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On August 17, 2026, the Premiers of Newfoundland and Labrador and Québec joined Prime Minister Carney to sign a Definitive Cooperation and Implementation Agreement for a new 50-year electricity transmission and generation contract between Newfoundland and Labrador Hydro and Hydro-Québec. If implemented, this agreement has the potential to provide abundant, clean and competitively priced electricity to support long-term economic growth in both provinces.
The Agreement would begin in 2027 and replace the original contract from 1969, which was scheduled to expire in 2041.
A brief history
The existing Power Contract between Québec Hydro-Electric Commission and Churchill Falls (Labrador) Corporation Limited has long been criticized as disproportionately favouring Hydro-Québec with the sale of electricity from Churchill Fall at 0.2 cents per kWh, a rate far below market value. In December 2024, the previous Government of Newfoundland and Labrador signed a Memorandum of Understanding with the Government of Québec and build new generation in Labrador.
After a change in provincial government in October 2025, Premier Wakeham announced work on the 2024 MOU would be suspended until an independent review could take place. The review was completed in April 2026, which underscored a need for additional transmission and electricity supply to support industrial growth in Labrador.
A new Agreement
The 2026 Definitive Cooperation and Implementation Agreement has several additional components than both the 2024 MOU and the 1969 Contract.
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New rates
Hydro-Québec would pay 1.8 cents per kWh beginning in 2027 with the price increasing over time. The rate would rise to roughly 11.5 cents in 2041, with an effective average of about 7.4 cents per kWh over the entire 50-year agreement.
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Extending asset life and new generation
The Churchill Falls Generating Station currently has a 5,428 MW generating capacity. Under the new Agreement, the Station’s 11 units would be replaced over time to extend its operating life and increase its capacity by an estimated 1,275 MW. In total, the Churchill Falls Generating Station’s capacity would become roughly 6,700 MW.
The new Agreement commits to developing the Gull Island Project, which is downstream of Churchill Falls and about 100 km to the southwest of the Town of Happy Valley-Goose Bay. This generating station would provide an additional 2,700 MW of capacity and would come online in 2036-2037. This capacity is larger than what was expected in the 2024 MOU.
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Additional generation being studied
The 2026 Agreement orders feasibility studies to develop 2,000 MW of onshore wind generation in Labrador. The feasibility study will look at costs and commercial arrangements. The federal government would take up to a 40 per cent equity co-interest in the project with the Labrador Innu.
The Agreement also commits to study a new powerhouse at Churchill Falls but avoids specifics.
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New trade for Newfoundland and Labrador
The new Agreement would increase access for Newfoundland and Labrador to sell electricity into other markets through Québec totalling 985 MW if all projects move forward.
– Up to 240 MW of access into New York from Churchill Falls and Gull Island generation (sold at the same price Hydro-Québec receives).
– 200 MW of access into the New England market from Churchill Falls and Gull Island generation (sold at the same price Hydro-Québec receives).
– Up to 280 MW of synthetic exports that would be sold at Ontario or Unites States’ market prices.
– 265 MW of direct transmission from new wind generation and/or Muskrat Falls. -
New transmission across Labrador
In addition to transmission necessary to develop the proposed new generation projects, the federal government will fund a study of the Labrador West Transmission Expansion to enable electricity access and economic development in the Labrador Trough (a world-class mining region across both provinces).
The federal government is also funding electricity planning studies and pre-construction work to support the Kami Iron Mine Partnership’s project, Focus Graphite, and SFP Pointe-Noire’s critical minerals handline capacity.
In total, these projects could provide a net present value of $49 billion (2026 dollars) for Newfoundland and Labrador. The projects are supported by a combined $10 billion in federal funding and investment.
Outstanding questions
It is unclear whether all the proposed generation projects will be developed (and when) after the agreement is finalized. The Churchill Falls updates and Gull Island construction are most certain, and additional wind development seems likely.
It is also unclear how future droughts may impact generation capacity and storage of the two provinces’ future electricity systems, or whether these potential concerns can be offset with additional wind generation.
Premier Wakeham signed the new Agreement without holding a referendum (as promised during the 2025 Newfoundland and Labrador Provincial Election). Instead, the government will debate the Agreement in a special sitting of the House of Assembly on September 14, 2026.
Finally, Québec’s provincial election is scheduled for October 6, 2026, creating uncertainty about whether the next government will continue to support the 2026 Agreement.
Next steps
The immediate priority is to complete the binding project and commercial agreements, including financing, regulatory approvals, construction arrangements and Indigenous engagement. The federal Major Projects Office will help coordinate federal financing and approvals.
The parties aim to finalize these agreements by the end of 2026.
If the Agreement proceeds, the Government and Newfoundland and Labrador has committed a 15 per cent Churchill River Electricity Rebate to residential customers for the first 2,000 kWh used for the duration of the Agreement.
Why this Agreement matters for eastern Canada
The new Agreement has been touted as one of, if not the largest clean energy projects in North American history. It would provide significant clean electricity generation to help supply Québec’s electrification and economic growth for the next five decades, while providing significant new revenues for Newfoundland and Labrador Hydro, the provincial government and the Innu.
Importantly, the Agreement would open new economic development opportunities in Labrador to benefit the region and help support Canada’s trade growth and diversification goals.
Resources
- Government of Newfoundland and Labrador announcement
- Hydro-Québec announcement
- Prime Minister’s Office announcement
- Definitive Cooperation and Implementation Agreement with Newfoundland and Labrador Hydro
- Churchill Falls Independent Review Committee Report
- Newfoundland and Labrador Energy Resource Map
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