Churchill Falls to face off against Hydro-Quebec at Supreme Court of Canada

The 735 kilovolt line that carries power from the Manic-Outardes complex in northeastern Québec to major load centres in southern Québec is shown in this CP file photo.

The Supreme Court of Canada says it will review the 1969 Churchill Falls energy deal that has been highly profitable for Hydro-Quebec but much less so for Newfoundland and Labrador.

Under the deal, Hydro-Quebec agreed to buy almost all the energy generated by a hydroelectric plant to be built on the Churchill River in Labrador.

The contract, which had a 65-year term, set a fixed price for the energy that would decrease in stages over time.

The dam has generated more than $26 billion for Hydro-Quebec compared with about $2 billion for Newfoundland and Labrador.

Churchill Falls (Labrador) Corp. Ltd. went to Quebec Superior court in 2010, arguing unsuccessfully that the sizable profits from electricity were unforeseen in 1969 and that Hydro-Quebec had a duty to renegotiate the contract.

An appeal court affirmed that ruling and, as usual, the Supreme Court did not give a reason for agreeing to hear the case.