Iberdrola gets green light for Energy East

17 September 2008


Spanish utility Iberdrola has described the acquisition of Energy East in the USA as a “milestone” in its strategic plan.

The authorities in the USA have given their approval to the $8 billion deal, which will consolidate Iberdrola’s position as the world’s fourth largest electricity company and make it Spain’s largest investor in the USA.

The New York State Public Service Commission (NYPSC), which was the last regulatory body to approve the deal, has imposed certain conditions, however.

“This acquisition is one of the key elements of our 2008-10 Strategic Plan and gives us an important platform to develop our growth in a market the Group has identified as key to its future development,” said Iberdrola chairman Ignacio Galán.

Energy East distributes electricity or natural gas to about 3 million customers in five states in the US northeast. It also operates thermal and hydropower generation assets.

The transaction was first announced in June last year and will increase Iberdrola’s assets in the USA to around $20 billion. Iberdrola says it has decided to accept the NYPSC’s conditions and go ahead with the takeover.

Energy East operates in the states of Maine, New York, Connecticut, New Hampshire and Massachusetts. The NYPSC’s conditions include $275 million in tariff adjustments, and a requirement for the utility to divest fossil fuel generation in New York state.

Iberdrola already owns a number of wind power projects in north-east USA through its renewable energy subsidiary Iberdrola Renovables, and says that it intends to develop further wind capacity in the region. New York state has a policy that companies should not own both generation and distribution assets.

Iberdrola Renovables is the second largest wind operator in the USA, with 2000 MW in operation and a target of 6900 MW by 2012.

Iberdrola’s enterprise value now stands at EUR65 billion and it is the world’s fourth largest electricity group by market capitalization. It has a presence in 40 countries and focuses on developed and liberalised markets such as Spain, the UK and the United States.




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