Aquila Inc. announced Wednesday that it would sell its natural gas operations in Kansas to Black Hills Corp., a South Dakota-based utility that plans to retain all affected Aquila employees once the deal closes next year.
The Kansas operation, whose customers include 33,000 in Lawrence and is based at 110 E. Ninth St. in downtown Lawrence, is part of Black Hills' $940 million purchase of Aquila gas interests in Kansas, Iowa and Nebraska, and gas and electric operations in Colorado.
Curt Floerchinger, a Lawrence-based spokesman for Aquila's Kansas and Colorado operations, said that Black Hills was committed to providing the same safe, reliable service that has been the hallmark of Aquila and its predecessors since 1860.
Black Hills also plans to retain all 30 Aquila employees in Lawrence and all 132 statewide, as the company expands its reach as a regional utility, Floerchinger said.
"It's business as usual," he said. "The customers will see the same people reading their meters and coming to their doors and driving the trucks all around town. And the fact that Black Hills will move forward with all the Aquila employees - that familiarity with the business is great, and that will be of great benefit to customers and shareholders as well."
The Black Hills transaction comes as Kansas City, Mo.-based Aquila plans to sell its other utility assets to Great Plains Energy Inc., another Kansas City-based utility.
The Great Plains stock transaction is valued $1.7 billion; Great Plains also will assume $1 billion in Aquila debt.
The deals await regulatory approval.
Aquila has grappled in recent years with debt levels and other issues connected with previous moves into energy-trading and other nonregulated businesses.
Black Hills currently provides natural gas service to about 32,000 customers in Wyoming, plus electric service to 101,500 customers in South Dakota, Wyoming and Montana. The combined company would have 753,000 customers and $3 billion in assets.
The sale of Aquila's gas operations in Kansas will not be expected to affect the company's push for a rate increase. Aquila has asked the Kansas Corporation Commission for permission to boost natural gas rates enough to collect another $7.2 million a year from its 106,000 customers in Kansas.
The increase would cost the typical residential customer in Lawrence another $4.40 a month for gas service.
The corporation commission is scheduled to rule on Aquila's request by June 29.
Aquila shares closed Wednesday at $4.34, down 33 cents. Shares of Black Hills were unchanged at $39.08.