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$2B plan for wind farms; Proposal arrives as Iberdrola awaits PSC approval on $4.5B Energy East deal

Iberdrola SA said Tuesday it wants to invest $2 billion in as many as 10 new wind farms in New York state within the next five years.

That’s assuming the state Public Service Commission approves the Spanish utility’s $4.5 billion bid to acquire Energy East Corp.

Iberdrola executives made the announcement at the Empire State Plaza, just a short walk from the PSC offices.

“The only thing that we want is to invest as much as we can here,” said Pedro Azagra, Iberdrola’s director of corporate development.

Whether Iberdrola will be able to invest in new wind projects here remains to be seen.

An administrative law judge is expected to issue a recommendation soon to the five PSC commissioners. The panel could vote on the case as early as June 18, although it seems more likely now that the vote will take place at the PSC’s July 16 meeting.

But PSC staff, who offer advice to the commissioners and run the agency’s day-to-day operations, have opposed the Iberdrola merger as currently structured on several fronts. They want Iberdrola to get out of the wind energy business in the state, and they want Iberdrola to offer more concessions and protections to consumers.

Iberdrola has offered $201 million in ratepayer benefits, while PSC staff is asking for about $644 million. Energy East serves 1.3 million customers in upstate New York through its New York State Electric & Gas and Rochester Gas & Electric subsidiaries.

Iberdrola has consistently said that getting out of the wind business would be a deal-breaker. Not only does it want to invest $2 billion in wind projects in New York state, but it is already a 50 percent owner in the Maple Ridge Wind Farm in Lewis County, the state’s largest wind farm.

Azagra said Tuesday’s announcement was “unrelated” to the pending decision by the judge, Rafael Epstein.

“It’s just to show what we’re willing to do in New York,” Azagra said. “The timing is what it is. We are all waiting for the judge to come out (with his decision).”

Azagra and other Iberdrola executives were joined by state political and business leaders who also support Iberdrola’s purchase of Energy East, saying it will bring jobs and investment to upstate New York.

“I want to urge the PSC to approve this deal as soon as possible,” said Kenneth Adams, president of the Business Council of New York State. “It is such a good deal for the state on so many levels.”

Brian McMahon, executive director of the New York State Economic Development Council, said he hopes the PSC approves the deal because it will send a message to those who believe that New York’s a tough place to do business.

“If New York doesn’t, then it just adds to our reputation for having an inhospitable regulatory environment,” McMahon said.

Shortly after the news conference, James Denn, a PSC spokesman, issued the following statement:

“We are pleased and encouraged by Iberdrola’s announcement that it wants to make future investments in New York,” he said. “We expect there will be a recommended decision from the administrative law judge in the near future. Obviously, the recommended decision will not include this development because it is not part of the proceeding’s very extensive record, but Iberdrola could choose to bring this proposal to the commission before it makes its ultimate final determination in the future.”

By Larry Rulison
Business Writer

Times Union

4 June 2008