Panel says Quebec energy deal falls short for Newfoundland and Labrador

Overview of the Panel's Findings

A panel appointed by the Newfoundland and Labrador government has raised concerns about a proposed energy deal with Hydro-Québec. The report, expected to be released on Tuesday, outlines several issues with the non-binding framework agreement to share power from Labrador, which was signed by the provinces' hydroelectric utilities in 2024.

The panel highlights that the agreement does not provide enough power for Newfoundland and Labrador, which could affect energy-hungry sectors like mining and hinder long-term economic growth. The report suggests that the government could make significant decisions that might allow Newfoundland and Labrador Hydro to work toward a revised agreement with Hydro-Québec that serves the public interest.

This report is anticipated to address concerns among the public who feel they have been treated unfairly by Quebec. It may also reignite negotiations between the provinces' power utilities, provided Quebec is willing to engage.

Background of the Energy Deal

The panel was tasked in December to determine whether the draft deal is in the "best long-term interests of the people of the province," according to its terms of reference. The deal was unveiled in late 2024 in St. John's by Newfoundland and Labrador's previous Liberal government. If finalized, it would expire in 2075.

Tony Wakeham, the current Progressive Conservative premier of Newfoundland and Labrador, has demanded a review of the proposal since its announcement. He assembled the panel just weeks after his party formed government last fall, halting all negotiations of final agreements to wait for the committee's report.

Quebec Premier Christine Fréchette recently spoke with Wakeham and both agreed on the importance of reaching a win-win agreement in the near term. She emphasized the need to work with neighbors to ensure economic and energy development for both provinces.

Details of the Proposed Deal

The draft deal scrutinized by the panel proposes new rates and allocations for power from the 5,428-megawatt Churchill Falls generating station in Labrador. Currently, Hydro-Québec receives the majority of the electricity at basement-floor prices under a contract signed in 1969, which has long been a source of bitterness in Newfoundland and Labrador.

The deal would also allow Hydro-Québec to lead new developments on the Churchill River, alongside Newfoundland and Labrador Hydro. If they proceed, the utilities would ultimately share more than 9,000 megawatts of power from the river, with Hydro-Québec entitled to roughly 80 per cent.

Newfoundland and Labrador would receive more money from Hydro-Québec for electricity from Churchill Falls, but at the expense of economic growth that would come with more power, according to the panel's report. The committee expressed concerns about Newfoundland and Labrador Hydro's lack of transmission ability to sell Churchill Falls power to export markets. They also mentioned "the challenge of sustaining joint ventures between partners with divergent interests."

Key Figures and Reactions

Chris Huskilson, a former chief executive of Nova Scotia-based power company Emera Inc., led the group. His team included former EY executive Michael Wilson, who previously criticized the draft deal and said Newfoundland and Labrador could get better terms.

Wakeham had promised the panel members would present their report in-person on Tuesday. However, his office stated this would no longer happen. The members decided their report speaks for itself, as reported by a spokesperson.

Former Quebec premier François Legault helped shepherd the proposed arrangement between Hydro-Québec and Newfoundland and Labrador Hydro. His party, the Coalition Avenir Québec, is not expected to do well in the province's upcoming election, which must be held by early October.

The Parti Québécois, which is ahead in the polls, has spoken out against the proposal, claiming it gives far too much to Newfoundland and Labrador.

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