A variety of hurdles must yet be overcome to develop the Lower Churchill hydroelectric megaproject, Newfoundland and Labrador's premier cautions.

'It's moving nowhere but up,' says Danny Williams of the market for hydro power.
(CBC)

Danny Williams told CBC News that he remains confident that the Lower Churchill — which the province is developing alone, but must sooner or later obtain co-operation from other governments — will proceed.

"We have never been better positioned. We have never been better prepared," Williams told CBC News.

"The market is right, the prices are certainly in the ballpark, it's moving nowhere but up. There never could be a better time to do this project," he said. "[But] we have some hurdles."

Indeed, Williams said the chances of the Lower Churchill project proceeding are about 50 per cent.

To proceed, the megaproject — which would generate more than 2,800 megawatts of power at two sites on Labrador's Churchill River, or enough electricity to potentially supply about 1.5 million households — must pass environmental reviews.

The project may also need the co-operation of the Quebec government, raising decades-old tensions between the two provinces over the Upper Churchill contract, which locks in the sale of power to Quebec at low rates.

Newfoundland and Labrador Hydro intends to develop two sites on the lower Churchill River.
(CBC)

Williams said the project must also pass muster with aboriginal groups.

"We have to enter into an agreement and strike a land claim agreement with our local Innu," Williams said.

"We have issues with the Quebec Innu who basically are trying to establish claims in Labrador, [and] we will have obviously issues with the federal government," he said.

The last point is, at the moment, the most volatile issue, given that Williams has been engaged in a rhetorical war with Prime Minister Stephen Harper since the fall of 2006.

Although Williams has lately tempered his criticism of Harper's handling of the equalization issue, he remains determined to have the federal Conservatives honour a pre-election pledge to exclude offshore oil revenues from the federal formula.

The federal government will likely be asked to supply a loan guarantee for the megaproject, which has projected construction costs of about $9 billion.

The Ontario government has had a strong interest in Lower Churchill power, and has suggested that the federal government take on a role in the project.

However, if Williams's relations with Ottawa deteriorate further, it may be tough to find the help the Lower Churchill project will likely need.

Environmental reviews of the Lower Churchill project are currently underway.