REG - Hydro-Quebec. - Further re (additional disclosures)
Regulatory Announcement
Hydro-Québec
November 16, 2018
Re: Hydro-Québec Additional Disclosures to the Annual Report on Form 18-K for the fiscal year ended December 31, 2017 - Third Quarter 2018
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This document is also available as follows:
- by writing to the Director - International Financing, Cash and Financial Services; Hydro‑Québec, 75 René‑Levesque Boulevard West, 6th Floor, Montréal, Québec, Canada H2Z 1A4.
For further information, please contact:
Stéphane Pépin
Director - International Financing, Cash and Financial Services
Hydro‑Québec
Telephone Number: 1-514-289-2210
Fax Number: 1-514-289-5143
ADDITIONAL DISCLOSURES TO THE ANNUAL REPORT ON FORM 18-K FOR THE FISCAL YEAR ENDED DECEMBER 31, 2017:
Exhibit 99.5
Additional disclosure to the Annual Report under the heading "Wholesale and Energy Marketing Operations - Markets Outside Québec"; and
Exhibit 99.6
Additional disclosure to the Annual Report under the heading "Litigation - CF(L)Co".
The following statements amend the Annual Report on Form 18-K for the fiscal year ended December 31, 2017:
EXHIBIT 99.5
The two last paragraphs of the section "Markets Outside Québec" on page 13 of the Exhibit 99.1 are hereby replaced with the following:
In 2017, Massachusetts Electric Distribution Companies ("EDC") issued a request for proposals for the supply of clean energy. On January 25, 2018 the EDC's evaluation team selected us and the Northern Pass Transmission ("NPT") line project led by our partner, Eversource Energy, for the supply of 9.45 TWh of clean hydroelectricity power over a 20-year period. In Québec, the NPT project involves the construction of a 1,090-MW transmission line about 80 km long. We expect this line to be extended into the United States and to connect the Des Cantons substation to Franklin substation in southern New Hampshire. On February 1, 2018, New Hampshire denied Eversource Energy the necessary construction permit for the construction of the NPT project. On February 16, 2018, the EDC's evaluation team indicated that it would continue negotiations until March 27, 2018 with NPT with the option of ceasing discussions.
EDC's evaluation team also indicated that negotiations would be conducted with the promoters of another transmission line project called New England Clean Energy Connect ("NECEC") in which we are also a partner. The NECEC project involves the construction of a new 1,200-MW transmission line from the Québec-Maine border to the town of Lewiston, Maine. On February 28, 2018, Eversource Energy filed a motion for rehearing and a request to vacate the New Hampshire decision. On March 12, 2018, New Hampshire suspended its oral ruling, but without issuing the required permit for the NPT project.
On March 28, 2018, EDC announced that it would pursue negotiations with Hydro-Québec and Central Maine Power ("CMP"), proponents of the NECEC project, regarding the construction of a new transmission line in Maine that will interconnect the Quebec and New England power systems. On June 14, 2018, Hydro-Québec and CMP jointly announced the successful conclusion of contract negotiations with EDC for the NECEC 100 percent hydropower project. In July 2018, EDC filed the agreements with the Massachusetts Department of Public Utilities, pursuant to the Massachusetts 83D Clean Energy Request for Proposals. Regulatory review is currently underway in Massachusetts to approve the commercial agreement and, in Maine, to obtain permits required to build the NECEC. At this stage, we are awaiting further developments.
EXHIBIT 99.6
The disclosure under the heading "Litigation - CF(L)Co" on page 25 of the Exhibit 99.1 is hereby replaced with the following:
On February 23, 2010, CF(L)Co instituted proceedings against Hydro-Québec seeking the modification, effective as of November 30, 2009, of the pricing terms under the 1969 Power Contract by increasing the contract price payable by Hydro-Québec to CF(L)Co. Alternatively, CF(L)Co is seeking the termination of the 1969 Power Contract. On two prior occasions CF(L)Co and its affiliates have attempted to challenge Hydro-Québec's rights under the 1969 Power Contract. The Supreme Court of Canada ruled in favour of Hydro-Québec on both occasions. In the most recent challenge, the Québec Superior Court rendered its decision on July 24, 2014, dismissing CF(L)Co's request and confirming Hydro-Québec's rights under the 1969 Power Contract. CF(L)Co appealed the judgment before the Québec Court of Appeal. The Court of Appeal dismissed CF(L)Co's appeal and confirmed the Superior Court decision on August 1, 2016. On April 20, 2017, the Supreme Court of Canada granted to CF(L)Co a leave to appeal. On November 2, 2018, the Supreme Court of Canada confirmed the Québec Court of Appeal decision and rejected CF(L)Co's request for a revision of the pricing terms under the 1969 Power Contract.
On July 22, 2013, Hydro-Québec filed legal proceedings against CF(L)Co before the Québec Superior Court in order to determine the interpretation of two essential Hydro-Québec rights, set forth in the 1969 Power Contract. On August 8, 2016, the Québec Superior Court rendered its decision (this decision was corrected on November 8, 2016 with no changes to its conclusions), confirming Hydro-Québec's rights. On September 7, 2016, CF(L)Co appealed the decision before the Québec Court of Appeal. The Court of appeal hearing is expected to be held in December of 2018.
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