ST. JOHN’S – Quebec and Newfoundland and Labrador have reached a non-binding agreement aimed at reshaping how Labrador’s energy resources are developed and shared, with financial support from the federal government.
Prime Minister Mark Carney and the premiers of both provinces gathered in St. John’s on Monday to announce the broad tentative framework, which would bring Hydro-Québec and Newfoundland and Labrador Hydro together to manage power from the Churchill Falls generating station while advancing new hydroelectric, wind and transmission projects worth more than $50 billion.
If the agreement is finalized, it would also advance a long-standing Newfoundland and Labrador objective: sending up to 985 megawatts of electricity generated in Labrador through Quebec to markets in the United States.
Negotiators are aiming to complete a final agreement by the end of 2026.
That timeline, however, faces a potential political complication in Quebec. Premier Christine Fréchette must call a provincial election by Oct. 5, and it remains uncertain whether an election campaign or a change in government could affect the negotiations.
“Whatever happens in Quebec will happen. I can’t control what happens in Quebec,” Newfoundland and Labrador Premier Tony Wakeham told The Canadian Press.
He nevertheless described the proposed agreement as a “win-win-win” arrangement.
Major expansion of Labrador’s energy potential
Under the framework, Newfoundland and Labrador’s utilities are looking at as much as 14,000 megawatts of new and existing hydroelectric development in Labrador and along the Churchill River.
For Newfoundland and Labrador, the objective is to turn the region’s substantial hydroelectric potential into long-term economic value.
Quebec, meanwhile, is seeking to secure a dependable source of electricity that could support its energy needs for decades.
The two provinces have been negotiating for years and reached a framework agreement in 2024. However, after Wakeham and his Progressive Conservatives won the provincial election last year, the premier sent negotiators back to the table.
At the time, Wakeham said he wanted Newfoundland and Labrador to obtain greater access to power, more value from its resources and transmission rights through Quebec.
The new framework includes several major infrastructure projects.
Among them is a proposed 2,700-megawatt generating station at Gull Island on the Churchill River, as well as upgrades to the existing 5,428-megawatt Churchill Falls generating facility.
The agreement also proposes new transmission lines and calls for a feasibility study into constructing a second powerhouse at Churchill Falls.
Ottawa commits $10 billion in financing
The federal government would provide $10 billion in financing for several of the proposed developments, including transmission infrastructure and the Gull Island project, according to a government news release.
The proposed agreement would also significantly change the price Hydro-Québec pays for electricity generated at Churchill Falls.
Under the terms presented to the media, the price would begin at 1.8 cents per kilowatt hour in 2027 and rise over time. Over the following 50 years, the effective average price would reach 7.4 cents per kilowatt hour.
That represents a substantial increase from the 5.9 cents per kilowatt hour average effective price contained in the previous draft agreement signed in 2024.
It is an even more significant change compared with the existing arrangement.
Hydro-Québec currently pays only 0.2 cents per kilowatt hour under a contract signed in 1969. That agreement was originally scheduled to remain in effect until 2041.
For decades, many people in Newfoundland and Labrador have considered the 1969 contract deeply unfair and, in some cases, unjust.
Referendum promise abandoned
Wakeham had campaigned last fall on a commitment to hold a public referendum on any final Churchill Falls-related agreement.
He reversed that position on Monday, confirming that there would be no referendum on the proposed deal.
“I know there will be people in our province who will be disappointed in that, but I accept that,” Wakeham said. “The time was now. There was an opportunity right now.”
The premier argued that the opportunity presented by the current negotiations was significant enough to justify moving forward without putting the final agreement to a public vote.
Potential turning point for Churchill Falls relations
The tentative agreement would terminate the 1969 Churchill Falls contract and replace it with a substantially different framework for sharing the value of Labrador’s hydroelectric resources.
For Newfoundland and Labrador, the proposed changes could mean greater revenue, new generating capacity and expanded transmission access.
For Quebec, the agreement would help secure long-term access to additional electricity while opening the door to new generation and transmission infrastructure.
The proposed developments could also strengthen electricity exports to the United States by creating a route for Labrador power to reach American markets through Quebec.
Although the agreement remains non-binding and still requires further negotiations before a final deal can be signed, it could mark a major shift in the relationship between Quebec and Newfoundland and Labrador.
After decades of tension over Churchill Falls and the terms of the 1969 contract, the proposed framework could provide the foundation for a new era of cooperation around hydroelectricity, transmission and energy development.
