TOPEKA, Kan. (AP) — Kansas regulators have rejected the proposed sale of the state's largest electric company to a Missouri-based utility for $12.2 billion.
The Kansas Corporation Commission issued an order Wednesday against the proposal from Great Plains Energy of Kansas City, Missouri, to buy Topeka-based Westar Energy.
"The companies will decide what the next steps are,” said Westar Energy spokeswoman, Gina Penzig.
The decision followed a briefing from KCC attorney Brian Fedotin, outlining reasons contained in the 43-page order as to why the merger was not in the public's best interests.
Among them, possible job cuts if projected savings estimates fell short and while the companies say a merger would reduce costs, the KCC says if those projections are 'overly-rosy', customers would pay higher costs for decreased services. In short, the KCC concludes, the proposal failed to meet not only the majority of merger standards, but the most important factors.
"The joint-applicants could not demonstrate that there were any savings that were going to come about by this merger and the commission indicated that,” said The Citizen’s Utility Ratepayer Board of Kansas spokesman, David Nickel. “The purchase price was extraordinarily high and it was difficult to establish if the company could meet their debt service."
Critics of the deal argued that Great Plains would be paying as much as $4.9 billion too much. They said the combined company would be so economically fragile that utility regulators would be forced to boost rates for its 1.5 million customers from central Kansas to central Missouri.
The utilities leaders disagreed with the vote, they said merging would save $2 billion dollars over the next decade, keeping electric rates in check.
"We think that it was good for Kansas, we think it was going to bring a lot of benefits to customers,” said Penzig.
The companies have 15 days to decide if they will ask the commission to reconsider its vote, Even if regulators deny the deal there's a stipulation Great Plains would still pay Westar $380 million.