John Ivison: Churchill Falls deal will outlast any damage Trump inflicts

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The most important thing happening in Canada this week is not the threat of 50 per cent tariffs on US$20 billion of this country’s products by President Donald Trump.

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Rather, according to Prime Minister Mark Carney, the most consequential event was Monday’s announcement in St. John’s, N.L., of a multi-billion-dollar clean energy deal with Quebec that will see a tripling of the generating capacity of the Churchill Falls hydro-electric project. The additional power generated by the expansion would be enough power to light, heat and cool Toronto, Montreal and Vancouver combined, Carney said.

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The deal replaces the notorious 1969 Churchill Falls power contract that heavily favoured Hydro-Quebec at the expense of Newfoundland and Labrador. It will see the average rate paid per kilowatt hour rise from 0.2 cents to around 6 cents.

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The benefit for Quebec is that it secures additional clean power for the province until 2077. Even allowing for the price increase, Hydro Québec will still be paying much less than any alternative source of power, Premier Christine Fréchette said.

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Quebec runs on cheap hydro and the deal guarantees predictable, stable energy for the next 50 years. The 10,000 MW provided for by the deal is more than one-quarter of Hydro-Québec’s current output.

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In that sense, Carney is right — it is historic in ending nearly 60 years of enmity between the provinces and offers increased economic development opportunities for both.

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The deal was stalled until the federal government stepped forward with $10 billion in financing. Ottawa will expand the Churchill Falls plant; construct a transmission line to the Labrador West mining trough; support the construction of a new dam at Gull Island; build a 2,000 MW onshore wind energy project; and refer the whole series of interlocking investments to the Major Projects Office to coordinate funding and accelerate permitting.

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It appears to be no coincidence that Carney, Fréchette and Newfoundland and Labrador Premier Tony Wakeham stood shoulder to shoulder to make the announcement two days before Trump’s new tariffs were due to land.

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Wakeham said that the deal would not have reached fruition without Carney’s leadership. “You helped bridge the gap between the two sides,” he said. “This is a partnership between two provinces and a federal government that is dreaming big for Canada and executing big for Canada. That, sir, will be your legacy and I’m proud to be a partner in it.”

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Fréchette acknowledged that a Parti Québécois government could tear up the agreement after October’s election. “But where will they get 10,000 MW of power, and at what cost?” she said.

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The veracity of the claim that this is a “win-win-win” deal is debatable — it involves huge federal investments and it will be years before taxpayers see any return.

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But it is absolutely the kind of “nation-building investment” that Carney promised when he sought election last year. “We are giving ourselves more than any other nation can take away,” he said.