July 22, 2013 was an eventful day for Canada's eastern
provinces, with two noteworthy developments concerning the future
of their electricity industries, including the Nalcor Energy Lower
Churchill mega hydroelectric project and its 824 MW first phase
Muskrat Falls hydroelectric project.
First, Hydro-Québec, Québec's electricity
utility, filed a motion with the Québec Superior Court for a
declaratory judgment challenging two recent positions taken by
Churchill Falls (Labrador) Corporation Limited (CFLCo) with respect
to the May 12, 1969 Churchill Falls Power Contract (the Power
CFLCo is a subsidiary of Newfoundland and Labrador Hydro, itself
a subsidiary of Nalcor Energy, Newfoundland and Labrador's
energy corporation (with a 65.8% equity interest), and of
Hydro-Québec (with a 34.2% equity interest). CFLCo owns the
5,428 MW Churchill Falls generating station and, pursuant to the
Power Contract, must make available almost all of the
facility's output to Hydro-Québec at what is generally
qualified as a very beneficial power purchase price for
Hydro-Québec. The Power Contract will be automatically
renewed in 2016 for a 25-year period ending in August 2041 at a
lower power purchase price.
In its proceeding, Hydro-Québec claims that it has an
exclusive right to purchase almost all of the output generated by
the Churchill Falls generating station until the expiry of the
Power Contract and that it has the right to control the facilities
to optimize the management of its own power needs.
According to certain commentators, including Mr. Tom Adam, an
electricity consultant, "Hydro Quebec's court application
responds to a plan by the NFLD government's crown utility
Nalcor to take a large block of power from Upper Churchill during
the winter, replacing that power with excess production from the
downstream Muskrat Falls project during the spring run-off."
His views on this developing story can be found in the following
column published on the Financial Post's website:
Muskrat madness: Quebec motion puts Newfoundland's
multi-billion dollar magaproject at risk.
Second, the Nova Scotia Utility and Review Board released its
decision granting its conditional approval for the Maritime Link
— the subsea electricity transmission cable designed to
transport electricity from the Muskrat Falls project to Nova
Scotia. Emera Inc., the public electricity company that owns Nova
Scotia's provincial utility, is involved in the Muskrat Falls
project as sponsor of the Maritime Link. Currently, 20% of the
output of the Muskrat Falls project is committed to Nova Scotia at
a fixed price. The Board's approval for the project is
conditional upon the commitment by Nalcor Energy that power
surpluses at the Muskrat Falls project will be made available at
market price to customers in Nova Scotia (up to an additional 20%)
to meet Nova Scotia's needs. If this commitment is not obtained
from Nalcor, the Board is of the view that the Maritime Link will
not be the lowest-cost option for Nova Scotia's customers. The
initial response from Nalcor appears to be a refusal to provide
this commitment as Mr. Ed Martin, Nalcor Energy's CEO, stated
in a July 22, 2013 press release that the Muskrat Falls project is
first developed for the benefit of the Newfoundland and Labrador. A
link to the decision of the Board can be found
here and a link to the Nalcor Energy press release in response
to the decision can be found
Canada is a constitutional monarchy, a parliamentary democracy and a federation comprised of ten provinces and three territories. Canada's judiciary is independent of the legislative and executive branches of Government.
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