Public Input Cited by PSC LAW JUDGE RAFAEL A. EPSTEIN - Energy East/Iberdrola

Public Input

In accordance with standard practice, we have monitored the public’s reaction to the proposed acquisition of Energy East by Iberdrola S.A., through allowing the public to post comments at our web site, making available a toll-free telephone number to call any time of the day or night, by encouraging written correspondence, and by conducting public statement hearings at various locations. Public statement hearings were held on February 19-22, 2008 in Carmel, Binghamton, Ithaca, Lancaster, Rochester, and Plattsburgh. In addition to the comments made at the public statement hearings, 147 letters, e-mails and telephone comments were timely received from customers, utility employees, stockholders, retirees, and members of other concerned constituencies. Of the many issues raised by the public, most concerned: (1) objections to foreign ownership of public utilities; (2) economic concerns; (3) environmental concerns, (4) continuation of retiree pensions and other benefits; and (5) service quality. Some speakers opposed the acquisition of Energy East by Iberdrola, some want requirements to be mandated if it is approved, and some support the merger based on economic and environmental reasons.

There is a very large number of concerns about Iberdrola being a foreign held corporation. Many people believe that it is not in New York’s best interest to put control of utilities in foreign hands. There are also concerns that Iberdrola, being a foreign corporation, will be beyond the reach of the laws of the State of New York or the United States, and will not have to answer to the Securities and Exchange Commission. Some feel that Iberdrola may inappropriately reduce expenditures for maintenance and repair and thus risk reliability of the supply of energy. Many customers are worried that there will be a lack of customer service and local support when the company running their utilities is foreign based.

There is also concern that Iberdrola is subject to takeover by other foreign corporations, and that utilities in New York will be at risk. There is also concern that the power of public utilities to exercise eminent domain will be passed on to foreign entities, granting them similar authority. Many people feel they are losing control of their nation’s vital interests, and that this poses a threat to national security.

At the hearings many customers expressed economic concerns. They are worried about currently high energy prices and their impact on the elderly and those who can least afford to pay high bills. These people are concerned that, with the acquisition, there will be no guarantee that rates will not increase. Many citizens are troubled by high executive payouts if the merger goes through. Many others are worried that Iberdrola stands to become a foreign monopoly supplying New York utilities, as it would be a producer (with its wind turbine electricity generators) as well as the distributor of the power it generates. Others are worried that the purchase price, which is above the book value, will be passed onto customers.

Shareholders in Energy East are concerned that the buyout will cost too much in capital gains taxes, and that they will lose dividends that they count on as part of their income to pay their bills.

Other members of the public are concerned that Iberdrola’s wind farms lack the capacity to produce enough power. They state that wind power is unreliable, inefficient, and expensive. Commenters have noted that the wind farms being built by Iberdrola produce infrasonic vibrations and too much noise and also destroy the natural beauty of upstate New York.

Many feel that New York lacks sufficient amounts of wind to make wind farms a viable option for a renewable energy source. Others are concerned that the creation of wind farms causes the destruction of natural habitats and woodlands.

Retirees of RG&E and NYSEG who are currently receiving pensions and benefits through Energy East are concerned that they might lose their benefits. They would like requirements for the continuation of those benefits if the acquisition is approved. Other employees want Iberdrola to be required to put more resources into staffing to respond to emergencies.