Western Resources last week threatened to cancel its proposedmerger with Kansas City Power & Light and sell off the companyto a national energy conglomerate following a decision by theKansas Corporation Commission (KCC) to reopen the docket on its $2billion merger.

The KCC on Monday granted a motion by the Kansas IndustrialConsumers Group to reopen the merger docket and add to the recordan agreement Western signed with the Missouri Public ServiceCommission staff and others in the Missouri docket. The industrialgroup was disappointed the Missouri agreement contained provisionsthat were more favorable to consumers than those in the Kansasagreement.

“To think that the KCC will force us to re-open the record inKansas after we reached an agreement in this merger isunbelievable,” said Carl M. Koupal Jr., Western Resources executivevice president and chief administrative officer. “The facts arethese: the Missouri and Kansas agreements cannot be compared giventhe differences in rate base, rate design, cost of service andlegal precedent in both states.

“This most recent action has forced us to seriously contemplatethe company’s future in Kansas,” he added. “Companies like WesternResources and KCPL – on a stand-alone basis – could be targeted byout-of-region conglomerates as takeover candidates, which couldhave a negative effect on the entire region.”

The agreement in Kansas, which was signed in May by severalinterested parties and the KCC staff, allows for a four-year ratemoratorium, $45 million in rate rebates and the company’sopportunity to recover $300 million. Koupal said the recovery ofthe $300 million is over 40 years and likely will be offset by morethan $7 billion in cost savings during the same time period.

“The agreement reached in Kansas provides customers withtangible benefits resulting from the merger. We will not tolerateadditional financial restrictions placed on our company by thestate regulatory body as a means to placate the winds of change,”said Koupal. “Those involved in this case who are misrepresentingthese facts are doing a great disservice to the future of theenergy industry in our state.”

KCC commissioners are due to begin discussing the merger on Aug.11. The merger also still requires regulatory approval in Missourias well as the Federal Energy Regulatory Commission. The mergerwould create a new company, Westar Energy, with more than 1 millioncustomers. Western Resources utilities KPL and KGE provide electricservice to 620,000 customers in Kansas and through its ownership inOneok Inc. Western has a 45% interest in the eighth largest gasdistribution company in the nation, serving more than 1.4 millioncustomers.

Rocco Canonica

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