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Attorney General's News Release
February 24, 2004
PSC rejects Aquila request to use Missouri assets as loan collateral; Nixon says ruling protects Missouri ratepayers
Jefferson City, Mo. — The Missouri Public Service Commission (PSC) today rejected an application by the energy utility Aquila to use about $1.1 billion of its assets in Missouri as collateral on a $430 million loan. Attorney General Jay Nixon, whose office intervened to oppose the Aquila request and worked closely with the Office of Public Counsel, said the ruling protects Missouri ratepayers from unnecessary and unreasonable risk, if Aquila defaulted on the loan or went into bankruptcy.
"The commission did the right thing in not allowing Aquila to leverage its regulated assets to support its misadventures in unregulated businesses," Nixon says. "Missouri ratepayers will not have to shoulder this burden of risk for the utility."
Aquila, based in Kansas City, operates electrical and gas distribution networks in Missouri and six other states, as well as Canada. Aquila provides service to commercial and residential customers in west-central and northwest Missouri, including St. Joseph and portions of the Kansas City area.
The ruling from the PSC reads in part:
The unreasonable risk of harm includes the possibility that Missouri's regulated assets alone would support Aquila's $430 million loan. That loan includes money for Aquila's unregulated businesses. Aquila's Missouri ratepayers alone might shoulder the burden of Aquila's financial difficulty, including a potential default on the note, or even bankruptcy. That burden could include a loss of service, since the loan agreement arguably allows the creditor to bypass the Commission, and immediately foreclose upon and sell the assets.
Aquila made similar requests of state utility commissions in Kansas, Colorado, Iowa and Minnesota. Kansas and Minnesota denied Aquila's request; Iowa and Colorado approved the request.
Inquiries from consumers should be directed to consumer@ago.mo.gov or 1-800-392-8222 (from within Missouri) or 573-751-3321 (outside Missouri).
All media inquiries should be directed to Press Secretary John Fougere.
E-mail Phone: 573-751-8844 Fax: 573-751-5818