Westar, KCPL seeking to revise merger plan
Topeka ? Officials at Kansas City Power and Light and Topeka-based Westar Energy said Tuesday that they may submit a revised plan for merging the two electric utilities.
Those statements came after the Kansas Corporation Commission unanimously rejected their request to reconsider its April 19 decision rejecting a proposal for KCPL’s parent company, Great Plains Energy, to acquire Westar for $12.2 billion.
Following that decision, the companies filed a petition for reconsideration of that order to give them time to revise the proposed transaction. But in a unanimous decision Tuesday, the KCC denied that petition, saying the companies had failed to state any reason why the original order was in error.
“The commission reiterates its belief that the Joint Applicants are responsible companies that serve their communities well as evidenced by the outpouring of support from community leaders and elected officials,” Tuesday’s order stated.
The order went on to say that the commission “encourages the parties to continue working together to ‘revise the Transaction to address the commission’s concerns related to purchase price, capital structure and other issues’ and welcomes the filing of a new application that can satisfy the merger standards and advance the public interest.”
“We appreciate the Commission is welcoming of a new application and we are pleased they recognize the outpouring of community support for the work our companies do,” Katie McDonald, spokeswoman for Great Plains and KCPL said in an email statement. “We continue to work with Westar in a timely manner to explore the possibility of a revised deal that is materially better than our standalone plan for both shareholders and customers. If a new agreement to combine is reached, the companies would file a new application under a new docket.”
Westar spokeswoman Gina Penzig said the Topeka company was disappointed in Tuesday’s order, but that it was encouraged by the statement that the KCC would welcome a new application.
“Westar continues to discuss potential changes to the merger agreement with Great Plains to determine if a new agreement can be reached that addresses the concerns of the KCC while still adding value for our customers, investors, employees and communities,” Penzig said in an email statement.
In its April 19 order, the KCC rejected the merger plan, saying the $5 billion acquisition premium Great Plains was offering to Westar was too high and would put the new combined company at financial risk.
The only way the combined company could absorb that cost, the KCC said, was by making cutbacks in staff and service, which would not be in the public’s best interest.
If the companies submit a new application, there is a chance it would be decided by a slightly different commission. That’s because under Kansas law, the KCC must act on such applications within 300 days, and the term of KCC Chairman Pat Apple would expire during that window.
Apple, a former Republican state senator from Louisburg, was appointed to the KCC by Gov. Sam Brownback on March 24, 2014. His term expires March 15, 2018.
Brownback has not said whether he plans to reappoint Apple to another term or name a new commissioner.
Appointments to the KCC are subject to Senate confirmation.