Oh my the Upper Churchill the mistake that is still hurting NL today, Smallwood and the desire for industrialisation led to the lack of one clause that, if added, could have meant billions of dollars of revenue.

Let's start at the top, Joey Smallwood was the first Premier of the new province of Canada after leading a successful campaign to bring Newfoundland into confederation with Canada. Smallwood, who was originally from Gambo spent his younger years in St. John's working in media and under Prime Minister Sir Richard Squires. These years can be seen as very formative for Smallwood, Squires main goal as PM of Newfoundland was a drive for industrialisation for the Dominion... and also lining his own pockets with government funds from time to time. Smallwood picked up the industrial bug from Squires, and his later political career focused on this drive. During the 20's and 30's Smallwood was a left of centre commentator, with the Barrelman radio program and wrote many books about left wing ideas in NFLD as well as some books describing the industrial potential of the Dominion with the best being "New Newfoundland". With all this in mind we can now move onto the province of Newfoundland, BRINco, CFLco and the removal of a billion dollar clause.

Industrialzation for Newfoundland would only happen if there was a large amount of cheap power, after Confederation sites were identified that would be able to transformed into hydroelectric power Bay D'Espoir on the south coast was one site but by far the largest was Grand Falls on the Hamilton River which was later renamed the Churchill River and Churchill Falls. Smallwood in 1952 pitched the idea of a Hydro project in Britain, which gained enough interest to create the British Newfoundland Corporation or BRINco. (My favourite British and Newfoundland company name is the Anglo Newfoundland Company or ANDCompany.) The plan for the hydro dam was for excess power to be sent to the Maritimes and down to the North Eastern seaboard of the US, the only problem with this was Quebec. The site of Churchill Falls was in the interior of Labrador, and Labrador is sourounded by Quebec, there were two options, to either send power through an under sea cable across the strait of Bell Island to the west coast of Newfoundland where it would then be transmitted to Nova Scotia through another under sea cable to Nova Scotia or the second option through Quebec. At first there was no movement but after Quebec nationalized power in the province, the Shawinigan power's 20% stake in CFLco meant Quebec had a seat at the table.

Talks between Hydro Quebec, and CFLco started an stopped right up until 1966 when finally a letter of intent was signed. However, this letter of intent was for an 84 year agreement, much longer than was originally thought by Smallwood and for a very cheap rate for Hydro Quebec. While construction began Hydro Quebec and CFLco continued to negotiate an agreement, but as for everything with this project it took much longer than expected to reach an agreement. This delay meant that CFLco was running out of money and in financial difficulty by 1968, more negotiations were held between CFLco and Hydro Quebec where it was agreed that Hydro Quebec's stake in the project would increase to over 30% and that major contract concessions would be given for Hydro Quebec to take more of the cost.

In 1969 the final contract was signed between Hydro Quebec and CFLco, which looked nothing like the original letter of intent. For 40 years the price of electricity would be 3 mills (three tenths of a cent) and the cost would change in changes until the end of the contract in 2041. The change in price was scheduled to go down, until it was at the rate of 2.5 mills for the last 15 years of the contract. The contract ended in 2016 but the agreement between Hydro Quebec and CFLco had an agreement that Quebec could sign an extension for another 25 years for a rate of 2 mills, which just happened this month. Until 2041 Hydro Quebec gets power for 2 tenths of a cent from Newfoundland, and CFLco has to pay to maintain the site, which costs more than it makes from selling the power.

So now you might wonder what is the clause? Well between the first letter of intent to the agreement the escalator clause was removed. This clause meant that when the price of power could be negotiated between the two groups intermittently. However, this was removed in the concessions between the groups in 1968.

Lastly, the next question is why did I talk about Smallwood when I started this mammoth answer? Well the Provincial government had a key stake in CFLco, and Smallwood was the driving force behind the contract negotiations. The removal of the escalator clause was a step that he himself approved and has lead to decades of lost revenue.