Archive for Friday, May 25, 2001

Western asks KCC to reconsider

Utility says state regulators have no jurisdiction over plans for corporate restructuring

May 25, 2001


— Western Resources Inc. asked the Kansas Corporation Commission Thursday to reconsider its investigation into the company's restructuring plans, saying the commission doesn't have jurisdiction.

The request came during the sixth day of a hearing on the company's proposal to increase its electric rates by $151 million.

On May 8, the commission initiated an investigation into Western's plans to separate its utilities KPL and KGE from its unregulated subsidiary Westar Industries.

The KCC is investigating whether the proposed Westar spinoff could unfairly leave the utility operations with debt that might be passed on to ratepayers.

In the petition Western filed Thursday with the KCC, the company maintains that the commission has no authority to regulate what Westar does, because Westar is not a public utility as defined by Kansas law.

"Although the commission has general authority to investigate public utilities, the commission may not regulate matters beyond its jurisdiction," Western's petition said.

KCC spokeswoman Rosemary Foreman said staff attorneys are reviewing the petition and that the KCC has no immediate comment.

Walker Hendrix, an attorney for the Citizens' Utility Ratepayer Board, said that Western made a lot of "legal and technical" arguments, but missed the broader picture.

"If the commission does not have jurisdiction, why wouldn't every utility set up an unregulated company and use it to suck the life blood out of the utility," said Hendrix, who represents residential and small business consumers.

Walker and the commission also have asked the federal Securities and Exchange Commission to investigate Western's business practices.

Despite the Kansas investigation initiated by the commission, Western filed a petition May 18 with the SEC seeking to proceed with a rights offering of Westar stock to its current shareholders. The rights offering is the first step in its plans to separate Westar from the utilities.

Tuesday, the KCC ordered Western to halt its restructuring plans and set a hearing for June 14 as part of the ongoing investigation.

Foreman said the KCC has 30 days to respond to Western's petition. Until the KCC responds, the June 14 hearing still will take place, she said.

Western's spokeswoman Kim Gronniger said Thursday that she didn't know if the company would take further action to avoid the KCC hearing on restructuring plans.

"At this point, we're just taking it one step at a time," Gronniger said.

Although many of the same issues may arise, the commission's investigation is separate from the rate increase hearing, which is expected to last until June 1.

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