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Westar CEO mum on possible takeover, reports record wind power output

Q2: U.S. Solar and Wind Power by the Numbers

Essential Energy Insights - September 17, 2020

Essential Energy Insights September 2020

Rate case activity slips, COVID-19 proceedings remain at the forefront in August


Westar CEO mum on possible takeover, reports record wind power output

Investors were hungry for news on a possible acquisition ofWestar Energy Inc. asthe company reported its earnings May 4, but Westar President and CEO MarkRuelle declined to comment on "rumors," choosing instead to talk upthe company's record-breaking wind power production over the quarter.

Westar is reportedly drawing interest from and a Canadian investorconsortium including BorealisInfrastructure Management and the ,according to an April 8 report. Westar's market value is believed to beapproximately $7 billion.

Earlier May 4, Westar reported first-quarter 2016 net income attributable tostockholders of $65.6 million, or 46 cents per share. The result, which is inline with analyst estimates, is an increase on the $51.0 million, or 38 centsper share, in net income attributable to stockholders booked during the firstquarter of 2015. Earnings were impacted by unusually mild weather that Ruellesaid began in late January, but the CEO said overall, the company turned in a "solidquarter."

Westar's wind farms had record-breaking performance in thefirst quarter of the year, clocking in at 1 million MWh and a capacity factorof 44%. Some sites, Ruelle said, had capacity factors in the mid-50s duringMarch. All in all, emissions-free generation accounted for more than 50% of thecompany's retail sales, with help from the Wolf Creek nuke. Westar and each have a47% ownership stake in the nuclear plant in Coffey County, Kan., and theKansas Electric Power CooperativeInc. owns the remaining 6%.

"By next year, we expect this to be the norm. That is,we expect emission-free power annually to be equivalent to more than half ourretail sales, with renewables being a full [one third] of sales," Ruellesaid.

Westar's transmission development remains on track, and thecompany still expects to invest nearly $250 million to improve reliability,eliminate constraints and integrate even more wind power.

In mid-April, Westar broke ground on the 280-MW Western Plains wind farm in Ford County, Kan.The self-build generating unit is in addition to a power purchase agreementannounced in December2015 for 200 MW from NextEra EnergyInc.'s Kingmanwind facility that is expected to be in service in early 2017.

Ruelle said the power purchase agreement includes a 50%ownership option, which Westar is at this time leaning away from exercising.Westar already has a record capital budget of $1.1 billion, and Ruelle said theKingman facility is a little bit more expensive than the Western Plainsproject. Moreover, Westar believes the projected capacity factor for theKingman facility makes the project better suited to a power purchase agreementrather than ownership.