Legault Admits Quebec-Newfoundland and Labrador Hydroelectricity Agreement is a “Bad Deal”

On Friday, Quebec Premier François Legault admitted that the hydroelectricity agreement made with Newfoundland and Labrador in past years was “a bad deal” and has not been beneficial for them, though he did not label it as an injustice.

Legault travelled to St. John’s to discuss the future with Newfoundland and Labrador Premier Andrew Furey once the 1969 Churchill Falls agreement expires in 2041. This contract has been incredibly one-sided in Quebec’s favour and has caused a lot of resentment in Newfoundland and Labrador.

“I don’t want to judge Mr. Smallwood or the people who signed this contract,” said Legault, speaking of Joey Smallwood, the initial premier of Newfoundland and Labrador and the person who signed the agreement. “But today, when you look at the price (Quebec pays) and you look at the market price, it became a bad deal for Newfoundland and Labrador.”

When asked if he would describe the agreement as unfair, Legault repeated saying it was “It’s a bad deal.”

Under the contract, Hydro-Québec is allowed to buy most of the power generated by the Churchill Falls hydroelectric dam in Labrador. This has resulted in the Quebec-owned utility profiting greatly, with close to $28 billion in earnings, while Newfoundland and Labrador have only gained around $2 billion.

As of 2022, the utility is paying a minimal 0.2 cents for each kilowatt hour of electricity from Churchill Falls, which leads to huge profits for Hydro-Québec. In 2022, the company earned $4.6 billion in profits largely from Churchill Falls energy.

This week, Legault expressed his desire for a deal that benefits both Quebec and Newfoundland and Labrador, even proposing to pay more for the electricity before the agreement ends in 2041.

Furey reported on Friday that he and Legault had decided to create teams to have “high-level discussions” about the existing deal and what could potentially be put in its place in 18 years.

“We had talked about the imbalance, the injustice, the perceived injustice, the real injustice, the fiscal injustice of the contract today,” said Furey. Adding that Legault is aware of the “punitive nature” of the arrangement.

On Friday, Legault and Furey expressed their willingness to collaborate with Indigenous groups during ongoing negotiations.

“It’s important for me and for Andrew (Furey) to have discussions with the Innu people and Indigenous people, and we will do so together,” Legault stated.