Friday, February 29, 2008

Schumer wary of NYSEG buyout by Jonathan D. Epstein

Sen. Charles E. Schumer on Thursday called on Spanish energy company Iberdrola S.A. to protect 1.5 million Upstate New York ratepayers from spiking energy bills and poor service when it buys the parent of New York State Electric & Gas.

Madrid-based Iberdrola, a global energy provider, agreed last June to pay $8.6 billion in cash to buy Portland, Maine-based Energy East Corp., the parent of NYSEG, which serves suburban and rural portions of Western New York. Energy East also owns Rochester Gas & Electric, and several New England utilities.

The proposal has been approved by federal officials but is still pending before the state Public Service Commission, which is negotiating a settlement with Iberdrola that can still be rejected or altered by the PSC. If approved, the purchase, coming seven years after British utility National Grid PLC bought Niagara Mohawk in 2001, means most customers in Western New York will get their power from a European-owned company.

But that earlier merger has had its problems. Schumer said Niagara Mohawk customers have experienced rate increases and “unpredictable service” since the merger, and said he wants to avoid another “National Grid debacle.” He noted that Iberdrola is paying significantly more than Energy East’s market value, but has offered few guarantees to benefit customers.

The New York Democrat urged Iberdrola to set up a trust fund — formally known as a regulatory deferral account — to offset rate increases in coming years so current customers of RG&E and Binghamton- based NYSEG don’t face higher monthly utility bills.

He also asked the Spanish company to agree to a “performance assurance plan” that would impose penalties if service quality deteriorates after the merger.

Both requests were included in a letter to the PSC, which also encouraged the agency not to prevent Iberdrola from developing further sources of renewable energy.

The deal would create an energy giant with operations in 14 coun - tries, and would give Iberdrola a strong position from which to expand in the United States.

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1 comment:

  1. Just another example of the typical environmentalists that argue they are in favor of "clean" energy as long as it's not in their backyard. Not to mention the message being sent to industries which might actually still be considering doing business in New York.