A company based in Spain said Tuesday that it hopes to invest $2 billion in wind energy in New York over the next five years if regulators approve its purchase of Energy East Corp., which serves four Northeastern states.
The global energy company Iberdrola SA needs approval from New York’s Public Service Commission to buy Energy East for $4.6 billion. The deal would affect 3 million customers from upstate New York to Maine and would put Rochester Electric and Gas Corp. and New York State Electric & Gas Corp. under foreign ownership.
In New York’s Capital Region, NYSEG serves parts of Saratoga and Rensselaer counties.
The company has received regulatory approvals from the other states and the federal government for its proposal, which includes a Rochester headquarters for the Northeast operation. New York’s Department of Environmental Conservation and economic development offices have also endorsed the proposal.
“Iberdrola has helped many countries meet their renewable energy goals and benefit from our high-tech investments and ‘green collar’ jobs that result from this kind of investment,” said Iberdrola’s Xabier Viteri.
Although New York officials support expansion into renewable energy to reduce costs and create jobs, the deal is questioned by state regulators who are concerned about whether it will best serve the public in cost and competitiveness.
In court briefs filed in April before Administrative Law Judge Rafael Epstein, staff of the Department of Public Service argued that if Iberdrola is allowed to own wind energy farms within the electrical service territories it would acquire from Energy East Corp. it could enable Iberdrola to exert “vertical market power” over the price of wholesale electricity generated by wind farms in that area.
The PSC staff have also questioned whether the deal adequately shields New York customers from paying for Iberdrola’s other business ventures. And they are concerned that the Spanish company’s financial records might not be fully available to state regulators, making it difficult to enforce measures to ensure the system is reliable and responsive to customers.
The PSC is awaiting Epstein’s preliminary recommendation, which the PSC can accept, reject or amend after a 35-day comment period and further staff comment, said James Denn, spokesman for the commission.
“We are pleased and encouraged by Iberdrola’s announcement that it wants to make future investments in New York,” Denn 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.”
The process is now in its 10th month and on schedule, Denn said. Another recent utility merger took 13 months.
U.S. Sen. Charles Schumer has said he worries customers in New York might face higher bills and service problems, as in the 2002 acquisition of Syracuse-based Niagara Mohawk Corp. by the British firm National Grid.
After Tuesday’s announcement, Schumer said he’s still concerned about rate hikes, but he supports Iberdrola’s effort to provide green power to New York.
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