Q&A: Tony Wakeham on the new Churchill Falls deal and how N.L. gets less money up front

On Monday, N.L. Premier Tony Wakeham stood alongside Quebec Premier Christine Fréchette and Prime Minister Mark Carney to announce a new Churchill Falls agreement. 

This agreement replaces a memorandum of understanding (MOU) that was signed in 2024, with what Wakeham called a better deal for the province. 

Wakeham touts this new agreement as giving the province more money, electricity and control. But how did N.L. negotiate these changes with Quebec and what were the trade offs? 

The CBC’s Carolyn Stokes sat down with Wakeham on Wednesday to ask.

This interview has been edited for length and clarity. 

Carolyn Stokes: We've been hearing a lot about the good parts of this deal, but not a lot about the trade-offs…[In the 2024 MOU] there were retroactive payments starting in 2025. This one doesn't start until 2027. And between now and the end of 2030, the province will get $870 million less than the old deal. So less money up front, at a time when we really need it. Can you explain, is it worth it to sacrifice that now? 

Tony Wakeham: Absolutely. I think what you have to do is look at the total value of what has been achieved here. Because we … gave a mandate to our negotiating team: more value, more power, more transmission. We’ve succeeded in all three. 

And when you compare the net present value of the old deal, at $36 billion compared to $49 billion right now. When we talk about cash, [before it was] $225 billion over the life of the contract, and now that's increased to $273 billion…because it isn't just about now, it has to be about the future.

Prices now tied to inflation

The previous deal tied the selling price for power to the market — market based prices. But, this deal is different because it's tied to inflation — the Consumer Price Index — and that could be significantly less than the market going forward… A fixed price like that…it kind of feels like we may be making the same mistake of the past. 

Well, all I can say is if you look at the total value of what we've achieved, we have more value. We have more money … And we're following the recommendations, what financial people are telling us is how we should account for that. And we do have an inflation factor built in. If inflation goes above two per cent, there will be adjustments to it. 

But, I look at it in totality of what we're able to achieve here and that's exactly what we have done … A significant amount, billions of dollars more in revenue, more power that we will now be able to use to develop our own industries — and that is not even factored into these numbers. 

When you think about the opportunities, new industry it can create, new royalties the new industry will create, the new jobs, the new taxes, and that’s not even factored into those numbers. So all of that, added on to this, I think is substantial.

What if the price of electricity, years down the road, goes through the roof, and then we're tied to the inflation… could we be worse off? 

Well, if you look at the prices that are in the agreement for the Churchill Falls deal and the escalation of prices… those are pretty large prices. … This guarantees us $273 billion in cash over the life of the agreement…We've eliminated this two per cent escalation clause, which…the old financial advisors for the former government told them not to do … because that added a $30-billion debt after 50 years to Gull Island. Now that debt will be eliminated, that debt will be reduced to something like $7 billion, which is much more manageable. 

No more referendum

So, there's no referendum. This is going to be debated on the House of Assembly floor on Sept. 14. What is the point of that? Like, what could fundamentally change after that debate? 

Well, I think as we move towards signing all of the definitive agreements...it's an opportunity for all the MHAs now to go back to their districts to go talk to people to talk about what's in the deal. …We want to hear from the people of Newfoundland and Labrador.

Sale of power to Quebec

We are able, with this deal, to sell more power… but we cannot sell the power at a price of our own choosing. Hydro-Quebec still retains all of that control…Do we have true control over that transmission?

I believe we do. I believe … if you look at the agreements, we've reached access to those lines, which we've never had before. The sell price is at the same price that Hydro-Quebec gets paid. It was always a thing where we were selling our power cheaper…and Hydro-Quebec would sell it higher. That's not the case here. 

But for me, the ultimate goal, is not to sell any power. It’s to use the power that we have to create new industries in Newfoundland and Labrador. That to me, would be the sign of a true success of this deal.

Do you worry about that though? Because there will be a point where people will look back at this deal, and you being such a big part of this deal. If it turns out that it doesn't work out as planned … are you concerned about how that will reflect on you as premier of the province? 

I have confidence in this agreement. I have confidence in the negotiating team we put in place and I have confidence in the work that they have done, that this is a better deal. And the opportunity here is the federal government’s involvement — which wasn't there before. 

Billions of dollars that the federal government [is] willing to commit and we're going to get these projects referred [to the Major Projects Office]. I didn't want to pass up an opportunity on that. The time is now. I think there's a real opportunity for Newfoundland and Labrador here, and I want to take full advantage of it.

• Ottawa partnership, U.S. tariffs why Churchill Falls referendum axed, says Wakeham

• New Churchill Falls agreement could have bigger impact than oil in N.L., says financial analyst

Federal involvement

If there is a change in government with the Quebec election, do you think that [Mark Carney’s] involvement is something that could make sure this deal actually does go ahead?

I think the federal government allowed us to come together, both the province of Quebec and ourselves. And I referred to it as a win, win, win. I truly believe that [and] I think the federal government involvement had a lot to do with that.

Download our  free CBC News app  to sign up for push alerts for CBC Newfoundland and Labrador. Sign up for our  daily headlines newsletter here . Click  here to visit our landing page .