PSC commissioner skeptical of plan to buy RG&E's parent by Jay Gallagher

ALBANY — A state utility regulator on Wednesday questioned whether a $2 billion investment in wind power by Iberdrola SA, the company that wants to buy Energy East Corp., is a good idea.

"I view the wind proposal in almost a neutral fashion," said Cheryl Buley, one of five members of the state Public Service Commission, which began considering whether to allow Spanish utility Iberdrola to buy the parent of Rochester Gas and Electric Corp. and New York State Electric and Gas Corp.

Buley said that despite an apparent fascination by elected officials with Iberdrola's promised investment, wind power has drawbacks. She said it is expensive, since it requires a subsidy, is often not available when most needed and could be hard to transmit to areas that need it.

Virtually every major political figure in the state has recommended that the PSC approve the $4.5 billion takeover, often citing the major investment by Iberdrola, the world's leading wind energy company.

Business groups also have generally supported the deal, with the Rochester Business Alliance and Greater Rochester Enterprise among the advocates.

But Buley urged caution. "We should not be doing things driven by popular, very superficial thinking," she said.

The commissioners are expected to vote next Wednesday whether to allow the deal, which was proposed by Iberdrola and Energy East in June 2007.

A PSC administrative law judge recommended against the deal earlier this summer, even though it has cleared regulatory agencies in three other states and at the federal level.

The judge, Rafael Epstein, wrote that the transaction "does not satisfy the public interest requirement of Public Service Law." He and other critics say having the company control some generation as well as transmission could lead to higher consumer prices.

The final decision is up to the five commissioners.

PSC Chairman Garry Brown said Wednesday he and the other commissioners have to ponder the pros and cons of the proposed deal as they try to make up their minds.

"In the end, the benefits have to outweigh the risks" for the commission to approve the sale, he said.

RG&E and NYSEG between them serve 16 percent of the state's electric customers and 12 percent of natural gas users across a swath of upstate and the Hudson Valley that covers 40 percent of the state's area, Brown said.

Combined, they have about 1.2 million electric and 562,000 natural gas customers.

New York ranks ninth in wind power in the country and first in the Northeast, said James Austin, a commission aide. He said the amount has grown from 12 megawatts in 2000 to 707 now, with the total expected to reach 1,267 by the end of the year.

That's still a small portion of the more than 39,000 megawatts of available power in the state. A megawatt is enough energy to power about 1,000 homes.

A $2 billion investment in wind would probably produce another 1,000 megawatts of wind capacity, according to the commission staff.

Austin said the state has several regions windy enough to make windmills efficient, including downwind from Lake Ontario and parts of western New York.