N.L. goes back to court over Churchill deal

The province of Newfoundland and Labrador is again turning to the courts in an attempt to reopen the Churchill Falls hydroelectric deal, this time through a legal challenge under Quebec law.

Nalcor Energy, Newfoundland and Labrador's energy corporation,revealed Monday that in the next few weeks it would file a motion with the Quebec Superior Court against Hydro-Qubec.

Corporation President Ed Martin said the suit would ask the courts in Quebec to rule on the disparities in the pricing arrangements of the Upper Churchill contract.

The 65-year deal, which was signed in 1969 and has been the subject of a long-standing dispute between Newfoundland and Labrador andQuebec, allows Hydro-Qubec to purchase Churchill power at inexpensive rates and sell it at a much higher cost.

The deal has also been the subject of several failed court actions by the government of Newfoundland and Labrador.

In late November, Martin wrote Hydro-Qubec and asked the corporation to renegotiate the pricing contract based on new legal opinions Nalcor had solicited froma Montreal law firm.

The opinions looked atcertain provisions of Quebec's civil code, which Martin said allow for the renegotiation of contracts if circumstances have changed in a way that could not have been reasonably foreseen when the contract was signed.

Hydro-Qubec has publicly dismissed the request.

Martin said Nalcor hasn't received an official response from Hydro-Qubec, so the corporation will go ahead with the legal challenge.

"There is an obligation," Martin said, "for Hydro-Qubec to renegotiate the pricing terms of the power contract given one, the dramatic inequities of the respected benefits, two, the length of the contract and three, the circumstances have changed in a way that could not have been reasonably foreseen at the time the contract was initiated."

Martin said Nalcor would file its suit within three weeks, but he said it could be two to three years before it makes its way through the courts.

Nalcor wants the pricing terms amended for the remainder of the Upper Churchill contract.

NalcorEnergy managesNewfoundland and Labrador Hydro, along with the province's interests in oil and gasand renewable energy.