The New York State Public Service Commission has voted to authorize the acquisition of Energy East Corp. and its affiliates – New York State Electric & Gas Corp. (NYSEG) and Rochester Gas & Electric Corp. (RG&E) – by Iberdrola S.A. The Commission's action requires provisions designed to enhance ratepayer financial benefits, mitigate vertical market power, protect the utilities' assets and financial condition, improve transmission and distribution system reliability and strengthen service quality.
The Commission reaffirmed its statement of policy regarding vertical market power and will allow Iberdrola to develop and own wind generation, but it imposed several conditions on the transaction. The conditions are designed to mitigate the risk that Iberdrola could exercise in the vertical market power, and to provide substantial ratepayer benefits.
In addition to the $100 million the company previously committed to wind development, the Commission ordered an additional $100 million be set aside for the same purpose. If the company fails to invest the additional $100 million, it will use up to $25 million in shareholder funds to invest in economic development projects in its service territories.
Under the Commission's authorization, NYSEG and RG&E electric and gas customers will receive at least $275 million in benefits. These benefits will, over time, be used to either reduce rates or moderate requested rate increases.
The Commission accepted Iberdrola's offer to divest fossil fuel generating plants and ordered the utilities to file a divestiture plan within 90 days of consummation of the merger. The Commission will also allow Iberdrola to continue to own and operate existing Energy East hydroelectric facilities.
SOURCE: New York State Public Service Commission