Surprise: Kansas Regulators Do the Right Thing.
Posted on April 20, 2017
Yesterday, with stinging words, the Kansas Corporation Commission rejected an effort by one Kansas utility to buy out another one. The KCC said that the offered price was so exorbitantly high that the bonds to pay for it would border on junk bonds. They also said that the claimed synergistic efficiency savings did not exist and the customers would not benefit. They also said that the utilities were asking the KCC to simply trust them without evidence.
What is surprising in this decision is that all three of his members of the KCC board were appointed by Governor Sam Brownback, a man who has been fully dedicated to movement-conservative principles. In particular he has taken every available opportunity to deregulate businesses and to transfer government resources to private businesses, especially those run by conies. Also his appointees have generally turned out to be–wait for it–movement conservatives. (To Brownback’s credit, however, his administration and appointees do not appear to engage in levels of direct corruption that are much in excess of Kansas norms.) And yet here we find his appointees actually putting the welfare of customers first (at least in this particular, egregious case).
I choose to take this as another hopeful sign of Kansas leaders responding to our recent election by turning back towards a more moderate approach.
At least until the next election.
I don’t claim to understand the gimcrack scammery involved in the rejected plan, but typically complex buyouts are designed to transfer profits to insiders while transferring risk and costs to small investors, bond holders, and workers. In this case there was probably also a hope they could get the KCC to allow increased consumer charges down the road by pointing to the buyout price as if it represented real capital investment.
Though it may not be a relevant factor (due to a recent decision under the state to approve upgrades to keep it in place and operating for another 30 years), it may be helpful that the company doing the buying (Great Plains Energy, which owns Kansas City Power and Light) together own more than 90% of the aging Wolf Creek nuclear reactor. No one really knows what the final costs of clean up will be, because the feds have not yet decided how to dispose of nuclear wastes, but the costs are being charged to current customers and placed in escrow.