Energy ministers from Newfoundland and Labrador and Ontario say the two provinces are working together on a deal to transfer hydroelectric power.

Ontario's Bob Chiarelli and Newfoundland and Labrador's Derrick Dalley said in a joint statement Monday they are "committed to exploring opportunities for importing clean and reliable electricity" that would be generated through the Lower Churchill hydroelectric project.

Derrick Dalley

Natural Resources Minister Derrick Dalley said that the Gull Island project can only be financed through long-term power deals with no cost to ratepayers in the province. (CBC)

Such an arrangement would include the as-yet-undeveloped Gull Island project in central Labrador, which is significantly larger than the Muskrat Falls power project now under construction outside Happy Valley-Goose Bay.

Dalley told reporters that talks began approximately one year ago and they have put together a working group to look closely at the possibility.

Over the next year, the two departments will be looking at ways to export power from Gull Island to Ontario.

"There [are] opportunities here, that Ontario has some supply needs and Newfoundland and Labrador may have some supply options," said Dalley.

"It's a tremendous export opportunity for Newfoundland and Labrador."

The project will cost at least $12 billion, which Dalley says will only be financed through long-term power deals with no cost to ratepayers in the province. 

"We are not in any way suggesting that we'd put any risk to the ratepayers of Newfoundland and Labrador," he said.

'Head start' into national energy policy, Ontario premier says

Chiarelli said he's excited about the prospect and the implications it could have for a national energy grid.

"It's a very visionary initiative," he said.

"We're very excited about it. The premiers have been talking about creating a national grid  and with very significant infrastructure investments in the Maritimes, there's a real prospect of getting a good head start into that national policy."

The announcement comes days after Canada's premiers reached a new energy strategy in St. John's, during the annual first ministers' summer meeting.

Bob Chiarelli

Ontario's energy minister says he's "very excited" about working on an energy deal with Newfoundland and Labrador. (CBC)

Before that meeting, Ontario Premier Kathleen Wynne toured the Muskrat Falls site, and expressed interest in the potential of the project — even though the 824 megawatts to be produced will be funnelled to markets in Newfoundland or the Maritimes.

"I try not to be jealous, I try and be constructive," Wynne said Tuesday. "I try not to covet our neighbours' resources, but to find ways of working together."

The Gull Island component of the overall Lower Churchill project has the potential to generate 2,250 megawatts.

Dalley said it will take the working group a year to study the economics of the project.

Quebec not mentioned in statement

The working group will include officials with both provincial governments as well as representatives from Nalcor Energy — Newfoundland and Labrador's Crown energy corporation — and Ontario's Independent Electricity System Operator.

Kathleen Wynne, Paul Davis, Philippe Couillard Premiers Meeting 20150717

Newfoundland and Labrador Premier Paul Davis, flanked by Ontario Premier Kathleen Wynne, left, and Quebec Premier Philippe Couillard, speaks to reporters during last week's premiers' meeting in St. John's. (Andrew Vaughan/The Canadian Press)

The statement makes no reference to Quebec, which has for decades been an obstacle in Newfoundland and Labrador's desire to sell Lower Churchill energy to markets in North America.

Dalley said that Quebec premier Philippe Couillard seems open to working with Newfoundland and Labrador, but that there are other options for getting power to Ontario.

"We're hearing very positive comments from Premier Coulliard," Dalley said.

"It may be an opportunity to work in the future around accessing through Quebec, but I think we also demonstrated beyond Quebec there are other means and other ways."

In 2010, then-premier Danny Williams struck a deal that saw Newfoundland and Labrador, Nalcor and Halifax-based Emera Inc. collaborate on the Muskrat Falls project, effectively bypassing Quebec in moving that energy to consumers.

Nalcor CEO Ed Martin has said that there is no rush to develop Gull Island and that the corporation would prefer to wait until a suitable deal is reached.

'Irresponsible negotiations': Dwight Ball

Provincial Liberal Leader Dwight Ball said he's uncomfortable with the announcement.

Dwight Ball

Liberal leader Dwight Ball said he feels the negotiations on Gull Island are rushed and irresponsible. (CBC)

"It's really irresponsible negotiations in my opinion," said Ball.

"Two red flags for me. One, this is a deal that shouldn't be rushed. Ed Martin has said that himself. And secondly, Quebec is not at the table. Already a number of unresolved issues with Quebec."

Much of the preparatory work on Gull Island, though, has long been completed, including an environmental assessment, engineering planning and agreements with aboriginal groups.