Western Resources Inc. and Kansas City Power and Light (KCPL) -could be reaching the end of their long-fought merger battle as theKansas Corporation Commission (KCC) approved the merger with someconditions.

Western said it is reviewing the 25-page KCC order. “Given thecomplexity of the issues and the significant financial implicationson our company’s future, we are reviewing all of our optionsregarding the conditions outlined in today’s order,” said David C.Wittig, Western CEO. Western Resources has 15 calendar days fromthe date of Tuesday’s order to file a motion for reconsiderationwith the KCC. A spokeswoman said Western had no further commentright now.

“[S]avings and benefits from the merger are one of the primaryreasons why the merger is in the public interest,” the commission’sorder said. “[I]t is reasonable and appropriate for these savingsto be shared between ratepayers and the shareholders. Inconsidering the public interest, it has been of primary importanceto the Commission that the merger appears to result in increasedefficiencies for the merged company, a substantial level of savingsthat can benefit both shareholders and ratepayers, enhancement ofthe reliability of electric service in the area, and a stronger,financially secure public utility.”

The KCC said it would allow Western to recover merger costs onlythrough savings generated by the merger. It allows WesternResources an opportunity to recover merger costs from mergersavings during a four-year rate moratorium, assures nomerger-related rate increase to customers, and returns mergersavings to customers following the moratorium.

On June 17, 1998, Western and KCPL filed a joint amended mergerapplication with the commission. The proposed merger, valued atabout $2 billion, would form Westar Energy, with Western Resourcesas the parent holding company owning 80.1% of Westar. KPL, KGE, andKCPL would become operating divisions of Westar.

As recently as last month, Western threatened to cancel its KCPLdeal and sell itself off to a national energy conglomerate after theKCC decided to reopen the docket on the deal (see Daily GPI, Aug. 4).

The Federal Energy Regulatory Commission has approved the merger(see Daily GPI, Aug. 24). Earlier thismonth, Western and KCPL filed a settlement with the FERC relating tomarket power, transmission and customer protection issues stemmingfrom the merger plan (see Daily GPI, Sept. 17). Under terms of the FERC filing,merged company Westar Energy will join a FERC-approved regionaltransmission organization (RTO) to ensure all participants in theregional electricity market have fair access and an equal opportunityto compete for generation supply. Westar will further transfer controlof its transmission facilities to the RTO, which will operate thefacilities as once control area for reliability, and will maintainseparate zonal rates that will not increase for four years.

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