WRI, KCP&L Merger Set For Hearing
FERC yesterday set the merger between Western Resources Inc. and
Kansas City Power & Light (KCP&L) for evidentiary hearing
on issues involving market power and customer protection.
Staff noted it was unable to reach final conclusions about the
competitive concerns of the proposed deal, given that much of the
"data and assumptions" underlying the partners' original merger
agreement, which was filed at FERC in September 1997, were outdated
by the time a revised agreement was submitted in August 1998.
Specifically, the staff noted they had questions about the
information and assumptions used in the merger application's
competitive screen analysis. Further, they said they needed
"additional information" from the merger partners to determine
whether combining Western Resources, which has an ownership
interest in gas transportation facilities, with KCP&L's
generating operations could give the Kansas City, MO-based utility
a competitive supply edge over competing generators in the region.
The concern is especially heightened considering that the
transportation facilities operate in the same geographic regions as
generators that compete with KCP&L, according to FERC staff.
Western Resources owns a 45% share of Oneok Inc., which has more
than 3,800 miles of pipeline in Texas and Oklahoma that have
interconnections with at least six major interstate gas pipelines.
"We are not able to determine what the upstream gas
transportation market [would look] like in this particular case
[post merger] for lack of information" from the merger partners,
said Diana Moss, a FERC staffer. It's unclear whether competing
generators would be able to access alternate gas transportation
facilities, she noted. Kansas and Missouri regulators also have
expressed similar concerns about the competitive aspects of the
merger and have set the issue for hearing, FERC staff indicated.
Topeka, KS-based Western Resources owns two electric
utilities-KPL, which serves northeastern Kansas, and KGE, which
serves southeastern Kansas. KCP&L provides electric service to
Kansas City, MO, and surrounding towns as well as parts of Kansas.
The utilities are seeking to combine their operations into a new
company-to be named Westar Energy.
©Copyright 1999 Intelligence Press Inc. All rights reserved. The
preceding news report may not be republished or redistributed, in
whole or in part, in any form, without prior written consent of
Intelligence Press, Inc.