Heavy machinery works at the site of the Muskrat Falls hydro project next to the Lower Churchill River in May.
— File photo by Derek Montague/The Labradorian
Premier Kathy Dunderdale describes the Hydro-Quebec move as "desperate" in challenging the Muskrat Falls development.
"This is not the first time we have come head to head... But the agenda won't be set by Quebec,” she told reporters during a noon-hour media availability.
On Monday, Hydro-Québec filed a court application that appeared to be aimed at the Labrador hydroelectric development.
It said in a news release that it’s asking the Québec courts for a declaratory order confirming several core rights contained in the 1969 Churchill Falls power contract.
Hydro-Québec takes aim at Muskrat Falls
The future of the Muskrat Falls project appears to be in jeopardy after Hydro-Québec filed a court application which appears to be aimed directly at the Labrador hydroelectric development.
The news release from Hydro-Québec didn’t explicitly mention Muskrat Falls at all, but the legal action is something critics have been warning about since last year, and it may threaten to scupper the whole project.
Hydro-Québec says in its news release it’s asking the Québec courts for a declaratory order confirming several core rights contained in the 1969 Churchill Falls power contract.
“Under the terms of the Contract which Hydro-Québec and CF(L)Co concluded in 1969, Hydro-Québec has certain essential rights, including: The exclusive right to purchase virtually all of the power and energy produced by Churchill Falls Generating Station until August 31, 2041; (and) the right to benefit from
operational flexibility,” the release states.
Essentially, the Newfoundland and Labrador government has made moves to assert that Muskrat Falls and Churchill Falls operate as an integrated system.
The plan is to make sure that Québec gets all of the electricity it’s entitled to, but to run the two hydroelectric dams in a way to manage water flow and use the Churchill Falls reservoir for storage during dry portions of the year.
Lawyers in this province have been speaking out on this issue since last fall, saying that the Water Management Agreement imposed by the Public Utilities Board wouldn’t hold up in court.
The release from Hydro-Québec doesn’t explicitly reference the Water Management Agreement, but it says moves made by CF(L)Co would limit its “operational flexibility” and therefore it is legally invalid.
Bern Coffey, one of the lawyers who has spoken extensively about this, said he’s not surprised to see the legal action coming from Hydro-Québec, but he said that until the case is resolved in the court system — right up to the Supreme Court of Canada — Nalcor needs to stop spending money on building Muskrat Falls.
“Frankly, why would you spend any money in the meantime?” Coffey said.
“Unless you can enforce that water management agreement against Hydro-Québec, it won’t financially work.”
Last fall, when Coffey was speaking extensively about these issues, both the Newfoundland and Labrador government and Nalcor insisted that they had legal opinions indicating that the Water Management Agreement was not an issue.
Gary Sutherland, a spokesman for Hydro-Québec, stuck to what was stated in the company’s news release when asked by The Telegram if its legal action was influenced by continued development of the Muskrat Falls project.
“This is a request to the courts to interpret the Churchill Falls contract (from 1969),” he said. “This is really to confirm that CFLCo’s positions on a couple of issues that we detailed in the press release are not founded.”
Tom Marshall, minister of natural resources and attorney general, said he wasn’t sure whether the Hydro-Québec application is part of one of the court cases that are already going on between Newfoundland and Labrador and Québec — there are two different cases already underway.
“There’s an application for a declaratory order. It’s in French. We’re seeking to have it translated into English so we can have an understanding of what they're looking for, what case it’s arising out of,” Marshall said.
“CF(L)Co and Nalcor are involved in a number of actions. One is a good faith case. Another one involves the Regie. I mean, until I know where this is coming from, obviously, I couldn’t comment.”
Marshall said that because the Hydro-Québec court challenge was specifically aimed at CF(L)Co — the company jointly owned by Nalcor and Hydro-Québec which operates the Churchill Falls facility — the Newfoundland and Labrador government won’t get directly involved in the case, and it will leave it to CF(L)Co to deal with it in court.
“It’ll be the lawyers with CF(L)Co that’ll be dealing with this,” he said.
Nalcor CEO Ed Martin was asked about the case at an afternoon media availability, but said he couldn’t comment on it until he had more information.
Liberal energy critic Dwight Ball said the case raises some pretty significant questions about the future of the Muskrat Falls development.
“What impact will this have on financing this project? Will people step up to the plate and finance this?” he said.
New Democrat Leader Lorraine Michael went further, saying that the court challenge may be enough reason to put the brakes on development altogether.
“Nalcor has continually insisted that there is no legal case here,” she said. “Hydro-Québec believes it has a case, obviously. They wouldn’t waste money if they didn’t think they had a case.”
— With files from Andrew Robinson