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More calls for PSC change; Elected officials fear agency’s handling of Iberdrola proposal will limit wind development

A Rochester-area Democrat is joining state Senate Majority Leader Joseph L. Bruno in calling for reform of the Public Service Commission.

Assemblyman Joseph Morelle, D-Irondequoit, says he is preparing legislation to re-evaluate the role of the five-member PSC and its staff, known as the Department of Public Service.

Morelle and Bruno expressed outrage this week when an administrative law judge urged the PSC to place significant conditions on Spanish utility Iberdrola SA in its $4.5 billion acquisition of Energy East Corp.

Based in Maine, Energy East has 1.3 million customers in upstate New York through its Rochester Gas & Electric and New York State Electric & Gas subsidiaries. The RG&E and NYSEG service area reaches from Rochester to Binghamton and to parts of the Capital Region and the North Country.

Legislative leaders from both political parties, as well as U.S. Sen. Charles Schumer, D-N.Y., have been critical of the PSC’s handling of the case.

The commissioners, who are appointed by the governor, have yet to vote on the merger or even discuss it.

But as part of the proceeding, staff at the Department of Public Service have opposed the merger on several grounds and called for a number of conditions to be placed on the deal.

The staff have urged PSC members to ban Iberdrola, the world’s largest wind developer, from owning or building electric generation in the state. They have also asked Iberdrola to set aside $640 million in customer benefits, although Iberdrola has only offered $200 million.

The judge overseeing the case, Rafael Epstein, recommended on Monday that the PSC ask Iberdrola for the full $640 million in customer benefits.

Epstein also wants to ban Iberdrola from owning or building power generation, including wind turbines, within the RG&E and NYSEG territories.

Bruno and others say limiting Iberdrola’s wind development in the state would be foolish because Iberdrola wants to invest $2 billion in wind projects in New York over the next five years.

Gov. David Paterson, an advocate of renewable energy, has pointed out the judge’s ruling is not binding. In a statement, Paterson said he is specifically focused on Iberdrola’s $2 billion wind development plan.

Paterson called the $200 million in customer benefits Iberdrola has already offered to consumers “significant” and hopes commissioners “would not let the perfect be the enemy of the good” when it comes to the final amount they request.

The PSC meets next on July 16, though a vote on the Iberdrola case hasn’t yet been scheduled.

Assemblyman Morelle said in a statement he wants the “scope and authority” given to the PSC and the Department of Public Service to be examined in light of the state’s deregulated energy market.

“Over the last 12 years, New York’s energy industry has gone through a massive and unprecedented restructuring designed by bureaucrats without a single legislative act,” he said.

By Larry Rulison
Business writer

Times Union

21 June 2008