PSC RECOMMENDED DECISION ADMINISTRATIVE LAW JUDGE RAFAEL A. EPSTEIN

CASE 07-M-0906 - Joint Petition of Iberdrola, S.A., Energy East
Corporation, RGS Energy Group, Inc., Green
Acquisition Capital, Inc., New York State
Electric & Gas Corporation and Rochester Gas
and Electric Corporation for Approval of the
Acquisition of Energy East Corporation by
Iberdrola, S.A.
NOTICE OF SCHEDULE FOR FILING EXCEPTIONS
(Issued June 16, 2008)

RECOMMENDED DECISION
RAFAEL A. EPSTEIN, Administrative Law Judge:

I. INTRODUCTION AND BACKGROUND

A. Overview and Summary

1. Summary

The Commission has been asked to approve a transaction in which Iberdrola, S.A. (Iberdrola) would acquire Energy East Corporation (Energy East) and its subsidiaries, including New York State Electric & Gas Corporation (NYSEG) and Rochester Gas and Electric Corporation (RG&E). In this recommended decision, the primary recommendation is that the Commission disapprove the transaction on the ground that it does not satisfy the “public interest” requirement of Public Service Law (PSL) §70. Alternatively, should the Commission approve the transaction, it is recommended that approval be subject to the following preconditions: (1) Iberdrola and its affiliates should not be allowed to own electric generating plants (whether wind powered, fossil fueled, or hydropower) interconnected with NYSEG’s or RG&E’s transmission or distribution systems; (2) corporate relations among Iberdrola and its New York affiliates should be subject to most of the financial and structural safeguards that have been proposed by Staff of the Department of Public Service and other parties; (3) NYSEG and RG&E customers should be credited with “positive benefit adjustments” (PBAs) of $646.4 million, including $201.6 million initially upon completion of the merger transaction (resulting in NYSEG and RG&E delivery rate reductions of $54.8 million or 4.4%, initially);1 and (4) at the conclusion of this case, an 11-month general rate proceeding should commence to consider NYSEG’s and RG&E’s overall revenue requirements and related matters, including implementation of the remaining $444.8 million of PBAs, terms of retail access by independent energy service companies, and revenue decoupling mechanisms to mitigate the financial impacts that might otherwise bias NYSEG and RG&E against energy efficiency and conservation measures.

IberdrolaRD.pdf