Newfoundland, Quebec heading for a showdown over Muskrat Falls power plant – by Steven Chase (Globe and Mail – July 24, 2013)

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Newfoundland and Labrador Premier Kathy Dunderdale will find herself face to face with Quebec counterpart Pauline Marois on Wednesday as the Atlantic Canadian leader pushes for greater control in a bitter, decades-old feud over the sale of electricity generated by hydro power in Labrador.

On the eve of an annual premiers meeting in Niagara-on-the-Lake, Ont., Ms. Dunderdale went public with a sharp attack on the Quebec government’s power utility, accusing it of making a “desperate move” to thwart Newfoundland and Labrador’s power business plans.

The Atlantic province, which believes it got a raw deal in a long-term supply agreement with Quebec, says it expects to gain a greater say over power deliveries to its neighbour in 2016 when the energy contract is automatically renewed for 25 years.

Newfoundland and Labrador, which owns two-thirds of the existing Churchill Falls generating station through a Crown corporation, says it believes that as of the renewal date, it will be able to revise its delivery schedule for Quebec-bound electricity so that it can operate the facility in tandem with the $7.7-billion Muskrat Falls hydro power development planned for downstream. Managing water flows between the two could help the province meet energy demand better.

But Hydro-Québec rejects this, and filed a lawsuit this week that it hopes will force the province to continue delivering power from the 1970s facility on a schedule of its choosing, rather than the fixed-block deliveries that appear to be in the works.

Ms. Dunderdale on Tuesday accused Hydro-Québec of trying to frustrate her province’s effort to derive more power and revenue from the Churchill River through the Muskrat development, more formally known as the Lower Churchill project.

“This is arrogance, and Hydro-Québec is being absolutely obstructionist in terms of the development of Lower Churchill – it’s behaviour we’re very used to in Newfoundland and Labrador,” Ms. Dunderdale told The Globe and Mail in an interview. “Newfoundland and Labrador is not going to be held hostage by Hydro-Québec any more.”

She said she is confident Hydro-Québec’s motion, filed in Quebec Superior Court, will fail.

Asked if Ms. Dunderdale will raise the power contract at the premiers’ gathering, known as the Council of the Federation, her spokeswoman, Jennifer Tulk, said: “Energy matters are always discussed at Council of the Federation meetings.”

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