Topeka ? Westar Energy Inc. announced Wednesday that it expected an accounting charge to reduce its earnings during the current quarter.

The charge will be about $40 million, or 33 cents per share of common stock, the company said in a statement. It said the charge would reflect how accounting rules apply to $400 million of its $3.2 billion in debt.

The company has projected earnings for the entire year of $1.27 per share, excluding one-time items, such as the accounting charge.

Westar, the state’s largest electric company, recorded another accounting charge of $9.20 per share during the first quarter of this year. It reflected a $657 million change in how the company accounted for intangible assets such as goodwill.

The company also said it expected to receive a $54 million federal tax refund before the end of this year.

David Wittig, Westar’s chief executive officer, said the company still planned to pay its stockholders dividends of $1.20 per share for 2002. He said the company would review its dividend policies for 2003 and beyond.

The firm also announced Wednesday that it had settled its lawsuit with PNM Resources, a New Mexico-based energy company that Westar had agreed to merge with until the deal fell apart last year. Westar agreed to drop its lawsuit against the company in exchange for PNM agreeing to drop all potential lawsuits against Westar. Westar’s lawsuit alleged that PNM improperly terminated the merger.