Please be advised that this is a PARTIALLY EDITED transcript of the House of Assembly sitting for Tuesday, September 15, 2026. The edited Hansard will be posted when it becomes available.

The entire audio/visual record of the House proceedings is available online within one hour of the House rising for the day. This can be accessed at: https://www.assembly.nl.ca/HouseBusiness/Webcast/archive.aspx

The House met at 10 a.m.

SPEAKER (Lane): Order, please!

Admit strangers.

Good morning, everybody. This morning we are going to continue on as per the agreed upon rules and schedule. From now until 12 p.m., Members will have an opportunity to ask questions of our two panellists.

I would like to welcome to our Chamber, Mr. Drew Leyburne, ADM with Energy Systems Sector, Department of Natural Resources, Government of Canada. Good morning, and welcome.

Ms. Sharonne Katz, Director General with the Department of Natural Resources, Government of Canada. Good morning, Ms. Katz, welcome to our Chamber.

SOME HON. MEMBERS: Hear, hear!

EXTRAORDINARY DEBATE PURSUANT TO STANDING ORDER 8(7) - Definitive Cooperation and Implementation Agreement between Newfoundland and Labrador Hydro, Hydro-Québec and Churchill Falls (Labrador) Corporation Limited

SPEAKER: We will be following along the same format as we did yesterday, 15-minute increments, you get one minute to ask a question and our panellists have as much time as they require to provide an answer.

Again, I would remind Members that you have to address your questions through the Chair. I know it can be a little bit difficult with the format but that’s the rules we all agreed upon and that’s the rules that I will be enforcing.

The hon. the Premier.

PREMIER WAKEHAM: Thank you, Speaker.

I want to welcome the representatives from federal government here today. There has been a lot of investment by the federal government into this agreement.

My first question would be: What role did Ottawa play in helping bring Newfoundland and Labrador and Quebec together on this agreement?

I think the people of Newfoundland and Labrador would like to hear a little bit more about how that played out.

SPEAKER: For our panellists, I would just ask that whichever of you are going to answer, if you could just raise your hand so I know who to identify and once I have identified you, you may provide the answer.

Mr. Leyburne, go ahead, Sir.

D. LEYBURNE: Thank you, Mr. Speaker.

I just want to start by saying it’s a pleasure to be here today. Our being here today, I think, is a testament to how important we view this agreement. We believe it is critical to enable prosperity, energy security, sovereignty, affordability and competitiveness for all Canadians, not just the two provinces in the region. As such, we were very proud to have stood with the Province of Newfoundland and Labrador as they announced the Definitive Cooperation and Implementation Agreement on August 17.

I want to stress that this agreement was, of course, reached by Newfoundland and Labrador and Quebec, and together with their respective utilities, they deserve the credit for the work that led to this milestone. We simply view the DCIA as transformational and wanted to be involved for that reason.

In terms of the support we provided, we committed to provide up to $10 billion in federal financial support and investments for clean electricity projects supported through the Major Projects Office Atlantic Energy Strategy. We also referred the Labrador Trough Clean Power, Critical Minerals and Infrastructure Corridor to the Major Projects Office as well. The Major Projects Office will work with provinces and proponents to advance projects within the Corridor, providing regulatory certainty and streamlining to attract private investment, coordinate and structure financing and work with Indigenous peoples to achieve meaningful partnerships.

In addition, a federal investment of nearly $20 million was provided to support mining enabling infrastructure, and that will be provided through the federal First and Last Mile Fund. These measures will strengthen power generation and export infrastructure, like ports, that support the development of that Corridor. This work recognizes the interconnection of the Churchill River project with other development in the region, including powering new mining projects and supporting the electrification and expansion of existing operations, attracting major investment and strengthening industrial competitiveness, enabling the build-out of more variable renewables in the region and supporting Labrador communities that need power to deliver critical services to a growing population. It also recognizes the importance of supporting infrastructure, including transmission, rail and ports, that enable development in this region.

SPEAKER: Thank you, Sir.

The hon. the Premier.

PREMIER WAKEHAM: Thank you, Speaker.

Is the federal funding contingent on definitive agreements being finalized?

SPEAKER: Ms. Katz.

S. KATZ: The federal government is a strong supporter of clean electricity projects across Canada, and we’ve committed tens of billions of dollars in tax incentives, strategic financing and targeted programs to catalyze such projects from coast to coast to coast.

In this case, the federal funding is contingent on the two parties reaching definitive agreements, and we are going to work very closely with the parties as they do so.

SPEAKER: Thank you.

Did I pronounce your name correctly, Katz?

S. KATZ: Yes, that’s correct.

SPEAKER: Okay. Thank you.

The hon. the Premier.

PREMIER WAKEHAM: Thank you, Speaker.

My next question is related to how these projects fit within Canada’s electric strategy and I would ask could you tell me a bit more about how these projects fit within Canada’s electricity strategy?

SPEAKER: Mr. Leyburne.

D. LEYBURNE: Thank you, Mr. Speaker.

Earlier this year, in May, we released the draft electricity strategy for Canada, called Powering Canada Strong. The highlight or the headline from that strategy was that Canada hoped to double its grid by 2050. For that to happen, we need to see a massive acceleration in the buildout of electricity across the country.

Projects like this are extremely rare, not just in this region, not just in Canada, but around the world. You’re not going to find a lot of projects that can add a gigawatt-plus of electricity to the grid. That really drove a lot of the federal interest in making sure that this project could move forward.

 A lot of things have shifted in the last few years, since these discussions kicked off. One of them is that with every passing month we realize the importance of clean, firm power in strengthening the grids. We are going to be adding a lot of variable renewable power to the grid over the coming decades, but having the backbone of hydro is such a gift that I think every jurisdiction in the world would love to be able to pursue.

SPEAKER: The hon. the Premier.

PREMIER WAKEHAM: Thank you, Speaker.

Following up on that, can you tell us more about the transformative strategy and what makes the Labrador Trough Clean Power, Critical Minerals and Infrastructure Corridor a transformative strategy.

SPEAKER: Ms. Katz.

S. KATZ: Thank you, Mr. Speaker.

On August 17, the federal government announced a coordinated package to advance the Labrador Trough Corridor’s potential as a leading energy and mining region. Canada referred the Labrador Trough Clean Power, Critical Minerals and Infrastructure Corridor to the Major Projects Office.

The MPO is going to work with provinces and proponents to advance projects within the Corridor, including mines, specifically for high-purity iron, providing regulatory certainty and streamlining to attract private investment, coordinate and structure federal financing, and work with Indigenous peoples to achieve meaningful partnerships.

High-purity iron ore plays an essential role in the decarbonization of the global steel industry. Steel is one of the most widely used materials and is fundamental to manufacturing construction, transportation and infrastructure projects in Canada and around the world. I don’t have to tell you, but the Labrador Trough is a massive geological belt and mining region, stretching both across Labrador and Quebec. There is significant potential for Champion Kami iron ore project and Julienne Lake iron ore project to advance.

In terms of transformative strategies, there are early stage initiatives specific to a region or a sector that will be transformative for Canada and Canadians. They have the potential to significantly strengthen Canada’s economy and/or security but require further development before specific projects can proceed. These strategies align with national priorities, such as growth, security, market diversification, sustainability and reconciliation. The Labrador Trough Clean Power, Critical Minerals and Infrastructure Corridor is a transformative strategy with the potential to transform the region economically, advance critical mineral and industrial development and bring Canadian resources to global markets.

SPEAKER: The hon. the Premier.

PREMIER WAKEHAM: Thank you, Speaker.

Some people have suggested that the federal support lowered the price Quebec pays. How does the Government of Canada see that?

SPEAKER: Ms. Katz.

S. KATZ: The federal government doesn’t mix into provincial matters, like rate setting. We created the conditions and create the conditions across the country for investment to proceed.

SPEAKER: The hon. the Premier.

PREMIER WAKEHAM: Just going back again, the federal government has committed a significant federal loan guarantee to this Gull Island project. Just wondering if you could expand on what that means to the project and to the agreement.

SPEAKER: Ms. Katz.

S. KATZ: Just one second. The federal loan guarantee is critical to advancing the Gull Island project. We are working with both parties to advance that project, similar to what we have done in the past with Newfoundland and Labrador on specific projects.

Apologies, just one second.

Can I transfer it over to you for a second?

SPEAKER: Mr. Leyburne, you’re going to continue?

D. LEYBURNE: Yes, if I could just ask for the second part of the question, just to make sure that we’re answering it fully.

SPEAKER: Sure. The hon. the Premier.

PREMIER WAKEHAM: It was related to the federal funding and the loan guarantee and what it would mean for the project in terms of derisking the project and federal government’s involvement.

SPEAKER: Ms. Katz.

S. KATZ: Thank you.

The federal government remains committed to creating the conditions for major clean energy projects like this one to succeed, with measures that support clean electricity investment, economic growth and Indigenous participation and efficient regulatory processes.

In this case, a clear investment strategy has been to guarantee the debt for the Gull Island project, which we will do. It is similar to what we have done in the past with Newfoundland and Labrador.

SPEAKER: The hon. the Premier.

PREMIER WAKEHAM: Thank you, Speaker.

One of the other big items in derisking Gull Island is the investment tax credits that the federal government has prepared to extend. They were due to expire in 2034. Why did the Government of Canada extend them to 2040?

SPEAKER: Mr. Leyburne.

D. LEYBURNE: Mr. Speaker, I think this measure was in recognition that for very large projects such as a hydro dam, the timelines required in order to get the project built just did not align with the 2035 end date for the tax credits. So for a number of projects, including these, the federal government did agree to extend that time frame to ensure that projects like these are not unfairly unable to access tax-like treatment.

It’s not unique to this project. Through efforts like the Alberta MOU that was negotiated, we have offered a kind of extension and new flexibilities that the original ITCs didn’t foresee.

SPEAKER: The hon. the Premier.

PREMIER WAKEHAM: Thank you, Speaker.

Again, there was a significant investment by the federal government in the Labrador West transmission line. Over a billion dollars that the federal government has committed to getting that transmission line built. Why was that so important, not only to the people of Newfoundland and Labrador, to the people of Lab West, but to the Government of Canada?

SPEAKER: Ms. Katz.

S. KATZ: Thank you, Mr. Speaker.

The transmission to the Labrador West region is critical to unlocking the critical minerals, the high-purity iron ore that I spoke about a few moments ago, and without that transmission line, there would not be any advancements in mines. We were asked by Newfoundland and Labrador Hydro as well as the Government of Newfoundland and Labrador to consider making a critical investment in the Labrador West transmission line, and we are intending to do so as definitive agreements advance.

SPEAKER: The hon. the Premier.

PREMIER WAKEHAM: Thank you, Speaker.

We’ve heard lots of talk in media and in the news articles and lots of discussion at the federal government level about the Major Projects Office, and so I’m wondering if you could take some time to talk about what the Major Projects Office actually is and what it will actually do for these projects.

SPEAKER: Ms. Katz.

S. KATZ: Thank you, Mr. Speaker.

The Major Projects Office was established to serve as a single point of contact to get nation-building projects built faster. The advancement of Churchill Falls, Gull Island, Labrador West and critical minerals demands a high level of speed and coordination, which is why the Government of Canada referred the Labrador Trough, clean power, critical minerals and infrastructure corridor to the Major Projects Office.

Following the referral, the strategy: Canada will work with the proponents, the Major Projects Office and relevant federal authorities to coordinate all the federal financing and facilitate very timely issuance and confirmation of all approvals, permits and certifications. This is about working collaboratively to build Canada strong and together.

SPEAKER: The hon. the Premier.

PREMIER WAKEHAM: So on that note again, just following up, Mr. Speaker, what would the permitting path have looked like without a referral to the Major Projects Office, and what does it look like now?

SPEAKER: Ms. Katz.

S. KATZ: Mr. Speaker, can I ask a clarification question?

SPEAKER: Pardon?

S. KATZ: Can I ask a clarification question?

SPEAKER: You want to ask a –? Yeah, go ahead.

S. KATZ: Yeah, I just wanted to ask are we talking about all the projects, or specifically any particular project?

SPEAKER: The hon. the Premier.

PREMIER WAKEHAM: I’m talking about actually what happens when a project gets referred to the Major Projects Office and what that would look like. I mean, this project obviously being referred to the Major Projects Office is something that the federal government has done and we would like – just so the people of Newfoundland and Labrador could understand how that actually moves this project along and takes away and talks about the single review, and those type of things.

SPEAKER: Ms. Katz.

S. KATZ: Thank you, Mr. Speaker.

Canada and the Major Projects Office will work very closely in coordination with the utility proponents, Hydro-Québec and Newfoundland and Labrador Hydro, and the relevant federal as well as provincial authorities to coordinate all federal permits in order to facilitate the timely issuance and confirmation of all approvals, permits and certifications required to advance these projects.

Our objective is to support efficient project delivery and ensure that implementation proceeds in accordance with the planning assumptions.

SPEAKER: The hon. the Member for Fortune Bay - Cape La Hune.

E. LOVELESS: Thank you, Mr. Speaker.

SPEAKER: And I will refer to you as the hon. Member from here on in, in the interests of time.

E. LOVELESS: Absolutely. Thank you.

Thank you, Mr. Speaker.

First of all, I guess on behalf of the Official Opposition, we say welcome to the panellists and thank you for being here today and contributing to this process, I guess, and allowing us to ask you questions so we can try to further understand the deal and what it means for Newfoundland and Labrador.

I think it’s fair based on the statements made by you two this morning and certainly by the lead negotiator, Barry Perry, yesterday that without the federal involvement that this probably wouldn’t be happening for sure.

So in terms of the involvement and the investment by the federal government in this deal, can you briefly comment on the investment tax credits and how they affect this agreement?

SPEAKER: Mr. Leyburne.

D. LEYBURNE: Thank you, Mr. Speaker.

The tax credits are, I think, a very crucial part of the overall formula that the federal government brought to bear. It’s worth noting that the tax credits are pan-Canadian. They apply to capital projects and clean electricity across the country, and they came into force earlier this year, but they’re retroactive back to 2024.

They also accrue to those who are making the capital investments. So in this case, Hydro-Québec will be making a lot of the expenditures and will see the benefits of the tax credits accordingly. But for the wind project and other areas where there’s investments made on a Newfoundland and Labrador side, there will be benefits as well.

We do anticipate that the direct net present value of this commitment to Newfoundland and Labrador for the ITCs alone will be in the range of about $1.5 billion.

SPEAKER: The hon. the Member for Fortune Bay - Cape La Hune.

E. LOVELESS: Thank you, Mr. Speaker.

Can you confirm and comment, if need be, that the previous Liberal provincial government requested federal involvement through investment tax credits in 2024 and 2025, including a letter to Deputy Prime Minister Freeland, and discussions at the First Ministers’ Meeting?

SPEAKER: Mr. Leyburne.

D. LEYBURNE: Mr. Speaker, I can confirm that there were ongoing conversations with probably every provincial and territorial government in Canada about the implementation of the tax credits. I can’t speak to specific conversations between individuals, but there were very active discussions. Before implementing the ITCs, the federal government did undertake a significant engagement, including putting out draft tax credits in advance, and very much benefited from the inputs from provincial governments.

SPEAKER: The hon. the Member for Fortune Bay - Cape La Hune.

E. LOVELESS: Thank you, Mr. Speaker, and thank you for that answer.

In the 2024 NLH Annual Report, it’s clear they were already working with the provincial government to secure the Clean Electricity Investment Tax Credit for Churchill Falls and Gull Island.

Can you also confirm that prior to the 2025 provincial election, the federal government listed Gull Island and Churchill Falls on its list of potential nation-building projects?

SPEAKER: Ms. Katz.

S. KATZ: Yes. Thank you.

In September 2025, the government announced the Atlantic Energy Strategy. At that time it was called Wind West Atlantic Energy; that it was referring the transformative strategy to the Major Projects Office as part of that referral of that transformative strategy. Both Churchill Falls and Gull Island were mentioned and as part of that work, that’s the reason that we are here today.

SPEAKER: The hon. the Member for Fortune Bay - Cape La Hune.

E. LOVELESS: Thank you, Mr. Speaker.

So that’s important that it’s on the record; that it was certainly on that list before August of this year.

Is there anything in the 2024 MOU that prevented federal involvement?

SPEAKER: Mr. Leyburne.

D. LEYBURNE: Sorry, Mr. Speaker – that prevented federal involvement?

SPEAKER: The hon. the Member for Fortune Bay - Cape La Hune. Can you clarify the question again?

E. LOVELESS: Yes, Mr. Speaker.

That’s correct.

SPEAKER: Mr. Leyburne.

D. LEYBURNE: No. There was nothing in the 2024 agreement that prevented federal involvement. The tax credits, for example, as they were conceived at the time, would have applied to any capital investments that were made. The specific negotiations that led to the package that the federal government brought for this MOU, which was a different deal, were very specific to that context.

SPEAKER: The hon. the Member for Fortune Bay - Cape La Hune.

E. LOVELESS: Thank you to the panelist.

Is it fair to say federal investment would have been possible to build on the 2024 MOU if the government had wanted it?

SPEAKER: Ms. Katz.

S. KATZ: So the federal government in 2024 had a number of tools, not just the Clean Electricity Tax Credits, including the Canada Infrastructure Bank where we had placed a minimum $10 billion of additional funding in 2024, I understand but I was not involved in those conversations that the Canada Infrastructure Bank had been in discussions with Newfoundland and Labrador Hydro on a variety of projects.

Canada is open and continues to be open to working with all provinces on advancing clean electricity to ensure affordable, reliable power for all Canadians.

SPEAKER: The hon. the Member for Fortune Bay - Cape La Hune.

E. LOVELESS: Thank you, Mr. Speaker.

I guess in terms of the beginning of negotiations, either of you, can you comment on – between the federal government and Newfoundland and Labrador – on the DCIA from August of this year? When did the meetings start?

SPEAKER: Mr. Leyburne.

D. LEYBURNE: I think what I would say is there has been continual conversations. I mean the size of this project, the impact and the import of this project are such that there was never a moment where the federal government wasn’t keenly aware and encouraging of this project.

I would say that as of early 2026, the federal government started to have conversations with both parties and to cheerlead a little bit and encourage the conversations could continue. I think we played a continuous role from early 2026 onward.

SPEAKER:  The hon. the Member for Fortune Bay - Cape La Hune.

E. LOVELESS: Thank you, Mr. Speaker.

In terms of mandates in the involvement here, in terms of a good partnership to build on, Prime Minister’s National Building Strategy, which is a good plan and I commend him for that and doing a good job with it, but would you agree that it’s not your responsibility from wearing the federal hat to work on what’s best for Newfoundland and Labrador? That lies with the current Premier and his team.

SPEAKER: Mr. Leyburne.

D. LEYBURNE: Yeah.

Of course, we would agree, particularly in matters related to electricity, which is a provincial responsibility that the primary responsibility, primary authority laid with both provincial governments.

The federal government can and does play from coast to coast to coast an important role in helping on major projects in electricity and other natural resources develop. I think that’s very akin to the role we played here.

SPEAKER: The hon. the Member for Fortune Bay - Cape La Hune.

E. LOVELESS: Thank you for that answer.

Moving to a different question and it’s tied to a lot of emotions for Newfoundland and Labrador and I don’t expect you to speak to the emotion part. That’s around and it has been referred to yesterday, will continue to be referred to today and tomorrow for sure and it’s been a long history of how Quebec has gotten much more in terms of a return for them versus Newfoundland and Labrador. That’s probably evident now in this deal as well and people are concerned about it.

The federal government has given $10 billion, as you mentioned earlier, toward the deal but Quebec is getting most of that. Quebec is receiving $6.5 billion; Newfoundland and Labrador is receiving $3.5 billion. Why is Quebec getting so much more?

SPEAKER: Ms. Katz.

S. KATZ: Mr. Speaker, the federal support is for the projects. The benefit of that support accrues to those who are making the investments. A large portion of those costs are being borne by Quebec as a key off-taker of the projects and the key risk-taker in this situation.

SPEAKER: The hon. the Member for Fortune Bay - Cape La Hune.

E. LOVELESS: Thank you, Mr. Speaker.

Well, the fact is that Quebec will receive almost double as I referred to and has been referred to before, the federal investment, the Newfoundland and Labrador. Was that concern ever discussed or raised by the Newfoundland and Labrador government or their negotiating team?

SPEAKER: Ms. Katz.

S. KATZ: Thank you, Mr. Speaker.

The federal government is not a party to the negotiations; the negotiations and the DCIA were developed between the two parties. As I mentioned, the federal support tracks the accrual to – the benefit of that support accrues to those who are making those investments. We did not decide how the DCIA would be structured. We are financing based on the DCIA.

SPEAKER: The hon. the Member for Fortune Bay - Cape La Hune.

E. LOVELESS: Thank you, Mr. Speaker.

You weren’t here yesterday, but we did hear that a member of the negotiating team was an aggressive negotiating member, and that’s Mr. Jerome Kennedy.

So could it be reasonably argued or aggressively pursued that the majority of the funding should come to Newfoundland and Labrador, given that the resource is in our province, not Quebec?

SPEAKER: Ms. Katz.

S. KATZ: The federal funding benefits both jurisdictions, as the projects will get built as a result of – not as a result – because the federal funding is also there to support these projects.

As, I believe, yesterday one of the other witnesses mentioned Gull Island is going to be a huge asset for the region, a 2,700-megawatt dam, and the federal government is pleased to be a party to that and supporting the project.

Our support is going to make sure that these projects happen.

SPEAKER: The hon. the Member for Fortune Bay - Cape La Hune.

E. LOVELESS: Thank you, Mr. Speaker.

Is it fair to say – and you can correct me if I’m wrong here – Hydro-Québec had already agreed to fund Gull Island and now the federal government is giving the loan guarantee to Hydro-Québec. Correct?

SPEAKER: Ms. Katz.

S. KATZ: Thank you.

These projects are important to unlock economic opportunities in the region. They are going to lead to much larger and long-lasting benefits to Newfoundlanders and Labradorians including thousands of jobs, 23,000 jobs at the top end, as well as a major boost to the provincial revenues through royalties and gross domestic product for the mining projects. In that case, Newfoundland and Labrador stands to benefit significantly.

SPEAKER: The hon. the Member for Fortune Bay - Cape La Hune.

E. LOVELESS: Thank you, Mr. Speaker.

Yes, Newfoundland and Labrador would benefit, but I think if you had to ask most Newfoundlanders and Labradorians, they would say we’re benefiting but not enough, and Quebec is benefiting way more than what we are.

That leads me to the word “fairness” and fairness was worked hard on by the previous government and inserting that in because Newfoundlanders and Labradorians want fairness.

Did the Government of Newfoundland and Labrador ask for an extra $3 billion to equal what Quebec is getting in their $6.5 billion? That is considered fair.

SPEAKER: Mr. Leyburne.

D. LEYBURNE: Speaker, what I can say is, as my colleague alluded to, the federal measures that were brought to bear were largely derivative from the DCIA and the division of benefits that were negotiated between the two provinces.

We did subsequently work with each of the two provinces to make sure that the federal contribution could help get this over the finish line. We are not negotiating – you don’t negotiate with tax credits. The allocation of that spending went to where the money was being spent.

The reality is the negotiators sat down across the table from each other with a clear understanding of what the provincial interests were and came to an agreement that they thought they could make work for both parties. The federal government simply came in, applied the tool kit it had, in a way that made sense.

As I said, for things like tax credits, those dollars simply went to where the capital was being expended.

SPEAKER: The hon. the Member for Fortune Bay - Cape La Hune.

E. LOVELESS: Thank you, Speaker.

Just a question, I guess it is hydro development as such and not inclusive of the MOU, but I am just wondering if Newfoundland and Labrador’s negotiating team or the Premier or his team had mentioned Unit 8 in Bay d’Espoir which supplies power to the province. The Bay d’Espoir operation is very vital to Newfoundland and Labrador’s existence in terms of providing power.

I am just wondering if that was ever a discussion around if Unit 8 will proceed and it’ a very important part of the hydro development needs in the Province of Newfoundland and Labrador.

SPEAKER: Ms. Katz.

S. KATZ: Thank you for your question.

We are here today to talk about the projects in Labrador, but the Government of Canada has a suite of tools and continues to use it suite of tools to advance clean electricity projects across all provinces, including on the Island of Newfoundland. There are conversations ongoing related to that project; I can confirm that.

SPEAKER: The hon. the Minister of Energy and Mines.

I will just refer to you as the hon. the minister for the next 15 minutes.

L. PARROTT: Thank you, Mr. Speaker.

Welcome to Newfoundland and Labrador. I would like for both members to let the House know how long they have been working with NRCan.

SPEAKER: Ms. Katz.

S. KATZ: I have been working the NRCan on and off for 10 years.

SPEAKER: Mr. Leyburne.

D. LEYBURNE: I’ve been with Natural Resources Canada for a little over 20 years.

SPEAKER: The hon. the Minister of Energy and Mines.

L. PARROTT: In your 30 years combined, have either of you ever seen an opportunity for a project like this to be developed that included the involvement of two provinces and the federal government on this magnitude?

SPEAKER: Mr. Leyburne.

D. LEYBURNE: No, it’s fair to say – I mean I think as everyone announced on August 17, this could be the largest clean energy enterprise ever undertaken in North American history. There is no parallel.

There are a lot of large dams in Canada already, as I said; we are blessed compared to most countries in the world. But the scale and scope of this, even compared to previous dams built in Canada, is exceptional.

SPEAKER: The hon. the Minister of Energy and Mines.

L. PARROTT: Mr. Leyburne, in your opinion do you think that outside just the scope of the Churchill Falls project and the scope of Gull Island, when you look at what it means, from a holistic standpoint with regard to the Labrador Trough, the Goose Bay expansion and other opportunities throughout Labrador, that this is probably one of the bigger projects that we’ve ever seen in a North American or global scale?

SPEAKER: Mr. Leyburne.

D. LEYBURNE: Mr. Speaker, I would agree. If this was just a dam it would be one thing, but when you look at the entire package of projects, you’ve got wind power projects that are looking to future needs in the province, you’ve got the ability to enable a number of mines at a moment when the importance of critical minerals is growing every day. You only have to look around the world to see where the interests are, not just for critical minerals but for clean energy. Newfoundland and Labrador and Quebec, I think, are at the vanguard of being able to meet the needs of not just Canada but the world.

SPEAKER: The hon. the Minister of Energy and Mines.

L. PARROTT: Mr. Leyburne, you may not be able to answer this but I’ll ask because I actually think you can. Can you tell the audience here what the Pilbara is in Australia?

SPEAKER: Mr. Leyburne.

D. LEYBURNE: Sorry, I cannot. Sorry to disappoint.

SPEAKER: The hon. the Minister of Energy and Mines.

L. PARROTT: The Pilbara is the largest iron ore deposit that is currently being mined in the world. Labrador Trough represents that doubled, 450 billion tons – 450 billion tons of clean, green iron ore accessibility.

Can you indicate what that means to us from a federal and provincial standpoint?

SPEAKER: Mr. Leyburne.

D. LEYBURNE: Mr. Speaker, this is what happens when you invite energy people to a mining conversation.

What I can say on behalf of my colleagues in the federal Department of Natural Resources is that these are significant iron ore assets. The quality and the amount of the resource, I think, are potentially transformative – as I said, at a time where there are not a lot of countries in the world that can access this kind of resource and bring it to market like Canada and the Province of Newfoundland and Labrador can.

SPEAKER: The hon. the Minister of Energy and Mines.

L. PARROTT: Thank you, Speaker.

I just want to go back to the 2024 MOU when it was announced in December. Were you or any other representatives from NRCan present at that announcement or were you signatory to that agreement?

SPEAKER: Ms. Katz.

S. KATZ: No, the Government of Canada was not involved, nor were we a signatory of that agreement.

SPEAKER: The hon. the Minister of Energy and Mines.

L. PARROTT: So the previous Liberal government had not included the federal government in the MOU. Had they come to you at any time prior to the announcement of the MOU asking for an extension of the tax credits beyond 2034?

SPEAKER: Ms. Katz.

S. KATZ: I can’t speak specifically because I am not one of my tax colleagues at the Department of Finance, but I can speak to the fact that a number of provinces, given the delay in the implementation of the tax credits, are seeking and had sought an extension to the tax credits.

SPEAKER: The hon. the Minister of Energy and Mines.

L. PARROTT: Can you highlight the commitment that was made by the federal government to the previous provincial government in the previous old MOU, as to how much funding was going to be supplied in the MOU that they had signed with Quebec?

SPEAKER: Ms. Katz.

S. KATZ: Thank you, Mr. Speaker.

As I indicated, we were not a party to that agreement. There was no federal support in that agreement. That said, the projects would have been eligible for the Clean Electricity tax credits that were later legislated.

SPEAKER: The hon. the Minister of Energy and Mines.

L. PARROTT: Just a question about the loan guarantee. From your experience, would it be normal practice for the federal government or anyone else who was providing a loan guarantee, to provide that guarantee to the entity that was not taking out the loan?

SPEAKER: Ms. Katz.

S. KATZ: Thank you, Mr. Speaker.

In all cases for loan guarantees it tracks the person who is seeking the loan and seeking to take out the loan, and so in this case it would be Hydro-Québec and so in this case it would make sense for the loan guarantee to be granted to Hydro-Québec.

SPEAKER: The hon. the Minister of Energy and Mines.

L. PARROTT: I would agree, that makes sense to me too.

So we have a project now where we have federal involvement, we have provincial involvement from both Newfoundland and Labrador and Quebec, and there’s a path forward.

The federal government have put up a loan guarantee, and obviously the tax credits, the loan guarantee, the $1 billion for the power line and we have invited Innu to the table with regard to wind and other equity possibilities.

Can you outline what it looks like for other possibilities that both the province, the Innu and Quebec could take advantage of from the federal government going forward?

SPEAKER: Ms. Katz.

S. KATZ: Thank you, Mr. Speaker.

There are a number of projects included as part of the announcement. The 2,000 megawatts of wind, the federal government is pleased to partner with a future independent power producer. The plan would be for there to be a procurement, as we understand it, to seek an independent power producer. The federal government will take an equity stake in that project and will offer to support the Innu Nation in that wind project, 2,000 megawatts of wind in Labrador. It would be the largest wind development in North America and would bring new energy to the project. So that’s the wind.

In terms of transmission, also, the federal government is looking to take an equity stake in the transmission project to Labrador West and we’ll look to partner, if it’s economically viable to partner at that time with the Innu Nation, should they wish to do so.

SPEAKER: The hon. the Minister of Energy and Mines.

L. PARROTT: Thank you, Speaker.

So we know that there are lots of opportunities that the federal government has presented, and I think you said earlier that you guys were not any part of direct negotiation. So am I right when I say that the negotiating team that represented Newfoundland and Labrador, along with representatives for provincial government, approached the federal government looking for this support?

SPEAKER: Ms. Katz.

S. KATZ: Thank you, Mr. Speaker, for the question.

As I indicated, in September the government referred the Atlantic Energy Strategy to the Major Projects Office and in doing so, the Minister of Energy and Natural Resources, as well as others, had conversations with the Premiers of both provinces, as I understand it, to discuss those projects and to bring them forward.

SPEAKER: The hon. the Minister of Energy and Mines.

L. PARROTT: So there are always lots of meetings, as everyone in this room would know. I would say you have met with my department on several occasions, and I would argue that the staffing side of Energy and Mines push at every opportunity for funding for every and all projects.

Have you had any communication from my department with regard to the Labrador Trough?

SPEAKER: Ms. Katz.

S. KATZ: Thank you, Mr. Speaker.

Absolutely, and as well as my colleagues in the department of natural resources in the mining sector have had many conversations with Energy and Mines in Newfoundland and Labrador to discuss the opportunities for the Labrador Trough, as has the Major Projects Office.

SPEAKER: The hon. the Minister of Energy and Mines.

L. PARROTT: Maybe a bit of a broad question, but I will ask this because my observation is that this is a different time in our country, but in your respectively, both of you, in your 10 and 20-year experience with NRCan, have you ever seen a time when Natural Resources Canada was more inclined to push projects forward, to develop resources and to put Canada at the leading edge of development?

SPEAKER: Mr. Leyburne.

D. LEYBURNE: No, I think we are living through an unprecedented time in that regard, just a confluence of international politics, changes in demand patterns and a recognition that natural resources truly do matter. There’s never been a moment in Canada’s history where natural resources were not important, but it certainly feels right now that bringing these projects and bringing these resources to international markets and to support domestic consumption has never been more important.

SPEAKER: The hon. the Minister of Energy and Mines.

L. PARROTT: I’d ask Ms. Katz to weigh in on the same question, please.

SPEAKER: Ms. Katz.

S. KATZ: Thank you.

No, I would 100 per cent concur. In my career, I’ve never seen times such as these. The creation of the Major Projects Office, the government, there isn’t a day that we don’t speak about specific projects and how we can advance them.

The goal is right now to build the Canadian economy, to create jobs for Canadians, to create prosperity for Canadians. I’ve never seen anything like it in my career.

SPEAKER: The hon. the Minister of Energy and Mines.

L. PARROTT: Despite the referral to the Major Projects Office, and again, I’d ask both of you to weigh in on this, do you see the development of Gull Island, Churchill Falls and the Labrador Trough as a nation-building opportunity that we should have a very serious look at?

SPEAKER: Ms. Katz.

S. KATZ: My opinion doesn’t matter. The prime minister has made that call, but I think it is a critical project. That is why in the first set of referrals as part of the Atlantic Energy Strategy, the prime minister referred to the Major Projects Office the Atlantic Energy Strategy with the goal to getting Atlantic utilities working very closely together, to getting Hydro-Québec working very closely with Atlantic utilities. I’ve spent a lot of time in the Atlantic region making sure that projects go ahead, hoping to work with provinces to collaborate across projects. I’ve spent a lot of my career working with New Brunswick and Nova Scotia specifically, but I will say never on a set of projects this big and with two jurisdictions collaborating over $70 billion worth of projects.

SPEAKER: The hon. the minister.

L. PARROTT: I’ll get Mr. Leyburne to weigh in on the same question.

SPEAKER: Mr. Leyburne.

D. LEYBURNE: I think my colleague alluded to it, Speaker, but we had already recognized the importance of Gull Island and Churchill with the first referral to the Major Projects Office, just on the electricity side. The introduction of the mining aspect of this at a time when critical minerals are at the fore of everybody’s thinking around the world from a security perspective, I think just doubles down on this recognition of this being a special project or a special set of projects.

SPEAKER: The hon. the minister.

L. PARROTT: From a department standpoint, have there been any conservations with regard to a feasibility study for the powerline from Churchill Falls to Labrador West and how it affects the Kami project, Tacora, Rio Tinto and any other future projects?

SPEAKER: Ms. Katz.

S. KATZ: Thank you. I was just going to talk about the First and Last Mile Fund investments.

The First and Last Mile Fund is an envelope of $1.5-billion infrastructure fund at Natural Resources Canada to unlock and bolster new critical minerals, mines and economic growth, including projects that move resources to customers at home and abroad.

In that respect and on the day, August 17, the prime minister announced that the Labrador West regional transmission expansion through Newfoundland and Labrador Hydro was going to receive $2.341 million. The purpose of the study is to complete frontend engineering and design for the transmission and stations needed to bring the power to Lab West. The proposed infrastructure would also help support the expansion and electrification of existing mining operation and enable future critical minerals development. The studies include geotechnical investigations, development of cost and schedule estimates, identification of requirements for environmental assessments, and the study participants including Tacora Resources for the Scully Mine, Rio Tinto IOC for Carol Lake, Champion Iron for the Kami Iron Ore Project and of course the Government of Newfoundland and Labrador for the Julienne Lake deposit.

SPEAKER: The hon. the minister.

L. PARROTT: Thank you, Speaker, and just one last question.

Obviously, we believe in the people in Labrador and we want to see them prosper. Do you believe that any of the expansions of mining, the work that happens in Goose Bay that’s been awarded or announced happens without extra electricity being created for Labrador?

SPEAKER: Ms. Katz.

S. KATZ: It is not whether I believe it or not. I understand from NL Hydro there are not any extra electrons to support those projects; hence, the critical importance of getting the upgrades to the Churchill Falls dam, Gull Island project, as well as the wind project to ensure that the Labrador West region has sufficient electricity to support the current growth and the future growth expected in the region..

SPEAKER: The hon. the Leader of the Third Party.

J. DINN: Thank you, Speaker.

Either Mr. Leyburne or Ms. Katz can answer this. How many projects have been referred to the Major Projects committee? How many have been approved and actually how many have shovels in the ground or are actually proceeding the process?

SPEAKER: Ms. Katz.

S. KATZ: Mr. Speaker, I should have actually gotten those numbers handy. I know that there are about 18 projects approved. There are six or eight transformative strategy and a number of those projects are under way. The Darlington project in Ontario has shovels in the ground. They have actually spent significant money. Crawford is moving ahead.

I don’t have, in front of me, the list of the major projects, so I cannot answer specifically for projects. I just happen to know that Darlington, because I’m an electricity person, is under way, as well as the dam up in Nunavut is also working very closing with Major Projects Office to get studies under way to work towards advancing that project.

SPEAKER: The hon. the Leader of the Third Party.

J. DINN: Thank you, Speaker.

Ms. Katz said the Major Projects committee was established as a single point of contact to get nation-building projects built faster and projects that demand a high level of speed and coordination.

So my question would be then, what does this mean for the environmental assessment process?

SPEAKER: Ms. Katz.

S. KATZ: The Major Projects Office – sorry, Mr. Speaker. Thank you. I am getting used to this.

The Major Projects Office was established to be the single point of contact for Major Projects key nation-building projects to coordinate federal regulatory processes and permitting. They do so for all the major projects that they have listed. They work with every federal department, Fisheries, Transport, Natural Resources Canada, to make sure that there is timely review, timely assessment of projects and projects can proceed quickly.

SPEAKER: The hon. the Leader of the Third Party.

J. DINN: Thank you, Speaker.

Again, what does this mean, then, for consulting and negotiating with Indigenous communities in the context, certainly, of the government’s reconciliation mandate?

SPEAKER: Ms. Katz.

S. KATZ: Settling Indigenous rights and advancing meaningful Indigenous participation are fundamental to how Canada approaches major resource and energy projects. Canada will respect our duty to consult and the UNDA obligations.

Churchill Falls and Gull Island are already subject to an existing Impact and Benefit Agreements with the Innu Nation known as the New Dawn Agreement. The federal government expects project proponents to continue to meaningfully engage Indigenous communities as projects advance.

These types of projects can create significant opportunities for Indigenous communities through employment, procurrent, training, long-term revenue sharing and potential equity participation.

Just to add that Minister Hodgson met with the Innu Grand Chief to engage in discussions prior to the August 17 announcement and Canada and Newfoundland and Labrador will continue to work with the Innu Nation on the wind and transmission projects to explore economic opportunities as these projects advance.

SPEAKER: The hon. the Member for St. John’s Centre.

J. DINN: Just to clarify that last bit. You say that Minister Hodgson met with –

S. KATZ: The Innu Nation Grand Chief.

J. DINN: So if I may, then there was, obviously, a consultation between the federal government and the Innu Nation. Are you aware that there was any consultation between the provincial government and the Innu? Were they part of that or –?

SPEAKER: Ms. Katz.

S. KATZ: The question, Mr. Speaker – yes, we understand that the provincial negotiating team has met on a number of times with the Innu Nation on the projects and we spoke about that prior to our engagement with the Innu Nation.

SPEAKER: The hon. the Member for St. John’s Centre.

J. DINN: That’s all now.

Thank you, Speaker.

SPEAKER: The hon. the Premier.

Then we’ll go next.

PREMIER WAKEHAM: Thank you, Speaker.

I just want to follow up with some of the questions that were asked and the answers given. There was mention of many conversations with provinces and territories related to projects, related to investment tax credits relating to referral to the Major Projects Office.

Can you expand on what you think or made this actual project, made this agreement possible and get it over the line? What made it get it over this time with the federal government?

SPEAKER: Mr. Leyburne.

D. LEYBURNE: Both the DCIA and the subsequent federal supports, they were very dependent on the context of the time that they were negotiated.

We have some new tools in our toolkit that we didn’t have two or three years ago. The tax credits are relatively new, were just emerging at that time. The Major Projects Office was new in the intervening years.

The heavy focus on a Building Canada Strong agenda that the federal government was elected to, with their new mandate, was new. We were able to bring a toolkit to bear that we might not have been able to bring to bear at different times.

SPEAKER: The hon. the Premier.

PREMIER WAKEHAM: Would you also then agree or comment on the importance of timing and the importance of moving forward with the opportunities that are in front of us as a province and as a country in terms of our national energy procurement and where we are in terms, as you mentioned earlier, about the whole process of recognizing the significant resources that we have here in Canada and that we’re now moving ahead to develop those resources. Just comment on the timing, if you would.

SPEAKER: Mr. Leyburne.

D. LEYBURNE: Yeah, there is definitely a sense of urgency.

That would have come through in the electricity strategy as I mentioned earlier. Every year the default or the baseline in Canada is that tens of billions of dollars are spent in the electricity sector, but we need to see a significant uptick in that.

So the sense of urgency that the federal government brought to bear, was really around that recognition that you only have to look as far as the increasing electricity demands in every province in Canada. After relatively stagnant for about 20 years, electricity demand in North America was flat. That is certainly not the case now and I think one of the reasons you see the increased interest from industry, from consumers and from every jurisdiction in Canada in producing more electricity is a recognition that we used to be worried about overbuilding and now we’re definitely more worried about underbuilding.

SPEAKER: The hon. the Premier.

PREMIER WAKEHAM: Thank you, Speaker.

The federal government is taking up to a 40 per cent equity stake in the proposed 2,000-megawatt wind project. What makes the project attractive from a federal perspective?

SPEAKER: Ms. Katz.

S. KATZ: Thank you, Mr. Speaker.

As I mentioned earlier, this project would be the largest in Canada, I believe, and also North America. It is a very important project to get energy on the system. Balancing the wind with the amazing hydro resources that exist in Labrador allows for – as the Newfoundland and Labrador Hydro CEO mentioned – a very, very good product.

There is a lot of interest in off-take of that 2,000 megawatts of wind. It seemed like a very good opportunity for the federal government to participate in that project.

SPEAKER: The hon. the Premier.

PREMIER WAKEHAM: Thank you, Speaker.

In terms of that 40 per cent equity take, can you comment on why an equity position in the wind project was taken rather than a loan guarantee or a grant, as elsewhere in the entire federal package that’s in front of us for all of these projects.

SPEAKER: Ms. Katz.

S. KATZ: Thank you, Mr. Speaker.

There is an opportunity, there is a clear off-take for that power and when there is a clear off-take and a clear opportunity, it makes sense for the federal government to take an equity stake where we can earn returns on that and work very closely with the Innu Nation, should they wish to participate in being a partner on that project.

The federal government has a suite of tools that it uses and different tools work for different things and in this case, given that there is a clear off-take interest on that project and a clear resource in Labrador, Canada is pleased to partner with an independent power producer and hopefully alongside the Innu Nation on that project.

SPEAKER: The hon. the Premier.

PREMIER WAKEHAM: Thank you, Speaker.

Again, this particular wind energy project does not involve Hydro-Québec, other than as an off-taker?

SPEAKER: Ms. Katz.

S. KATZ: Thank you, Mr. Speaker.

Yes, that is correct. Hydro-Québec is an off-taker but is not involved in the project. It is a partnership between an independent power producer that has yet to be selected, the federal government, and hopefully the Innu Nation should they wish to be partners.

SPEAKER: The hon. the Premier.

PREMIER WAKEHAM: Thank you, Speaker.

In looking at that too then, can you comment on the risk to the Newfoundland taxpayer in terms of that particular project, in terms of the investment by Newfoundland taxpayers in that project?

SPEAKER: Ms. Katz.

S. KATZ: Thank you, Mr. Speaker.

There is no investment by Newfoundland taxpayers in that project. That would be a federal government investment, an independent power producer and, hopefully, the Innu Nation, should they be interested in participating in that project. We are in early-stage discussions with them.

SPEAKER: The hon. the Premier.

PREMIER WAKEHAM: Thank you, Speaker.

You may have addressed this earlier in some form, but I’d like for you to expand, both of you if you have the opportunity to do so, I can give you the opportunity to do it here for the both of you, about the significance of pairing 2,000 megawatts of wind with Churchill Falls hydro and what does that do? What does that achieve that wind on its own would not?

SPEAKER: Mr. Leyburne.

D. LEYBURNE: At its most basic level, it allows the province to bring the predictability and the base load power of hydro, which ensures that the lights can stay on at all times. With the variability of wind, as my colleague alluded to, this is a nearly perfect combination of assets that this one province is able to access.

If you look at what industrial consumers are looking for, data centres as one example, they are looking for predictable – they call it five 9s predictability – around the electricity they choose. That’s hard to provide with just variable renewables but when you pair it with base load power like hydro, it’s very easily produced.

I mention data centres as one example, but that is true of any industrial consumer, whether it’s a mine, aluminum smelter, a factory of any kind.

SPEAKER: The hon. the Premier.

PREMIER WAKEHAM: Ms. Katz, did you want to make a comment?

SPEAKER: Ms. Katz.

S. KATZ: Thank you, Mr. Speaker.

I would say that as my colleague, Mr. Leyburne, mentioned pairing up wind and hydro is critical. You’ve got capacity from the Churchill Falls project and even the upgrades, as they mentioned last night, do not bring a lot of energy. This would bring a lot of energy to the system and it does not require any additional transmission.

So the wind is expected to be built in Labrador around the existing transmission, to reduce the need for new transmission. Typically projects of this size would require new transmission, which is a significant cost. In this case, the very brilliant logic of pairing the wind with the capacity resource of Churchill Falls and not requiring new transmission is a savings for the off-take.

SPEAKER: The hon. the Premier.

PREMIER WAKEHAM: Thank you, Speaker.

We know that the first thing that has to be done is a feasibility study around this wind project. In your opinion, given what both of you have said, is this opportunity something that wind power is being done elsewhere? How would you comment on how you see this proceeding in terms of the viability of this wind project?

SPEAKER: Ms. Katz.

S. KATZ: Mr. Speaker, thank you again for the question.

I think that I can honestly say I’ve heard from a few wind developers in Canada that once they heard the announcement reached out to ask about it. That tells you it’s quite viable.

I’m not a wind expert but they are and they know that it’s a very interesting project to them. I’m not going to comment on who but I will say that the largest builders that we have are quite interested. A number of folks are interested in this project so it is quite a viable option.

SPEAKER: The hon. the Premier.

PREMIER WAKEHAM: Thank you, Speaker.

Our province has the option to buy out the federal stake over time. Would you consider that a normal feature of federal equity participation? How does the department approach it?

SPEAKER: Ms. Katz.

S. KATZ: Thank you, Mr. Speaker.

Yes, actually, it is an option. It is something that is done in a number of projects that I’ve worked on, be it with the Canada Infrastructure Bank or with the Canada Growth Fund. It is a typical feature where there is an option for a provincial utility to buy out the project at a later date. Or First Nations, which we’ve got First Nations partners interested in this project as well.

SPEAKER: The hon. the Premier.

PREMIER WAKEHAM: So the project will get built without any risk to the taxpayers of Newfoundland and Labrador, but at some point in the future should the government of the day decide that they would like to take an equity stake or buy out the federal government equity stake, that option is available to them?

SPEAKER: Ms. Katz.

S. KATZ: Yes, that option is available to them.

SPEAKER: The hon. the Premier.

PREMIER WAKEHAM: Thank you, Speaker.

In terms of the investment tax credits, do they apply to the wind project on the same terms as the Hydro build?

SPEAKER: Ms. Katz.

S. KATZ: Sorry, let me just clarify the question, Mr. Speaker. So the terms on the wind, are they the same as for the Hydro build? Did I get that correct?

We’re still negotiating the loan guarantee and other aspects of financing with the parties, so I’m not at liberty to get into the details. The federal government is not taking an equity stake in the Hydro project. There will be a loan guarantee for the Hydro project, if I’m understanding the question correctly.

SPEAKER: The hon. the Premier.

PREMIER WAKEHAM: Thank you, Speaker.

The Labrador Trough corridor was referred in August 2026 to the Major Projects Office. What was it about this agreement that met the threshold?

SPEAKER: Ms. Katz.

S. KATZ: Thank you, Mr. Speaker.

As we discussed, the Labrador Trough is a significant, massive geological belt and mining region stretching approximately 1,100 kilometres across both Labrador and Quebec. It is a huge area with high purity iron ore, which plays an essential role in the decarbonization of the global steel industry, and steel is one of the most widely used materials and is fundamental to manufacturing, construction, transportation and infrastructure projects across Canada and around the world.

SPEAKER: The hon. the Premier.

PREMIER WAKEHAM: Thank you, Speaker.

It was asked earlier about the timelines for the Major Projects Office. Is there a target timeline for federal decisions on referred projects?

SPEAKER: Ms. Katz.

S. KATZ: Thank you for that question.

In terms of these projects, for the electricity projects, the Government of Canada will look to refer the projects to the Major Projects Office following the signing of definitive agreements. So at that time, the government will work with the Major Projects Office to determine what is the right path forward for the projects. At that point, we will have negotiated a whole bunch related to the financing. So I expect it will be very focused on streamlining the parameterizing processes to make sure that those projects go ahead.

I want to note that not all projects referred to the Major Projects Office are designated under the Building Canada Act. That is a tool that is used to help projects advance for the benefits of Canadians, but not all projects require it.

If you’ll permit me, Mr. Speaker, I just wanted to clarify an answer that I had previously about the projects that are under construction right now. As we understand it, the Contrecoeur, Darlington, McIlvenna Bay, NCTL – that was a couple of weeks ago – and Nouveau Monde Matawinie Mine are under construction right now, of the projects that were referred to the Major Projects Office.

SPEAKER: Thank you.

Now, how could I ever have forgotten?

The hon. the Member for Burin - Grand Bank.

SOME HON. MEMBERS: Hear, hear!

P. PIKE: Thank you, Speaker.

Certainly great to have this opportunity this morning to ask questions to the representatives of National Resources Canada.

Speaker, the Conservative government is claiming this deal will provide Labrador with more power, but the 400 megawatts of that comes from a proposed wind project. Is that correct?

SPEAKER: Ms. Katz?

S. KATZ: Thank you for the question, Mr. Speaker. I do not have the specifics of how Newfoundland and Labrador Hydro intends to split up the power. I can’t comment on that.

SPEAKER: The hon. the Member for Burin - Grand Bank.

P. PIKE: It’s our understanding that 400 megawatts will come from this proposed wind project.

The agreement says that – and you already touched on it, Ms. Katz – but the agreement says the proposed wind project is subject to a feasibility study. Can you explain what the feasibility study will entail?

SPEAKER: Ms. Katz:

S. KATZ: Thank you, Mr. Speaker, for the question.

Typically – I will speak to in general feasibility studies, because this one would be undertaken by an independent power producer. Typically feasibility studies look at the wind resource, look at the geography to determine the best location, determining where it would connect to a transmission line, so the transmission interconnect studies. But a lot of the studies would be related to where the best wind resource is and they would study that over a period of time to determine where it makes the most sense to put the wind resource and the wind turbines.

SPEAKER: The hon. the Member for Burin - Grand Bank.

P. PIKE: Is Indigenous approval required for this proposed wind project?

SPEAKER: Ms. Katz.

S. KATZ: Thank you for the question.

In this case the federal government doesn’t have a review process for wind projects in terms of an impact assessment. Typically a provincial review would take place and as part of those processes there is a duty to consult. There would be a duty to consult on that project.

SPEAKER: The hon. the Member for Burin - Grand Bank.

P. PIKE: Would you be able to tell us which Indigenous groups will need to provide approval for it to proceed?

SPEAKER: Ms. Katz.

S. KATZ: Thank you, Mr. Speaker, for the question.

At this time it is not clear where the wind resources will be. If they track the existing transmission lines, it is expected that it would be the Innu Nation. It just depends on where, because it could be a number of sites where the wind projects would be. So that would be determined at the time of the project development.

SPEAKER: The hon. the Member for Burin - Grand Bank.

P. PIKE: So at this point we don’t know which Indigenous groups are going to be consulted on this project?

SPEAKER: Ms. Katz.

S. KATZ: Correct, Mr. Speaker.

It is too early to tell but, as I said, if it is tracking the transmission lines, which we understand it could, that would be the Innu Nation.

SPEAKER: The hon. the Member for Burin - Grand Bank.

P. PIKE: Has this project received any environmental approvals yet?

SPEAKER: Ms. Katz.

S. KATZ: Thank you, Mr. Speaker, for the question.

No, it is in early stages and it will be subject to a feasibility study. Then it would undergo, as I understand, provincial approvals.

SPEAKER: The hon. the Member for Burin - Grand Bank.

P. PIKE: So we have no idea, then, when the entire 2,000 megawatts of wind would be online given that there has to be a feasibility study, environmental studies, engineering and Indigenous consultations?

SPEAKER: Ms. Katz.

S. KATZ: Thank you, Mr. Speaker, for the question.

I think that it would be online as quickly as those things can get done. I think that there is interest on both sides to get this wind project done, and we are working expeditiously with the provinces on the other aspects of the deal. I anticipate that we will work very quickly with Newfoundland and Labrador Hydro and to seek an independent power producer for this project. That’s part of, probably, a request for information to get more details on the project.

SPEAKER: The hon. the Member for Burin - Grand Bank.

P. PIKE: Quebec will get 1,600 megawatts of wind power, is that correct or not?

SPEAKER: Ms. Katz.

S. KATZ: Thank you, Mr. Speaker.

I don’t have the exact details of what is considered. I understand that Quebec has agreed to be a very significant off-taker of the wind when it gets built.

SPEAKER: The hon. the Member for Burin - Grand Bank.

P. PIKE: This is very important to the overall project, as you know. We would like to have those numbers. These are the numbers that we have, but we would like to have those numbers.

So that means that Newfoundland and Labrador would only get 400 megawatts if Quebec is getting 1,600 megawatts. That is only 25 per cent for Newfoundland and Labrador. Did Newfoundland and Labrador try to get more than one-quarter of the wind energy?

SPEAKER: Ms. Katz.

S. KATZ: Thank you, Mr. Speaker.

I think that is a question for the negotiating team and for Newfoundland and Labrador Hydro. I think, also, the previous question was for the future proponent.

SPEAKER: The hon. the Member for Burin - Grand Bank.

P. PIKE: So obviously you don’t know the answer.

Thank you.

I have a question – a burning question really. Why wouldn’t Quebec build this wind capacity in their own province? What benefit do they get from building it in Labrador?

SPEAKER: Ms. Katz.

S. KATZ: Thank you, Mr. Speaker, for the question.

I think that would be better referred to Hydro-Québec on the wind in their province and their desire to buy wind in Labrador.

SPEAKER: The hon. the Member for Burin - Grand Bank.

P. PIKE: The agreement says ownership will be determined by Newfoundland and Labrador Hydro if undertaken and completed. So even the ownership structure is up in the air – and pardon that pun, by the way. Does that lead to more uncertainty and doubt that this project will actually happen?

SPEAKER: I am not sure who is taking this one.

S. KATZ: I will take it.

SPEAKER: Ms. Katz.

S. KATZ: Thank you, Mr. Speaker.

We are working very closely with the Government of Newfoundland and Labrador and Newfoundland and Labrador Hydro and will work closely to ensure that a feasibility study happens and determine at that time how the project will proceed.

SPEAKER: The hon. the Member for Burin - Grand Bank.

P. PIKE: Did the Premier or his team ask for assistance with any additional transmission lines in Newfoundland and Labrador, such as the line to the south coast of Labrador or additional capacity on the Labrador-Island Link?

SPEAKER: Ms. Katz.

S. KATZ: Thank you, Mr. Speaker.

I am not aware of additional but it is a very large department and I work very specifically on these large projects. I am not aware of other transmission requests, but there could be other transmission requests.

I should also say that there will be tax credits and there are tax credits related to interprovincial transmission and soon-to-be intraprovincial transmission.

SPEAKER: The hon. the Member for Burin - Grand Bank.

P. PIKE: The people of Southern Labrador are certainly eagerly awaiting some good news when it come to the Labrador Island Link.

Did the Premier or his delegates ask for assistance with any additional transmission lines through Quebec or the ability to transmit power through Quebec?

SPEAKER: Ms. Katz.

S. KATZ: Thank you, Mr. Speaker.

Additional to what – additional to these projects?

SPEAKER: The hon. the Member for Burin - Grand Bank.

P. PIKE: Yes.

SPEAKER: Ms. Katz.

S. KATZ: There has been discussion of transmitting the power to Quebec to the Romaine Complex and, as indicated, there are tax credits available for these projects. The Government of Canada has committed to working with the proponents on accessing the tax credits, ensuring that’s efficient.

SPEAKER: The hon. the Member for Burin - Grand Bank.

P. PIKE: Thank you.

What is the estimated price for the energy derived from the wind for this project? Do you have any idea?

SPEAKER: Ms. Katz.

S. KATZ: Thank you, Mr. Speaker.

That would be a better question to the future proponent at this time. It’s early to say. It’s a little too early to tell.

SPEAKER: The hon. the Member for Burin - Grand Bank.

P. PIKE: Thank you, Speaker.

I have no more questions.

SPEAKER: The hon. the Minister of Energy and Mines.

L. PARROTT: Thank you, Mr. Speaker.

Just a question: would either of you be aware of any major project in Canada that would progress without a prefeasibility, feasibility, environmental or FID?

SPEAKER: Mr. Leyburne.

D. LEYBURNE: Mr. Speaker, these are pretty standard requirements in order to meet the investor milestones for major projects. No, this is quite standard. It would be quite difficult to move to any one of those steps without having done the one before.

SPEAKER: The hon. the Minister of Energy and Mines.

L. PARROTT: So it’s pretty safe to say that in your opinion, no provincial, no federal or no private company would move a project of this magnitude further without taking those steps first, correct?

SPEAKER: Mr. Leyburne.

D. LEYBURNE: Yeah, that is correct. Of course, as the scale and the complexity of the projects increase, the amount of due diligence required at the front end to make sure the projects are being set up in a good way is even more important.

SPEAKER: The hon. the Minister of Mines and Energy.

L. PARROTT: Just for clarity for the Members opposite, could you describe in your own words what an off-take agreement would mean, specifically when it refers to power? Well, they don’t understand.

SPEAKER: Ms. Katz.

S. KATZ: Thank you for the question, Mr. Speaker.

Someone who is willing to purchase at a specific rate. An arrangement to buy power at a specific rate for a specific period of time.

SPEAKER: The hon. the Minister of Energy and Mines.

L. PARROTT: Thank you very much, Mr. Speaker.

When referring to wind – and we look at the 2,000 proposed megawatts with a 1,600 megawatt off-take agreement and 400 megawatts remaining here in the province; the availability of federal partnerships, along with Indigenous partnerships and provincial participation, if they so desire, along with the ability for us to purchase back any investment that the federal government makes from an equity standpoint – would that clarify where the wind project is right now as it progresses through common industry practices of prefeasibility, feasibility, environmental and FID?

SPEAKER: Ms. Katz.

S. KATZ: Mr. Speaker, that’s a typically standard approach for projects is to go through prefeasibility, feasibility, et cetera, and then we would get into environmental assessments, consultation, et cetera, to get a project to move ahead.

SPEAKER: The hon. the Minister of Energy and Mines.

L. PARROTT: The federal government has made a commitment of a billion dollars, I believe for this proposed wind project. If the wind project does not move forward does this billion dollars stay on the table for any other project of this type to happen throughout the province?

SPEAKER: Ms. Katz.

S. KATZ: Thank you for the question.

As the prime minister indicated in his letter, should the wind project not proceed, the billion dollars in value can be made up in other projects of interest to the province.

SPEAKER: The hon. the Minister of Energy and Mines.

L. PARROTT: Thank you very much.

Just for clarification and you may not have an answer to this but I’ll ask it. In the previous MOU that the previous Liberal government of the day signed, had they approached the federal government looking for support to put power lines to the South Coast of Labrador?

SPEAKER: Mr. Leyburne.

D. LEYBURNE: Mr. Speaker, neither of us were as directly involved in the negotiations, certainly between the two provinces nor with the federal discussions. Whether there was a specific request made for the south shore, I’ll be honest and say I’m not sure.

SPEAKER: The hon. the Minister of Energy and Mines.

L. PARROTT: But request aside there was no agreement with the federal government for any sort of funding with regard to the previous MOU, is that correct?

SPEAKER: Ms. Katz.

S. KATZ: Thank you, Mr. Speaker.

Other than tax credits that would have been available to any clean electricity project in Canada, not to my knowledge, no.

SPEAKER: The hon. the Minister of Energy and Mines.

L. PARROTT: I’ve heard critics talk about wind and capabilities, capacity versus energy and all of the things associated with wind projects. There’s a very distinct reason why we look at wind around a facility like a hydroelectric facility or certainly a geothermal facility and that has to do with the ability to provide firm power.

Would it be your assertion that a big part of the reason why wind would be successful in Labrador is because of its close proximity to both Churchill Falls, Muskrat Falls and Gull Island?

SPEAKER: Mr. Katz or Mr. Leyburne.

D. LEYBURNE: Yes, Mr. Speaker, that’s correct. Hydro dams within an electricity system are effectively the very large batteries and when you operate a wind project in the absence of something like hydro as a baseload it does require some other form of storage. In this case this is a battery that you can produce electricity from on call but can also be used to smooth out the variability of wind projects.

SPEAKER: The hon. the Minister of Energy and Mines.

L. PARROTT: When we look at the overall value of the project in Labrador and we talk about wind, we talk about Gull, we talk about the Churchill Falls upgrades, certainly the ability to expand our mining and, I guess, giving Labrador the power that it not only needs but deserves, would you argue that this is a very big step forward for a northern part of Canada and a step that proves that we’re are world leaders?

SPEAKER: Mr. Leyburne.

D. LEYBURNE: The scale of this project means that anywhere in Canada this would be a massive project. In a region that has seen fewer larger projects and not as frequently attracting tens of billions of dollars, I think you can expect, if these projects move forward, for them to be additionally transformative.

I think it was mentioned off the top, but we’re talking about $30 billion that could be brought to bear in the next 15 years or so, and that’s only half of the value that you can expect these might collectively produce over their lifespan.

So, yes, we use the phrase transformative strategy, in this case, I think it would be truly transformative.

SPEAKER: The hon. the Minister of Energy and Mines.

L. PARROTT: Mr. Leyburne, from your 20 years’ experience with NRCan, when you look at projects across Canada that changed really the landscape and the capabilities of a specific geographical area as this would, would it be safe to say that the associated off-take industries and development of those areas really is immeasurable?

SPEAKER: Mr. Leyburne.

D. LEYBURNE: Well, I hope we can measure it eventually in the form of economic activity, but, yes, in addition to all the obvious benefits that these projects and electrification brings, the doors that are open when you have access to incremental electricity, I think we’re just starting to wrap our heads around.

With every passing year, certainly around the world, electricity takes up a bigger and bigger slice of the pie in the overall energy mix. As the prime minister said, being master of your own house in the electricity space is valuable now, but probably even more valuable with each passing year.

SPEAKER: The hon. the Minister of Energy and Mines.

L. PARROTT: I am certain much as this province is doing, we’re doing a 10-year energy plan, the federal government has obviously looked at energy capabilities right across the country.

Can you just comment on what the successful completion of this plan would mean for, not just for Newfoundland and Labrador, but Canada as a whole?

SPEAKER: Mr. Leyburne.

D. LEYBURNE: I guess in most basic terms, it would provide a reassurance that for this entire part of the country there’s a plan. Every part of Canada and every part of the world is going to have to do some soul-searching about where it will draw its electricity from. When you can take off a massive bite of that demand with a single project like this, it provides a reassurance, not just to the region but to the North American grid.

SPEAKER: The hon. the Minister of Energy and Mines.

L. PARROTT: We talked earlier about the loan guarantee that the federal government is currently negotiating with the Province of Quebec. We’ve heard people talk about the risks associated with the project and we have been very clear that the risks associated with the project from Newfoundland and Labrador’s standpoint have been mitigated to the fullest extent possible.

Can you just speak about what a loan guarantee from a risk standpoint means for this project moving forward?

SPEAKER: Ms. Katz.

S. KATZ: Mr. Speaker, I’m going to clarify that we are working with Hydro-Québec. The province is currently in an election state and so we’re working very closely Hydro-Québec on the loan guarantee.

So the Gull Island Project is huge. It will strengthen Canada’s position as a global leader in clean, reliable and affordable electricity. It’s one of the largest perspective hydroelectric developments in North America and is going to generate significant economic investments, long-term employment and strong economic partnerships with the Inu Nation of Labrador.

Working closely with the Minister of Finance and the Department of Finance and we are going to negotiate a loan guarantee with Hydro-Québec backed by the federal government to ensure that this project proceeds and with the right financial conditions to make sure that it proceeds.

SPEAKER: The hon. the Minister of Energy and Mines.

L. PARROTT: I know I have specifically talked with the companies, specifically Vale from Voisey’s Bay, asking them to initiate conversations with the federal government with regard to electrifying Voisey’s Bay.

Can you just elaborate on what other kind of funding outside of the tax credit is available for electrification of Labrador and what the ultimate goal is?

SPEAKER: Mr. Leyburne.

D. LEYBURNE: Yes, the federal government has a pretty broad range of tools right now available to help with electricity projects. The tax credits are perhaps the most visible because they’re used at the front end but we have the Clean Growth Fund which is producing funding for a number of electricity projects already. The Canadian Infrastructure Bank has dedicated a significant proportion of their overall portfolio to electricity projects. We’ve got the SRF which is an inheritor of the Strategic Innovation Fund that is putting money into electricity-related projects.

Within Natural Resources Canada, we have the SREPs program that is a $4.5 billion program to assist with clean electricity projects across the country, and as we alluded to earlier, even though it is a mining-based program, the First and Last Mile Fund, a number of the projects it’s funding are electricity projects to enable mining development across the country.

SPEAKER: The hon. the Minister of Energy and Mines.

L. PARROTT: If you could elaborate based on that funding, and I know specifically with CIB, but CIB and any other portions of that funding that would not only help promote but foster Indigenous and Innu involvement in these projects. Can you highlight exactly what is out there from the CIB and what it means and how they can take advantage of that?

SPEAKER: Ms. Katz.

S. KATZ: Thank you, Mr. Speaker.

So there is also the Canada Indigenous Loan Guarantee Program that is available. There are various tools within the Canada Infrastructure Bank and others to support Indigenous investment in major projects. So all of those tools are available. As my colleague Mr. Leyburne mentioned, including the SREPs program has opportunities for Indigenous groups to build projects and be a party to projects.

SPEAKER: The hon. the Minister of Energy and Mines.

L. PARROTT: Just so we’re clear, there’s been questions around consultation with Indigenous, certainly feasibility, environmental, all the steps that have to be taken in order to get a project across the line. Am I right in saying that the federal government through our involvement in the Major Projects Office, through the First and Last Mile Fund, through one project, one review, not only expects all of those things from the Province of Newfoundland and Labrador, but are receiving them and that we are working closely together from a departmental standpoint and have been since the start?

SPEAKER: Ms. Katz.

S. KATZ: Yes, thank you, Mr. Speaker.

I will add that partnership and consultation with Indigenous peoples is central to this government’s mission to build nation-building projects, and that is something that is very critical to our involvement in any project being considered: meaningful participation and partnership from Indigenous peoples on decisions that affect them. That is a critical part of the projects that we are working on and we have been working on with the department in Newfoundland and Labrador.

SPEAKER: The hon. the Minister of Energy and Mines.

L. PARROTT: I just want to go to Labrador West one more time. I know outside of the new projects, outside of Kami or certainly Julienne Lake or Iron Bear or other projects that we’re hoping to get across the line, the federal government has worked very closely with both Tacora Resources and Rio Tinto. Can you just highlight a little bit for what this project means for them as an existing entity and certainly what it means to the people of Labrador West?

SPEAKER: Ms. Katz.

S. KATZ: Thank you for the question.

It means more reliable and affordable power that will be produced and available. It can help the mining companies. If they choose to decarbonize certain aspects of their operations, they can do so with this available power. It will help with the newly announced funding for Goose Bay, for the upgrades to the base, and it will make power available for the households in Labrador West.

SPEAKER: Thank you.

The hon. the Member for St. John’s West.

K. WHITE: Thank you, Speaker.

The Premier doesn’t talk about the fact that Newfoundland and Labrador is getting less federal funding. He recently posted a video saying: Watch me as I explain the $3.5 billion in value Newfoundland and Labrador gets from the federal government. There was no video explaining the $6.5 billion Quebec got in the same deal. Can you please explain what the $6.5 billion Quebec receives is for?

SPEAKER: Ms. Katz.

S. KATZ: Hi, thank you for the question.

I’m not going to get into all the details because I am not in a position to talk about elements that are commercially sensitive, but what I can say is that a large portion of the support, as my colleague, Mr. Leyburne, mentioned, is through tax credits. Tax credits track who spends the money and they are a direct percentage of that. The benefit of that support accrues to those who are making the investments. And again, a large portion of the costs are being borne by Quebec as the primary off-taker of the power.

SPEAKER: The hon. the Member.

K. WHITE: Thank you.

For clarification, benefits of ITC and the loan guarantee go to Hydro-Québec to reduce their financial contribution to the project, correct?

SPEAKER: Ms. Katz.

S. KATZ: Thank you for the question.

That’s how ITCs work, Speaker. ITCs reduce the capital cost of the project.

SPEAKER: The hon. the Member.

K. WHITE: Thank you.

Did the Government of Newfoundland and Labrador ask for an extra $3 billion to equal what Quebec receives?

SPEAKER: Ms. Katz.

S. KATZ: Thank you for the question.

I have not been privy to all the conversations. Again, all of the federal financing tracks the investments made.

SPEAKER: The hon. the Member.

K. WHITE: Thank you.

You may be aware, but equalization has been a sore spot in this province, as many people feel Newfoundland and Labrador does not get enough in terms of equalization payments compared to other provinces. In fact, the previous Liberal government commenced a court action arguing that the equalization formula was unfair. Currently, Quebec makes about $18 billion from hydroelectricity yet still receives up to $14 billion in equalization.

How will any of the new revenue from this deal effect Quebec’s equalization payments?

SPEAKER: Mr. Leyburne.

D. LEYBURNE: Mr. Speaker, at this point, being able to anticipate the specific impacts of any of this economic activity on the equalization formula or any other tax or federal measure would be too hypothetical to speculate at this point.

SPEAKER: The hon. the Member for St. John’s West.

K. WHITE: Thank you.

Does the federal government believe that this is the best deal Newfoundland and Labrador could get from Quebec for the Churchill River?

SPEAKER: Mr. Leyburne.

D. LEYBURNE: Our starting point was that we wanted to see the two parties come to an agreement in good faith that they felt respected the needs of both provinces. Once we were satisfied that they had reached that conclusion, we were happy to step in with the help we provided.

SPEAKER: The hon. the Member for St. John’s West.

K. WHITE: Thank you.

Can you tell us what Michael Sabia’s role in negotiation was?

SPEAKER: Mr. Leyburne.

D. LEYBURNE: Mr. Speaker, the federal family that was involved across multiple departments and agencies in Ottawa was very broad. The clerk, as the prime minister’s deputy minister was very involved, as the prime minister himself was, but, as I said, it was a multi-party effort. The Department of Natural Resources, finance, the Privy Council Office, where the clerk works were all involved.

SPEAKER: Ms. Katz also wants to respond. Is that okay to you?

S. KATZ: I just wanted to add that the Privy Council Office is responsible for intergovernmental affairs and all relationships with the provinces and so as such, again, the prime minister’s deputy minister is the lead of that department.

SPEAKER: The hon. the Member for St. John’s West.

K. WHITE: Thank you.

It was noted earlier that demand for electricity would be higher in the coming years. Can you tell us how you expect that to effect electricity prices?

SPEAKER: Mr. Leyburne.

D. LEYBURNE: Mr. Speaker, it is very difficult to answer that question with specifics for timing and in what locations. The reality is, as we said in the electricity strategy, as the world moves to more and more electrification of industrial processes, you may find that electricity bills may go up in some places but are offset by reductions in energy costs for other fuels.

Generally speaking, the great utilization you can make of transmission assets by adding more consumers and more production and maximizing the use of those wires, it does tend to have a positive effect on prices.

SPEAKER: The hon. the Member for St. John's West.

K. WHITE: Thank you,

If the wind project doesn’t go ahead, will the federal government make it up and provide an equal new benefit to Newfoundland and Labrador?

SPEAKER: Ms. Katz.

S. KATZ: Thank you, Mr. Speaker.

As I indicated earlier, if the wind project does not proceed, as the Prime Minister indicated to the Premier in his letter, the value – the billion dollars in value will be available to other projects.

SPEAKER: The hon. the Member for St. John's West.

K. WHITE: The federal government and Quebec – communiqués from both of those regarding this deal claim that the Churchill Falls expansion project will create an additional 2500 megawatts. The Newfoundland and Labrador government is claiming that it is on the backburner and relegated to a feasibility study. Can you please explain the discrepancy in those communications?

SPEAKER: Ms. Katz.

S. KATZ: Thank you, Mr. Speaker, for the question.

I would defer those kinds of questions to Hydro-Québec, but what I will say is similar to the wind, the expansion is a study and it has been indicated there will be a study. The federal government is working very closely with both parties on that, on all aspects of the deal.

SPEAKER: The hon. the Member for St. John's West.

K. WHITE: Can you please explain or tell us what are the federal governments requirements or commitments to Indigenous people, regarding this agreement?

SPEAKER: Ms. Katz.

S. KATZ: As I indicated earlier, the federal government has engaged with the Innu Nation and will continue to do so moving forward. Minister Hodgson met with the Innu Nation Grand Chief on August 17 prior to the announcement, and the department officials continue to engage with the Innu Nation on these projects and the opportunities.

SPEAKER: The hon. the Member for St. John's West.

K. WHITE: Does it concern you that the Innu Nation has expressed they may not sign off on this agreement by the December 31 deadline?

SPEAKER: Ms. Katz.

S. KATZ: Thank you for the question.

We are continuing to work very closely with the parties to advance the agreements to make sure that they reach definitive agreement. We are not a party to the DCIA and so it’s up to the two parties to conclude negotiations on that, but we remain committed to working closely with the two parties on the negotiation.

SPEAKER: The hon. the Member for St. John's West.

K. WHITE: Would you say that the federal government would like this agreement to proceed?

SPEAKER: Mr. Leyburne.

D. LEYBURNE: Mr. Speaker, if the question is about whether we would like the overarching agreement to proceed, the answer is yes. We’ve had a long interest in seeing major projects in the electricity and the hydroelectricity space move forward, and so yes, it is in the federal interest to see these projects progress.

SPEAKER: The hon. the Member for St. John's West.

K. WHITE: And you would agree that the federal government is interested in interprovincial co-operation and national unity, yes?

SPEAKER: Mr. Leyburne.

D. LEYBURNE: Mr. Speaker, yes. This is a core function and reason for the federal government to exist, to assist with the health of the federation.

SPEAKER: The hon. the Member for St. John’s West.

K. WHITE: Thank you.

You’d also agree that the current Quebec government seems pleased with this deal, yes?

SPEAKER: Mr. Leyburne.

D. LEYBURNE: Mr. Speaker, our sense, and the reason we are enthusiastic about the project, is that both provinces, both negotiating parties, felt satisfied with the agreement.

SPEAKER: The hon. the Member for St. John’s West.

K. WHITE: I think it’s fair to state that, in August, there was a fair likelihood that a separatist party could form government in Quebec. Would you agree that would have been of concern to the federal government?

SPEAKER: Mr. Leyburne.

D. LEYBURNE: Mr. Speaker, what I would say is, we are hoping to see this project developed in a way that it has a durability. The election of one government or another in a provincial capital is a regular occurrence for us within the federal family. We have shown that we can work with all parties, once elected.

SPEAKER: The hon. the Member for St. John’s West.

K. WHITE: Thank you.

Do you think it’s possibly that the federal government was interested in announcing this deal before a separatist party possibly took over?

SPEAKER: Ms. Katz.

S. KATZ: Thank you for the question.

We announced this deal as it was ready to be announced. Timing was decided by the two parties as they came to an agreement. We worked very closely with them, but this was as the timing of them coming to an agreement.

SPEAKER: The hon. the Member for St. John’s West.

K. WHITE: Did the federal government insist on Newfoundland and Labrador giving up market-based pricing because Quebec wanted them to?

SPEAKER: Ms. Katz.

S. KATZ: Thank you for the question, Mr. Speaker.

As I indicated, we were not involved in the Definitive Cooperation and Implementation Agreement negotiations.

SPEAKER: The hon. the Member for St. John’s West.

K. WHITE: Would you agree that it is the role of the federal government to make the pie bigger, but not the role of the federal government to determine how big the piece of the pie was for each province?

SPEAKER: Mr. Leyburne.

D. LEYBURNE: Mr. Speaker, yes, I would agree with that.

The negotiations happened between two parties. We want to see good projects move forward. How the relative risk, responsibilities and rewards are divided between the two parties was solely at their discretion.

SPEAKER: The hon. the Member for St. John’s West.

K. WHITE: Would you agree that it is the Premier’s job to ensure Newfoundland and Labrador benefits?

SPEAKER: Mr. Leyburne.

D. LEYBURNE: Mr. Speaker, I’m sure that’s a question best addressed to the Premier but, generally speaking, I would assume that is his primary aim.

SPEAKER: The hon. the Member for St. John’s West.

K. WHITE: We can’t ask questions.

That’s it for me.

Thank you, Speaker.

SPEAKER: Can we reset the clock, please?

The hon. the Premier.

PREMIER WAKEHAM: We have shared in this House of Assembly a copy of the letter that the prime minister wrote to me in support of this project. I am wondering if either one of the guests in the Assembly are aware of a similar letter that the prime minister would have written to the former Liberal government when they finalized their negotiations on their previous MOU?

SPEAKER: Ms. Katz.

S. KATZ: Thank you, Mr. Speaker.

We were not close to the deal and I would have no knowledge of a letter at that time.

SPEAKER: The hon. the Premier.

PREMIER WAKEHAM: Thank you.

In this letter, the prime minister clearly lays out the support for this project and this agreement and the support for the Province of Newfoundland and Labrador. One of the things that the letter talks about, obviously, is the federal loan guarantee for Gull Island and it particularly talks about reducing the financial cost of the project.

Would you agree that the provision of a loan guarantee actually helps reduce the cost of the project?

SPEAKER: Ms. Katz.

S. KATZ: Thank you, Mr. Speaker.

Yes, I would agree that backing a project through a federal loan guarantee is meant to reduce the financing costs of the project because the federal government’s borrowing costs are lower, typically, than most parties.

SPEAKER: The hon. the Premier.

PREMIER WAKEHAM: Speaker, when we reduce the actual cost of the project, considering that this project will be financed 75 per cent, that is a savings on the cost, which would result in a lower cost of power to the off-takers; is that correct?

SPEAKER: Ms. Katz.

S. KATZ: Thank you, Mr. Speaker, for the question.

There generally is a correlation between lower borrowing costs and cost of power. However, we are not engaged in the setting of costs of power associated with that deal. That is solely the responsibility of the joint venture that will undertake that project.

SPEAKER: The hon. the Premier.

PREMIER WAKEHAM: Speaker, I just reference that because the fact of the matter is the Province of Newfoundland and Labrador will own 60 per cent of the Gull Island project. Hydro-Québec are actually building it and paying for it. So the benefits of the loan guarantee are not simply to the Province of Quebec. I would ask either one to comment on that.

SPEAKER: Ms. Katz.

S. KATZ: Thank you for the question.

Yes, I would agree that the fact that you have that asset at the end is a very significant value to the people of Newfoundland and Labrador.

SPEAKER: The hon. the Premier.

PREMIER WAKEHAM: Thank you, Speaker.

Again, when I look at the letter from the prime minister, it talks about, individually, of the investment tax credits and, again, there has been a lot of discussion about that. But it also does mention the fact that, as we alluded to earlier, as the minister alluded to earlier, the opportunity is there for us to continue to look at development within our own province as well as in other arrangements, and the availability of investment tax credits and opportunities for those projects as well.

SPEAKER: Ms. Katz.

S. KATZ: Thank you, Mr. Speaker.

Absolutely, and there’s not just the electricity tax credits. There’s the Clean Technology Investment Tax Credit, there’s the Clean Technology Manufacturing Investment Tax Credit, there is the Critical Minerals Exploration Tax Credit. There are a number of tax credits that are available in a variety of areas for the province, and much of it is capital expenditure.

SPEAKER: The hon. the Premier.

PREMIER WAKEHAM: Thank you, Speaker.

In terms of the Major Projects Office, again, it’s described as structuring federal financing. Does it decide the financing or assemble what departments and agencies already have?

SPEAKER: Ms. Katz.

S. KATZ: Thank you, Mr. Speaker.

It’s a one-window approach, and we’re actually behaving that way right now. We have been throughout this whole process, working as one window. I work very closely with my colleagues in the Department of Finance at the Canada Infrastructure Bank, at the Canada Growth Fund, in the Canadian Indigenous Loan Guarantee Program and through all the funding resources in Transport Canada and in the Department of Natural Resources to ensure that there is a one-window approach to federal financing.

So when you look at any project that is associated with these in through the Labrador Trough, that has been a referred transformative strategy as well as the Atlantic Energy Strategy. All of those projects will benefit from the coordinated federal financing approach that the Major Projects Office takes.

SPEAKER: The hon. the Premier.

PREMIER WAKEHAM: Thank you, Speaker.

Following up on that, does the Major Projects Office have the authority over departments or does it coordinate and rely on them to move?

SPEAKER: Ms. Katz.

S. KATZ: Thank you, Mr. Speaker.

The authorities typically rest with the ministers responsible. The Major Projects Office does not have the authority. With that said, we are all beating the same drum, marching in the same order – I’m very bad with references. We are all working as one team to build Canada. That is the priority of this government. So it was very clear when we brought all of our colleagues together to look at these opportunities, we built the financing package to meet the significant opportunity that is here today.

SPEAKER: The hon. the Premier.

PREMIER WAKEHAM: Speaker, just following up on that, in terms of the federal financing. Does referral to the Major Projects Office let the federal financing be structured as a package rather than through separate program applications?

SPEAKER: Ms. Katz.

S. KATZ: Thank you, Mr. Speaker.

Yes, the referral of the strategies to the Major Projects Office does benefit these projects in a significant way.

SPEAKER: The hon. the Premier.

PREMIER WAKEHAM: Is there a role for the provincial government inside the office’s process for these projects?

SPEAKER: Ms. Katz.

S. KATZ: Thank you, Mr. Speaker.

Yes, the Major Projects Office works very closely with provincial governments and provincial utilities and proponents to work on projects and to structure financing to work on the regulatory processes. It also works very closely with Indigenous communities and impacted First Nations to ensure that the projects go forward in the right way.

SPEAKER: The hon. the Premier.

PREMIER WAKEHAM: Thank you, Speaker.

I realize that the time is running out, so I just want to take an opportunity to thank the two representatives from the federal government for coming here today and give them an opportunity to perhaps just summarize the federal involvement in this major agreement, in this agreement that we have in front of us today. We’ve talked about a lot of different things in terms of how the financing will work and in terms of the investments and stuff. Just to give them an opportunity for both of them to perhaps wrap up.

SPEAKER: Mr. Leyburne.

D. LEYBURNE: Thank you, Mr. Speaker.

I think if I were to sum up, maybe where I started today, this is a significant project for Canada. As I mentioned no matter where you plunk these assets, they would be of extreme value to any country in the world. I think when you’re talking about adding gigawatts of power, to the North American grid there are only a few corners of this continent that can make that claim and the ability to do it.

The federal involvement was really a recognition of the importance and the scale of this opportunity.

As I said at the beginning, it’s not just about the electricity, it’s about the mining, it’s about the community development, it’s about the supply chains that can be developed through a project of this scale.

As such we were extremely happy when the two parties and their utilities, the two provinces and the utilities were able to reach this DCIA. It is a major turning point for this project, but I think also in some ways a major turning point for the federation.

SPEAKER: Ms. Katz.

S. KATZ: Thank you, Mr. Speaker.

There are not many precedents for having federal officials appear in a provincial House. I actually searched it up before coming to see how often it had happened – not very often. Being here is testament to the importance of these projects to the federal government and, by extension, Canada. We’re a strong supporter of clean electricity projects across Canada and we’ve committed tens of billions in tax incentives, strategic financing and targeted programs to catalyze such projects from coast to coast to coast. We believe this is critical to enable prosperity, energy security and sovereignty, affordability and competitiveness for all Canadians.

This agreement was reached by the two provinces, Newfoundland and Labrador and Quebec, with their utilities and they really deserve the credit for the work that led to this milestone. We will all benefit from this generational investment as it will bring new, reliable power, thousands of jobs, energy security and catalyze attentional infrastructure such as mines and rail to our country.

We are really proud to help create the conditions for these investments to succeed.

Thank you for having us today.

SOME HON. MEMBERS: Hear, hear!

SPEAKER: Certainly, on behalf of the Legislature, Mr. Leyburne and Ms. Katz, I want to thank you for coming today and providing all of your answers for Members to consider, and certainly also to all the people of Newfoundland and Labrador who are tuning in, we appreciate your participation.

With that said, based on the rules we all agreed to, we are going to recess now until 1 p.m.

The House is in recess.

Recess

The House resumed at 1 p.m.

SPEAKER (Lane): Order, please!

We are going to continue on. As per the rules that were approved – because words matter – we are going to move on from now until 3 p.m.

We have two new panellists. I would like to welcome Mr. Jason Chee-Aloy, managing director with Power Advisory. Have I got that pronunciation pretty close?

J. CHEE-ALOY: Yes, Mr. Speaker, that is correct.

SPEAKER: Thank you.

And Mr. Brady Yauch – correct? Thank you. He is director of markets and regulatory with Power Advisory.

So we will continue on in the same format as we have been using all along, 15-minute increments, one minute to ask your question and the panellists have whatever time they require to answer the question. Once again, questions to be directed to the Chair. I would ask the two panellists, once a question is asked and before an answer is given, if you could raise your hand so I know who to identify, who is going to answer. Thank you.

Okay, off to the races.

The hon. the Minister of Energy and Mines.

L. PARROTT: Thank you, Mr. Speaker.

Mr. Chee-Aloy and Mr. Yauch, welcome back to the House of Assembly.

Can you describe to me what your firm’s role was in the 2024 MOU and what your role was in the current one?

SPEAKER: Mr. Chee-Aloy.

J. CHEE-ALOY: Mr. Speaker, by way of formality, maybe you can just simply address me every time, and then if Mr. Yauch is going to speak, I can address him.

SPEAKER: Okay, that’s fine. Thank you.

Mr. Chee-Aloy.

J. CHEE-ALOY: Thank you for the question.

We were engaged in early 2023, and our role was predominantly to do market assessments to value the energy from Churchill Falls and really to determine optionality that Hydro-Québec would have in terms of how they would fill their future supply needs as well as potential options for Newfoundland and Labrador in terms of, in the event they did not achieve an agreement with Hydro-Québec, what options did they have. We worked on valuing the supply, principally, for Churchill Falls, and that’s what we mainly did for the 2024 MOU.

With respect to post-2024, we then worked with Newfoundland and Labrador Hydro predominantly on the Churchill Falls Power Purchase Agreement or PPA payment structure.

SPEAKER: The hon. the Minister of Energy and Mines.

L. PARROTT: So is it fair to say that you’ve looked at both structures? Would it be a fair statement to make that you understand the block pricing framework better than anyone in this Chamber?

SPEAKER: Mr. Chee-Aloy.

J. CHEE-ALOY: Mr. Speaker, we did look at different structures. We do understand the block structure that was articulated in the MOU under Schedule F.

SPEAKER: The hon. the Minister of Energy and Mines.

L. PARROTT: In plain terms, what has changed in the pricing of the Churchill Falls power between the 2024 MOU and the current one?

SPEAKER: Mr. Chee-Aloy.

J. CHEE-ALOY: Mr. Speaker, the changes are, there is no more Schedule F. There are no blocks that would be used to price or reprice Churchill Falls power contractually on an annual basis and adjusted that based on those blocks.

The main change has been a fixed price, under the new agreement that will be adjusted per annum by way of an inflation index.

SPEAKER: The hon. the Minister of Energy and Mines.

L. PARROTT: Was the block pricing structure in the 2024 MOU a finished agreement or a concept still to be negotiated?

SPEAKER: Mr. Chee-Aloy.

J. CHEE-ALOY: Mr. Speaker, as Ms. Williams had said yesterday, the MOU represented the principles to which the block structure would be negotiated. There was a lot of discussion in terms of what the blocks were. Those discussions were had with Hydro-Québec as I understood it, but the details in terms of the methodology and the formulas of how to set out the payment structure was still to be negotiated.

SPEAKER: The hon. the Minister of Energy and Mines.

L. PARROTT: In January 2025, when you told the House that details of Schedule F were left for negotiation, would you say that that still held true when the MOU lapsed?

SPEAKER: Mr. Chee-Aloy.

J. CHEE-ALOY: Mr. Speaker, I think the overarching point about the timeline of the MOU would apply to its entirety.

SPEAKER: The hon. the Minister of Energy and Mines.

L. PARROTT: Putting the deal that we have now aside, what does a long-term power pricing structure have to do to work for a 50-year period?

SPEAKER: Mr. Chee-Aloy.

J. CHEE-ALOY: Mr. Speaker, could I ask the minister to rephrase the question a little bit?

SPEAKER: Certainly.

The hon. the Minister of Energy and Mines.

L. PARROTT: So what I’m asking is, in his professional opinion, what does he feel a 50-year term for a pricing agreement would entail?

SPEAKER: Mr. Chee-Aloy.

J. CHEE-ALOY: Based on my experience, having worked on lots of generation contracts around Canada including hydroelectric generation contracts or power purchase agreements as they’re more commonly referred to in the industry – PPAs. Most of those contracts are fixed prices with some form of price escalator based on inflation per annum.

SPEAKER: The hon. the Minister of Energy and Mines.

L. PARROTT: Would you agree that a contract over that term should be clear enough to administer and durable enough to survive any changes and should deliver fair value over the life of the term?

SPEAKER: Mr. Chee-Aloy.

J. CHEE-ALOY: Mr. Speaker, I think any time that two parties enter into a power purchase agreement, there needs to be principles of fairness and if both parties can reach that goal or that principle then it could be a sound contract.

SPEAKER: The hon. the Minister of Energy and Mines.

L. PARROTT: Do you feel that the complexity of a pricing formula can carry a cost all on its own?

SPEAKER: Mr. Chee-Aloy.

J. CHEE-ALOY: Mr. Speaker, I think that really depends on how you structure a contract or a power purchase agreement. I will say that if a power purchase agreement requires a lot of contract management and administration post-execution of a contract, there can be some costs incurred to do that.

SPEAKER: The hon. the Minister of Energy and Mines.

L. PARROTT: So during the life of a 50-year term and a contract, does it not only matter when the money arrives, not just how much?

SPEAKER: Mr. Chee-Aloy.

J. CHEE-ALOY: Mr. Speaker, most all PPAs I know have some sort of annual payment. It’s just this question of what does that payment look like in terms of when the money arrives? It arrives every year.

SPEAKER: The hon. the Minister of Energy and Mines.

L. PARROTT: So the IRC found that the block formula leaned heavily on Hydro-Québec’s own regulated rates and its replacement energy cost with little weight on a broader market. Is a replacement cost a market price?

SPEAKER: Mr. Chee-Aloy.

J. CHEE-ALOY: Mr. Speaker, electricity markets are quite complicated and they’re different per jurisdiction. So there are market prices for replacement costs. There are proxies for fixed-cost recovery in different markets and there are markets that have a single price where the price is expected to include all of those costs. So it really depends on what market or what jurisdiction you’re looking at in terms of how that question gets answered.

SPEAKER: The hon. the Minister of Energy and Mines.

L. PARROTT: We’re looking at Quebec.

SPEAKER: That was the question?

L. PARROTT: Yeah.

SPEAKER: Mr. Chee-Aloy.

J. CHEE-ALOY: Well Mr. Speaker, not to sound this way, but it also depends on how you define a market. But if we think about Quebec in terms of what does that electricity system look like in terms of price signals and markers in terms of value for supply, there is a price that’s paid to most customers that’s predicated in Quebec statute.

There are prices that are produced by Hydro-Québec distribution’s supply plans as they file them with their regulator, and some of those prices indicate contract prices for assets like hydroelectric generation, wind generation. There are prices that get reported by way of average prices that drive revenues on export markets to which Hydro-Québec is doing transactions. So there’s a basket of prices in Quebec that start to provide information in terms of the value of supply.

SPEAKER: The hon. the Minister of Energy and Mines.

L. PARROTT: So under the old MOU, the PPA block pricing probably would have required intensive management, and not only that, it still hadn’t been worked out. So what would be your prediction of the cost, and the work associated with that?

SPEAKER: Mr. Chee-Aloy.

J. CHEE-ALOY: Mr. Speaker, a lot of that really would have depended on how those blocks and the structure of the payments would have been negotiated. Certainly there are more variables to be considered. As I had appeared before this House in January 2025, we discussed wholesale market pricing, we discussed replacement costs, we discussed the price that Hydro-Québec receives for supplying its own load.

So all of those sorts of prices would drive the negotiation in terms of how to determine those blocks, when those blocks would kick in, when they would expire, the weighting of those blocks, and those were just simply to be negotiated.

Depending on other contract terms, whether there were reopeners in the contract to adjust the price outside of the per annum adjustments that were contemplated under the old MOU, those could very well bring on administration, post-contract management.

In essence, what I am saying is it really depends on how you negotiate what the pricing structure looks like, whether there would be additional administrative requirements or other costs post-contract execution.

SPEAKER: The hon. the Minister of Energy and Mines.

L. PARROTT: In the old MOU under Schedule F, who set the rates that most the formula depended on?

SPEAKER: Mr. Chee-Aloy.

J. CHEE-ALOY: Mr. Speaker, at the time of valuing the Churchill Falls supply to Quebec, I don’t remember exact shares, but there was a share that was priced off the Hydro-Québec price that they received for supply for most of Quebec’s load, which is called, basically, the patrimonial supply. Then there were elements of other blocks, like wholesale markets, to which we had to do forecasts. Then there was a waiting, along with replacement costs.

SPEAKER: The hon. the Minister of Energy and Mines.

L. PARROTT: So a part of that pricing came from – and you will have to forgive my French – Régie de l’énergie in Quebec, which is Quebec’s own regulatory board – correct?

SPEAKER: Mr. Chee-Aloy.

J. CHEE-ALOY: Mr. Speaker, as I understand it, for the patrimonial supply, which is something like just over three cents a kilowatt hour, I believe that it in Quebec’s statute. I don’t’ believe the Régie opines and determines that price.

SPEAKER: The hon. the Minister of Energy and Mines.

L. PARROTT: In the previous question, you mentioned that it would have had to been negotiated to be applied or contemplated. So after the previous debate in the House, were there any discussions about how those variables would be applied in definitive agreements?

SPEAKER: Mr. Chee-Aloy.

J. CHEE-ALOY: Mr. Speaker, there was a lot of work done after that. Mr. Yauch and I had appeared before the House in early January 2025, roughly starting in the spring of 2025, early spring. We were asked to do lots of work to come up with different ways to structure the payments as contemplated under Schedule F, in combination with Schedule G from the old MOU.

So we did work with Newfoundland and Labrador Hydro on that for months, basically spring and summer of 2025.

SPEAKER: The hon. the Minister of Energy and Mines.

L. PARROTT: So in Schedule G, it paid $2 billion in 2041, and it rose to $8.4 billion by 2075. Can you explain what that value, what that number does to the shape of the value for the entire deal?

SPEAKER: Mr. Chee-Aloy.

J. CHEE-ALOY: Mr. Speaker, in terms of the schedule of payments as laid out in Schedule G of the former MOU, our firm – therefore, myself – we did not have any input into those numbers. We were not involved in calculating those numbers, so we don’t really know exactly what drove that schedule. So that’s my first point.

The second point is, as I said in January 2025 and I’m establishing this afternoon, we did work on the Schedule F, the so-called blocks. The idea of the blocks was to adjust the price on an annual basis to try to approximate fair value for the Churchill Falls supply. The challenge was when we were working on how to structure the blocks in terms of the different size of the blocks, timing of the blocks, price of the blocks and how to work that altogether and transform that into a logical way where it can reflect the schedule of payments from Schedule G, that proved to be extremely challenging.

SPEAKER: Okay, the minister’s time is up.

The hon. the Member for Mount Scio.

S. STOODLEY: Thank you, Speaker.

On behalf of the Official Opposition, we would like to welcome Power Advisory and thank you very much for being here today. Thank you for your service in the former MOU and the current DCIA. Thank you very much.

I’d like to start with, I guess a specific question. In terms of the current, the new DCIA, if electricity becomes significantly more valuable, let’s say in 20 years, who gets the upside under the new DCIA? Is it Quebec or Newfoundland Hydro?

SPEAKER: Mr. Chee-Aloy.

J. CHEE-ALOY: Mr. Speaker, it really depends on where prices go. In terms of upside, it depends on which party has the ability to receive that upside. Now I will say that – this is just my experience, again – when you’re negotiating a power purchase agreement or you’re, more importantly, the supplier of the electricity within a power purchase agreement, as I’ve established before, most power purchase agreements are a fixed price, escalated per year by inflation. You take a view of the future, and you ask yourself where do I think prices are going, prices that I can actually realize. Then you make a value judgment in terms of what the contract would be offering as revenues because at the end of the day, as the supplier, you’re just looking for revenue certainty and of course you want the most upside.

So you’re making a judgment between the prices that you can actually receive if you did not have that power purchase agreement and prices that you would receive under that power purchase agreement. If the prices in that power purchase agreement are on balance better than what you could receive not having that power purchase agreement, then I would say the upside is with the power purchase agreement. The same as vice versa.

SPEAKER: The hon. the Member for Mount Scio.

S. STOODLEY: Thank you very much, and thank you for that answer.

I note that in 2025, Power Advisory, you said, and I quote, “We recommended the framework as embodied in Schedule F.” We’ve heard from the CEO of NL Hydro, Speaker, that Schedule F is for fairness. I heard her say that so many times. I guess I would ask Power Advisory do you believe Schedule F for fairness, and I believe you both mentioned Schedule F 45 times during your 2025 appearance here in the House, do you believe the current DCIA embodies the spirit Schedule F for fairness as per the public’s expectation of fairness?

Thank you.

SPEAKER: Mr. Chee-Aloy.

J. CHEE-ALOY: Mr. Speaker, the new agreement, I believe, is fair. So to answer the bulk of the question, related to why in January 2025, I was focused on Schedule F so much, and kind of related to the change that we are talking about today, it was so important based on knowing the contract terms and conditions, the payment structure or lack thereof in the original 1969 power purchase agreement.

One of the big goals, initially negotiating what became the 2024 MOU was to make sure that there was protection and that prices would be adjusted to create more fairness.

I still stand by Schedule F in and of itself, as a mechanism contractually yes, to be negotiated would have done that.

I think what’s happened now is and I’m sure we’ll get questions on the IRC, their recommendations, Mr. Perry, Ms. Williams and – sorry, I’m just blanking on Jerome’s last name.

AN HON. MEMBER: Kennedy.

J. CHEE-ALOY: Based on their testimony, there were I think logical reasons why there was a move away from as I said a couple of minutes ago, the challenges of reconciling the mechanism under Schedule F to the schedule payments in G, landing on a fixed price to be escalated per annum by inflation with additional enhancements to the overall agreement that still provide Newfoundland and Labrador Hydro with market pricing through optionality.

I apologize to Mr. Kennedy.

SPEAKER: The hon. the Member for Mount Scio..

S. STOODLEY: Thank you very much.

I’m wondering if Power Advisory can please confirm that the new agreement does not have direct electricity market-based pricing for the power that is sold from Churchill Falls to Hydro-Québec in accordance with Annex F?

SPEAKER: Mr. Chee-Aloy.

J. CHEE-ALOY: Mr. Speaker, as I just had said, I believe that the new agreement does have access to market pricing in, I think, it’s Schedule B, I don’t remember the annex number. There’s optionality for Newfoundland and Labrador Hydro to elect a certain amount of megawatts and they would receive the same pricing as Hydro-Québec for New England, another option for New York. Another option as called the synthetic price which is a combination of New England, New York, Ontario. There’s an optionality to sell more power, 95 per cent of the contract price at the time and there’s optionality in terms of the premium tranche, which is 150 per cent of the contract price. A lot of that is market-based pricing.

SPEAKER: The hon. the Member for Mount Scio..

S. STOODLEY: Thank you, Speaker.

We know that the optionality is either use the electricity in Labrador or get value from it. Assuming that the extra electricity is being used in Labrador, which I know we all hope is the case. If all of that extra electricity is being used and we have not chosen the optionality, we have not chosen to sell it, is there any market-based pricing for the other components?

Thank you.

SPEAKER: Mr. Chee-Aloy.

J. CHEE-ALOY: Mr. Speaker, I think the agreement is pretty clear in the sense that, if I relate it back to the MOU, there is more megawatts at play in terms of what NLH can recall and there is more optionality with what they can do with it.

So I think, overall, those are good things. Those are enhancements to the agreement.

SPEAKER: The hon. the Member for Mount Scio.

S. STOODLEY: Thank you, Speaker.

I am wondering if Power Advisory can confirm that this DCIA has removed the direct reference to replacement value?

SPEAKER: Mr. Chee-Aloy.

J. CHEE-ALOY: Mr. Speaker, there isn’t an explicit block that is going to try to proxy what the replacement cost is if Quebec had to build a new generation project at a certain price. That is true.

But I think it’s really important, and it’s really our opinion, that the MOU in terms of establishing value for the Churchill Falls supply, to which, as I said, we had helped do that, to value that supply, we had to do our own analysis, it was led by my colleague, Mr. Yauch, in terms of what Hydro-Québec may do in terms of optionality to meet their own supply needs, which incorporates replacement cost principles.

So in getting the net present value number, as we had talked about in January 2025 of $33.8 billion, replacement cost is baked in that.

Now fast-forward to today with the agreement, our view is, and it is written in a couple different places in the IRC report, that there is value in the Churchill Falls supply, and what I believe is, it served as a foundation and as a springboard that wasn’t discarded with the new negotiating team. It was still that value that had replacement costs built in.

The change was how do you amend and adjust the contract price over the course of the contract term? As I said, replacement cost in that block is no longer there, but you do have a price and it is escalating by inflation.

SPEAKER: The hon. the Member for Mount Scio.

S. STOODLEY: Thank you, Speaker.

I’m wondering if Power Advisory could please inform the House if Quebec invests millions or billions of dollars into new electricity infrastructure, how will that impact the price?

I believe it will not directly impact the price but I’m wondering if Power Advisory could confirm that, please.

SPEAKER: Mr. Chee-Aloy.

J. CHEE-ALOY: Mr. Speaker, it is correct that depending on whatever Quebec decides in terms of what is the generation project they build, it is not directly impacting the price.

However, as I had said with one of my previous answers this afternoon, I believe like most power purchase agreements, as I said, as a supplier of the electricity, there needs to be a judgment in terms of the contract price that they would receive with whatever escalation provisions per year in that contract. Are they comfortable with that price relative to the prices that they can receive if they didn’t have the contract.

When I look at the schedule of payments under Appendix D in the agreement and I look at the inflation indexation and the formula that was created, I think 11 cents a kilowatt hour in 2041 is a good price. As it escalates towards 20 cents, around 2060, is a very good price. I’m saying this as someone that typically helps developers build projects, help these generators renegotiate their contracts. We’ve looked at comparable contracts across the country, we’ve looked at comparable prices that hydroelectric generation receives across that country, and the prices that I’ve just described, by way of the escalation, in my opinion, are very good prices.

SPEAKER: The hon. the Member for Mount Scio.

S. STOODLEY: Thank you, Speaker.

I do want to say on the record that it is challenging to get all your questions in, in two 15-minute blocks as a Member on the floor. This might be my last question, we’ll see.

Speaker, yesterday we heard the lead negotiator indicate very clearly that they believe that this is Newfoundland and Labrador’s last chance at Gull Island. They indicated that Quebec will likely not talk to us again about development of Gull Island if we do not sign this now.

I’m wondering if Power Advisory agrees that this is our last chance to develop Gull Island.

SPEAKER: Mr. Chee-Aloy.

J. CHEE-ALOY: Mr. Speaker, I don’t know if it’s the last chance, but I know this much, as I had said in January 2025, what I see are two motivated parties. What I notice now, today, especially since Prime Minister Carney was elected in March of last year, then the creation of the Major Project Office in August of last year, the implementation of a National Electricity Strategy and the federal government agreeing to, with Newfoundland and Labrador and Quebec, things like loan guarantees, investment tax credits and equity, between the MOU being executed in 2024 in December to now, these are even better conditions combined with two motivated parties.

So it is my strong opinion that the time is quite perfect to execute such a deal and get on with negotiating the definitive agreements so we can put shovels in the ground and eventually receive the benefits of all that supply.

SPEAKER: The hon. the Member for Mount Scio.

S. STOODLEY: Thank you, Speaker.

I know the DCIA has a new component of wind energy in it, and it involves a feasibility study. I know Power Advisory are very involved in wind. I believe – please correct me – Power Advisory are managing Nova Scotia’s wind process for offshore wind in Nova Scotia.

I guess I’m wondering if you can comment on the likelihood you believe that the wind project going from feasibility study as outlined in the DCIA to realization in terms of the power that’s outlined – I believe it’s 400 megawatts – what the likelihood of that is, and whether or not Power Advisory have any conflicts in that wind element, and what does Power Advisory do to ensure it will resolve those conflicts?

Thank you.

SPEAKER: Mr. Chee-Aloy.

J. CHEE-ALOY: Mr. Speaker, I’ll unpack that.

The first thing is, it is our opinion based on lots of work that we do with wind developers, these independent power producers, that there is an outstanding wind resource in Labrador. We believe that it makes good economic sense to develop 2,000 megawatts of wind in Labrador and build the associated transmission to the load customers in Labrador as well as Quebec. We know this because, as I said earlier, we work a lot with wind IPPs with their project development.

Just by way of a clarification, we are acting for the Government of Nova Scotia, but not with respect to offshore wind procurement, in terms of administering a procurement process. We are acting for the Government of Nova Scotia in administering an onshore wind process. We have been designing the RFP, the request for proposal, the PPA and the procurement is live and up and running.

In terms of the conflict question, we provide advice to a lot of IPPs in a lot of different markets; we don’t have a specific mandate when it comes to the actual Labrador project because the Labrador project is just getting under way. Newfoundland and Labrador Hydro has to lead studies, there has to be a lot of things that have to be done before any of the procurements actually get going and the actual contracting.

SPEAKER: The hon. the Minister of Energy and Mines.

L. PARROTT: Thank you, Mr. Speaker.

Mr. Chee-Aloy, Annex D of the new agreement sets out a dollar figure for every year from 2027 to 2077. What does that change compared with the formula?

SPEAKER: Mr. Chee-Aloy.

J. CHEE-ALOY: Mr. Speaker, I’ll let Mr. Yauch answer this. I’ll take a break.

SPEAKER: Mr. Yauch.

B. YAUCH: Mr. Speaker, the Annex D lays out the payment structure for all the energy supplied under the CF PPA. It’s slightly different than the Schedule F in the former MOU. On an NPV basis – net present value – as you sit here today, they are generally the same value. The shape of those payments have just been changed under the Annex D compared to the 2024 MOU.

SPEAKER: The hon. the Minister of Energy and Mines.

L. PARROTT: So under the previous MOU the payment in 2041 was $2 billion. Under this agreement it’s $2.8 billion. Can you just explain what the smoothing of the schedule did for the province?

SPEAKER: Mr. Yauch.

B. YAUCH: Mr. Speaker, so by smoothing, under the 2024 MOU (inaudible) –

SPEAKER: Mic on?

B. YAUCH: – increase, it was –

SPEAKER: One moment there.

Mr. Yauch’s – Speaker to the Broadcast Centre.

AN HON. MEMBER: (Inaudible.)

SPEAKER: On? Okay.

Go ahead, Mr. Yauch.

Sorry for that.

B. YAUCH: Under the 2024 MOU, the payment structure that was laid out in Schedule F started very low but then increased substantially as the CF PPA progressed through time. By smoothing, which is what you referred to in Annex D, you see that line has just essentially been smoothed a little bit, so that means that the province, or CF(L)Co will receive more payments in the short- to medium-term than under the long term.

So it basically takes some of the payments that we had at the back end of the deal and moves them to front or medium term of the deal.

SPEAKER: The hon. the Minister of Energy and Mines.

L. PARROTT: So there’s been obviously lots of questions and all kinds of, I guess, opinions on escalation, and I guess the bigger question is, there are critics out there who say there’s not enough escalation in the Churchill Falls contract. What would your opinion be on that?

SPEAKER: Mr. Chee-Aloy.

J. CHEE-ALOY: Thank you, Mr. Speaker.

As I said earlier this afternoon, we are active all over the country as I established with one answer. We sometimes administer procurements so we would be opining on what the escalator would be in the power purchase agreement for the Nova Scotia Green Choice Program because we’re running the procurement, we’re designing those documents.

We’ve also, as I said earlier, been on the other side where we’re helping developers build their projects so therefore, at times, we are helping them participate in these competitions or solicitations, for example, requests for proposals or RFPs.

As I said before and I also said it in January, power purchase agreements and their prices are commonly escalated by inflation. Now, to unpack this more – what we typically see is CPI and it’s adjusted down by some per cent and so it’s not 100 per cent of the CPI. I’ve seen that but it’s very rare. So I see some form of CPI percentage and then that is what’s applied on a compounded basis to adjust the prices upwards.

I had said earlier that I believe the 11 cents, if you put a pin in 2041, when the old Churchill Falls PPA would expire, is a good price. When that gets escalated, without getting into the bands – we can if you want but if we take the 2.6 per cent and you escalate that, when we look at what inflation is in general, when we look at what other power purchase agreements have by way of a percentage of CPI index, 2.6 is a pretty good number. Therefore, bringing the price to 20 cents a kilowatt hour around 2060 is a very good number.

Back to the point – the supplier valuing, what that price is over time, comparing it to the prices it can receive – 20 cents a kilowatt hour is higher than any forecast that I have seen for spot market prices in Ontario, New York, New England, going out that far.

SPEAKER: The hon. the Minister of Energy and Mines.

L. PARROTT: Can you explain the inflation adjustment in Annex F and provide some commentary as to whether or not it gives any protection to the province?

SPEAKER: Mr. Chee-Aloy.

J. CHEE-ALOY: Mr. Speaker, I used to calculate this stuff, younger in my career, but I’ll let Mr. Yauch do that because he’s our calculator.

SPEAKER: Okay.

Mr. Yauch.

B. YAUCH: Mr. Speaker, the payment structure that you see in Annex D increases by a certain percentage up until 2041. Then beyond 2041, the base payment structure increases by 2.6 per cent. Then in addition to that, you have the inflation mechanism that was mentioned, and what that does is if inflation is outside of the expectations we have today, give or take 2 per cent with a sort of buffer around that, if inflation exceeds that then the base payment structure will increase to compensate NL Hydro for that increase.

So the intention was that given the long-term nature of this contract, that we don’t know what inflation is actually going to be over 51 years. So if inflation expectations are materially different than we expect sitting here today, then the contract will account for that in the payment mechanism.

SPEAKER: The hon. the Minister of Energy and Mines.

L. PARROTT: Premium tranche, can you just give us your opinion on the premium tranche and what it supplies that the previous MOU didn’t?

SPEAKER: Mr. Chee-Aloy.

J. CHEE-ALOY: Mr. Speaker, as I said, it provides more optionality to sell Churchill Falls electricity at prices higher than the Churchill Falls price. I’ll let Mr. Yauch also reply on more details with respect to the premium tranche.

SPEAKER: Mr. Yauch.

B. YAUCH: Mr. Speaker, the premium tranche is when NL Hydro or CF(L)Co recalls power to use internally. If they don’t need it to serve domestic load, they can sell the power back to Quebec but do so at a premium. So the premium is based on the CFPPA, so as we’ve talked about in Annex D, the CFPPA price increases quite substantially when you get to the back end of the deal, beyond 2041. So in those years, if domestic load doesn’t materialize to the extent that they think today, they can push the power back to HQ, but do so at 150 per cent premium to the base PPA price.

SPEAKER: The hon. the Minister of Energy and Mines.

L. PARROTT: Just so we’re clear, if we needed to recall that power and we gave the three years notice, just say, for example, we knew a mine was coming online or a new customer, what happens to the pricing?

SPEAKER: Mr. Yauch.

B. YAUCH: So given a three-year window, that’s part of the deal. So you tell Hydro-Québec three years from now we have a mine coming online. If you were selling that block to Hydro-Québec at the 150 per cent premium, you’d then recall it for your domestic needs and you pay the PPA price that’s laid out in Annex D, and then you use it for domestic needs. So it comes back to you, but not at the premium price.

SPEAKER: The hon. the Minister of Energy and Mines.

L. PARROTT: Does that sound like a good deal to you?

SPEAKER: Mr. Chee-Aloy.

J. CHEE-ALOY: Mr. Speaker, I believe it is a good deal.

SPEAKER: The hon. the Minister of Energy and Mines.

L. PARROTT: in January, your firm told the House that Schedule F would pick up the export prices. Is being paid a price that moves with the market the same thing as being able to sell into it?

SPEAKER: Mr. Chee-Aloy.

J. CHEE-ALOY: Mr. Speaker, it is the same thing in the sense of receiving the same price as Hydro-Québec has contemplated on the agreement.

SPEAKER: The hon. the Minister of Energy and Mines.

L. PARROTT: Can you give me a little, brief overview of your interpretation of what the 985 megawatt transmission and market pricing portfolio is and what it means for the province?

SPEAKER: Mr. Chee-Aloy.

J. CHEE-ALOY: Mr. Speaker, I think the Minister of Energy is referring to the optionality in adding up those megawatts in terms of receiving a price. Essentially, that would mean that Newfoundland and Labrador Hydro, they don’t need to reserve the transmission through Quebec.

They basically have to make that call three years in advance, declare the supply totals that they want to exercise by way of the contract and then receive the appropriate pricing, as declared by them and under the contract. Again, whether it’s New England pricing, New York pricing, the synthetic price of the blend with those two in Ontario or others.

SPEAKER: The hon. the Minister of Energy and Mines.

L. PARROTT: Under the previous MOU, could Newfoundland and Labrador sell a megawatt of power to anyone else other than Hydro-Québec?

SPEAKER: Mr. Chee-Aloy.

J. CHEE-ALOY: Mr. Speaker, there was less optionality in terms of recall. There was no optionality in terms of receiving a direct price. It was all predicated on negotiating the blocks within Schedule F.

I would also offer up that – and I stand by everything I said in January 2025. I mean, it was meant to be a hedge in the sense of ensuring fairness and the supply from Churchill Falls would receive price adjustments in accordance with the value of the energy.

So the negotiations had to happen regarding how much of the export pricing block versus how much of the replacement cost block, what prices apply to those blocks, as well as pricing and the size of the block for Quebec’s use based on their own supply needs.

It was meant to be a complete hedge that way and I still believe that the concept, as I said in January 2025, was good, but I also said it was novel and I said it wasn’t typical. I also said that there was hard work to be done and we still needed to negotiate those things.

SPEAKER: The hon. the Minister of Energy and Mines.

L. PARROTT: Just so the House understands – because there’s confusion about all of our portfolio of transmission, I guess is the best way to put it – can you explain to the House how the synthetic export price is set?

SPEAKER: Mr. Chee-Aloy.

J. CHEE-ALOY: Speaker, the synthetic price is, again, a declaration three years prior of a certain amount of megawatts to say we’re going to sell this at – and the contract stipulates one-third Ontario, one-third New York, one-third New England, based on prices at that time that Quebec actually realizes.

Mr. Yauch, I’ll let you conclude that.

SPEAKER: Mr. Yauch.

B. YAUCH: Speaker, the synthetic block, as my colleague said, it’s one-third of these markets. These are markets that Hydro-Québec has access to and exports energy into. The idea behind the synthetic block is that without having to book transmission or other physical constraints, you can have access to the pricing in those markets for supply from the facility.

Now, I will say the 985 megawatts also includes some long-term contracts that Hydro-Québec has, and so you also get those export pricing through those blocks as well.

SPEAKER: The hon. the Minister of Energy and Mines.

L. PARROTT: Energy referenced in Annex H, annual averages, does that mean that our province sees nothing for any winter price hikes?

SPEAKER: Mr. Chee-Aloy.

J. CHEE-ALOY: I’ll let Mr. Yauch answer that.

SPEAKER: Mr. Yauch.

B. YAUCH: Speaker, so for the synthetic block, you get the annual average price. That will include the winter price spikes if they appear. Now, you do also have another block of 265 megawatts with firm transmission capacity. That’s one of the options that NLH can use to export energy, so it can export energy on that tie that it has access to for the entire length of the contract.

SPEAKER: The hon. the Minister of Energy and Mines.

L. PARROTT: So obviously, over a 50-year period, these prices changes. What happens if one of these price references changes or stops existing?

SPEAKER: Mr. Chee-Aloy.

J. CHEE-ALOY: Speaker, as far as I’ve read in the agreement – and we weren’t in the negotiating room, as I already explained what our role was. My interpretation of the agreement is if for whatever reason those prices on the export market don’t exist, then a replacement price is to be negotiated.

SPEAKER: The hon. the Minister of Energy and Mines.

L. PARROTT: I guess, just for clarification, just from your involvement in the 2024 MOU to your involvement here in the DCIA, can you just at a high-level, I guess, explain the benefits and what you see as the upside of the current agreement versus the old one?

SPEAKER: Mr. Chee-Aloy.

J. CHEE-ALOY: Mr. Speaker, I’m going to take some time here, because I think this is so important.

As I said earlier, I think there was all very well-founded intentions with all of the lessons learned, with the existing Churchill Falls contract to ensure that any new contract there would be fairness in terms of valuing the supply from Churchill Falls, in terms of the contractual payments.

To add a little bit more colour to things I was saying earlier today as well as January 2025, I mean Hydro-Québec is so good at what they do. They export a lot of power, short-term sales on their spot markets to multiple markets, not just the interconnected ones of Ontario, New England and New York. They also have long-term sales through long-term contracts and as we’ve been talking about this afternoon, things can change in those markets.

What we tried to do and this is what Ms. Williams was referring to yesterday, which I agree with and I agreed with it in January ’25 and I still agree with it in principal that if you can amend prices and have them adjust and be able to receive that upside, whether you’re getting upside from wholesale markets or you’re getting upside from the price of replacing supply and building new supply in Quebec, all of those things were embodied in Schedule F.

As I’ve also said, after January 2025, when our firm went to work on this with Newfoundland and Labrador Hydro, to really get to the details now, the real heavy lifting to take those concepts and those principles and put them actually into practice, it’s one thing to determine what those blocks look like, the size of those blocks as I said, the timing to which they come in, the timing to which they terminate, the price of these things and come up with something like that. It proved to be very complicated to reconcile that objective with the schedule of payments.

As I said earlier, our firm – that was not our mandate. We don’t know how the schedule of payments were developed, but we did know that they have to contort to each other.

Now, I’ll offer this up. I obviously knew that in January 2025, but I also have seen really complicated contracts. I wouldn’t advise against having a very complicated contract, but contractually lots of things can be done. I think as a practical matter it just proved to be very difficult.

So now you have the IRC that basically said the same thing and we weren’t at the negotiating table this time around with the new negotiating team and Hydro-Québec, but one thing I haven’t said – and I’ll introduce it now – as I said, we were still involved with pricing Churchill Falls supply and the framework. We’d be asked to provide advice on certain aspects that were being proposed, either by Newfoundland and Labrador Hydro or Hydro-Québec this past summer of 2026. We can see it ourselves; it was getting really hard to reconcile the two.

Then the two parties agreed that, okay, we’re going to go back to what I would believe is a more – and I’ve stated – traditional way of pricing electricity supply under a power purchase agreement, a fixed price and escalate that with inflation. I’ve established earlier today that I believe that framework is providing good prices and I use two prices: 11 cents a kilowatt-hour in 2041, escalating to 20 cents a kilowatt-hour or so roughly around 2060. When I compare those prices to comparable contracts or regulated rates around the country, those prices are very good.

I believe – again, we didn’t opine on this; we weren’t in the negotiating room – what happened then each side looked at that and said yeah, that makes a lot of sense, there’s a lot of value there. Then on top of that they were successful in negotiating enhancements. Those are the megawatts that they have the optionality to sell to Hydro-Québec predicated on their selection of New England Prices, New York prices, Ontario prices within the mix of the synthetic price, as well as the premium tranche.

Overall, I think it’s a good deal.

SPEAKER: The hon. the Leader of the Third Party.

J. DINN: Thank you, Speaker.

I’m not so much interested in saying which deal is better, but I just need to clarify something with regard to Annex D and Schedule G, if I do the quick math, there seems to be more money in the Schedule G than there does in Annex D, if I look in terms of the billions – if I add up the payments.

I’m just trying to reconcile that in regard to whether it is to do with the smoothing – the way the payments are structured and so on and so forth, but there seems to be more money in the 2024 deal than in the current one.

SPEAKER: Mr. Yauch.

MR. YAUCH: Thank you, Mr. Speaker.

In nominal dollars, that’s just the dollars of the day as we move through inflation, Schedule G would have been higher because it had more dollars at the back end of the contract when they would have been higher inflation.

On an NPV basis, the net present value, you take all the future payments over the next 51 years and you put them in today’s dollars, they’re the same. It’s just because you’re getting paid – a dollar today is worth more than a dollar two days from now. That’s basically what you’re seeing between the two different contracts.

J. DINN: Perfect, thank you.

SPEAKER: The hon. the Leader of the Third Party.

Please address the Chair.

J. DINN: Yes.

How common are purchase agreements like Schedule F in the original MOU? We heard testimony yesterday that it is very difficult to reach agreements on pricing schemes that bundle different market prices like in Schedule F.

So from the experts with experience, are such bundle pricing formulas very complex and difficult to reach agreement on, and are there such agreements?

SPEAKER: Mr. Chee-Aloy.

J. CHEE-ALOY: Mr. Speaker, as I’ve said, that type of framework where prices would be adjusted based on different blocks of different ways to sell power or value power, and I said it in January 2025, it is very unique. I’ve re-established again what the driver was and why I believe that was a good driver.

As I said earlier, I believe there is a way to calculate all of that in Schedule F. I never thought that was an issue that was going to be difficult. The difficulty was reconciling it with the schedule of payment in Schedule G. That’s what proved to be ultimately challenging; not Schedule F in and of itself, not the blocks in and of itself.

SPEAKER: The hon. the Leader of the Third Party.

J. DINN: Speaker, is it possible to have a CPI model in the agreed upon pricing that still allows for us to capture at least a portion of market pricing?

SPEAKER: Mr. Chee-Aloy.

J. CHEE-ALOY: Mr. Speaker, as the way it’s being negotiated and agreed to, the CPI is what it is. It is referenced, and it’s down to the t of where to actually go get the information. There are formulas that adjust it based on how CPI changes year-over-year and how the plus or minus 40 basis is incorporated in that. So directly it’s not. I’ll say this, I can’t comment because I don’t know if the negotiating team had tried to negotiate anything else in terms of a market index or anything like that. So I’m commenting on what I see before me in the agreement.

SPEAKER: The hon. the Leader of the Third Party.

J. DINN: Thank you, Speaker.

Does the deadband in this new agreement sufficiently protect the value of the payments we, Newfoundland and Labrador, receive if there are several years of higher than anticipated inflation?

SPEAKER: Mr. Chee-Aloy.

J. CHEE-ALOY: Mr. Speaker, based on my experience and looking at various PPAs, I think the structure of the bands and CPI is very reasonable. On balance, like I said earlier, I’ve seen PPA prices adjusted per annum as a percentage of CPI. I’ve seen it as high as 100 as I said, but that’s very rare. I’ve seen it 60 per cent. I’ve seen it as low as 30 per cent of CPI. So I think given where the bands are, the initial inflation of 2.06 then 2.6 post-2041 are reasonable proxies of what you would expect looking at a long term of the contract and inflation over time.

SPEAKER: The hon. the Leader of the Third Party.

J. DINN: Thank you, Speaker.

The 50-year term of this is a substantial commitment which has received near-universal opposition and Mr. Perry has stated that reopening pricing and deal structure throughout the life of an agreement like this is not typical. Critics of this deal have cited examples to the contrary. BC Hydro has regulatory rate reviews with independent power producers. Iceland’s national power company redetermines power price with industrial customers every 10 years. The United Kingdom’s Low Carbon Contracts Company implements a five-year strategic review of pricing. My question to our experts is can they explain why other jurisdictions can install renegotiation mechanisms into the long-term agreements, but we cannot?

SPEAKER: Mr. Chee-Aloy.

J. CHEE-ALOY: Mr. Speaker, as a practical matter, as I kind of said earlier with Schedule F, despite how difficult it is and reconciled with Schedule G, I mean, you can still try to negotiate that and you can probably still come up with something, and whether that made sense, that’s a whole other story. Clearly, that’s not the path that the negotiating team went down.

I give that preamble because negotiating reopeners is really up to the two negotiating teams that could do that. I’ve seen contracts where reopeners are negotiated, reopeners not just for adjusting price, but reopeners with respect to other terms and conditions within PPAs.

I think it’s important to add at this point, Churchill Falls being a large utility-scale transmission-connected hydroelectric facility, most facilities that are comparable that way across the country are rate regulated and their price is adjusted more frequently, for example, every five years.

I said this in January 2025; I’m saying this again. When you look at the comparators that I think make a lot of sense, in Ontario, Ontario Power Generation’s hydroelectric facilities that are rate regulated, the price they are receiving right now is under five cents. In looking at Manitoba Hydro’s hydroelectric facilities, the regulated price they’re receiving right now is under four cents. When I look at New York and the New York Power Authority’s regulated hydroelectric generators, when I take the exchange rate today, they’re receiving under 2.5 cents.

So I think that, again, it gives me evidence, as someone that has work in the field for over 25 year, that this is a good deal, but I’ll offer this point, and this is what kind of put me over the top. You can say: Jason, like those are rate-regulated generators and we don’t know where the rates are going by way of a regulator deciding these things 20 years from now. So I look at contracts; I look at power purchase agreements that have been executed with hydroelectric generators that have been operating for decades, and the best contract I can find in this country is the Ontario IESO Northern Hydro Program contract.

I keep going back to 2041, and this is to give the House an example of why the inflation index matters and how it can be good, okay? In Ontario, in that contract, it escalated per annum 60 per cent of CPI. In 2041, the price under that contract is 11 cents a kilowatt hour. There is a better inflation escalation in the agreement in Newfoundland and Labrador right now.

So post-2041, when you compare the two contracts as contemplated under the agreement in Newfoundland and Labrador, compared to the Ontario IESO Northern Hydro Program, post-2041 that’s a higher price for Churchill Falls supply compared to Ontario-based generators under those contracts, solely because of the better inflation index applied to adjust the price upwards per year.

SPEAKER: The hon. Member.

AN HON. MEMBER: (Inaudible.)

SPEAKER: The hon. Member. Oh, you’re done? Is the Leader of the Third Party finished?

Okay.

SPEAKER: The hon. the Minister of Energy and Mines.

L. PARROTT: So if we take all of this together, the fixed schedule, the smoothing of payments, inflation mechanism, the premium tranche, and the export references, is this a more durable pricing structure than what we had seen in the previous 2024 MOU?

SPEAKER: Mr. Chee-Aloy.

J. CHEE-ALOY: Mr. Speaker, I think it provides a nice balance of – it’s good to have certainty, and that’s certainly what the fixed prices escalated by CPI with the bands provides, but it’s also good to have optionality, and as we’ve been speaking to the optionality of Newfoundland and Labrador Hydro being able to sell megawatts at prevailing market prices realized by Hydro-Québec, really provides a nice blend, and that’s why I believe it’s a good deal.

SPEAKER: The hon. the Minister of Energy and Mines.

L. PARROTT: So the word optionality, you’ve used it several times, and just so – certainly the people at home that are watching this can understand – just, can you I guess in layman’s terms explain to them what optionality means for the Province of Newfoundland and Labrador and this contract?

SPEAKER: Mr. Chee-Aloy.

J. CHEE-ALOY: Yes, Mr. Speaker, so I don’t see the same optionality in other PPAs. In other words, you have a supplier, you have a buyer, and the buyer is basically taking all the electricity supplied by way of the contract terms from the supplier.

What’s been achieved at this point with the DCIA is Newfoundland and Labrador Hydro has optionality two ways. As has been discussed in other sessions in this Chamber since yesterday, there’s optionality of Newfoundland and Labrador Hydro to use some of the supply, which is more than what was contemplated under the previous MOU, for its own domestic need.

So I agree with everything that has been said in the event that there is a mining investment that is increasing the demand for electricity being able to use the electricity under the DCIA as contemplated to provide electricity for that critical load.

I am linking this also to the opportune time we are in right now. Because, obviously, the federal government is not just looking at investing in electricity or energy infrastructure projects; they are looking at investing in a whole host of industrial projects for all kinds of reason. I believe all of that is very, very real, given the circumstances our country faces right now.

There is also optionality, as I said earlier, in terms of three years prior to calling that option, Newfoundland and Labrador Hydro arguably will have a view on the value of supply and they are going to then have the option to exercise being able to receive a price otherwise they would not have received in some of these other markets, as they see fit.

I have mentioned the markets, again, as New England, New York and Ontario.

SPEAKER: The hon. the Minister of Energy and Mines.

L. PARROTT: From you experience, would it be safe to say if the province were exercising it optionality and either recalling the energy or deciding to sell it, with very little effort, they would have a window to three years out, i.e., a mine closing down or a mine coming online. This isn’t a simple matter of someone moving out of a house or a town and getting a little bit smaller. This is large-ticket energy usage and we could use this to our advantage pretty much all the time.

SPEAKER: Mr. Chee-Aloy.

J. CHEE-ALOY: Mr. Speaker, I think the optionality, as I just described it, is an extraordinary benefit. I am now going to provide an anecdote to my home province in Ontario. I am based in Toronto.

The Ontario government has been very, very clear about wanting to attract a lot of different industry. Arguably, Ontario relative to most other provinces is really under threat, given the policies of the present-day Trump administration. There are lots of loads that want to connect in Ontario and there just isn’t enough supply or enough certainty.

I do believe that is partially because, (a), Ontario has made the decision that they are going to build new nuclear. I am not saying that is good; I am not saying that is bad. The fact is it takes a long time to build it. The second thing is they have a vehicle in the Ontario IESO to procure supply, to recontract supply. People at home, if the are watching, they are going to laugh because I’m saying it all the way in Newfoundland and Labrador, IESO, they’re not moving fast enough and they’re not planning the system effectively to accommodate those loads.

So if you have a vehicle in Newfoundland and Labrador, to better ensure that new supply will be built, additional supply will be built, and then you know that you have the ability to use some of that supply to help incentivize and secure new investment – for example, mining – I think that’s a very beneficial option.

SPEAKER: The hon. the Minister of Energy and Mines.

L. PARROTT: To your knowledge, before this agreement, how much export access did the province have?

SPEAKER: Mr. Chee-Aloy.

J. CHEE-ALOY: Mr. Speaker, we’ve established that it was still 265 megawatts of transmission reservation that Newfoundland and Labrador Hydro has. That’s what they had before, that’s what they have now. But they have the optionality of – I haven’t added it up – I think the number was 900-some odd megawatts of access to wholesale market pricing.

Mr. Yauch?

SPEAKER: Mr. Yauch.

B. YAUCH: In the previous MOU, you had access to the 265 megawatts that NL Hydro has today. That is continued in the current DCIA, but the optionality of the additional megawatts that you have access to, that was not in the MOU that you have today.

SPEAKER: The hon. the Minister of Energy and Mines.

L. PARROTT: The number is 985, so it’s an additional 720.

What do you think it would cost for us to build our own power lines to get to those markets that we’re talking about instead of wielding it through Quebec’s power lines?

SPEAKER: Mr. Chee-Aloy.

J. CHEE-ALOY: Mr. Speaker, I don’t have the exact price, but I do believe the ranges of $20 billion, $30 billion that were discussed by Mr. Perry, Ms. Williams and Mr. Kennedy are accurate. We work with transmission developers. We know what it takes to permit transmission, we know what it takes to cite it and route it. We know what it takes to effectively and properly stakeholder, not just with First Nation Bands, but also local communities and other stakeholders. It would take a lot of money and it would take a lot of time.

SPEAKER: The hon. the Minister of Energy and Mines.

L. PARROTT: One of the other export models we have is synthetic. So the synthetic export price is paid net of transmission charges. What does net mean in practice?

SPEAKER: Mr. Yauch.

B. YAUCH: Mr. Speaker, net means that it incorporates the transmission costs in the price. If the price is $40 and transmission is $5, you would get $35 netted transmission costs. It includes some portion of transmission costs in that synthetic price.

SPEAKER: The hon. the Minister of Energy and Mines.

L. PARROTT: Who would keep the clean energy credits on the synthetic export volumes?

SPEAKER: Mr. Chee-Aloy.

J. CHEE-ALOY: I only know this by my read of the agreement, but all of the environmental attributes associated with any of those transactions are retained by Newfoundland and Labrador Hydro.

SPEAKER: The hon. the Minister of Energy and Mines.

L. PARROTT: On the Champlain Hudson and the NECEC volumes we receive the same price as Hydro-Québec. Can you explain how that be verified?

SPEAKER: Mr. Chee-Aloy.

J. CHEE-ALOY: I’ll let Mr. Yauch take this.

SPEAKER: Okay, Mr. Yauch.

B. YAUCH: Mr. Speaker, both Champlain Hudson, commonly referred to as CHPE, or NECEC, they are both public contracts, so the public price that Hydro-Québec is paid for that power is available. It’s publicly available for one of those lines for New York in particular. It does not include the transmission costs so that would be netted off the public price, but generally what HQ is paid for both of those two projects is publicly available and can be verified.

SPEAKER: The hon. the Minister of Energy and Mines.

L. PARROTT: Just going back to something I asked you a few minutes ago, the changing out of our pricing options, from one option to another takes a three-year period where we give notice that we’re either going to utilize or take back.

I guess, you’ve kind of touched on what it means from a mining standpoint in optionality but just in practical terms, can you just again say how important that is to this contract?

SPEAKER: Mr. Chee-Aloy.

J. CHEE-ALOY: Mr. Speaker, it allows NLH more planning tools and more flexibility. I think it’s pretty clear that electricity is such an important part of our lives and the economy. I believe that we’re going to continue to electrify over the course of time, so I see this with a lot of utilities and electricity planners. They’re all looking for if they had more optionality, if they had more flexibility.

Because building power plants and building transmission lines, it takes a long time. What I find often dealing with clients is, the world changes whether economic or otherwise and then ideally, they need to adjust, that’s the electric utility but they don’t have some of the tools to help them adjust.

In baking in this optionality in these power purchase agreements and knowing that there is a call that I could recall X amount of megawatts three years in advance to have it going forward, I know that in planning my system. I know that not just in maintaining reliability but in meeting other objectives: economic development, social objectives, things like that. Frankly, I don’t see this type of optionality elsewhere. I really don’t.

You often see planners. They are tasked with doing these long-term plans and sometimes they’re tasked with filing these long-term plans with their regulator. I understand that governance, but when I step back and look at it, the timing never works, right? You take two years to do a plan and then you file it with the regulator. Then you have another year of proceeding and then you have a decision. The plan now is three years old. And I think economies are changing fast. I think technology is changing fast. I find a lot of electricity utilities are then behind.

I see what’s happening right now. Five years ago or so, before COVID, there are a lot of utilities projecting that they would have too much supply. And then that got exacerbated by COVID because of less electricity demand. And then because of the lack of investment, a lot of jurisdictions are short supply right now. Having the ability to recall power if you are short or you need it is a very valuable thing, and I think it’s increasingly valuable going forward.

SPEAKER: The hon. the Minister of Mines and Energy.

L. PARROTT: Mr. Chee-Aloy, your firm, obviously, looks at this stuff from a national and most likely a global lens, but how do you think what we’re doing here fits in with the federal government’s electricity strategy?

SPEAKER: Mr. Chee-Aloy.

J. CHEE-ALOY: Speaker, I think it’s extremely important, because from my observations – and we’ve been involved in some of this around the country – the federal government is very big on electricity infrastructure, and we see that embodied in the national electricity strategy. For all kind of historic reasons – I’m not saying these were bad – the fact is that most of our transmission connections, at least in terms of size, in terms of the ability to transport large volumes of electricity, are mostly north-south, Canada to the US.

What Churchill Falls, its upgrade, the development of Gull Island, the development of 2,000 megawatts of wind, it is not all being consumed in Labrador, obviously. It is to move the energy elsewhere. Frankly, it is going to get moved beyond Quebec. Some of that will end up in Ontario. I believe that there are a lot of things happening that are critical for the government strategy. I have argued over the last year and a half, across the country, Atlantic Canada is the start of all of that. In many ways this agreement is the start of all of that.

I said this before in January 2025, we act for entities all across the country. In my personal practice, I’m typically acting for executives in the sector, boards of directors, regulators, governments, and everybody outside of Newfoundland and Labrador is dumbfounded by, oh my god, how can this deal happen, it’s so great. It is a lot of megawatts, and I’ve said it before and I’ll say it again, traditionally it was always hard to deal with Quebec. I am not saying that negatively, I’ve said before, Hydro-Québec are really good at what they do and part of it is that they are shrewd negotiators.

I see this as a win-win. I’m looking at the whole region and Nova Scotia creating a system operator, months ago PEI, New Brunswick, and Nova Scotia signing a join MOU to basically explore a Maritime system operator that will do long-term planning for that part of Atlantic Canada that may eventually jointly procure generation and transmission.

It is all about better connecting this part of the country and then eventually the country, where we all win. I think that this agreement, in terms of its vastness, and the fact that two provinces, two utilities that have had their challenges were able to get this over the finish line. There is still hard work to do by negotiating the definitive agreements in terms of power purchase agreements. I do think that is going to happen though, and I do think that we’re living in a moment, and I do believe that it is very important, not just for maintaining and fulfilling the federal government’s objectives, but for Canadians.

SPEAKER: Thank you.

Before I get to the next individual. Mr. Chee-Aloy, I just want to – the Clerk advised me that somewhere along the way I went from Chee-Aloy to Chee-Aloy and I’m not sure how I got there. But anyways, I apologize.

J. CHEE-ALOY: Mr. Speaker, I forgot about Jerome Kennedy’s last name. (Inaudible.)

SPEAKER: The hon. the Leader of the Official Opposition.

J. HOGAN: Thank you.

Welcome back. Good to see you both again.

The first few minutes of my questions, pardon me, but I’m going to bounce around, just trying to fill in some gaps over the last hour and a half.

When we talked about when you were asked, I think, by the minister, about the block structure – I have quotes here. I think it was from you, Mr. Chee-Aloy – still to be negotiated. Is that fair to say?

Sorry, Speaker. That’s fair to say, that it was still to be negotiated.

SPEAKER: Mr. Chee-Aloy.

J. CHEE-ALOY: Mr. Speaker, yes. That’s true.

SPEAKER: The hon. the Leader of the Official Opposition.

J. HOGAN: He’s better at it than I am.

Speaker, I guess I would ask Mr. Chee-Aloy, that doesn’t mean the formula itself or block structure ID or concept is good or bad, it’s just means the work hadn’t been done to finalize it. Is that correct?

SPEAKER: Mr. Chee-Aloy.

J. CHEE-ALOY: Mr. Speaker, that’s correct and, again, as Ms. Williams had said yesterday, the MOU provided those principles. Like I said, it’s provided that foundation, that was a term I had used before. There was a lot of heavy lifting to do.

As I said in my testimony so far, that work had started last year. There was a lot of work to try to make it work, for sure – summer of 2025.

SPEAKER: The hon. the Leader of the Official Opposition.

J. HOGAN:  Thank you, Speaker.

Something the minister said and I don’t mean to put words in his mouth. I don’t have the exact quote so he can correct me if I’m wrong but I don’t think there’s anything controversial. He said something along the lines, can complexity of a formula carry a price all on its own? I think, meaning that if you do have a difficult formula, can there be adverse consequences, I guess, negative consequences to the deal?

I guess my question, Mr. Speaker, would be, if something that is complex is a fundamental principle to a party wanting that to form part of the agreement, I would suggest that the fundamental principle would take precedent over the complexity. Again, that may be a subjective decision for one of the parties, but is that fair to say?

SPEAKER: Mr. Chee-Aloy.

J. CHEE-ALOY: Mr. Speaker, that’s fair to say and as I said earlier this afternoon, the Schedule F in the blocks in and of itself, I do believe that there is a way to structure that. There’s a way that it is complex but it can be overcome in and of itself. The issue was applying that structure to reconcile it with the schedule of payments in Schedule G.

That was the part that the negotiating teams on both sides, basically, got to and then they decided to move off to a different construct.

SPEAKER: The hon. the Leader of the Official Opposition.

J. HOGAN: Thank you, Mr. Speaker. I appreciate that.

Of course, the Schedule F was your suggestion, was your advice from the outset. I know we’d heard some comments over the last day and a half about the percentages of market-based pricing, export markets, domestic markets in Quebec, and replacement costs that would have formed the formula, but of course, if you can confirm that – as you said, a lot of hard work left to do – whether those numbers were, for example, 10 per cent for export markets, that could have moved up or down if and when the formula was finalized. Is that correct?

SPEAKER: Mr. Chee-Aloy.

J. CHEE-ALOY: Mr. Speaker, that’s correct. The 10 per cent of the markets, that comprised what became the assessment of the value of Churchill Falls supply that drove in part the net present value initially of 3 – 3.8. Absolutely, my experience in negotiating power purchase agreements, typically you would have a term sheet that sets out the parameters.

I believe that the DCIA – it’s not named a term sheet – I think it’s a very detailed term sheet. It’s more detailed than the MOU. But even then, you still enter into negotiations, and as you’re really drilling down in terms of the covenants of a contract, the terms and conditions of a contract, things can change. Right? And it comes down to two parties negotiating what they think is the best deal that they can get after exhausting a complete negotiation.

So yes, things could certainly change.

SPEAKER: The hon. the Leader of the Official Opposition.

J. HOGAN: Thank you, Mr. Speaker.

You know, if your forecasts were replacement costs are going to increase by a lot over the next 50 years, then of course if you were the one getting paid based on the formula, you would want replacement costs for form a larger part of the formula. Again, you would have to forecast those three components – or whatever components are in the formula and make that decision, and hopefully you’re right. Is that fair to say?

SPEAKER: Mr. Chee-Aloy.

J. CHEE-ALOY: Yes, Mr. Speaker, that’s certainly the case in terms of you’d have to do the work under the former MOU Schedule F to get comfortable with what value could be per block. So wholesale market exports is a block; replacement costs is a block; even trying to project or forecast where the price of electricity will go for the patrimonial powers I described earlier for Quebec supply.

But I want to come back to the point that I made earlier, right? Again, in my opinion, looking at the 2041 price of 11 cents escalating to 20 cents, that’s really good. When I compare that to where I professionally think the wholesale markets might go, I think what replacement costs might be and the cost there, I think 11 cents to 20 cents is in the money.

SPEAKER: The hon. the Leader of the Official Opposition.

J. HOGAN: Thank you, Speaker.

Just on that, the NPV, as Mr. Yauch said, for both agreements was – I don’t know if he said identical or the same, they’re bang on. Ms. Williams spoke about this. It was just a forecast. Is that correct?

SPEAKER: Mr. Chee-Aloy.

J. CHEE-ALOY: The NPV of $33.8 billion, Mr. Speaker, was driven off many things that went into value in the Churchill Falls supply, in terms of what would be a good option for Quebec to exercise based on all the other supply options.

Mr. Yauch, I don’t know if you want to –

SPEAKER: Mr. Yauch.

B. YAUCH: Mr. Speaker, I think it’s very important to understand that the Schedule G payment structure and the $33.8 billion that comes out of it, that was based on a very detailed multi-year analysis of the value of supply in Quebec. That included things like replacement value, existing assets, wholesale markets. It was a bucket of all these sources of supply that Quebec could use to meet its own supply needs, and then we put a dollar value to it that came out to $33.8 billion or thereabouts.

Then Schedule F was the principles to try to get what that value was tied to market in some way, shape or form. That’s how those two factors kind of interact with one another.

SPEAKER: The hon. the Leader of the Official Opposition.

J. HOGAN: Thank you.

I have a lot more questions than that; unfortunately, I’m already halfway through my time. I’m going to move on to some questions about the premium price, which I know you’re familiar with. It allows Newfoundland and Labrador to sell an allocation of power to Quebec at a 1.5 times price. It’s power Newfoundland and Labrador would otherwise get from its own use.

Can you just confirm it’s not power that we’re already meant to sell through Quebec through a PPA?

SPEAKER: Mr. Yauch.

B. YAUCH: Mr. Speaker, yes, that’s correct. That is part of the recall amount. So you use for domestic needs. If you do not need it for domestic needs, Newfoundland and Labrador Hydro will sell it back to Hydro-Québec at the premium.

SPEAKER: The hon. the Leader of the Official Opposition.

J. HOGAN: This might be obvious but for any power that we sell to Quebec under this premium price, the most we can make is 1.5 times the sale price, which would be 1.5 times the Churchill Falls PPA.

SPEAKER: Mr. Yauch.

B. YAUCH: That is correct.

SPEAKER: The hon. the Leader of the Official Opposition.

J. HOGAN: I know you’ve talked about the CF PPA, both of them, but again, the underlying assumption has to be that’s a good price of the CF PPA for the premium price to be a good price as well. Is that correct?

SPEAKER: Mr. Yauch.

B. YAUCH: That’s correct. On balance, we’ve talked about supporting the overall value of the CF PPA, so the premium would be a premium on top of that value.

SPEAKER: The hon. the Leader of the Official Opposition.

J. HOGAN: Just for example, in year three of this agreement, which would be 2029, Newfoundland and Labrador will get an extra 25 more megawatts that we have now in Churchill Falls. The price will be about 2.35 cents. So 1.5 times premium of that would be 3.25 cents just for 25 megawatts. Is that accurate?

SPEAKER: Mr. Yauch.

B. YAUCH: Yes, Mr. Speaker, that appears accurate.

SPEAKER: The hon. the Leader of the Official Opposition.

J. HOGAN: I appreciate he doesn’t have the numbers so it its subject to check, of course, I appreciate that.

Again, in year 10, for example, of the agreement, 2036 when Newfoundland and Labrador will get 605 more megawatts. The price is about 5.7 cents then, so our price would be 8.5 cents. Is that correct? Assuming my numbers, years and megawatts are right.

SPEAKER: Mr. Yauch.

B. YAUCH: That is correct if you allocate it to the premium block. You can allocate it to the other blocks that we spoke about. NECEC, CHPE or the synthetic block pricing, those may have different prices. So it all depends on the optionality of what NHL actually does with the power that it doesn’t need.

SPEAKER: Thank you.

The hon. the Leader of the Official Opposition.

J. HOGAN: Thank you.

Just a quick question on that and the optionality which you spoke about as a positive. If the 720 megawatts are all used domestically, the market exposure then goes down significantly because, obviously, there would be no market exposure for the 720 megawatts anymore. It that correct?

SPEAKER: Mr. Yauch.

B. YAUCH: Yes, that is correct. If you use it for domestic purposes, if you are not selling it on these various block. Then you get into Schedule G, the kind of value of Quebec and all the various components that was included in that price, so you sort of move into the Schedule G payment world.

SPEAKER: The hon. the Leader of the Official Opposition.

J. HOGAN: Thank you, Mr. Speaker.

The upside of optionality, of course, we can use it or we can sell it. That is great. The downside is if we use it all, we have less market exposure for pricing. Is that correct?

SPEAKER: Mr. Yauch.

B. YAUCH: Mr. Speaker, that’s correct.

SPEAKER: The hon. the Leader of the Official Opposition.

J. HOGAN: I think you already answered it. I am just going to ask it in a different way.

The premium price agreement is actually a cap because it is based on a Churchill Falls PPA fixed-price schedule. Is that correct?

SPEAKER: Mr. Yauch.

B. YAUCH: Mr. Speaker, that’s correct.

SPEAKER: The hon. the Leader of the Official Opposition.

J. HOGAN: Another way to ask, the price can extend higher than that cap regardless of electricity markets in Quebec. Is that correct?

SPEAKER: Mr. Yauch.

B. YAUCH: That’s correct. If you use your allocation owing for the premium price block and you don’t take the other options if they are worth more. So it is only if you decide to allocate all of your block to the CF premium block.

SPEAKER: The hon. the Leader of the Official Opposition.

J. HOGAN: I think we are on the same page, that the premium pricing is only available for the Churchill Falls entitlement. That is what you are saying?

SPEAKER: Mr. Yauch.

B. YAUCH: That’s correct.

SPEAKER: The hon. the Leader of the Official Opposition.

J. HOGAN: On that point, the 720 megawatts is actually available for more than just the CF entitlements. It’s available for the CF upgrades and Gull Island as well. Is that correct?

SPEAKER: Mr. Yauch.

B. YAUCH: Mr. Speaker, it applies to the entire recall amounts that are negotiated, that are weighed out, I believe it’s in Annex B.

SPEAKER: The hon. the Leader of the Official Opposition.

J. HOGAN: Mr. Yauch, the Churchill Falls power, at least in the early years, is cheaper than the Gull Island power. Is that correct?

SPEAKER: Mr. Yauch.

B. YAUCH: Mr. Speaker, that’s correct.

SPEAKER: The hon. the Leader of the Official Opposition.

J. HOGAN: This is good, rapid fire.

So the Gull Island power, which you just confirmed at least in the early years is more expensive, the Government of Newfoundland and Labrador or Newfoundland and Labrador Hydro was not able to secure a premium price for the expensive power, only for the cheap Churchill Falls power. Is that correct?

SPEAKER: Mr. Yauch.

B. YAUCH: Mr. Speaker, I think it’s the timing of when Gull Island comes in. It doesn’t come in in the early years, it comes in the later years when the CF PPA starts to readjust, essentially moves higher. So in 2030, there is no Gull Island recall because it doesn’t actually exist yet. So it’s really a timing issue, when those new assets start being included in the recall amounts.

SPEAKER: The hon. the Leader of the Official Opposition.

J. HOGAN: Yeah, of course. We’re not going to sell power when Gull Island is not built. I understand that. But at least from the concept of Churchill Falls would be the cheaper power, we would only be able to allocate the premium price on the cheaper power for Churchill Falls. Is that correct?

SPEAKER: Mr. Yauch.

B. YAUCH: I mean, you get CF PPA recalls over the entire 51 years. So in the early years, yes, it’s given the shape of Schedule G or Annex D, however you want to rephrase it. It’s lower price in the early years. In the back end of the years, if you get 150 per cent premium, it’s obviously significantly higher.

SPEAKER: The hon. the Leader of the Official Opposition.

J. HOGAN: I’m just going to go back to some, I guess market-based pricing questions.

Mr. Chee-Aloy, you talked about logical reasons why, as your quotes – sorry, Mr. Speaker, that’s what Mr. Chee-Aloy said, they moved away from Schedule F, and I understand the negotiations and what happened. I think in another quote, you said there needs to be a judgment. Well obviously, when you’re negotiating at some point.

So I guess at that stage if you realize, for example, one of two things, it’s too complicated and you don’t want to proceed or Hydro-Québec is saying we don’t want to do this anymore because you can’t figure it out, at that stage of negotiations, obviously there’s a judgment call that needs to be made by one or both parties whether to proceed or not: either keep working at it or say, look, we’re not going to figure this out, or pivot and make a different decision on the formula. Is that fair to say?

SPEAKER: Mr. Chee-Aloy.

J. CHEE-ALOY: Mr. Speaker, that’s correct. I think that both parties are dealing with a lot of broad things. It’s not just the value in and of itself. I know that that’s important, but without a deal, there are still 17 years, or up until 2041, of being paid 0.2 cents a kilowatt hour. So there is realizing real dollars and real payments and real benefit of getting out of that contract.

Something that was discussed yesterday, and not really today, Hydro-Québec, as I have established before, and I continue to say this in my practice, they are I think accurate in the amount of supply that they need and their actions are definitely showing that.

They’re in the process of procuring 10,000 megawatts of wind inside of Quebec. On top of that, they wanted 2,000 megawatts more from Labrador. They’re doing things like solar. They’re doing things like battery storage in terms of real procurements.

I think the tell in all of this is in March, early this year – I know because I’m in the sector, I know the sector did not expect Hydro-Québec to issue a request for information, RFI, for offshore wind from Nova Scotia. I think that is the biggest signal that they are serious about needing supply.

So I think back to point when you’ve got two teams negotiating the DCIA and then moving on to negotiating definitive agreements, I think it’s pretty clear where the direction is and where the needs are.

I said it earlier, and you couple in where the federal government’s at regarding their initiatives and what they are brining to the table with loan guarantees and investment tax credits and equity, a lot of factors went into that judgment to pivot to get to the DCIA execution.

SPEAKER: Just for the information, Minister, we’re at 14:39, we do side to side, obviously, but just for information, the Member for Humber - Bay of Islands wanted to have an opportunity as well. So just bear that in mind, if you want to give him an opportunity now or if you want to split the time or whatever.

Are you okay with that?

L. PARROTT: Yes.

SPEAKER: The Member for Humber - Bay of Islands.

E. JOYCE: Thank you, Mr. Speaker, and thank you, Minister.

I’m just going to ask a few questions. Of course, the history of Quebec and Newfoundland, there is still a lot of people, proponents again this, who are out saying that we should wait for 2041 – let the deal run out.

What’s your professional opinion on that?

SPEAKER: Mr. Chee-Aloy.

J. CHEE-ALOY: Mr. Speaker, I think that that is not a good idea. I think that, as I said in January 2025 and repeated today, I see two motivated parties in Newfoundland and Labrador Hydro and Hydro-Québec.

I also said in January 2025, our firm really understands the history in Newfoundland and Labrador. On this file in and of itself, we have been engaged since early 2023. We were engaged by the Newfoundland and Labrador government before that to assess different options for a potential negotiation. My colleague, John Dalton, he had testified on behalf of Newfoundland and Labrador or whoever the proponent was at the Supreme Court.

I mean, just earlier today, I was hearing two people randomly talk about what is going on in the Chamber, so I understand, but again, given that there is an agreement on the table – I said it earlier, the MOU, there was a lot of good work. It was foundational. I believe that the IRC was right in acknowledging the value. I believe that the negotiating team took that value as negotiated and were accepting of it. The goal then was to enhance it. I think the enhancements of the optionality with more recall megawatts available and the ability to sell that at market prices are beneficial.

If the inflation index, the CPI, or if it was a different type of index resulting in a lower price, I may have a different opinion depending on what that price is, but based on what I have seen across this country, and I use the example of the Ontario contract, which I think, up until this DCIA, was the best contract for any utility-scale hydro facility that’s in operation to recontract for multiple years. This is on par with that.

Then, on top of that, the Canadian government with the equity, the loan guarantees and the investment tax credits, I don’t think the situation gets better. I kind of said that in January 2025 but these things have happened now since. Again, I started with saying, when Prime Minister Carney was elected in March and the Major Projects Office started up in August of 2025, all of these things have benefited this initiative.

SPEAKER (Dwyer): The hon. the Member for Humber - Bay of Islands.

E. JOYCE: Thank you, Speaker.

The other thing that’s floating around a lot in the social media is the CPI is fixed and there’s a lot saying the actual cost we’re getting for CPI is not that 2 per cent. Can you confirm if that is the actual figure, or like what other people are saying is that no, in actual fact, when you calculate it in through the system it’s much lower?

SPEAKER: Mr. Chee-Aloy.

J. CHEE-ALOY: Mr. Speaker, as I said earlier, most power purchase agreements that I have seen across Canada, there’s a price adjustment with some sort of escalator based on consumer price index, CPI, and then it’s a matter of a percentage of that. Both parties tend to like that index because it is representing a broad basket of goods. It is very well-known. There’s a lot of confidence that the index is tried and true. It’s not going anywhere, and it is a Government of Canada-driven indicator. I think it’s stood the test of time through a lot of good agreements, but I’ll let Mr. Yauch add to that.

B. YAUCH: Mr. Speaker, I think when we talk about inflation, we really need to understand what is happening in the contract and not. There is the base payment that’s in Annex D or Schedule G in the previous MOU. That goes up by a fixed amount, and that had an embedded inflation assumption in that number, but it goes up beyond that. If inflation goes beyond the deadband that has been negotiated which is around 2 per cent, if inflation is, for example, 5 per cent a year, each year annually, the payment mechanism will be adjusted to account for that. The idea was that while we sit here today and we have our expectations of inflation, if those expectations over time are materially different, that you don’t want to dilute the value of the CF PPA, and that’s why that inflation mechanism was added in addition to the base payment structure that goes up between 14 per cent between now and 2041 and then 2.6 per cent for 2041 afterwards.

SPEAKER: The hon. the Member for Humber - Bay of Islands.

E. JOYCE: I’m going to ask you another general question, and a lot of people are putting this out on the social media again. I just want to clarify. They’re saying the best option for Newfoundland and Labrador right now is to negotiate the Upper Churchill on its own and do Gull Island on its own. What’s your expert opinion on trying to separate those two entities?

SPEAKER: Mr. Chee-Aloy.

J. CHEE-ALOY: Mr. Speaker, I don’t think those are really good options. We had established earlier that to have alternate paths to sell that supply, a lot of infrastructure would have to be built, a lot of transmission would have to be built and that’s a cost and that’s a big cost.

I mean with all respect, I think that there have been lessons learned in Newfoundland and Labrador regarding building big projects without an off-taker in the beginning.

SPEAKER: The hon. the Member for Humber - Bay of Islands.

E. JOYCE: Thank you for the answers.

One last question, last night there was a discussion here in the House and I guess, I’ll just try to get it clarified for a second opinion, that we have access to the US markets now and normally if you sell the power you have to go through the Quebec lines. Is that correct that if we’re selling the power, is that normal procedure to just go to the lines, bring the power to the lines, say Quebec. Quebec and them would send it on to New York or Toronto or wherever else. Is that normal procedure for that, for the power to go through someone’s else line but still it’s your power, going to end up in New York City or –

SPEAKER: Mr. Chee-Aloy.

J. CHEE-ALOY: Mr. Speaker, that’s generally how it works but there are a lot of rules and protocols that have to be exercised to do that.

In the circumstance today and into the future, Newfoundland and Labrador Hydro has 265 megawatts of basically transmission reservation to use within Quebec to export supply.

How that practically works is, Newfoundland and Labrador Hydro would then need to communicate to Hydro-Québec how much supply is actually going to flow and when across the transmission. It hits Quebec and let’s just say Newfoundland and Labrador Hydro and they do this, I don’t know how often, but they have the ability then to go on and sell that power somewhere else.

So Quebec is connected to Ontario, New England, New York. Let’s just say for argument’s sake, it’s selling it into New England, Newfoundland and Labrador Hydro would have to then reserve that supply not just though the Quebec system, it has the reservation and it just tells Quebec it’s going to do that, up until 265 megawatts.

It has to actually clear with New England and New England has to basically accept it. That’s how the physical system flows, and then Newfoundland and Labrador Hydro would have to successfully also participate in these wholesale markets at the various interconnections.

I’ll let Mr. Yauch add to that.

B. YAUCH: Speaker, the only thing I will add is that for everything beyond the 265 of access that Newfoundland and Labrador Hydro already has, you typically would have to procure some sort of transmission right, physical, financial, to get the energy through a certain system into the other system. The synthetic option that’s there now or the other two that are related to firm transmission lines, they essentially resolve that problem by essentially paying you what you would get as if you had done that.

SPEAKER: The hon. the Member for Humber - Bay of Islands.

E. JOYCE: Thank you.

Just in conclusion, I just want to thank the two of you. You were here in 2025 with the great knowledge and expertise and again here this year. Thank you for all the frank answers, and very enlightening. Thank you.

SPEAKER: The hon. the Minister of Energy of Mines.

L. PARROTT: Thank you, Speaker.

Just for clarification, I want to go back to some of the questions that were earlier. One of the questions was around the $33.8 billion that was allotted. In the MOU, that target was something that was set. Basically, it was a set target of present-day value of $33.8 billion. Obviously, those payments depended on all of the indices that nobody had settled. There was no contract. There was no agreed-upon figure. Is it possible that it could have ended up being less than that?

SPEAKER: Mr. Chee-Aloy.

J. CHEE-ALOY: Speaker, I’ll let Mr. Yauch answer this.

SPEAKER: Mr. Yauch.

B. YAUCH: Speaker, in the MOU, there was a Schedule G payment, the $33.8-billion NPV that we’ve spoken about, and the intention was to then get Schedule F, all the market prices and indices, to match that $33.8 billion. It’s been spoken about at length the challenge of getting those two things to weld together in an appropriate way. But to you second point, yes, if you did do it, if you solved that problem, and then all the supply was tied to various market pricing, you could lose. Upside and downside, they go together when you talk about wholesale markets.

SPEAKER: The hon. the Minister of Energy of Mines.

L. PARROTT: In the current pricing scheme, with the 14 per cent escalation to 2042 and the 2.6 and the tie-in to CPI, would you argue that that is a more stable pricing scheme than what we may have gotten in the previous MOU?

SPEAKER: Mr. Chee-Aloy.

J. CHEE-ALOY: Again, I’ll let Mr. Yauch answer this.

SPEAKER: Mr. Yauch.

B. YAUCH: Mr. Speaker, it provides some more certainty in pricing in that as you sit here today, you can look at the schedule G or Annex D payments and see what they’re going to be and assume that it stays within the bound of inflation. Under the previous MOU, there was more uncertainty in the sense that wholesale markets, particularly when you talk about electricity, can be very volatile and uncertain.

SPEAKER: The hon. the Minister of Energy and Mines.

L. PARROTT: So if you take that into consideration and you take both schemes and you put it out over a 50-year period, which one of those would you think would be easier to manage?

SPEAKER: Mr. Yauch.

B. YAUCH: (Inaudible) contracts are complicated to a certain extent and can be managed. So I think in either case, you can manage the complexity. Under the DCIA, I think there is a more simplified structure and I believe you’ve seen both parties talk about that, the simplified nature of it, and there’s a benefit to that in the sense that maybe it’s a bit easier to manage in terms of settling every single month or hour, however you’re going to settle the contract.

SPEAKER: The hon. the Minister of Energy and Mines.

L. PARROTT: Obviously after the previous MOU was announced and obviously that January negotiations towards definitive agreements had started, how close do you think you were to turning Schedule F into a working contract? Did you get to a place where you were confident that it would work?

SPEAKER: Mr. Yauch.

B. YAUCH: It was very complicated, I’ll say that. There was a lot of work done. I spent many hours looking at it. In terms of how close the negotiating team was with Hydro-Québec, we wouldn’t have insight into that, but I can speak from the amount of work we did to try to get these two things that kind of work against each other, Schedule G and Schedule F to a certain extent. If you try to get them to work in a reasonable, transparent manner that was fair to both sides, proved to be very challenging.

SPEAKER: The hon. the Minister of Energy and Mines.

L. PARROTT: So given the idea of certainty with the Churchill Falls contract, obviously certainly if Gull Island is to go ahead and the wind projects, from a national standard, I would assume that you would think that this is perhaps the biggest power project that the nation has ever seen?

SPEAKER: Mr. Chee-Aloy.

J. CHEE-ALOY: Mr. Speaker, short of some of the nuclear projects in Ontario, this is the biggest deal for electricity supply to be contracted in the history of this country. I can’t even think of a bigger deal in the US.

So the only thing comparable is the nuclear program, building that out in Ontario, but that stuff is all going to be regulated. But in terms of two parties coming together in a contract, there is no other bigger deal.

SPEAKER: The hon. the Minister of Energy and Mines.

L. PARROTT: I recognize the fact that the Member for Humber - Bay of Islands asked the question, but one of the biggest things that we’ve heard is to just forget about it, let Churchill Falls expire and go into 2041.

Obviously, you guys have done a whole lot of work in this. I’m just wondering if you could, broad scope, explain to everyone what it means for us to let that expire, whether or not we actually can win from the scenario and what it means for us to move forward with this contract?

SPEAKER: Mr. Chee-Aloy.

J. CHEE-ALOY: Mr. Speaker, I’ve said it earlier this afternoon, I said it in January 2025, I believe, our firm believes, that Quebec does need a lot of supply. As my colleague can attest to, he led a lot of the analysis essentially shaking down Hydro-Québec, in terms of what their options are for supply. So we are very convinced and continue to be convinced that the time is now. But because Quebec needs a lot of supply, we do not believe that they are going to wait forever to make a deal after the original PPA expires in 2041.

I had said earlier, that Hydro-Québec are doing things that people historically would not have expected them to do to meet supply: plans to procure 10,000 megawatts of wind in Quebec, plans to procure 3,000 megawatts of solar and I think, as I said earlier, the real tell is issuing a request for information in March this year for offshore wind.

Our firm has done a lot of work in offshore wind in the US and with the Trump administration in terms of their policies that have stopped the development of offshore wind. There has been a big pivot by American companies, European companies and others to potentially participate in the offshore wind licensing competition that is being planned by the joint federal government and Nova Scotia government regulator.

We know, based on our experience and knowing those entities, there’s a lot of interest in building offshore wind off the shore of Nova Scotia.

We also know there’s a lot of interest by global transmission developers to come into Atlantic Canada and build transmission to take that offshore wind supply to Quebec. And Hydro-Québec has all this information right now. So the fact that they’re doing that is in our opinion, in my opinion, they are being very diligent to assess all of their supply options.

So that’s a big, big thing in terms of Quebec needed supply, and it’s batter up, right? Newfoundland and Labrador Hydro, they’re at the plate. And I don’t think you’re swinging and missing, I think you’re hitting the ball for big time base hit, home run. And then the second thing is, frankly, there’s just a lot of money at stake. It’s gone from in nominal dollars $227 billion to $270-something billion, and at the height of this agreement, there’s an additional $4 to $5 billion a year on a $10 billion budget in Newfoundland and Labrador.

That’s generational wealth; that’s outstanding benefit; that’s outstanding value.

SPEAKER: The hon. the Minister of Energy and Mines.

L. PARROTT: Just one last thing. I’d like to thank you for your attendance here this afternoon, and for your (inaudible) and your honesty. So thank you very much.

SOME HON. MEMBERS: Hear, hear!

SPEAKER: Yes, thank you. Certainly I echo those remarks on behalf of the House of Assembly. We appreciate Mr. Yauch and Mr. Chee-Aloy, for you coming along today and answering these questions. I’m sure people watching at home appreciate hearing the questions and the answers as well.

Thank you.

Now I’m going to propose we just take five minutes recess so our panellists can depart and our new panellists can come in, and we’ll start again in five.

House is in recess.

Recess

SPEAKER: Order, please!

The next block will take us now from 3 till 5 p.m. and then we will recess for supper.

This afternoon, we have with us special guests Jonathan Dickman-Wilkes, vice-chair, Investment Banking and managing director in J.P. Morgan’s Power, Utility and Renewable Energy Group, and Taras Koval, vice-president of J.P. Morgan.

Welcome to our Chamber.

Again, just to very quickly go over the rules, especially for our guests. Questions will be asked in 15-minute increments from Members. We’ll go side to side, generally speaking. The Member gets one minute to ask the question but the panellist gets as long as they require to answer the question.

All questions and answers are supposed to be directed to the Chair and I would ask to our two guests, whichever one of you gentleman are going to answer the question, once it’s proposed if you could just raise your hand so I know which of you to identify and our Broadcast Centre down below knows to turn on your mic.

Okay, with that said, the hon. the Minister of Finance and President of Treasury Board.

C. PARDY: Thank you very much, Speaker.

Let me first of all welcome our two guests to the House of Assembly here in Newfoundland and Labrador.

My first question would be: What was your role in these negotiations?

SPEAKER: Mr. Dickman-Wilkes

J. DICKMAN-WILKES: Thank you, Mr. Speaker.

Thanks for having us here today as part of these important debates.

J.P. Morgan acted as financial advisor to Newfoundland and Labrador Hydro. In the capacity of financial advisor we provide advice on financial matters. That includes items such as evaluation, financial modelling, opining on risk management and also the financeability of existing and new assets.

We have J.P. Morgan, my colleague, Taras and I and a team of us have worked for the province on the broader Churchill River file since 2022.

SPEAKER: The hon. the Minister of Finance and President of Treasury Board.

C. PARDY: Thank you very much, Speaker.

Just stating that since 2022, they’ve been engaged with Newfoundland and Labrador Hydro. They were very much part of the 2024 MOU as well, as advisors for Newfoundland and Labrador Hydro.

Did your role change between the 2024 MOU and the current agreement?

SPEAKER: Mr. Dickman-Wilkes.

J. DICKMAN-WILKES: Thank you, Mr. Speaker.

Our role towards the 2026 agreement compared to our role leading up to the 2024 MOU was highly consistent. The nature of our engagement after the 2024 MOU and the subsequent debate in this House in January 2025, was, at the time, focused on the advisory to matriculate the MOU into definitive agreements at the time.

So we were hired. Our mandate was extended, if you will, to advise NLH on final agreements at that time and because things changed here, we resumed in the capacity of supporting the 2026 negotiation to bring us here today.

SPEAKER: The hon. the Minister of Finance and President of Treasury Board

C. PARDY: So, Mr. Speaker, while they were engaged to Newfoundland and Labrador Hydro but I said, generally, the mandate is the same but I’m assuming there will be some variances if there are some differences in the mandate between the two.

SPEAKER: Mr. Dickman-Wilkes.

J. DICKMAN-WILKES: I would say there weren’t many differences in the nature of our mandate. Maybe I’ll just take a minute to review how investment bankers work with the clients to provide financial advisory services. Our team, Taras and myself and many others, work very, very regularly with almost constant contact with our client, with the financing folks, primarily at our clients.

So the process of providing investment banking advice is highly iterative and depending on the needs of our clients, our client will ask us, if it’s within our broader scope, as financial advisor, and we’ll provide those services.

SPEAKER: The hon. the Minister of Finance and President of Treasury Board.

C. PARDY: Thank you, Mr. Speaker.

What has changed from a financing point of view between the 2024 MOU and the current agreement? Would those changes be good for the province?

SPEAKER: Mr. Dickman-Wilkes.

J. DICKMAN-WILKES: Thank you, Mr. Speaker.

I’ll offer a couple of points and then I’ll ask my colleague, Taras, to add on if that’s acceptable.

SPEAKER: Sure.

J. DICKMAN-WILKES: With respect to, I think the Member’s question was about financing, and, yes, there are certainly some changes that concern the financeability of the assets on the broader Churchill River package. Probably the most significant is the Gull Island project and the restructuring of the contract at Gull Island, which has been discussed quite thoroughly here already in the last day and a half, from a contract that has a fixed escalation for its whole term to one that is much more similar to a regulated utility rate-based model. That is to say regulated utility rate-based model is the contract structure, the project structure that is used for very high capex, capital projects by most utilities in North America.

To say a little bit more about that, the key difference is that instead of an increasing revenue, typically you have a decreasing revenue through the life of the contract, but the benefit, and getting back to the essence of your question, is that the capital cost of the large project starts amortizing immediately, both the debt and the equity. At the end of the contract term, which in this case is 50 years, you have much lower debt balances at the end of that 50-year period, recognizing that the amortization profile is longer than that at 65 years in the current agreement.

That is quite a fundamental change in the financeability of the Gull Island project. We have all got the addition of some Government of Canada attributes.

Let me pause there and, if it is okay, I will have my colleague add.

SPEAKER: Sure.

Mr. Koval.

T. KOVAL: Thank you, Jonathan. I think you answered that fairly well.

Just to add one more thing on the 2 per cent escalator. Part of the reason why the financing risks are reduced when the cost recovery is switched to a traditional cost of service is because to achieve a 2 per cent escalation through the PPA term, the revenues at the front of the curve would have to start at a low profile that would likely result and slightly shrink that service coverage ratio, which would sightly increase the financing risk.

SPEAKER: The hon. the Minister of Finance and President of Treasury Board.

C. PARDY: Can you possibly speak to the – we’ll come back to the escalator in a very short time and we’ll drive down on that a little deeper, but can you speak to the federal support.

SPEAKER: Mr. Dickman-Wilkes.

J. DICKMAN-WILKES: Yes, Mr. Speaker.

In addition to the federal loan guarantee for the Gull Island debt financing, which as an aside but it is a relevant aside, I would say that it is likely to be the largest powerplant financing in the history of this country. So a very large quantum of debt, therefore the loan guarantee of that debt is a significant point benefit to this agreement.

In addition to the loan guarantee, as you know there is also an investment tax credit that is part of the financing package which has the net effect of reducing the capital cost. Particularly in this case because unlike many investment tax credits at various jurisdictions, including the US, where the ITC, the investment tax credit, is available at project completion. In this case, my understanding is that the Government of Canada has agreed to make the ITC during construction. The benefit of that is if it is not available until the project is complete, you still need to finance the capital expenditures during construction. Which for a large project like this, can be many years of additional financing cost.

SPEAKER: The hon. the Minister of Finance.

C. PARDY: I think the viewers at home that are watching, Mr. Speaker, would know that there are a variety of financing levels awarded by the credit rating agencies that are different across Canada. For example, I would assume that the Government of Canada, with a AAA credit rating would have the highest in Canada, probably one of the highest, I think, along with Germany in the G7. Quebec will have an AA according to three out of four bond-rating agencies. Newfoundland and Labrador, we have the lowest credit rating in the country with an A1 rating.

When we look at the federal involvement as far as them backing the Quebec venture and debt, that is a good thing, isn’t it?

SPEAKER: Mr. Dickman-Wilkes.

J. DICKMAN-WILKES: Yes, Mr. Speaker.

The answer is yes. It’s a good thing. The higher a credit rating, the less lenders are going to charge to take on the credit risk of that borrower, and the federal government guaranteeing the credit is effectively the same as the federal government itself borrowing the money for its own purposes. To say a little further, and you might have been going there, but I’ll just offer it, we’ve estimated based on historical credit spreads – I’m getting a little technical here, I apologize – for bonds between Quebec’s sovereign provincial rating and the Government of Canada rating, the AAA that the Member referred to. Over the course of the project financing term for a project the scale of Gull Island – obviously there’s scenario analysis around this – our calculations would suggest that the value of that federal government guarantee is in the range of a billion dollars NPV.

SPEAKER: The hon. the Minister of Finance and President of Treasury Board.

C. PARDY: Thank you, Speaker.

Could you please explain the cost-plus pricing for Gull Island and Churchill Falls upgrades and how it changed from the 2024 MOU, and are those changes improvements for the province?

SPEAKER: Mr. Dickman-Wilkes.

J. DICKMAN-WILKES: Yes, Mr. Speaker.

The cost-plus pricing model and financing model, and I referred to this a couple minutes ago in one of my earlier responses, is a lower risk model for operating and financing a large capital project like Gull Island. The reason that I say that and it’s the model used by almost every utility that I’m aware of in North America; it involves the financing of the capital cost using debt and using equity, and the owners of the asset, which is typically a utility, earning a regulated rate of return on the equity balance throughout the life of that project.

So that presents a much lower-risk investment than an asset that has, you know, a PPA attached to it, just because there is inherently more risk, generally, in a PPA, and there’s a few elements of that. When we talk about cost-plus, whatever the capital cost is, that’s what it is, and the equity will generate the return at the stated rate of return, which in the case of the current agreement, as you know, is 8.5 per cent.

Operating costs also are pass-through, as is, without mark-up, okay? So again, it’s viewed to be the lowest risk and effectively the lowest-cost manner of financing a large utility project like Gull Island.

SPEAKER: Okay, the minister’s time has expired.

The hon. the Member for Corner Brook.

J. PARSONS: Thank you, Speaker.

Great segue from the Finance Minister, I have questions about Gull Island as well. So as we just heard, I guess, the recommendation was to do it more as a regulated utility, with a rate-based model. In this case, do we have the model done so that we have, I guess, the expected revenue requirement and the starting prices for the power coming from Gull Island?

SPEAKER: Mr. Dickman-Wilkes.

J. DICKMAN-WILKES: Thank you, Speaker.

The big variable in the answer to your question is the finalized capital cost of the project, okay? And you’ll be aware that one can only estimate what that is, given where we sit today relative to what the possible in-service date is for Gull Island. That’s probably the biggest single variable and I do believe that our client, which is Newfoundland and Labrador Hydro, has done work on that, and certainly Hydro-Québec also has done work on that.

So I think there are estimates of the answer that you’re asking for. We don’t have those here today. Those will have to – perhaps Newfoundland and Labrador hydro can answer that. The engineering studies still need to be further advanced, so that the cost estimate for the project can be tightened.

SPEAKER: The hon. the Member for Corner Brook.

J. PARSONS: Surely, though, I guess, we have in the DCIA a schedule with capacity estimates, a COD of around 2026, with about a $30-billion capital cost and with the cost-of-service model, we know that the revenue requirement will be declining throughout the life of financial arrangement. So we must have some idea of the pricing at this point shouldn’t we, if we are agreeing to this?

SPEAKER: Mr. Dickman-Wilkes.

J. DICKMAN-WILKES: Mr. Speaker, certainly, there are estimates of the revenue requirement for the asset which are based on an array of assumptions, as you’re suggesting. The numbers that you cited certainly are familiar to us. Obviously, there are also going to be estimates of operating costs, et cetera, and financing costs which is another key point of uncertainty here.

None of us can begin to predict what interest rates are going to be when the capital is actually spent to build this asset, but, certainly, yes, there are estimates of the revenue requirement for the asset.

Can I just ask if my colleague has anything to add?

SPEAKER: Mr. Koval.

T. KOVAL: Thank you, Jonathan; thank you, Speaker.

I don’t believe I have anything to add.

SPEAKER: The hon. the Member for Corner Brook.

J. PARSONS: Again, it would be really helpful to see the estimates for Gull Island because there are estimates I know in the marketing in the literature provided by government around what the NPV is in the return to Newfoundland Hydro on this. There is a number in the document around $7.3 billion, but I understand from our meetings with Hydro that includes the upfront equity payments, a NPV of around $3.8 billion might be the amount for the life of the project.

So do we have some better number that we can base whether or not this is a good deal or not?

SPEAKER: Mr. Dickman-Wilkes.

J. DICKMAN-WILKES: Yes, thank you, Mr. Speaker.

So maybe just to turn back the clock a little bit, step back for a moment. We talked about the model as being a regulated rate of return model for the project, and the equity contribution for NLH into the project is the $3.5-billion number, which I think everyone is familiar with.

The nice thing about the rate of return model is that the net income that that equity balance it is going to generate is fixed. It is not going to be at risk, you know, relative to what the ultimate capital cost of the asset is. Hydro-Québec is taking the development risk of the asset, and so, in that context, the return to the province on this equity is fixed. It’s a very low-risk investment for the province.

SPEAKER: The hon. the Member for Corner Brook.

Please address the Chair.

J. PARSONS: Oh, sorry, Speaker.

Again, I understand the model. The model as I understand it, with the regulated utility, the whole reason for having this kind of model is to ensure that the price that the consumer pays or the rate taker pays for the energy out of such a utility is the lowest possible price. Of course, in this case, we know that Quebec is taking a minimum of 84 per cent of the energy or the capacity from Gull Island.

So, again, is it correct that Quebec is going to get the majority benefit from this?

SPEAKER: Mr. Dickman-Wilkes.

J. DICKMAN-WILKES: Well, Quebec is developing the project, is paying the Province of Newfoundland and Labrador $3.5 billion for the right to develop the project and your percentages are correct in terms of the off-take of the project.

I mean, if we step back and think about what could happen at in-service date for Gull Island, you mentioned earlier a number of $30 billion of capital costs, because the equity thickness or the ownership for Newfoundland and Labrador Hydro is fixed and the equity contribution towards the capital cost for the Province of Newfoundland and Labrador, Newfoundland and Labrador Hydro, is also fixed, to the extent that the capital cost is higher than the $30 billion, Newfoundland and Labrador Hydro benefits because the deemed equity thickness in the project is preset and the actual cash equity, if you will, that NLH is going to put in is also fixed, okay?

It’s highly unusual that this type of arrangement, that the actual equity contribution is a fixed number. Usually, owners of an asset that’s being developed share in the cost overrun risk. In this case, that’s not the case. Hydro-Québec is taking all of that capital cost overrun risk.

SPEAKER: The hon. the Member for Corner Brook.

J. PARSONS: Thank you, Speaker.

To that point, as I understand it, there is a mechanism for increasing the amount of equity or debt required for overruns and it is borne by this project subordinated debt and the equity replacement debt. In this case, that debt would be taken by the joint venture, won’t it?

SPEAKER: Mr. Koval.

T. KOVAL: That is correct.

SPEAKER: The hon. the Member for Corner Brook.

J. PARSONS: So, Speaker, it doesn’t sound like it is actually Hydro-Québec that’s taking on the risk. The joint venture is, in which we own 60 per cent of. In terms of who is getting the value out of this project, I have to wonder is there really any upside here for us? Is this just the utility being built for Quebec and for Hydro-Québec?

SPEAKER: Mr. Dickman-Wilkes.

J. DICKMAN-WILKES: Speaker, again, I see it as a very low-risk investment to the Province of Newfoundland and Labrador. The equity contribution is fixed. The rate of return is fixed. So the net income coming off the asset is going to be fixed and certain. At the conclusion of the contract, this is going to be essentially an asset that is 50 years out of 65 years with its debt amortization, okay, so it will have a relatively – not zero – small amount of debt given the size of the asset.

Frankly, I think that the province could look to that asset and think that’s an underlevered asset and depending on what power prices happen to be in 50 years, there could be a tremendous amount of upside to the province because it’s 60-per cent owner of this asset.

SPEAKER: The hon. the Member for Corner Brook.

J. PARSONS: Likewise, turning now to the upgrades project, that also is done through a cost-of-service type model. In this case, of course, there’s a lot lower cost of capital. The first question I have is there is a $4.8-billion estimate to the upgrade capital cost, but in the DCIA document it says that capital cost will be actual cost minus $700 million. I’m just wondering if this $4.8 billion is the actual cost or the cost minus the $700 million, and what is the $700 million for?

SPEAKER: Mr. Koval.

T. KOVAL: Mr. Speaker, the $4.8 billion is after the $700 million, and the $700 million referenced in the DCIA is a subtraction of capital that would have been spent at CF(L)Co regardless of if the upgrades were built or not. So capital spending would’ve already been there.

SPEAKER: The hon. the Member for Corner Brook.

J. PARSONS: So in this case, CF(L)Co is completely financing this deal. There is no extra capital coming in through Hydro-Québec or through NL Hydro. Is that correct?

SPEAKER: Mr. Koval.

T. KOVAL: Mr. Speaker, that’s right.

SPEAKER: The hon. the Member for Corner Brook.

J. PARSONS: My question here is so if Gull Island, it seems to make sense that the amount of energy was being sold, we’ll set the price for the declining cost of energy on a per kilowatt basis, in this case – as we heard yesterday from Jennifer Williams – there is very little energy being produced. It’s more of a capacity project. It’s an upgrading of the plan itself.

First of all, do we have a model for the cost of or the revenue requirement for that upgrade and, again, can you confirm it is declining, just like Gull Island? What is the pricing model? Is it for energy or capacity.

SPEAKER: Who’s taking this one?

Mr. Koval.

T. KOVAL: Mr. Speaker, I can confirm that that is also a declining revenue requirement similar to the Gull Island. I can also confirm it’s cost plus PPA where all the capital costs will be recovered from the off-takers, similar to Gull Island.

Apologies, Mr. Speaker, I might be forgetting a part of the question.

SPEAKER: The hon. the Member for Corner Brook.

J. PARSONS: I guess Hydro-Québec is taking 77 per cent of this power, I believe. How are they paying for it? Are they paying for energy or are they paying for capacity?

SPEAKER: Mr. Koval.

T. KOVAL: Mr. Speaker, the upgrades are going to be capacity propped.

SPEAKER: The hon. the Member for Corner Brook.

J. PARSONS: So in terms of the overall Churchill Falls project, the first part of the payments are based around energy payments and these costs of this revenue requirement will be raised through capacity. Is that correct?

SPEAKER: Mr. Koval.

T. KOVAL: Mr. Speaker, I believe that is correct.

SPEAKER: The hon. the Member for Corner Brook.

J. PARSONS: Again, do we have that revenue requirement at the outset calculated model yet?

SPEAKER: Mr. Koval.

T. KOVAL: We do have that revenue requirement and we do have those asset models. Unfortunately, I do not have those figures with me today or ready to quickly bring them up with me today. Those figures have been modelled and that is how the all-intake contribution from both Gull Island and the upgrades to projects that we just talked about has been calculated from those two specific models.

SPEAKER: The Member’s time is expired.

Moving over to this side.

The hon. the Minister of Finance and President of Treasury Board.

C. PARDY: Thank you, Speaker.

I know people have opinions and they state opinions but yesterday my colleagues across the aisle had posted a Facebook post after Barry Perry had presented to the House on the traditional cost-of-service model. If I can read you what the post is, I’d like to have your commentary to make sure we clarify it for Newfoundlanders and Labradorians what the significance would be.

It says, the negotiating team just confirmed and with a video showing that that the trajectory on the line that Barry Perry was stating – the price Quebec pays for Gull Island power goes down over time. Just like the Churchill Falls deal of 1969.

Can you give an opinion on that, please?

SPEAKER: Mr. Dickman-Wilkes.

J. DICKMAN-WILKES: Mr. Speaker, I’ll just say this. As a financial advisor to NLH, I think we do have a pretty solid understanding of the differences between these two things. Frankly, it feels a little bit like a political question. I think that there are very important differences between the 1969 contract and the regulated cost-of-service model as I’ve said, I think, twice already, that regulated service model is the way that most large-scale utility assets are financed in North America today. I would say that there are some pretty significant differences.