Mega Dams Part One: A Tale of Muskrat Falls and Gull Island

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This is the first post in a three-part series on mega dams by Lori Lee Oates.

Mega dams and hydroelectric projects have a troubled history in Canada and in many parts of the world. They are, in essence, examples of neocolonialism, extractive economics, and the exploitation of Indigenous populations in the contemporary period. This first piece will focus on Labrador, which is home to both the Churchill Falls hydroelectric development and the ill-fated Muskrat Falls project. The dynamics of these mega dams as examples of industrial colonization have been discussed extensively in Muskrat Falls: How a Mega Dam Became a Predatory Formation. However, despite these known histories, Labrador is also slated to be the site of the Gull Island hydroelectric development, a part of the proposed Atlantic Loop and an element of Canada’s plan for a transition off fossil fuels.

“Mega dams and hydroelectric projects have a troubled history in Canada and in many parts of the world. They are, in essence, examples of neocolonialism, extractive economics, and the exploitation of Indigenous populations in the contemporary period.”

Labrador is physically attached to Quebec but part of the province of Newfoundland and Labrador. The boundary dispute between Quebec and the then Dominion of Newfoundland was settled by the Judicial Committee of the Privy Council (JCPC) in London in 1927. Not surprisingly, the boundary was never settled to the satisfaction of Quebec. As a result, Labrador’s extensive hydro and mining resources were put under the jurisdiction of Newfoundland. Yet, Newfoundland could not move hydroelectricity to the vast North American markets from Labrador without going through Quebec.

Churchill Falls, Labrador
“Churchill Falls Labrador 11 — Muskrat Falls” by dugspr — Home for Good is licensed under CC BY-NC 2.0.

Damming the Churchill River

Churchill Falls is a large waterfall 74.7 metres high on the Churchill River in Labrador. With the completion of the Quebec North Shore and Labrador Railway in 1954, negotiations for the extensive hydroelectric development of the falls were undertaken, with the Government of Newfoundland taking the lead for Labrador from St. John’s. Negotiations on the Churchill River project were finally completed in 1969. The contract provided for the sale of 5.2 million kWh per year of power to Hydro-Québec for 40 years at a price of under 3 mills (three-tenths of one cent) per kWh. Hydro-Québec had the option to renew for another 25 years at only 2 mills per kWh. There was no allowance for the fact that the market price for hydroelectricity would increase. Hydro-Québec has since reaped massive profits from the development while Newfoundland and Labrador’s profits have not increased. Successive lawsuits have taken place, none of which have been decided in favour of Newfoundland and Labrador. However, the deal between the two provinces expires on August 31, 2041.

Five people in orange vests and hardhats stand talking with the construction of Muskrat Falls Dam in the background
The Honourable Paul Davis, Premier of Newfoundland and Labrador, tours Muskrat Falls with fellow Provincial and Territorial Premiers during Meeting of Canadian Premiers and National Aboriginal Organization Leaders. July 2015. “Canada’s Premiers tour Muskrat Falls” by GovNL Photos is licensed under CC BY-NC-ND 2.0.

In 2003, Premier Danny Williams, of Newfoundland and Labrador, came to power promising “no more giveaways.” In the final days of his government, he signed a $6.2 billion deal with Emera to develop the Lower Churchill River, while bypassing Quebec. The Muskrat Falls project was sold to the people of Newfoundland and Labrador on the basis that it would provide green energy. Local business leaders actively pushed for the project. The project was made possible by a loan guarantee that was offered by then Canadian Prime Minister Stephen Harper. At the time, the loan guarantee was for $5 billion. The Newfoundland and Labrador Public Utilities Board (PUB) was removed from their electricity rate setting responsibilities over Muskrat Falls, removing any public transparency. Upon arrival in office in 2015, the new Liberal government of Newfoundland and Labrador examined the project and decided to continue it. The new Trudeau government then extended the loan guarantee to reflect the rising cost of the project by an additional $2.9 billion. Both major parties in Canada were then tied to the ill-fated project.

A Misguided Project

It made national news when Indigenous persons from across the country travelled to Ottawa to protest the project in 2016. The Nunatsiavut Government of the Labrador Inuit pursued a Make Muskrat Right campaign. Their concerns about the metal mercury in the water and food supply were backed by scientists, including some from Harvard University. The province’s hydroelectric crown corporation, NALCOR, downplayed the findings. On October 14th of that year, renowned Inuk artist Billy Gauthier began a hunger strike and was joined by two other protesters, Jerry Kohlmeister and Delilah Saunders. NALCOR filed an application to cap the wetlands to address these concerns. It was later reported that the provincial Department of Municipal and Provincial Affairs had missed the deadline to approve the wetland capping. It also made national news when civil and criminal charges were laid against journalist Justin Brake when he entered the Muskrat Falls site to cover the protests for The Independent NL. Charges were later dropped and Brake won his civil case in court, establishing rights for Canadian journalists to cover protests and particularly protests led by Indigenous groups.

A man in snow gear holds a sign that says "No more dams"
“Grand Riverkeepers Labrador & Friends of Grand River/Mistashipu hosted a Snowmobile Ride for the Grand River in honour of International Day of Action for Rivers 2015. 13 people and 7 snowmobiles made there way to Mudlake via the Grand River for a boil up and celebration of the river. We shared and had great conversation about the importance of rivers, the Muskrat Falls megadam project upstream, and why rivers in Labrador must be protected!” “No More Dams!” by International Rivers is licensed under CC BY-NC-SA 2.0.

On March 5, 2020, the Government of Newfoundland and Labrador released a report entitled Muskrat Falls: A Misguided Project. During the Muskrat Falls inquiry, Professor Brent Flybvjerg provided a report and presentation which showed that during the process of analyzing hydroelectric projects, a process of “optimism bias” takes over. He maintained that those assessing such projects become more optimistic than they should, that they can effectively execute it. Notably, other recent mega dam projects in Canada have also been highly problematic. Much of the western world has abandoned pursuing them and is even decommissioning them. In Canada they continue to be part of the green energy transition strategy.

“Other recent mega dam projects in Canada have also been highly problematic. Much of the western world has abandoned pursuing them and is even decommissioning them. In Canada they continue to be part of the green energy transition strategy.”

Gull Island: Repeating Past Mistakes?

Gull Island is a proposed hydro development near Muskrat Falls that was environmentally assessed at the same time as Muskrat Falls. On June 23, 2021, in the Newfoundland and Labrador House of Assembly, Premier Andrew Furey was asked about Gull Island. He stated, “there are no current discussions with respect to Gull Island.” However, he indicated he is keen to develop “an incredible asset.” The premier added, “the most important thing is to make sure we have the expertise and the appropriate people in place [so] that when — if we do, and we should consider doing a deal on Gull Island.” A public narrative is being set that the province just needs the right human resources to do the project and those have been put in place with the Muskrat Falls project, which is years behind schedule and still not online. It is now obvious that Muskrat Falls was never going to be an economical project and it was never going to provide the promised energy security. A public loan guarantee was necessary to gain project sanctioning. Arguably, it has made citizens of Newfoundland and Labrador more energy insecure than they have ever been. Former Premier Danny Williams continues to defend the project. 

This map of the Muskrat Falls Reservoir shows Gull Island relation to the hydroelectric development at Muskrat Falls.
This map of the Muskrat Falls Reservoir shows Gull Island relation to the hydroelectric development at Muskrat Falls. — Nalcor – Nalcor Energy

Rate Mitigation 

In 2021, on the eve of a federal election, it was announced that the Governments of Canada and Newfoundland and Labrador had reached an agreement on electricity rate mitigation for the province, valued at $5.2 billion. The deal was said to “starve off the starkest financial consequences of the Muskrat Falls hydroelectric project in Newfoundland and Labrador, an agreement that includes keeping electricity bills in the province from spiking in a few months.” The money is a cash transfer from the Hibernia offshore oil project. However, it is a loan that must be repaid in 2042 after the agreement expires on the original Churchill Falls projects. The risks of the Muskrat Falls project have been effectively socialized, while the benefits have been privatized to large contractors. The most recent estimates put the cost of the project at over $13 billion.

On September 21, 2021, the Newfoundland and Labrador Minister of Industry, Energy, and Technology, Andrew Parsons, delivered a message that the province should temper its expectations of what it will receive after the end of the deal with Quebec in relation to the Churchill Falls project in 2041. St. John’s lawyer and Liberal insider John Samms stated, ‘We did a bad deal. Time to get over it. Time to make it a better deal now.’ On CBC’s Here and Now, he told citizens to get past their “nationalistic petulance” There has also been an op-ed published in La Presse, which proposed Hydro Quebec buying Newfoundland and Labrador Hydro. The provincial crown corporation seems to be under consideration for privatization. The people of Newfoundland, and especially Labrador, seem to be on the path of exploitation, leading to underdevelopment, yet again.

The broader Canadian and global context of mega dams will be further discussed in part two of this series.

Feature Image: “March 14 2019 – Grand Riverkeeper Labrador Boil Up on the River” by International Rivers is licensed under CC BY-NC-SA 2.0.
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Lori Lee Oates

Teaching Assistant Professor at Memorial University of Newfoundland
Lori Lee is a Teaching Assistant Professor in the Department of Sociology at Memorial University of Newfoundland. Her Ph.D. is in global and imperial history from the University of Exeter, focusing on the global movement of ideas in the nineteenth century. Lori Lee's current research interests include the resource curse, and women and climate justice. At present, Lori Lee is working on her first monograph for SUNY Press and a special issue on Gender and Climate Justice for Atlantis: Critical Studies in Gender, Social Justice & Culture. She has been a contributor to the CBC, The Globe and Mail, Canada's National Observer, and The Hill Times. Lori Lee has advised national environmental groups on the political economy of climate change and a just transition off fossil fuels.

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