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Frozen trees are seen under Hydro-Quebec power lines on Jan. 31, 2019 in Levis, Que.Jacques Boissinot/The Canadian Press

It was like déjà vu all over again last month when Quebec Economy Minister Pierre Fitzgibbon declared that electricity policy would be a top provincial priority over the next decade.

For six decades, Quebec has leveraged its vast hydroelectric resources as part of an industrial strategy aimed at attracting large power consumers with cheap energy prices. Mr. Fitzgibbon, who was named by Premier François Legault to head up a new economic superministry that includes responsibility for Hydro-Québec, appeared to be stating the obvious when he said “energy is the most important economic file in Quebec for the next 10 years.”

Mr. Legault’s Coalition Avenir Québec government has touted its ambitious but controversial plan to build new hydro dams in anticipation of a 50-per-cent increase in power demand by 2050, as the province seeks to become a hub for critical mineral refining and electric-battery component manufacturing. The plan has its detractors, and not just among environmentalists and Indigenous communities who oppose the diversion of any more natural waterways.

The sudden departure of Hydro-Québec chief executive officer Sophie Brochu only three years into a five-year mandate appears to be the result of clashing visions of the government-owned utility’s future, after an October radio interview in which she publicly questioned the strategy of offering lowball power rates to lure industry to the province. Sticking to this strategy ultimately involves building new, and more expensive, hydroelectric dams to ensure adequate supply.

Despite Ms. Brochu’s star profile in Quebec business circles – she previously ran the province’s main natural-gas provider and was considered a potential candidate to head up Caisse de dépôt et placement du Québec in 2019 – she ran up against the reality that electricity policy remains closely guarded prerogative of the provincial government. Political meddling is almost inevitable at Hydro-Québec, which has been a powerful symbol of state capitalism and economic determinism since the province nationalized its hydroelectric industry in the 1960s.

Ms. Brochu’s resignation, effective in April, clears the way for the Legault government to appoint a new Hydro-Québec chief who can work with Mr. Fitzgibbon. The CAQ government will also have to name a new Hydro-Québec chairperson after Jacynthe Côté, a former senior executive at aluminum giant Alcan prior to its 2007 takeover by Rio Tinto PLC, announced last month that she is stepping down in May to become chair of Royal Bank of Canada.

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Ms. Brochu’s departure appears to end the debate over the future direction of Quebec’s electricity policy. Mr. Fitzgibbon has insisted the construction of new dams will be necessary to meet projected power demand, though he has remained coy on the details about which rivers could be dammed. One potential reason relates to the negotiations the Legault government is preparing to undertake to renew Hydro-Québec’s 1969 contract to purchase power from the massive Churchill Falls hydroelectric station in Labrador. A renewal deal could include plans for Quebec and Newfoundland and Labrador to partner on a new hydro development on the river. The two provinces tentatively reached such a deal in 1998, but the agreement fell through.

Under the current contract, which expires in 2041, Quebec purchases more than 5,000 megawatts of Churchill Falls power at 0.2 cents per kilowatt-hour, or a tiny fraction of the energy’s resell value. Successive Newfoundland governments have unsuccessfully pressed for a better deal – but the province’s bargaining power will only grow as 2041 approaches.

Premier Andrew Furey’s government recently created the Churchill River Energy Analysis Team with a mandate “to strengthen Newfoundland and Labrador’s negotiating position in advance of 2041″ and to explore opportunities for future hydro development on the river. The province’s disastrous experience in undertaking on its own the 824 MW Muskrat Falls hydro development, which has gone billions of dollars overbudget and led to a federal bailout, has underscored the need for the government to attract outside partners to proceed with the development of the much larger 2,250 MW Gull Island hydro project downstream from Churchill Falls.

In 2021, a Newfoundland economic advisory committee recommended packaging “the Churchill River resources as a single opportunity, including Muskrat Falls, Gull Island, and the 2041 contract on the Upper Churchill, and seek federal government and private sector partners to maximize the economic value and its renewable energy potential.” However, Hydro-Québec remains a natural partner for any such development, given its existing 34-per-cent stake in Churchill Falls project and the likely need to transport power from Gull Island through Quebec.

Gull Island is the most attractive undeveloped hydro site in Eastern Canada. Regardless of who becomes Hydro-Québec’s next CEO, the construction of new dams within Quebec would be an inferior choice compared with the joint development of Gull Island.