Some business leaders and politicians are upset that a state agency is putting roadblocks in the way of a merger between a Spanish power company and RG&E's parent company.
They like the idea of a merger between Iberdrola and Energy East, which owns RG&E and NYSEG, largely because the company promises to invest up to $2 billion in wind energy development. Greater Rochester Enterprise, for example, pitches Rochester as a high-tech community on the forefront of renewable energy development. Its leaders see Iberdrola as a good fit in the community.
The state's regulatory watchdog, the Public Service Commission, has the final say on the merger. Its staff, as well as a judge involved in the proceedings, have recommended against the merger as proposed. They are concerned it would give the company too much clout in the power market. Competition could be stifled, they say, because Iberdrola would own both the means of producing and distributing energy. If the commission does allow the merger, Iberdrola should have to sell off its wind power assets, they say. Iberdrola officials, meanwhile, have said that they will walk away from the deal if they're forced to give up those assets.
"I think it's good the PSC has asked the questions, but I think clearly the right decision is to endorse the proposal," says Sandy Parker, CEO of Rochester Business Alliance.
Iberdrola owns a 50 percent stake in the state's largest wind farm, Maple Ridge, and has plans to develop around a dozen more. Worldwide, they are one of the largest wind energy producers.
Politicians think the company could be a valuable partner in helping the state meet its renewable energy goals - 25 percent of the state's power is supposed to come from renewables by 2013. So some influential Republicans and Democrats are starting to run interference with the process.
During a radio show appearance, Republican State Senator Joe Bruno said the judge involved in the proceedings should be "dismissed" for ruling against the merger.
United States Senator Chuck Schumer has been especially vocal on the merger, which he favors. He's called the demand that Iberdrola sell off its wind farm assets "irrational and illogical." He'll meet with PSC chair Gary Brown to discuss the judge's recommendations that the company not be allowed to own renewable energy facilities, including wind farms.
The PSC staff and the judge are just doing their jobs - to independently review whether the transaction is in the public interest - and politicians shouldn't criticize their recommendations, says Fairport resident Charles Straka. He's not involved with the merger case, but he is an unpaid representative of the average customer - an intervener in technical terms - in an ongoing RG&E rate case. And much of his interest in the merger deals with competition and its effect on rates.
"If the Public Service Commission process is overruled, who's going to control rates at all?" he says.
New York's experiment in power utility deregulation is key here. The underlying concept is that fostering competition between power producers should result in lower energy costs. Part of that effort has involved separating energy production and distribution so that one company doesn't control both.
If Iberdrola owns both the production facilities - wind farms, in this case - and the means of distribution, says Straka, it will give the company an advantage and may stifle competition, he says.
In public documents, an industry group has also voiced concerns that an Iberdrola-Energy East merger could hurt utility competition. The Independent Power Producers of New York, which represents power generating companies, favors Iberdrola's plans to sell RG&E and NYSEG's fossil fuel plants. If the merger happens, it also wants Iberdrola to sell Energy East's New York hydroelectric plants and refrain from connecting any new power plants, including wind farms, to RG&E or NYSEG distribution systems.
"It's a question of being fair," Straka says. "We don't need Iberdrola to own a utility company."
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