TOPEKA, Kan. (AP) — Kansas regulators on Wednesday rejected the proposed sale of the state’s largest electric company to a Missouri firm in a $12.2 billion deal that critics argued would financially hobble the combined utility.
The Kansas Corporation Commission issued its order against a proposal from Kansas City, Missouri-based Great Plains Energy Inc. to buy Topeka-based Westar Energy Inc. after consumer advocates and the commission’s own staff criticized the acquisition. Opponents argued that Great Plains was paying far too much and regulators could be forced to boost rates to keep the combined company stable.
“The proposed transaction is simply too risky,” the commission said in its unanimous order.
Great Plains is the parent of Kansas City Power & Light Co., and its proposed acquisition of Westar would give it 1.5 million customers from central Kansas to central Missouri. Great Plains and Westar argued the deal would create nearly $2 billion in operating efficiencies over the next decade to keep electric rates in check.
Westar and Great Plains stockholders overwhelmingly approved the deal last year, but the companies also needed approval from regulators in Kansas, Missouri and the U.S. government. The Missouri Public Service Commission has had hearings but has yet to rule.
In Kansas, the commission’s decision might not be the final word. The companies could file a lawsuit to overturn it.
The two companies have acknowledged that their deal would result in the companies trimming their workforces, but they promised that Westar would retain its Topeka headquarters. They also told the Kansas commission that the companies included more than 40 provisions in their deal to protect consumers from the financial risks associated with it.
Under the deal, Great Plains would acquire Westar’s $3.6 billion in debt, and critics argued that it would be paying as much as $4.9 billion more than the book value of Westar’s assets.
Critics also said achieving the promised savings in operating costs would require Great Plains to shutter generating plants and cut more than 600 full-time jobs by 2020. They said that despite its promise, the company would have to consider closing Westar’s offices in Topeka.
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