Utility Mergers Get Mixed Reviews

One utility merger moved forward Monday while another may have been short-circuited.

Texas Utilties Co. agreed to buy natural gas company Enserch Corp. for $1.7 billion, a deal that would give the electric utility new business selling gas in Texas, the companies said this morning.

Under the terms of the agreement, Texas Utilities will buy Enserch common stock for $550 million and pay $1.15 billion for its debt and preferred shares.

The deal has been approved by the boards of both Dallas-based companies. The agreement is subject to approval by shareholders and the Securities and Exchange Commission.

Meanwhile, Western Resources Inc. offered to buy Kansas City Power & Light Co. in a $1.7 billion deal aimed at breaking up a friendly merger proposed between KCPL and UtiliCorp United Inc.

In announcing the offer Sunday, Western Resources’ chairman, John Hayes Jr., said a merger would result in a stronger company with deeper rate cuts for electric and gas customers in Missouri and Kansas. Hayes also said the combination would not result in any layoffs.

Hayes said the combination would save more than $1 billion during the first 10 years, or 64 percent more than in a proposed KCPL merger with UtiliCorp.

Hayes said Topeka, Kan.-based Western Resources would file with the Kansas Corporation Commission Monday to intervene in the UtiliCorp-KCPL merger.

KCPL provides electric service in Kansas City, eastern Kansas and western Missouri. KCPL and Western Resources each own about half of the Wolf Creek nuclear plant in Kansas.

UtiliCorp sells electric and gas in several parts of the country, as well as in Canada, Britain, New Zealand, Australia and Jamaica.