Topeka ? \State regulators on Friday approved the latest plan from Westar Energy Inc. for improving its finances, which promises $20.5 million in rebates to electric customers.

The Kansas Corporation Commission’s three members declared the plan “reasonable and in the public interest,” even though it eliminates a looming debt-reduction deadline set by the KCC.

Last year, the KCC gave Westar until Aug. 1 to reduce its debt from more than $3 billion to $1.67 billion. The company was all but certain to miss the deadline, because its debt is still $2.9 billion.

Under the new plan, Westar will rely more on its investors to raise capital and less on debt, but it would not be tied to a specific debt-reduction target. The company will continue efforts started in February to sell off nonutility assets to raise cash for debt reduction.

The rebates are included because the plan arose from negotiations among Westar, the KCC’s staff and other parties. Those parties — all except the Citizens’ Utility Ratepayers Board — endorsed the plan and signed an agreement with the company.

The KCC’s action came only two days after its hearing on the plan.

“We’re very pleased the KCC acted so quickly,” said Westar spokeswoman Karla Olsen. “We’re anxious to move forward with our plan.”

CURB, which represents residential and small-business consumers, had objected to the proposal because it still allowed Westar shareholders to collect their annual stock dividends of 76 cents per share, worth about $50 million a year in all. Its attorneys had said other parts of the plan were reasonable.

CURB had argued the rebates — $10.5 million on May 1, 2005, and $10 million on Jan. 1, 2006 — were too small, compared to the dividends stockholders would receive. The rebates amount to an average of about $16 in 2005 and an additional $15 in 2006 for each of Westar’s 653,000 Kansas customers.

Niki Christopher, a CURB attorney, said the commission usually accepted agreements among parties in the cases before it.

“We’re not surprised, but we’re a little disappointed,” she said.

Still, she acknowledged, “There were lots of parts of the plan that we did not object to.”

Jim Zakoura, an Overland Park attorney representing Westar’s largest industrial electric customers, said the commission recognized that the plan represented a compromise.

“They sure acted quickly,” he said. “They didn’t let any moss grow on the stone.”

The KCC has been examining Westar’s management for two years. Last year, it ordered Westar to reduce its debt and said it wanted to prevent ratepayers from either subsidizing non-utility operations or paying off debt associated with those interests.

In its six-page order Friday, a unanimous KCC said Westar “should have flexibility to choose its own path toward financial and corporate restructuring.”

The latest plan would give the company until the end of 2004 to increase the percentage of capital coming from shareholders to 40 percent. Right now, the company calculates that such equity is 30 percent of the company’s capital — with most of the remaining 70 percent coming from debt.

To increase its equity — the net value of its property — the company could either reduce its debt or attract more capital from investors.

The KCC noted that the bulk of the cash for reducing debt would come from the sale of the nonelectric assets, most notably Westar’s 88 percent interest in the Protection One security alarm firm and its interest, previously 45 percent, in ONEOK Inc., a Tulsa, Okla., natural gas company.

Westar hopes asset sales will raise more than $1 billion for debt reduction. The company has said if its plans do not reduce its debt enough, it could issue more stock at the end of 2004 to raise money.