Missouri wants in on the regulatory approval process in the planned $8.6 billion purchase by the parent of Kansas City Power & Light Co.of Topeka-based Westar Energy Inc.
Great Plains Energy Inc. announced last week it was buying Kansas’ largest electric utility and that it would seek approval from the Kansas Corporation Commission and some federal agencies, but not the Missouri Public Service Commission.
The staff of the Missouri regulatory body, however, said in a six-page motion that Great Plains agreed 15 years ago to seek the agency’s approval if it acquired a public utility or an affiliate of one. The agreement was part of the state’s 2001 approval to allow Great Plains to acquire Aquila, which now operates alongside KCP&L.
Missouri sought the deal because Great Plains is a holding company and not a regulated public utility directly, as is KCP&L.
Great Plains attorneys countered quickly, saying the 2001 deal applies only to buying Missouri-regulated utilities, and that Westar operates only within Kansas.
“Staff’s interpretation would expand the commission’s jurisdiction to non-Missouri regulated public utilities, and grant the commission extraterritorial powers never contemplated by Missouri law,” Great Plains’ filing said.
Besides, the company’s filing said, the Missouri Public Service Commission saw no reason to get involved when the St. Louis area firm Laclede Group bought an Alabama natural gas company from its parent firm in 2014. It said Laclede had granted the Missouri body the same sort of approval that Great Plains had in 2001, and it cited other similar precedents.
A Great Plains spokeswoman and the attorney representing the Missouri Public Service Commission staff each declined to comment on the filings.
The Missouri commission’s staff acts as the agency’s technical experts but interacts with the regulatory body through the process of public proceedings, chief staff counsel Kevin A. Thompson said. He submitted a motion to the Missouri Public Service Commission asking it to open an investigation into the proposed purchase’s impact on Missouri ratepayers.
The staff motion also said the commission needs to weigh in on Great Plains’ Westar deal because of similar issues surrounding Aquila and its purchase by Great Plains. One issue was debt, with Great Plains agreeing to take on $3.6 billion of Westar debt in the current proposal.
“Staff is mindful of the negative results experienced by Aquila Inc.,which also embarked upon a course of heavily-leveraged expansion,” the staff filing said.
Great Plains’ filing said Aquila took on debt mostly to get into unregulated energy markets and was hobbled by the collapse of Enron. Westar, Great Plains’ filing said, “is on solid financial footing and engages primarily in regulated operations.”
The staff filing also cited one other similarity between the Westar deal and the Aquila deal, namely claims that the merger would create savings. In the Aquila deal, it said, the savings came “chiefly through the termination of almost all of the employees of Aquila” and that this could reduce efficiency and safety if duplicated in a Westar deal.
“There are absolutely no facts to support that irresponsible and inflammatory allegation,” Great Plains’ answer said.
Aquila’s 2,200 employees were divided between Great Plains and another company involved in the sale of Aquila’s assets called Black Hills Corp., the filing said. It said 920 became KCP&L employees and 1,091 received jobs with Black Hills, with fewer than 5 percent receiving severance at the time the sale closed.