NYSEG Covers Up Alternative Bids in Favor of Spanish Company Takeover
By Jim Willis on Mar 22, 2008 in Business, Energy, Government & Politics | Printable Version
At least the New York State PSC (Public Service Commission) is not sleeping while Energy East, parent of NYSEG (New York State Electric & Gas) seeks to sell out to a foreign owner. See PSC holds off approval of Energy East-Iberdrola deal in today’s Press & Sun-Bulletin.
The PSC is digging and has found there were two other offers for Energy East. But the big guns at Energy East don’t want to disclose who, or what, those offers were. I wonder why? Could it be the other offers lacked some of the gold in the golden parachutes the people at the top of Energy East will get from Iberdrola? You can be sure the people at the top are looking out for themselves and themselves only, and don’t care a wit for the workers or the ratepayers. No doubt they will move out of the area once this deal is done, meaning they won’t have to live under the higher rates that will surely come as a result of their actions.
The whole thing stinks to high heaven if you ask me. I have been against this from the start on the grounds that key infrastructure should not be foreign-owned. As I state every time I write about this, I am not xenophobic–I have many friends in other countries. It’s nothing against Spain or the Spanish people. My objection has everything to do with the security of our homeland.
Perhaps wiser people than I, who read this blog, can answer a question for me. I’ve noticed in following this story that there are rumors another company is trying to buy out Iberdrola itself! Of course Iberdrola denies the rumors out-of-hand. But ‘what if’? What if Iberdrola buys NYSEG and say, a French company buys Iberdrola? And then, because France freely engages in commerce with Iran, an Iranian company buys the French company and becomes the new owner of NYSEG? Or instead of France, a company from North Korea buys Iberdrola? Or a company from a country with hostile relations toward the U.S.? What happens then? Can we prevent and control who the ultimate owner is once ownership of NYSEG transfers off-shore? Perhaps approval of the sale of an American utility is always subject to approval by our country–I’m not sure but would like to know.
Equally disturbing to me is lack of control at the local level. When Iberdrola sends down the word to “reduce the workforce” (i.e., fire people) to boost the bottom line, or to “invest” all sorts of money in “green technologies” (socialist pap that increases our gas and electric rates), local managers will have little control. Yes, the PSC must approve rate increases and the like. But those who own this monopoly, and it IS a monopoly, will be able to do with it what they want and there is no way to ultimately control them. The owners, instead of being here in the U.S. of A, are a continent away.
Yeah, maybe I’m a bit paranoid on this topic. But something instinctively tells me this is not a good deal for New Yorkers, and not a good deal for America. What do you think? Leave a comment and make me feel better about NYSEG being sold to a foreign country.
Technorati Tags: Energy East, NYSEG, Iberdrola, foreign ownership utilities
WHB | Mar 23, 2008 | Reply
Jim, I presume in light of you leading statements that you are aware of a potential bid from EDF (a French state owned power company) to purchase Iberdrola. I think there is also some Italian interest as well. Any deal would still be a long way off and would require the EU to sign off on it. In all likelihood your worst case scenario would include negotiations between the companies, the EU and the US. Such deals and a required spin off of subsidies are not uncommmon. Though they have become more high-profile since 9/11. The ports issue being the obvious example. Not that it is all that encouraging. You may be pleased to know that the US govt. blocked a Chinese company from buying an American oil company about 2 years ago (I forget which one). Perhaps now you can sleep better.
WHB
Jim Willis | Mar 24, 2008 | Reply
Thanks WHB. That does make me sleep better!
Although I still don’t like foreign ownership of our infrastructure. 
Mother Pearl | Jul 19, 2008 | Reply
I’ve been reading your comments about this NYSEG/Energy East/Iberdrola affair. If you are so concerned about the security of our homeland, Mr. willis, why don’t you petition our government to track down and throw out all of the illegals that live in this country who could be planning God knows what and could very well be facilitating the implosion of the USA? I hardly believe that an International company such as Iberdrola is a threat with which any of us have to be concerned. The person at the helm of Energy East has weakened the companies under its umbrella by taking hundreds of millions of dollars for his personal use out of their coffers through legal loopholes and manipulation; cutting manpower and budgets to the point that the companies are hemorrhaging, yet you are concerned about a Spanish company that might put some money back into Energy East companies to build them back up and put some much-needed improvements to work. Oh, I forgot…. as long as it looks good on paper and the stockholders are making a buck, that’s all that ever matters. It doesn’t matter that the operational infrastructure of the Energy East companies may be so old they are actually hazardous and unreliable.
Jim Willis | Jul 21, 2008 | Reply
Mother Pearl – thanks for your comment. I appreciate all civil commenters, even those who disagree with me!
Yes, I am concerned with the security of our country, as I believe most citizens are. I am against amnesty for illegal immigrants. I believe your point is, “why don’t you expend your energy writing and lobbying against illegals rather than the sale of Energy East?” To which I would respond, they are both important issues and both issues deserve our attention.
I have no ill feelings against Iberdrola per se. I would feel the same if it where any foreign-owned company. America’s infrastructure (power companies, roads, ports) should never be under the control of someone who may one day be unfriendly to this country.
Let me ask you: Would you object to the sale of Energy East if it were to an Iranian or North Korean company, knowing of those country’s hatred for America and our ideals? It seems to me those who are our allies today may not be so tomorrow. That is why I object to this sale.
aise | Jul 27, 2008 | Reply
First of all, I want to apologize for my filthy english. I’m writing this from Spain, just because it’s been really strange to me to read Jim’s first comment on this subject, and I’ve felt the need to write something about it.
Nowadays we live in a global world, with global markets, at least there is a majority of countries who believe in the same rules for their economy, their politics, their foreign affairs… and I sincerely thought Spain and the United States were together in that group of countries.
When we talk about energy infrastructures, one thing that is quite clear here in Spain (and in Europe), is that the operation of these infrastructures has nothing to do with the property, with who is the owner. There are rules, and there are independent commissions, who are in charge of such things, and who care for a correct operation of such goods. And in case that any owner tried to operate against those rules, these commissions would act to reconduct this behaviour, or even remove the owners from the property of the firm. So we don’t need the owner to be a local firm as a condition for a good operation of the service.
But this is only a question about the way energy markets work. And there is something else in Jim’s comment that really sounds uncomfortable and “out of time” to anybody here in Europe, the question about “the property moving out to another continent”. If you look at the owners of our firms here in Europe, you’ll find capital from almost every country in the world, most of it from the United States, let me say. Nothing to say about it, if these capitals respect those rules I mentioned in my first paragraph about politics, foreing affairs, democracy, and the rules in my second paragraph, about the operation of each local market. If I take a look at the capital of the companies from which I buy most things (my car, my food, my gas, or my cola drink), it won’t be easy to find spanish money in it. But I thought this was far from being a problem nowadays.
In this case of Iberdrola, please check the composition of its capital, most of it is in US banks and funds’ hands, so maybe in the end Energy East gets back to american owners after being sold to Iberdrola. Or maybe not, companies are bought and sold every day at the stock exchanges, don’t forget it. Sold to Iberdrola or not, you can go to your agent, give an order and become the owner of (a part of)that energy infrastructure.
That is a global world with a global market, and I couldn’t expect you americans to disagree about it.
Best wishes from the old Europe.
Jim Willis | Jul 27, 2008 | Reply
Dear Aise,
Thank you for your comment! I do believe you’re the first reader (and commenter) of this blog who is from Spain. I deeply appreciate that you’ve taken the time to leave a comment.
Your comments make a great deal of sense. I should make it clear that my position on foreign ownership of infrastructure is in the minority. Most of my fellow citizens (and most of my friends!) disagree with me on this point and in fact have no problem with Iberdrola’s potential purchase of Energy East.
Your argument that energy companies really can’t make a move without approval and oversight from the Public Service Commission is a good argument–and true. It’s also true that anyone can be an “owner” by purchasing stock–and stock in energy companies is owned by peoples from around the world.
My continuing concern is that the major decisions of the company will be made by people other than those who have their citizenship in and owe their allegiance to this country. Having someone run an energy company is, to me, different from a soft drink manufacturer. Bad decisions, or decisions that can harm a great many people, can be made by those who own infrastructure. It is not the same with cameras or soft drinks or cars or other consumer goods. Those items are not key to a country’s defense and the welfare of its citizens. Infrastructure is key.
I will restate that I have deep respect (and fondness) for Spain and other European countries. I don’t believe I am in any way xenophobic. I have a number of friends and colleagues from other countries, ethnicities and colors. I further recognize the global nature of our economy and how we are all intertwined. And that America owns operations in countries around the world.
But I continue to make an exception for ownership of key infrastructure. My gut tells me we should not let management and ownership of key infrastructure be controlled by non-Americans, as much as we like them and as much as we respect them.
Once again, thanks for commenting. I suspect in the end Iberdrola will purchase Energy East. There just aren’t enough voices objecting. So this whole discussion will become “academic” as we say.
Best wishes to you in old Europe from those of us in the New World.
Jim
aise | Jul 27, 2008 | Reply
Hi again, Jim.
So it seems the key issue is that we are talking about an estrategic activity.
I don’t know how estrategic would you consider these activities:
* all the software in spanish companies is bought to Microsoft
* most of the turbines in our new power plants are bought to General Electric
* the leading company in PC equipment in Spain is IBM, and the other ones are not spanish, either
* more than half of our planes must be Boeing, I guess
* Most of the oil we import comes throug american companies
* I’d bet american companies play a significant role in our pharmaceutical o biogenetical sectors (no local company, that’s sure)
* the only spanish car manufacturer sells about 15% of the market, the rest is served by foreign companies
* 85% of the total energy consumed in Spain is imported from other countries
* in the UK, around 80% of consumers buy their electricity to companies based in other countries
* in spanish energy sector, the first company was bought by an italian one last year, the fourth one is portuguese, and nowadays the third one is about to be sold to a french one.
In my opinion, even in estrategic activities, we should not care where the capital comes from, we just have to strengthen the operating rules and supervising commissions’ job.