NL Hydro says Gull Island power could all go to Hydro-Québec if province does not exercise 16% option

Newfoundland and Labrador Hydro says the province has the option to purchase 16 per cent of the power generated at Gull Island, but the remaining power could all go to Hydro-Québec if that option is not exercised.

The issue came up Wednesday during questioning at the House of Assembly as MHAs examined details of the proposed Churchill Falls and Gull Island agreement.

NL Hydro representatives explained that the province has an option to purchase 16 per cent of Gull Island's power.

If the province determines that exercising the option is not economically viable, Hydro-Québec would purchase the entire output of Gull Island under a 50-year power purchase agreement.

The arrangement would allow Hydro-Québec to take the full Gull Island output if Newfoundland and Labrador chooses not to take its 16 per cent entitlement.

NL Hydro representatives said the utility's preference is for the power entitlement secured through the developments to be sold within Newfoundland and Labrador, which they said would provide the greatest economic benefit to the province.

However, the decision on whether to exercise the 16 per cent option would ultimately depend on an assessment of the economics of purchasing the power.

The Gull Island project is part of the proposed agreement between Newfoundland and Labrador and Hydro-Québec announced in August.

The agreement also provides for a long-term power purchase arrangement involving Gull Island.