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Energizing growth

RG&E has evolved while still delivering safe, reliable power

Rochester Gas and Electric Corp.’s relationship with Iberdrola S.A. connects the local energy distributor to an international power company whose resources allow for greater investments in the local community, its leaders say.
 
RG&E, founded in 1848 as the Rochester Gas Light Co., has been acquired twice in the last 10 years. In June 2002, Energy East Corp. spent $1.4 billion to acquire holding company RGS Energy Group Inc., along with New York State Electric & Gas Corp.
 
Thomas Richards, now Rochester’s mayor, at the time was RGS president, chairman and CEO. After reportedly refusing to negotiate terms more favorable to Energy East, Richards was ousted upon the deal’s closing.
 
In January 2003, RG&E announced plans to eliminate 225 jobs, part of an effort to achieve $50 million in savings as RGS and Energy East promised to regulators at the time of the merger.
 
Then, in September 2008, Spain-based Iberdrola purchased RG&E and NYSEG from Energy East.
 
"RG&E is basically the same company, with the same mission we had 10 or 15 or 20 or 30 years ago, which is to deliver safe and reliable energy to our customers, and do it in a way that keeps them satisfied, and at a reasonable price," said Joseph Syta, RG&E’s controller and treasurer.
 
RG&E’s local headquarters has been at 89 East Ave. since 1926.
 
RG&E and Iberdrola USA Inc. employ 950 locally-down from 1,900 roughly a decade ago. The employment reductions stem from a regulatory mandate that energy distributors exit the business of generating energy.
 
RG&E’s sale of its R.E. Ginna Nuclear Power Plant in Wayne County to Baltimore-based Constellation Energy Group LLC in 2004 cut RG&E’s work force by some 440. In 2008, more than 100 additional jobs were eliminated when RG&E closed the Russell Station coal-fired plant.
 
"The primary generation sources we sold were the two nuclear plants: the Ginna plant, which we owned at 100 percent, and the RG&E share of the Nine Mile II plant outside of Oswego," Syta said, adding that both are still generating energy for the New York grid. The New York Independent System Operator coordinates the distribution of power to the state’s providers.
 
"We still have first call on 90 percent of the energy that gets produced at the Ginna plant," Syta said.
 
In July, Houston-based Direct Energy Services LLC announced plans to acquire Iberdrola’s energy retail subsidiaries Energetix Inc. and NYSEG Solutions Inc. for $110 million.
 
"We have gone through a transition," said Mark Lynch, president of RG&E and NYSEG, reflecting on RG&E’s long history and essential role in the area’s growth. "Even with the change of ownership to Energy East and now Iberdrola, our core mission is still the same."
 
RG&E provides energy to 367,000 electricity customers and 300,000 gas customers in nine counties.
 
It awarded $4.7 million in electricity and natural gas rate incentives and grants to 39 companies in the Rochester area in 2011. The awards will result in capital investments of $141 million by the recipients, and the addition or retention of 2,900 jobs, RG&E officials said. The company’s largest investment last year was $950,000 to help the General Motors Corp. plant in Honeoye Falls expand its hydrogen fuel cell manufacturing operation.
 
RG&E is in the midst of a $250 million upgrade to infrastructure on the west side of Rochester, scheduled for completion late in 2014.
 
"We’re doing that in anticipation of strengthening the transmission system, and then the distribution systems, to support future growth within the Rochester area," Lynch said. "We want to be part of the growth engines."
 
Lynch credited Iberdrola with providing the resources for upgrades and incentives.
 
"There are a lot of advantages to being part of a large international company such as Iberdrola S.A.," he said. "Improving the efficiency of our operation translates into better rates in the future for our customers. We’re looking at employing best practices and standardization that we’re seeing across the globe.
 
"As we continue to move forward, you’re going to see the same emphasis-and maybe even a renewed emphasis-on our communities and economic development, and in our relationships with key stakeholders."
 
10/12/12 (c) 2012 Rochester Business Journal. To obtain permission to reprint this article, call 585-546-8303 or email rbj@rbj.net.

 

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