An administrative law judge advised state regulators on Monday to block a Spanish energy conglomerate's bid to buy Energy East, a Maine-based utility with operations in four states, including New York, citing anticompetitive concerns.

The recommendation by the judge, Rafael Epstein, largely sided with an earlier recommendation by staff members of the Public Service Commission, which must approve the acquisition of Energy East by the conglomerate, Iberdrola. The commission's five-member board will have the final say.

Iberdrola's bid has the enthusiastic support of key members of the state Legislature and U.S. Senator Charles Schumer, Democrat of New York, who point to the company's plan to invest at least $2 billion in building wind power facilities in New York if it is permitted to acquire Energy East, which is the parent company of two other utilities in upstate New York and already owns wind turbine facilities. Governor David Paterson also says he supports the deal as long as Energy East's customers are protected from unfair pricing.

But regulators say that the merger would give Iberdrola a virtual monopoly on wind power generation in the state while also providing the company with transmission and distribution lines, running afoul of state laws that prevent the generation, transmission and distribution of power by a single company.
In his decision, Epstein noted that "Iberdrola's wind generation ownership also has engendered an unusual amount of commentary by editorial boards and public officials, uniformly opposing ownership restrictions as contrary to the state's interests and even 'stone-headed."'

But he appeared unpersuaded by Iberdrola's promise of investment, writing that "the economic benefits of competition are no less real than an immediate infrastructure investment."

Epstein also recommended that the board impose numerous conditions on Iberdrola, should it ultimately approve the sale. They include limits on the company's ownership of electric generating plants in New York and rebates worth hundreds of millions of dollars to customers of the companies being acquired.

A spokesman for Iberdrola said the company was reviewing the judge's recommendation.