Dive Brief:
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The staff of the Kansas Corporation Commission (KCC) has recommended against Great Plains Energy’s proposed $12.2 billion acquisition of Westar Energy, according to media reports. If the KCC commissioners approve staff’s recommendation, it could kill the proposed acquisition.
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In a filing, staff found the proposed acquisition is not “the public interest when evaluated in the light of the commission's merger standards," and creates "an unacceptably high financial risk for both current and future customers and shareholders."
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Great Plains spokesman Chuck Caisley told media outlets KCC staff’s recommendation was highly unusual, especially when it did not offer a solution or a path forward. He said the utility has no current plans to renegotiate the price or the capital structure of the proposed deal.
Dive Insight:
The acquisition of Westar Energy by Great Plains Energy would give Missouri based Great Plains, corporate parent of Kansas City Power & Light, more than 1.5 million customers in Kansas and Missouri and over 13 GW of total generation.
But the deal has faced scrutiny from a long list of intervenors, including industrial consumers, smaller regional utilities and unions, many of whom object to the acquisition.
In August, Westar revealed the deal was the subject of federal review, saying it received a letter from the Department of Justice in June requesting information on the merger.
In October, Kansas regulators pushed Great Plains to show greater evidence of cost savings that would come from the merger.
KCC staff also cited reports by credit rating agencies expressing concern about the high price of the deal and how it would be financed.
Great Plains’ Caisley told media outlets that the staff failed to note that one of the main concerns of the ratings agencies was that the deal might face regulatory hurdles.
Caisley also said Great Plains totally disagrees with staff’s assessment and that the staff was overstepping its bounds.
Great Plains plans to file a rebuttal statement on Jan. 9.
