N.Y. PSC Denies Revisions to NYSEG/RGE Code of Conduct

The New York PSC has denied NYSEG and Rochester Gas & Electric's petition to amend their affiliate code of conduct to allow Iberdrola affiliates to participate in competitive procurement procedures utilized by the two utilities (Case 07-M-0906).

The petition was specifically sought to allow Iberdrola Engineering & Construction Company (Iberenco) to participate in RFPs for engineering and construction management projects; however, the changes to the code of conduct would not have been narrowly tailored to such situations, or to only implicate Iberdrola Engineering & Construction Company to the exclusion of other potential affiliates. As such, the Commission's order and reasoning includes a broader scope, and is of interest despite the distribution-related nature of the instant request.

Under the existing code, any Iberdrola affiliate can provide NYSEG or RGE with shared services, if those services are priced at fully-loaded costs.

"What the Petitioners propose is a major modification to the Code that would allow Iberenco, and perhaps other [Iberdrola] affiliates, to charge the NYSEG and RG&E affiliates a price, obtained through an RFP procurement, that is higher than the fully-loaded cost price," the Commission said in denying the petition, which had been opposed by Multiple Intervenors (11/12).

The Commission held that the benefits of allowing the Iberdrola affiliates to participate in any RFPs (which petitioners said could lower costs) are, "speculative and are substantially outweighed by the risk that their participation will increase the costs that NYSEG and RG&E ratepayers must bear."

"The Petitioners have not demonstrated, however, that the pools of qualified bidders are presently inadequate, or that the addition of another bidder will substantially affect the prices submitted in the RFP procurements," the PSC said.

"Moreover, whatever reduction in bid prices might be obtained initially from Iberenco's participation could swiftly be lost, and much higher prices could be incurred, if the pool of bidders shrank because potential RFP participants not affiliated with [Iberdrola] fear its Iberenco affiliate will receive preferential treatment in the evaluation of bids," the Commission added.