1969 Churchill Falls Agreement

Unfortunately, the Supreme Court`s decision did not remove deep financial and psychological scars. Newfoundland made a mistake once and not knowing it by accepting the 1969 treaty. And it doubled a generation later, blindly advancing the muskrat Falls high-risk megaproject on the Lower Churchill River, which is set to begin producing hydro in 2020. For the third time on Friday, the Supreme Court of Canada upheld a controversial 1969 treaty that sells massive amounts of Churchill Falls hydroelectricity to Quebec, with a relatively small profit for Newfoundland and Labrador. Hydro-Québec purchased electricity from Churchill Falls at 1969 prices and sold it at 1996 prices. Under the agreement, this will continue for another 45 years. The windfall gains for Hydro-Québec are immense. And ruthless. Until the autumn of 1966, the parties had agreed on a 21-page memorandum of understanding. Hydro-Québec officials signed it on October 13, 1966, as did representatives of CFLCo. The letter that Hydro-Québec would have the right to purchase almost all of the energy on an intake or payment basis seems to have been quite satisfactory to both parties. Certainly, Hydro-Québec was satisfied with the conditions. Its general manager, Robert Boyd, indicated in a letter to Hydro-Québec commissioners on September 22, 1966, that the costs were lower than those of any other source, including nuclear, that Hydro-Québec could support.

Towards the end of that letter, he wrote that, under the agreement, which is valid until 2041, Hydro-Québec can source electricity from the Labrador central plant. The distribution company had successfully argued that the agreement was valid because it had assumed all the costs and risks associated with the project when the contract was signed. Renegotiation of the Churchill Falls agreement to fundamentally rebalance the distribution of benefits. Not a small path. That is what we need. Keeping CF(L)Co`s head afloat won`t do that. It would not solve the fundamental injustice that is at the heart of the agreement. Newfoundland and Labrador, in their long-standing struggle with Hydro-Québec, secured a rare victory over a 50-year-old agreement on the sale of Churchill Falls electricity, a long-standing source of litigation for the province. Within 30 days of signing the mou, CFLCo had recalled the workers to the site. (Some work had been completed earlier at times when agreements were imminent.) Before the end of the year, the company also began structuring the final electricity contract on the basis of the Memorandum of Understanding. In March 1967, CFLCo provided for a timetable that would lead to an electricity contract until 31 October of the same year.

While waiting for this contract, CFLCo began with a vast and expensive construction program to meet Hydro-Québec`s requirement that the first power be available in 1972. . .