Bad deal or injustice? Quebec, N.L. premiers see Churchill Falls differently

ST. JOHN'S, N.L. -

Quebec Premier Francois Legault recognized on Friday that a decades-old hydroelectricity contract that has made his province billions of dollars has become "a bad deal" for Newfoundland and Labrador -- but he stopped short of calling it an injustice.

Legault was in St. John's for talks with Newfoundland and Labrador Premier Andrew Furey about what comes after the notorious 1969 Churchill Falls agreement ends in 2041. The lopsided arrangement between Quebec and Newfoundland and Labrador heavily favours Quebec, and has left a lasting bitterness in Canada's easternmost province.

"I don't want to judge Mr. Smallwood or the people who signed this contract," Legault told reporters, referring to Joey Smallwood, Newfoundland and Labrador's first premier and the man who signed the agreement. "But today, when you look at the price (Quebec pays) and you look at the market price, it became a bad deal for Newfoundland and Labrador."

When pressed again about whether he would call the arrangement "unjust," Legault reiterated, "It's a bad deal."

The agreement allows Quebec's provincially owned hydroelectric utility, Hydro-Quebec, to purchase most of the electricity generated by the Churchill Falls hydroelectric dam in Labrador -- and reap most of the profits. As of 2019, the deal had yielded close to $28 billion in profits to Quebec, and about $2 billion for Newfoundland and Labrador.

The utility pays 0.2 cents per kilowatt hour for Churchill Falls power, a price Furey described on Friday as "essentially free." Hydro-Quebec posted record profits in 2022 -- $4.6 billion -- collected partly by selling cheap power from Churchill Falls.

Earlier this week, Legault said he wanted a "win-win" deal for Quebec and Newfoundland and Labrador -- and even suggested paying the province more for electricity before the deal ends in 2041.

Furey told reporters Friday that he and Legault agreed to assemble teams for "high-level discussions" about what could be changed in the existing contract and what might replace it in 18 years.

Newfoundland and Labrador's premier described the deal differently than Legault did.

"We had talked about the imbalance, the injustice, the perceived injustice, the real injustice, the fiscal injustice of the contract today," Furey said of his discussions with his colleague. He added that Legault recognized the "punitive nature" of the arrangement.

Some in Newfoundland and Labrador, like Pam Frampton, former managing editor at the Telegram newspaper in St. John's, speak of growing up "in the shadow" of Churchill Falls.

"There were always these associated feelings of shame and bitterness, and the feeling that we had been duped," she said in an interview.

Jeff Webb, a historian at Memorial University, says some residents of Newfoundland and Labrador think the province wouldn't have endured the "humiliation" of needing equalization payments from the federal government if the Churchill Falls agreement had more evenly served both provinces.

"It does speak to people's sense that this is something that's always been rightly ours, and it's been stolen," Webb said in a recent interview.

Innu in Quebec and Newfoundland and Labrador have gone to court seeking damages for the destruction they say the dam has wrought in their traditional territory. The Innu of Uashat mak Mani-utenam in Quebec filed a $2.2-billion lawsuit against Hydro-Quebec earlier this year, and the Innu Nation in Labrador sued Hydro-Quebec and Churchill Falls (Labrador) Corp., a subsidiary of Newfoundland and Labrador Hydro, for $4 billion in 2020.

Legault and Furey said Friday they were ready to work with Indigenous groups as talks continue.

"It's important for me and for Andrew (Furey) to have discussions with the Innu people and Indigenous people, and we will do so together," Legault said.

This report by The Canadian Press was first published Feb. 24, 2023.