Attorneys at the state Public Service Commission were scrambling this week to postpone hearings over the $4.5 billion acquisition of Energy East Corp. by the Spanish utility Iberdrola SA.
Headquartered in Maine, Energy East has 3 million customers in New York and New England. Its Rochester-based utility, New York State Electric & Gas, has 45,000 customers in the Capital Region.
Iberdrola originally came to the PSC in August seeking approval of the deal. Hearings were scheduled to begin Feb. 25.
However, late last month, several news reports said that Iberdrola was the target of a hostile takeover bid by France’s largest utility, Electricite de France, with possible help from a Spanish construction company called Actividades de Construccion y Servicios SA. Other reports said that Germany’s largest utility, E.ON AG, was also interested in acquiring Iberdrola.
On Tuesday, staff attorneys at the PSC made a motion to an administrative judge overseeing the hearing process, asking him to indefinitely suspend the hearings until more information can be uncovered about Iberdrola’s possible suitors. PSC staff is seeking an answer by Feb. 19.
“Indeed, it is uncertain if Iberdrola will even continue to exist if the hostile takeover is consummated,” staff wrote. “It may not be possible for this proceeding to go forward in the face of this uncertainty.”
In filings made Thursday in response to PCS staff’s postponement motion, Iberdrola and Energy East were defiant.
“Staff’s motion is unnecessary and should be rejected because there has been no offer or bid made, or agreement reached, to acquire the stock of, or obtain a controlling interest in, Iberdrola,” lawyers for Iberdrola and Energy East wrote.
The companies also argued that even if a bid to acquire Iberdrola were to actually materialize, then the PSC staff would be able to react at that point.
“In such an event, the commission and staff would have the ability to fully evaluate the impact of any such proposed evaluation,” the companies said.
Staff at the PSC, which regulates the state’s energy and telecom utilities, perform its day-to-day tasks and make recommendations to the PSC’s board of five commissioners, which have the final say in such cases.
In previous filings, PSC staff have been critical of Iberdrola’s bid to acquire Energy East and suggested that the company needed to provide more consumer benefits. They said it also needed to shed its wind farms in New York and the power plants already owned by Energy East in the state.
Iberdrola,in its response Thursday, also included in its filing a letter from ACS, the Spanish construction company, that said that it “has held discussions” with Electricite de France “about its interest in Iberdrola,” but no agreement was reached.
Iberdrola officials declined to comment beyond its filing, and PSC staff will not comment in the middle of merger cases.
By Larry Rulison
9 February 2008
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