Probably as many New Yorkers think the state Public Service Commission is in charge of TV public-service announcements as know that it oversees the companies that provide electric and natural-gas service to citizens of the state.
But they will likely be hearing more about the commission in the next few years, if the cost of oil continues its climb and finding alternative sources of energy becomes even more critical.
The five-member commission next month has a key decision to make: whether to allow a large Spanish energy company, Iberdrola, to buy Energy East, the corporation that owns Rochester Gas and Electric Corp. and New York State Electric and Gas, which between them serve 1.3 million upstate homes, farms and businesses. Price tag: $4.5 billion.
The staff of the commission has recommended that the board turn thumbs down, partly because it would give one company control of not only the wires and pipes that carry gas and electricity to customers but also some power plants and other facilities that generate the electricity.
“Full divestiture of all the generation Iberdrola and Energy East own, and their complete exit from the generation business in New York, is needed to fully protect ratepayers from the pernicious effects of vertical market power,'” according to a staff report on the plan.
The “pernicious effects of vertical market power” was one thing the commission tried to eliminate in the 1990s when it voted to force utilities to sell most of their power plants to independent entities.
The idea was that if other companies got involved in generating electricity, it would increase competition and lower rates.
Everyone hoped that deregulating the energy business would be as successful as unshackling the telecommunications industry proved to be. Remember the days when long- distance phone calls were expensive, multiple phones in the same house cost extra money every month and it could take weeks to get a new phone installed? Deregulation helped to slay those dragons.
It hasn’t worked out as well in the energy field. Prices haven’t gone down for the most part, with the skyrocketing cost of oil and gas that still generates much of the electricity in the state playing a large role. New Yorkers still pay more for their electricity than almost all other Americans east of Hawaii – a fact often cited by manufacturers and other business leaders when they talk about New York’s tough business environment.
One of the great lures of the Iberdrola proposal is that it calls for building 10 wind farms around the state that would add almost 1,000 megawatts in power. (A megawatt is enough power to supply about 1,000 homes.) The company also owns half of the 321-megawatt Maple Ridge Wind Farm in Lewis County.
“We need as much wind as we can get in New York,” said Iberdrola’s Pedro Azagara. “The new (energy) capacity we need has to come from somewhere.”
The investment in wind energy would help the state get closer to meeting its goal of generating 25 percent of its electricity by renewable resources (mostly hydropower, sun and wind) by some time in the next decade.
And it turns out New York is a pretty good place for wind generation, Azagara said. New York overall is 30 percent windier than Europe, he said, where Iberdrola has major wind facilities.
But that promise of more wind power runs into the commission’s stance that generators and distributors should be separate.
Unlike most states that depend largely on coal to generate electricity, New York has a healthy mix of fuels: 30 percent natural gas, 23 percent nuclear, 14 percent hydropower, 14 percent coal, 8 percent oil, 7 percent imported and 2 percent renewables, according to the state Energy Association, a trade group.
There is no way in the near future that renewables will become a significant part of the mix, but Azagara makes the point that it’s still the best direction to go, and Iberdrola is ready to give it a shove that way.
The commission – five members appointed by the governor and confirmed by the Senate – is expected to decide the issue next month.
They are not as visible as state lawmakers since they don’t have to run for office. But in a time when energy issues are becoming ever more crucial, New Yorkers are depending more than ever on their judgment.
25 May 2008
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