First Session, 47th

General Assembly

61 Elizabeth II,

BILL 53

AN ACT TO AMEND THE CHURCHILL

FALLS ( LABRADOR ) CORPORATION LIMITED (LEASE)

ACT, 1961 AND THE ELECTRICAL POWER CONTROL ACT, 1994

Received and Read the First Time ...................................................................................................

Second Reading .................................................................................................................................

Committee ............................................................................................................................................

Third Reading .....................................................................................................................................

Royal Assent ......................................................................................................................................

HONOURABLE JEROME

P. KENNEDY, Q.C.

Minister of Natural

Resources

Ordered to be printed by

the Honourable House of Assembly

EXPLANATORY NOTE

This Bill would amend The Churchill Falls (Labrador) Corporation Limited

(Lease) Act, 1961 and the Electrical

Power Control Act, 1994 to enable the implementation of a Labrador

industrial rate policy.

A BILL

AN ACT TO AMEND THE CHURCHILL FALLS ( LABRADOR ) CORPORATION LIMITED (LEASE) ACT, 1961 AND THE

ELECTRICAL POWER CONTROL ACT, 1994

Analysis

THE

CHURCHILL FALLS ( LABRADOR ) CORPORATION LIMITED

(LEASE) ACT, 1961

S.7 Amdt.

The Public Utilities Act, 1964, not to apply in certain cases

ELECTRICAL

POWER CONTROL ACT, 1994

2. S.3 Amdt.

Power policy

S.5.1 R&S

Direction to board

4. Ss.5.8 and 5.9 Added

5.8 Act to apply

5.9 The Churchill Falls

( Labrador )

Corporation

Limited (Lease)

Act, 1961

Be it enacted by the Lieutenant-Governor and

House of Assembly in Legislative Session convened, as follows:

THE CHURCHILL

FALLS ( LABRADOR ) CORPORATION

LIMITED (LEASE)

ACT, 1961

SNL1961 c51

as amended

Section 7 of

The Churchill Falls (Labrador) Corporation Limited (Lease) Act, 1961 is

amended by renumbering it as subsection 7(1), and by adding immediately after that

subsection the following:

(2) Paragraph (1)(a), subparagraph (1)(b)(iii) and

paragraph (1)(

c) shall cease to apply on January 1, 2015.

(3) Subparagraph (1)(b)(ii) shall cease to apply

as of January 1, 2015 in respect of an amount of electrical energy and capacity

equal to 225,000 kW at 100% load factor at the 230 kV busbar located at the

Churchill Falls (Labrador) Corporation Limited switchyard in Churchill Falls,

but in all other respects that subparagraph shall remain in effect.

ELECTRICAL POWER CONTROL ACT, 1994

SNL1994 cE-5.1

as amended

2. Paragraph 3(

a) of the Electrical Power Control Act, 1994 is amended by deleting the word

"and" at the end of subparagraph (iii), by deleting the semi-colon at

the end of subparagraph (iv) and substituting a comma and the word

"and", and by adding immediately after that subparagraph the

following:

(

v) should promote the development of industrial

activity in Labrador ;

Section 5.1 of the Act is repealed and the

following substituted:

Direction to

board

5.1 Notwithstanding

sections 3 and 4 of the Act and the provisions of the Public Utilities Act, the Lieutenant-Governor in Council may

direct the public utilities board with respect to the policies and procedures

to be implemented by the board with respect to the determination of rate

structures of public utilities under the

Public Utilities Act and, without limiting the generality of the foregoing,

including direction on the setting and subsidization of rural rates, the

setting of industrial rates in Labrador, the fixing of a debt-equity ratio for

Hydro, and the phase in, over a period of years from the date of coming into

force of this section, of a rate of return determination for Hydro, and the

board shall implement those policies and procedures.

4. The Act is amended by adding immediately after

section 5.7 the following:

Act to apply

5.8

(1) Notwithstanding

section 7 of The Churchill Falls (Labrador)

Corporation Limited (Lease) Act, 1961 , as of January 1, 2015, the Public Utilities Act shall apply to all transmission

lines and related assets located in Labrador, except

(

a) those in relation to the supply of

hydro-electric power described in subparagraph 7(1)(b)(

i) of The Churchill Falls (Labrador) Corporation

Limited (Lease) Act, 1961 ; and

(

b) those included in the Muskrat Falls Project.

(2) The Public

Utilities Act shall not apply to the setting of electricity rates for

industrial customers in Labrador other than

the transmission components of those rates, which shall be regulated under subsection

(1).

(3) The public utilities board may receive

applications, hear evidence and make rulings in respect of a matter that will

come into its jurisdiction as a result of subsection (1) or subsections 7(2)

and (3) of The Churchill Falls (Labrador)

Corporation Limited (Lease) Act, 1961 before January 1, 2015, but an order

made by the public utilities board as a result of that application or hearing

shall not have effect until on or after January 1, 2015.

The Churchill Falls ( Labrador )

Corporation Limited (Lease) Act, 1961

5.9

(1) Where

Churchill Falls (Labrador) Corporation Limited and Newfoundland and Labrador

Hydro cannot reach an agreement for the sale and purchase of the electrical

energy and capacity described in subsection 7(3) of The Churchill Falls (Labrador) Corporation Limited (Lease) Act, 1961 within

a reasonable time, either party may apply to the public utilities board to establish

the rate to be charged and paid under an agreement.

(2) Where an application is made to the public

utilities board under subsection (1), the public utilities board shall

establish the rate to be charged and paid under an agreement, taking into

account the submissions of the parties and the following:

(

a) Churchill Falls ( Labrador )

Corporation Limited's requirements for price stability and sufficient revenues

to cover anticipated costs;

(

b) the proportionality of the volume of energy

under an agreement to Churchill Falls ( Labrador )

Corporation Limited's total volume of energy produced;

(

c) the terms of the Churchill Falls ( Labrador ) Corporation Limited's shareholders agreement;

(

d) other prices received by Churchill Falls ( Labrador ) Corporation Limited for sale of electrical

energy and capacity; and

(

e) the policy objective set out in subparagraph

3(a)(v), and the achievement of that policy objective.

(3) The rate established by the board under

subsection (2)

(

a) shall be indexed to and adjusted annually for

inflation, and the nature of that adjustment may be established by the public

utilities board as appropriate for the industry;

(

b) shall be binding on Churchill Falls (Labrador)

Corporation Limited and Newfoundland and Labrador Hydro, but may be amended or

changed by the parties by agreement without the prior approval of the public

utilities board; and

(

c) may be increased by the public utilities board

at any time the rate is less than 50% of the blended Labrador industrial generation

rate, upon application by Churchill Falls ( Labrador )

Corporation Limited, at the discretion of the public utilities board.

Queen's Printer