Energy merger brings local name change

The area's natural gas customers will soon be making their payments out to a different company.

Great Plains Energy Inc. said Monday it had completed its $1.7 billion purchase of Aquila Inc., ending more than a year of struggle to acquire its crosstown Kansas City rival.

The purchase also involves Rapid City, S.D.-based Black Hills Corp., which said it bought Aquila's natural gas and electric utilities in Colorado, Iowa, Kansas and Nebraska for $940 million.

Aquila serves about 17,500 natural gas customers in the Spencer region. The company employs about 12 people locally.

Jim Anderson, the company's external affairs manager for western Iowa, said all of the Aquila employees in Spencer will be retained by Black Hills Corp.

"Our utility name, Aquila, will go away and we'll be called Black Hills Energy," Anderson said. "For our customers it should be pretty seamless. They're going to pay their bills at the same place and the phone numbers will be changing, but the old numbers still work."

Aquila's Spencer region includes Fostoria, Terril, large portions of the Iowa Great Lakes, Estherville, Wallingford and Superior. To the southeast, company's Spencer office has customers in the Pocahontas and Fonda areas. Royal, Paullina and Primghar also fall into the local service region. The call center, in Lincoln, Neb., will remain open to handle service calls 24 hours a day.

The deal increases Black Hill's customer base fivefold to 750,000.

"I remember having my first discussions about this in May 2006, so it's been a long time coming," said Dave Emery, chairman and CEO of Black Hills. "With the lower cost structure (of the combined operations) there should be some opportunities for more savings that can be passed on to customers through less frequent rate increase requests."

Emery said the company will retain 1,050 Aquila utility employees and has hired an additional 200 people to oversee the larger company, including 50 former Aquila corporate employees.

The deal closed only after months of wrangling between the companies and the Missouri Public Service Commission, which was under pressure from consumer advocates, some of Aquila's industrial customers and even its staff to oppose the acquisition.

Critics have warned that customers may end up helping Great Plains recoup some of the cost of buying Aquila, although Missouri regulators said ratepayers wouldn't be liable for $47.2 million in transaction costs.

Kansas regulators also limited the amount Black Hills can charge former Aquila customers, requiring the company to freeze natural gas delivery prices for three years.

The sale presumably ends the 91-year independent history of Aquila, founded in 1917 as the Green Light and Power Co. and renamed UtiliCorp United Inc. in 1985 as it acquired utilities throughout the Midwest. The company ran into trouble as it racked up debt as part of a buying binge in the 1990s and invested heavily in energy trading, which collapsed following the Enron debacle in 2001.

Great Plains shares were down 37 cents to $25.46 in afternoon trading Monday. Black Hills shares were up 36 cents at $32.29.