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NEW YORK POWER AUTHORITY CHAIRMAN ANNOUNCES TERMINATION OF QUEBEC PACT

NEW YORK POWER AUTHORITY CHAIRMAN ANNOUNCES TERMINATION OF QUEBEC PACT
 NEW YORK, March 27 /PRNewswire/ -- New York Power Authority Chairman Richard M. Flynn announced today he had terminated a contract for the purchase of 1 million kilowatts (kw) of hydroelectric power from Hydro-Quebec.
 Flynn said economic considerations led to cancellation of the agreement, signed in 1989.
 "Our goal in reopened negotiations with Hydro-Quebec was to achieve economic benefits for New York ratepayers comparable to those originally projected under the 1989 contract," Flynn said. "We proposed a price that was competitive based on current changed realities in New York State. Unfortunately, Hydro-Quebec concluded that it could not agree to a new price at this time."
 When Flynn signed the contract three years ago, savings were expected to be about $3 billion over 21 years beginning in 1995.
 "But in the utility business circumstances can, and often do, change," Flynn said. "I recognized that an 'escape clause' included in the contract would, if necessary, give us the opportunity to reevaluate all aspects of the agreement before committing to going forward."
 By last August, when Flynn negotiated an 11-month delay in the deadline for a final decision on the contract, it was clear the economics had changed significantly. Key factors in the change, he said, were sizable increases in the projected roles of energy conservation and independent power production and a sharp decrease in forecasted prices for oil and natural gas.
 The Power Authority chairman said he had consistently pledged that he would not sign a contract unless New York needed the power, it was environmentally positive and it made economic sense.
 He said the projected conservation and independent power contributions had pushed off until at least 2000 the need for more generating capacity for New York.
 Flynn noted that Hydro-Quebec had indicated it would be unable to supply the power until 2001, so the contract's start would have been delayed until about the turn of the century.
 He said he was pleased that environmental issues on both sides of the border are being thoroughly considered.
 "I insisted on full and fair environmental reviews under Canadian procedures for any projects Hyro-Quebec would build to help meet our contract," said Flynn. "I stated repeatedly that we would not buy a single kilowatt unless this condition was met."
 "I am confident that sophisticated, thorough review processes are in place and will include the full participation of the Native People of Northern Quebec," he said. "And I am proud that the New York Power Authority helped make that happen."
 He also noted that, at Gov. Mario M. Cuomo's direction, the State Department of Environmental Conservation has been examining the Quebec power's air-quality benefits to New York.
 Flynn said the three utilities that would have received most of the power -- Con Edison, the Long Island Lighting Co. and Orange and Rockland -- supported the decision to terminate the contract.
 The utilities would have received a total of 800,000 kw for resale to their customers without profit. The Power Authority would have supplied the remaining 200,000 kw to its government customers in New York City and Westchester County.
 Flynn said the Power Authority's review of the contract had established "a model for effective pricing for New York State electricity supplies."
 "We have carefully assessed need and benefits and environmental issues, using the most up-to-date, reliable information," Flynn said. "I am confident that our decision is sound and that it accurately reflects the current competitive realities in New York."
 The contract termination ends a process that began in January 1988 when the Power Authority agreed in principle with Hydro-Quebec to buy the power. Flynn and Hydro-Quebec Chairman Richard Drouin signed the contract at a New York City ceremony in April 1989.
 Two years later, responding to Canadian news reports that Hydro- Quebec might seek to truncate environmental review of new power plants needed to meet the contract, Flynn wrote to Drouin to insist on "full and proper" reviews.
 Last August, when agreement was reached to extend the deadline for a final decision on the contract, Hydro-Quebec announced that it would not begin work on roads and other infrastructure for its proposed Great Whale Project until the entire project had undergone environmental review.
 In January of this year, the governments of Canada and Quebec signed a memorandum of understanding with the Cree and the Inuit of the James Bay region to coordinate the environmental reviews.
 -0- 3/27/92
 CONTACT: Stephen Shoenholz of the New York Power Authority, 212-468-6313; after office hours, 201-568-7565/ CO: New York Power Authority; Hydro-Quebec ST: New York, Quebec IN: UTI SU:


TQ -- NY060 -- 2532 03/27/92 16:57 EST
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Date:Mar 27, 1992
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