CITIZEN POWER ALLIANCE

WASHINGTON — U.S. Sen. Charles Schumer urged the staff of the New York Public Service Commission to back off its demand that Iberdrola SA sell its wind-energy assets and forgo developing any new wind power in the state as a condition of buying Energy East Corp.

The New York Democrat said the PSC is being "stone-headed" in the conditions it has set and would prevent upstate from benefiting from more wind power.

Iberdrola, a Spanish company that is the world's leading producer of wind energy, has said it might pull out of the proposed $4.5 billion purchase of Energy East over the issue.

Energy East is the parent company of both Rochester Gas and Electric Corp. and New York State Electric and Gas Corp.

Iberdrola has a 50 percent stake in the Maple Ridge Wind Farm in Lewis County, the largest wind farm in the state. It also has promised to invest at least $100 million in wind power throughout upstate if the buyout of Energy East is approved.

The state currently generates only about 1 percent of its electricity from wind. The state government has set an ambitious goal of getting 25 percent of power through renewable sources by 2013 and needs more wind power to achieve that, Schumer said.

"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."

PSC spokesman James Denn said that the Iberdrola deal has not yet come before the full commission and that negotiations between the company and the commission's staff are continuing. The recommendation that Iberdrola be required to give up its interests in wind generation facilities was part of a 41-page staff brief issued Friday.

Denn said the staff is trying to make sure Iberdrola doesn't monopolize the wind energy market in New York. The PSC staff has argued that if the utility is allowed to retain its wind generation capabilities, it will engage in anti-competitive practices.

"If a company can control both the generation and the distribution of electricity, they have an opportunity to exert a greater influence on the market than you might want them to," Denn said.

But Schumer said there is no evidence that this would happen, and if it does, it is up to the PSC to stop it. He said it also doesn't make sense to require a company to divest 100 percent of its wind energy assets.

Every other state where Energy East owns assets, including Maine, New Hampshire, Massachusetts and Connecticut, has approved the buyout by Iberdrola, which was announced 10 months ago. Iberdrola's chairman, Ignacio Sanchez Galan, suggested recently that his company might abandon the deal and seek another U.S. acquisition because of the PSC's demands.

Schumer noted that the state Consumer Protection Board has called the PSC staff's position "unreasonable." Also, groups ranging from the Natural Resources Defense Council to Greater Rochester Enterprise have argued that Iberdrola should be allowed to stay in the wind business because of the significant economic development boost it could bring to the state.

"It's outrageous that the PSC is working against the very interests of its own state," Schumer said.

EKELLY@GNS.Gannett.com