Politics vs. Power: Newfoundland and Labrador’s partisan fight puts historic Churchill Falls hydro deal at risk

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Newly elected Premier Tony Wakeham has reaffirmed his commitment to subject the Churchill Falls and Gull Island agreement to a public referendum and an independent review before any final deal is signed.

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Wakeham argues that Newfoundlanders deserve full transparency before committing to another long-term contract with Quebec, referencing the province’s lingering resentment over the original 1969 Churchill Falls agreement, which left Newfoundland locked into decades of low-priced power sales.

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Under the deal, Newfoundland and Labrador will remain the majority owner in the new projects, while Hydro‑Québec will have a significant minority stake. The Atlantic province could receive immediate cash flow, long-term royalties and access to low-cost energy for industrial development. The agreement also commits to upgrades at Churchill Falls and positions the province for up to $200 billion in economic benefits over its lifetime.

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Negotiators face a tight timeline: the non-binding memorandum requires a final agreement by April 2026, leaving only six months to settle key details such as pricing, risk-sharing and potential off-ramps. There’s also a possibility the government could change in Quebec, further complicating a potential deal. Legault is heading into what may be his final year in office, with a provincial election set for October 5, 2026.

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Pineau argues that few realistic buyers exist for the roughly 30 terawatt-hours of annual power expected from Churchill Falls. Options like new transmission lines to Ontario or the United States, an aluminum smelter or a hydrogen plant would each cost billions and pose risks too high for investors to take on.

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If the deal collapses, Pineau warned, Newfoundland would be the real loser, while Quebec would still enjoy 15 more years of cheap electricity under the existing contract.

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Newfoundland and Labrador Conservative Senator David Wells has joined those demanding a detailed review of the MOU. He voiced concern that the preliminary agreement grants Hydro-Québec a 40 per cent ownership stake in the Upper Churchill operation as part of the Gull Island development.

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Wells argues that the public needs to understand what’s at stake with the proposed partnership and that his concerns go beyond power prices and include “ownership, control, and ensuring Newfoundland and Labrador finally gets a fair deal from its resources.”

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Wells supports the premier’s plan for an independent assessment before the province commits to binding terms.

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François Bouffard, associate professor of electrical and computer engineering at McGill University, said the MOU offers enormous upside if executed properly.

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“From a finance perspective, this is a very sweet deal,” Bouffard said, providing immediate cash flow, which Newfoundland urgently needs, and positions the province to benefit from decades of clean energy production.

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The province has already attempted to develop the Churchill River through the Muskrat Falls project, led by the Crown corporation Nalcor Energy Ltd. The project proved disastrous — it was completed in 2023, years behind schedule and ran more than $7 billion over budget. Its mounting costs eventually prompted a $5.2-billion bailout from Ottawa. Partnering with Hydro-Québec would help eliminate many of these financial and project-management risks, said Bouffard.

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“I think the people of Newfoundland and Labrador need to understand that, if for some reason — like in the case of Muskrat Falls — there are serious geotechnical issues with the new site, well, it’s going to be coming out of Hydro-Québec’s pocket, not Newfoundland and Labrador’s. So, it’s a give and take,” he said.