It's a done deal as Iberdrola accepts terms

ALBANY -- Iberdrola SA agreed Wednesday to conditions set by state regulators last week for its $4.5 billion acquisition of Energy East Corp.

Energy East has 1.7 million gas and electric accounts in upstate New York through its New York State Electric & Gas and Rochester Gas & Electric subsidiaries.

The Spanish utility is expected to close quickly on the deal, first announced more than a year ago.

Approval of the acquisition by the state Public Service Commission took nearly as long. The PSC's thorough and often tedious approval process, which is much like a trial, captivated energy investors around the world. The agency's four-member panel gave the deal unanimous approval Sept. 3, and issued an official order on the case Tuesday.

The deal also caught the attention of political leaders across New York, enticed by Iberdrola's plan to spend $2 billion on wind-farm projects in the state. Such an investment could help New York reach its ambitious renewable energy goals.

"Iberdrola is pleased to accept this opportunity to help the Empire State meet its energy, environmental and economic goals," Iberdrola Chairman Ignacio Galan said in a statement.

Wind energy has always been at the forefront of the case. The staff of the PSC had initially sought to ban the company from wind-farm ownership, citing a state policy that forbids utilities from owning electric generation.

State leaders had been pressuring the PSC to approve the deal without hindering Iberdrola's ability to own wind farms in New York. U.S. Sen. Charles Schumer, D-N.Y., even took the unusual step of meeting with PSC Chairman Garry Brown to let his views be known when it looked like the deal might be in jeopardy. Iberdrola is the world's largest wind energy developer.

"I pushed both sides from the extreme to the middle so that New Yorkers could reap the benefits of a fair deal that protects consumers and invests in much-needed alternative energy in the state," Schumer said in a statement.

Under the conditions of the PSC approval, Iberdrola must provide its customers with $275 million in benefits that will go to lower rates for gas and electric service. It also must spend at least $200 million on wind-farm projects in New York over the next two years.

The company has also agreed to a long list of service quality and financial stability standards the PSC typically pursues in merger cases.

An Iberdrola spokesman said he did not know when the deal would officially close, although it could happen as early as today based on past utility mergers.

When National Grid agreed to the PSC's conditions imposed as part of its $7.3 billion acquisition of KeySpan Corp. last year, the deal closed within a matter of hours.

The PSC is expected to issue soon a longer version of its order, explaining its decision in more detail, although a PSC spokeswoman said Iberdrola can close the deal before that is issued.