June 12 (Reuters) - A Kansas regulatory commission has disclosed that it is considering an investigation into whether power utility Evergy Inc’s agreement with hedge fund Elliott Management could end up costing consumers.
The accord with Elliott established a committee within Evergy’s board of directors that is exploring whether the company should be sold or implement a significant cost-cutting program. The committee is due to make a recommendation to the company’s board by July 30.
Kansas Corporation Commission (KCC) staff petitioned the utility regulator to launch a probe into Evergy’s ability to provide efficient service at “just and reasonable rates” as a result of any transaction the company pursues, according to a Thursday filing.
A commission spokeswoman said on Friday the regulator’s leadership will decide on the staff’s request as early as next week.
“Staff is very concerned that Elliott’s focus on increasing shareholder value will place Evergy’s customers at a high risk of paying higher rates or receiving lower quality service in order to support an increase in shareholder value,” the KCC filing said, laying out questions it wants Evergy’s management to answer.
Evergy serves 1.6 million customers in Kansas and Missouri. Its stock was flat on Friday, giving it a market capitalization of $13.8 billion.
An Evergy spokeswoman said the company was reviewing the KCC filing and agreed on the importance of a “robust and transparent” process allowing input from all stakeholders.
Elliott declined to comment.
Should the KCC launch a probe, it would mark the second major intervention in the company’s dealmaking in recent years.
Evergy’s creation followed a two-year regulatory battle. First announced in 2016 as Great Plains Energy buying Westar Energy for $8.6 billion, the transaction was restructured as a merger-of-equals after the KCC objected to how a Great Plains purchase would impact the combined company’s finances and customer bills. (Reporting by David French in New York and Svea Herbst-Bayliss in Boston; Editing by Will Dunham)