Nfld. & Labrador

Hydro-Québec seeks N.L. court order forcing Nalcor execs to obey subpoena

Hydro-Québec and Nalcor Energy are at odds over whether top electricity executives in Newfoundland and Labrador should comply with subpoenas issued by a judge in Quebec, as part of a case with significant implications for both power giants.

Dispute linked to lawsuit dealing with renewal of Churchill Falls contract in 2016

Hydro-Quebec power lines are shown in this file photo. (Jacques Boissinot/The Canadian Press)

Hydro-Québec and Nalcor Energy are at odds over whether top electricity executives in Newfoundland and Labrador should comply with subpoenas issued by a judge in Quebec, as part of a case with significant implications for both power giants.

Documents filed at Newfoundland and Labrador Supreme Court in St. John's shed new light on a continuing dispute about the renewal of the Churchill Falls power contract in 2016.

Hydro-Québec sued Churchill Falls (Labrador) Corporation, known as CF(L)Co, two years ago.

The power giant wants a ruling on what rights it has under the renewed Upper Churchill contract.

CF(L)Co – which is two-thirds owned by Newfoundland and Labrador Crown corporation Nalcor – operates the Churchill Falls power plant.

The Newfoundland and Labrador Supreme Court building in downtown St. John's. (CBC)
Hydro-Quebec owns the other one-third stake in CF(L)Co.

The case is being heard in Quebec.

But before the trial begins in October, Hydro-Québec wanted to have its lawyers examine two Nalcor executives – Newfoundland and Labrador Hydro vice-president Rob Henderson and Lower Churchill Project vice-president Gilbert Bennett – under oath.

According to court documents, CF(L)Co disagreed, questioning whether those examinations were relevant or necessary.

In March, Quebec Superior Court Chief Justice Francois Rolland issued an order granting Hydro-Québec's request.

But lawyers for Nalcor and its subsidiary Newfoundland and Labrador Hydro said no, stressing that the subpoenas had not been approved by a court in this province.

Now Hydro-Québec has filed a Supreme Court application in St. John's to have the orders enforced and the Quebec judge has written his counterparts in Newfoundland and Labrador requesting their assistance in doing so.

The matter will be heard later this month.

Nalcor declined comment, while Hydro-Québec did not return a message before deadline from CBC News.

Dispute over renewal terms

According to documents from the Quebec lawsuit now filed at Supreme Court in St. John's, the case boils down to what happens with Upper Churchill power as of Sept. 1, 2016.

That's when the initial 40-year power contract, negotiated in the late 1960s, expires. It then renews for an additional 25-year term.

Hydro-Québec argues that it retains essentially the same rights that have existed over the past four decades.

"Construed as a whole, it is clear that the renewed contract grants Hydro-Québec the exclusive right to purchase all the power and energy generated at the plant, with the exception of the power and energy associated with the Twinco Block and the 300 MW Block, and the right to dispose thereof on the same terms as apply under the original contract," Hydro-Québec court documents note.

The company also wants to confirm that CF(L)Co is restricted from selling more than the 300 MW limit, saying that power is "allotted exclusively to Hydro-Québec."

In its court filings, CF(L)Co disagrees.

"Hydro-Québec's position to the effect that it would enjoy exclusive and seemingly unlimited rights to almost all the power and energy that can be generated at the plant is devoid of any merit and unsupported by the terms and conditions of the renewal contract," those documents note.

"It is also incompatible with the original intent of the parties when they executed the renewal contract, the conduct of the parties since its signing and prior to its coming into force, as well as industry usage."

CF(L)Co argues that Hydro-Québec's "business as usual view" of the renewed contract is wrong, and there are "significant differences" between the terms and conditions of both.

'Desperate move,' Dunderdale said in 2013

In launching the lawsuit in July 2013, Hydro-Québec said in a press release that CF(L)Co's interpretation of the renewal contract would only entitle the company to fixed monthly blocks of energy.

Hydro-Québec said it would be deprived of "operational flexibility" to co-ordinate the operation of Churchill Falls with its entire generating fleet, both on a seasonal and a multi-year basis. 

The then-premier of Newfoundland and Labrador slammed the Hydro-Québec lawsuit as "arrogant" a day later.

"I think that I would characterize this as a desperate move by a company that's been trying, one way or another, to thwart development on the Lower Churchill for a number of years unless it was clearly in the best interests of the people of Quebec," Dunderdale told reporters in St. John's at the time.

Nalcor officials subsequently downplayed any connection between the lawsuit and water management issues on the Churchill River, and stressed that they remained confident in CF(L)Co's interpretation of the contract renewal.

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