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New agreement worked out to replace 2024 Churchill Falls MOU
By Gary Kean
A new deal to develop electricity projects on the Churchill River in Labrador will generate 2,750 megawatts of new power and is promising $13 billion more for Newfoundland and Labrador than an agreement reached in 2024.
The latest power pact between Newfoundland and Labrador Hydro and Hydro Quebec effectively replaces the memorandum of understanding from two years ago.
The deal was announced and signed in St. John’s on Monday.
The agreement is also promising better value for Newfoundland and Labrador than the 2024 MOU, which itself had been set as the basis of a final deal to replace the infamous 1969 Churchill Falls contract signed between the two provinces.
The ‘69 deal sold hydroelectric power generated at Churchill Falls to Quebec at below market value. Quebec has made billions of dollars of profit off that deal, which is not set to expire until 2041.
However, negotiations have been ongoing in recent years to right what has been perceived as a historic wrong in Newfoundland and Labrador.
The 2024 MOU, which was negotiated under former Liberal premier Andrew Furey’s administration, was dead in the water after Newfoundland and Labrador voted in Tony Wakeham’s Progressive Conservatives in the fall of 2025.
Wakeham had campaigned on getting a better Churchill Falls agreement and even promised to hold a referendum on any deal that his government worked out with Quebec. However, on Monday, Wakeham said the referendum is off in favour of a special sitting of the House of Assembly to commence on Sept. 14, in which MHAs will be able to “scrutinize the deal on behalf of their constituents.”
Quebec also has a new premier since the 2024 MOU, with Christine Fréchette taking over leadership of Coalition Avenir Québec in April 2026 and succeeding former premier François Legault.
Fréchette and the CAQ will seek to maintain power in Quebec’s general election in the October 2026, but trail the Parti Québécois in the polls.
THE DETAILS
The new agreement resets the value of the project for Newfoundland and Labrador from $36 billion in the previous MOU to $49 billion in 2026 net present value.
In what is being touted as the largest clean energy investment in North American history – with more than $50 billion in capital spending in Newfoundland and Labrador – the deal involves a suite of new hydro, wind and transmission developments.
Whereas the previous MOU featured 1990 megawatts of power from upgrades to the existing Churchill Falls power plant, a new generating facility at Churchill Falls and development of a new plant at Gull Island on the Lower Churchill River, the revised deal promises 2,350 megawatts of new hydro power.
That supply of hydroelectric power will come from upgrading the existing Churchill Falls plant and also increasing generation from the proposed Gull island project.
Building a new plant at Churchill Falls is not part of the new plan.
Also new are plans to add an additional 400 megawatts from a wind power project, bringing the total amount of new power to be generated to 2,750 megawatts.
The 50-year deal includes opportunities for Labrador Innu to participate in new transmission and wind assets in Labrador.
The announcement also introduced the concept of a Labrador Trough Clean Power Critical Minerals and Infrastructure Corridor. The Labrador Trough refers to a roughly 1,100-kilometre geological belt rich in mineral resources that stretches across Labrador and Quebec.
The corridor idea would be an economically transformative strategy that would promote critical mineral and industrial development and bring Canadian resources to market.
The new agreement is promising more power and transmission before 2041 to serve Labrador mining and industry needs.
There is a higher effective price of 7.4 cents a kilowatt hour in 2027 for Churchill Falls electricity sold to Quebec. The previous MOU had the price set at 5.9 cents, compared to 0.2 cents in the 1969 contract.
It also includes a straightforward pricing model for the Churchill Falls contract, with built-in escalation and further price increases if inflation is higher than expected.
The new deal also features a 985-megawatt transmission portfolio Newfoundland and Labrador can sell into the United States markets.
FEDERAL SUPPORT
While the new deal is between the two provincial utilities, the federal government is helping move the projects along to the tune of $3.5 billion through financial support, investments and tax credits/equivalent supports.
Canada will provide $1 billion for the Labrador West Transmission component of the project, $1 billion to NL for the wind development project, and $1.5 billion for the Gull Island, Churchill Falls upgrades and NL transmission components.
The federal government will also be guaranteeing Gull Island debt, providing support for the Innu Nation and may provide further support from the federal Major Projects Office.
Negotiators plan to take a breather, but will soon be back to work on figuring out a finalized deal, which they expect to have completed by the end of 2026.
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