Kansas Regulators Back Westar-Great Plains Merger, With A Few Caveats

Jan 30, 2018

A merger of Westar Energy and Great Plains Energy deserves approval, regulatory staff say in a new report, if the two utilities sweeten the deal with more money for ratepayers and less for shareholders.

The staff report issued this week is only advisory -- combining the two companies still needs a go-ahead from the Kansas Corporation Commission -- but it signals that the companies may be close to a merger that wins regulatory approval.

Kansas Corporation Commission staff say in the report that Westar and Great Plains have learned from past mistakes that doomed the two companies’ previous attempt at combining. KCC Utility Division Director Jeffrey McClanahan even praises the two companies’ efforts in his written testimony.

“The applicants should be commended for resolving all of the fatal flaws and structuring the deal as a merger of equals,” he says.

But even with the praise, McClanahan and his staff are calling for a few more tweaks to the application.

Staff are primarily worried that projected savings from the merger would pay off better for shareholders than for ratepayers. To fix that, they suggest giving more upfront bill credits to customers. They also want to see a five-year moratorium on rate increases.

A combined utility would also be required to file an annual earnings review with the commission to analyze whether the new company’s revenues are being shared fairly between shareholders and ratepayers, report says.

KCC staff also recommend provisions that keep workers for the new company in Topeka. The application already includes a five-year commitment, the report suggests a 10-year pledge.

Westar and Great Plains Energy have until Feb. 19 to respond and make any case against the recommendations.

Commissioners won’t make their final decision until June.

--

Brian Grimmett is an energy and environment reporter for KMUW’s Kansas News Service, a collaboration of KMUW, Kansas Public Radio, KCUR and High Plains Public Radio covering health, education and politics. Follow him on Twitter @briangrimmett.