Iberdrola SA’s $4.5B buyout of NYSEG parent is backed by state agencies despite objections of PSC staff
The state’s environmental and economic development agencies are supporting Iberdrola SA’s $4.5 billion acquisition of Energy East Corp. despite objections by the staff at the Public Service Commission.
The support could prove vital to Iberdrola’s bid to acquire Energy East, which serves 1.2 million people in upstate New York through subsidiaries New York State Electric & Gas and Rochester Gas & Electric. That includes about 45,000 NYSEG customers in the Capital Region.
Iberdrola first brought the merger proposal to the PSC in August, seeking approval within six months.
But the deal has met firm opposition from the PSC staff, which wants Iberdrola to reduce rates and sell its wind farm projects and the power plants it would acquire from Energy East.
The PSC is the state agency that regulates utilities and telecommunication firms in New York. A five-person board votes on all decisions, but it’s the staff that manages the day-to-day operations of the department and provides recommendations to commission members.
A hearing on the merger is scheduled Feb. 25. But following news reports that Iberdrola may be the target of a hostile takeover by France’s largest utility and possibly others, the PSC staff has asked an administrative law judge overseeing the case to postpone the hearing.
Iberdrola has resisted the move, and no decision by the judge was announced as of Tuesday afternoon.
The PSC staff has expressed concern that if Iberdrola were to keep and expand its wind farms and power plants in New York, it would hold too much control over the wholesale electricity market and discourage other wind developers from entering the state. Iberdrola has denied that claim.
Although the PSC staff has firmly opposed the deal as currently structured, the state Department of Environmental Conservation and Empire State Development Corp., the state’s economic development arm, submitted testimony to the PSC saying the deal has merit.
Testimony by J. Jared Snyder, an assistant commissioner at the DEC, said Iberdrola could help promote Gov. Spitzer’s renewable energy policies. The governor has sought to reduce greenhouse gases and energy consumption in the state while also increasing the amount of renewable energy generation, including wind power.
“We would like to suggest that the PSC not automatically foreclose Iberdrola’s development and ownership of wind energy holdings in New York state and that it find a way to work with Iberdrola in encouraging more wind energy projects,” Snyder said.
Iberdrola is part-owner of the Maple Ridge Wind Farm in Lewis County, which at 321 megawatts is the largest in the state. It is also developing a wind farm in Herkimer County.
Daniel Gundersen, upstate chairman for Empire State Development, submitted a statement to the PSC saying the merger offers “a number of key economic development benefits” that would help Spitzer’s efforts to stimulate the upstate economy. “Iberdrola’s current investment in the development and operation of wind projects in the state represents the type and quality of private-sector investment the state requires to diversify its renewable fuels portfolio with the objective of putting downward pressure on energy rates over the long term,” Gundersen wrote.
The PSC has declined to comment since the case is pending. Iberdrola released a statement Tuesday that the merger “will create jobs, help New York state achieve its renewable energy goals, help ratepayers and strengthen the upstate economy.”
By Larry Rulison
13 February 2008
|Wind Watch relies entirely
on User Funding