To Whom It May Concern:
The Appellate Division, Fourth Department, in Rochester, NY, has denied the request by respondent William O. Hatch to dismiss as legally insufficient the proceeding brought by Town of Howard resident, Gerald S. Hedman, to remove Hatch from his position as a member of the Howard Town Board. Mr. Hedman alleges, pursuant to Section 36 of the State’s Public Officers Law, that the Howard Town Board member violated the public trust by engaging for more than two years in an elaborate fraud or ruse to intentionally conceal his relationship with wind energy developer Everpower Global Corp. and the proposed Howard Wind Project in Steuben County, New York.
The appellate court’s order also includes the following rulings: (a) It grants the request to strike from the caption all petitioners other than Mr. Hedman. (b) It extends until July 17, 2008 the time for petitioner Hedman to file his brief with the court, and gives the respondents, including Mr. Hatch and Everpower, until August 21, 2008 to file and serve their briefs. (c) It denies Mr. Hedman’s request for permission to supplement his petition to include additional facts. (d) It denies Mr. Hedman’s request for oral argument before the appellate court.
A copy of the Fourth Dept.’s June 17, 2008 Order is attached. Also attached are the following court papers: (1) An excerpt from our Verified Petition containing the claim against Mr. Hatch; (2) Our Affirmation In Opposition to Hatch’s Motion to dismiss; and (3) Our Supplemental Affirmation in response to Everpower’s papers in support of the motion to dismiss.
Arthur J. Giacalone
140 Knox Road
PO Box 63
East Aurora, NY 14052
(716) 687-1902
AJGLAW@VERIZON.NET
4th_Dept_order_in_Hedman_v_Hatch_-Everpower_et_al%5B1%5D.pdf
AFFIRMATION IN OPPOSITION TO MOTION TO DISMISS
AD4_Hatch_-_Opposing_Affirmation_excerpt_6-12-08%5B1%5D.doc
SUPPLEMENTAL AFFIRMATION IN OPPOSITION TO MOTION TO DISMISS
AD4_Hatch_-_Supplemental_Opposing_Affirmation_6-13-08%5B1%5D.doc
VERIFIED PETITION
Art_78_II_-_re_Hatch_claim%5B1%5D.doc
Wednesday, June 18, 2008
Iberdrola rethinking bid for Energy East
Iberdrola SA said Tuesday it will rethink its proposed $4.5 billion acquisition of the parent company of New York State Electric & Gas Corp. after a state administrative law judge recommended that the deal be rejected.
The administrative law judge, reviewing the case for the state Public Service Commission, recommended that Iberdrola’s deal to acquire Energy East Corp. be rejected because it would not be in the public interest.
The judge, Rafael A. Epstein, also recommended that the deal only be approved if Iberdrola, the world’s largest owner of wind energy parks, agreed to sell its power generation plants in New York and provided $646 million in rate cuts to customers of Energy East’s two New York utilities, NYSEG and Rochester Gas & Electric Corp.
Those conditions are at odds with Iberdrola’s desire to continue owning wind farms in New York and its plans to invest as much as $2 billion in renewable energy projects in the state if the deal is approved.
Iberdrola considers it a “priority” that the company’s investment plans are not capped, an Iberdrola official, who declined to be identified, said in an e-mail.
The final economic conditions imposed on the takeover could also impede the transaction if they erode the valuation creation prospects of the deal, the official said.
The Spanish utility reiterated its plans to invest $2 billion to develop wind parks in New York in coming years if the purchase is completed. But if the deal doesn’t go ahead, Iberdrola will invest elsewhere in the U. S., the official said.
The 151-page decision by the administrative law judge is not binding on the state Public Service Commission, which is the only state regulatory agency that still needs to approve the deal.
But the acquisition is facing significant opposition in New York. The PSC staff also opposes the deal because of concerns about whether it will best serve the public interest and recommends that the purchase be approved only if it provided ratepayers with a tangible reduction in rates.
“While we believe this recommendation lacks merit, it does heighten the probability that the merger will ultimately be denied,” said Ryan McLean, a Morningstar analyst.
The Iberdrola deal is butting heads with the PSC’s long-held goal of having the state’s utilities get out of the business of generating electricity in an effort to encourage competition in the power generation markets.
Epstein supported that policy in his recommendations, as well as calling for an immediate 4.4 percent, or $55 million, cut in delivery rates to be followed by a broader review of NYSEG and RG&E’s rates that would provide another $445 million in savings to the utilities’ customers.
The administrative law judge, reviewing the case for the state Public Service Commission, recommended that Iberdrola’s deal to acquire Energy East Corp. be rejected because it would not be in the public interest.
The judge, Rafael A. Epstein, also recommended that the deal only be approved if Iberdrola, the world’s largest owner of wind energy parks, agreed to sell its power generation plants in New York and provided $646 million in rate cuts to customers of Energy East’s two New York utilities, NYSEG and Rochester Gas & Electric Corp.
Those conditions are at odds with Iberdrola’s desire to continue owning wind farms in New York and its plans to invest as much as $2 billion in renewable energy projects in the state if the deal is approved.
Iberdrola considers it a “priority” that the company’s investment plans are not capped, an Iberdrola official, who declined to be identified, said in an e-mail.
The final economic conditions imposed on the takeover could also impede the transaction if they erode the valuation creation prospects of the deal, the official said.
The Spanish utility reiterated its plans to invest $2 billion to develop wind parks in New York in coming years if the purchase is completed. But if the deal doesn’t go ahead, Iberdrola will invest elsewhere in the U. S., the official said.
The 151-page decision by the administrative law judge is not binding on the state Public Service Commission, which is the only state regulatory agency that still needs to approve the deal.
But the acquisition is facing significant opposition in New York. The PSC staff also opposes the deal because of concerns about whether it will best serve the public interest and recommends that the purchase be approved only if it provided ratepayers with a tangible reduction in rates.
“While we believe this recommendation lacks merit, it does heighten the probability that the merger will ultimately be denied,” said Ryan McLean, a Morningstar analyst.
The Iberdrola deal is butting heads with the PSC’s long-held goal of having the state’s utilities get out of the business of generating electricity in an effort to encourage competition in the power generation markets.
Epstein supported that policy in his recommendations, as well as calling for an immediate 4.4 percent, or $55 million, cut in delivery rates to be followed by a broader review of NYSEG and RG&E’s rates that would provide another $445 million in savings to the utilities’ customers.
Bruno decries PSC judge
Political fallout continued after Monday's recommendation by an administrative law judge against the takeover of Energy East Corp. by Iberdrola SA of Spain. Judge Rafael Epstein of the state Department of Public Service urged the five-member Public Service Commission to reject the $4.5 billion deal. His recommendation, while not binding, is infuriating some in Albany.
On Tuesday, Gov. David Paterson and Senate President Joseph Bruno weighed in.
"That person ought to be dismissed," Bruno, R-Brunswick, Rensselaer County, said of Epstein on WROW radio in Albany. "The Public Service Commission is one of the most ponderous, difficult bureaucratic agencies in this state."
Paterson suggested again that he supports the sale.
"I am especially focused on Iberdrola's commitment to invest $2 billion in wind energy in the state," Paterson said. "Iberdrola has also pledged $200 million in ratepayer benefits. ... Although this amount is less than suggested by the administrative law judge, I hope the commission will not let the perfect be the enemy of the good when it comes to ratepayer benefits."
Epstein said the proposed deal doesn't satisfy the public-interest requirement of state law.
On Tuesday, Gov. David Paterson and Senate President Joseph Bruno weighed in.
"That person ought to be dismissed," Bruno, R-Brunswick, Rensselaer County, said of Epstein on WROW radio in Albany. "The Public Service Commission is one of the most ponderous, difficult bureaucratic agencies in this state."
Paterson suggested again that he supports the sale.
"I am especially focused on Iberdrola's commitment to invest $2 billion in wind energy in the state," Paterson said. "Iberdrola has also pledged $200 million in ratepayer benefits. ... Although this amount is less than suggested by the administrative law judge, I hope the commission will not let the perfect be the enemy of the good when it comes to ratepayer benefits."
Epstein said the proposed deal doesn't satisfy the public-interest requirement of state law.
Iberdrola acquisition still in play
An administrative law judge's ruling to reject the Iberdrola merger in its current form is not the final word.
The process to make a final determination is still very much in play, and all vested parties should make the most of it. The deadline to comment on the judge's recommended decision is July 1, after which the senior staff of the Public Service Commission will put together its draft order for the commissioners.
This is an opportunity for all involved to ensure that all pertinent details are gathered and concerns addressed.
The staff of the Public Service Commission has come under criticism for being overly restrictive, and in some cases rightfully so. Iberdrola continues to provide a strong case for itself in the way of economic development to the state, as well as wind energy capabilities. The Spanish conglomerate recently pledged to invest $2 billion in wind energy in New York.
Judge Raphael Epstein encouraged the PSC to set certain conditions — including having Iberdrola sell its wind power facilities in NYSEG-Energy East service areas and grant $646 million in benefits to the public — if it goes forth with the deal. At the least, Epstein has deviated from the PSC's stringent policy view that generation and distribution should remain completely separate, requiring Iberdrola to sell all of its wind interests.
That view seems overly extreme, particularly considering the low rates RG&E customers enjoyed thanks in part to the utility's ownership of the Russell Station plant. The issue is one the senior staff and commissioners should re-examine as the process continues. As the state looks to increase the percentage of power it garners from alternative energy, deals like the one with Iberdrola should be heavily considered.
This page has said the PSC is right to uphold its core duty of ensuring the public interest is protected. But how "public interest" is protected and what constitutes a "net benefit" are open to debate. And a strong case could easily be made in Iberdrola's favor.
Let the remainder of the process play out, with the final, and hopefully informed, say going to the five-member commission.
The process to make a final determination is still very much in play, and all vested parties should make the most of it. The deadline to comment on the judge's recommended decision is July 1, after which the senior staff of the Public Service Commission will put together its draft order for the commissioners.
This is an opportunity for all involved to ensure that all pertinent details are gathered and concerns addressed.
The staff of the Public Service Commission has come under criticism for being overly restrictive, and in some cases rightfully so. Iberdrola continues to provide a strong case for itself in the way of economic development to the state, as well as wind energy capabilities. The Spanish conglomerate recently pledged to invest $2 billion in wind energy in New York.
Judge Raphael Epstein encouraged the PSC to set certain conditions — including having Iberdrola sell its wind power facilities in NYSEG-Energy East service areas and grant $646 million in benefits to the public — if it goes forth with the deal. At the least, Epstein has deviated from the PSC's stringent policy view that generation and distribution should remain completely separate, requiring Iberdrola to sell all of its wind interests.
That view seems overly extreme, particularly considering the low rates RG&E customers enjoyed thanks in part to the utility's ownership of the Russell Station plant. The issue is one the senior staff and commissioners should re-examine as the process continues. As the state looks to increase the percentage of power it garners from alternative energy, deals like the one with Iberdrola should be heavily considered.
This page has said the PSC is right to uphold its core duty of ensuring the public interest is protected. But how "public interest" is protected and what constitutes a "net benefit" are open to debate. And a strong case could easily be made in Iberdrola's favor.
Let the remainder of the process play out, with the final, and hopefully informed, say going to the five-member commission.
Tuesday, June 17, 2008
Iberdrola rethinks US strategy
Iberdola, the Spanish energy company that owns ScottishPower, said yesterday it will reconsider buying Energy East Corporation, a US power firm, if its ability to invest in renewable energy is restricted in the state of New York.
An Iberdrola spokesman said a judge's recommendation against the $4.5bn purchase still meant that New York's Public Services Commission (PSC) would have the final say.
"Even though we are still confident of a positive outcome from the PSC, if we cannot go ahead with the purchase of Energy East, Iberdrola will not change its objectives in the United States given various opportunities for investment in other states that it has already identified," the spokesman said.
advertisementIf the deal collapses it will free up about $6.4bn (about £3bn) for Iberdrola - the value of the Energy East deal when assumed debt is included.
On Monday, New York judge Rafael Epstein said the deal should be blocked because it is not in the public's best interests but he said that if the transaction were to be approved it should be with certain conditions.
These would include prohibiting Iberdrola from owning electricity generating plants interconnected with Energy East's transmission and distribution systems in New York and requiring the company to pay out nearly $650m of "positive benefit adjustments" for customers in New York.
Wall Street analysts have already said that the judge's recommendation has diminished the likelihood of the deal being completed and Iberdrola has been playing down its importance for some time, saying it has other places where it can invest its money. City energy industry analysts said Iberdrola could look elsewhere in the United States or seek opportunities in Europe, particularly in the UK where the government raises few obstacles to foreign takeovers.
The company said it expects the New York PSC to hand down its decision next month after Iberdrola has had an opportunity to present more evidence.
Iberdrola raised the money for the Energy East deal through a share issue a year ago which raised 3.375bn (about £2bn at the time).
Iberdrola has been linked to a possible bid for British Energy, the Scottish-based nuclear generator, However, Iggnacio Sanchez Galan, Iberdrola's chairman, told The Herald last week that the big electricity company was no longer interested in bidding for the East Kilbride-based nuclear generator.
While on a visit to New York City, Galan said: "The price is very far from what we consider possible."
An Iberdrola spokesman said a judge's recommendation against the $4.5bn purchase still meant that New York's Public Services Commission (PSC) would have the final say.
"Even though we are still confident of a positive outcome from the PSC, if we cannot go ahead with the purchase of Energy East, Iberdrola will not change its objectives in the United States given various opportunities for investment in other states that it has already identified," the spokesman said.
advertisementIf the deal collapses it will free up about $6.4bn (about £3bn) for Iberdrola - the value of the Energy East deal when assumed debt is included.
On Monday, New York judge Rafael Epstein said the deal should be blocked because it is not in the public's best interests but he said that if the transaction were to be approved it should be with certain conditions.
These would include prohibiting Iberdrola from owning electricity generating plants interconnected with Energy East's transmission and distribution systems in New York and requiring the company to pay out nearly $650m of "positive benefit adjustments" for customers in New York.
Wall Street analysts have already said that the judge's recommendation has diminished the likelihood of the deal being completed and Iberdrola has been playing down its importance for some time, saying it has other places where it can invest its money. City energy industry analysts said Iberdrola could look elsewhere in the United States or seek opportunities in Europe, particularly in the UK where the government raises few obstacles to foreign takeovers.
The company said it expects the New York PSC to hand down its decision next month after Iberdrola has had an opportunity to present more evidence.
Iberdrola raised the money for the Energy East deal through a share issue a year ago which raised 3.375bn (about £2bn at the time).
Iberdrola has been linked to a possible bid for British Energy, the Scottish-based nuclear generator, However, Iggnacio Sanchez Galan, Iberdrola's chairman, told The Herald last week that the big electricity company was no longer interested in bidding for the East Kilbride-based nuclear generator.
While on a visit to New York City, Galan said: "The price is very far from what we consider possible."
Iberdrola promise is not promising
The "promise" to invest billions of dollars in industrial wind development is exactly why we do not want Iberdrola in New York. Isn't the purpose of investing in renewable energy to reduce fossil fuel use and emissions? Big wind does nothing to meet those goals. Politicians are basing their support for wind on biased advertising and lobbying efforts rather than solid science and evidence.
Our power grid operates by providing a steady supply of electricity matched to consumer demand. Because wind is intermittent, variable and unpredictable, regular power plants equal to wind capacity must operate on standby, ready to balance the variations of wind. They burn fuel and produce emissions in this mode, but the electricity they would otherwise produce is wasted. How does this help the environment or the economy?
Billions in tax write-offs and subsidies for wind projects total more than developers get for selling the small amount of electricity that turbines produce. Supporting this ineffective industry posing as the "green" answer is a great disservice to the American public.
—JOAN SIMMONS
CANANDAIGUA
The writer is a member of Citizen Power Alliance.
Our power grid operates by providing a steady supply of electricity matched to consumer demand. Because wind is intermittent, variable and unpredictable, regular power plants equal to wind capacity must operate on standby, ready to balance the variations of wind. They burn fuel and produce emissions in this mode, but the electricity they would otherwise produce is wasted. How does this help the environment or the economy?
Billions in tax write-offs and subsidies for wind projects total more than developers get for selling the small amount of electricity that turbines produce. Supporting this ineffective industry posing as the "green" answer is a great disservice to the American public.
—JOAN SIMMONS
CANANDAIGUA
The writer is a member of Citizen Power Alliance.
Iberdrola needs to walk away from the Energy East acquisition
The courageous ruling by the PSC administrative law judge to reject approval of the Iberdrola acquisition of Energy East is getting intense criticism by all the usual suspects. On the face of all the hullaballoo coming from self-indulgent beholding politicians, covetous transnational corporations and their business interest crony groups, the public should savor the moment. Who protects the energy consumer and the hard-pressed taxpayer? Well, we have an answer and his name is Rafael Epstein!
As any good judge knows, applying sound legal decisions to rulings is the true purpose of the office. Since NYS electric utility deregulation, the Public Service Commission has operated under the legal principle that power generation must be separate from utility transmission and distribution. Iberdrola is a foreign predator and corporate raider who wants to be immune from such legal niceties as well established PSC mandates. What Iberdrola demands is that the political class runs roughshod over any vestige of public protective regulation.
Iberdrola wants to be able to develop industrial wind projects anywhere in New York and pass on the expense of this costly and unreliable electric generation onto the backs of the ratepayer. So why do selective corporate business support the Energy East acquisition? Simply put, favored companies receive their reward with the promise of lower and discounted utility rates for volume usage. The true cost of electric generation is then passed on to the residential consumer and small business accounts.
Shameless hacks like Senator Schumer expend valuable political capital to pressure the PSC to violate the law and approve the Energy East deal. This is the same “public servant”, who made a national issue of the United Arab Emirates - Dubai Ports World takeover of U.S. port facilities. Recently reported, Iberdrola has signed a contract with Abu Dhabi National Energy Co (Taqa), opening investment opportunities with Middle East funding for the Spanish energy group that includes North America. It seems that Schumer applies situation ethics, when he attempts to influence New York State policy, which is well outside his charge as a U.S. Senator.
Judge Epstein’s ruling states that Iberdrola needs to sell its wind power facilities within New York's Energy East territory. Any proponent who supports the Iberdrola acquisition is really saying that the PSC should violate its own deregulation policy for the benefit of the special interests of a foreign conglomerate. The tortured logic employed by big business apologists that condemn the ruling does not pass the smell test. Any perceptive reading of the entire ruling demonstrates that critics are only proficient in disseminating disinformation.
Local politicians need to take their own reality check. Comments attributed in the Democrat and Chronicle to State Sen. James Alesi and Assemblyman Joseph Morelle -“said the agency was being short-sighted”, are unfortunate. However, the D&C has proven that their reporting is on par with a wind industry public relations agency. Let us hope that constituents of the Alesi and Morelle will contact their representative and voice their full support for the Epstein ruling.
The recommendation report includes concerns about “Iberdrola being a foreign held 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 and subject to takeover by other foreign corporations, and that utilities in New York will be at risk”.
Observers of the Spanish corporate deals know that several European companies are presently vying for control of Iberdrola itself. What rational person would want a foreign company as your electric supplier, especially when its own management and stability is in play?
The public should send the PSC commissioners a concise and validating approval of the Judge Epstein ruling. It is crucial to make your voice heard, especially when a genuine public advocate has the guts to stand up to the utility corporate monopoly and their political defenders. Finally, shame on all those NYS business enterprises, that are so eager to support the divestiture of domestic control from Energy East for the benefit of the world’s biggest wind developer.
It is rare in a world that prizes centralist economic globalization at the expense of individual financial independence that a decision is correct. All New York State residents owe a well deserved round of thanks to Judge Rafael Epstein. Everyone who has been involved in opposing the Iberdrola acquisition of Energy East also warrants our gratitude. The PSC regulatory process has worked up to this point. Follow-up and write the PSC commissioners and remain eternally vigilant.
James Hall
As any good judge knows, applying sound legal decisions to rulings is the true purpose of the office. Since NYS electric utility deregulation, the Public Service Commission has operated under the legal principle that power generation must be separate from utility transmission and distribution. Iberdrola is a foreign predator and corporate raider who wants to be immune from such legal niceties as well established PSC mandates. What Iberdrola demands is that the political class runs roughshod over any vestige of public protective regulation.
Iberdrola wants to be able to develop industrial wind projects anywhere in New York and pass on the expense of this costly and unreliable electric generation onto the backs of the ratepayer. So why do selective corporate business support the Energy East acquisition? Simply put, favored companies receive their reward with the promise of lower and discounted utility rates for volume usage. The true cost of electric generation is then passed on to the residential consumer and small business accounts.
Shameless hacks like Senator Schumer expend valuable political capital to pressure the PSC to violate the law and approve the Energy East deal. This is the same “public servant”, who made a national issue of the United Arab Emirates - Dubai Ports World takeover of U.S. port facilities. Recently reported, Iberdrola has signed a contract with Abu Dhabi National Energy Co (Taqa), opening investment opportunities with Middle East funding for the Spanish energy group that includes North America. It seems that Schumer applies situation ethics, when he attempts to influence New York State policy, which is well outside his charge as a U.S. Senator.
Judge Epstein’s ruling states that Iberdrola needs to sell its wind power facilities within New York's Energy East territory. Any proponent who supports the Iberdrola acquisition is really saying that the PSC should violate its own deregulation policy for the benefit of the special interests of a foreign conglomerate. The tortured logic employed by big business apologists that condemn the ruling does not pass the smell test. Any perceptive reading of the entire ruling demonstrates that critics are only proficient in disseminating disinformation.
Local politicians need to take their own reality check. Comments attributed in the Democrat and Chronicle to State Sen. James Alesi and Assemblyman Joseph Morelle -“said the agency was being short-sighted”, are unfortunate. However, the D&C has proven that their reporting is on par with a wind industry public relations agency. Let us hope that constituents of the Alesi and Morelle will contact their representative and voice their full support for the Epstein ruling.
The recommendation report includes concerns about “Iberdrola being a foreign held 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 and subject to takeover by other foreign corporations, and that utilities in New York will be at risk”.
Observers of the Spanish corporate deals know that several European companies are presently vying for control of Iberdrola itself. What rational person would want a foreign company as your electric supplier, especially when its own management and stability is in play?
The public should send the PSC commissioners a concise and validating approval of the Judge Epstein ruling. It is crucial to make your voice heard, especially when a genuine public advocate has the guts to stand up to the utility corporate monopoly and their political defenders. Finally, shame on all those NYS business enterprises, that are so eager to support the divestiture of domestic control from Energy East for the benefit of the world’s biggest wind developer.
It is rare in a world that prizes centralist economic globalization at the expense of individual financial independence that a decision is correct. All New York State residents owe a well deserved round of thanks to Judge Rafael Epstein. Everyone who has been involved in opposing the Iberdrola acquisition of Energy East also warrants our gratitude. The PSC regulatory process has worked up to this point. Follow-up and write the PSC commissioners and remain eternally vigilant.
James Hall
Babcock denies debt default
INVESTMENT firm Babcock & Brown has begun meeting with its bankers as the financial houses consider whether to enforce a review of the group's $2.8 billion syndicated debt facility.
B&B lost half its market value last week as investors questioned its complex, debt-fuelled structure and worried that the loss in capitalisation could result in debt defaults or covenant breaches.
The funds manager has defended its financial robustness and credit position a number of times in the past few business days.
The company reaffirmed today that a fall in its market value below $2.5 billion did not constitute a debt default or breach of covenants for the $2.8 billion facility. The company's bankers had included the capitalisation clause in documents for the three-year facility, which was signed off in April.
It allows the syndicate of 25 bankers the right to call for a review of the facility if B&B's market value falls below $2.5 billion.
"The facility banks have not yet made a decision as to whether such a review action is appropriate," B&B said.
(Click to read entire article)
B&B lost half its market value last week as investors questioned its complex, debt-fuelled structure and worried that the loss in capitalisation could result in debt defaults or covenant breaches.
The funds manager has defended its financial robustness and credit position a number of times in the past few business days.
The company reaffirmed today that a fall in its market value below $2.5 billion did not constitute a debt default or breach of covenants for the $2.8 billion facility. The company's bankers had included the capitalisation clause in documents for the three-year facility, which was signed off in April.
It allows the syndicate of 25 bankers the right to call for a review of the facility if B&B's market value falls below $2.5 billion.
"The facility banks have not yet made a decision as to whether such a review action is appropriate," B&B said.
(Click to read entire article)
Iberdrola to reconsider Energy East if restricted
Spanish power company Iberdrola (IBE.MC: Quote, Profile, Research, Stock Buzz) said on Tuesday it will reconsider its purchase of U.S. power company Energy East Corp (EAS.N: Quote, Profile, Research, Stock Buzz) if its ability to invest in renewable energy is restricted in the state of New York.
An Iberdrola spokesman said a judge's recommendation against the $4.5 billion purchase still meant that New York's Public Services Commission would have the final say.
"Even though we are still confident of a positive outcome from the PSC, if we can't go ahead with the purchase of Energy East, Iberdrola will not change its objectives in the United States given various opportunities for investment in other states, that it has already identified," the spokesman said.
If the deal falls through it will liberate $6.4 billion for Iberdrola -- the value of the Energy East deal when assumed debt is included.
On Monday, New York judge Rafael Epstein said the deal should be blocked because it is not in the public's best interests but he said that if the deal were to be approved it should be with certain conditions.
These would include prohibiting the company from owning electricity generating plants interconnected with Energy East's transmission and distribution systems in New York and requiring the company to pay out nearly $650 million of "positive benefit adjustments" for customers in New York.
Analysts have already said that the judge's recommendation has diminished the likelihood of the deal being completed and Iberdrola has been playing down its importance for some time, saying it has other places where it can invest.
The company said it expects the New York PSC to hand down its decision next month after Iberdrola has had an opportunity to present further evidence.
Iberdrola raised the money for the Energy East through a share issue a year ago which raised 3.375 billion euro ($4.5 billion at the time).
Iberdrola shares were down 0.5 percent by 1100 GMT compared to a 0.5 percent gain for the DJ Stoxx European utilities index.
An Iberdrola spokesman said a judge's recommendation against the $4.5 billion purchase still meant that New York's Public Services Commission would have the final say.
"Even though we are still confident of a positive outcome from the PSC, if we can't go ahead with the purchase of Energy East, Iberdrola will not change its objectives in the United States given various opportunities for investment in other states, that it has already identified," the spokesman said.
If the deal falls through it will liberate $6.4 billion for Iberdrola -- the value of the Energy East deal when assumed debt is included.
On Monday, New York judge Rafael Epstein said the deal should be blocked because it is not in the public's best interests but he said that if the deal were to be approved it should be with certain conditions.
These would include prohibiting the company from owning electricity generating plants interconnected with Energy East's transmission and distribution systems in New York and requiring the company to pay out nearly $650 million of "positive benefit adjustments" for customers in New York.
Analysts have already said that the judge's recommendation has diminished the likelihood of the deal being completed and Iberdrola has been playing down its importance for some time, saying it has other places where it can invest.
The company said it expects the New York PSC to hand down its decision next month after Iberdrola has had an opportunity to present further evidence.
Iberdrola raised the money for the Energy East through a share issue a year ago which raised 3.375 billion euro ($4.5 billion at the time).
Iberdrola shares were down 0.5 percent by 1100 GMT compared to a 0.5 percent gain for the DJ Stoxx European utilities index.
Judge against power venture: Arbiter says current Iberdrola deal does not benefit public, recommends conditions
Wall Street reacted with disappointment Monday after an administrative law judge recommended Iberdrola SA's $4.5 billion merger with Energy East Corp. not be approved without conditions -- including limits on where the Spanish company can develop wind power projects.
Shares of Energy East (NYSE: EAS) fell $4, or 14.94 percent, to close at $22.75 on heavy volume following the decision by Rafael Epstein, who is overseeing the case for the state Public Service Commission.
Energy East, based in Maine, is the parent company of New York State Electric & Gas and Rochester Gas & Electric. It has about 1.3 million customers in upstate New York.
Epstein's decision, which is not binding, says the merger as currently structured does not have any public benefit and should be "disapproved" by the PSC's five commissioners, who regulate utilities in New York.
However, if the commissioners want to approve the deal, he said they should demand a number of conditions, including barring Iberdrola from owning power plants in the NYSEG and RG&E service territories, which stretch from Rochester to Binghamton to parts of the Capital Region.
Epstein also said the PSC should require Iberdrola to set aside $646 million in benefits for Energy East customers, including $54 million in immediate rate reductions.
But he said only $201 million of the benefits should be implemented right away, and the remaining $444 million should be considered during a rate case to go before the PSC.
On both issues, Epstein's decision appeared to be a carefully crafted compromise.
Staff at the PSC had wanted to see Iberdrola barred from owning any power generation -- including wind turbines -- anywhere in the state.
Iberdrola wants to be able to develop wind farm projects anywhere in New York, and it had already agreed to sell all of Energy East's fossil-fuel plants as a condition of the deal.
PSC staff had argued before the judge for more than $640 million in customer benefits, while Iberdrola had offered $201 million in benefits.
Epstein also said the deal should include "financial and structural safeguards" proposed by PSC staff to protect New York customers.
It's unclear when the PSC's five members will vote on the merger. Written responses to the decision by interested parties such as PSC staff and Iberdrola are due back to the judge on July 1. After that, the PSC's next meeting would be on July 16.
The commissioners are under no obligation to ask for any of the conditions that the judge is seeking. They could also decide to add or subtract conditions or reject the deal entirely.
An Iberdrola spokesman said the company was still reviewing the judge's decision and did not have an immediate comment.
On Monday, U.S. Sen. Charles Schumer, D-N.Y., who has been asking the PSC to approve the deal without any restrictions on wind development, reacted angrily to Epstein's decision.
"The ruling defies common sense," Schumer said in a statement. "At a time when gas prices are $4 a gallon and we desperately need to develop alternative sources of energy, to place such severe restrictions on the world's leading wind power producer to develop wind power cries out for reversal."
However, the state Consumer Protection Board, the agency responsible for representing consumers in cases before the PSC, said in a statement it was "heartened" that Epstein recognized many of its recommendations in the case, including "our assertion that it is not necessary for Iberdrola to divest its wind generation business in New York" and that utility customers be protected from financial risks of the merger. Rulison can be reached at 454-5504 or by e-mail at lrulison@timesunion.com.
Shares of Energy East (NYSE: EAS) fell $4, or 14.94 percent, to close at $22.75 on heavy volume following the decision by Rafael Epstein, who is overseeing the case for the state Public Service Commission.
Energy East, based in Maine, is the parent company of New York State Electric & Gas and Rochester Gas & Electric. It has about 1.3 million customers in upstate New York.
Epstein's decision, which is not binding, says the merger as currently structured does not have any public benefit and should be "disapproved" by the PSC's five commissioners, who regulate utilities in New York.
However, if the commissioners want to approve the deal, he said they should demand a number of conditions, including barring Iberdrola from owning power plants in the NYSEG and RG&E service territories, which stretch from Rochester to Binghamton to parts of the Capital Region.
Epstein also said the PSC should require Iberdrola to set aside $646 million in benefits for Energy East customers, including $54 million in immediate rate reductions.
But he said only $201 million of the benefits should be implemented right away, and the remaining $444 million should be considered during a rate case to go before the PSC.
On both issues, Epstein's decision appeared to be a carefully crafted compromise.
Staff at the PSC had wanted to see Iberdrola barred from owning any power generation -- including wind turbines -- anywhere in the state.
Iberdrola wants to be able to develop wind farm projects anywhere in New York, and it had already agreed to sell all of Energy East's fossil-fuel plants as a condition of the deal.
PSC staff had argued before the judge for more than $640 million in customer benefits, while Iberdrola had offered $201 million in benefits.
Epstein also said the deal should include "financial and structural safeguards" proposed by PSC staff to protect New York customers.
It's unclear when the PSC's five members will vote on the merger. Written responses to the decision by interested parties such as PSC staff and Iberdrola are due back to the judge on July 1. After that, the PSC's next meeting would be on July 16.
The commissioners are under no obligation to ask for any of the conditions that the judge is seeking. They could also decide to add or subtract conditions or reject the deal entirely.
An Iberdrola spokesman said the company was still reviewing the judge's decision and did not have an immediate comment.
On Monday, U.S. Sen. Charles Schumer, D-N.Y., who has been asking the PSC to approve the deal without any restrictions on wind development, reacted angrily to Epstein's decision.
"The ruling defies common sense," Schumer said in a statement. "At a time when gas prices are $4 a gallon and we desperately need to develop alternative sources of energy, to place such severe restrictions on the world's leading wind power producer to develop wind power cries out for reversal."
However, the state Consumer Protection Board, the agency responsible for representing consumers in cases before the PSC, said in a statement it was "heartened" that Epstein recognized many of its recommendations in the case, including "our assertion that it is not necessary for Iberdrola to divest its wind generation business in New York" and that utility customers be protected from financial risks of the merger. Rulison can be reached at 454-5504 or by e-mail at lrulison@timesunion.com.
Ruling opposes takeover by Iberdrola by Jim Stinson
Anger greets recommendation that PSC block deal for RG&E parent
An administrative law judge is recommending that the state Public Service Commission reject the proposed takeover of Energy East Corp. by Iberdrola SA, a big Spanish utility that has said it would invest billions in wind power projects in New York.
Energy East, the parent of both Rochester Gas and Electric Corp. and New York State Electric and Gas Corp., agreed a year ago to be acquired by Iberdrola for $4.5 billion.
The Department of Public Service law judge, Rafael Epstein, picked apart the deal, writing that the PSC should say no "on the ground that it does not satisfy the 'public-interest' requirement of Public Service Law."
But if the PSC does approve the takeover, Epstein said, it should first set some conditions for Iberdrola to meet — and at least one of those conditions would appear to be a deal-breaker.
The conditions include forcing Iberdrola to sell its wind power facilities within New York's Energy East territory, grant $646 million in benefits to the public and abide by safeguards and rate proceedings as proposed by the PSC staff.
Iberdrola officials had said earlier that they would walk away from the deal if New York demanded that they sell their wind power farms.
Iberdrola executives were reviewing the recommendation Monday, according to a spokesman for the company, which is based in Bilbao, Spain.
Shares of Energy East plummeted 15 percent after Epstein's recommendation was released Monday. The stock fell $4 to close at $22.75 per share. Iberdrola's purchase offer is $28.50 a share.
The recommendation was praised by some groups that have been concerned about the impact of the deal on ratepayers and on competition in the energy industry.
But Epstein's findings were met with anger by some politicians and business leaders, who generally favor the takeover.
"I am absolutely flabbergasted," said Sandy Parker, chief executive officer of the Rochester Business Alliance. She said New York's regulatory process often ignores economic development benefits.
The recommendation also brought a rebuke from Sen. Charles Schumer, D-N.Y., who supports Iberdrola and has been critical of the state's process for considering the deal.
"The ruling defies common sense," Schumer said. "At a time when gas prices are $4 a gallon and we desperately need to develop alternative sources of energy, to place such severe restrictions on the world's leading wind power producer ... cries out for reversal."
State Sen. James Alesi, R-Perinton, and Assemblyman Joseph Morelle, D-Irondequoit, also said the agency was being short-sighted.
"State government and its agencies must remove obstacles to new business growth, particularly in upstate, and certainly should not be creating new ones," said Morelle.
A major reason behind Epstein's recommendation was the PSC's general policy to separate energy generators from energy distributors.
That policy was supported by Gavin Donohue, president of the Independent Power Producers of New York.
Donohue said that if a company is allowed to generate wind power within its service area, it could delay the building of competing wind farms in its territory — although Iberdrola hasn't done that elsewhere, he said.
"We're trying to prevent utilities from getting back into the generation business," Donohue said.
Mindy Bockstein, executive director of the state's Consumer Protection Board, applauded Epstein's finding that RG&E and NYSEG customers should be insulated from any financial risks that might result if the deal goes through.
She also noted Iberdrola's promise earlier this month that it would invest $2 billion in renewable energy projects in New York if the sale was approved. Because the commitment was made after public hearings on the deal had concluded, Bockstein said it couldn't be considered by Epstein. But she said she will "formally ask the PSC to consider the substantial implication of this investment" before the five-member commission makes its final decision.
Epstein's recommendation guides the PSC but does not bind it.
Iberdrola's $2 billion investment offer had drawn praise from Gov. David Paterson, although Paterson stopped short of endorsing the takeover.
JFSTINSO@DemocratandChronicle.com
An administrative law judge is recommending that the state Public Service Commission reject the proposed takeover of Energy East Corp. by Iberdrola SA, a big Spanish utility that has said it would invest billions in wind power projects in New York.
Energy East, the parent of both Rochester Gas and Electric Corp. and New York State Electric and Gas Corp., agreed a year ago to be acquired by Iberdrola for $4.5 billion.
The Department of Public Service law judge, Rafael Epstein, picked apart the deal, writing that the PSC should say no "on the ground that it does not satisfy the 'public-interest' requirement of Public Service Law."
But if the PSC does approve the takeover, Epstein said, it should first set some conditions for Iberdrola to meet — and at least one of those conditions would appear to be a deal-breaker.
The conditions include forcing Iberdrola to sell its wind power facilities within New York's Energy East territory, grant $646 million in benefits to the public and abide by safeguards and rate proceedings as proposed by the PSC staff.
Iberdrola officials had said earlier that they would walk away from the deal if New York demanded that they sell their wind power farms.
Iberdrola executives were reviewing the recommendation Monday, according to a spokesman for the company, which is based in Bilbao, Spain.
Shares of Energy East plummeted 15 percent after Epstein's recommendation was released Monday. The stock fell $4 to close at $22.75 per share. Iberdrola's purchase offer is $28.50 a share.
The recommendation was praised by some groups that have been concerned about the impact of the deal on ratepayers and on competition in the energy industry.
But Epstein's findings were met with anger by some politicians and business leaders, who generally favor the takeover.
"I am absolutely flabbergasted," said Sandy Parker, chief executive officer of the Rochester Business Alliance. She said New York's regulatory process often ignores economic development benefits.
The recommendation also brought a rebuke from Sen. Charles Schumer, D-N.Y., who supports Iberdrola and has been critical of the state's process for considering the deal.
"The ruling defies common sense," Schumer said. "At a time when gas prices are $4 a gallon and we desperately need to develop alternative sources of energy, to place such severe restrictions on the world's leading wind power producer ... cries out for reversal."
State Sen. James Alesi, R-Perinton, and Assemblyman Joseph Morelle, D-Irondequoit, also said the agency was being short-sighted.
"State government and its agencies must remove obstacles to new business growth, particularly in upstate, and certainly should not be creating new ones," said Morelle.
A major reason behind Epstein's recommendation was the PSC's general policy to separate energy generators from energy distributors.
That policy was supported by Gavin Donohue, president of the Independent Power Producers of New York.
Donohue said that if a company is allowed to generate wind power within its service area, it could delay the building of competing wind farms in its territory — although Iberdrola hasn't done that elsewhere, he said.
"We're trying to prevent utilities from getting back into the generation business," Donohue said.
Mindy Bockstein, executive director of the state's Consumer Protection Board, applauded Epstein's finding that RG&E and NYSEG customers should be insulated from any financial risks that might result if the deal goes through.
She also noted Iberdrola's promise earlier this month that it would invest $2 billion in renewable energy projects in New York if the sale was approved. Because the commitment was made after public hearings on the deal had concluded, Bockstein said it couldn't be considered by Epstein. But she said she will "formally ask the PSC to consider the substantial implication of this investment" before the five-member commission makes its final decision.
Epstein's recommendation guides the PSC but does not bind it.
Iberdrola's $2 billion investment offer had drawn praise from Gov. David Paterson, although Paterson stopped short of endorsing the takeover.
JFSTINSO@DemocratandChronicle.com
Tour of wind farms set for Saturday
Area residents interested in wind power development are invited to take part in a guided tour of an operating wind power conversion system at Cohocton on Saturday.
Helen Thomas, of First Wind — known as UPC Wind before the firm adopted its new name in May — said there are no fees involved. Lunch will be provided as part of the tour. Buses, provided by First Wind will leave at 8 a.m., and are scheduled to be back at the fire hall by 4 p.m. Coffee and donuts will be available prior to the two-hour trip.
Those planning to take part in the tour are asked to contact First Wind representative Tricia Walter at 585-591-3270. The Cohocton project, developed as a UPC Wind system, is located near Bath. For some area residents, Saturday’s tour will mark a second visit to the Steuben County site.
In January, the firm was selected by a number of town property owners to develop a wind farm in the town of Charlotte, after the group toured the Cohocton site in December 2007.
Helen Thomas, of First Wind — known as UPC Wind before the firm adopted its new name in May — said there are no fees involved. Lunch will be provided as part of the tour. Buses, provided by First Wind will leave at 8 a.m., and are scheduled to be back at the fire hall by 4 p.m. Coffee and donuts will be available prior to the two-hour trip.
Those planning to take part in the tour are asked to contact First Wind representative Tricia Walter at 585-591-3270. The Cohocton project, developed as a UPC Wind system, is located near Bath. For some area residents, Saturday’s tour will mark a second visit to the Steuben County site.
In January, the firm was selected by a number of town property owners to develop a wind farm in the town of Charlotte, after the group toured the Cohocton site in December 2007.
Monday, June 16, 2008
PSC should kill Iberdrola deal, law judge says by Jim Stinson
The state Public Service Commission should reject the proposed takeover of Energy East Corp. by a big Spanish utility, an administrative law judge said Monday in a much-awaited recommendation.
Energy East is the parent of both New York State Electric & Gas and Rochester Gas and Electric.
The Department of Public Service law judge, Rafael Epstein, picked apart the proposed $4.5 billion deal between Iberdrola SA and Energy East, writing that the commission should disapprove the transaction "on the ground that it does not satisfy the 'public-interest' requirement of Public Service Law."
But if the commission does approve the sale of Energy East, there are pre-conditions that should be met, he wrote.
They include forcing Iberdrola to sell its wind power plants in New York, to agree to $646 million in public-benefit adjustments, and to abide by safeguards and rate proceedings as proposed by the PSC staff.
Iberdrola officials had earlier said they would walk away from the deal, which has been approved by other affected states and the federal government, if New York demanded they sell their wind power farms.
Epstein's recommendation sets the stage for the parties in the case to respond -- they have until July 1 to do so -- and then a vote by the PSC.
U.S. Sen. Charles E. Schumer, D-N.Y., said the ruling "defies common sense" at a time when gas prices are around $4 a gallon and "we desperately need to develop alternative sources of energy."
"The ruling could cost us jobs upstate, $2 billion in (wind power) investment and should be rectified by the Public Service Commission," Schumer said.
He said the ruling's attention to ensuring that rates are kept low was one of the few commendable parts of the decision.
Energy East is the parent of both New York State Electric & Gas and Rochester Gas and Electric.
The Department of Public Service law judge, Rafael Epstein, picked apart the proposed $4.5 billion deal between Iberdrola SA and Energy East, writing that the commission should disapprove the transaction "on the ground that it does not satisfy the 'public-interest' requirement of Public Service Law."
But if the commission does approve the sale of Energy East, there are pre-conditions that should be met, he wrote.
They include forcing Iberdrola to sell its wind power plants in New York, to agree to $646 million in public-benefit adjustments, and to abide by safeguards and rate proceedings as proposed by the PSC staff.
Iberdrola officials had earlier said they would walk away from the deal, which has been approved by other affected states and the federal government, if New York demanded they sell their wind power farms.
Epstein's recommendation sets the stage for the parties in the case to respond -- they have until July 1 to do so -- and then a vote by the PSC.
U.S. Sen. Charles E. Schumer, D-N.Y., said the ruling "defies common sense" at a time when gas prices are around $4 a gallon and "we desperately need to develop alternative sources of energy."
"The ruling could cost us jobs upstate, $2 billion in (wind power) investment and should be rectified by the Public Service Commission," Schumer said.
He said the ruling's attention to ensuring that rates are kept low was one of the few commendable parts of the decision.
US judge consels against Iberdrola-Energy East deal
NEW YORK, June 16 (Reuters) - A New York administrative law judge recommended on Monday that state regulators disapprove Iberdrola SA's (IBE.MC: Quote, Profile, Research, Stock Buzz) $4.5 billion takeover of U.S. utility Energy East Corp (EAS.N: Quote, Profile, Research, Stock Buzz), saying the deal is not in the public's best interest.
New York's Public Service Commission -- regulators who oversee the state's utilities -- could kill the deal by not approving it.
"The commission should disapprove the transaction precisely because its lack of potential synergies or other benefits (when combined with the attendant risks) means that disapproval would avert a net detriment rather than forfeit an opportunity," Administrative Law Judge Rafael Epstein wrote in his decision.
Should the commission approve the deal, Epstein recommended it be subject to several preconditions. This would include nearly $650 million of positive benefit adjustments for Energy East customers in New York.
The Department of Public Service's staff, which advises the commission, has also opposed the acquisition, saying the deal's potential benefits are insufficient to satisfy the state's public interest standard.
Utility mergers in the United States are notoriously difficult to complete, often requiring the parties to receive approvals from state as well as federal regulatory agencies.
If the commission votes down the merger, it would become the latest in a line of high-profile utility deals to fall victim to local politics, which includes Exelon Corp's (EXC.N: Quote, Profile, Research, Stock Buzz) bid for Public Service Enterprise Group Inc (PEG.N: Quote, Profile, Research, Stock Buzz) and FPL Inc's (FPL.N: Quote, Profile, Research, Stock Buzz) scuttled acquisition of Constellation Energy Group Inc (CEG.N: Quote, Profile, Research, Stock Buzz)
New York's Public Service Commission -- regulators who oversee the state's utilities -- could kill the deal by not approving it.
"The commission should disapprove the transaction precisely because its lack of potential synergies or other benefits (when combined with the attendant risks) means that disapproval would avert a net detriment rather than forfeit an opportunity," Administrative Law Judge Rafael Epstein wrote in his decision.
Should the commission approve the deal, Epstein recommended it be subject to several preconditions. This would include nearly $650 million of positive benefit adjustments for Energy East customers in New York.
The Department of Public Service's staff, which advises the commission, has also opposed the acquisition, saying the deal's potential benefits are insufficient to satisfy the state's public interest standard.
Utility mergers in the United States are notoriously difficult to complete, often requiring the parties to receive approvals from state as well as federal regulatory agencies.
If the commission votes down the merger, it would become the latest in a line of high-profile utility deals to fall victim to local politics, which includes Exelon Corp's (EXC.N: Quote, Profile, Research, Stock Buzz) bid for Public Service Enterprise Group Inc (PEG.N: Quote, Profile, Research, Stock Buzz) and FPL Inc's (FPL.N: Quote, Profile, Research, Stock Buzz) scuttled acquisition of Constellation Energy Group Inc (CEG.N: Quote, Profile, Research, Stock Buzz)
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