Newfoundland and Labrador has achieved a rare win in its longstanding battle with Hydro-Québec over a 50-year-old agreement on sales of Churchill Falls power that has long been a source of contention for the province.
The Quebec Court of Appeal says in a ruling that Churchill Falls Corp. Ltd. — a subsidiary of Newfoundland’s Crown corporation overseeing hydroelectricity — has the right to sell energy produced above a certain threshold. Hydro-Québec retains the right to sell Churchill Falls energy up to a monthly cap.
That’s good news for Newfoundland and Labrador because it ensures that Churchill Falls Corp. can manage water on the Upper Churchill to avoid negatively affecting the Muskrat Falls facility’s ability to generate power, said Premier Dwight Ball.
The province will be able to set a threshold for the size of reservoirs and ensure adequate flow from the Upper Churchill to the Lower Churchill, he said.
“At least now from a water management point of view, we will not have to worry about that again,” said Ball.
The decision is the latest round in a battle that reached the Supreme Court of Canada, which ruled last year that Hydro-Québec had no obligation to modify its 1969 deal, which has provided much more financial benefit to Quebec than to Newfoundland and Labrador.
The deal has yielded close to $28 billion in profits to Quebec, compared to just $2 billion for Newfoundland and Labrador.
Under the agreement, which is valid until 2041, Hydro-Québec can purchase the majority of electricity from the central Labrador facility. The utility had argued successfully the deal was valid because it had assumed all the costs and risks that came with the project when the contract was signed.
Thursday’s decision concerns how a contract that has been highly profitable for Hydro-Québec should be interpreted since September 2016, rather than whether it should be renegotiated. In 2013, Hydro-Québec asked for interpretation of the contract with regards to water management, Ball said. Newfoundland and Labrador lost a ruling on that in the Quebec Superior Court in the summer of 2016 and quickly decided to appeal, he said, resulting in Thursday’s verdict.
“We had to. There was no choice,” Ball said. “If we didn’t appeal it back in 2016 and accepted the loss, then I think we would have been in a very different position today.”
Stan Marshall, Nalcor Energy’s president and CEO, said in a statement that the Crown corporation is “pleased” with the decision.
“The decision issued today is complex and the company will need some time to complete a comprehensive review of the judgment and its financial and operational impacts. We will continue to work cooperatively with Hydro-Québec to implement the court decision,” it continued.