Minister responds to CF(L)Co ownership issue

Mines and Energy Minister Paul Dicks says it is inaccurate and misleading for Opposition Energy Critic John Ottenheimer to suggest that a deal between Newfoundland and Labrador Hydro and Hydro-Quebec effectively gives away control of the Churchill Falls (Labrador) Corporation (CF(L)Co).

Minister Dicks was responding to comments made by Mr. Ottenheimer on CBC�s Radio Noon Program on Tuesday, August 29.

The minister said there is no circumstance where Hydro-Quebec could gain control over CF(L)Co or dilute Newfoundland and Labrador Hydro�s ownership interest from the current 65.8 per cent.

Mr. Dicks said the Shareholders� Agreement and the Guaranteed Winter Availability Contract (GWAC) executed in 1999, protect NLH�s future interest in the corporation.

The minister explained that the change in financial reporting, as outlined in the 1999 NLH Annual Report, whereby NLH now reports its investments in CF(L)Co as a joint venture, is in accordance with generally accepted accounting principles.

"It is most inaccurate for Mr. Ottenheimer to suggest that the new Shareholders� Agreement gives control to Hydro-Quebec, "Mr. Dicks said. "If Mr. Ottenheimer had inquired, he would have found out that Hydro-Quebec previously had many of these rights under previous contractual agreements and the laws of the Canadian Business Corporations� Act. The Shareholders� Agreement, which was executed in 1999, serves to recognize many of these rights that were already held by Hydro-Quebec."

The minister said: "The Shareholders� Agreement also ensures that CF(L)Co will retain the right to the 225 MW TWINCo block of power for sale in Labrador, after the TWINCo subleases expires in 2014. Under the original contract, Hydro-Quebec had the right to acquire this block of power at the original power contract prices.

"As well, the GWAC, which guarantees availability of 682 MW of power to Hydro-Quebec during the winter, provides additional annual revenue of approximately $34 million for the remaining term of the 1969 contract. This additional cash flow contributes to the future financial viability of CF(L)Co"

Mr. Dicks said the Shareholders� Agreement and the Guaranteed Winter Availability Contract will not be publicly released. "Commercial agreements such as those among Newfoundland and Labrador Hydro, CF(L)Co and Hydro-Quebec are confidential. If released, they could compromise ongoing negotiations between Newfoundland and Labrador Hydro and Hydro-Quebec related to the Gull Island development. Commercial agreements of this magnitude cannot be negotiated in public."

Media contact: Gary Callahan, (709) 729-4890.

2000 08 30 2:30 p.m.