Today (Dec 12) Newfoundland and Labrador signed an historic Memorandum of Understanding (MOU) with Québec to terminate and replace the 1969 Upper Churchill Contract, develop Gull Island and expand capacity of the Churchill Falls plant. The deal will result in more than $225 Billion in total revenue to the provincial treasury over the life of the agreements.
The Innu of Labrador have a special relationship with the Province through the New Dawn Agreement. Innu Nation Grand Chief Simon Pokue and Premier Furey signed an official acknowledgement of the MOU confirming the province's commitments to the Innu of Labrador.
New Agreement on Upper Churchill
The resulting agreement would come into force effective January 1, 2025. The new Power Purchase Agreement means an immediate increase in the price for Upper Churchill Power. This increases annual revenue to the province an average of $1 Billion per year over the next 17 years compared to the average of less than $20 million per year received today. It also changes the effective price per kilowatt hour from 0.2 cents to 5.9 cents - or thirty times the current price. The new agreement includes a price escalator, with the price for power growing based on a market-based block pricing model over the life of the contract. A new modern shareholders' agreement will also be put in place.
New Developments
New developments will increase capacity in Labrador by 3,900 MW. Hydro-Québec will pay Newfoundland and Labrador Hydro $3.5 Billion in today's dollars for the right to co-develop these projects and those funds will be used to pay Newfoundland and Labrador's equity in the new assets.
The Gull Island Generating Station will be constructed with an installed capacity of 2,250 MW. A new powerhouse will be built at Churchill Falls adding 1,100 MW. Québec will bear full responsibility for construction risks and cost overruns on these new projects.
The existing units at Churchill Falls will be upgraded to increase capacity by 550 MW. New transmission lines will be built in Labrador and Québec to enable these new generation projects.
The value of these combined construction projects is at least $33 Billion and will provide thousands of jobs over a generation.
With access to more power from the existing Churchill Falls plant and increased capacity from new developments, Newfoundland and Labrador Hydro will access 1,990 MW, which is almost four times the capacity it has today. This will be available for industrial development in Labrador, increasing economic development and even more jobs for this province.
The $225 Billion in revenue is transformative in meeting the needs of Newfoundlanders and Labradorians - for schools, hospitals, roads, technology, debt relief and more. It also allows the Government to maintain the current power rates for Labrador residential and small business customers, while ensuring Labrador industrial rates remain competitive.
Quotes
"Today we began to write a new chapter for this province and this changes everything. This agreement will have a generational impact on the growth and prosperity of Newfoundland and Labrador. It will mean nearly a quarter of a trillion dollars in revenue over the life of the agreement for schools, hospitals, roads and debt relief, and it will bring thousands of new jobs through construction and industrial development. And it starts as of 2025 with a billion dollars a year flowing to the province from the Upper Churchill compared to the $20 million we receive today."
Dr. Andrew Furey
Premier, Newfoundland and Labrador
"This is an historic day for the provinces of Newfoundland and Labrador and Québec and the Innu Nation. I am pleased that the two provinces have reached an MOU that respects our deep relationship with the Mishta-shipu (Churchill River waterway) and the land that is central to our people. The acknowledgement by the Province of Newfoundland and Labrador recognizes and protects our New Dawn (Tshash Petapen) Agreement and provides for inclusion of the Innu of Labrador in future energy projects."
Grand Chief Simon Pokue
Innu Nation
"Access to clean energy for Newfoundland and Labrador will fuel growth for local business and attract development to our province," said Andrew Parsons, Minister of Industry, Energy and Technology. "It provides certainty for industrial customers to plan their futures right here in Newfoundland and Labrador and increases our attractiveness as a key jurisdiction for business growth across sectors. This is transformational."
Honourable Andrew Parsons
Minister of Industry, Energy, and Technology
"Today, we rightly amplify the powerful Churchill River and secure its place as one of national importance for us and our country. This river is a world-class source of renewable energy, critical to addressing climate change and is an important economic enabler. Together with our partners in Quebec, we are building a prosperous energy-driven future for all."
Jennifer Williams
President and CEO, Newfoundland and Labrador Hydro
For more information
Prince Phillip Drive
St. John's Newfoundland
Canada A1B 4J6
www.gov.nl.ca
