MR. JONES’ WRITTEN STATEMENT:
We are, however, as current NYSEG CASE NUMBER 08017/07-M—0906 customers, deeply opposed to this proposed acquisition and we urge that the Public Service Commission not allow it to proceed. The reasons for our opposition are as follow. There will be six of these.
The first is Energy Security. We do not believe it is in the best interest of utility customers for our electrical generation infrastructure to be in the hands of foreign investors and under the influence of foreign governments that may not always have our best interests in mind.
Our second issue is with regard to energy reliability. Iberdrola has made this bid not because they wish to provide a superior service and value to utility customers, but because they want to make a superior return on their investment. Maximizing these returns may encourage them to inappropriately reduce expenditures for maintenance and repair and thus risk reliability of the supply. With a parallel abiding interest in maximizing cash flow they may be tempted to postpone or cancel capital improvements and thus put future supply at risk. The objectives of maximizing their profits while also providing reliable affordable service are in direct conflict and cannot be reconciled. Less value for us simply means more value for them. Acting in their interests of their majority foreign shareholders they will choose more value, less service.
Our third concern is with energy cost. Iberdrola can give no assurance, nor is there anything in their history to indicate that utility customers will not be facing significant increases for energy as price increases are a direct contributor to increased profits for Iberdrola.
Our fourth concern has to do with long-term commitment. We believe that Iberdrola and any other foreign investors are rapidly buying into the U.S. infrastructure sectors for only one reason: that is that our dollar is weak compared to other currencies and their Euro buys much more than at any time in the past. We are concerned that this deal does not constitute a long-term commitment to utility customers and that it is a matter of convenient opportunity for Iberdrola to buy Energy East at a bargain basement price. We fear that after several rounds of cost cutting that Iberdrola will break up the assets of Energy East and resell them for a quick profit.
Our fifth concern has to do with continuity of ownership. On February 5, 11 2008, it was reported that Energie de France SA was working with a Spanish builder, ACS, on a plan for hostile takeover of Iberdrola. Such a consecutive change in ownership would be further step away from the interest of utility customers and put the government of France in a majority position in that organization.
Our sixth and perhaps one of our most important issues has to deal with business ethics. We do not believe that Iberdrola has demonstrated a sufficiently high level of business ethics and respect for the law 24 to be allowed to control our energy infrastructure.
On February 15th, 2008, it was reported that Iberdrola has been fined 15.4 million Euros for (quote) “abusing its dominant position in the electricity generally market” (unquote). The fine was levied by the Nacional Comision de law Competencia, and followed a complaint from Endesa SA, a smaller Spanish utility.
In April of 1007, an Antitrust Complaint was filed with the U.S. Department of Justice, targeting the industrial wind energy industry in New York, in which Iberdrola is trying to become a major player. It is alleged that wind energy developers and their associates, including Iberdrola, conspired to geographically allocate the market for wind energy projects and fix prices for leases, payments of taxes and other payments.
Additionally, there are criminal allegations that include bribery, larceny, false instruments, mail fraud, conspiracy to deprive taxing authorities and attorney misconduct.
The New York State Attorney General’s Office has several active investigations underway as per those allegations.
We believe that our objections to the proposed acquisition are serious and substantive and we strongly urge the Public Service Commission to prevent Iberdrola’s takeover of our energy supplier.
Thank you for the opportunity to comment on this matter.
ADMINISTRATIVE LAW JUDGE: Thank you very much.
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