Great Plains Energy closes deal to buy Aquila

Great Plains Energy Inc. said Monday it had completed its $1.7 billion purchase of energy provider Aquila Inc., ending more than a year of struggle to acquire its crosstown Kansas City rival.

As part of the deal, Rapid City, S.D.-based Black Hills Corp., bought Aquila's natural gas and electric utilities in Colorado, Iowa, Kansas and Nebraska for $940 million.

Great Plains operates Kansas City Power and Light Co. and will retain Aquila's electric utilities in Missouri and other assets as a separate subsidiary.

The company said it expects the combination to save $198 million over five years and $547 million over a decade. It also is retaining about 900 Aquila employees.

For Black Hills, which will rename the Aquila properties Black Hills Energy, the deal increases the company's customer base fivefold to 750,000.

The deal closed only after months of wrangling between the companies and the Missouri Public Service Commission, which was under pressure from consumer advocates, some of Aquila's industrial customers and even its staff to oppose the acquisition.

Critics have warned that customers may end up helping Great Plains recoup some of the cost of buying Aquila, although Missouri regulators said ratepayers wouldn't be liable for $47.2 million in transaction costs.

Kansas regulators also limited the amount Black Hills can charge former Aquila customers, requiring the company to freeze natural gas delivery prices for three years.

Opponents also are concerned the purchase _ coming as KCP&L is in the midst of a building boom, including a new, almost $2 billion power plant near Weston _ could hurt the utility's credit rating, increasing its costs for borrowing money. Great Plains has denied that would happen.

While the Public Service Commission's order went into effect Monday, some of the opponents, including the industrial customers and the Missouri Public Counsel have asked the agency to reconsider the case and put its order on hold.

Aquila was founded in 1917 as the Green Light and Power Co. and renamed UtiliCorp United Inc. in 1985 as it acquired utilities throughout the Midwest. The company ran into trouble as it racked up debt as part of a buying binge in the 1990s and invested heavily in energy trading, which collapsed following the Enron debacle in 2001.

Great Plains shares gained 27 cents to $26.10 in trading Monday. Black Hills shares gained 38 cents at $32.31.