Exhibit 10.39


 


THE
STATE CORPORATION COMMISSION


OF THE
STATE OF KANSAS


 


	
  Before
  Commissioners:

  	
   

  	
  John Wine, Chair

  
	
   

  	
   

  	
  Cynthia L. Claus

  
	
   

  	
   

  	
  Brian J. Moline

  



 


	
  In the Matter of
  the Investigation of Actions

  	
  )

  	
   

  	
   

  
	
  of Western
  Resources, Inc. to Separate its

  	
  )

  	
   

  	
  Docket No.
  01-WSRE-949-GIE

  
	
  Jurisdictional
  Electric Public Utility Business

  	
  )

  	
   

  	
   

  
	
  from its
  Unregulated Businesses.

  	
  )

  	
   

  	
   

  



 


No. 62


ORDER
APPROVING LIMITED STIPULATION


AND
AGREEMENT


 


For the reasons discussed
below, the Commission finds that it has jurisdiction over the Limited
Stipulation and Agreement filed February 11, 2003, and that Westar Energy, Inc.
(Westar Energy) is authorized to repurchase the Westar Energy stock presently
held by Protection One, Inc., as more fully explained below.


 


1.             On February 14, 2003, the Commission conducted a hearing
on the Limited Stipulation and Agreement submitted by Commission Staff (Staff),
Kansas Industrial Consumers (KIC), Citizens’ Utility Ratepayer Board (CURB),
MBIA Insurance Corporation (MBIA), Westar Energy and its affiliates Protection
One, Inc. (Protection One) and Westar Industries, Inc. (Westar
Industries).  The following appearances
were entered:  Ms. Susan B. Cunningham,
General Counsel, and Ms. Anne Bos, Assistant General Cousnel, on behalf of
Staff and the public generally; Messrs. Martin J. Bregman, Executive Director,
Law, Westar Energy, Inc., and Larry M. Cowger, Director, Law, on behalf of
Westar Energy, Inc.; Ms. Teresa James, Messrs. Eric Griffen and Mitchell Hertz
on behalf of Protection One; Mr. David Springe and Ms. Niki Christopher,
Consumer Counsel, on behalf of CURB; and Mr. James P. Zakoura of behalf of KIC;
and Mr. Carl Zobrist on behalf of MBIA.


 


 

















 


2.             The signatory parties of the Limited Stipulation and
Agreement seek waiver of the Commission’s interim restrictions set forth in
paragraph 113 of Order 51. 
Specifically, the signatory parties request permission to allow Westar
Energy to repurchase Westar Energy stock presently held by Protection One.  Limited Stipulation and Agreement at
¶ 13.  The Limited Stipulation and
Agreement states that the sole purpose of the agreement is to allow Westar
Energy to make cash available for Protection One, contending that the cash
transfer will allow settlement negotiations to continue among the parties.  The signatory parties also contend that the
repurchase of the Westar Energy stock by Westar Energy from Protection One is
better than a simple transfer of funds from Westar Energy to Protection
One.  Id. at ¶ 14.


 


3.             Under the Limited Stipulation and Agreement, Westar
Energy will repurchase all of Westar Energy common and preferred stock
presently held by Protection One for approximately $11.6 million.  The purchase price was based upon the
closing price for a share of Westar Energy common stock as of February 13, 2003,
and based upon the most recent sales prices for shares of each class of Westar
Energy preferred stock.  Protection One
previously purchased the Westar Energy stock during 2002 for approximately $13
- 14 million through capital provided by Westar Energy.


 


4.             Protection One states that it will use the proceeds from
the transaction to make an interest payment of approximately $7 million, due
February 18, 2003, on publicly-held debt of which Westar Industries holds
approximately 10 percent of the total debt. 
Protection One states that through recent measures taken within the
company to curtail expenditures, it has sufficient cash to meet the interest
obligation.  However, Protection One
asserts that the measures taken by Protection One have resulted in other areas
of its business being short.  Protection
One maintains that the infusion of cash is still needed for the company to
proceed with its business plan to sell 


 


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the company.  Westar Energy also states that it has
sufficient cash on hand to make the purchase and that the purchase will not
affect the execution of its Financial Plan to reduce its excessive debt level.


 


5.             Westar Energy, and its wholly-owned subsidiary, Kansas
Gas and Electric Company (KG&E), doing business as Westar Energy, are certified
electric public utilities that provide retail electric service in the state of
Kansas.  As public utilities, the
Commission has comprehensive regulatory authority to establish rules governing
affiliate relations and accounting practices between and among the public
utility and nonutility businesses. 
K.S.A. 66-101 et seq.


 


6.             The Commission previously entered Orders 51 and 55
imposing interim standstill protections to prevent interaffiliate accounting
practices and relations that are harmful to WEstar Energy’s public utility
operations.  Further, the interim
standstill protections were ordered to protect ratepayers from the risks of
Westar Energy’s nonutility business ventures conducted within the corporate
family controlled by Westar Energy and to prohibit the unjust enrichment of
Westar Energy’s unregulated businesses at the expense of Westar Energy’s
utility operations and ratepayers.


 


7.             Those restrictions prohibit Westar Energy from making an
investment/purchase, as contemplated by the Limited Stipulation and
Agreement.  However, the waiver of those
restrictions, in this particular instant, is reasonable and in the public
interest because it results in Westar Energy acquiring an asset and results in
Westar Energy making progress towards unwinding the affiliate relationship with
Protection One.  Accordingly, the
Commission grants the limited waiver to the interim standstill protections of
Orders 51, as contemplated by the Limited Stipulation and Agreement.


 


IT IS, THEREFORE, BY THE COMMISSION ORDERED THAT:


 


 


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A.            Westar Energy is authorized to repurchase Westar Energy
stock from Protection One according to the terms of the Limited Stipulation and
Agreement.


 


B.            This Order is effective upon service by facsimile
transmission.


 


C.            Any party may file a petition for reconsideration of this
Order within fifteen days of the date this order is served.  If this Order is served by mail, service is
complete upon mailing, and three days may be added to the above time frame.


 


D.            The Commission retains jurisdiction over the subject
matter of this investigation and the parties for the purpose of entering such
further order or orders as it may deem necessary and proper.


 


	
   

  	
  BY THE COMMISSION IT IS SO ORDERED.

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Wine, Chr.;
  Claus, Comm.; Moline, Comm.

  	
   

  	
   

  	
  ORDER MAILED

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Dated: February
  14, 2003

  	
   

  	
   

  	
  FEB 14, 2003

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  /S/ Susan K.
  Duffy

  
	
   

  	
   

  	
   

  	
  Susan K. Duffy

  
	
   

  	
   

  	
   

  	
  Executive
  Director

  



 


 


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