Province will receive increased benefits from Upper Churchill power
Premier Brian Tobin today announced the boards of Newfoundland and Labrador Hydro and Hydro-Quebec have ratified the Guaranteed Winter Availability Contract (GWAC) and Churchill Falls (Labrador) Corporation (CF(L)Co.) Shareholders' Agreement, signed by the utilities last month.
"The ratification of these agreements by Hydro-Quebec's Board of Directors solidifies the utility's commitment to the Churchill River Power Project," said Premier Tobin.
Under the GWAC, the existing Churchill Falls plant will operate at full capacity from November 1 to March 31 each year to provide 682 MW to Hydro-Quebec. In return, CF(L)Co.'s financial viability will be ensured, with revenues increasing, on average, $34 million per year, of which the province will receive $23 million.
For the first season (November 1, 1998 through March 31, 1999) CF(L) Co. will receive about $3.4 million in additional revenue. This revenue will escalate to $34 million in 2008/2009, and increase by one per cent annually thereafter.
"In total, GWAC will provide about $1 billion from Upper Churchill power for Newfoundland and Labrador over the next 40 years C a very significant increase over what the province would otherwise receive," added Tobin.
In addition to GWAC, a Shareholders' Agreement was put in place to clarify each shareholder's rights. The agreement gives 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. This ensures Newfoundland and Labrador never loses control of CF(L)Co.
"These agreements represent the successful conclusion of another step in the negotiations with Hydro-Quebec relating to the Labrador Hydro Project," said Mines and Energy Minister Roger Grimes. "The Project has been evolving since March 1998."
The project will be reconfigured to involve increasing the utilization rate at the existing Churchill Falls powerhouse to 80 per cent from 70 per cent, thereby maximizing the potential of current infrastructure, and partially diverting only the Romaine River into the Smallwood Reservoir. Engineering studies were also favorable for the development of Muskrat Falls, and a decision about this component will be made in the coming months. Work continues with the federal government on the "Infeed" component of the project.
"These changes will make for a better deal overall as a result of a reduction in capital costs and increased profits for Newfoundland and Labrador," said Grimes. "The $10 billion project will still be the largest in Canada, and Newfoundlanders and Labradorians will still enjoy significant job opportunities and related spin-off benefits."
The Churchill River Power Project is a joint initiative of the provinces of Newfoundland and Labrador and Québec and their respective hydroelectric utilities.
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1999 06 18 3:40 p.m.