By Amanda Durish Cook
In what may be one of its last earnings reports as an independent company, Westar Energy said it improved its third-quarter earnings over 2015 while falling two pennies short of Zacks Investment Research’s consensus forecasts at $1.09/share.
The Topeka, Kan.-based company reported net income of $155 million in the quarter, besting last year’s showing of $138 million ($0.97/share).
Westar said the rise was due to rate increases granted by the Kansas Corporation Commission this spring and an increase in corporate-owned life insurance income. (According to its 10-K filing for 2015, Westar reports as income increases in the cash surrender value and death benefits of its policies.)
Year-to-date earnings are $40 million above the $253 million earned through the same period third quarter of 2015. But the company said the higher revenue was “partially offset by a Southwest Power Pool assessment and higher expenses due to improving long-term grid reliability.”
Westar did not host a quarterly conference call because of its pending sale to Great Plains Energy. The company said it would not hold any future earnings conferences before the deal closes. (See Great Plains Energy, Westar Shareholders OK $12.2B Deal.)
The earnings announcement comes two weeks after Kansas regulators warned that they might block the merger because of staff’s conclusion that the companies’ filing lacked information on costs savings and what operations would continue in Westar’s Topeka headquarters (Docket No. 16-KCPE-593-ACQ).
A spokesperson for the two utilities said they did not expect the commission’s concerns to alter the merger’s spring completion target. The companies filed for joint application reconsideration Nov. 2, adding testimony from two Great Plains employees attesting to future customer savings and the reasonableness of the purchase price. However, Great Plains staff said the allocation of savings as a result of the merger is unknown and no final determinations have been made on what departments will remain in the Topeka office.
Great Plains recently struck a compromise with the Missouri Public Service Commission that requires the company to keep its capital structure and credit ratings isolated from Westar’s. The agreement also bans Great Plains from seeking increases in retail rates or capital spending because of the purchase. Great Plains initially maintained that the Missouri PSC had no jurisdiction over the sale.
