"...Smallwood decided not to bring in the federal government and miraculously a few days later in October 1966 the new Quebec premier Daniel Johnson (Sr.) agreed to the deal proposed by Brinco and Newfoundland. On October 13,1966 the deal was signed formally between Churchill Falls (Labrador) Company and Hydro Quebec. That deal gave Quebec the output of Churchill Falls at the border with no restrictions on Quebec's basic right to resell to its own customers. The price was set for forty years at 2.5 mills per kilowatt-hour initially with the price going down to 2.1 mills over the life of the contract. Later refinements to this deal in 1967 gave Quebec an added twenty-five years of fixed priced power at a mere 2.0 mill rate.... ...In May 1969 the contracts were signed giving Hydro Quebec the unimpeachable right to buy Churchill Falls power at fixed rates for sixty-five years. The Supreme Court of Canada has ruled in recent times that this contract is valid. Quebec sells the power to the Americans and obtains an annual profit ranging from 400-900 million dollars." source
"provide more than 4,000 megawatts of electricity to Hydro-Québec at prices agreed upon in 1969. The price paid to Newfoundland will actually decline greatly as the agreement approaches its expiry date in the year 2041." source
capacity
actual production
"During the period 1975 to 1991 (inclusive) CF(L)Co produced a total of 595 billion kilowatt hours of electricity representing an average annual production of 35 billion kilowatt hours" {http://www.ieee.ca/millennium/churchill/cf_operations.html}
exports
- Electricity: US$832 million (2002 exports) source
- quebec net electricity exports to us: 13232 GWh 1999 source
the paper
Churchill Falls, now part of the province of Newfoundland and Labrador, was recognized for its hydroelectric potential earlier than 1900{http://www.heritage.nf.ca/society/electrifying_labrador.html}, although its remoteness and complexity prevented development. Help from Quebec would clearly be needed to do so, and real efforts began in the 1950s. Agreements with Hydro Quebec occurred in the 1960s, with the first power being generated at the end of 1971.
While there had been plans to make the project a federal one, this never occurred. The agreements were incredibly one-sided. Essentially all of the electricity went to Quebec, and the price was set initially to 2.5 mills (a mill is $0.001 per kilowatt hour), decreasing to 2 mills {http://www.barrystagg.com/n-nov96.htm}. The long-term contract is up for "automatic renewal" in 2016, for another 25 years{http://www.ucs.mun.ca/~feehan/CF.pdf}.
"Even in the late 1960s, a price of 2 mills was extraordinarily low and not achievable from any new energy source then available to Hydro-Quebec... ...A price of electricity of 2 mills in 2017 with that price fixed until close to the end of 2041 is barely distinguishable from being free"{http://www.ucs.mun.ca/~feehan/CF.pdf again}. The figure at right depicts how distorted the contracted price is from reality today. Quebec happends to generate surplus electricity, and sells much of it to the United States. As the diagram shows, in 2003 Quebec was purchasing at 2 mills and exporting at 84.9. "
Since the amount of electricity involved is approximately 30 million megawatt hours annually, the potential gap between the value of the power and the amount paid to CFLCo was already roughly $1 billion a year by 2004 and rising. If current trends in energy prices continue, that annual gap is likely to be in the billions of dollars by 2017." {again}
need to adjust these for inflation
1961: contract proposal of 3.5 mills initially... 3.1 seen as best price from other sources
64: US price likely to be 5 mills
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