December 5, 2017 8:31 am

Supreme Court to hear bid to reopen Churchill Falls hydro station

The Churchill Falls power development in central Labrador, is pictured under construction which was completed in late 1971. The Supreme Court of Canada says it will review the 1969 Churchill Falls energy deal that has been highly profitable for Hydro-Quebec but much less so for Newfoundland and Labrador. Under the deal, Hydro-Quebec agreed to buy almost all the energy generated by a hydroelectric plant to be built on the Churchill River in Labrador.

THE CANADIAN PRESS/HO
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Lawyers will argue in the Supreme Court of Canada today that a decades-old power deal they say unfairly benefits Quebec over Newfoundland and Labrador should be reopened.

Lawyer Doug Mitchell says the contract for the Churchill Falls hydro station in Labrador should be renegotiated to reflect different circumstances.

He says the arrangement has so far generated more than 27.5 billion dollars for Hydro-Quebec, versus about two billion dollars for Newfoundland and Labrador.

Mitchell says negotiators in 1969 could not have foreseen how energy markets would shift, allowing Hydro-Quebec to buy that power at cheap fixed prices then sell it for huge profits.

At issue is whether partners in long-term deals are obligated by so-called good faith principles to adjust terms over time.

Hydro-Quebec says it helped finance Churchill Falls in exchange for price guarantees that don’t expire until 2041.

Newfoundland’s natural resources minister says a win could mean billions of dollars for the province as it faces deficits and mounting debt.

© 2017 The Canadian Press

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