Nalcor, lawyer wrangle over water management rights

Staff ~ The Telegram
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Lawyer Bern Coffey said Nalcor  has not given a valid answer in dismissing concerns he raised about the water management agreement for the Churchill Falls reservoir.

Nalcor issued a statement in response to Coffey’s letter to the editor in the Weekend Telegram, which noted the contract with Hydro-Québec states firm capacity  shall be available at all times when Hydro-Québec has requested it.

Coffey said before the province sanctions billions in spending on the Muskrat Falls project, either an agreement on water management rights is needed with Hydro-Québec, or the courts have to iron out what Nalcor and Hydro-Québec’s rights are.

“Nalcor’s media release omits any reference to the contractual right given Hydro-Québec by the second sentence in subsection 6.4 of the Hydro-Québec power contract (and subsection 5.2 of the renewed power contract), which sentence reads, ‘In addition whenever additional capacity can, in the opinion of CFLCo, be made available, such capacity shall also be available to Hydro-Québec on request,’” Coffey said.

“That contractual provision is also referenced in a recital in the 1998 guaranteed winter availability contract.”

In his letter to the editor, Coffey, one of a group of lawyers involved in 2041 Energy Inc., aimed at promoting alternatives to the Muskrat Falls hydroelectric development, raised concerns about the water management agreement and that without Hydro-Québec’s consent, Nalcor has no right to “store water” in the Churchill Falls reservoir if such storage would “adversely affect” Hydro-Québec’s contractual rights.

But Nalcor insists  Hydro-Québec doesn’t control the Churchill River or have the right to determine the timing and capacity of electrical output at Churchill Falls.

While Hydro-Québec has contracted rights for specific output from the Churchill Falls plant varying slightly between winter and summer seasons, how Churchill Falls meets its contractual obligations to Hydro-Québec is at the discretion of Churchill Falls, Nalcor said.

“The water management agreement between Nalcor Energy and Churchill Falls defines how the two companies manage the flow of water on the upper and lower Churchill River to optimize and maximize output of the river,” Lower Churchill Project vice-president Gilbert Bennett said in a news release.

“No agreement or consent by Hydro-Québec is required to provide water management certainty for the lower Churchill developments.”

Bennett said Tuesday Nalcor is simply not worried about the contract Coffey has raised.

“We don’t see a role for Hydro-Québec here. They are a customer of Churchill Falls,” Bennett said.

“At the end of the day, Nalcor had two sets of law firms working its side of the agreement, Churchill Falls had two sets of lawyers. ... We are all very comfortable with the water management agreement.”

Organizations: Hydro-Québec, Energy Inc.

Geographic location: Churchill River

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Recent comments

    October 27, 2012 - 20:18

    Quebec must be laughing at the lawyers from NFLD that are apposing the muskrat falls development, with all the free legal advice the lawyers are giving on the Muskrat Falls DEVELOPMENT That Quebec would have to pay for if they worked for them, There is only one real solution for the supply of a safe, Clean and long lasting and reliable source of power in the world, That is the source of power produced by a HYDRO Development, The Mighty Churchill Falls HYDRO Development is one of the Greatest,Safest,and Cleanest source of power in the world, If the Muskrat Falls Was Developed with a Transmission Line To The Island Then Underwater To The Canadian Main Land, with extra power lines to carry the upper Churchill power after 2041 when the one sided deal in with Quebec now in place expires, It would be the cleanest, Cheapest, Most Reliable Source of power in the world,That could be sold to any and all markets. Then NFLD NOT Quebec would be in controle of the Upper Churchill Falls Power

    October 25, 2012 - 19:16

    Those lawyers that formed a group to oppose the Development of Muskrat Falls are putting obstacles in the path of the development of Muskrat Falls. Instead of trying to find an excuse as to why this development should not be built, they should be doing all they can to try to help build this development. The Island of Newfoundland needs this power. The oil fired generating plant in Holyrood, Duff's Hydro is listed as one of the top ten worse air pollutors in the world. It burns millions of barrels of crude oil per month which will only increase in cost each year. The Churchill Falls which ran for millions of years will run forever. This will cut out the expense of oil in Holyrood. I think the Muskrat Falls should be built with the transmission line to the island as planned, then underwater to the Eastern Mainland of Canada with extra transmission lines to carry the Upper Churchill Power when the one-sided contract now in place with Quebec expires in 2041. Without its own transmission line, Quebec not NFLD will always be in control of the Churchill Falls power.

  • Thomas Tucker
    October 25, 2012 - 13:37

    When will this end. We should all remember how this development has been held out as election bait since Jos, Smallwood. With the possible exception Beaton Tulk the list includes all of them: Moores, Peckford, Rideout, Grimes, Wells, Tobin, Williams. The jury may still be out on the Williams deal but it sure seems to walking down the path previously traveled. Nearly everyone on this list showed by their behaviour to have serious lapses with truth and intentions in regard to this issue. My stomach still turns when recalling Wells being a lead lawyer for Hydro Quebec against the Water Rights Reversion Act. And winning. Now there's a proud Newfoundlander for you. The real problem is the near unbreakable contract with Hydro Quebec. Any other lopsided contract entered into through the conniving of the Federal Liberals, Quebec Liberals, Bank of Montreal and Hydro Quebec against Brinco would have been branded as near criminal. But not at the Supreme Court of Canada. With appointed judges showing regional bias in favour of the status quo we should not be so foolish to expect justice. Keep in mind this court is dominated by members from Quebec and westward; never yet an appointment from Newfoundland from 1949 to this date. Hopefully the Williams effort will come to pass, time marches on.

  • Brad Cabana
    October 24, 2012 - 18:32

    Apparently Nalcor is ignoring the 1999 Shareholder's Agreement between Hydro Quebec and CFLCO, which gives Hydro Quebec a veto over this type of issue. Sounds to me like another case of certain politicians trying to push people around, but leaving themselves wide-open to the courts: ie: Abitibi.

  • Winston Adams
    October 24, 2012 - 14:31

    John, your not impressed that efficient heating fully offsets twice the current Holyrood production, and equal to the full amount we intend to take from MF in 2017. But remember, efficient heating comes with a 30 percent drop in electrcity bills while MF has at least a 40 percent increase. That's got to make you jump for joy. Or laugh? Or cry? Or shut you up with no reply?

  • Cyril Rogers
    October 24, 2012 - 13:28

    Notably absent from this discussion is the fact the lawyers argue on legalities and advise clients on what they think is legal, despite decisions that often go against their position. One would expect that NALCOR would have: (1) referred the matter to the courts rather than assume that their lawyers legal opinions was the final word, or (2) entered into an agreement with Hydro Quebec to ensure no nasty surprises down the road. Let's not forget that the legal minds who advised the government about the seizure of the Grand Falls mill neglected to ensure that we were not saddled with a property that will require hundreds of millions to restore to an acceptable environmental standard. The law is a blunt instrument at times and can be very unpredictable. The opinions expressed by both sides may be incorrect and sanctioning of this project cannot be entrusted to a legal opinion.

  • John Smith
    October 24, 2012 - 12:55

    I also think it's interesting that Mr. Coffee's law partner, was the gentleman who did all the legal wrangling for the province when it came to the water rights issues Re: Muskrat and the lower churchill. As such he should have all the info on water rights and their related issues.

  • Eli
    October 24, 2012 - 12:32

    This article is bringing out the Nalcor bloodhounds and flaks. Hundreds of millions so far on a non sanctioned project. Legalized theft thanks to PC legislation. And who cares about the fine print that could handcuff Newfoundland all over again.

    • Jay
      October 24, 2012 - 13:37

      Eli, why is it that if your for this project you're a "flak" but if your against it, you're just looking out for the best interests of the province. It's great that the 2041 group, after fighting this initiative for months, now thinks it has an actual reason to be against it. Isn't it great for Quebec that we can count on local lawyers to look out for their rights. It reminds me of the good old days of Clyde Wells (a Liberal). Of course, before that it was the Churchill Falls giveaway (Liberals). Are we starting to see a pattern here? Tory times may be hard times, but Liberal times are good times........for Quebes

    • Eli
      October 24, 2012 - 13:56

      Jay, so you're telling me it was wrong for the Liberals to give away the farm on the Upper Churchill but ok for the PC's to sink us in debt with a similar project, one we don't even know the cost yet? Nalcor is a (convenient) PC baby last time I checked.

    • Jay
      October 24, 2012 - 14:33

      Eli, No, that's not what I'm ssaying at all, but isn't it just like you to put words in somebody's mouth, consistent with your earlier personal attacks. The PCs, and every government since Joey, has been trying to clean up the mess that was created. I'm not even sure I even support the project, but it never ceases to amaze me how quickly some of these lawyers will cut this province's throat to settle petty political scores or make a few bucks.By the way, so much for Roger Grimes saying that Quebec is irrelevant.

    • Eli
      October 24, 2012 - 15:37

      Jay..."The PC's and every other government since Joey......." ? You're absolutely right! and I for one don't want the people of Newfoundland to be paying thru the nose for this pipedream. Never was a Joey supporter but doesn't this deal sound like another one of those Joey "Develop or Perish" boondoogles? Chocolate factories, Rubber boots? It's not personal Jay, it's business.

    • Jay
      October 25, 2012 - 06:17

      Good For You. You can remember a line from the Godfather. With that in mind, please stop the personal attacks and stick to the issues.

  • Winston Adams
    October 24, 2012 - 12:18

    John, as you are so interested in alternatives, but seem ignorant of the benefits of energy efficiency, this is my claculation; efficient heating saves 65 percent compared to standard heaters. Now i knew there was substancial ability for this to offset Holyrood use. Now I know this will give you lots of laughs. But here it is, and i put this out there to you first, as you are so concerned about your light bills and oil polution. For the domestic sector alone, if all residential units were converted to efficient heating, it would save twice the generation production of Holyrood for all of last year, 2011 , which Nalcor says was 855 GWH Need I say this again? Why not. TWICE the production of Holyrood for 2011 year. This must make you so happy. Tell me about it.

  • Cold Future
    October 24, 2012 - 10:12

    The sole customer for Upper Churchill power is Hydro Quebec until 2041. Of course there can be no agreement to do anything which alters HQ's electricity delivery. There may be benefits to co-operation with HQ in the operation of a downsttream hydro plant. There is no indication that any negotiations have taken place with HQ. There remains a tremendous challenge for Nalcor to prove that the proposed plant at Muskrat can be built and operated without a very significant subsidy required from the domestic non industrial ratepayers to provide electricity to mainland customers a rates much below the cost to produce the power. Its time NL looked at alternatives to this disastrous proposal to warehouse power to the mainland while domestic customers face the hardship of enormous rate increases in order to subsidize it.

  • John Smith
    October 24, 2012 - 09:43

    This just goes to show how completely inept the 2041 group really is. They just want to continue to muddy the water with fabrication, lies and innuendo. That's all they have, they have no proof, no data, no facts. They have nothing. If he sees a viable alternative to muskrat why doesn't he present it? With the cost breakdowns, construction costs, cost over runs, and so on? That would be constructive. However they can't do that...because there are no viable alternatives to muskrat. Gill Bennett was on Back talk on VOCM yesterday and the host asked him if he had received any questions about water management from this group? Of course they had not. Who are we to belive? A St.John's lawyer, who has bad blood between himself and former premier Danny Williams...or the people at Nalcor? The thing is any one who truly understands the project knows that when muskrat is up and running it will be part of one large power and water management system. Nalcor will use Bay D'espoir, Cat arm, muskrat falls and the upper churchill to provide power to Quebec hydro(to meet our obligations there), to Labrador, to the island and to NS. The water will be stored and released at different times in different resevoirs, to meet seasonal demand, and other requirements.We can really see how desparate, and out of touch this group alternatives....just made up junk....pathetic...truly, truly pathetic....

  • I am also against Mr. Coffey causing possible problems with his stance on our own water resource
    October 24, 2012 - 09:32

    I am against the Muskrat Falls Contract as it is proposed but I am also against Mr. Coffey for compounding the problems surrounding the Upper Churchill Contract. My reason for being against the Muskrat Falls proposed Contract is the unknown factor of how many Billions of dollars it is going to cost to produce just 800 mega watts of hydro energy when other sources of energy are touted to be available for much less cost and the hydro consumers who are mostly elderly having to bear the burden for 57 years . We are told it will be between $6 Billion and $10 Billion dollars, that is an astronomical amount of debt for so little energy.

  • Watchdog
    October 24, 2012 - 08:52

    I have to laugh at this part: "Coffey, one of a group of lawyers involved in 2041 Energy Inc., aimed at promoting alternatives to the Muskrat Falls hydroelectric development". If that's really your "aim", Mr. Coffey, what are you doing trying to spin the fine print on the Hydro-Quebec contract?

  • Maurice E. Adams
    October 24, 2012 - 08:50

    Read Hydro Quebec's 2009 letter to the PUB concerning its 1969 contractual rights re Nalcor's Water Management Agreement and see relevant section of the province's Electrical Power Control Act at

  • Robb
    October 24, 2012 - 08:24

    Hey Roy, I think you are on to something.....all of this with the 2041 crew just seems odd. While I never like to do the liberal thing and spread fear over something, just what are these 2041 jokers doing....??....And you may be right, their agenda seems to be to delay the project at any please people, don't be fooled by fools.

  • roy
    October 24, 2012 - 07:14

    If Mr. Coffey and his experts are right then what kind of agreement did the Liberals sign, where their lawyers at the time this stupid. If he is right then the Liberals should go and hide. I believe he is putting up a smoke screen to delay the project . I don't agree with higher electricity cost but we as a province must move ahead. Is this sour grapes since he did;t get the liberal leadership or has he been in contact behind or backs with Hydro Quebec to set up a stumbling blcok/?