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WRI, KCP&L Merger Set For Hearing

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and assumptions" underlying the partners' original merger agreement, which was filed at FERC in September 1997, were outdated by the time a revised agreement was submitted in August 1998.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.

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