Senator slams PSC in deal
Schumer calls regulator “stone-headed” in wind stance against Iberdrola
U.S. Sen. Charles Schumer criticized the state Public Service Commission on Wednesday for requiring Spanish utility Iberdrola SA to sell its New York state wind farms before they’ll allow it to acquire Energy East Corp.
“This is one of the most amazing things that I’ve seen,” Schumer said. “The PSC is being very stone-headed and not being very practical.”
Iberdrola is the world’s largest wind farm developer. The company has maintained that developing wind projects in New York state is a key aspect of its $4.5 billion deal for Energy East, the parent company of New York State Electric & Gas and Rochester Gas & Electric.
The purchase needs the approval of the five commissioners of the PSC, the state body that oversees utilities.
But PSC staff, who provide recommendations to the commissioners, want Iberdrola to agree to a number of conditions as part of their approval.
One of the conditions is that Iberdrola get out of the wind power business in the state. In legal briefs filed before an administrative law judge, PSC staff have argued that Iberdrola as a utility would hold too much sway in the state’s deregulated wholesale electricity market if it also controls wind farms that generate and sell electricity.
In a conference call with reporters, Schumer said PSC staff’s demands were “misguided” and were putting the merger in jeopardy.
“This is absolutely absurd,” Schumer said. “The PSC has not offered a shred of evidence to support this claim.”
“We welcome the senator’s comments,” said PSC spokesman James Denn. “It is important to note that there are many aspects to this proceeding. Wind generation ownership is an aspect, along with other perhaps more significant issues, such as benefits for ratepayers and financial protections for the assets of the subsidiaries in New York. No final decisions have been made and the proceeding continues as expected.”
PSC staff have said Iberdrola must also sell upstate fossil fuel power plants and hydro power plants that it would acquire from Energy East. Schumer, meanwhile, wants Iberdrola to be able to keep Energy East’s Russell Station power plant near Rochester, a coal-fired plant that Energy East has pledged to convert to cleaner-burning natural gas.
Iberdrola has already offered PSC staff the sale of Russell Station and other fossil fuel plants as a concession. But Schumer says Iberdrola would keep rates lower for Rochester-area customers.
Schumer, though, was most outspoken about the benefits that Iberdrola’s experience and investment in wind generation would bring to the state. Iberdrola owns a 50 percent share of the Maple Ridge Wind Farm in Lewis County, the state’s largest wind farm. And it has plans for 10 more projects.
New York state also has an energy policy goal, known as the Renewable Portfolio Standard, to get 25 percent of its electricity from renewable sources like wind and hydro power by 2013. The state is currently at 19 percent.
“This (deal) presents a real opportunity to learn from the best, and make New York a center for wind energy,” Schumer said.
When asked why he would try to get the PSC to change its mind on a key component of the state’s deregulated market — the separation of generation and transmission — he said that policy has been a failure.
“It hasn’t worked very well,” Schumer said. “You have a unique situation here. The divestiture was supposed to bring lower rates. It hasn’t.”
Even with Schumer’s urging, Wall Street appears wary that the deal will get done. Iberdrola is offering Energy East $28.50 in cash per share. But shares of Energy East (NYSE: EAS) ended trading Wednesday at $22.80, only slightly more than they were trading at just before the merger was announced last July.
By Larry Rulison
Business Writer
1 May 2008
Tags: Wind power, Wind energy
Some possibly related stories:
- Sen. Schumer to meet with PSC chairman about Iberdrola bid
- Judge against power venture; Arbiter says current Iberdrola deal does not benefit public, recommends conditions
- Schumer presses for utility-merger deal
- Schumer heightens pressure to approve Iberdrola deal
- New York PSC sets meetings on Iberdrola, Energy East
- Judge urges regulators to deny sale of Energy East
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