Churchill Falls MOU 'not in the public interest,' says N.L. independent review committee

The duke of marlborough Falls memorandum of discernment betwixt newfoundland dog and Labrador and quebec city has “fundamental issues” that echo the long-reviled 1969 contract between the two provinces, according to a report from the PC government’s independent review committee released Tuesday.

The review says the MOU does have financial benefits for Newfoundland and Labrador, but it also has major limitations — including restricted access to Churchill Falls power for Newfoundland and Labrador Hydro, “problematic” pricing and payment models, and the level of control afforded to Hydro-Québec.

“The [committee] concludes that, despite the benefits, the MOU in its current form is not in the public interest,” reads the report, authored by review committee members Chris Huskilson, Guy Holburn and Mike Wilson.

The report accuses the former Liberal government of meddling in negotiations between Newfoundland and Labrador Hydro and Hydro-Québec, asserting control over key decisions and “actively” directing Hydro’s negotiating team.

According to the report, that direction included requiring that the deal include a 2 per cent escalator clause and limiting the term of the deal to 50 years — despite expert advice otherwise. Two major criticisms of the 1969 agreement have been the lack of an escalator clause and its 65-year length.

“The IRC’s view is that the NLH board did not exercise its full governance authority over negotiations, and that government intervention over-reached in a way that was harmful to negotiated outcomes,” reads the report.

The committee also says the previous government’s statements about the deal included numbers that were “understated, overstated or incomplete.”

The committee also argues that the MOU’s total potential financial benefit to the provincial treasury is better represented by the net present value amount — $31 billion — rather than the nominal amount — $227 billion — presented by the former Liberal government. 

The report comes about a year and a half after Newfoundland and Labrador and Quebec signed the MOU, which was set to replace the 1969 Churchill Falls contract, long-loathed by N.L. Politicians because of the low price it set for power purchased by Hydro-Québec. 

The new deal promised to replace that contract, upgrade and expand the existing Churchill Falls facility and begin development of Gull Island, a long-discussed hydroelectric project on the Churchill River.

The MOU, signed by former N.L. Premier Andrew Furey and former Quebec Premier Francois Legault, was expected to be formalized in April 2026. That didn’t happen.

The Progressive Conservatives, skeptical of the deal, won last fall’s provincial election. Premier Tony Wakeham convened the review committee in December, promising any eventual deal will be put to a public referendum.

In a news release, Wakeham said the report doesn’t shake his government’s resolve to develop Churchill Falls and Gull Island.

“If the experience of 1969 taught us anything it is that we must always look past the big promises and best intentions and always read the fine print,” Wakeham said.

And in a news conference Tuesday afternoon, Wakeham stressed that the committee was independent and their conclusions were their own.

The report, he said, concluded the MOU had its merits but is "deeply flawed."

"Simply put, there needs to be material improvements to this deal before we would ever consider signing it," he said.

But Wakeham said they are not starting over in the process.

"This was never about tearing anything up. This was always about getting the best deal for our province.”

The premier also announced a new three-member negotiating team on Tuesday, comprised of former Fortis CEO Barry Perry, former cabinet minister Jerome Kennedy and N.L. Hydro CEO Jennifer Williams — who was part of the original negotiating team.

According to the news release, the new team will report to a yet-to-be-announced independent oversight body.

The committee criticized the block price model for Churchill Falls power included in the MOU, which it said is heavily weighted on prices regulated within Quebec.

“A simpler price model could be more durable and easier to administer while still meeting the objective of fair value over time,” reads the report.

The committee also argues that though the MOU promises to spur industrial growth in Labrador by increasing N.L. Hydro access to Churchill Falls power by 605 MW before 2041, it limits further growth because it provides access to just 500 MW over the 33 years afterwards.

The report questions the ownership structure of Churchill Falls and any future development, arguing that Hydro-Québec’s position as a minority stakeholder and customer amounts to a conflict of interest. It says that Hydro-Québec — not N.L. Hydro — would be the main beneficiary of the expansion and upgrades to Churchill Falls as proposed by the MOU.

The committee pointed to other potential ownership structures for Gull Island, such as private-public partnerships, but didn’t indicate a preference. 

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