Nalcor recently said: “We don’t see a relationship between this action (Hydro-Québec’s application filed in Québec Superior Court on 22 July 2013) and water management. It speaks to interpretation of the power contract.”
Hydro-Québec’s court application and water management at Muskrat Falls are directly related. Hydro-Québec’s application explicitly references Nalcor’s 2009 PUB application to impose a water management arrangement on CF(L)Co and Nalcor.
Hydro-Québec wants the Québec Superior Court to interpret its Churchill Falls power contract. The final outcome of that interpretation process is important, crucially so.
Section 3.1 of the Water Management Agreement prohibits its implementation from adversely affecting any provision in Hydro-Québec’s power contract. Judicial interpretation of that contract will determine what its provisions mean and, therefore, what the Water Management Agreement cannot adversely affect.
Hydro-Québec wants the Québec Superior Court to declare that under the renewed contract between CF(L)Co and Hydro-Québec (in force from 2016 to 2041):
1. Hydro-Québec has the exclusive right to purchase all the available power and energy produced at the Churchill Falls Plant, with the exception of the power and energy related to the 225 megawatt Twinco block and the 300 MW recall block.
2. Hydro-Québec’s rights under section 4.1.1, including the right of programming and planning power and energy, are in no way limited, circumscribed or restricted based on monthly purchase blocks subject to a ceiling established on the basis of the notion of “continuous energy,” and those rights may be exercised against all available power and energy produced at the Churchill Falls Plant other than the power and energy associated with the Twinco and recall blocks.
3. Hydro-Québec is not limited in its requests for delivery of energy blocks by a monthly cap established on the basis of the notion of “continuous energy” in the renewed contract.
4. CF(L)Co must deliver to Hydro-Québec, upon Hydro-Québec’s request, the power available and all the energy produced at the Churchill Falls plant other than the power and energy associated with the Twinco and recall blocks.
5. CF(L)Co does not have any right to any amount of power and energy from the Churchill Falls Plant, except the power and energy associated with the Twinco and recall blocks.
6. CF(L)Co is unable to sell to a third party, including Newfoundland and Labrador Hydro, any amount of power and energy other than the amount associated with the 300 MW recall block.
If Hydro-Québec obtains these declarations, CF(L)Co will, until 2041, be required to deliver the power available and all the energy produced at the Churchill Falls Plant to Hydro-Québec, other than the Twinco and recall blocks. No appreciable CF(L)Co production for Nalcor could occur because it would conflict with CF(L)Co’s obligations to Hydro-Québec.
The Water Management Agreement, on which the Muskrat Falls Project relies, would be rendered ineffectual.