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Westar-Great Plains Merger Gets Staff OK — If Tweaked

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A staff report backs the proposed merger of Westar and Great Plains utility companies, if savings are shared fairly with ratepayers.

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 said in the report that the proposal cures the fatal flaws that doomed the two companies’ previous attempt at combining. KCC Utility Division Director Jeffrey McClanahan even praised 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 said.

In the new merger proposal, the staff report said, Westar and Great Plains had learned from past mistakes.

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

The staff 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, the staff report said.

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

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

The commissioners won’t make their final decision until June.

Brian Grimmett, based at KMUW in Wichita, is a reporter focusing on the environment and energy for the 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. Kansas News Service stories and photos may be republished at no cost with proper attribution and a link back to the original post.

I seek to find and tell interesting stories about how our environment shapes and impacts us. Climate change is a growing threat to all Kansans, both urban and rural, and I want to inform people about what they can expect, how it will change their daily lives and the ways in which people, corporations and governments are working to adapt. I also seek to hold utility companies accountable for their policy and ratemaking decisions. Email me at grimmett@kmuw.org.
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