The deal to build the project, expected to cost more than $6.2 billion, is between the province's Crown energy company Nalcor and Nova Scotia private utility Emera (TSX:EMA).
Sources tell The Canadian Press that governments for the two provinces are expected to announce details on Tuesday.
The two utilities have a joint plan to harness energy from the lower Churchill River in Labrador and bring it to Newfoundland and the mainland using subsea cables.
The two sides announced a term sheet in November 2010 for the complex project but then missed a one-year deadline and an extension to reach a final agreement as they worked out details.
Newfoundland and Labrador is to hold a political debate this fall before deciding whether to sanction the project.
Under conditions of the term sheet, Nalcor would spend $2.9 billion to build a power generating facility at Muskrat Falls to produce 824 megawatts of electricity.
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