Supreme Court sides with Hydro-Quebec in historic Churchill Falls dispute

The Supreme Court of Canada says there is no legal obligation to reopen the 1969 Churchill Falls energy deal that has been highly profitable for Hydro-Quebec — and for Hydro-Quebec customers — but much less so for Newfoundland and Labrador.

In a 7-1 ruling today, the high court says it cannot force the parties to renegotiate the contract even though the arrangement has turned out to be unexpectedly lucrative for the Quebec utility.

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

The contract, covering 65 years, set a fixed price for the energy that would decrease over time. It's earned more than $27.5 billion for Hydro-Quebec to date and about $2 billion for Newfoundland and Labrador.

The deal is also the reason why Quebec consumers pay the lowest electricity rates in the country — by far.

Churchill Falls (Labrador) Corporation 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 the ruling but the Supreme Court agreed to hear the corporation's case.