Time is running out for the Public Service Commission, which must decide if it will let a Spanish firm come to New York and pump $2 billion into wind energy Upstate.

The PSC would be nuts to let the deal slip away. But it will – unless it moves fast.

The firm, Spanish energy giant Iberdrola SA, requires the PSC’s OK to buy power distributor Energy East. Once in New York, it says, it’ll spend a further $2 billion Upstate to develop wind power.

Economically struggling Upstaters rarely see that kind of investment. Yet the PSC seems intent on making sure they don’t see it now, either.

Indeed, a PSC administrative judge actually recommended that the commission nix the deal – or at least make Iberdrola pay $646 million for the “privilege” of doing business here and agree not to build wind farms in certain areas.

Without the wind agreement, PSC staffers fear anti-competitive practices by the firm. But that’s a wholly unwarranted concern – since wind power would still account for only a small (and intermittent) source of New York’s juice and wouldn’t dominate markets anytime soon.

As for the $646 million, well . . . seems that’s just the price of admission to New York – even if PSC staffers argue that it would go to benefit electric ratepayers.

If the deal goes bust, no one gets any benefit.

(Maybe the PSC should just hang a sign on the Statue of Liberty: “Looking to invest? Look elsewhere.”)

Iberdrola’s already waited more than a year now for a decision – and it’s getting antsy. Shifts in the market may soon make the investment less attractive – and the company’s walked away from deals before.

What a tragedy if this falls through.

New York needs the investment. It needs the electric power (produced, by the way, by carbon-free wind turbines).

Upstaters need the jobs.

Albany needs the tax revenue.

Shouldn’t Gov. Paterson be pushing the commission for a quicker green light?

The PSC still has time to do the right thing – but not much.

New Yorkers are waiting.