Nalcor can't sell extra power from Churchill Falls, Quebec court rules

A Quebec court has struck another blow to Nalcor over the renewal of the contract to sell power to Quebec from Churchill Falls.

The 1969 contract automatically renews on September 1 of this year, and runs until 2041. Nalcorargued thatunder changes to language in the renewal contract, Hydro-Quebecwas only entitled to a fixed block of power.

Hydro-Quebec disagreed, taking Churchill Falls (Labrador) Corporation, the company that runs Churchill Falls, to court, arguing that Quebec has the right to buy all of the power produced from the power plant aside from two fixed blocks of power that Nalcor is entitled to.

In a decision Monday, the Quebec Superior Court agreed with Hydro-Quebec that it has the right to all the power and can control when that power is delivered, instead of being required to take a fixed monthly block.

"The company is reviewing the decision and will provide further information once this review is complete,"Nalcorsaid in a statement Tuesday.

Nalcor insistedthat this court decision won't have an impact on Muskrat Falls. There is a water management agreement that requires Muskrat Falls and Churchill Falls to operate together. It's required because Muskrat Falls has very little capacity to store water.

That means in order to generate power, Muskrat Falls isreliant on water flowing out of the Churchill Falls generating station up stream on the Churchill River.

Nalcor saidthat the water management agreement has not been challenged in court and wasn'tpart of this court case.

The 2041 Group, made up of lawyers who areopposed to Muskrat Falls, have disagreed, saying a loss will reduce the amount of power Muskrat Falls produces.

Last week, the Quebec Court of Appealruled against Nalcorin a different case.Nalcor had tried to overturn the automatic renewal of the 1969 Upper Churchill contract for another 25 years, arguing the terms were unfair. The courtsided with Hydro-Quebec and upheld the renewal.