Archive for Tuesday, May 1, 2001

Power concerns raised

KCC, Stovall asked to investigate concerns about restructuring

May 1, 2001


Key legislators Monday called for an investigation into Western Resources and a halt to the electric utility's proposed restructuring.

The move comes as Western Resources the parent company of KPL and KGE electric utilities seeks federal approval to restructure its holdings and state approval of a $151 million rate increase.

But on Monday, State Reps. Carl Holmes, Tom Sloan and Laura McClure, the chairman, vice chairman and ranking Democrat on the House Utilities Committee, brought a host of concerns to the Kansas Corporation Commission, which regulates utilities.

"I want the lights on at a reasonable cost to Kansas consumers," Holmes, R-Liberal, said.

The lawmakers asked that the commission:

Try to halt any restructuring of Western Resources.

Investigate transactions "which have depleted the utilities of their financial equity."

Require the return of the lost equity to the utilities, KPL and KGE.

Make recommendations to the Legislature on how to protect consumers from "predatory restructuring of regulated companies."

Get the attorney general involved to ensure that ratepayers will not be placed at risk by "financial manipulations and corporate restructuring."

KCC Chairman John Wine said the agency had been concerned about how Western's restructuring would affect ratepayers, and had previously decided to hire a consultant to help determine what the commission should do.

"We have been investigating if there are any steps necessary in order to protect utility ratepayers from losses of unregulated activities," Wine said.

Kim Gronniger, a spokeswoman for Western, said the company would decline comment until it could more thoroughly examine what the lawmakers wanted. In the past, Western has defended its proposed restructuring as making the company stronger and its rate hike request as necessary to cover the costs of increasing electrical capacity.

Western Resources includes companies, such as KPL and KGE, that are regulated by the state. It also has companies, such as Westar, which includes the security firm Protection One, that are not regulated.

Western wants to spin off the unregulated companies and eventually sell the utilities to Public Service Co. of New Mexico. Its application is being considered by the federal Securities and Exchange Commission.

Consumer advocates and ratepayers say that for the past several years, Western executives have been taking the profits from the utilities paid by electric ratepayers and used them to help build their other companies.

"We understand that the utility portion of Western Resources has lost $1.5 billion in equity over the past few years, while the equity position of unregulated Westar has grown," said a letter to the KCC from Holmes, Sloan, R-Lawrence and McClure, D-Osborne.

"It appears that transactions have been manipulated to transfer equity between the regulated and unregulated enterprises," the letter states.

Holmes said his committee has worked for years on legislation to help utility companies increase capacity, and now it appears Kansas' major power company "won't have the creditworthiness to build plants."

Sloan said reports that Western had transferred equity and given lavish perks to its executives just raised too many alarms.

"There are so many questions being asked about the financial viability," of KPL and KGE, he said.

Commenting has been disabled for this item.