ALBANY, N.Y. (AP) – The global energy company Iberdrola SA has hit more resistance in New York to its planned $4.6 billion buyout of Energy East Corp.

A state administrative law judge has recommended that New York utility regulators nix the proposed deal, saying it doesn’t satisfy the public interest requirement of state utilities law.

Iberdrola needs approval from New York’s Public Service Commission to buy Energy East, which is the parent company of Rochester Gas and Electric Corp. and New York State Electric and Gas.

Maine-based Energy East also owns power companies serving customers in Connecticut, Massachusetts and Maine, and regulators in each of those states has given the buyout plan their blessing.

But New York PSC staff opposes the deal because of concerns about whether it will best serve the public in cost and competitiveness.

They recommended a series of preconditions that Iberdrola must meet – including providing more than $600 million in rate cuts and other benefits to customers and selling all of its power-generation plants in the state, which is in line with PSC’s goal of getting utilities out of the generation business to encourage competition.

Iberdrola, which is based in Spain, objected to some of the PSC’s demands – including sale of its interest in wind and hydropower generating plants – and the case was referred to Administrative Law Judge Rafael Epstein for review.

Epstein’s non-binding, 151-page opinion issued Monday recommends rejecting the deal because it would not be in the public interest.

At the same time, Epstein recommends conditions – similar to those proposed by PSC staff – that Iberdrola should meet if the commission approves the deal, including selling generating plants that are connected to RG&E’s or NYSEG’s distribution network and providing $646 million in rate cuts and other benefits to customers.

James Denn, a PSC spokesman, said there has been no date set for a final decision on the proposal.

A spokesman for Iberdrola said the company, which is based in Spain, is reviewing the judge’s recommendations and had no immediate comment.

AP-ES-06-16-08 1710EDT