Got a Problem With Hydro-Québec?

The person who pinned the “Got a problem with Hydro-Québec?” flyer to the bulletin board in the Montreal public library probably didn’t think about how a visitor from Newfoundland and Labrador would respond. Got a problem with Hydro-Québec? How about one that is more than 50 years old and isn’t scheduled to end until 2041?

No, the community organization distributing the flyer, ACEF (loosely translated as the Cooperative Association of Family Economy of Montreal North), is thinking about a different audience. It was reaching out to Hydro-Québec customers who have complaints about billing issues with the Québec utility company.

If, however, someone from Newfoundland and Labrador wants to lodge a complaint with Hydro-Québec there is no need to seek ACEF’s assistance. “We want our relationships to be based on respect and fairness,” Hydro-Québec says on the Complaints and Claims page of its website. “If you feel you have been treated unfairly, please let us know.”

The View From Québec

It probably isn’t necessary to tell Hydro-Québec officials or Québec politicians or Québec reporters and commentators that Newfoundland and Labrador has a problem with Hydro-Québec. 

“I fully understand the frustration and anger that you have, that you feel about the Churchill Falls contract,” Québec Premier Francois Legault said following his February meeting with Premier Andrew Furey to discuss renegotiating the Churchill Falls contract.

There is ample evidence that Québec media also understand how people here feel. Political columnist Philippe Léger described the deal for the French talk radio station 98.5 FM as an historic “injustice.” During the same broadcast parliamentary correspondent Louis Lacroix cautioned that Québecers “must not underestimate the hurt that the agreement represents for Newfoundland.”

Acknowledging that people in Newfoundland and Labrador feel a sense of grievance is not to say everyone in the Québec media thinks the Churchill Falls deal is unfair. Following Legault’s February visit, widely read independent Québec newspaper Le Devoir published a commentary by economist Daniel Larouche titled “Churchill Falls, a perfectly fair contract.” Larouche argues that Hydro-Québec assumed the financial risk for the project in 1969 and “Québec owes no debt to Newfoundland, neither financial nor moral.”

Francois Legault’s Options

Reading Québec media offers a couple of insights into why Legault is ready to talk about “adjustments’ to the contract before 2041. First, according to Hydro-Québec’s 2022-2026 Strategic Plan, the energy surplus it currently enjoys will disappear by the end of 2026. 

Québec’s challenge is to continue to meet domestic electrical demand, increasing industrial demand, and export commitments. For example, Hydro-Québec is facing a 20-year export commitment made with New England utilities five years ago. The deal has been described in Québec as a “strategic mistake.”

Premier Legault also talks about meeting the increasing demand for power with new hydro projects in Québec. That he refuses to identify all the potential hydro projects is a measure of the opposition from environmentalists and Indigenous communities Hydro-Québec will encounter with any new project.

Further, boosting the output from Churchill Falls or adding power from a Gull Island project could face similar opposition from Indigenous groups in both provinces. In Labrador, the Innu Nation has already filed a $4 billion lawsuit seeking compensation for ecological and cultural damages from the Churchill Falls project. And in Québec, the Uashat Mak Mani-Utenam Innu community is seeking $2.2 billion in damages for the Churchill Falls project.

Whose Court?

Aggrieved or not, it’s impossible to dismiss Larouche’s account of how the Churchill Falls contract evolved. The co-author of “Hydro-Québec: After 100 Years of Electricity” reminds Le Devoir readers that in 1969 Hydro-Québec agreed to buy almost all of the production and guarantee all of the debt of the project.

Being the party at risk and the one putting up the money is why it was agreed in 1969 that the applicable law governing the contract would be the laws of the Province of Québec. That is why Newfoundland and Labrador’s legal challenges over the years, the latest culminating in a loss at the Supreme Court in 2018, were initiated and argued in Québec courts.

When appraising Québec’s bargaining position, the Supreme Court decision cannot be ignored. Legault knows Newfoundland and Labrador is out of legal challenges. When, on the eve of his visit to St. John’s, he was asked about terms of a possible deal, Legault replied: “We won in court, so on that side, it’s clear.”

The question for Furey is this: In a new deal, regardless of its ingredients, will the applicable law of the contract with Hydro-Québec be the common law and statutory law of the province of Newfoundland and Labrador—or will a new deal, like the existing one, be governed by the civil law and statutory law of the province of Québec?

Furey’s office declined to answer the question, but a source with some insight into the government’s overall approach to a new Churchill Falls deal says, “absolutely” the provincial government expects the applicable law of any new deal to be the common law and statutory law of Newfoundland and Labrador.

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Eventually we will learn whether the issue of applicable law is going to be a feature of any adjustments to the existing Churchill Falls deal. In the meantime, Hydro-Québec is reporting record profits. Due to an increase in export prices the utility reported net income for 2022 of $4.56 billion. According to the Montreal Gazette, at the February press conference announcing the 2022 financial results, outgoing Hydro-Québec CEO Sophie Brochu told reporters, “about one-third of the utility’s profit” comes from the Churchill Falls deal.