Newfoundland and Labrador has signed a memorandum of understanding with a New England state regarding the sale of power from a proposed hydroelectric megaproject in Labrador.

Premier Danny Williams said a memorandum signed with the state of Rhode Island means both parties will "explore the merits" of a potential sale of power from the Lower Churchill hydroelectric project, which is poised to undergo a federally sanctioned environmental review. 

Premier Danny Williams has signed a memorandum of understanding with the governor of Rhode Island on selling Lower Churchill power.
(CBC)

The memorandum concerns about 200 megawatts of power — or just seven per cent of the 2,800 megawatts that the Lower Churchill's two proposed sites are expected to generate.

In a statement Wednesday, Williams celebrated the agreement as a partnership of common interests. Both parties are pursuing a power arrangement for 2015.

"It is clear that our clean, renewable hydro power is a sought-after commodity for a continent in need of environmentally friendly power sources to help reduce greenhouse gases emissions," Williams said.

"Rhode Island is a leader among the New England states in this area and they have recognized the potential of our hydro resource in assisting them to meet their goals."

Rhode Island Gov. Donald Carcieri signed the memorandum with Williams at the recently concluded conference of New England governors and Eastern Canadian premiers, in Prince Edward Island.

"The State of Rhode Island is interested in exploring new supplies of clean and renewable power to meet the energy needs of our residents," Carcieri said in a statement.

Newfoundland and Labrador Hydro, a provincial Crown corporation, will negotiate with Rhode Island on behalf of the government.

Speaking with reporters, Williams said the province has been promoting its energy resources, including oil, gas and hydroelectric power, in the New England market.

"This is big stuff and the state of Rhode Island sees the potential and is interested in making an early commitment to Newfoundland and Labrador on this," Williams said.

Newfoundland and Labrador decided last year to pursue development of the Lower Churchill project on its own, while turning down other bidders.

The government of Ontario has also expressed an interest in purchasing power from the Lower Churchill project, calling it a good fit among plans for an east-west power grid.

Newfoundland and Labrador Hydro is examining how to deliver power to markets. It has asked Hydro-Quebec for an estimate of costs, and is considering other routes, such as a partially submerged route that would run underwater before being routed through the Maritimes.