Quebec's top court rules for N.L. in Churchill Falls dispute with Hydro-Quebec

MONTREAL — Newfoundland and Labrador has achieved a rare win in its long-standing battle with Hydro-Quebec over a 50-year-old agreement on sales of power from the Churchill Falls generating station.

A Quebec Court of Appeal decision Thursday ruled that Churchill Falls Corp. Ltd. — a subsidiary of Newfoundland's Crown corporation overseeing hydroelectricity — has the right to sell energy produced above a certain threshold.

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"Hydro-Quebec does not have the exclusive right to purchase, and receive, all of the energy produced by the Upper Churchill power plant," Justice Jacques Chamberland wrote, reversing a trial court ruling from 2016.

Hydro-Quebec utility retains the right to sell Churchill Falls energy up to an annual cap.

The decision is the latest round in a battle that reached the Supreme Court of Canada, which ruled last year that Hydro-Quebec had no obligation to modify its 1969 deal with the Atlantic province.

Under the agreement, which is valid until 2041, Hydro-Quebec can purchase the majority of electricity from the central Labrador facility. The utility had argued successfully the deal was valid because it had assumed all the costs and risks that came with the project when the contract was signed.

Thursday's decision concerns how a contract that has been highly profitable for Hydro-Quebec should be interpreted since September 2016, rather than whether it should be renegotiated.

"Hydro-Quebec is satisfied with the fact that the Quebec Court of Appeal confirms it's right to operational flexibility stated in the 1969 contract and rejects the notion of monthly caps," said spokesman Cendrix Bouchard.

The utility said it is analyzing the decision before deciding whether to file an appeal.

Churchill Falls Corp. president Stan Marshall said in a statement the company is "pleased" with the ruling.

"I'm very relieved, I will say," added Newfoundland Premier Dwight Ball. "It's good news for the province."

Ball told reporters it was a tough decision to go through the effort of appeal in 2016, "but we had to, it was no choice."

He said the ruling removes question marks around water management and the Muskrat Falls project.

- With files from Holly McKenzie-Sutter in St. John's, Nfld.

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