Today on the floor of the House of Assembly, government advisors confirmed that the price Quebec pays to Newfoundland and Labrador for power from the new Gull Island megaproject will decrease over time.
Premier Wakeham is trying to hide this from the public. The Official Opposition has asked for Gull Island prices three times – in briefings with the Premier’s negotiators on August 19th and September 8th and again today in the House of Assembly -but it has not been provided. Simple questions, including asking for the expected price Gull Island will be sold at at the beginning and end of the contract, have gone unanswered.
Gull Island is one of the largest undeveloped hydroelectric resources in North America, and the Conservatives have agreed to sell its power for a 50-year contract that declines over time – declining more and faster than the infamous 1969 Churchill Falls Contract.
Lead Negotiator Barry Perry confirmed during questioning in the House of Assembly that for Gull Island, “the higher the amounts are in the earlier years and the price comes down over time.” Mr. Dickman-Wilkes from JP Morgan stated that the later prices “would certainly be much lower than the starting PPA rate.”
Under the new Power Purchase Agreement (PPA), the price Newfoundland and Labrador receives for Gull Island power is expected to remain relatively stable initially before declining over time. As energy markets and the value of electricity rise, Newfoundland and Labrador will receive less and less revenue for the power it sells to Quebec, while Hydro-Québec will receive the benefit of the increasing market value of that electricity – just like 1969.
This raises the same fundamental concern that has haunted the original 1969 Churchill Falls contract: locking Newfoundland and Labrador into a long-term price structure that fails to increase, while the price of electricity rises, and Quebec’s ability to profit does too.
While the Conservatives released a graph showing the price of Churchill Falls power, they conveniently will not release a graph showing the trajectory of Gull Island pricing.
Agreeing to a contract that declines over time deprives future generations of the benefit of one of our province’s greatest resources. Newfoundlanders and Labradorians were promised a better deal, and so far all we are seeing is a better deal for Quebec.
–30–