Inquiry hears of Quebec-NL tensions over Churchill River energy

HAPPY VALLEY-GOOSE BAY, NL — The Muskrat Falls inquiry has been told that Quebec’s hold on the Churchill River’s resources has long blocked Newfoundland and Labrador from accessing elusive energy markets.

Historian Jason Churchill was an expert witness Wednesday at the independent inquiry into the cost and schedule overruns of the $12.7 billion Labrador dam, led by provincial Supreme Court Justice Richard LeBlanc.

Churchill presented a report on the political struggle over the river’s hydro energy resources from 1949 through 2007, and the province’s attempts to sign agreements to export and sell Labrador’s valuable energy resources.

“The expression ‘the more things change the more they stay the same’ encapsulates the overall theme of negotiations to develop the Churchill River’s hydroelectric potential,” Churchill’s report reads. “The geographic isolation of Labrador’s hydroelectric resources has dominated discussions from Confederation.”

Churchill spoke to the tense relationship between Newfoundland and Labrador and Quebec, stemming from the notoriously lopsided 1969 Churchill Falls deal, which has generated more than $27.5-billion for Hydro-Quebec and about $2-billion for Newfoundland and Labrador to date.

According to Churchill’s paper, Quebec’s firm position set the tone for future negotiations, referring to former premier Jean Lesage’s 1965 comments that any electricity passing through Quebec territory would “become property of Hydro-Quebec.”

Churchill concluded that while political actors and tactics changed over the six decades he studied, Quebec’s hold over the river’s resources constrained Newfoundland and Labrador, informing former premier Danny Williams’ 2007 energy plan for the future of the province.

Williams’ plan, titled “Focusing Our Energy,” took an optimistic tone, suggesting that the province had reached a watershed moment and was on the cusp of prosperity. Williams retired from politics shortly after announcing the plan for Muskrat Falls in 2010.

The project was fairly well received at the time because the subsea cables suggested access to other Canadian and U.S. markets that had previously been blocked by Quebec.

Since then, the project has essentially doubled in cost, and ratepayers in the small province of 530,000 are concerned at the prospect of footing the sizable bill if outside markets don’t purchase the excess power.

Churchill wrote that the Labrador-Island transmission link “has added a new wrinkle to the established narrative” by offering an alternative to transmitting through Quebec.

“Time will tell if it means that things have changed utterly, or if the goals of Newfoundland and Labrador premiers since Confederation to have the province reap the full rewards of the Churchill River’s hydroelectric resources will remain elusive,” Churchill’s report read.

Stan Marshall, the current CEO of Nalcor Energy, the provincial Crown corporation overseeing Muskrat Falls, took the stand to offer a detailed update on the construction process to date.

Marshall, who has famously called the project a “boondoggle,” said the main construction components are mostly complete, pending final touches this year on the north dam, installation of turbines and further work on the dam’s intake and tailrace gates.

Marshall said Nalcor is planning for full power from Muskrat Falls to be online by 2020.