Topeka ? Westar Energy Inc. should be restructured, state utilities regulators agreed Thursday morning, possibly including replacing the current managers of its electric operations.

The Kansas Corporation Commission didn’t take formal action. But commissioners agreed Westar has been using its electric utility operations to carry too much debt including that of its non-regulated subsidiaries.

“We can issue any order that is supported by the record, and we have a very extensive record related to management,” said Chairman John Wine. “That would be out there, and that would be available for us to consider in drafting this order.”

Westar provides power to about 636,000 Kansas customers, making it the state’s largest electric company. Its KPL unit provides electric service in the Lawrence area.

But Westar also has unregulated businesses, including an 85 percent interest in Protection One, a security alarm business.

Commissioners did not discuss who would manage the proposed electric subsidiary or whether current executives, including Westar president, chairman and CEO David Wittig, would be in charge of the utilities.

The commission said it would issue an order in October.

The biggest issue for the three commissioners was how Westar has allocated its assets and debts between its electric operations and its other interests. The commission put Westar’s debt at $3.6 billion, and said only $1.5 billion of that could be attributed to utility operations. Instead, the company has allocated $3.1 billion in debt to its electric operations, the KCC said.

Westar puts its debt at $3.2 billion, and attributes $2.9 billion of it to the utilities.

Whatever the figures, the allocation is an issue for commissioners because they worry that ratepayers will be forced to pick up the costs of paying off debt not incurred for their benefit.

“That kind of misallocation is inappropriate and unacceptable,” Wine said.

“Ratepayers don’t share in the gains, and they shouldn’t share in the pain,” commissioner Brian Moline said.

The Kansas Corporation Commission has been reviewing Westar Energy Inc.’s finances for months and had two weeks of public hearings in July. Among other things, the commission wants Westar to pay down its $3.2 billion in debt.

The commission’s meeting came after a flurry of announcements by the company this week.

The latest one, made Wednesday, was that Westar and Public Service Company of New Mexico settled litigation in New York state court over a failed $4.4 billion deal they had announced in 2000.

Westar also said it did not plan to cut dividends to stockholders from the $1.20 per share, despite an accounting charge this quarter of $40 million or 33 cents a share.

The Citizens’ Utility Ratepayers Board, which represents residential and small-business consumers, has suggested a cut, to free up more money to pay off debt. But Walker Hendrix, CURB’s consumer counsel, acknowledged that a dividend cut might cause Westar’s stock to tumble.

Read more on this story in Friday’s Lawrence Journal-World.