Nalcor tries to allay water management legal questions

James McLeod jmcleod@thetelegram.com
Published on October 28, 2012
A recent photo of Muskrat Falls. — Telegram file photo

A group of lawyers opposed to the Muskrat Falls development say a potential hole in the water management structure on the Churchill River creates an issue that could jeopardize the whole project.

But Nalcor vice-president Gilbert Bennett dismissed the concerns, saying its water management plan are on sound legal footing, and they're based on equally solid engineering plans.

Lawyers Bern Coffey and Dennis Browne said their read of the legal paperwork, dating all the way back to the 1969 Churchill Falls contract with Hydro-Québec, leads them to believe the whole affair could wind up in a Quebec courtroom and undermine the reliability of the Muskrat Falls generating facility once its built.

Once Muskrat Falls is built, and connected to Churchill Falls via transmission lines, Nalcor plans on operating the two facilities in co-ordination.

The lay of the land at Muskrat Falls means there's very little storage capacity behind the dam, but there's 30 billion cubic metres of water storage at Churchill Falls.

Because water runs down the river, the plan is to co-ordinate the use of Churchill Falls and storage in the reservoir to make sure that Muskrat Falls gets the water it needs.

"The legislation requires that the operators on the river system manage the overall system in the most efficient manner to meet the collective needs of the operators on the system," Bennett said. "What we're trying to do is avoid situations where the water levels are drawn down so that you reduce the efficiency of the plant, and you also want to avoid spillage."

But Coffey believes that may conflict with Hydro-Québec's 1969 contract with the Churchill Falls Labrador Corp. (CFLCo) - which operates the power plant and which Nalcor is a majority owner.

Under that contract, Hydro-Québec can request flexibility on how much power Churchill Falls generates at any given time, and those requests can "have the effect of varying the amount of water to be carried in storage at any time."

Moreover, Coffey and Browne said Hydro-Québec has repeatedly indicated it's not onside with any water management agreements for the river, and it could go to court to establish its contract for power from Churchill Falls, trumps any water management agreement.

Browne and Coffey argued that the structure of the contracts mean that Hydro-Québec could insist on their contractually-required electricity coming from Churchill Falls, period.

"(It's) not that Hydro-Québec would win or lose. It's impossible to say. That's the whole point of the court process. It's very difficult at times to predict how things will turn out," Coffey said. "But it is apparent that they could raise it."

Under Nalcor's plan, it would be possible for Muskrat Falls power to go to Hydro-Québec as part of the integrated system, which would allow for the Churchill Falls dam up river to store water instead of use it for generation.

But Bennett said Nalcor acknowledges Hydro-Québec is entitled to a certain amount of electricity, but it doesn't matter where that comes from.

"The electrons are the electrons. From an operational perspective, you can't tell where they come from," he said.

Really, he said, the water management framework is just about maximizing the use of the water they've got on the river.

"That's where we actually turn to our engineering analysis and our hydrological modelling to give us a high degree of confidence that the water management agreement does what it needs to do," he said. "We have extensive history for the river system; our hydrological records go back to 1953 on a continuous basis."

Bennett said Nalcor has multiple legal opinions and is confident with its position.

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