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December 23, 1998
(Executive Council)


Province receives first installment of $27 million on recall of Upper Churchill power

Premier Brian Tobin announced today that the province has received its first installment of $27 million for the resale of 130 mw of Upper Churchill power to Hydro-Quebec. As part of the March 9 announcement this year by Newfoundland and Labrador and Quebec concerning further development of the Churchill River system, the three year required notice for recall of the remaining 130 mw of power was waived, allowing Newfoundland and Labrador Hydro to recall the power and sell it to Hydro Quebec at current market value.

Newfoundland and Labrador Hydro, through CF(L)Co., began selling this power and energy at current market values to Hydro Quebec effective March 1998. Prior to this new arrangement to access the remaining recall, Newfoundland and Labrador Hydro was required to use any recall power within Newfoundland and Labrador. In practice, this meant that the province could not use the power. Now it has the flexibility of selling the power outside the province, or using it within the province, when it is needed.

"We are pleased to see the first of many installments for the sale of this Upper Churchill power to Quebec," said the premier. "In fact, this $27 million in revenue to the province is more than twice as much as we received from the sale of Upper Churchill power through CF(L)Co. dividends and royalties in 1997. Our province will receive about $600 million from the sale of this recall power over the life of the Churchill Falls contract."

The premier said the sale is part of the overall framework agreed to by Newfoundland and Labrador and Quebec for further development of the Churchill River system in Labrador. He said the benefits of waiving the 130 mw recall go directly to the people of our province from the sale of this power at current market rates, until the power is needed in our province.

On March 9, arrangements were also made for Hydro Quebec to enter into a Guaranteed Winter Availability Contract with CF(L)Co. for extra peak season generating capacity from November 1 through March 31, starting November 1, 1998. The sale of this capacity will result in additional revenues to the province of about $1 billion by the time the contract expires in 2041 (at the same time as the Upper Churchill Power contract expires). This equates to average revenues to Newfoundlanders and Labradorians in the order of a further $23 million annually.

Newfoundland and Labrador Hydro and Hydro Quebec are continuing negotiations on development of the Churchill River system.

Media contact: Karen McCarthy, (709) 737-1823.

1998 12 23                                      12:00 p.m.


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