Newfoundland and Labrador achieved a rare win in a court case with Hydro-Quebec over the Churchill Falls contract, the Canadian Press reported Thursday.
Nalcor described the unanimous decision by the Quebec Court of Appeal as “substantially in favour” of subsidiary CFLCo. Premier Dwight Ball says the ruling means the Water Management Agreement, which allows for the co-ordination of the Muskrat Falls and Churchill Falls facilities, will work. But Nalcor has insisted the case had no impact on water management.
“We are pleased with the decision made by the Quebec Court of Appeal,” Nalcor CEO Stan Marshall said in a statement. “The decision issued today is complex and the company will need some tome to complete a comprehensive review of the judgement and its financial and operational impacts. We will continue to work co-operatively with Hydro-Quebec to implement the court decision.”
For its part, Hydro-Quebec says it’s satisfied that the court upheld its right to “operational flexibility” under the 1969 Churchill Falls contract. One of the issues was whether the 2016 Churchill Falls renewal contract would limit Hydro-Quebec to monthly blocks of energy. The Canadian Press reported there would be an annual cap.
“Hydro-Quebec is not subject to fixed monthly blocks of energy,” the company said in a statement. “This decision confirms that CFLCo must respect its commitments to Hydro-Quebec. The decision is complex, and analysis of other items is under way.
“Hydro-Quebec intends to maintain co-operative relations with CFLCo.”
In their ruling, the panel of three judges wrote:
“Hydro-Quebec does not have the exclusive right to purchase, and receive, all the energy produced by the Upper Churchill power plant … but, rather, the right to purchase, and to receive, annually, a specific quantity of energy equivalent to the value of the Annual Energy Base (which is then allocated monthly pursuant to the concept of Continuous Energy, according to a mathematical formula that provides for the calculation of the monthly payments owed by Hydro-Quebec); and
“Hydro-Quebec has the right, at all times, to the power defined by the expression Firm Capacity … as well as, upon request, all additional power which, in CF(L)Co’s opinion, is availability Hydro-Quebec ensured under the Guaranteed Winter Availability Contract.”
The judges further declared that “the rights conferred on Hydro-Quebec … provide it with an operational flexibility very similar to the operational flexibility it enjoyed since the commissioning of the Upper Churchill plant, including its right to schedule and plan its energy and power requirements and to postpone (or accelerate) the delivery of energy from one month to another, the whole without being limited to a quantitative cap established pursuant to the concept of Continuous Energy on a monthly basis.”
They also declared “that until August 31, 2041, CF(L)Co cannot sell to a third party, or use for the benefit of a third party, including Newfoundland and Labrador Hydro, any quantity of power whatsoever, with the exception of the power associated with the ‘Recapture’ (300 MW) and ‘Twinco’ (225 MW) blocks, and, since September 1, 2016, the power associated with the energy produced by the Upper Churchill plant over and above the value of the Annual Energy Base, regardless of whether such sales, or use, are made on a firm or interruptible basis.”