The 1969 Power Contract Story (short version)
From the SCC Water Rights reversion decision
As amazing as it seems, very few people in Newfoundland and Labrador know how the 1969 Power Contract came about.
They can talk about ti a lot. They get angry about it. But they cannot explain it even in the most simple terms.
Take Andrew Furey for example. He’s been around for 40 odd years. Comes from a political family. Has been Premier for the better part of three years. And has had a few briefings by now on the who business, especially since there are big negotiations coming along any day now with Quebec about what will happen when the contract expires.
He told David Herle recently that “this deal was done between Joey Smallwood - that's how far back we're going - and the Quebec government um in the 1960s and it extended the development of a massive hydroelectric project over 5000 megawatts in Labrador uh for export uh through Quebec into the northeastern seaboard largely. The problem with the deal - anyone can do a deal - the problem with the deal was it was guaranteed fixed fixed rate so it was a cheap rate even for the early 70s, 0.2 cents a kilowatt hour. 0.2 cents !”
Not true. Not even close.
Even in that simple version, Furey screwed up who was involved in the talks: it was Hydro Quebec and a company owned by a private group of investors, a smaller chunk by Hydro-Quebec, and an even smaller part by the Government of Newfoundland and Labrador.
So, not Joe Smallwood.
The plant was about 5,500 megawatts of installed generation. A minor point, but still.
While there were attempts by one partner - Hydro-Quebec - to sell the power into New England on behalf of the company, they couldn’t get it to the US at a price American customers would buy. So they went with a plan to sell the power to Hydro-Quebec,m which was always part of the plan.
The final deal was for 45 years of power at 0.4 cents a kilowatt hour, a price that was normal and fair *at the time*. It just didn’t have an escalator clause. Then again, most of the long-term contracts at the time didn’t.
The number Furey used was the current price, which is 0.2 cents but that only started in 2016.
He neglected to point out that Newfoundland and Labrador has been the majority shareholder in CF(L)Co these days *and* that we get the power at the same rate to feed Labrador and to sell into the Untied States.
The actual story has been in public for decades. Here’s a summary from the Supreme Court of Canada decision on the Water Rights Reversion Act from the early 1980s. The only change made here has been to break up some of the paragraphs into smaller bits. We’ll did out some other summaries like this and offer them up over the next few weeks to help you get as clear a picture as possible of the background to this story.
This one takes you to 1980ish and sets up the case the SCC had to decide.
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