Officials: Takeover to preserve local feeling -
Spokesman says Mid-Kansas Electric will boost efficiency

By Tim Vandenack, tvandenack@hutchnews.com
The Hutchinson News
, September 28, 2005

When Mid-Kansas Electric Co. takes over Aquila's power assets in Kansas - including its client base in Dodge City, Great Bend and Liberal - company officials hope to inject a homey, local feel into the operation.

Customers "are going to be able to see their next-door neighbor out here working on their system," said Steve Miller, spokesman for the Hays-based Mid-Kansas.

More practically, he says the larger network controlled by the six western Kansas electric cooperatives that formed Mid-Kansas - they also own the Hays-based Sunflower Electric Power Corp. - will lead to improved operational efficiencies.

"We're all going to be able to do things that we weren't able to before this transaction occurred," Miller said, noting, for one thing, the ability to access a larger pool of spare parts when needed.

Mid-Kansas, formed by the six co-ops to carry out the deal, announced last week that it plans to spend $255.2 million to buy Aquila's power network in Kansas, including its transmission, distribution and generation systems.

The firm also would take over Aquila's 68,700 power customers in 32 central and western Kansas counties, adding them to the 54,100 that the six co-ops now serve and boosting the overall coverage area of the associated companies to 56 counties.

"We're obviously going to be one of the major players in the state, collectively," Miller said.

The cooperatives that own Mid-Kansas include: Wheatland Electric of Scott City, Victory Electric of Dodge City, Pioneer Electric of Ulysses, Lane-Scott Electric of Dighton, Prairie Land Electric of Norton and Western Co-op Electric of WaKeeney.

Aquila's natural gas network and client base in Kansas would not be impacted. Aquila is based in Kansas City, Kan.

State and federal regulators still must sign off on the deal, which should take six to 12 months, but officials from the six co-ops, Mid-Kansas and Sunflower already are looking to the future.

And when all is said and done, Aquila's current slate of power customers in Dodge City, Liberal and Great Bend, among many other communities, will become Mid-Kansas clients, assuming there are no hitches along the way. Wheatland Electric of Scott City, one of the six co-ops that own Mid-Kansas, already serves Garden City.

Any changes to customers' rates because of the ownership switch would be subject to consideration by the Kansas Corporation Commission, the sector regulator. But specific tweaks remain unclear at this point, though Mid-Kansas likely will submit a new rate plan around the same time the regulator considers the transaction.

"We don't inherit the rate structure" of Aquila, said Miller. "We have to do it all over again."

Broadly, though, Miller sees positives all the way around.

"They've always been dedicated to serving their neighbors," he said of the cooperatives. "That's what coops have been all about."

He said the geographic proximity of the Aquila assets and the six co-ops makes for a natural fit and that the transaction aims to foster a sense of stability. The 211 Aquila workers employed to oversee the assets in question will become employees of the six co-ops, Mid-Kansas or Sunflower.

"We're just so excited and confident about what we'll be able to bring to people," Miller said.

As part of the deal, Mid-Kansas would acquire a 6,431-mile transmission and distribution network and 608 megawatts of generating capacity from Aquila. The six cooperatives and Sunflower now manage a 20,000-mile transmission and distribution network and 596 megawatts of generating capacity.

Copyright 2005 ,The Hutchinson Publishing Co.


Purchase doubles size of cooperatives

By Mike Corn, The Hays Daily News, September 22, 2005

The six rural electric cooperatives that own Hays-based Sunflower Electric have joined together to purchase Aquila's electric operations in Kansas.

The purchase, announced Wednesday, will nearly double - in virtually every respect - the size of the cooperatives.

The newly formed Mid-Kansas Electric Co. will be purchasing territory from Aquila that includes 65,440 customers and six electric generation facilities. The six existing cooperatives currently serve 54,084 customers.

The cooperatives include Western in WaKeeney; Prairie Land in Norton; Lane-Scott in Dighton; Pioneer in Ulysses; Victory in Dodge City; and Wheatland in Scott City.

Aquila, based in Kansas City, Mo., also sold operations in Wisconsin and Missouri. Collectively, the Aquila sales totaled $896.7 million. That money will be used to reduce debt and other liabilities.

Once the sale is approved by regulators, service in the Aquila territory will be divided among the six cooperatives.

The generation facilities in the sale will include a part of Jeffery Energy Center and half of the electricity generated by the Gray County wind farm. The four other generation plants use natural gas.

Mid-Kansas was formed by Sunflower owners to pursue the purchase of Aquila's electric system in Kansas.

The cost will be $255.2 million, a figure that ultimately will be adjusted based on coal stockpiles and inventory at the time the sale is completed.

Although Aquila is suggesting that the sale might take 12 months to complete, Sunflower Electric spokesman Steve Miller said that Mid-Kansas cooperative is hopeful that everything can be completed within six months.

When it is complete, the cooperatives will begin serving customers in 32 central and western Kansas counties. Mid-Kansas will be a utility that is regulated by the Kansas Corporation Commission.

Miller said the additional territory likely would make the Sunflower network the second largest utility in the state, behind Westar.

Sunflower, however, will not be an owner in the new territory, Miller is quick to point out. The six cooperatives will own the Aquila territory, and Sunflower will contract with the members to operate generation and distribution facilities, much as it does now. The cooperatives own Sunflower as well.

Sunflower currently operates the Holcomb generating facility outside Holcomb, as well as a smaller facility in Garden City.

None of the six cooperatives, he said, would be able to purchase the Aquila properties individually. But together, they have the power and the financing to purchase the property.

Miller said he thinks the new area being purchased will help improve efficiency. That's because while the number of customers doubled, the number of miles of lines to supply the customers is up only slightly.

The six cooperatives currently have nearly 19,000 miles of distribution lines. The Mid-Kansas territory will add only 6,431 miles to the area.

The six cooperatives and Sunflower will also absorb the 211 employees who will be moving along with the new customer base.

Of those, 92 will be going to Sunflower, 13 will be going to Western and 30 to Prairie Land.

Miller said the new customers also can be served with the electricity generated at Holcomb and the facilities that will be going with the transfer.

"Whatever they need, we're going to serve them," Miller said.

Among the generation transfers will be partial ownership in the coal-powered Jeffery Energy Center near Manhattan. Mid-Kansas will acquire 176.8 megawatts of power from that facility alone. Collectively, the additional generation facilities will add the capacity for 608 megawatts of electricity.

Of the generation capability being purchased, 50 megawatts will come from the Gray County wind farm near Montezuma. Of that, however, 10 megawatts is contracted for sale to Midwest Energy, also based in Hays.

Sunflower itself has the capacity to generate almost 600 megawatts of electricity.

"We've got plenty of generation," Miller said.

On Wednesday - a day of record-breaking temperatures, only a small slice of the power needed by customers of the six cooperatives was purchased rather than generated.

Miller hailed the purchase agreement, saying that it reflects the true spirit that cooperatives were built on.

"The grandest story is the true cooperative spirit of a bunch of little guys going together to buy this," Miller said immediately following the announcement of the purchase. "They worked hard to get this, all six of them."

Managing editor Mike Corn can be reached at (785) 628-1081, ext. 129, or by e-mail at mcorn@dailynews.net.