FERC yesterday set the merger between Western Resources Inc. andKansas City Power & Light (KCP&L) for evidentiary hearingon issues involving market power and customer protection.
Staff noted it was unable to reach final conclusions about thecompetitive concerns of the proposed deal, given that much of the”data and assumptions” underlying the partners’ original mergeragreement, which was filed at FERC in September 1997, were outdatedby the time a revised agreement was submitted in August 1998.
Specifically, the staff noted they had questions about theinformation and assumptions used in the merger application’scompetitive screen analysis. Further, they said they needed”additional information” from the merger partners to determinewhether combining Western Resources, which has an ownershipinterest in gas transportation facilities, with KCP&L’sgenerating operations could give the Kansas City, MO-based utilitya competitive supply edge over competing generators in the region.The concern is especially heightened considering that thetransportation facilities operate in the same geographic regions asgenerators that compete with KCP&L, according to FERC staff.
Western Resources owns a 45% share of Oneok Inc., which has morethan 3,800 miles of pipeline in Texas and Oklahoma that haveinterconnections with at least six major interstate gas pipelines.
“We are not able to determine what the upstream gastransportation 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 competinggenerators would be able to access alternate gas transportationfacilities, she noted. Kansas and Missouri regulators also haveexpressed similar concerns about the competitive aspects of themerger and have set the issue for hearing, FERC staff indicated.
Topeka, KS-based Western Resources owns two electricutilities-KPL, which serves northeastern Kansas, and KGE, whichserves southeastern Kansas. KCP&L provides electric service toKansas City, MO, and surrounding towns as well as parts of Kansas.The utilities are seeking to combine their operations into a newcompany-to be named Westar Energy.
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