The $4.5 billion merger between Energy East Corp. and Spanish power producer Iberdrola SA won the unanimous approval today of the state Public Service Commission, removing the final regulatory hurdle facing the deal.
The commission approved the merger in a 4-0 vote, ending a lengthy review that led to state regulators imposing a host of conditions on the deal.
Those conditions include a commitment by Iberdrola to spend $200 million on new wind power facilities in New York within roughly two years, which PSC officials said would add about 100 megawatts of renewable generating capacity.
Iberdrola also would be required to pass on between $250 million and $300 million in benefits to customers of New York State Electric & Gas Corp. and Rochester Gas & Electric Corp., the two New York utilities owned by Energy East. NYSEG provides electric service, and some natural gas service, to about 175,000 customers in some suburban and rural portions of Western New York.
The commission also imposed several conditions to limit the market power that Iberdrola would gain by owning wind energy projects at the same time that it owns electricity transmission systems within the state.
The PSC, for a decade, has pushed for the state's utilities to divest their conventional power generating plants and focus their operations on transporting and delivering electricity to their commercial and residential customers.
Some PSC commissioners had raised concerns that Iberdrola would have too much market clout … and potentially could unfairly favor its own wind farms … if it was permitted to allow substantial wind power facilities, as well as the power lines that would transmit that electricity and that of competing power plants.
Iberdrola would be barred from owning any New York power plants that are powered by fossil fuels, such as natural gas, coal or oil. The company also would be required to sell fossil fuel-powered generating stations currently owned by RG&E.
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