N.L. Hydro ‘taken to the cleaners’ on Churchill Falls MOU, says former CEO

Newfoundland and Labrador Hydro, a Crown corporation, has recently come under fire for its new memorandum of understanding with Hydro-Québec regarding Churchill Falls power. Bill Wells, a former CEO of N.L. Hydro, believes that the province is being shortchanged by Hydro-Québec and should have negotiated for tens of billions more in revenue.

Wells argues that the replacement cost of power production is a key metric that should have been considered in the negotiations. The new MOU sets the price for power at the existing Churchill Falls plant at a rate that steadily increases over the years. However, Wells points out that Hydro-Québec has stated that the cost of producing electricity at alternative projects falls between 13 and 16 cents per kilowatt hour. He believes that Newfoundland and Labrador could have demanded a higher price for their power.

On the other hand, Jennifer Williams, the current CEO of N.L. Hydro, defends the MOU as a fair deal that maximizes value for both provinces. She emphasizes that the agreement will bring significant revenue to Newfoundland and Labrador over the next 50 years. Williams dismisses Wells’ criticisms and states that the agreement is the best possible deal for the province.

Critics of the MOU, including Wells, have raised concerns about the escalator clause, which will determine the rate at which the price of power increases over the years. They worry that factors such as market prices and replacement costs may be unpredictable. However, Williams assures that the deal includes safeguards to protect the province’s interests and ensure substantial returns.

Overall, the debate over the Churchill Falls MOU highlights the complex negotiations involved in securing long-term energy agreements. While some believe that Newfoundland and Labrador could have demanded more from Hydro-Québec, others argue that the current deal is fair and beneficial for both provinces. As the agreement is finalized, it will be interesting to see how the long-term implications play out for the energy industry in the region.