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KCP&L’s track to become Fortune 500 company needs one last Missouri OK, as long as that comes quickly

JEFFERSON CITY, MO – KCP&L’s path to acquiring Westar and together making them Missouri’s newest Fortune 500 company was always going to be challenging, but elected leaders on both sides of the state line were confident that the two companies were better together with Kansas City headquarters than both being acquired and owned by companies on the east coast. 
Missouri regulators seemed to be out of the way when the Office of Public Counsel and the Public Service Commission staff came to an agreement months ago. However, a conversation in 2001 has set up one last regulatory hurdle on the Missouri side

During a 2001 stipulation agreement involving the creation of Great Plains Energy as a holding company of Kansas City Power & Light Co., they agreed not to acquire another utility without commission approval. 

At the February 16th meeting, Missouri regulators used this as the basis to rule that they have jurisdiction in the meter of KCP&L and Westar in a 5-0 vote. However, it is viewed as a simple process that is simply to ratify the agreement made between the staff and OPC that the merger will not harm Missouri consumers. 

PSC Chairman Daniel Hall, who is in the awkward position of serving as a Democrat under a Republican governor, explained that in Section 7 of the agreement 

“I believe that under the section 7 condition, public utility does, in fact, include Westar,” Hall said. “It’s designed to protect ratepayers from potentially harmful acquisitions undertaken by Great Plains at the holding company level.” 

The basis was the because the PSC feels this acquisition falls within the earlier stipulation it must be regulated so other commission orders will be viewed the same in the future. The companies were required to file in 10 days and did so on Monday

The move, which could delay final regulatory approval until mid-April, has garnered the attention of some Missouri elected officials.

“This deal would bring a Fortune 500 company to Kansas City, hold down energy prices for customers and strengthen our state”, House Speaker Todd Richardson said. “This should be a top priority and be handled as expeditiously as possible.”

It is common knowledge inside the Capitol that if the acquisition is unsuccessful and Missouri regulators are to blame, there would most likely be an intense review of the regulatory process during the next legislative session, as the newly elected Governor has made his dislike of state regulations and regulators a signature piece during his first weeks in office. 

While most observers see the Missouri ruling as a delay with near-certain approval coming from the PSC in early April, the challenge is Kansas Corporation Commission, whose approval is necessary. Their staff has come out in opposition to the deal but has hinted that they see a path toward a deal, citing a large amount of political support.

The other approval necessary is from the Federal Energy Regulatory Commission (FERC). They are expected to approve the acquisition but there could be the issue of a quorum present. 

Many observe that there is a practical danger from Missouri’s ruling, that the PSC could cause a delay that could hurt the acquisitions chances in Kansas. Most view April 24th as the key date in Kansas, and Missouri approval would be needed a couple of weeks earlier. However, Chuck Caisley, Kansas City Power & Light’s vice president of marketing and public affairs, has stated they will accommodate the order and are appreciative of the expedited schedule.