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Western Resources Threatens to Exit Kansas After KCC Decision

Western Resources Threatens to Exit Kansas After KCC Decision

Western Resources yesterday threatened to cut its losses and sell the company to a national energy conglomerate because of a decision by the Kansas Corporation Commission (KCC) to reopen the docket on its merger with Kansas City Power and Light. The KCC issued an order late Monday to reopen the merger docket because of a stipulation and agreement Western signed with the Missouri Public Service Commission staff and others in the Missouri docket.

"To think that the KCC will force us to re-open the record in Kansas after we reached an agreement in this merger is unbelievable," said Carl M. Koupal Jr., Western Resources executive vice president and chief administrative officer. "The facts are these: the Missouri and Kansas agreements cannot be compared given the differences in rate base, rate design, cost of service and legal precedent in both states.

"This most recent action has forced us to seriously contemplate the company's future in Kansas," he added. "Companies like Western Resources and KCPL - on a stand-alone basis - could be targeted by out-of-region conglomerates as takeover candidates, which could have a negative effect on the entire region."

The agreement in Kansas allows for a four-year rate moratorium, $45 million in rate rebates and the company's opportunity to recover $300 million. Koupal said the recovery of the $300 million is over 40 years and likely will be offset by more than $7 billion in cost savings during the same time period.

"The agreement reached in Kansas provides customers with tangible benefits resulting from the merger. We will not tolerate additional financial restrictions placed on our company by the state regulatory body as a means to placate the winds of change," said Koupal. "Those involved in this case who are misrepresenting these facts are doing a great disservice to the future of the energy industry in our state."

Western Resources utilities KPL and KGE provide electric service to 620,000 customers in Kansas and through its ownership in Oneok Inc. Western has a 45% interest in the eighth largest gas distribution company in the nation, serving more than 1.4 million customers.

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