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Donald Gordon, the gruff Scot who headed an English-only executive team at Canadian National Railway (CN) in the early 1960s, was once burned in effigy in Quebec. But Quebeckers may have to reconsider his legacy after last week’s Supreme Court of Canada ruling upholding the 1969 Churchill Falls power contract on which their province has made billions, thanks in large part to Mr. Gordon.

As president of CN in 1962, Mr. Gordon earned the ire of French-Canadians for declaring that he couldn’t find a qualified francophone to join CN’s executive ranks. He also enraged Quebec nationalists by insisting on naming CN’s then-flagship Montreal hotel after Queen Elizabeth.

Yet, in his post-CN career as chairman of the British Newfoundland Corp. (Brinco), Mr. Gordon led the negotiations that culminated in the 1969 Churchill Falls power contract, a deal that has seen Hydro-Québec pocket about $28-billion in profits on electricity purchased from Churchill Falls, compared to barely $2-billion for Newfoundland and Labrador. What looked in 1969 like a good deal for Brinco has turned out to be a bonanza for Quebec.

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Last week’s Supreme Court ruling upholding the validity of that contract ended nearly 40 years of litigation brought by successive Newfoundland governments seeking to rewrite the Churchill Falls deal. Hopefully, Quebec and Newfoundland will spend the almost 23 years that remain on the contract until it expires in 2041 on more constructive endeavours than mutual mud-slinging.

Indeed, Supreme Court Justice Clément Gascon, who wrote the majority 7-1 ruling in favour of Hydro-Québec, hinted at a way forward in noting that the Newfoundland government now controls an asset worth an impressive $20-billion. That asset is the massive 5,400-megawatt Churchill Falls generating station, of which Newfoundland bought majority control from Brinco in 1974 after then-premier Frank Moores threatened to nationalize the facility.

Newfoundland owns its 65.8 per cent stake in the Churchill Falls project through Churchill Falls (Labrador) Corp. Ltd. (CFLCo), while Hydro-Québec owns the remaining 34.2 per cent. As 2041 approaches, cash-strapped Newfoundland should start thinking of ways to monetize its stake in CFLCo instead of spending millions on lawsuits that it stands no chance of winning.

After all, two decades is not a long time in power-planning terms. And Hydro-Québec has an interest in preserving its access to Churchill Falls power, which it could never replace at anything close to what it now pays under the 1969 deal. Hydro-Québec faces a decision on whether to negotiate locking in access to Churchill Falls beyond 2041 or building new capacity of its own.

“It does take a long time to develop hydroelectric assets, so I would imagine the discussions around [Churchill Falls] will begin long in advance of 2041,” Newfoundland Natural Resources Minister Siobhán Coady told CBC News following Friday’s court decision.

Any future negotiations will benefit from the clarity provided by the Supreme Court ruling, which shatters once and for all several myths about the contract. Most of those myths involve the idea that Brinco negotiated under duress and that it was at the mercy of Hydro-Québec to transport power from Churchill Falls to markets in southern Canada and the United States.

Indeed, the Supreme Court noted that Brinco was run by “elite titans of industry,” reprising the expression used by former Quebec Superior Court judge Joel Silcoff, who first ruled on the case in 2014. Mr. Gordon, who died only weeks before the final contract was signed in 1969, was succeeded at Brinco by William Mulholland, a U.S.-born investment banker at Morgan Stanley who led the financing of Churchill Falls. Mr. Mulholland would later go on to become president and chief executive of the Bank of Montreal, Brinco’s main banker.

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Brinco itself was created in the 1950s at the urging of then-Newfoundland premier Joey Smallwood, who courted corporate leaders to develop mining and hydroelectric assets in Labrador. Its founding shareholders, including Rio Tinto Group and N.M. Rothchild & Sons of London Ltd., envisioned developing Churchill Falls in part to provide power to smelters in Labrador.

The Supreme Court ruling also shatters the myth that a 1966 letter of intent between Brinco and Hydro-Québec would have been far more advantageous for Newfoundland than the 1969 contract that was signed, as critics of the final deal contend. The 1969 contract provided for an automatic renewal of the original 40-year deal in 2016 for an additional 25 years “at a single fixed price slightly lower than the rate it was to pay at the end of the initial term.” In exchange, the court noted, Hydro-Québec undertook to guarantee any cost overruns on the construction of Churchill Falls. It was a good deal for Brinco, which got exactly what it expected out of the deal.

Subsequent disruptions in the energy market, including the 1970′s Arab oil embargo and public opposition to nuclear power, vastly enhanced the value of electricity produced at Churchill Falls. So much so that the power generating station is now worth a cool $20-billion, pegging Newfoundland’s stake in CFLCo at about $13-billion. That should be the starting point for talks with Quebec.

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