Nfld. & Labrador

N.L. files court action over Churchill contract

Nalcor Energy, Newfoundland and Labrador's energy corporation, has followed through on a threat to ask the courts to reopen the Churchill Falls hydroelectric deal signed more than four decades ago.

Nalcor Energy, Newfoundland and Labrador's energy corporation, has followed through on a threat to ask the courts to reopen the Churchill Falls hydroelectric deal signed more than four decades ago.

The challenge — outlined Tuesday by Nalcor officials — has been filed with the Quebec Superior Court against Hydro-Québec.

"The motion details the basis of our claim to have the pricing terms of the 1969 Upper Churchill Power Contract amended for the remaining term of the contract to 2041," Nalcor president Ed Martin said in a release. "We are asking the court to amend the contract pricing terms to address the inequity which has resulted from unforeseen circumstances."

The 65-year deal has been the subject of a long-standing dispute between Newfoundland and Labrador and Quebec. It allows Hydro-Québec to purchase Churchill power at inexpensive rates and sell it at a much higher cost.

Nalcor announced in January that it planned to go to court based on a section of Quebec's Civil Code that requires all parties to act in good faith in all legal dealings.

"We believe that considering the changing circumstances, Hydro-Quebéc's refusal to renegotiate further constitutes an abuse of rights, and more generally, we believe that refusal is also in violation of the notion of 'fair play' and the 'spirit of justice,' both of which have been found by the Supreme Court of Canada to form part of the notion of good faith," Martin said.

Martin said Nalcor believes that since the contract was signed circumstances have changed in such a way that "could not have been reasonably foreseen at the time." He said energy prices have risen significantly and "access to export markets is now a possibility under open access regulations.

Martin wrote Hydro-Québec in late November and asked the corporation to renegotiate the pricing contract based on new legal opinions Nalcor had solicited from a Montreal law firm.

Hydro-Québec has publicly dismissed the request, but Martin has said Nalcor hasn't received an official response from the Quebec utility.