Quebec, Newfoundland make power deal
It’s being reported all over that Quebec has made a new deal with Newfoundland and Labrador over the cost of Churchill Falls power, and while headlines emphasize that Quebec will now be paying thirty times the previous rate for Newfie Labrador power, nobody has yet ventured to estimate what this will mean on our hydro bills.
It’s also not been made clear what leverage Newfoundland used to make Quebec abandon a deal that was clearly good till 2041 to get that power for 0.2 cents per kWh, and agree to adjust it to 5.9 cents. Here’s the Newfie Newfoundland version of the story.
H. John 00:26 on 2024-12-13 Permalink
I thought Michael Sabia did a good job explaining what we know, and what we don’t about the future, when he spent more than 30 minutes with Patrice Roy on Radio-Canada.
https://ici.radio-canada.ca/info/videos/1-8846781/nouveau-plan-action-hydro-quebec-entrevue-avec-michael-sabia
Roy (and team) again did a thought provoking review of the issue.
Nicholas 00:44 on 2024-12-13 Permalink
The leverage is the deal will last for 50 years, so rather than 0.2 cents for 16 years and then market rate of ?? for 34, it’s a smooth 5.9 cents for 50. Also NL was considering building a link through to Cape Breton and then the rest of the Maritimes, plus New England, which would cost a lot, but then they had another way through to the US and Quebec might get little or nothing. Also Quebec is going to build the third dam, Gull Island, and shoulder the entire financial risk, and then guaranteed power from it, most of the total, at a fixed rate. NL Hydro has a cash crunch, and their most recent project has had some overruns, so they’re happy to not have as much risk and get something from it. It seems both sides get something out of it, and it’s hard to know who “won”, but hopefully both did.
Kate 10:02 on 2024-12-13 Permalink
Thank you both.
DeWolf 10:08 on 2024-12-13 Permalink
As Nicholas said – for Quebec, the short term increase in cost will pay for long-term stability and a new source of affordable power. In exchange, Newfoundland gets a windfall that will vastly increase its provincial budget and both provinces get to end a decades-long conflict.
Warren 23:13 on 2024-12-13 Permalink
I don’t love your use of “Newfie”, as it would be seen as a bit insulting to Newfoundlanders.
Kate 11:12 on 2024-12-14 Permalink
You are, of course, free not to love it.Editing to add my deepest apologies for the slur.