Iberdrola to restructure sale of natural gas-, coal-fired assets

The New York State Public Service Commission directed Iberdrola S.A. to restructure the sale of its fossil fuel generational power plants in New York by offering the plants for sale individually rather than as a group. The company’s initial efforts to sell the power plants as a group failed to satisfy floor price requirements of the divestiture plan.

Iberdola's sale of its fossil fuel generation assets was a condition for regulatory approval of the company’s merger with New York State Electric & Gas Corp. (NYSEG) and Rochester Gas and Electric Corp. (RG&E) in 2008.

Iberdrola’s New York fossil fuel assets include: RG&E's 62 MW Allegany combined-cycle plant; Cayuga Energy Inc.'s 63 MW Carthage combined-cycle plant; RG&E's stations 3 and 9, both 18 MW natural gas-fired combustion turbines; and RG&E's recently retired Russell coal-fired power plant.

Regulators said it was unlikely the Russell site would attract a buyer interested in anything other than redevelopment. It directed RG&E to file a plan on how it will demolish the Russell site and remediate it environmentally.

In November 2009, a divestiture plan for auctioning the fossil generation assets was approved by state regulators. In December 2010, Iberdrola and its affiliates said that bids received for the assets failed to meet the requirements of the divestiture plan.

The commission decided the asset sale might attract more interest if two combined-cycle generation facilities were treated as two separate components in one package to be auctioned; grouping the twoRG&E peaking turbines into a second package to be auctioned; and separating the now-dormant Russell site into a third package.

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