Churchill Falls Contract between Hydro-Québec and CF(L)Co - Hydro-Québec petitions the Québec Superior Court to confirm certain of its contract rights

Hydro-Québec is filing a motion today with the Québec Superior Court to obtain a declaratory judgment. The company is asking the Court to confirm that two recent positions taken by CF(L)Co with respect to the Churchill Falls Contract (the Contract) are ill-founded. The Québec Superior Court has exclusive jurisdiction to rule on any dispute arising out of the Contract. It should be noted that the Contract will be automatically renewed in 2016, for a 25-year period ending in 2041.

1 - Energy deliveries to which Hydro-Québec is entitled
Under the terms of the Contract which Hydro-Québec and CF(L)Co concluded in 1969, Hydro-Québec has certain essential rights, including:

• The exclusive right to purchase virtually all of the power and energy produced by Churchill Falls Generating Station until August 31, 2041;
• The right to benefit from operational flexibility.

According to the recent positions taken by CF(L)Co, Hydro-Québec would, for the entire Contract renewal period (2016 to 2041), be entitled only to fixed monthly blocks of energy. This position would deprive Hydro-Québec of the operational flexibility to determine the quantities of energy it can request from CF(L)Co. This operational flexibility enables Hydro-Québec to coordinate the operation of Churchill Falls with its entire generating fleet, and to do so both on a seasonal and a multi-year basis. 

In Hydro-Québec's opinion, CF(L)Co's position is incompatible with several provisions of the Contract. Hydro-Québec wishes to have the Court confirm that it will not be obliged to limit its requests for energy deliveries to fixed monthly blocks from 2016 to 2041.

2 - Sale of quantities exceeding 300 MW by CF(L)Co
Under the Contract, until 2041, CF(L)Co has the right to recapture a 300-MW block of power and energy and sell it to a third party. However, this right has limitations: CF(L)Co may not, under any circumstances, sell quantities exceeding 300 MW to a third party, until expiry of the Contract. Yet, since June of 2012, CF(L)Co has sold quantities of more than 300 MW to Newfoundland and Labrador Hydro (NLH), a related provincial Crown corporation, causing the interruption of deliveries scheduled by Hydro-Québec under the Contract.

Hydro-Québec therefore wishes to confirm that, as long as the Contract is in effect, namely until August 31, 2041, CF(L)Co may not sell quantities of power and energy exceeding 300 MW to a third party, including NLH.