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OTTAWA – The Premier of Newfoundland and Hydro-Quebec say they will look to the future, not the past, now that the Supreme Court of Canada has ruled that Quebec no longer has a legal obligation to reopen the 1969 agreement on the separation of energy at Churchill Falls.
In a 7-1 decision Friday, the High Court said that it could not force the parties to renegotiate the decades-old contract, even though the deal was unexpectedly lucrative for the Quebec public service, but much less for Newfoundland and Labrador.
As part of this agreement, Hydro-Québec has agreed to purchase almost all of the power produced by the Churchill River Power Station in Labrador.
The 65-year contract set a fixed price for electricity that would decrease over time. Hydro-Québec has generated more than $ 27.5 billion to date and about $ 2 billion in Newfoundland and Labrador.
Churchill Falls (Labrador) Corporation Ltd., part of Hydro-Newfoundland and Labrador, went to the Quebec Superior Court in 2010. It unsuccessfully supported the huge profits generated by electricity. were unforeseen in 1969 and Hydro-Québec had the obligation to renegotiate the contract.
A court of appeal upheld the decision, but the Supreme Court agreed to hear the company's case.
In its decision, the High Court stated that there was no legal basis in Quebec civil law for the claim filed by the company, known as CFLCo.
A majority of the Supreme Court stated that CFLCo sought to cancel certain aspects of the contract while retaining those that suited it. In fact, he asked Hydro-Québec to give up the benefits it had obtained in exchange for the sacrifices it had made to start the huge project – a situation CFLCo has enjoyed since 1969 and continues to benefit today. .
"In the final badysis, CFLCo provided no convincing factual or legal basis for the courts to reshape the contractual relationship it had with Hydro-Québec for 50 years," the court said.
The landmark decision threatened to further damage relations between Quebec and Newfoundland and Labrador. The project, initially defended by Newfoundland Premier Joey Smallwood, was a sore point.
The premier of Newfoundland, Dwight Ball, said Friday that he would not come back on the court's decision. "The past is the past, for us the decision is the decision," he said.
Ball pointed out that he had recently had a positive conversation with the new Quebec Premier, François Legault, and that the two men were committed to working together for mutual benefit.
Quebec's energy minister, Jonatan Julien, added: "This decision not only ends a conflict, it also makes it possible, in particular, to plan our collaboration with the Government of Newfoundland and Labrador. "
The Churchill River in Labrador has more than 300 meters of elevation less than 32 kilometers, making it one of the world's largest sources of hydropower. A huge underground power plant, cut from mbadive granite, produces more than 34 billion kilowatt-hours of energy a year, enough to power a big city.
CFLCo told the Supreme Court that the regulatory and energy market landscape in 1969 was very different from what it is today: energy is a public good with no real market value, and exports are simply a means of disposing of surpluses and require legislative measures. authorization. Hydro-Québec was a utility provider, legally required to sell electricity to Quebec consumers at low prices.
Over the decades everything has changed, said CFLCo. Energy has become a product of supply and demand with lucrative export markets.
In turn, the mandate of Hydro-Québec has evolved and the utility has made billions of dollars of electricity sales to Quebecers and billions of additional exports to previously non-existent markets representing 20 to 40 times the contract price said CFLCo in court. Meanwhile, the company remains stuck in 1969, selling at a fixed price and falling electricity.
Hydro-Québec submitted that under the contract, it badumed the risk badociated with fluctuations in the market value of energy, which made it possible to fund the Churchill Falls Project. In return, Hydro-Québec was satisfied that the price set in the contract would provide the utility, for the duration of its mandate, with a stable supply and protection against inflation.
In fact, CFLCo was seeking a new contractual equilibrium unrelated to the one created by the parties – a remedy that does not fall within the role and function of the courts, said Hydro-Québec.
The Supreme Court agreed with this conclusion. The conclusion that significant changes in the electricity market over the years do not justify non-compliance with the terms of the contract.
Hydro-Québec spokesman Cendrix Bouchard welcomed the decision, saying that it confirmed that the public service had acted in good faith during the negotiation and management of the project. contract. Hydro-Québec hopes that the outcome of the lengthy legal process means "the beginning of a new chapter" for the partners, he added.
Although the project began producing electricity in the early 1970s, the contract came into effect in 1976 with a 40-year term and an automatic extension of 25 years, which means that it expires in September 2041.
In its ruling, the Supreme Court pointed out that the terms of the contract provide for CFLCo to start operating a plant worth more than $ 20 billion for its own benefit.
Newfoundland's Minister of Natural Resources, Siobhan Coady, said the post-2041 talks have not started yet, but the province hopes to learn from the current contract.
The only dissenting judge was Malcolm Rowe of Newfoundland and Labrador who stated that Hydro-Quebec had disavowed the trust and cooperation relationship created by the contract, turning it into a "one-sided operation".
"This is unjustified under Quebec civil law."
– With records from Holly McKenzie-Sutter
– To follow @JimBronskill on Twitter
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