CITIZEN POWER ALLIANCE

Funny: Saving the planet always seems to collide with more earthly concerns.

In Washinton, politicians trying to fashion a policy to fight global warming are arguing over how it would affect America’s economic competitiveness. Lofty climate-change goals also collide with pandering on the daily cost of gasoline. A train ride away in New York, the same debate is playing out, but in the real world.

Iberdrola, the big Spanish utility and the world’s biggest producer of renewable energy, has been trying for almost a year to secure New York state approval for propose its $4.5 billion takeover of Energy East, a utility operating throughout the Northeast. Iberdrola wants to buy Energy East to have a foothold in big power generation in the U.S., where it already operates a load of wind farms. It sees the Energy East deal as a springboard to rolling out more wind power in New York, which is desperately trying to meet its own targets for clean-energy generation.

But the New York Public Service Commission, the five-person body that has to give the final green light, is leery. It’s worried Iberdrola’s deal could harm consumers by raising power prices; it argues the deal would give Iberdrola a virtual monopoly, since the Spanish utility could control both generation and transmission of electricity. So, the New York commission is proposing that the world’s biggest wind-farm operator divest some of its wind farms to win regulatory approval.

That’s got some big names steaming. New York senator Charles Schumer called the PSC attitude “stone-headed” the other day for nitpicking over the deal. From the Albany Times-Union:

“This is one of the most amazing things that I’ve seen,” Schumer said. “The PSC is being very stone-headed and not being very practical.”

From the Rochester Democrat and Chronicle:

“The Public Service Commission could make this a real benefit for New York, and instead they’re turning this into a fiasco,” Schumer said in a conference call with reporters. “We’re urging them to quickly turn this around.”

New York is the only Northeast state that hasn’t yet approved the Iberdrola acquisition, and Iberdrola is getting antsy. The Spanish utility said last week, after making almost a score of concessions to secure regulatory approval, that it will look for another acquisition if necessary.

Some people are concerned because Iberdrola itself could be the target of a bid by a big French utility, which could upset the whole apple cart. But the pressure doesn’t look likely to abate. Big power consumers, watching their wallets, have urged the New York commission to strongarm Iberdrola.

Renewable-energy fans are rushing in to try to break the impasse. The National Resources Defense Council, an environmental group, told the New York commission that, despite potential competitiveness concerns, Iberdrolas commitment to roll out more clean energy is just what New York needs to meet its target of 25% renewable-energy by 2013. The New York Consumer Protection Board said much the same. Even the New York Department of Economic Development supports the deal, since it would mean fresh capital for local utilities.

Just another reminder, this spring from the Empire State, that greening America’s energy system won’t be a bed of roses.