The independent review committee has determined that the memorandum of understanding (MOU) concerning Churchill Falls is against the public interest. The committee’s report highlights significant issues that harken back to the criticized 1969 contract between Newfoundland and Labrador and Quebec.
Report Findings
Published on a Tuesday, the report reveals that while the MOU offers some financial advantages for Newfoundland and Labrador, it presents major constraints. Some of the critical limitations include:
- Restricted access to power from Churchill Falls for Newfoundland and Labrador Hydro.
- Unfavorable pricing and payment structures.
- Excessive control granted to Hydro-Québec.
The authors of the report—Chris Huskilson, Guy Holburn, and Mike Wilson—concluded that, despite its economic benefits, the MOU fails to align with the public interest.
Political Context
The report also criticizes the actions of the former Liberal government. It claims that this government interfered with the negotiation process between Newfoundland and Labrador Hydro and Hydro-Québec. Specifically, it alleged that government directives skewed key decisions, including:
- Implementing a 2% escalator clause.
- Limiting the contract’s term to 50 years, counter to expert recommendations.
Historically, criticisms against the 1969 agreement focused on its lack of an escalator clause and its extended duration.
Financial Implications
The review committee called into question the financial representations made by the previous government. They argued that the MOU’s potential financial advantage to the province should be assessed through its net present value of $31 billion, rather than the nominal figure of $227 billion quoted by the former administration.
Public Reaction and Future Actions
Premier Tony Wakeham, who took office after the Progressive Conservatives won the provincial election, expressed skepticism about the MOU. He convened the review committee in December, pledging that any future agreements will undergo public referendum.
New Negotiation Team
In a press conference following the report’s release, Wakeham emphasized the independence of the committee and acknowledged its findings. He indicated the necessity for substantial improvements to the MOU before it could be ratified.
Wakeham announced the establishment of a new negotiating team, which includes:
- Barry Perry, former CEO of Fortis.
- Jerome Kennedy, a former cabinet minister.
- Jennifer Williams, CEO of N.L. Hydro, who participated in the original negotiations.
This team will be overseen by an independent body, the details of which are yet to be announced.
Conclusion
The review committee raised concerns about the MOU’s proposed block pricing for Churchill Falls power, arguing for a more straightforward model. The report also questioned the ownership structure, highlighting a potential conflict of interest for Hydro-Québec and expressing uncertainty over the future of Gull Island’s development.
As discussions proceed, the focus remains on ensuring that any final agreement serves the best interests of Newfoundland and Labrador.
