N.L. loses at top court on Churchill Falls contract
Premier says time to move on after final ruling
ST. JOHN’S, N.L. • Newfoundland and Labrador’s premier said he was disappointed but finally ready to turn the page Friday, after yet another court loss in the province’s long feud with Quebec over Churchill Falls power revenues.
Premier Dwight Ball says a Supreme Court of Canada ruling Friday — which leaves his cash-strapped province stuck with a lopsided 1969 deal — will not interfere with the province’s relationship with Quebec.
“The past is the past. For us, the decision is the decision,” Ball said Friday.
“What I’ve recognized a long time ago (is) we make more progress, we get more benefits for people of our province when we work together.”
Ball suggested there would be no further court challenges from his current government of the decadesold contract that saw HydroQuébec agree to purchase Churchill Falls power for 65 years at a fixed rate set to decrease over time.
The deal has since delivered more than $27.5 billion to Hydro-Québec and around $2 billion to Newfoundland and Labrador.
The stark imbalance in profits has been the source of decades of animosity between the two provinces — and a number of legal battles that have exclusively sided with Hydro-Québec.
The latest challenge began in 2010, when Churchill Falls (Labrador) Corp. Ltd. (CFLCo) argued unsuccessfully before the Quebec Superior Court that Hydro-Québec had a “good faith” obligation to reopen the contract based on unforeseeable changes to the energy market.
The decision was later upheld by the Quebec Court of Appeal.
The Supreme Court ruled 7-1 in favour of Hydro-Québec on Friday, finding no duty to renegotiate, regardless of the contract’s unanticipated “substantial profits” for Quebec.
A majority of the Supreme Court said CFLCo was seeking to undo certain aspects of the contract while keeping the ones that suit it. In effect, it was asking HydroQuébec to give up the benefits it obtained in exchange for the sacrifices it made to get the massive project up and running — a situation from which CFLCo has been benefiting since 1969 and continues to benefit today.
Nalcor Energy, the provincial Crown corporation that is the parent company of Churchill Falls (Labrador), said in a statement Friday that it accepts the court’s decision.
“This decision is final and brings to an end an eightyear legal process,” the statement read.
“We are disappointed with the outcome but will continue to honour the contract and continue to work co-operatively with HydroQuébec.”
Ball said he wasn’t surprised by the judges’ decision. Neither was former premier Tom Marshall, who said in an interview that he was “profoundly disappointed” by the news.
Marshall was justice minister when he was introduced to the “good faith” argument the case hinged on, that says in such a lengthy contract, changes in the electricity market should be considered.
“This action was not asking for the contract to be cancelled. This action was simply asking for fairness,” Marshall said Friday.
“I feel very sad right now, but I think we certainly gave it our best shot and got a fair hearing at the highest court in the land.”
Marshall said he respects the expertise of the judges, but he had been hopeful the “good faith” argument might result in changes to what he sees as an unfair deal for his province.
“I’m at an age where I’m not going to be around when that contract comes to an end, when they negotiate a new one. I’d like to know what’s going to happen,” Marshall said.
The contract was renewed in 2016 and expires in 2041.
Before that date arrives, Newfoundland and Labrador faces stark financial challenges.
The Muskrat Falls hydroelectric dam in Labrador has now more than doubled in costs and is currently the subject of an ongoing public inquiry.
Ball said planning for Churchill Falls power sales after 2041 will begin “far in advance.”
In the meantime, Ball is discussing other collaborative opportunities with Quebec, like expanding Labrador’s mining industry, and maintained that a friendly relationship with the neighbouring province will be to Newfoundland and Labrador’s benefit, despite the historically rocky relationship.
Natural Resources Minister Siobhan Coady said the harsh lessons learned from watching the electricity market transform will factor into the shaping of future contracts.
“Things changed since the contract was awarded back in the 1960s, and we’ll be all the more wiser I think as we move to 2041,” she said.
I THINK WE CERTAINLY GAVE IT OUR BEST SHOT.