KCP&L reaches key settlement in proposed purchase of Westar; future of Lawrence power plant unclear

The Westar Energy Plant north of Lawrence is pictured in this file photo from 2007.

Kansas City Power & Light has reached an agreement with the staff of the Missouri Public Service Commission that should eliminate one key question in the utility’s proposed $12 billion merger with Topeka-based Westar Energy.

Lawrence residents, though, may still have a significant question about the merger of two of the region’s largest electric providers: What will happen to Westar’s coal-fired power plant just outside the Lawrence city limits?

Terry Bassham, chairman and CEO of KCP&L, told a Lawrence crowd Thursday that it was still too early to know how the merger will impact the Lawrence Energy Center, which employs about 100 people and is one of the county’s largest payers of property tax.

Bassham said the proposed merger will give the combined company more options in how it produces power.

“We will continue to look for the best opportunities across the board,” Bassham said at a luncheon for economic development leaders, business leaders and others interested in the proposed merger. “I do know it is a great plant, though.”

The plant in recent years was upgraded with scrubbers and other cleaner coal technology.

KCP&L and its parent company, Great Plains Energy, announced in May that it had reached a deal to buy Westar Energy for $12.2 billion. Westar is the largest electric provider in Kansas, and is the dominant electric utility in Lawrence.

The deal, however, must still win regulatory approval. Questions have emerged about whether the Missouri Public Service Commission would seek to halt the deal out of fear that the additional debt taken on by Great Plains Energy would harm Missouri utility customers.

At Thursday’s event, KCP&L leaders said they filed a settlement on Wednesday with the staff of the Missouri Public Service Commission that provided more information and assurances about the soundness of the deal, said Chuck Caisley, vice president of marketing and public affairs for KCP&L. The settlement also includes provisions about how Missouri utility customers would be impacted if the combined company faltered. As part of the settlement, the staff has agreed to not seek jurisdiction in the case, which is a sign the staff does not plan to object to the acquisition.

Caisley said the Missouri Public Service Commission may still hold hearings on the acquisition. However, if the regulatory staff doesn’t object to the acquisition, that makes it unlikely that the commission would seek to scuttle the deal.

An attempt to reach a spokesperson with the regulatory commission wasn’t successful Thursday evening, and a copy of the filing wasn’t immediately available.

The proposed acquisition still faces multiple regulatory hearings in Kansas. The Kansas Corporation Commission is set to have a hearing on the acquisition on Dec. 5, Caisley said. The KCC’s website didn’t yet have a time or place for that hearing listed on Thursday afternoon.

The KCC has said it will issue a decision on the hearing by mid-April. In August, several parties intervened in the case. They include: the Kansas Citizens’ Utility Ratepayer Board, a state agency that represents residential and small business customers; Midwest Energy, a utility company that buys electricity from Westar; Occidental Chemical, one of the largest industrial electric consumers in the state; and two chapters of the International Brotherhood of Electrical Workers.

Thursday’s event featured Bassham — who would serve as chairman and CEO of the combined company — and Mark Ruelle, president and CEO of Westar. Other topics discussed at the luncheon at Arterra Event Gallery included:

• The name of both companies is likely to change after the merger. Bassham said he thought it was important to have one name for the entire company, but he said he’s uncertain that the Kansas City reference in the KCP&L name would be effective in other Kansas communities. Bassham said it likely would take leaders 12 to 18 months after the acquisition is finalized to come up with a new name for the utilities.

• Bassham reiterated support for keeping Westar’s offices in downtown Topeka. Bassham said it was too early to say exactly which employees would be staying in the Topeka offices, but he said the company is committed to keeping senior management-level positions in Topeka. The corporate headquarters of Great Plains Energy will remain in Kansas City, Mo., although Bassham did note that the new company will have more Kansas electric customers than Missouri customers.

• Company officials did not provide any estimates for how many employees may be laid off as part of the merger. Westar’s Ruelle, though, said a surge in baby boomers retiring has Westar’s natural attrition rate at about 5 percent, which he said is one way the company may be able to reduce the number of layoffs as part of the deal.

• Bassman pledged that service levels under the new company will be as good as or better than what Westar is currently providing. He said electric rates are not likely to decline as part of the deal, but he said the efficiencies of the new company should cause rates to increase more slowly and less frequently.