02:46 PM EST, 12/12/2024 (MT Newswires) -- The Canadian province of Newfoundland and Labrador reached a new electricity supply agreement in principle with Quebec, apparently ending a long-time dispute with a deal that will increase hydroelectric power in the country's eastern region, Bloomberg News is reporting Thursday.

It said the two provinces agreed on a new 50-year contract worth C$34 billion ($24 billion) at an average cost of 6 Canadian cents per kilowatt-hour (kWh). Churchill Falls Labrador Corp. will increase its generating capacity and a new run-of-river generating station will be built on the Churchill River at Gull Island.

All together, the projects will cost C$25 billion, creating the second-largest hydroelectric complex in North America after Baie-James. About C$20 billion of debt will be needed, the rest being equity, according to government-owned Hydro-Quebec. Building the transmission lines required to transport the electricity could cost between C$2 billion and C$3 billion more.

Hydro-Quebec, owned by Canada's second most populous province, holds a 34% stake in the Churchill Falls Labrador Corp. and will have 40% stake in the Gull Island project.

The report noted Churchill Falls provides 4,800 megawatts to Hydro-Quebec, representing about 15% of Quebec's overall supply or enough to power 1.7 million households. The new projects will boost power capacity coming from Labrador by 50%, or 2,400 extra megawatts.

Bloomberg said the agreement is still in a tentative phase, and many changes could happen before a definitive deal is reached. Among the risks -- building the Gull Island project and the transmission lines may hit roadblocks with Indigenous communities.

"We negotiated this agreement carefully and rigorously," Hydro-Quebec Chief Executive Officer Michael Sabia said in a news release. "We are confident that we will be able to control the construction costs of the new infrastructure."

The report noted Sabia is currently working on what he calls an "action plan" that may amount to as much as C$185 billion to build new power-generation capacity and improve transmission reliability by 2035.

In 1969, the report also noted, Newfoundland and Quebec entered into a contract ending in 2041 in which Quebec could buy almost all the electricity output produced at Churchill Falls' generating station for 2 Canadian cents per kWh. Meanwhile, Hydro-Quebec exported electricity outside of Quebec, including in the US, at an average price of 10.3 Canadian cents per kWh in 2023.

Newfoundland considered the contract an injustice and tried to reopen it, but the Supreme Court of Canada upheld its terms in 2018.

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