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Fitch Rates KGE's Secured PCRRBs 'BBB+'; Outlook Stable.

NEW YORK -- Fitch Ratings has assigned a 'BBB+' rating to the $50 million issuance of 5% secured pollution control refunding revenue bonds (PCRRBs) due June 1, 2031 issued by the City of Burlington, Kansas on behalf of Kansas Gas and Electric (KGE). The issuance is expected to close on Oct. 15, 2009. The Rating Outlook is Stable.

Proceeds from the issuance will be used to refund $50 million of the City of Burlington's existing PCRRBs, series 2004C, issued on behalf of KGE. The original issuance of PCRRBs was used to refinance the cost of pollution control, sewage treatment, and solid waste disposal facilities at the Wolf Creek Generating Station located near the City of Burlington in Coffey County, Kansas.

KGE's ratings and Stable Outlook primarily reflect an improved regulatory environment in Kansas, parent Westar Energy, Inc.'s (Westar) conservative management style, strategic focus on its utility operations, high debt leverage, and a moderately large capital spending program. Rate increases effective earlier this year support improving cash flows and provide the utility the opportunity to earn a timely and reasonable return on its transmission and environmental investments.

Recovery mechanisms approved in recent years by the Kansas Corporation Commission provide some stability to the financial profile, mitigating regulatory lag associated with its capital expenditure program and the negative effects of fuel and purchased power cost price volatility. Financial performance for 2009 will be constrained by abnormally cool weather in the third quarter of 2009 and lower off-system sales. However, going forward Fitch expects continued improvement in Westar's credit metrics. Fitch estimates that EBITDA to interest will remain above 3.5 times (x), and FFO to debt will trend up toward 18% through 2010.

KGE and Westar's credit ratings are the same, reflecting centralized operations and treasury functions. KGE provides regulated electric service under the Westar brand name and is functionally integrated with the parent's utility operations. KGE relies on Westar for its short-term cash needs, and Westar's revolving credit facility is secured by KGE's first mortgage bonds. In addition, no regulatory or corporate structures are currently in place to restrict the migration of cash between parent and subsidiary.

KGE is a regulated utility that provides electric generation, transmission, and distribution services to 313,000 customers in south-central and southeastern Kansas, including the city of Wichita. The utility owns or leases nearly 2,600 megawatts of net generation capacity, which is fueled primarily by a balanced mix of coal and natural gas. KGE is a wholly owned subsidiary of Westar, which also provides electric generation, transmission, and distribution services to more than 370,000 customers in central and northeastern Kansas.

Additional information is available at 'www.fitchratings.com'.

ALL FITCH CREDIT RATINGS ARE SUBJECT TO CERTAIN LIMITATIONS AND DISCLAIMERS. PLEASE READ THESE LIMITATIONS AND DISCLAIMERS BY FOLLOWING THIS LINK: HTTP://FITCHRATINGS.COM/UNDERSTANDINGCREDITRATINGS. IN ADDITION, RATING DEFINITIONS AND THE TERMS OF USE OF SUCH RATINGS ARE AVAILABLE ON THE AGENCY'S PUBLIC WEBSITE 'WWW.FITCHRATINGS.COM'. PUBLISHED RATINGS, CRITERIA AND METHODOLOGIES ARE AVAILABLE FROM THIS SITE AT ALL TIMES. FITCH'S CODE OF CONDUCT, CONFIDENTIALITY, CONFLICTS OF INTEREST, AFFILIATE FIREWALL, COMPLIANCE AND OTHER RELEVANT POLICIES AND PROCEDURES ARE ALSO AVAILABLE FROM THE 'CODE OF CONDUCT' SECTION OF THIS SITE.
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Comment:Fitch Rates KGE's Secured PCRRBs 'BBB+'; Outlook Stable.
Publication:Business Wire
Geographic Code:1U2NY
Date:Sep 30, 2009
Words:534
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