Nalcor tries to allay water management legal questions

James
James McLeod
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Muskrat Falls. — Telegram file photo

A group of lawyers opposed to the Muskrat Falls development say a potential hole in the water management structure on the Churchill River creates an issue that could jeopardize the whole project.

But Nalcor vice-president Gilbert Bennett dismissed the concerns, saying its water management plan are on sound legal footing, and they're based on equally solid engineering plans.

Lawyers Bern Coffey and Dennis Browne said their read of the legal paperwork, dating all the way back to the 1969 Churchill Falls contract with Hydro-Québec, leads them to believe the whole affair could wind up in a Quebec courtroom and undermine the reliability of the Muskrat Falls generating facility once its built.

Once Muskrat Falls is built, and connected to Churchill Falls via transmission lines, Nalcor plans on operating the two facilities in co-ordination.

The lay of the land at Muskrat Falls means there's very little storage capacity behind the dam, but there's 30 billion cubic metres of water storage at Churchill Falls.

Because water runs down the river, the plan is to co-ordinate the use of Churchill Falls and storage in the reservoir to make sure that Muskrat Falls gets the water it needs.

"The legislation requires that the operators on the river system manage the overall system in the most efficient manner to meet the collective needs of the operators on the system," Bennett said. "What we're trying to do is avoid situations where the water levels are drawn down so that you reduce the efficiency of the plant, and you also want to avoid spillage."

But Coffey believes that may conflict with Hydro-Québec's 1969 contract with the Churchill Falls Labrador Corp. (CFLCo) - which operates the power plant and which Nalcor is a majority owner.

Under that contract, Hydro-Québec can request flexibility on how much power Churchill Falls generates at any given time, and those requests can "have the effect of varying the amount of water to be carried in storage at any time."

Moreover, Coffey and Browne said Hydro-Québec has repeatedly indicated it's not onside with any water management agreements for the river, and it could go to court to establish its contract for power from Churchill Falls, trumps any water management agreement.

Browne and Coffey argued that the structure of the contracts mean that Hydro-Québec could insist on their contractually-required electricity coming from Churchill Falls, period.

"(It's) not that Hydro-Québec would win or lose. It's impossible to say. That's the whole point of the court process. It's very difficult at times to predict how things will turn out," Coffey said. "But it is apparent that they could raise it."

Under Nalcor's plan, it would be possible for Muskrat Falls power to go to Hydro-Québec as part of the integrated system, which would allow for the Churchill Falls dam up river to store water instead of use it for generation.

But Bennett said Nalcor acknowledges Hydro-Québec is entitled to a certain amount of electricity, but it doesn't matter where that comes from.

"The electrons are the electrons. From an operational perspective, you can't tell where they come from," he said.

Really, he said, the water management framework is just about maximizing the use of the water they've got on the river.

"That's where we actually turn to our engineering analysis and our hydrological modelling to give us a high degree of confidence that the water management agreement does what it needs to do," he said. "We have extensive history for the river system; our hydrological records go back to 1953 on a continuous basis."

Bennett said Nalcor has multiple legal opinions and is confident with its position.

jmcleod@thetelegram.com Twitter: TelegramJames

Organizations: Hydro-Québec, Churchill Falls Labrador Corp., CFLCo

Geographic location: Churchill River, Quebec

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  • DON II
    October 28, 2012 - 21:15

    The Government of Newfoundland is attempting to dismiss and refuse to listen to well respected and very experienced and knowledgeable lawyers such as Bern Coffey and Dennis Browne who have raised legitimate questions and concerns regarding the proposed Muskrat Falls project. In recent years the Government of Newfoundland has relied on bad advice from its officials and from outside special interests with vested interests in having the Government follow their advice. The Government of Newfoundland followed very bad advice when it expropriated the environmental liability of the Abitibi Pulp and Paper Mill. There was absolutely no need to expropriate the mill and transfer the liability for cleaning up the mill to the tax payer. The Government of Newfoundland accepted very bad advice from lobbyists with vested interests who wanted private properties in Cupids expropriated in order to create a Provincial Historic Sit to commemorate a fictional historic site known as the Cupids Cove Plantation. Historians know and the Government of Newfoundland ought to have known that a place called the Cupids Cove Plantation is NEVER mentioned in the entire historical record of the Province of Newfoundland and Labrador. The same vested interests claimed that John Guy landed at Cupids when the historical record contains documents, letters and maps that show that John Guy DID NOT land at Cupids in 1610. There was absolutely no justification for expropriating private properties in Cupids. Now, the Government of Newfoundland is acting on more bad advice from vested interests to proceed with all haste with the Muskrat Falls project regardless of the potential for increasing the Provincial debt beyond the capacity of the Government to control and creating the potential of substantially increasing electricity rates for customers which use electricity as their main source of heat in Winter. Why does the Government of Newfoundland listen to these behind the scenes lobbyists and vested interests? Why does the Government insist on undertaking actions which are not in the best interests of the public, the tax payers or the Crown? When there is no real open or transparent Government, these ill advised actions can be easily arranged and undertaken in secret with little or no opposition. In the case of Muskrat Falls, lawyers Coffey and Browne are trying to shed light on the ill considered actions regarding Muskrat Falls and the potential for economic disaster for the Government of Newfoundland and Labrador. Secrecy, unfettered lobbying and behind the scenes manipulation regularly serves as business as usual inside the Confederation Building. I commend Bern Coffey and Dennis Browne for having the courage to speak truth to power and to demand answers and transparency from the Government of Newfoundland despite the abuse and ridicule they will be subjected to for displaying the temerity to stand up for what is right against the power of the Government and its cronies!

  • D. Beck
    October 28, 2012 - 15:52

    Before Muskrat Falls Project comes to fruition, why isn't Churchill Falls operating at maximum capacaity. It is my understanding that only a portion of the turbines in place in Churchill Falls are producing electricity. Apparantly, there is a huge amount of electricity available but not being activated. My question is why is Chuirchill Falls not being optimized to its maximum capacity before spending millions/billions on another project? It is high time to settle whatever disputes that exist between Quebec and Newfoundland regarding the Churchill Falls development and use it to its maximum capacity before creating another power source.

  • Maurice E. Adams
    October 28, 2012 - 14:28

    Seems Quebec Hydro has a number of legislative/contractual/agreement documents in their favour ---- 1) ........the Power Contract between Hydro-Quebec and CF(L)Co dated May 12, 1969 ("1969 Power Contract");------- 2)..... the Renewed Power Contract between Hydro-Quebec and CF(L)Co, which will come into force automatically (2016) on expiry of the 1969 Power Contract;---------3).......... the Guaranteed Winter Availability Contract between Hydro-Quebec and CF(L)Co, dated November 1, 1998; --------- 4)........ the 1999 Shareholders Agreement between HQ and CF(L)CO; --------- 5)........ the province of NL's own Electrical Power Control Act; and--------- 6) .........Nalcor's Water Management Agreement itself (which HQ has refused to be party to)............... Seems HQ is holding all the cards and any "reasonable" person would either, first, get approval from Quebec Hydro, or two, get a court decision on whether or not Nalcor (through its Water Management Agreement) or Hydro Quebec has the over-riding authority to manage water in and flowing from the Churchill Reservoir ---- and do so BEFORE locking the provinces ratepayers into what may be $10-15 billion project that might first and foremost and by law have to operated in a way that is under the control of Hydro Quebec --- and for their benefit (FIRST, and perhaps, solely).

  • Brad Cabana
    October 28, 2012 - 10:15

    The 1999 Shareholders Agreement between Hydro Quebec and NL Hydro allows Quebec to use every MW of power, above and beyond its set MWs, from the Upper Churchill dam. Sections 3.4.6 and 3.4.7. Nalcor knows this and is trying to be cute by going to the PUB for a water management agreement. Problem is, Hydro Quebec has a veto over CFLCO sending that power to anyone else. In other words, this is a case of Williams trying to do an end run around a contract that his old buddy Dean MacDonald signed in 1999. You can see both the 1999 Shareholders Agreement and the Upper Churchill Falls Power Contract 1969 at StandInYourPlaceNL.com .