One of the more interesting court cases to come along in quite some time is slated to get underway in September. Unlike the ongoing and never-ending debate over Muskrat Falls, this case will deal with the Upper Churchill power contract and the question of fairness. It may be our final effort to try and right a terrible wrong.
Back in 2009, Nalcor, through its CFLCo. subsidiary, wrote a letter to Hydro-Québec requesting that the long-term Upper Churchill contract be reopened. Not surprisingly, Hydro-Québec didn’t even bother to reply.
Nalcor president Ed Martin did not mince words at the time. “We have not received a reply from Hydro-Québec and therefore we have no choice but to interpret that as a rejection of our request,” he said. His next move was to instruct the companies’ lawyers to proceed with a legal action.
In 2010, the company filed a motion with the Quebec Superior Court that argues Hydro-Québec has not acted in good faith when it comes to this lopsided agreement and has violated a tenet of the Quebec civil code which demands that all parties to a contract must “act in good faith” in the negotiation and the ongoing execution of contracts.
On the surface it looks like a no-brainer. Anyone with basic common sense can see that the price being paid by Hydro-Québec for Upper Churchill power is ridiculously low. Adding insult to this injury is the knowledge that in 2016 we will begin selling the power for even less then we do now.
If opponents to Muskrat can argue that it makes no sense to produce power and sell it for less than it costs to produce, surely a court can see that power being purchased for one-quarter of a cent per kilowatt hour today can not be available for sale at one-fifth of a cent tomorrow, unless one of the parties to the contract suffers a loss. Hydro-Québec knows this and has chosen to ignore it. I wonder what the courts will think.
We weren’t forced to sign
Hydro-Québec will argue that a contract is a contract and will say that CFLCo. entered into the agreement with eyes wide open; that no one was trying to do anyone any harm and no one set out to deliberately disadvantage anyone. Hydro-Québec will no doubt look at how energy prices changed, along with changes in world markets, and say they had no idea those changes would be so advantageous to them. In other words, don’t hold their good fortune against them.
Back in 2010, Nalcor’s Ed Martin spoke with great confidence on the merits of their case.
“This inequity must be addressed and the legal opinions we have received support the legal action we are taking,” he said.
“We believe the situation with the Upper Churchill contract to be unjust and to refuse to renegotiate the pricing terms is inconsistent with the obligation imposed by the law of Quebec to act in good faith in all legal relationships.”
A lengthy process
Nalcor says the case is due to be heard in mid-September. It will take some time before we get a decision and some think Nalcor and the province are wasting time and money by pursuing this strategy. Some believe we should just give up on the Upper Churchill contract and live with the damn thing until it expires in 2041. I’m not one of them.
We have an obligation to fight this wrong at every turn and the money it will cost is money well spent. Despite our mistrust of the Quebec political and legal system, we should make our arguments for justice as clearly as possible.
Will Hydro-Québec do an about-face and request some kind of last-minute settlement on the courthouse steps? I don’t hold out a lot of hope, given the money the contract generates.
Still, I’ll be watching closely. It may be our trial of the century. Fingers crossed.
Randy Simms is a political commentator and broadcaster. He can be reached at: email@example.com