The Churchill Falls curse

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This is basically all Newfoundland and Labrador got out of the deal.

Today the Supreme Court of Canada made it clear: Newfoundland and Labrador is stuck with one of the one-sided business deals in history for the foreseeable future.

The Supreme Court of Canada will not force Hydro-Québec to renegotiate a 65-year contract to buy low-cost electricity from the Churchill Falls power station in Labrador.

The decision means Quebec’s power utility will continue to reap enormous profits from the Churchill Falls deal. But it’s a blow for Newfoundland and Labrador, which has seen a small fraction of the benefits from the project.

The price of electricity dramatically increased after the agreement was signed in 1969 but Hydro-Québec has refused to alter the terms of the contract to account for the changed market.

The Churchill Falls Corporation took the utility to court in 2010 to force a renegotiation, arguing that Quebec’s Civil Code meant that both parties had to treat each other in “good faith.”

In the decision released Friday, the Supreme Court upheld two lower court decisions in favor of Hydro-Québec, with seven justices in agreement and only one, Justice Malcolm Rowe, a Newfoundland native, dissenting.

The court said Hydro-Québec had no legal obligation to renegotiate the deal.

“The duty of good faith does not negate a party’s right to rely on the words of the contract unless insistence on the right constitutes unreasonable conduct in the circumstances.”

The court rejected Churchill Falls Corporation’s claim that the original contract was akin to a joint venture, with both sides sharing the risks and rewards. And the court found there was nothing implicit in the contract to suggest it would be renegotiated if the market changed.

The deal finally expires in 2041.  With Newfoundland’s luck, they’ll probably have perfected cold fusion or something by then.

Barrie McKenna explains what the Churchill Falls fiasco means to Newfoundland and Labrador, and how the provincial government tried to avoid repeating that big mistake by making another big mistake:

The obvious lesson in the latest failed lawsuit is that Newfoundlanders should move on. This should be the end of the story.

Unfortunately, the Supreme Court ruling hasn’t erased deep financial and psychological scars. Newfoundland unknowingly blundered once by agreeing to the 1969 contract. And it doubled down a generation later by blindly forging ahead on its own with the high-risk Muskrat Falls megaproject on the Lower Churchill River, which is slated to begin producing hydroelectric power in 2020.

For former Newfoundland premier Danny Williams, developing Muskrat Falls was never just about generating hydro power. It was about sticking it to Quebec, and righting the perceived wrongs of the Churchill Falls contract. Never again, he vowed, would Newfoundlanders let themselves be exploited by Quebec. So instead of selling the power from Muskrat Falls to the most obvious customer – Quebec – the province opted to go it alone, with all the inherent risks. It will repatriate the power to Newfoundland and finance a circuitous underwater transmission line to Nova Scotia.

The unfortunate consequence of this energy hubris is that instead of being cheated by its neighbour, Newfoundlanders are fleecing themselves. Delays and cost overruns on the $12.7-billion megaproject will cause residential hydro rates to more than double across Newfoundland by 2022 and could eventually bankrupt the tiny province. A provincial inquiry, charged with uncovering what went wrong and whom to blame, is slated to release its final report late next year.

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As the Supreme Court pointed out in its decision, the contract was specifically structured “to have Hydro-Québec assume a risk that CFLCo did not want to assume.” The low fixed price and the long term were Hydro-Québec’s compensation for taking on that risk, the court concluded.

The court did point out that the province stands to get back full rights to Churchill Falls and its cheap power in 2041, reaping the windfall gains in the decades beyond.

That won’t help Newfoundland in the short-term. The province is caught in an economic, fiscal and demographic trap. The federal Parliamentary Budget Officer has warned that the small and slow-growing province must either slash spending or dramatically raise taxes to avoid a debt trap, and bankruptcy.

Obnoxiousness isn’t always a crime

The skeet who yelled a sexist meme at NTV reporter Heather Gillis during a live shoot has been acquitted of criminal charges:

A provincial court judge in St. John’s has ruled it could be illegal to shout a sexist slur at female reporters, but not in the case of what happened to NTV reporter Heather Gillis last year outside the city dump.

It was never a question of whether Justin Penton hurled the words at Gillis while she was interviewing St. John’s Mayor Danny Breen at the Robin Hood Bay waste management facility in April 2017. The issue for the judge was whether or not it constituted a crime in that context.

Gillis reported she was “humiliated, embarrassed and disgusted” by the comments. Breen said it made him uncomfortable.

But Judge Colin Flynn ruled an emotional disturbance does not meet the criteria for a charge of disturbing the peace.

“Something more than emotional upset and a momentary interruption in a conversation is needed to constitute the criminal offence,” Flynn wrote in his decision.

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Last April, Gillis had just finished interviewing Breen, who was a city councillor at the time, and was following up with a few off-camera questions. Penton drove by in his truck and yelled “F–k her in the p—y” on his way into the dump.

A lower court judge is bound by Supreme Court of Canada decisions, and in this case it appears that Judge Flynn is following the 1992 Lohnes decision.  He even suggested that Parliament could, and probably should, add “emotional disturbance” to the Criminal Code provisions regarding causing a disturbance.

Needless to say, the University of Twitter College of Law respectfully disagrees:

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Twitter is angry about a court decision.  Dog bites man.  But even many of Newfoundland’s blue-checkmarks are calling out the decision:

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Newfoundland’s media world is a small one, in which most local journalists know each other well, so it’s not surprising to see the province’s media personalities coming to the defense of a colleague.

But would so many reporters, commentators and entertainers be piling on this if it didn’t happen to someone from their own world?

The St. John’s drug scene

CBC’s David Cochrane on the darker side to oil-fueled prosperity in my hometown:

St. John’s is the hottest cocaine market in Atlantic Canada. At least that’s what the drug dealers whom the Royal Newfoundland Constabulary arrests tell the police officers.

The volumes of cocaine coming into the city are enormous,in spite of the many arrests and the relative geographic isolation. The spike in disposable incomes from the local oil boom and commuter workers from western Canada is fueling the demand. It is the dark side of prosperity.

Friday’s announcement of a $1-million police task force to tackle drugs and organized crime shows how true that is.

But embedded into that drug trade is a streak of hidden and unreported violence. There’s a rash of drug dealers ripping off other drug dealers. There are home invasions in areas much nicer than Tessier Place where stick-up crews are trying to rip off a dealer’s dope stash or his bank roll.

Police and prosecutors hear of severe beatings using bats,crowbars,brass knuckles and bear spray. The victims of these beatings often refuse to give the police a statement even if they end up in hospital with life-threatening injuries. After all,how do you tell a cop that the guy who hurt you did it in order to steal your cocaine stash?