Questions and Answers
Why was the Expert Panel formed?
The formation of the Panel was a recommendation by the Muskrat Falls Commission of Inquiry. The purpose of the Panel is to help prepare the government of Newfoundland and Labrador for when the current Churchill Falls power supply agreement with Hydro Quebec expires in 2041. The Panel will recommend various approaches and ideas for government to ensure that Newfoundland and Labrador receives benefits from its assets on the Churchill River.
How were members of the Panel selected?
As recommended by the Muskrat Falls Commission of Inquiry, the Panel is made up of experts in energy development and resource management. Each member brings a unique set of expertise to the table, including expertise in environmental management and natural resources development. The Innu Nation, Nunatsiavut Government, and NunatuKavut Community Council each have a representative on the Panel. The Panel is chaired by Karl Smith.
Each Panel member was required to sign a non-disclosure agreement.
What will happen after the Panel concludes its work?
The Panel will provide advice on possible approaches to the Government of Newfoundland and Labrador, which will then evaluate the recommendations and determine the next steps. It is too early to say what might come next and that could very well depend on the specific recommendations by the Panel. The provincial government and the Panel are committed to taking whatever steps are needed to ensure the province benefits from its assets on the Churchill River.
Will the Panel’s findings be made public?
The Panel is committed to publishing as much of its findings as possible. Because the Panel’s work could have implications for future commercial negotiations with any number of parties, some information can not be made public. Any information that is kept confidential will be done so in the best interest of the province, and to ensure we do no not compromise any negotiating position of Newfoundland and Labrador as we approach 2041.
Is there a way for the public to engage with the Panel?
You can engage with the Panel by contacting the [email protected] email address.
What is the difference between this Expert Panel and the Churchill River Energy Analysis Team? Will the two groups work together?
The Churchill River Energy Analysis Team (CREAT) was created by the Government of Newfoundland and Labrador in the winter of 2022. CREAT has been given the mandate of undertaking a detailed analysis of the hydro-electric opportunities that exist on the Churchill River. This includes detailed forecasting of electricity prices, potential capital costs, energy trends, and other relevant factors that could affect the potential value that could be achieved from the Churchill River.
The work of CREAT will help strengthen Newfoundland and Labrador’s negotiating position in advance of 2041. The Team will be supported by officials from the Government of Newfoundland and Labrador with experience in finance, legal, electricity and intergovernmental relations; Newfoundland and Labrador Hydro officials with knowledge about the opportunities on the Churchill River; and other government officials or NL Hydro resources as requested by the Team Lead.
While the Panel and CREAT are not working directly together, some support members are common to both teams. Further, the work completed by CREAT will be provided to the Churchill River Management Expert Panel to help inform their eventual recommendations to the Government of Newfoundland and Labrador.
2041 is 19 years away. Why is it so important that the Panel do this work now?
19 years might seem like a long time away but when it comes to utility planning, it’s right around the corner. Utilities, like Newfoundland and Labrador Hydro, plan 10, 20, or 30 years out from the current day. It’s important that the Panel begin this work now so that the Government of Newfoundland and Labrador and Newfoundland and Labrador Hydro can adequately plan for the long term.
What type of ideas will the Panel consider during its work?
The Panel will consider multiple options regarding the future of the assets on the Churchill River. This includes examining the potential for transmitting power generated from the Churchill River to new provincial customers, to customers beyond our provincial borders, and for renewed supply to customers in Quebec. This work will inform the pros and cons of various options available for consideration. These are just some examples of the options surrounding the river that will be considered by the Panel in order to help enhance the negotiating position of the province in 2041.
Does this mean that Newfoundland and Labrador will finally receive maximum benefits from the Churchill Falls generating station?
The Province has the constitutional authority to regulate its natural resources. The aim of the Panel is to explore and provide advice on the best approaches that ensure that Newfoundland and Labrador benefits from its assets on the Churchill River.
Who Owns Churchill Falls?
The Churchill Falls Generating Station, the corresponding transmission assets in Labrador, and the town itself is owned and operated by Churchill Falls (Labrador) Corporation (CF(L)Co). CF(L)Co is jointly owned by Newfoundland and Labrador Hydro (a crown corporation owned by the Government of Newfoundland and Labrador) and Hydro Quebec with 65.8% and 34.2% ownership, respectively.
Did Hydro Quebec always own part of CF(L)Co?
Yes, Hydro Quebec has maintained an ownership interest in CF(L)Co since the original 1969 Power Contract was signed, before the generating station was constructed.
Why is power from Churchill Falls sold to Hydro Quebec?
The Power Contract, dated May 12, 1969, provided for the development of the Churchill Falls Plant and sale of power to Hydro Quebec. Over the entire initial term of this contract, Hydro Quebec purchased on average approximately 30 terawatt-hours of energy annually, about 90% of the total output of Churchill Falls. Power sold under this contract was priced below 0.3 cents per kilowatt hour.
This contract ended in 2016 however, it was automatically renewed for an additional 25-years at a price of 0.2 cents per kWh. This renewal expires on August 31, 2041.
Are there any other contracts in place with Hydro Quebec regarding Churchill Falls?
Yes, in 1999 Newfoundland and Labrador Hydro and Hydro Quebec entered into the Guaranteed Winter Availability Contract (GWAC) and Churchill Falls (Labrador) Corporation (CF(L)Co.) Shareholders’ Agreement.
Under the GWAC, the existing Churchill Falls plant operates at full capacity from November 1 to March 31 each year to provide an additional 682 MW to Hydro-Quebec. In return, CF(L)Co.’s receives increased revenues averaging approximately $34 million per year.
In addition to GWAC, a Shareholders’ Agreement was put in place at the same time to clarify each shareholder’s rights. The agreement gave Newfoundland and Labrador Hydro the same right as Hydro-Quebec to inject cash into CF(L)Co. in return for shares if cash deficiencies exist.