Editor's note: This story was updated at 3:30 p.m. July 10.
Two of the region’s largest utilities are taking another run at a merger.
Great Plains Energy, based in Kansas City, Mo., and Topeka-based Westar Energy announced Monday that they would seek regulatory approval for a proposed merger, which if approved would create a Fortune 500 company with $14 billion in assets and approximately 1.6 million customers in Kansas and Missouri.
The Kansas Corporation Commission earlier this year rejected a bid by Great Plains to acquire Westar, Kansas’ largest utility, for $8.6 billion. Regulators balked because the deal also would have required Great Plains to assume $3.6 billion in debt.
The new deal addresses those concerns by proposing a “merger of equals,” said Mark Ruelle, president and CEO of Westar, who if the deal is approved would serve as the non-executive chairman of the board of the new company.
“A merger of equals means that neither company is acquiring the other. Neither is paying a premium to the other. And there will be no transaction debt. We simply combine and exchange our shares in a new company that our shareholders both own,” Ruelle said at a joint news conference outside Westar’s downtown Topeka headquarters.
Tom Wright, a former chairman of the KCC, said the companies’ new proposal appears to address the commission’s previous concerns.
“At first glance it appears it does, but it will all be dependent on the details,” said Wright, who served on the KCC from 2007 to 2014.
The merger would generate immediate operating efficiencies of $35 million to $45 million, according to the companies. Those savings would grow to between $140 million and $170 million by 2021.
“The new transaction unlocks better operational savings and better long-term growth than either of our companies could generate on our own,” said Terry Bassham, president and CEO of Great Plains.
Based on those projections, the companies are promising to provide $50 million in savings to their customers, as soon as the deal is approved, in the form of a one-time rate reduction on their initial bills.
“We’re so confident in those savings generated by this deal that we’re willing to make that commitment even before those savings have been generated,” he said.
Gina Penzig, a spokeswoman for Westar, said it wasn’t possible to calculate an average savings to customers until the deal is approved and regulators determine how it should be apportioned to residential, industrial and other types of consumers.
There would be no layoffs, officials said. Instead, the companies would retire some aging generating units and not fill some job vacancies going forward to achieve the savings.
The combined companies would be leaders in renewable energy, Bassham said.
“One-third of our retail sales will come from wind energy,” he said. “And almost half of all energy provided to our customers would be through carbon-free power.”
The merger would mean no immediate change for Wolf Creek, Kansas’ only nuclear power plant. The companies, which already own a share of the facility, would keep it in operation through the end of its “licensed life” in 2045, Ruelle said.
Jim McLean is managing director of the Kansas News Service, a collaboration of KCUR, Kansas Public Radio and KMUW covering health, education and politics. You can reach him on Twitter @jmcleanks. Kansas News Service stories and photos may be republished at no cost with proper attribution and a link back to kcur.org.