New York bows out of hydro deal; Cree claim victory.

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New York state cancelled its $17-billion contract to buy electricity from Quebec's controversial Great Whale hydro-electric project.

Cree leaders in northern Quebec greeted the news as a major victory. But Hydro-Quebec, the provincial power company, said construction of the mega-project will start on schedule in 1993.

"Don't assume this deal is cancelled forever and don't assume that Great Whale will not be built," said Pierre Bolduc, the Hydro-Quebec official who negotiated the power deal with New York.

New York governor Mario Cuomo said the state decided to back out of the agreement because its needs have changed since the deal was signed in 1989.

Three years ago, the New York Power Authority predicted the state would be facing an electricity crunch over the next decade. Since then, the state has successfully promoted energy conservation, reducing the growth in demand by almost half. State regulations have also been changed to allow small independent power producers to generate electricity using natural gas.

We do not need new electricity generating capacity until after the turn of the century," Cuomo said in a media statement. "(Hydro-Quebec's prices) are no longer competitive...and won't be for another five to 10 years."

Cree Grand Chief Matthew Coon-Come, who helped mount a massive campaign against Great Whale, described the contract announcement as a "major blow" to the project,.

"I doubt very much the project will go ahead," he said. "Quebec Premier Robert Bourassa) will have a hard time because he needs the American dollars, the American investment and the American contracts to proceed with Great Whale."

Bill Namagoose, executive director of the Grand Council of the Cree called the New York decision a victory for the little guy.

"I'm beginning to hope for the power of the grass roots," he said. "It was a long shot, but we hit the target's bullseye."

But Bolduc cautioned the Cree against celebrating too quickly. He said Quebec's energy needs make the project a necessity and that New York may want to buy power again in the future.

"New York Power Authority has told us they still want to buy energy from Quebec and they may very well come back to the bargaining table in a couple of years.

Cuomo said he isn't ruling out purchases from Hydro-Quebec in the future "if the cost is competitive, the need exists and the appropriate environmental reviews for a new facility have been conducted.