River thieves

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You just can’t trust Quebec. That’s a common sentiment behind at least one side of the discussion over hydroelectrical development in Labrador.

Of course, “Quebec” — in the broadest sense — should accept some responsibility for its reputation. The lopsided Churchill Falls deal of 1969 has left a permanent scar on the provincial psyche. And all attempts to renegotiate or litigate have fallen through.

A contract is a contract, or so the Supreme Court of Canada ruled in 1984 when it crushed Newfoundland’s attempt to affirm its constitutional control over Churchill River waters.

Interesting decision, that.

Basically, the court said that while the province indeed has rights to its own natural resources — including water — it cannot use that right to undo an interprovincial contract.

It didn’t condemn the premise of the act, merely its intent. That’s important, and here’s why.

Two weeks ago, St. John’s lawyer Bern Coffey raised concerns about a clause in the Churchill Falls agreement that suggests Hydro-Québec can dictate how this province controls the flow of water on the river. Coffey is a member of the anti-Muskrat Falls group Energy2041.

The contract spells out the specific amount of power that the provider, CF(L)Co, must make available to Quebec — referred to as the “firm capacity.”

Coffey points to this clause: “The firm capacity shall be available at all times when Hydro-Québec has requested it. In addition, whenever additional capacity can, in the opinion of CF(L)Co, be made available, such capacity shall also be available to Hydro-Québec on request.”

To accommodate its planned Muskrat Falls project, the province’s energy corporation, Nalcor, plans to periodically store water in the Smallwood reservoir at Churchill Falls in order to manage power production downriver.

Coffey says Hydro-Québec may have a say in how that stored power is used.

But do they? Two things:

The phrase “whenever additional power can, in the opinion of CF(L)Co, be made available” is hazy at best. CF(L)Co is majority owned by Nalcor, in partnership with Hydro-Québec. If power is being stored for purposes associated with Muskrat Falls, under what reasoning would it be considered “available” to Québec?

Second, the Supreme Court acknowledged that Newfoundland retains management rights over its own waterways. It merely quashed the 1984 act because its apparent intent was to undermine the Churchill Falls contract. Thus, any water usage that does not hinder that contract is perfectly within the province’s rights.

As Nalcor stated in a response to Coffey’s letter, “How Churchill Falls meets its contractual obligations to Hydro-Québec is at the discretion of Churchill Falls.”

The province’s Public Utilities Board has already imposed a water management agreement to that effect. It spells out exactly how Churchill Falls and Nalcor can store and share electrical capacity, while protecting the contracted supply to Quebec.

Coffey still thinks more clarity is needed. Curiously, that suggests he, too, is worried about Quebec’s trustworthiness.

At the least, it’s one of the more unique twists we’ve seen in the debate.

Organizations: Hydro-Québec, Supreme Court of Canada, Public Utilities Board

Geographic location: Quebec, Newfoundland, Churchill River

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  • Brad Cabana
    October 27, 2012 - 13:23

    The piece missing to finish your line of thinking is the 1999 Shareholder's Agreement between CFLCO and Hydro Quebec which gives Hydro Quebec the right to veto any change to the Upper Churchill contract that CFLCO might attempt to do. Its sections 3.4.6 and 3.4.7. You can thank then head of NL Hydro Dean MacDonald for that one. So, in other words, if Hydro Quebec decides to take every MW of extra power that extra water in the dam produces there is not a thing we can do about it. In many ways, the Shareholders Agreement, inked 30 years after the Upper Chuchill deal was done, is actually far worse than the UC agreement. Sadly.

  • NLer's First
    October 27, 2012 - 01:23

    For citizens who oppose Muskrat Falls, go to website below and sign a petition for a Referendum and PUB Review. Or Google the new website. www.standinyourplacenl.com

  • Winston adams
    October 26, 2012 - 12:31

    It seems to me that the Innu in labrador are the only ones who can get legal redress on the Upper Churchill deal, if MF fails and the NEW DAWN agreement is dead. With Nfld, the court says a contract is a contract- tough. Now River Thieves is the title of a book about our early settles taking from the Beothic, salmon, fur and such. But in this century, rivers are more important for hydro electricity. The upper churchill went ahead without consultation with them . We built them shacks at Davis Inlet to get them out of the way. Aboriginal rights did't exist in the minds of Joey Smallwood or Peter Cashin. There was no war aginst the Innu, and no treaty. We were simply River Thieves. And a mighty river it was. The courts in recent decades recognise this was wrong, from decisions in other jurisdictions. And it was wrong in labrador , by Nfld and Quebec. This issue is not about a contract, and that is why there would be redress if 1. The innu got their act together, 2. they got good legal advise to get this redress. One big problem is that the Innu is so financially dependent on the federal government they fear serious consequences if they go down that path.

  • David
    October 26, 2012 - 09:24

    Quebec was handed a terrific deal by a gang of monumentally incompetent boobs. But if we were in Quebec's shoes, Danny would most certainly have initiated parades every year commemorating the deal signing. If we had a fraction of the smarts, ambition and ingenuity of Quebec, we wouldn't be such a bunch of sniveling whiners. Seriously, between this old canard, and the history-revisionist crowd who now want Newfoundland to separate, what a surly bunch of whiners.

  • saelcove
    October 26, 2012 - 08:49

    When are we going to stop blaming Quebec and accept the fact we gave it away

  • Maurice E. Adams
    October 26, 2012 - 07:58

    LATEST Muskrat Falls POLL RESULTS:----- Option 1 (Sanction) [9%] ........ Option 2 , Option 3, Option 4 combined [91%]........ see details at www.vision2041.com

    • What Poll
      October 26, 2012 - 09:49

      Still pushing that biased, inaccurate poll I see. Where else have you ever seen a a credible poll providing "updates" while the poll is in process? Never, because it adds to bias.

  • Maurice E. Adams
    October 26, 2012 - 07:22

    The references noted in your editorial are limited and suggest that Nalcor's Water Management Agreement conveys more rights to Nalcor than it actually does......... Please read carefully Quebec Hydro's 2009 position re the Nalcor/CF(L)Co Water Management Agreement, especially page 2 of Quebec Hydro's reply, and you will see that (when read in conjunction with the NL Electrical Power Control Act), that Quebec Hydro's pre-existing Upper Churchill contractual rights take precedence over Nalcor/CF(L)Co's Water Management Agreement. The relevant excerpt (section 5.7) from NL's own Electrical Power Control Act (EPCA), effectively confirms that the pre-existing Quebec/CF(L)Co Upper Churchill contracts take precedence over Nalcor's/CF(L)Co's subsequent Water Management Agreement: EPCA QUOTE: " Provision of an agreement void 5.7 A provision of an agreement referred to in section 5.4 or 5.5 shall not adversely affect a provision of a contract for the supply of power entered into by a person bound by the agreement and a third party that was entered into before the agreement under section 5.4 or 5.5 was entered into or established, or a renewal of that contract.UNQUOTE What this says, in effect, is that the 1969 Upper Churchill and related contracts between Hydro Quebec and CF(L)Co "shall not be adversely affect(ed)" by Nalcor's Water Management Agreement. That is, Hydro Quebec's rights under its earlier 1969 and related contracts take precedence over Nalcor's Water Management Agreement. Hydro Quebec's 2009 letter to the PUB reads, in part, that "Hydro-Quebec wishes to express to the Board its position that any water management agreement to be established by the Board must recognize that the CF(L)Co/Hydro-Quebec Power Contracts have the benefit of Section 5.7 of the EPCA. We note that the Nalcor Application, as well as the Nalcor and CF(L)Co submissions of December 10, 2009, acknowledge that the CF(L)Co/Hydro-Quebec Power Contracts are protected by Section 5.7 of the EPCA, as does the water management agreement proposed by both Suppliers to the Board." See and read HQ's complete, 2 page 2009 letter at www.vision2041.com

  • Petertwo
    October 26, 2012 - 07:14

    I had the erroneous thought that the courts stood for justice, not contracts. This Churchill Falls agreement is not a just agreement, it is unequal and very unfair. The Supreme Court of Canada ought to be ashamed of itself. Canada ought to be ashamed of itself by the disgusting way in which this province has been treated, and is still being treated.

    • Eli
      October 26, 2012 - 12:35

      "The Supreme Court of Canada should be ashamed of itself"? "Canada ought to be ashamed of itself"? Government appointed judges, and a country that loves to laugh at and hate Newfoundland at the same time will ensure nothing changes. Ever!