NEWS

N.L. loses Upper Churchill bid in Quebec court

07/25/2014 08:24 EDT | Updated 09/24/2014 05:59 EDT
A Quebec court has dismissed the latest bid from Newfoundland and Labrador to redefine the ever-controversial Upper Churchill contract, something that has caused sharp divisions between the two provinces for more than four decades.

But the battle is not at all over, with Nalcor — Newfoundland and Labrador's Crown energy corporation — vowing on Friday to appeal the decision. 

Nalcor CEO Ed Martin said Hydro-Qué​bec's refusal to renegotiate a fixed-rate contract that does not expire until 2041 is "an abuse" that ultimately hurts the people of Newfoundland and Labrador. 

Churchill Falls (Labrador) Corp., which is largely owned by Nalcor, took its case to redraw the 1969 power price agreement with Hydro-Québec to Quebec Superior Court. 

The 65-year contract, which took effect in 1976, allows Hydro-Québec to buy energy from Newfoundland and Labrador at flat rates established decades ago, and resell the energy to customers at prices several times higher. 

In a 250-page ruling, the court says CF(L)Co did not offer a convincing argument to change the deal. 

The court said a change would have a stark effect on consumers in Quebec. 

"If granted, [such a change] would have resulted in a substantial and non-budgeted increase in the mill rate payable for the purchase of Churchill Falls energy in each year during the remaining initial term of the power contract, as well as during the renewal term terminating in 2041," the decision said. 

"Depending on the method of calculation used, the relief sought, if granted would have resulted in an additional cost to Hydro-Quebec for the CFLCo energy totalling many billions of dollars." 

The court ordered CFLCo to pay $1.3 million in court costs. 

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