Wakeham Says Churchill Falls Review Rejects MOU in current form
The Churchill Falls review panel said the memorandum of understanding is not in the best long-term interest of Newfoundland and Labrador. Premier Tony Wakeham said his government is at the table and willing to negotiate, and the province has already named a new team for future talks.
The panel also said the central issue for government is “the issue of financial vs economic value.” It put the total value at $227-billion in nominal terms, but said the better measure is a present net value of $31-billion.
Wakeham's new negotiation team
Government announced a three-person committee to handle future negotiations: Barry Perry, a former Fortis CEO; Jerome Kennedy, a lawyer and former PC cabinet minister; and Jennifer Williams, the current NL Hydro CEO. The group will report to a new Independent Oversight Body, which gives the next round of talks a separate layer of review.
Wakeham said “his government is at the table and is willing to negotiate,” but he also tied the pace of progress to Quebec and the federal government. He said how quickly they act on the committee’s concerns will shape the speed of the next stage.
Churchill Falls power limits
The panel said the current MOU would give NL Hydro access to 605 megawatts of existing power before 2041 and up to 60 per cent of existing Churchill Falls capacity by 2061. It also said the deal would allow only an additional 500 megawatts from 2042 to 2075, calling that a “significant limitation.”
That limit, the panel said, could constrain growth in industries such as mining. It also said GDP impact could be 65 per cent higher, or $115-billion, if there were greater capacity.
Gull Island ownership concerns
The review panel also questioned the proposed 60/40 joint ownership model for Gull Island. It said joint ventures are often hard to maintain in the long run, that conflicts are “likely to arise” when a shareholder is also a major customer, and that the arrangement would likely amount to a permanent decision.
The committee said other ownership arrangements in the energy sector were not considered before negotiations started. It named Participation Agreements, Public-Private-Partnerships and Build-Operate-Transfer models as options that should have been on the table.
The panel said the way negotiations were overseen “did not meet the standards demanded by a project of this scale, complexity, and importance.” The province said the review conclusions will be the foundation for future negotiations, putting the next phase on the new team’s work and on how Quebec and the federal government respond to the concerns now on the record.
