SOURCE: Westar Energy, Inc

December 28, 2007 14:33 ET

Westar Energy Receives Order on Rate Treatment for Proposed Investment in Wind Energy

Utility Will Proceed With 295 MW of Wind Power but Suspends Plans for Second Phase

TOPEKA, KS--(Marketwire - December 28, 2007) - Thursday the Kansas Corporation Commission issued its order on Westar Energy, Inc.'s (NYSE: WR) request for the commission to determine the rate treatment for its proposed investment in wind energy. While finding the utility's proposal to invest in wind energy prudent, the order declined to approve Westar's request for an incentive rate of return allowed by Kansas law. The order also indicated that in the future wind generation could be subject to undefined operating standards and potential financial penalties that have not been imposed on other forms of generation.

"We are concerned that the KCC's decision introduces uncertainty as to how wind investments might be regulated in the future, increasing their risk and inhibiting such development. Because deadlines are so tight to secure some of the state's most attractive wind sites for our customers, we will move forward with 295 MW despite the increased risks," said Bill Moore, Westar Energy president and chief executive officer. "However, given the regulatory uncertainty that the commission's order introduces and the decision by the commission not to approve the legislatively-authorized incentive for producing electricity from a renewable resource, we have suspended plans to move forward with additional wind generation." Westar had planned to add an additional 200 MW of wind power by the end of 2010.

On Oct. 1, Westar Energy announced it had reached tentative agreements with developers to build three wind farms totaling 295 megawatts of generation and filed a request with the KCC to determine in advance its policies for setting rates for those projects. The agreements with the developers were contingent on the KCC approving Westar's request for rate treatment.

The KCC, in its order, approved Westar's proposal to own about half the wind generation and to purchase half the energy from other wind power developers through power purchase agreements. However, the commission's order left open the possibility that it might impose financial penalties and standards on Westar not previously imposed on other Kansas utilities or on other types of generation. The commission also declined to approve Westar's request for a 1 percent incentive return. Kansas law allows for an incentive up to 2 percent for investments in renewable energy. "We are concerned about the uncertainty introduced by the commission's decision, particularly the indication that it may impose harsher operating standards for this new wind generation than it has imposed on other types of generation in Kansas," added Moore. "We don't see the order encouraging the further development of wind energy in Kansas." Westar said it is still considering whether to seek clarification or reconsideration of some provisions of the order.

The order has no immediate impact on Westar Energy's rates.

Westar Energy, Inc. (NYSE: WR) is the largest electric utility in Kansas, providing electric service to about 674,000 customers in the state. Westar Energy has about 6,100 megawatts of electric generation capacity and operates and coordinates approximately 33,000 miles of electric distribution and transmission lines.

For more information about Westar Energy, visit us on the Internet at

Forward-looking statements: Certain matters discussed in this news release are "forward-looking statements." The Private Securities Litigation Reform Act of 1995 has established that these statements qualify for safe harbors from liability. Forward-looking statements may include words like "believe," "anticipate," "target," "expect," "pro forma," "estimate," "intend," "guidance" or words of similar meaning. Forward-looking statements describe future plans, objectives, expectations or goals. Although Westar Energy believes that its expectations are based on reasonable assumptions, all forward-looking statements involve risk and uncertainty. Therefore, actual results could vary materially from what we expect. Please review our Form 10-Q for the period ended Sept. 30, 2007 for important risk factors that could cause results to differ materially from those in any such forward-looking statements. Any forward-looking statement speaks only as of the date such statement was made, and the company does not undertake any obligation to update any forward-looking statement to reflect events or circumstances after the date on which such statement was made except as required by applicable laws or regulations.

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