Water rights are crucial

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The Oct. 26 editorial “River thieves” stated: “(Lawyer Bern) Coffey still thinks more clarity is needed. Curiously, that suggests he, too, is worried about Quebec’s trustworthiness.”

I have never commented on “Quebec’s trustworthiness.”

If by “trustworthiness” the editorial was suggesting there are doubts about Hydro-Québec’s willingness to concede contractual rights, then such doubts are well founded. Hydro-Québec (HQ) has a history of vigorously defending its 1969 power contract rights.

HQ’s 1969 Contract (4.2.1(i) and (ii)) says HQ “may request CFLCo to operate the (Churchill Falls) plant so as to supply Hydro-Québec’s schedule of power requirements,” and HQ “may require deliveries which have the effect of varying the amount of water to be carried in storage (in Churchill Falls reservoirs) at any time.”

In exercising those rights, HQ determines the timing and capacity of electrical output at the Churchill Falls plant, and consequently water flow on the lower Churchill River.

Where will things stand if HQ takes the matter to court and the result is that Nalcor cannot implement its water management agreement with CF(L)Co?

Nalcor’s own pre-filed evidence in the 2009 Water Management Agreement Application to the Public Utilities Board provides the answer. In outlining the major problems associated with producing power and energy on the lower Churchill River without a working water management arrangement, Nalcor said: “In many months, the lower Churchill facilities (Muskrat Falls and Gull Island) would have insufficient water for production requirements during periods of reduced production (upstream) at Churchill Falls.” (Pre-filed evidence: page 13, lines 16-18).

In relation to Gull Island, Nalcor concluded: “Consequently, without a water management agreement, Nalcor would be limited to approximately 400 MW of continuous delivery in a long-term power purchase agreement for Gull Island.” (Pre-filed evidence: page 14, lines 8-10).

Based on the data and scenarios in Nalcor’s own pre-filed evidence, without a working water management agreement Nalcor would be limited to approximately 175 MW of continuous delivery in a long-term power purchase agreement for Muskrat Falls.

With billions of dollars at stake, and considering HQ’s past success in defending its contractual rights, “more clarity” is not enough. Legal certainty is required. If Nalcor doesn’t now either reach an agreement with HQ or have the courts definitively determine the matter, HQ is apt to in future institute legal proceedings. The outcome for Newfoundland and Labrador could be disastrous, financially and otherwise.

Bern Coffey

St. John’s

Organizations: Hydro-Québec, Public Utilities Board

Geographic location: Quebec, Gull Island, Churchill River Newfoundland and Labrador

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Recent comments

    November 06, 2012 - 10:13

    @MOE That is a pretty ugly web site. It recalls the phrase "Ransome note typography" that I first heard after the Apple Mac first came out. It would be a lot less work if you were to use a framework such as Joomla!. The results would look a lot more professional. I see that you actually used a web authoring tool. I guess the ugliness and poor readability were done on purpose! _____ sheesh!

  • John in Whitbourne
    November 06, 2012 - 10:02

    The figures of 150MW and 400MW were probably determined by the definition of 'continuous delivery in a long-term power purchase agreement'. The net flows in the river won't change and the only thing that Hydro Quebec can vary is the timing of those flows. Nalcor can also change the flows by controlling its use of recall power from CF. Quebec's purpose is the maximization of revenue generation from the CFA, not interference with Nalcor's profitability. As long as Nalcor can meet HQ's requirements, there will be no problems. In theory, Nalcor could even purchase power on the North American spot market to make up any shortfall. ___ Never forget that the HVDC links will mean that Quebec can theoretically deliver power over our system in the event of problems with their own system and they testified to their regulator that they have a transmission capacity shortfall.

  • Nattering Nabob
    November 06, 2012 - 09:46

    Hydro Quebec are not going to drink the water. Correct me if I am wrong, but I understood that the Supreme Court left Newfoundland the option to supply power to Hydro Quebec from other sources. There is no difference between a Megawatt of power generated at Churchill Falls and a Megawatt (measured at the Churchill transmission stations) of power generated at Muskrat Falls, Holyrood or even Niagara Falls. The transmission facilities connecting Muskrat Falls to Nova Scotia provide access to both buy and sell power in a much larger market. If necessary, we could route some cables through the magnetic fields in the CF powerhouse and claim 'spooky action at a distance' because the laws of physics work better in English. The electrons are (like lawyers) indistinguishable from one another. The only thing that matters is electro-motive force (EMF).

  • Concerned
    November 05, 2012 - 20:43

    Go to http://gov.nl.ca/lowerchurchillproject/bac, dated Nov. 18, 2010. Correct me if I'm wrong, that's the same Danny stepped down and thats the last time this site was updated. The second paragraph states: Extensive pre-feasibility work, such as the progression of the environmental assessment process, finalization of a Water Management Agreement; negotiations for an Impacts and Benefits Agreement (IBA) with Innu Nation of Labrador;development of a financing strategy; as well as extensive engineering studies and field work have been undertaken. Sounds to me nothing was finalized on a water agreement or else it would of been slapped in our faces long before this.

  • Cyril Rogers
    November 05, 2012 - 10:34

    The government and NALCOR are trying to tiptoe past this WMA, and hope it doesn't rear its ugly head. If it does, and Hydro Quebec will challenge the matter whenever its interests are threatened, the resulting fallout will cause more financial strain. This needs to be referred to the courts now, before this fast-track project is allowed to waste any more of our money. Ambiguity will not cut it when it comes to resolving this matter.

  • Maurice E. Adams
    November 05, 2012 - 07:43

    Just a few similarities between the Upper Churchill development and Muskrat Falls, see www.vision2041.com