We’re heading toward another Churchill Falls disaster, and we’ve been warned

In December 2024, as most of us were heading into the holiday season, Premier Andrew Furey engaged in the great theatrical fanfare of tearing up the 1969 Churchill Falls agreement and announced a new non-binding memorandum of understanding had been reached with Québec. 

The Liberals followed this up with a $300,000 advertising campaign over the holiday season, using our own money to tell us what an excellent deal they had struck. The original Churchill Falls agreement is the stuff of legend in provincial politics, famous for its failure to secure an escalating price agreement, and for its 40-year length, with an automatic renewal for another 25 years. This allowed Québec to reap most of the benefits from what was, at the time, one of the largest hydroelectric projects in the world.

Last January, after three days of intense debate in the House of Assembly, the Liberals gained enough support in the legislature to appoint an “independent” three-person panel chaired by NL Consumer Advocate Dennis Browne and two other individuals approved by Browne. On Jan. 27 the province announced that, joining Browne on the Independent Churchill River Oversight Panel’s (ICROP), were power industry consultant Douglas Bowman, and chartered accountant Michael Wilson, an entrepreneur and former Ernst & Young executive.

Wilson bows out

In May 2025, Wilson quietly resigned from the panel, a significant development Newfoundlanders and Labradorians only learned about in early September when news outlet AllNewfoundlandLabrador broke the story.

Wilson’s resignation letter was heavily redacted and he declined interview requests from media, but in August he released a document entitled MOU – It’s All About the Price! in which Wilson says he believed “the independence of the Panel became impaired.”

He provided an analysis of the MOU, which concluded the deal could be significantly improved. 

Wilson has since said he aired his concerns with Browne prior to submitting his resignation letter to the Clerk of Executive Council. In both cases, he says, his views were ignored. 

Problems with the MOU

Among the key terms of the MOU is Hydro-Québec’s commitment to develop a new generating station at Gull Island on the Lower Churchill River, 40 per cent of which would belong to the Québec utility. Wilson argues Gull Island is “the most valuable undeveloped resource in the province,” and that there’s been no independent valuation of the asset shared with the public.

The value of such an asset owned by provincial taxpayers is not something to be guessed at during negotiations but rather set through a process of professional appraisal. This important exercise should be a regular part of any sensible attempt at due diligence. Done professionally, the value can be justified with comparison to similar assets, with consideration given to shifts in the marketplace. According to Wilson, this transaction alone requires significant scrutiny.

Wilson also questions the justification for selling existing Churchill Falls power to Hydro-Québec “at a ‘price’ at least 50% lower than the current replacement ‘cost.’” Again, the process of valuation is unclear. How were these prices and costs established? It seems that no data has been presented to the public on how price, cost, and value have been set as part of the terms of the MOU. Our provincial leaders have not done a proper assessment to protect our interests. 

“Cost estimates for the new development and the projected price to be paid by HQ for [Gull Island] power are not included in the MOU, so it would appear these key terms are to be negotiated prior to the execution of the final contracts,” Wilson continues in his letter, further showing us that key questions remain answered despite the province having announced the agreement with such fanfare. Certainly, such information should be reviewed and analyzed by the oversight panel and reported to the public.

Official opposition energy critic Lloyd Parrott has written to Premier Hogan asking for the release of Wilson’s unredacted letter of resignation. Notably, Wilson has also suggested Browne do the same so the public can make an informed decision.  

Given the importance of this agreement on a national scale, our leaders would be foolish to underestimate its value to Québec and the federal government. Hydroelectric development is clearly a federal priority, as signaled by Prime Minister Mark Carney’s appointment of former Hydro-Québec CEO Michael Sabia as his Clerk of the Privy Council. The Gull Island project is also on Carney’s list of “nation building projects” that could be fast-tracked. 

Electricity will be to this century what fossil fuels were to the last century, in a world of business interests that plan to “electrify everything”. The International Energy Agency’s World Energy Outlook 2024 says “clean energy momentum remains strong enough to bring a peak in demand for each of the fossil fuels by 2030.” It also notes that “electricity use has grown at twice the pace of overall energy demand over the last decade,” and that “electricity demand growth is set to accelerate further in the years ahead, adding the equivalent of Japanese demand to global electricity use each year.”

As far back as 2021, CarbonTracker.org recognized the fossil fuel sector was undergoing a process of “spiralling disruptions” in which renewable energy would eventually overtake fossil fuels as the world’s main source of energy. 

These types of economic projections are at least part of the reason Québec is moving so quickly to secure this resource. That the world is moving away from fossil fuels makes it even more critical to get this deal with Hydro-Québec right, since Newfoundland and Labrador is soon likely to find itself without oil revenues as the world approaches peak oil. This future has been noted by journalists and scholars alike.

Propaganda abounds

Local businessperson Mark Dobbin has called the MOU a “once in a generation opportunity.” He fears Québec will go elsewhere, leaving Newfoundland and Labrador with “the possibility that the asset will be stranded because technology is advancing.” Dobbin says other energy sources like wind, solar, grid-scale batteries and nuclear are “coming on strong,” and that our province “could be left with nothing at the end of the day but a beautiful river with water flowing through it.” Notably, Dobbin also favoured Muskrat Falls. 

But he misses many key points here. It’s precisely because wind, solar, and batteries (renewables) are coming on strong that the rest of Canada, and the United States, needs hydroelectricity that could be produced on the Churchill River. Hydroelectricity and battery storage guard against the intermittent nature of wind and solar power. Wind doesn’t always blow and the sun doesn’t always shine, but you can hold generating capacity in dams and hydroelectricity in batteries. There are powerful interests investing billions in doing just that. 

Artificial intelligence and data centres are expected to continue growing and creating more demand for energy, according to the International Energy Agency. So demand for electricity is going nowhere and our hydroelectric potential is likely to become more valuable as that demand increases. 

Wilson is just the latest person to speak out on the process around NL and Québec’s MOU, though he is the most inside person and one of the most financially-literate people to speak out so far. Others come from across disciplines and the political spectrum. 

On Aug. 28, former political leaders from all three parties said they view the deal as another “giveaway.” Former Premier Brian Peckford has urged Newfoundland and Labrador Hydro to “scrap the deal.” 

Meanwhile, former head of the Economics Department at Memorial University Wade Lock chimed in earlier this year, saying “the MOU document lacks sufficient details needed to demonstrate that the deal or the contract that is expected to ensue from this MOU is better than the 1969 contract.” 

A group of four individuals who have spent their lives engaged in public policy-making in the province warned in a letter to the editor last month that we are ignoring the lessons of Muskrat Falls, and the usual critics at the Uncle Gnarly blog have been actively speaking out against the MOU. Our province would have been better off if we had all listened to them on Muskrat Falls. 

Last week, Newfoundland and Labrador Hydro CEO Jennifer Williams said we have to “push back against a culture of ‘no.’” As a historian of extractive industries in this province, I have no idea what she’s talking about. What exactly have we said no to? The destruction of our fishery? The first Churchill Falls deal? Sprung Greenhouse? Some of the lowest oil royalty rates in Canada? Muskrat Falls? Isn’t the problem that our leaders always say ‘yes’ too fast, fail to do their due diligence, and undervalue our assets in pursuit of a quick announcement before an election? That they put national interests ahead of our provincial interests, as has always been done with our fishery? 

As we head into another provincial election, we’re on the verge of allowing history to repeat itself. Another Liberal government is planning on delivering our assets to Québec, as our people receive minimal benefits, while going deeper into debt. 

We will continue to be told we’re going to the rest of Canada, cap in hand, asking for more handouts, and that we’re a drain on the country. 

It’s time for us to consider that Newfoundland and Labrador is not a “have-not” province. The truth is, we’re a province that is continually looted by outside jurisdictions and corporations, as the best jobs and benefits go elsewhere. 

Now we’re on the verge of being looted again.