Energy East danced with others before choosing Iberdrola by Larry Rulison

The state Public Service Commission has ruled that Energy East Corp. must reveal the names of companies that sought merger deals with the utility before it accepted a $4.5 billion offer from Iberdrola SA last year.

The ruling is part of the ongoing case before the PSC.

Based in Maine, Energy East has 1.4 million customers in upstate New York through its New York State Electric & Gas and Rochester Gas & Electric subsidiaries. About 45,000 of its customers are located in the Capital Region.

Last summer, Iberdrola, a Spanish utility, announced it planned to acquire Energy East. The merger needs approval from the states where Energy East does business, and New York is the last state that needs to give its approval.

As is often the case in PSC proceedings, staff at the agency have sought confidential records and financial records from Energy East and Iberdrola. Staff has been seeking more information about “alternative transactions” that Energy East may have rejected before agreeing to be be acquired by Iberdrola.

“Staff states that the company’s September proxy statement indicated that management of Energy East was approached about alternative transactions,” the PSC wrote in an order approved Wednesday. “The proxy statement, according to staff, reveals that the board of directors of Energy East discussed the potential beenfits of the alternative transactions and determined that the benefits of the Iberdrola acquisition outweighed the benefits of these alternative trasactions.”

The Times Union reviewed that proxy statement, which notes that the Energy East board met June 8 to discuss the Iberdrola merger. Here is what the company said happened at that meeting:

“The board of directors discussed the potential benefits of the two other pending strategic transactions under consideration at the time and determined that the benefits of completing those transactions were outweighed by the benefits associated with the proposed transaction with Iberdrola.”

The Iberdrola-Energy East merger is currently before an administrative law judge who wrapped up hearings yesterday. Now the PSC staff and the companies will submit motions to the judge, who will eventually make a recommendation to the PSC’s five commissioners whether to approve the deal or not.

Under state law, the public must benefit from the deal.

Iberdrola has already offered several concessions including rate cuts and investments in wind power that would benefit the state’s renewable energy plans.

Energy East has 10 days from last Wednesday to reveal the names of the suitors, but PSC spokesman James Denn said the names would not become public information and would only be revealed to those involved in the case, such as PSC staff.