Hearings Begin in Kansas on Utility Merger

Tough questions were aimed at officials of Great Plains energy and Westar Energy officials during Monday’s opening day of a merger hearing before the Kansas Corporation Commission.

Mainly, they focused on how such a proposed merger will affect the rates of consumers. Westar CEO Mark Ruelle and Great Plains CEO Terry Bassham faced the line of questions and defended their second effort to merge, calling it the only options for rising costs.

“Looking at how to address and attack those costs, a merger was a way to do that,” Bassham said. “The merger is the best opportunity that we could find.”

The merger would create a new holding company called Monarch Energy. It’s combined equity value would be about $15 billion according to a report in the Topeka Capital Journal.

Shareholders of Westar okayed the merger last November. Under the proposal, Westar would own 52.5 percent and GPE would own 47.4 percent of the new company.

But consumer groups are skeptical of the merger.  Bill Riggins with the Kansas Electric Power Cooperative contended it would mean approving a rate increase “with no idea of its magnitude.”

He told the Commission, “It’s worth noting that the parties opposing the settlement are the ones that have to write a check to the companies every month.”

Others had reservations too including the Kansas Industrial Consumers Group whose attorney James Zakoura expressed concerns about the $6.2 billion in capital expenditures proposed by the company. He suggested the cap-ex might be closer to $4.9 billion.

Zakoura complained Kansas energy rates are already too high when compared to those paid in neighboring states. He pointed out the rate in Oklahoma is 10.58 cents per kilowatt hour compared to the 13.32 cents paid in Kansas. The rate in Nebraska is 11.06 while Coloradans pay 12.17 and those in Texas pay 11.18 cents per kilowatt hour.