In a change that promises some rate relief, the merger of Westar Energy with Kansas City Power & Light has been approved, forming a new company to be called "Evergy."
The deal, approved Thursday by the Kansas Corporation Commission and the Missouri Public Service Commission, creates a mammoth power company with about 1 million Kansas and nearly 600,000 Missouri customers.
The new combined utility will be renamed to "Evergy," a combination of the words "ever" and "energy," said Westar spokeswoman Gina Penzig.
It will probably take until next year to implement the name change, she said.
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Missouri's approval early Thursday left the Kansas commission as the final hurdle to combining the two companies. They voted 3-0 in favor without discussion.
Kansas staff attorney Brian Fedotin outlined the agreement.
He told the commissioners that a negotiated settlement between the utilities and consumer advocates met all the conditions the commissioners had set, and would bring benefits to customers and the economies of the communities where Westar and KCP&L operate.
"The merger as conditioned in the settlement agreement is in the public interest," Fedotin said.
That finding echoed the earlier approval order issued by Missouri regulators.
“The Merger will create a stronger combined company, with more customers, more geographic diversification, no transaction debt to complete the merger, and the prospect for higher earnings growth rates than either GPE or Westar would be able to achieve on a stand-alone basis,” the Missouri Public Service Commission order said.
Westar customers will see some benefits in their rates, starting with a current case where the company is now seeking a net $52.6 million annual rate hike.
The approval of the merger reduces the estimated impact of Westar's proposed rate hike from $5.91 a month to $2.80 for the average customer using 900 kilowatt-hours of electricity.
In addition, customers will share about $90 million in rate credits over the next five years, Penzig said.
Estimated monthly bill impacts for KCP&L customers were not immediately available.
But Fedotin said Kansas KCP&L customers will share a one-time bill credit of $7.5 million when the merger closes. They'll also share bill credits of about $3 million a year from 2019 through 2022.
KCP&L's Missouri customers will split a one-time credit of $29 million, said spokesman Jeremy McNeive.
The merger deal contains a guarantee that Evergy will continue to have about 500 employees at the current Westar headquarters in Topeka for five years and keep a substantial presence there for at least 10 years.
Evergy will also keep the current KCP&L headquarters in Kansas City, Mo., and its Wichita and Raytown, Mo. customer service centers, the Missouri order said.
Evergy will have about 5,000 employees total, Penzig said.
That's about 300 less than Westar and KCP&L had in 2016, before the companies filed to merge, she said.
No employees will face involuntary layoffs. Anticipating the merger, both Westar and KCP&L have been reducing employment levels by not filling some job openings caused by ordinary attrition and retirements, Penzig said.
Both companies agreed to continue their charitable giving at or above their 2015 levels.
The deal is being characterized as “a merger of equals” to be accomplished by swapping stock around.
Westar shareholders will get one share of stock in the new company for each share of Westar they now own. Great Plains shareholders will get 0.5981 shares of the new company for each of their shares.
The stock swap will be tax-free for the shareholders, the companies have said.
Merger supporters have said the transaction makes sense because the neighboring utilities would be able to cut costs by consolidating operations and doing away with duplicated jobs.
Westar and KCP&L shareholders voted more than 90 percent in favor of merging, Fedotin said.
It’s the second time the two companies have sought to merge.
Last year, Kansas commissioners rejected a merger of the utilities, saying it would be too risky for Kansas electric customers and that Westar shareholders would reap too much of a windfall.
In that instance, Great Plains proposed to buy Westar outright for $12.2 billion in cash and stock — $4.9 billion more than the book value of Westar’s corporate assets.