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Iberdrola: Vote on $4.5B merger

Spanish utility wants PSC to hold meeting to decide on company’s deal to acquire Energy East

Lawyers for Iberdrola SA are pushing the Public Service Commission to vote on the proposed $4.5 billion merger with Energy East Corp. before its next meeting, which is scheduled for Aug. 20.

The Spanish utility has made a well-publicized bid for Maine-based Energy East, which has 1.3 million customers in upstate New York through its Rochester Gas & Electric and New York State Electric & Gas subsidiaries.

The PSC has been considering the merger for 12 months through a lengthy legal process that involves an administrative law judge and evidentiary hearings, much like a trial.

In the past, Iberdrola told shareholders it hoped to finalize the deal by the end of June.

But the company and the staff at the Department of Public Service, the agency that advises the PSC, have been far apart on several issues regarding the merger, including whether Iberdrola should be allowed to own wind farms in the state.

Settlement talks broke down earlier this year. And the judge overseeing the case made a recommendation in June calling on the state to limit Iberdrola’s wind development to outside Energy East’s service territory in New York.

Now the PSC commissioners must take up the case themselves; they don’t have to follow the judge’s recommendations.

On July 14, the law firm representing Iberdrola wrote the PSC asking commissioners to hold a special meeting by the end of July.

“The joint petitioners respectfully submit that there is no reason for any further delay in decision-making in this proceeding and, therefore, request that the commission undertake to render its decision before the end of July 2008, including through a special session if need be,” wrote Stanley Widger Jr. an attorney with Nixon Peabody LLP.

PSC spokesman Jim Denn said no special session has been announced.

Meanwhile, Iberdrola Chairman Ignacio Galan on Thursday told shareholders and analysts during a mid-year conference call that the company believes the merger “will be resolved soon.”

Galan also said that Iberdrola will not accept any regulatory limits on its ability to build or own wind farms in New York.

Iberdrola is a 50 percent owner of the Maple Ridge Wind Farm in Lewis County, the state’s largest, and plans to invest up to $2 billion in New York wind farms over the next five years.

Staff at the Department of Public Service have argued that if Iberdrola – the world’s largest wind developer – were able to own both electric generation and transmission, it would hold too much sway over the state’s wholesale power market.

Over the past decade, the PSC has pushed electric utilities out of the generation market by having them sell off power plants. The goal is to create a more competitive marketplace for electricity. Iberdrola has argued that wind power is too unpredictable a source to manipulate the market.

The utility has also said it will help the state reach its ambitious goal of 25 percent renewable energy by 2013. As a result, Gov. David Paterson and other state political leaders have urged the PSC to approve the deal.

“Our position is very clear,” Galan said during Thursday’s conference call. “We’ve gone to the United States with a fundamental priority in our minds, and that is to implement renewables, basically wind power. Any constraints that are applied in that regard, our reply will be no. We do not want to have any limitations in terms of our wind power.” Rulison can be reached at 454-5504 or by e-mail at lrulison@timesunion.com.

Previously:Iberdrola SA, a Spanish utility, has been seeking approval from the five-member state Public Service Commission to acquire Energy East Corp. in a $4.5 billion deal.

The latest:After months of evidentiary hearings and legal briefs filed as part of the case, lawyers for Iberdrola want the PSC to vote on the merger by the end of the month.

What’s next:That lies with the PSC. Commissioners could decide on the merger at their next meeting, set for Aug. 20, or could call a special session.

By Larry Rulison
Business Writer

Times Union

25 July 2008