September 14, 2021
Under the agreement, which is valid until 2041, Hydro-Québec will be able to source electricity from the Labrador 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. For former Newfoundland Premier Danny Williams, the development of Muskrat Falls was never just about hydro generation. It was a matter of sticking to Quebec and correcting the perceived wrongs of the Churchill Falls Treaty. Never again, he swore, would Newfoundlanders allow themselves to be exploited by Quebec. So instead of selling Muskrat Falls` electricity to the most obvious customer – Quebec – the province decided to go it alone with all the inherent risks. It will repatriate power to Newfoundland and fund an underwater transmission line to Nova Scotia. 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 Hydro-Québec was able to secure as favourable an agreement as possible at an opportune time. In 1915, Wilfred Thibaudeau studied the Labrador Plateau, then part of Quebec. He designed a pipe scheme to divert water before arriving at the waterfalls. The project would use the natural capacity of the watershed, which covers more than 23,300 square miles (60,000 km2), eliminating dam construction. The advantage of the site was the waste of the river of more than 300 meters in less than 32 km and the constant supply of water. These results were confirmed by a 1947 survey, but development was not pursued due to the remoteness of the site and the remoteness of the power supply markets.  The rate of 2.0 mills is very low in itself and, if we consider the decline in the purchasing power of silver since the beginning of the century, it is an extremely advantageous interest rate for Hydro-Québec, even at that time.
BRINCO would not be able to benefit from financing for the plant without a guaranteed market for its energy. In 1963, Quebec nationalized all its hydroelectric facilities and proposed to Newfoundland to do the same with the Hamilton Falls project, which Smallwood refused.  BRINCO has studied alternatives to sending electricity to neighbouring Quebec, including sending it to New Brunswick and the federal request for intervention. But the only practical solution was to negotiate an agreement with Quebec. In 1969, after 16 years of attempts to finance the project, BRINCO was in a serious financial situation, while Quebec was inundated with money, which further strengthened Quebec`s negotiating position. Ultimately, BRINCO would sell 90 per cent of the electricity to Hydro Québec at a fixed price, renewable for 40 years for another 25 years. The contract signed in 1969 provided for the sale of approximately 31 billion kilowatt hours per year to Hydro-Québec for a period of 40 years. During these 40 years, the price would be about 3 mills (3 tenths of a cent) per kilowatt-hour in the first 5 years, and then gradually decrease until it is about 2.5 mills in the last 15 years. . .
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