As a general principle it is not fair to publicly rebuke a public servant unless the official chooses to be a demonstrably biased mouthpiece for the Government. CEO Ed Martin’s justification of the Muskrat Falls development with a series of untruths and misrepresentations signaled a fundamental change in the behaviour of NL Hydro CEOs. Little, if anything, has changed since his departure.
NL Hydro CEO, Jennifer Williams, exceeded her operational role during the administration of Premier Andrew Furey. Premier Wakeham has evidently demanded the same of her, and she has complied. Her false and misleading statements in defense of both MOU 1 and MOU 2 represent terribly poor judgment, putting the credibility of the Crown Corporation at risk. She was touting MOU 1 as the best possible deal; since then, she has changed her mind. Evidently, for her, MOU 2 is better than “best possible”.
When bureaucrats try to outdo the politicians in the hyperbole department, Houston we have a problem!
Today, we’ll examine two of the Hydro CEO invocations in a recent CBC Here and Now interview and look at how she mangles the truth. One of her claims was that MOU 2 means “MORE MONEY SOONER”.
The Independent Review Committee calculated that under the MOU’s pricing schedule, the payments flowing to the provincial treasury from CFLCo equate to a forecast levelized cost of energy of 3.8 cents per kWh from 2025 to 2041, rising to 16.7 cents from 2042 to 2075 (pages 4 and 84 of the IRC report). MOU 2 (Annex D) is only marginally higher — about 5 cents per kilowatt-hour on average from 2027 to 2041, rising to about 19 cents from 2042 to 2077.
Hydro-Québec’s own cost of new generation is already 17 cents per kilowatt-hour, as they stated publicly on August 17. Under MOU 2, HQ does not pay us that price on the existing power from CF plant until roughly 2057. Thirty years from now.
In addition, Hydro-Québec’s own forecast cost for new power generation has been revised sharply upward. Greg Roberts’ Facebook posts note that less than two years ago – in the December 12, 2024 MOU release – they were anchored to 13 cents per kWh. That is a 31 percent upward revision. It means that if the trajectory continues — the actual value of Churchill Falls power over the 51-year term is materially higher than what today’s replacement-cost benchmark implies.
Cognizant of the opportunity cost of locking in the existing power allocations for HQ, the Independent Review Committee modelled the industrial-development and found that provincial GDP could rise by $48 billion in present value over 2025 to 2041 and by $130 billion in present value over 2042 to 2075 from expansion of the Labrador mining sector that is currently constrained by lack of power. The giveaway to Quebec amplifies the potential cost to NL locking in the sale of CF power at cheap, pre-determined established prices. Every megawatt sold cheap to Quebec is a megawatt not available to industrial development at home.
IRC Member Mike Wilson’s public comments (see Uncle Gnarley October 9, 2025), made essentially the same point from a different angle: the present value average price we are agreeing to sell power at is around 2.7 cents per kilowatt-hour (present value), not the 5.9 cents Jennifer Williams cited publicly. Wilson calculated the wealth transfer to Hydro-Québec from the existing Churchill Falls plant alone at $131 billion — worse than 1969.
In a recent Uncle Gnarley Blog post, Gabe Gregory was just as categorical, his analysis runs completely counter to Jennifer Williams’ claims. States Gregory:
“…critics of the MOU noted that there was no escalation of pricing related to changes in energy (electricity) pricing tied to market change over the 51- year term, a feature confirmed by the IRC. MOU 2 fails to deliver any change in market pricing over MOU 1. The problem remains that prices are established, or pre-determined without any reference to market price change over the entire term of the contract. Therefore, to the degree that electricity prices rise, or that the market value of energy is higher than the pre-established prices, virtually all of the benefit will accrue to HQ. This is the same problem that exists with the current 1969 contract.
The Independent Review Committee states that in the case of MOU 1 only $9.2 billion of the $36 billion in present-value benefits to the provincial treasury arrive before 2042. That is 26 percent of the value in the first 16 years and 74 percent deferred to the following 33 years in present-value terms.
Gabe Gregory’s post entitled Explainer: Why MOU 2 Should be Soundly Rejected, like Greg Roberts Facebook posts, reinforce this problem with MOU 2. States Gregory:
“The MOU 2 prices are established well below current market prices and that continues throughout the 51- year term. NL never gets the market value for the power we sell. For example, the current export value of electricity is approximately 16 cents/Kwh. Under MOU 1 we would not reach that price until 2054 and under MOU 2 that price will be reached in 2053. In either case, we are talking about 27-30 years for the price to reach the current market value. One can only imagine how high the actual price will be at that time.” (Emphasis added.)
Gabe Gregory continues:
“If we assume that electricity market prices will increase at the average rate of 4.1% noted in the Independent Review Committee report over the past five decades, then market prices will be in the range of 47.3 cents/Kwh in 2053. If this occurs as current trends indicate then NL will be selling electricity to HQ for over 30 cents/Kwh less than its market value. That is a staggering $10.4 billion loss of value in just one year to CF(L)co (the annual loss in present value terms is $2.3 billion). And that trend is present throughout the term to 2077. Our past financial losses under the 1969 contract will be minor compared to the losses we will experience into the future!”
What could be clearer?
A second issue is the much heralded CPI mechanism in Annex F, which Jennifer Williams and Premier Wakeham herald as an important accomplishment when all it does is exacerbate the paltry amount of revenue received by NL. In short, it does not work.
David Vardy, Dr. Doug May, Greg Roberts and Gabe Gregory have all confirmed, having conducted careful analysis, that while the target inflation reference is 2.06 percent, its inherent limitation (a plus-or-minus 40 basis-point “deadband” on a cumulative basis) means that if cumulative inflation runs anywhere between 1.66 percent and 2.46 percent, the province gets no adjustment at all. Only deviations outside that band trigger a top-up or discount. It is partial protection against inflation, it is not indexation. And critically, CPI is not the right benchmark. The right benchmark is an index of energy market prices, which is likely to rise far faster than CPI given forecast demand.
Opposition Leader, John Hogan, for a few days, was beside himself about the CPI mechanism; in his case, however, he chose a single issue when the whole MOU 2 (like his MOU 1) is a catastrophe. As Opposition Leader, his job is to be chief critic of bad policy; instead he fears that Premier Wakeham’s MOU2 might cast a shadow over MOU1. He does not comprehend that the travesty of both MOUs warrants condemnation.
But back to the bigger issue. Jennifer William’s claim of “more money sooner” amounts to a very small amount of cash in the short-term as the Province forgoes all the additional value from a deal that should be based on open transmission to all customers for our energy.
She fails to acknowledge all this value is lost in exchange for pulling forward a decade of below-market cash flow. That is why critics have frequently referred to the pre-2041 payments as a payday loan. It is a very expensive short-term sweetener attached to a very large long-term give-away.
If this is Jennifer’s idea of a better deal following on “the best possible deal”, wait until the public realizes that she is an integral part of Premier Wakeham’s propaganda machine.