (LIL) is governed by a traditional cost of service model where ROE is recovered when costs are incurred each year. The costs of the generation component (the Muskrat Falls site and the TL from Muskrat Falls to Churchill Falls) are recovered through another system, known as “escalating supply prices” and ROE recovery is back end loaded. The costs of Gull Island, along with the upgrades and the expansion, will be recovered using a “cost-plus pricing terms projected to deliver a 2% per annum escalation of revenues over the term” of the power purchase agreements. Is the cost recovery model for development projects under the MOU the same as it is for the generation costs of Muskrat Falls and will repayment of NL Hydro’s ROE be similarly deferred?
23. If so, will this deferral delay payment of revenues to NL Hydro as a shareholder in CFLCo and the GIJV?
24. Will deferred ROE payments be carried beyond the term of the power purchase agreements?
25. Would there be an advantage to the province if we increased our water rentals and royalties?
26. When was the province’s water rental and royalty regime last revised? How does it compare with other provinces?
27. What is the best balance between dividends and royalties in optimizing the province’s fiscal regime?
28. How do our water royalties and rentals compare with those levied in the province of Quebec?
29. If we charged the same rates in this province as in Quebec what would be the impact upon the $16 billion shown in the benefits table?

I am posting the full response dated 2025-10-09 from Jennifer Williams below.

David Vardy

Good day David,

(note that I have cc’d the others that you copied on your e-mail)

We have received your emails containing the 29+ questions and your request to answer within twenty-four hours. Given the depth and number of questions, the requested twenty-four-hour timeframe is not reasonable to provide detailed, thorough responses as is required by the questions and ATIPP requirements. Of additional importance is that all answers must be assessed for commercial sensitivity as we cannot and should not inadvertently disclose information publicly that could harm our negotiating position with Hydro-Quebec while in the midst of negotiating definitive agreements.

I also want to address the theme of some of your questions in your second email about the appearance of Hydro Executives and external consultants J.P. Morgan and Power Advisory L.L.C. in the House of Assembly in January 2025. During these four days and nights, questions were posed by all parties and MHAs to which all representatives were required to answer. Hydro nor its consultants were able to dictate the conversation in any way and were not asked to prepare materials for presentation to the house. Instead, and appropriately, Hydro was required to respond to questions posed by all elected officials, and they chose the course of query and information being sought. At all times, every representative who appeared was fulsome and honest in our responses.   

Further, Hydro recognizes and takes seriously its legislative duty to be open and transparent and publishes as much information as possible, including all 30 pages of the MOU. Likewise, we also have an obligation to communicate with residents of the province, many with varied backgrounds, interests and communications preferences, to explain what this historic MOU means for people. This range of interest and audience requires many different communication tools and iterations of materials. With that in mind, Hydro has endeavored to communicate as much as possible since December 2024. Hydro has been available to the public in many formats including, but not limited to, the following:

• As noted above, Hydro’s executive and experts appeared for four days in the House of Assembly to answer questions;
• Answered questions for attendees during four public webinars;
• Completed countless media interviews and written responses to media;
• Posted hundreds of pages of documents on a publicly available information portal;
• Appeared in numerous public speaking engagements;
• Held briefings for interested parties, including yourself; 
• Shared public information videos on the various aspects of the MOU; and 
• Developed an online portal (www.ourchapter.ca) containing the MOU, many documents and resources, FAQs, explainer videos, and more for public information.

In closing, please be advised that all questions have been relayed to Hydro’s ATIPP coordinator for review and assessment. Once complete, the responses will be posted publicly. 

For your information, I am attaching a copy of the Board of Director’s recent response to the ‘group of nine’ letter and our and our external consultants, J.P. Morgan, assessments of the assumptions claimed by Michael Wilson and others.  

I thank you for your continued interest in the MOU.

Respectfully,

Jennifer