Churchill Falls Corporation files motion over Upper Churchill hydropower contract

Churchill Falls (Labrador) Corporation Limited (CFLCo) filed a motion in Quebec Superior Court commencing proceedings against Hydro-Quebec to amend the 1969 Upper Churchill Power Contract pricing. 

Under the contract, energy generated from the Churchill Falls hydroelectric project in Labrador is sold to Hydro-Quebec.

“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,” said Ed Martin, president and CEO of CFLCo and Nalcor Energy. “We are asking the court to amend the contract pricing terms to address the inequity which has resulted from unforeseen circumstances.”

CFLCo said it sent a letter to Hydro-Quebec late last year seeking a re-negotiation of the deal but that Hydro-Quebec did not respond.

It is CFLCo’s position that, since the power contract was initiated, circumstances have changed in a way that could not have been reasonably foreseen. Energy prices have escalated significantly, and access to export markets is now a possibility under open access regulations. This change in circumstances and the length of the contract, which is 44 years plus an automatic renewal for an additional 25 years, has resulted in a gross inequity in the distribution of contractual benefits, according to the corporation.

The present purchase price under the contract is one-quarter of one cent per kilowatt hour, and the automatic renewal clause fixes the purchase price at one-fifth of one cent for the 25 year period beginning in 2016. This will mean, for the remainder of the contract, power will be sold to Hydro-Quebec for less than five percent of its recent commercial value, according to CFLCo.

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