Published: Monday, November 30, 2009
MONTREAL -- Newfoundland and Labrador has formally requested a new deal with Hydro-Quebec on the controversial 1969 Churchill Falls power contract in what could be the opening salvo of a new court challenge.
This time, it is using provisions of Quebec's unique Civil Code to buttress its long-held argument that Quebec has - and wants to continue - shortchanging the economically stressed province on the power agreement.
"The gross inequity of this agreement cannot be denied," Newfoundland Premier Danny Williams said in a statement Monday to the province's House of Assembly.
"For example, last year it is estimated that Hydro-Quebec reaped profits from the Upper Churchill contract of approximately $1.7-billion, while Newfoundland and Labrador received a mere $63-million," Mr. Williams said.
"Power which is bought from our province for a quarter of a cent per kilowatt hour is then resold by Hydro-Quebec for up to 36 times the price they pay for it."
After oil prices soared in the 1970s, adding to the value of hydroelectric power, Newfoundland repeatedly contested the contract before the courts. Although the matter has twice travelled to the Supreme Court of Canada, the 65-year deal, negotiated between the governments of Newfoundland's Joey Smallwood and Quebec's Jean Lesage, remains intact.
On Monday, Mr. Williams told his legislature that "a very legitimate and compelling legal argument that has not yet been tested" forms the basis of the fresh offensive. It revolves around a Civil Code provision requiring parties to a contract to act in good faith in all legal relationships, including the negotiation and ongoing performance of contracts, Mr. Williams said.
Legal opinions from "some of the most eminent and brilliant legal minds in Quebec" support the argument, said Mr. Williams who has strongly denounced the proposed purchase of New Brunswick's provincial utility by Hydro-Quebec.
Changes to Quebec Civil Code in 1994 set the stage for Monday's renewed challenge to the contract, Ed Martin, head of Churchill Falls (Labrador) Corp. and of Crown utility Nalcor Energy, told reporters.
Mr. Martin said he sent a letter to Hydro-Quebec CEO Thierry Vandal requesting that his company renegotiate the pricing terms for the remainder of the contract "to establish a fair and equitable return to both CF(L)Co. and Hydro-Quebec for the future."
The letter, sent Monday, asked Hydro-Quebec to commence negotiations by Jan. 15, 2010.
Hydro-Quebec would not comment on the matter Monday and would not say if it received Martin's letter.
Montreal Gazette
Source: http://www.financialpost.com/story.html?id=2286949
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