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).
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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.