BEFORE THE STATE CORPORATION COMMISSION OF THE STATE OF KANSAS
Exhibit
10.1.7
BEFORE
THE STATE CORPORATION COMMISSION
OF
THE STATE OF KANSAS
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In
the Matter of the Joint Application of Great Plains Energy Incorporated,
Kansas City Power & Light Company and Aquila, Inc. for approval of the
Acquisition of Aquila, Inc. by Great Plains Energy
Incorporated
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Docket
No. 07-KCPE-1064-ACQ
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On
February 26, 2008, Great Plains Energy Incorporated ("GPE"), Kansas City Power
& Light Company (“KCPL”), the Kansas Corporation Commission Staff (“Staff”),
the Citizens’ Utility Ratepayers Board (“CURB”), Aquila, Inc. d/b/a Aquila
Networks ("Aquila"), Black Hills Corporation ("BHC"), and Black Hills/Kansas Gas
Utility Company, LLC ("BH Kansas Gas"), (individually "Party," or collectively,
the "Parties") hereby agree to the following terms and conditions of this
Settlement Agreement ("Agreement").
Article
I
Introduction
On April
4, 2007, GPE, KCPL and Aquila filed with the Kansas Corporation Commission
("Commission") a Joint Application for an Order approving the acquisition of
Aquila by GPE. The Joint Application was made pursuant to the terms
of GPE/KCPL’s Stipulation and Agreement in Docket No. 01-KCPE-708-MIS, and
pursuant to Aquila’s Stipulation and Agreement in Docket No.
02-UTCG-701-GIG. The proposed acquisition relates to an Asset
Purchase Agreement ("APA") dated February 6, 2007, by and among Aquila, BHC,
GPE, and Xxxxxxx Acquisition Corp, under which GPE will effectively acquire
Aquila’s Missouri electric and steam operations and its merchant services
operations (“GPE Transaction “), and BHC will acquire Aquila's natural gas
utility assets in Kansas
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and
Aquila's natural gas utility assets in Iowa, Nebraska, and Colorado and Aquila's
electric utility assets in Colorado (“BHC Transaction”).
Also on
April 4, 2007, BHC and Aquila filed an application in a separate docket seeking
approval of the BHC Transaction (Docket No. 07-BHCG-1063-ACQ (“1063
Docket”)). Although the two transactions are separate, each is
contingent upon the successful completion of the other. Therefore, on
November 1, 2007, the Commission issued an order consolidating the dockets
for further proceeding.
On
January 31, 2008, the parties to the 1063 Docket filed for approval of the
Commission a unanimous Joint Motion and Settlement Agreement, upon which a
hearing was held on February 12, 2008, and the matter was submitted to the
Commission for determination.
Article
II
Purpose
This
Agreement has been prepared and executed by the Parties for the sole purpose of
resolving all of the issues in 07-KCPE-1064-ACQ (“1064 Docket”). The
Parties understand and agree that the proposals, positions, modifications, and
adjustments made or reflected in this Agreement, whether express or implied, are
made or obtained only through the spirit of compromise and are made subject to
Article VI below.
In
addition, this Agreement has been negotiated in light of the terms and
conditions presently in effect for GPE and KCPL under KCPL’s Comprehensive
Energy Plan (“CEP”) and five-year Regulatory Plan established by the Commission
in Docket No. 04-KCPE-1025-GIE (“1025 Docket”). It is the intent of
the Parties that this Agreement shall not have an impact on, or change any of
the terms of, the Stipulation and Agreement and Order in the 1025
Docket.
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Article
III
Terms of the Settlement
Agreement
The
Parties agree that the requests included in the Joint Application, as modified
by the terms set forth below, can be found by the Commission to be consistent
with public interest, and accordingly recommend that the Commission so find and
that the agreement be approved. The requests included in the Joint
Application are modified as follows:
1. Quality of Service
Performance Metrics:
KCPL will
adopt and comply with the performance metrics and other provisions set forth in
Attachment 1 and Attachment 2 to this
Agreement. In the event that the Commission orders standards for
Kansas utilities as a result of Docket No. 02-GIME-365-GIE or any other docket,
KCPL shall be released from compliance with the performance metrics hereunder
for the aspects of service addressed by the standards established by subsequent
Commission order at the point such Commission-ordered standards are
effective. Attachment 3 to this agreement
is a quarterly quality of service reporting form.
2. Transition Cost
Recovery:
KCPL will be allowed to recover
transition costs of $10 million through a five-year amortization ($2 million per
year), beginning with rates effective as a result of KCPL’s Rate Case #4, as set
forth in the 1025 Docket, currently scheduled to be filed in
2009. Transition costs are the costs incurred to integrate and
centralize Aquila’s and GPE’s and/or KCPL’s operational functions, such as but
not limited to information technologies and customer service
functions. The Parties agree that the Commission should authorize
KCPL to establish a regulatory asset for the transition costs in
the
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amount of
$10 million (which represents the Kansas jurisdictional amount). The
Parties further agree that KCPL should be authorized to amortize this regulatory
asset over five (5) years commencing with the first day on which rates resulting
from KCPL’s Rate Case #4 are effective. The deferred expenses will
not receive any rate base treatment in future rate cases. There will
be no recovery of any acquisition premium or transaction costs.
3. Other Rate Case
Issues:
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a.
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KCPL’s
2008 rate case (Rate Case #3 as set forth in the 1025 Docket) will not
include any effects associated with the Aquila
transaction. KCPL will file a KCPL stand-alone
case. There will be no allocation factor changes reflecting the
merger transaction.
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b.
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In
no event shall expense relating to the acquisition premium, transaction
costs, or unrecovered transition costs be recoverable in the future rates
of KCPL’s Kansas electric service customers. Nor shall any
unamortized amounts be included in rate base for Kansas rate making
purposes. KCPL shall track transition costs separately and
remove transition costs from any future rate filing since the amortized
amount referenced in Section III(2) above is agreed to be adequate and
reasonable recovery of all such transition
costs.
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c.
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The
Parties agree to accept the following conditions, as set forth in the
Direct Testimony of Xxxx Xxxxxxxx, filed in the 1064 Docket on December
18, 2007, as amended on January 18,
2008:
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1)
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Aquila
will be held in a separate subsidiary of GPE until and unless Commission
approval is granted to change this
structure.
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2)
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KCPL
will not include costs associated with any of Aquila’s liabilities in its
Kansas revenue requirement;
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3)
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KCPL
will not include any costs from this transaction in its Kansas revenue
requirement or contribution in aid of construction calculations except as
set forth in Section III(2) above;
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4)
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KCPL
will not include an annual adder to cost of service to reflect any sharing
of synergies; and
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5)
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In
the event Staff or CURB determine the conditions agreed to in Kansas are
less favorable for KCPL ratepayers in Kansas than for KCPL ratepayers in
Missouri based on the outcome of Missouri Case No. EM-2007-0374, or the
outcome of any future docket relating to the same subject matter in the
event the application in Case No. EM-2007-0374 is amended and refiled
(“Missouri Order”), Staff and CURB reserve the right to seek Commission
approval to modify any provision contained in this
agreement. No Party shall contest the legal or equitable right
of Staff or CURB to seek Commission approval to modify any term of this
agreement, although the Parties shall have the opportunity to address the
merits of any proposed change. Application for and comments on
any proposed changes shall be filed within 10 days of the issuance of the
Missouri Order.
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Article
IV
Joint
Motion
The
Parties hereby jointly move the Commission, pursuant to K.A.R. 82-1-230a, to
issue an order finding that this Agreement is reasonable in light of the record
as a whole, consistent with law, and in the public interest, and accordingly
approving the Agreement.
Article
V
Condition
Precedent
This
Agreement shall not become effective unless and until the Commission enters an
order approving the Agreement in its entirety, without condition or modification
and until the Commission enters an order approving a settlement agreement or a
ruling on the merits of the issues in the 1063 Docket.
Article
VI
Privilege and
Limitation
This
Agreement is made pursuant to K.A.R. 82-1-230a, and shall become binding upon
the Parties upon its execution; provided, however, that if this Agreement does
not become effective in accordance with Article V above, it shall be null, void,
and privileged. This Agreement is intended to relate only to the
specific matters referred to herein. No Party waives any claim or
right which it may otherwise have with respect to any matter not expressly
provided for herein. No Party shall be deemed to have approved,
accepted, agreed, or consented to any principle or precedential determination,
or be prejudiced or bound thereby in any other current or future proceeding
before the Commission except as provided for herein. The Parties may
utilize this Agreement, or any portion thereof, in any Kansas
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No. 07-KCPE-1064-ACQ
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proceeding
wherein the subject matter of the proceeding involves any subject matter
contained in the Agreement.
Failure
to enter the Order approving this Agreement, or failure for any reason of the
Order to become final in this 1064 Docket or failure for any reason of the Order
in the 1063 Docket to become final, voids this Agreement. Should the
Commission not approve this Agreement in its entirety, the Parties reserve all
of their respective litigation rights, including, but not limited to: cross
examining all witnesses in a subsequent hearing on the merits of this matter,
presenting arguments and briefs in support of their respective positions,
requesting reconsideration of any Commission Orders and appealing any Commission
Order to the Courts.
The
Parties shall have the right to present witnesses to the Commission in support
of this Agreement and provide to the Commission whatever further explanation the
Commission requests. Any rationales for settlement advanced by the
Parties are independent of each other and not acquiesced in or otherwise adopted
by the Parties.
The
Parties agree that the Joint Application and Schedules filed in this matter,
along with the supplemental testimony and schedules, the rebuttal testimony and
schedules, and the prefiled testimony filed by all of the Parties shall be
entered into the record and the Parties agree to waive cross-examination of the
witnesses.
If the
Commission accepts this Agreement in its entirety and incorporates the same into
its final Order in this docket, the signatory Parties intend to be bound by its
terms and the Commission's Order incorporating its terms as to all issues
addressed herein, and will not appeal the Commission's Order on those
issues.
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No. 07-KCPE-1064-ACQ
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Article
VII
Discontinuance
of Requirements Established For Aquila
In Docket No.
02-UTCG-701-GIG
The
Parties acknowledge that at such time as the proposed transaction is
consummated, the requirements imposed upon Aquila by Commission Orders issued in
Docket No. 02-UTCG-701-GIG shall terminate and said docket closed.
WHEREFORE,
for the reasons set forth herein, the Parties request this Joint Motion be
granted and the Agreement included herein be approved.
Dated
February 27, 2008.
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/s/ Xxxxxxx X. Xxxxx
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Xxxxx
X. Xxxx, #22619
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Xxxxxxx
X. Xxxxx, #18275
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Litigation
Counsels
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Kansas
Corporation Commission
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1500
S. W. Arrowhead Road
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Topeka,
Kansas 66604
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Telephone:
(000) 000-0000
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Facsimile:
(000) 000-0000
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Docket
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/s/ X. Xxxxxx Xxxxxxx
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Xxxxx
X. Xxxxxxx, #15691
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X.
Xxxxxx Xxxxxxx, #13127
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Consumer
Counsel
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Citizens'
Utility Ratepayer Board
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1500
S.W. Arrowhead Road
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Topeka,
Kansas 66604
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Telephone:
(000) 000-0000
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Facsimile:
(000)
000-0000
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Joint
Motion and Settlement Agreement
Docket
No. 07-KCPE-1064-ACQ
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/s/ Xxxxx Xxxxxxx
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Xxxxx
Xxxxxxx, #20072
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Senior
Attorney
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Aquila,
Inc.
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00
Xxxx Xxxxx Xxxxxx
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Kansas
City, Missouri 64105
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Telephone:
(000) 000-0000
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Facsimile:
(000) 000-0000
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X.
Xxxxxx Xxxxxxxx, #6629
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ALDERSON,
ALDERSON, WEILER,
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CONKLIN,
XXXXXXXX & XXXX, LLC
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2101
S. W. 21st
Street
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Topeka,
Kansas 00000-0000
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Telephone:
(000) 000-0000
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Facsimile:
(000) 000-0000
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Attorneys
for Xxxxxx
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Joint
Motion and Settlement Agreement
Docket
No. 07-KCPE-1064-ACQ
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/s/ Xxxxx X. Xxxxxxxx
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Xxxxx
X. Xxxxxxxx, #11177
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XXXXXXXX
& XXXX, LLP
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216
S. Xxxxxxx, P. O. Box 17
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Ottawa,
Kansas 66067
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Telephone:
(000) 000-0000
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Facsimile:
(000) 000-0000
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Attorneys
for Black Hills Corporation and Black Hills/Kansas Gas Utility Company,
LLC
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Joint
Motion and Settlement Agreement
Docket
No. 07-KCPE-1064-ACQ
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Xxxxxxx
X. Xxxxxxx, #12080
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Vice
President and General Counsel
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Kansas
City Power & Light
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1201
Walnut
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Kansas
City, Missouri 64141
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Telephone: (000)000-0000
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Facsimile: (000)000-0000
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/s/ Xxxxxx Xxxxx
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Xxxxxx
Xxxxx, #13342
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CAFER
LAW OFFICE, LLC
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0000
XX Xxxxxxxxx Xxxxx, Xxx 000
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Topeka,
Kansas 66614
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Telephone:
(000) 000-0000
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Facsimile:
(000) 000-0000
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Attorneys
for Great Plains Energy, Incorporated
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and
Kansas City Power & Light
Company
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