Articles Published by Todd Natenberg

Kansas City Business Journal

Friday, December 14, 2007

Aquila CEO Green denies attempting to sway Missouri PSC

He says e-mail to board was out of context

Kansas City Business Journal - by Todd Natenberg Staff Writer

Did Missouri Public Service Commission Chairman Jeffrey Davis promise Aquila Inc. CEO Richard Green that he would approve a sale to Great Plains Energy Inc.?

Both men say no, but an e-mail Green sent to his board of directors says otherwise.

"It simply was not that," Green said in response to allegations that his meeting with Davis was an effort to influence the commission. "It was very common practice to have these courtesy visits to give important people a heads-up as to what was happening, so they're not surprised."

Davis' take on the e-mail: "I'll say it: He lied to his board."

In the damaging e-mail, Green wrote: "Chairman Davis said that he wants to see a strong utility in the western part of the state and is willing to move quickly to get the transaction approved. It is clear he wants to demonstrate to a wide audience that he can push deals through in Missouri."

These words, which Green insists referenced an approval process, not an overall approval, threaten the $1.7 billion deal.

The recent release of this e-mail and others has set off a chain of events that Davis called a "three-ring circus."

Facing pressure from Missouri Public Counsel Lewis Mills, Davis recused himself from hearings on the Great Plains-Aquila deal.

Mills has said he plans to ask for similar recusals from three of the remaining four commissioners because of communications they had with Great Plains CEO Mike Chesser and Kansas City Power & Light Co. CEO Bill Downey.

"I'm still shocked by the whole turn of events," Davis said. "I never, ever told Rick Green or anyone that I would approve this transaction. I told him what I tell everyone that comes to me and says, 'Hey, I'm thinking about filing a case.' We will give you a fair hearing. I will do my best to give you a yes-or-no answer sooner than later. And if there's a way to get to yes, we will try to do that."

In retrospect, Davis said he wished he had documented the conversation. He said he had planned to, for fear of how the meeting could be interpreted, but never followed through.

"I'll tell you this," Davis said, "I will never meet with (Green) again -- not without a court reporter present."

Green said that his e-mail was taken out of context and that Davis' assurance was based on his desire to decide the case in a timely fashion. "That is really the meaning of the e-mail," he said. "The context is being decisive one way or the other."

When asked why he didn't say that in the e-mail, Green said: "It's because there is nobody in this conversation, meaning management and my board, who would think of anything but the full process. When that never enters my mind, it's just not something that you get that particular about in terms of what each word means."

Mills isn't so easily convinced.

"He used the word 'approve,' not 'decided,' not 'determine whether it is a good idea nor not,' but get the transaction approved," he said. "People's memory shifts over time. I don't have any reason to believe he's being dishonest, but that's not what he said (in January)."

For some, the issue of the exact words that were spoken is a moot point.

"In Missouri, the status of a Public Service Commission is that of a judge," said Stu Conrad, a private lawyer representing a group of industrial utility customers. "They are held to the same standards as judicial officers. The question becomes not whether something occurred but the appearance of impropriety."

Green said he hopes the submission of a new proposal to the PSC will clear the way for a determination of the deal on its merits.

"It's still clear that everybody sees the common sense of these two companies coming together," he said. "What we need to work on is how we transfer that common-sense combination to clearly show some benefit for the customer. That's a work in progress."