Utility Merger Accord Sought
By Larry Rulison, Albany Times Union, N.Y.
Jul. 15–ALBANY — U.S. Sen. Charles Schumer is urging Iberdrola SA and state regulators to hammer out a settlement on the Spanish utility’s $4.5 billion merger with Energy East Corp.
Schumer, who has been outspoken about the potential benefits of the deal for the state’s alternative energy supply, met last Friday with Garry Brown, chairman of the five-person Public Service Commission that must approve the deal.
"It was a very positive meeting," Schumer said Monday in a conference call with reporters.
The PSC isn’t expected to vote on the deal until its August meeting at the earliest. Iberdrola and Energy East have been going through a process, much like a legal trial, in which the two companies have tried to justify the merger to an administrative law judge.
Energy East has 1.3 million customers in upstate New York through its Rochester Gas & Electric and New York State Electric & Gas subsidiaries.
Staff at the Department of Public Service, who advise the PSC, have opposed the deal, arguing that Iberdrola shouldn’t be allowed to build wind farms in New York state if it buys Energy East. Staff members believe that by owning both generation and transmission, Iberdrola will exercise too much of what’s known as vertical market power in the state’s wholesale electric market.
Iberdrola, which is the world’s largest wind farm developer, won’t accept that condition and has officially committed to $100 million in projects in New York, with a total of $2 billion that it would like to build.
Schumer said Monday that Iberdrola should increase its commitment beyond $100 million, although he didn’t provide a new figure. He also believes the DPS should allow Iberdrola to build wind farms anywhere it wants in the state. The company has already agreed to sell off Energy East’s large coal-fired power plant in the Rochester area.
Schumer wouldn’t reveal what he and Brown discussed, although he sounded encouraged that an agreement could be reached that would be approved by the PSC commissioners.
"I think it’s good that all three parties are talking among themselves," Schumer said.
An Iberdrola spokesman said the company welcomed Schumer’s interest, but said its plans for renewable investments weren’t related to merger conditions.
"The PSC has never before required an unregulated affiliate to invest in generation as a condition of merger approval," a spokesman for the company said.
PSC spokeswoman Anne Dalton said that there are currently no settlement talks.
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