8-K

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON D.C. 20549

FORM 8-K

Current Report Pursuant

To Section 13 or 15(d) of the

Securities Exchange Act of 1934

Date of report    January 13, 2003

(Date of earliest event reported) (January 9, 2003)

Protection One, Inc.	Protection One Alarm Monitoring, Inc.
(Exact Name of Registrant as Specified in Charter)	(Exact Name of Registrant as Specified in Charter)

Delaware	Delaware
(State or Other Jurisdiction of Incorporation)	(State or Other Jurisdiction of Incorporation)

1-12181-01	1-12181
(Commission File Number)	(Commission File Number)

93-1063818	93-1065479
(I.R.S. Employer Identification No.)	(I.R.S. Employer Identification No.)

818 S. Kansas Avenue Topeka, Kansas 66612	818 S. Kansas Avenue Topeka, Kansas 66612
(Address of Principal Executive Offices, Including Zip Code)	(Address of Principal Executive Offices, Including Zip Code)

(785) 575-1707	(785) 575-1707
(Registrant’s Telephone Number, Including Area Code)	(Registrant’s Telephone Number, Including Area Code)

PROTECTION ONE, INC.

Item 5.    Other Events

On December 23, 2002, the Kansas Corporation Commission (KCC) issued an order (Order) modifying an order issued November 8, 2002 addressing the financial plan of Westar Energy, Inc. (Westar Energy), the 88% owner of Protection One, Inc. The Order was attached as an exhibit to our Form 8-K filed December 30, 2002. After analyzing the Order, we determined that the Order could, if not modified, adversely affect us. Accordingly, on January 10, 2003, we filed with the KCC a petition for partial stay and reconsideration of the Order, a copy of which petition is attached hereto as Exhibit 99.1, which describes certain of the potential effects of the Order on us. Also on January 10, 2003, Westar Energy filed a petition for specific reconsideration of the Order, a copy of which petition is attached hereto as Exhibit 99.2, which also describes certain of the potential adverse effects of the Order on us.

On January 9, 2003, Westar Energy advised us that its board of directors has authorized its management to explore strategic alternatives for divesting its investment in us with a view to maximizing the value received by Westar Energy. We expect to work closely with Westar Energy management to identify alternatives that are in the best interest of all of our shareholders.

A copy of our filing with the KCC is available on our web site, www.protectionone.com, under the Investors link.

Item 7.    Financial Statements and Exhibits

(c)  Exhibits

Exhibit 99.2	– Petition for Partial Stay and Reconsideration of Protection One, Inc. dated January 10, 2003.
Exhibit 99.1	– Petition for Specific Reconsideration of Westar Energy, Inc. dated January 10, 2003.

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, each Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

		Protection One, Inc.
Date:	January 13, 2003	By:	/s/    Darius G. Nevin
			Darius G. Nevin Executive Vice President and Chief Financial Officer

		Protection One Alarm Monitoring, Inc.
Date:	January 13, 2003	By:	/s/    Darius G. Nevin
			Darius G. Nevin Executive Vice President and Chief Financial Officer

EXHIBIT INDEX

Exhibit Number	Description of Exhibit
99.2	Petition for Partial Stay and Reconsideration of Protection One, Inc. dated January 10, 2003.
99.1	Petition for Specific Reconsideration of Westar Energy, Inc. dated January 10, 2003.

EX-99.2

                                   BEFORE THE
                          STATE CORPORATION COMMISSION
                             OF THE STATE OF KANSAS

Before Commissioners:               John Wine, Chair
                                    Cynthia L. Claus
                                    Brian J. Moline

In the Matter of the Investigation of Actions of   )
Western Resources, Inc. to Separate its            )  Docket No. 01-WSRE-949-GIE
Jurisdictional Electric Public Utility Business    )
from its Unregulated Businesses                    )
                                                   )

                         PROTECTION ONE, INC.'S PETITION
                  FOR PARTIAL STAY AND LIMITED RECONSIDERATION
                           OF COMMISSION ORDER NO. 55

           Mitchell F. Hertz                         Teresa J. James
           Robert R. Gasaway                         WALLACE, SAUNDERS,
           KIRKLAND & ELLIS                            AUSTIN, BROWN & ENOCHS
           655 Fifteenth Street, N.W.                1900 Epic Center
           Suite 1200                                301 North Main Street
           Washington, D.C. 20005                    Wichita, KS 67202-4806
           (202) 879-5000                            (316) 369-2100



                                TABLE OF CONTENTS



                                                                                                      Page
                                                                                                   
INTRODUCTION .....................................................................................       1

BACKGROUND .......................................................................................       3

     A.   Protection One Is A Publicly Traded Company, And Westar Has No Authority To Make
          Unilateral Decisions Affecting Protection One's Minority Shareholders ..................       3

     B.   Protection One Has Entered Into Several Lawful Contracts With Westar
          Energy and Westar Industries ...........................................................       4

     C.   Order 55 Will Adversely Affect Protection One ..........................................       6

ANALYSIS .........................................................................................       7

I.   ABROGATION OF PROTECTION ONE'S CONTRACTS WITH WESTAR WOULD BE UNCONSTITUTIONAL ..............       8

II.  ABROGATION OF PROTECTION ONE'S CONTRACTS EXCEEDS THE COMMISSION'S AUTHORITY .................      13

     A.   The Commission Lacks Authority To Abrogate Utilities' Contractual Arrangements .........      13

     B.   Even If The Commission Had Authority To Abrogate Utilities' Contractual Arrangments,
          Order 55 Lacks Record Support ..........................................................      17

     C.   Even If The Commission Had Authority To Abrogate Utilities' Contractual Arrangements,
          It Should Decline To Exercise It .......................................................      18

III. APPLICATION OF ORDER 55 TO THE PROTECTION ONE CONTRACTS WITH WESTAR ENERGY WOULD UNLAWFULLY
     UNDERMINE THE COMMISSION'S GOALS FOR WESTAR ENERGY'S CAPITAL STRUCTURE ......................      20

     A.   Abrogating Protection One's Contracts Would Undermine The Commission's
          Goals By Weakening Westar Energy's Financial Position ..................................      21

     B.   Abrogating Protection One's Contracts Would Subject Westar Energy To Liability For
          Contract Damages .......................................................................      23

IV.  THE COMMISSION'S ORDER IS INVALID BECAUSE THE COMMISSION HAS FAILED TO PROVIDE A REASONED
     EXPLANATION FOR ITS DECISION TO ABROGATE PROTECTION ONE'S LAWFUL CONTRACTS ..................      25

CONCLUSION .......................................................................................      27


                                       ii



     This petition for partial stay and limited reconsideration ("the Petition")
is being filed by Protection One, Inc. ("Protection One") independently of
Westar Energy, Inc. ("Westar Energy")./1/ It is being filed pursuant to K.A.R.
(S)(S) 82-1-235(c)(2), (3), and (4) in order to urge that the Commission
specifically reconsider the issues of fact, issues of law, legal authorities,
and additional evidence described herein. The gravamen of the Petition is that
Order 55 of this Docket is unconstitutional, unauthorized by statutory
authority, unsupported by record evidence, and insufficiently explained -- at
least to the extent that it directs Westar Energy or Westar Industries, Inc.
("Westar Industries") to breach contracts with Protection One. Protection One
respectfully requests that the Commission immediately stay the effect of Order
55 as it may apply to Protection One contracts. Protection One also requests
that the Commission reconsider and revise the Order so that it clearly does not
abrogate or interfere with Protection One's contractual arrangements. Finally,
pursuant to K.A.R. (S) 82-1-235(c)(3), Protection One respectfully suggests that
the Commission hear oral argument on the pressing issues covered in this
Petition. Given the importance of these issues, Protection One believes that
oral argument would be helpful to the Commission.

                                  INTRODUCTION

     Protection One is principally engaged in providing security alarm
monitoring to homes and small businesses, including the sale, installation, and
servicing of alarm systems. With over one million customers, Protection One is
the second largest provider of security services in the United States.


- ----------------------
/1/ Petition One's Petition to Intervene was filed on January 9, 2003, and is
now pending before the Commission. In anticipation of a Commission ruling
granting that intervention petition, this Petition is being filed consistent
with the January 10, 2003 deadline for submissions seeking reconsideration of
Order 55.



     Protection One has been much discussed in these proceedings. Often, it has
been described as an "affiliate" of Westar Energy. See, e.g., Order No. 51 at
(P) 58. In fact, Protection One is a publicly traded company, listed on the New
York Stock Exchange. A clear majority (approximately 88 percent) of Protection
One's stock is owned by Westar Industries, which in turn is 100 percent-owned by
Westar Energy. But precisely because Protection One is publicly traded and has
shares in the hands of the public (as it has since before Westar Industries'
acquisition of Protection One stock), Protection One's management and board of
directors must (and do) protect the interests of both the company as a whole and
all of Protection One's shareholders, including its minority shareholders, to
whom certain fiduciary duties are owed.

     This Petition is being filed, among other reasons, to inform the Commission
of these interests. It asks that the Commission stay and reconsider Order 55 to
the extent that it purports to abrogate Protection One's contractual rights -- a
step that would inevitably be to the significant detriment of Protection One's
future business prospects, as well as, for reasons discussed below, the
detriment of Westar Energy and, ultimately, the stated objectives of the
Commission.

     Protection One, which has not appeared in these proceedings until now,
trusts and hopes that the Commission finds this Petition non-repetitive,
helpful, and a useful basis for discussions. It is not intended to address, much
less to disparage, the Commission's ultimate goals for Westar Energy's corporate
organization or capital structure. Rather, the Petition aims to build on
Protection One's common interests with the Commission, including especially the
Commission's important interests in preserving Westar Energy's ability to retire
significant amounts of debt with proceeds from the sale of Westar Energy's
holdings of Protection One stock, and to obtain repayment for Westar Industries
pursuant to the credit facility Westar Industries provides to

                                       2



Protection One. These shared objectives are realistically obtainable only to the
extent that Protection One remains a viable business, and is so perceived by the
investing public and prospective purchasers of Westar Industries' interest in
Protection One. That viability is being questioned because of the Commission's
Order 55. Accordingly, granting this Petition and modifying that Order would
constitute significant steps toward goals the Commission and Protection One
share in common.

                                   BACKGROUND

     Absent reconsideration of Order 55, Protection One, including its minority
shareholders, will be substantially and unlawfully prejudiced by the
Commission's actions in these proceedings.

     A.   Protection One Is A Publicly Traded Company, And Westar Has No
          Authority To Make Unilateral Decisions Affecting Protection One's
          Minority Shareholders.

     Protection One is incorporated in Delaware and listed on the New York Stock
Exchange. One of the largest U.S.-based security services providers, Protection
One has approximately 2,900 employees in the United States as a whole,
approximately 725 of which are based in Kansas.

     Since its initial public offering in 1994, Protection One's stock has at
all times been publicly traded, with shares in the hands of the public. At the
time of that 1994 offering, Protection One was listed on the NASDAQ (under the
ticker symbol ALRM). Protection One continued to be NASDAQ-traded through the
1997 transactions that originally created its affiliations with Westar Energy,
right up to its November 1998 listing on the New York Stock Exchange (under the
ticker symbol POI).

     Westar Energy became the indirect, majority owner of Protection One as a
result of a November 24, 1997 transaction between Protection One and Western
Resources, Inc. (which

                                       3



later changed its name to Westar Energy). Protection One received all of the
outstanding stock of Western Resources' security alarm monitoring businesses
(then known as Westsec and Westar), plus additional consideration in the form of
cash and securities. In return, Protection One issued to Western Resources
68,673,402 shares of Protection One common stock (approximately 82.4 percent of
Protection One's outstanding stock at that time). Today, approximately 12
percent of Protection One's common stock is publicly held, while Westar
Industries (a subsidiary of Westar Energy) holds the remainder. (The
relationship between Protection One, Westar Energy, and Westar Energy's
utilities is shown in Attachment A.)

     It bears emphasis that, although a majority of its stock is held by Westar
Industries, Protection One has its own executive leadership and board of
directors, which have legal duties and fiduciary obligations independent of
those of Westar Energy. As of the filing of this Petition, Protection One's
board consists of eight persons, of which only one has significant ties to
Westar Industries or Westar Energy, apart from his Protection One board
membership. (The Protection One board of directors is more fully described in
Attachment B.) Neither Westar Industries, nor Westar Energy, has any authority
to make unilateral decisions compromising the interests of Protection One's
minority shareholders.

     B.   Protection One Has Entered Into Several Lawful Contracts With Westar
          Energy and Westar Industries.

     Protection One has entered into a number of legally-binding contracts with
Westar Energy and Westar Industries. Several of these contracts merit detailed
explanation because of their importance to Protection One and the risk that the
Commission by its Order 55 may (perhaps unintentionally) have set the stage for
an unlawful abrogation of or infringement on these contracts. These contracts
include, but are not limited to, the following:

                                       4



     The Tax-Sharing Agreement with Westar Energy. At the time of the merger,
Western Resources and Protection One entered into a mutually beneficial
Tax-Sharing Agreement under which the two companies agreed to file a
consolidated tax return. Under applicable tax law, Protection One had the
option, but not the obligation, to enter into this agreement. Absent a
Tax-Sharing Agreement, Protection One would have used any net operating losses
to offset operating income, if any, in future years. Under the Tax-Sharing
Agreement, however, Westar Energy received the tax benefits of Protection One's
losses throughout the course of the current tax year and, as a result, is
obligated to return those tax savings to Protection One. The Tax-Sharing
Agreement has thus provided benefits to Westar Energy, in that Westar Energy has
enjoyed the time value of money saved due to reduced taxes throughout the 2002
tax year prior to making payment to Protection One. For the 2002 tax year,
Protection One is owed an amount projected at between $17 and $29 million that
will be due when Westar Energy's 2002 tax return is filed, possibly as early as
the first quarter of 2003. (A copy of the Tax-Sharing Agreement is included in
Attachment D.)

     The Senior Credit Facility with Westar Industries. Protection One's Senior
Credit Facility with Westar Industries allows it to borrow up to $280 million,
subject to compliance with various financial conditions. This facility provides
essential liquidity for Protection One, for it makes credit available (up to the
$280 million limit) immediately upon Protection One's request. Under the Senior
Credit Facility, Protection One pays a floating interest rate on all borrowed
funds, and is subject to certain financial covenants. Currently, Protection One
is in compliance with all Senior Credit Facility covenants and, as of January 9,
2002, Protection One had outstanding borrowings of $215.5 million. Protection
One thus currently has a legal right to

                                       5



make additional borrowings under the facility in accordance with its terms. (A
copy of the Senior Credit Facility is included in Attachment E.)

     The Outsourcing Agreement With Westar Energy. The Commission's Order also
affects certain obligations remaining under the Outsourcing Agreement between
Westar Energy and Protection One Data Services, Inc. ("PODS"), a wholly-owned
Protection One subsidiary. Under that agreement, the parties initially
contracted for PODS to provide through December 2005 certain critical
information technology services previously performed by Westar Energy itself.
Although the parties to the Outsourcing Agreement mutually agreed to terminate
the Agreement effective December 31, 2002, certain of Westar Energy's other
obligations under the Agreement remain to be performed, including Westar
Energy's obligation to reimburse PODS approximately $500,000.00 in pre-payments
that have already been made by PODS for certain third-party IT services to be
provided in 2003 or other future years.

     Finally, the Commission should bear in mind that the flows of funds between
Protection One and Westar Energy or Westar Industries are by no means all in one
direction. For example, Protection One pays Westar Energy to provide
administrative and advisory services pursuant to a Shared Services Agreement
dated April 1, 1999 (as amended). (A copy of the Services Agreement is included
in Attachment F.) These services are charged at Westar Energy's fully-loaded
costs and include various accounting, tax, audit, human resources, purchasing,
and facilities management activities. For the nine months ending September 30,
2002, Protection One paid approximately $3.6 million for these services.

     C.   Order 55 Will Adversely Affect Protection One.

     Whether intended or not, Order 55 is poised to unlawfully abrogate or
infringe contracts between Westar Energy (as well as Westar Industries) and
Protection One. For example, Order 55 prohibits Westar Energy from fulfilling
its obligations under the Tax-Sharing Agreement. See

                                       6



Order No. 55 at (P) 73. Specifically, Order 55 apparently purports to nullify
Protection One's right to receive the payments due to Protection One for tax
year 2002 and subsequent years. See id.

     In this same vein, Order 55 establishes a requirement that Westar Energy
notify the Commission "thirty (30) days before any investment of $100,000 or
more in nonutility businesses by Westar Energy or any affiliate." Order No. 55
at (P) 80. While allowing Protection One to draw down its line of credit is not
strictly speaking an "investment," if the Commission were to construe this
language to include draw-downs, the Order would undermine Protection One's
ability to access its unused credit capacity. By requiring 30 days advance
notice, Order 55 also denies Protection One its contractual right to draw down
funds immediately. (Again, this credit facility provides Protection One with
essential liquidity, and any impairment of Protection One's ability to draw
against it would have significant repercussions for Protection One.)

     Finally, Order 55 expressly infringes Westar Energy's remaining obligations
under the Outsourcing Agreement with Protection One's subsidiary, PODS, by
requiring Westar Energy to seek Commission approval "before making any . . .
transfer of cash" that "equals or exceeds $100,000." Order No. 51 at (P) 113;
Order No. 55 at (P) 71 (stating that this requirement applies to the Outsourcing
Agreement).

                                    ANALYSIS

     The Commission might well imagine that the immediate contractual
impairments described above -- depriving Protection One of some $17-29 million
owed this year under the Tax-Sharing Agreement; potentially forestalling it from
drawing down funds under its Senior Credit Facility; and potentially stopping or
delaying it from receiving some $500,000.00 due under its Outsourcing Agreement
- -- will financially impact Protection One, significantly and adversely.
Ultimately, Order 55 could have enormously adverse effects on Protection One.

                                       7



While the Commission in many circumstances might not be much concerned with
Protection One, or its future, there are compelling reasons why it should take
careful account of these bracing facts -- namely, their direct, negative
financial impacts on Westar Energy and its utilities. Indeed, even a perception
by the public capital markets that the Commission is impairing Protection One's
value or viability must be addressed -- and dispelled -- if the Commission's
goals are to be realized. Left unaddressed, such perceptions can only have the
effect of driving down the price that Westar Energy can command for its
Protection One stock holdings. For reasons described below, it is in the
manifest best interest of all parties, including the Commission and the Kansas
utility ratepayers, to work hard to ensure that the value and viability of
Protection One are left unimpaired.

I.   ABROGATION OF PROTECTION ONE'S CONTRACTS WITH WESTAR WOULD BE
     UNCONSTITUTIONAL.

     The Commission has directed Westar Energy to "revise the Tax Sharing
Agreement to reflect its obligation to retain for the utility business the
benefits of tax losses attributable to the nonutility business until the
Commission finds that the utility company no longer bears debt associated with
the nonutility businesses." Order No. 55 at (P) 73. Further, it has potentially
made credit available to Protection One, not immediately, but (if at all) only
on 30 days' notice to the Commission. In addition, the Commission's Orders
provide that Westar Energy must seek "Commission approval before making any ...
transfer of cash to [Protection One] ... where the value of such transaction
equals or exceeds $100,000." Order No. 51 at (P) 113; see also Order No. 55 at
(P) 71. This requirement effectively abrogates Westar Energy's continuing
obligations under the Outsourcing Agreement between Protection One and Westar
Energy. Other agreements between Protection One and Westar Energy are also
placed at risk under the Commission's Order.

                                       8



     These directives do not square with the Contract Clause of the United
States Constitution. The Contract Clause provides that "[n]o State shall . . .
pass any ... Law impairing the Obligation of Contracts .... "Art. I, (S) 10,
cl. 1. The Supreme Court has devised a three-part test for determining whether a
state law or regulation violates the Contract Clause: The law must [1] operate
as a "substantial impairment of a contractual relationship." Allied Structural
Steel Co. v. Spannaus, 438 U.S. 234, 244 (1978). If it does, it will be upheld
only if [2] the State provides "a significant and legitimate public purpose
behind the regulation," and [3] the "adjustment of the rights and
responsibilities of contracting parties [is based] upon reasonable conditions
and [is] of a character appropriate to the public purpose justifying [the
legislation's] adoption." Federal Land Bank of Wichita v. Bott, 240 Kan. 624,
634 (1987) (quoting Energy Reserves Group, Inc. v. Kansas Power & Light, Co.,
459 U.S. 400, 411-12 (1983)) (internal quotation marks omitted). Applying these
factors, particularly as interpreted by the Kansas Supreme Court in Land Bank of
Witchita v. Bott, illuminates the invalidity of the contract-abrogating
provisions of Order 55.

     At the outset, there is substantial impairment of Protection One's
contractual relationships. The Supreme Court has recognized that "[t]otal
destruction of contractual expectations is not necessary for a finding of
substantial impairment." Energy Reserves, 459 U.S. at 411. Even so, here the
destruction is nearly total. The Tax-Sharing Agreement, for example, mandates a
"return benefit" to Protection One, but the Commission has expressly ordered
that Westar Energy "revise" the Agreement and "retain for the utility business
the benefits." Order No. 55 at (P) 73. In other words, the "revision" being
ordered is for Westar Energy to accept Protection One's obligations under the
Agreement but to refuse performance in return. Any vague assurances that perhaps
in the future the Commission might permit

                                       9



performance -- either under the Tax-Sharing Agreement or other contracts --
could hardly salvage what has been taken from Protection One, or repair the
damage from negative perceptions of Protection One's value and continued
viability by the public equity markets. In this same vein, to the extent Order
55 requires 30 days advance notice before Protection One draws upon the Senior
Credit Facility, the Order would substantially undermine that contract because
it defeats the very purpose of having revolving credit arrangements -- namely,
quick access to ready cash.

     Although some courts have found lack of contractual impairment where a new
law was foreseeable, this escape hatch does not apply to the Commission's Order.
To justify abrogation, parties must have at the time their contract was entered
a "fair and appreciable warning of an impending intervention into their
agreements." Holiday Inns Franchising, Inc. v. Branstad, 29 F.3d 383, 385 (8th
Cir. 1994). Of course, it is no defense that Westar Energy (but not Protection
One) operates in a heavily regulated industry: "[A] history of regulation is
never a sufficient condition for rejecting a challenge based on the contracts
clause ... [t]he fact that some incidents of a commercial activity are heavily
regulated does not put the regulated firm on notice that an entirely different
scheme of regulation will be imposed." Chrysler Corp. v. Kolosso Auto Sales,
Inc., 148 F.3d 892, 895 (7th Cir. 1998). Here, the contracts between Westar
Energy and Protection One were lawful when made, and expectation of performance
was entirely reasonable. Indeed, the Commission's Order as a whole has garnered
national press coverage as an "unusual step" in the regulation of electric
utilities. See Rebecca Smith, Energy Firms Seek to Share Pain with Subsidiaries,
Wall. St. J., Dec. 26, 2002.

     In light of these substantial, unexpected impairments of Protection One's
contractual rights, Order 55 simply fails to further the kind of "significant
public purposes" that might justify

                                       10



such impairments. See Spannaus, 438 U.S. at 244. The Commission is not, for
instance, responding to an "emergency" akin to the Great Depression, see, e.g.,
Home Bldg. & Loan Ass'n v. Blaisdell, 290 U.S. 398 (1934), or even the Kansas
farm foreclosure crisis of the 1980s, see, e.g., Federal Land Bank of Wichita v.
Bott, 240 Kan. 624 (1987). Indeed, Order 55 does not even acknowledge the legal
necessity of such a showing.

     Finally, even if the Commission were to conclude at some future point that
abrogating contracts is essential for significant public purposes, it has failed
to pursue those purposes through "reasonable conditions" that preserve as much
as possible the integrity of the underlying agreements. See Spannaus, 438 U.S.
at 244. In particular, Order 55 contravenes the Kansas Supreme Court's decision
in Botts. There, even though the Family Farm Rehabilitation Act was passed in
response to a genuine farm foreclosure emergency, the court struck down the Act
as a violation of the Contract Clause because it did not protect "the integrity
of the mortgage indebtedness." Botts, 240 Kan. at 636. As the court explained:

     [The Act] impairs the mortgage debt by authorizing redemption at less than
     the judgment amount and preventing the mortgagee from bidding at a judicial
     sale or obtaining a deficiency judgment. It changes the rate of interest
     from that provided in the contract to a set rate provided in the Act. The
     conditions of redemption are changed as the Act authorizes redemption of
     any part or parcel of the mortgaged land. Further, the Act makes no
     specific provision for the payment of taxes, profits, or reasonable rental
     during the period of extended redemption.

Id. at 636-37. This list of offending particulars is significantly less severe
than either the Commission's outright cancellation of the Tax-Sharing Agreement,
or the potential 30-day advance notice requirement for Protection One's Credit
Facility, or its requirement for Commission pre-approval for payments under the
Outsourcing Agreement. Order 55 thus fails the Botts standard for testing the
validity of contractual impairments.

     In any event, the Commission cannot dispose of the Contract Clause issue
without providing, at a minimum, "a concise and specific statement of the
relevant law and basic facts."

                                       11



See Gas Serv. Corp. v. State Corp. Comm'n, 4 Kan. App. 2d 623, 625 (1980)
(citing SEC v. Chenery Corp., 318 U.S. 80 (1943)). The Commission, just as a
state or federal court, has a duty to construe its authority so as to avoid
constitutional problems. See National Compressed Steel Corp. v. Unified Gov. of
Wyandotte County, 38 P.3d 723, 732 (Kan. 2002) ("statutes should be construed to
avoid constitutional problems"); Edward J. DeBartolo Corp. v. Florida Gulf Coast
Bldg. & Constr. Trades Council, 485 U.S. 568, 575 (1988) ("[W]here an otherwise
acceptable construction of a statute would raise serious constitutional
problems, the Court will construe the statute to avoid such problems unless such
construction is plainly contrary to the intent of Congress."); M.S.W., Inc.
Board of Zoning Appeals of Marion County, 29 Kan. App. 2d 139, 152 (2001) ("In
order to avoid violation of constitutional provisions preventing the taking of
private property without compensation, zoning ordinances must permit
continuation of nonconforming uses in existence at the time of their
enactment.")

     Accordingly, should Order 55 be left unmodified, the Commission would be
unlawfully glossing over serious constitutional issues. There has been no
attempt to resolve those issues, much less explanations as to how the Commission
is using its authority to avoid them, as is its duty. The Commission's Order is
thus legally deficient on grounds that the Commission has failed to consider
thoroughly all of the relevant legal issues. See K.S.A. (S) 77-621(c)(1); see
also National Wildlife Fed'n v. ICC, 850 F.2d 694, 708 (D.C. Cir. 1988) ("[W]e
find the Commission's analysis of the takings issue raised by Ms. Beres
insufficient to support its conclusion ... [a] remand for further
consideration is therefore in order."). Rather than creating serious
constitutional difficulties without discussion, the Commission should revise its
Order so that it does not impair Protection One's contractual arrangements.

                                       12



II.  ABROGATION OF PROTECTION ONE'S CONTRACTS EXCEEDS THE COMMISSION'S
     AUTHORITY.

     Although Order 55 is unconstitutional as currently framed, the Commission
need not necessarily reach that issue at this time. It may instead grant this
Petition on alternative statutory grounds.

     Naturally, the Commission has a paramount duty to abide by the federal
constitution. Put simply, "[n]o state legislator or executive or judicial
officer" can "fail to adhere to the Constitution" without "violating his
undertaking to support it." Cooper v. Aaron, 358 U.S. 1, 18 (1958). Under both
the Oath Clause and the Supremacy Clause, state officials have a duty to follow
the United States Constitution in preference to any other obligations, including
any unconstitutional state statute or state constitutional provision mandating
the contrary. See, e.g., Meredith v. Fair, 328 F.2d 586 (5th Cir. 1962); see
also Howlett v. Rose, 496 U.S. 356, 367 (1990) ("The laws of the United States
are laws in the several States, and just as much binding on the citizens and
courts thereof as the State laws are.") (quoting Claflin v. Houseman, 93 U.S.
130, 136-37 (1876)). Similar obligations are imposed by Kansas statute. See
K.S.A. (S) 77-621(c)(1) (noting the unlawfulness of agency action if
unconstitutional on its face or as applied).

     Fortunately, no such tensions arise in this case, because Kansas law also
supports the revision of Order 55 along the lines suggested by Protection One.
The Commission should accordingly revise its Order, taking into account the
statutory bounds on its authority.

     A.   The Commission Lacks Authority To Abrogate Utilities' Contractual
          Arrangements.

     Kansas law provides no specific statutory authority for impairing
Protection One's contracts with Westar Energy or Westar Industries. Apparently
recognizing this fact, the Commission has cited its broad and general authority
over electric utilities. See, e.g., Order No. 51 at (P) 54 (citing K.S.A. (S)(S)
6-101, et seq.). Unquestionably, the statutory provisions on which

                                       13



Order 55 relies grant wide powers. But they do not give the Commission unlimited
powers to abrogate lawful private contracts.

     K.S.A.(S) 66-101 states that the Commission "is given full power, authority
and jurisdiction to supervise and control the electric public utilities . . .
doing business in Kansas, and is empowered to do all things necessary and
convenient for the exercise of such power, authority and jurisdiction."
K.S.A.(S) 66-101 (emphasis added); see also K.S.A.(S) 66-101(h) (giving the
Commission supervisory authority over all electric public utilities doing
business in Kansas). The statute's focus on "necessary and convenient" echoes
the "necessary and proper" clause of the federal Constitution and its associated
jurisprudential history dating back to Chief Justice Marshall's decision in
Marbury v. Madison, 5 U.S. (1 Cranch) 137, 176 (1803). Although this
jurisprudence is often debated, it is clear and undisputable that a measure is
neither "necessary," "proper," nor "convenient," when it is proscribed by the
Constitution. Cf. State ex rel. Tomasic v. Kansas City, 230 Kan. 404, 417 (1981)
("the legislature and the people have the right to assume that public officials
will exercise their express and implied powers fairly, honestly and
reasonably"). Put simply, the Commission has no authority to violate the
Constitution. See Malone Oil Co. v. Department of Health & Env't, 234 Kan. 1066,
1068 (1984) (agency action "to be valid must be appropriate, reasonable and not
inconsistent with the law").

     Moreover, it is equally clear that absent specific statutory authorization,
an agency's action "cannot stand." Michigan v. EPA, 268 F.3d 1075, 1081 (D.C.
Cir. 2001). Kansas courts have thus consistently recognized that
"[a]dministrative agencies are creatures of statute and their power is dependent
upon authorizing statutes, therefore any exercise of authority claimed by the
agency must come from within the statutes." American Trust Adm'rs, Inc. v.
Sebelius, 44 P.3d 1253, 1257 (Kan. 2002); State ex rel. Brant v. Bank of
America, 272 Kan. 182, 185 (2001)

                                       14



("administrative agencies . . . , as creatures of statute, may only act within
the scope of authority granted by authorizing statutes"). Such delegated
authority should not be "lightly presumed." Michigan v. EPA, 268 F.3d at 1082.
"Were courts to presume a delegation of power . . . agencies would enjoy
virtually limitless hegemony." Id. (quoting Ethyl Corp. v. EPA, 51 F.3d 1053,
1060 (D.C. Cir. 1995)).

     Here, while the Kansas legislature delegated to the Commission broad powers
to supervise and control electric public utilities, it did not (and, indeed,
could not) grant the Commission authority to abrogate legally-binding contracts
that were lawful when entered. Indeed, precisely because the Commission has such
broad powers (including the express powers to engage in ratemaking, control
dividends, and limit prospectively contracts that Kansas utilities might enter),
it is clear that the Kansas legislature did not intend for the Commission to
have the entirely unnecessary power of abrogating pre-existing, legally-binding
contracts. As the U.S. Supreme Court has noted, deciding what "will or will not
be sacrificed" to the "achievement of a particular objective" is "the very
essence of legislative choice" and it "frustrates rather than effectuates
legislative intent simplistically to assume that whatever furthers the statute's
primary objective must be the law." Rodriguez v. United States, 480 U.S. 522,
528 (1987). Accordingly, "[w]here there is a complete and legislated procedure,"
there is "no room" for agencies to further broaden their mandates by invoking
inherent powers. Acosta v. National Beef Packing Co., 44 P.3d 330, 339 (Kan.
2002)

     While the Kansas courts have never dealt explicitly with a case where, as
here, the Commission has attempted to shift the substantive benefits of multiple
utility contracts, courts have examined the Commission's limited authority to
revise rate contracts. It stands to reason that the Commission's power is at its
highest in this context because the Commission's primary

                                       15



responsibility is to ensure just and reasonable rates. See K.S.A. (S) 66-101(b).
Even in that context, however, where the Commission's authority is at its
zenith, the Commission does not enjoy unlimited powers to reformulate standing
contracts. As the Kansas Supreme Court explained long ago, contracts are
"protected from impairment by the federal Constitution and by the Kansas Bill of
Rights." Wichita R.R. & Light Co. v. Court of Indus. Relations, 214 P. 797, 803
(Kan. 1923). Accordingly, the Commission cannot waive contracts aside "by simply
invoking the convenient apologetics of the police power." Id. (quoting Kansas
City S. Ry. v. Kaw Valley Dist., 233 U.S. 75, 79 (1914) (Holmes, J.)). Courts
have continued to apply this doctrine limiting the Commission's authority to
abrogate rate contracts, as the Commission itself has recognized. See, e.g.,
Central Kansas Power Co. v. State Corp. Comm'n, 81 Kan. 817 (1957); Western
Distrib. Co. v. City of Mulvane, 116 Kan. 472 (1924); see also Re: Long Term
Contracts, Docket No. 99-GIMT-706-GIT, 2000 WL 342221, at (P) 46 (2000).

     In light of the demanding standard for abrogating rate contracts (which
arguably fall within the Commission's primary responsibility), the standard for
abrogating non-rate contracts is even more demanding. When non-rate contracts
are at issue, the nexus between the contract and the Commission's delegated
authority is far more attenuated. Accordingly, the Kansas courts have held that
state agencies have no authority to extend arbitrarily the duration of a public
service company's contract. See Welsbach St. Lighting Co. v. Public Utils.
Comm'n, 101 Kan. 774 (1917). Similarly, Kansas courts have been unwilling to
interfere with private lease agreements between public utilities. See Farmers
Coop. Grain and Supply Co. v. Chicago, Rock Island & Pac. R.R. Co., 33 P.2d 170
(Kan. 1934). As the courts have explained, "not every contract" involving public
utilities may be "disturbed by the regulatory body of the state." Id.

                                       16



     B.   Even If The Commission Had Authority To Abrogate Utilities'
          Contractual Arrangments, Order 55 Lacks Record Support.

     In any event, even if the Commission had legal authority supporting its
decision to abrogate Protection One's lawful contracts, the Commission should
still revise its Order because it lacks record support. See K.S.A. (S)
77-621(c)(7). Under Kansas administrative law, agency action is per se arbitrary
and capricious if it is not "supported by substantial competent evidence." Sokol
v. State Dep't of Soc. and Rehab. Servs., 267 Kan. 740, 746 (1999). As the
Kansas Supreme Court has warned, unless agency actions are "supported by
findings of fact for which there is evidence in the record," agency expertise,
"the strength of modern government, can become a monster which rules with no
practical limits on its discretion." Zinke & Trumbo, Ltd. v. State Corp. Comm'n,
242 Kan. 470, 475 (1988) (quoting Burlington Truck Lines v. United States, 371
U.S. 156, 167 (1962)).

     Here, however, neither the Tax-Sharing Agreement, nor the Senior Credit
Facility, nor the Outsourcing Agreement, will have any established, negative
impacts on Westar Energy's ratepayers. Even assuming (incorrectly) that the
contracts drain resources from Westar Energy, the Commission can ensure that
this drain does not become a funnel from the pockets of the Kansas energy
consumer. See K.S.A. (S)(S) 66-101, et seq. In fact, the Commission has
authority to establish rates based on a hypothetical capital structure to ensure
that the ratepayers do not bear the burdens of paying for certain debt, as it
did in recent rate cases involving Westar Energy. See In re Application Of
Western Resources, Inc. For Approval To Make Certain Changes For Its Charges For
Electric Service, Docket No. 01-WSRE-436-RTS, Order on Rate Applications, (P) 34
(July 25, 2001) (noting that "the apparent capital structure of the standalone
electric utility is not generally an appropriate one to use for ratemaking
purposes, and that the preferred approach [is] to determine a hypothetical
capital structure"). Indeed, the Commission

                                       17



has acknowledged that its control over ratemaking ensures that any burdens from
"excess" Westar Energy indebtedness are not felt by Kansas ratepayers. See Order
No. 51 at (P) 98.

         Moreover, to Protection One's knowledge, there is no record evidence,
nor has any party seriously contended, that the affected Protection One
contracts are impairing the quality or reliability of Westar Energy's service to
ratepayers. The most that the Commission has ever said is that Westar Energy's
cost of borrowing has increased (or not decreased as much as the Commission
would have expected in this economic climate) as a result of the greater debt.
But increased borrowing costs are not a result of the Protection One contracts.
Moreover, any increase in borrowing costs can be addressed through the
Commission's authority to control rates and limit dividend payments. See K.S.A.
(S)(S) 66-101, 66-1214.

         In summary, no record evidence of which Protection One is aware shows
that higher Westar Energy borrowing costs have resulted in higher rates; no
record evidence shows that the Commission lacks ratemaking authority to prevent
Westar Energy from passing-through such higher costs (if any) to customers; no
record evidence shows that Westar Energy's borrowing costs are, in fact, higher
due to the Protection One contracts; no record evidence shows impairment of
service; and no record evidence shows the Protection One contracts are causing
any harm to the public. But without such evidence, Order 55 cannot withstand
scrutiny.

         C. Even If The Commission Had Authority To Abrogate Utilities'
            Contractual Arrangements, It Should Decline To Exercise It.

         More fundamentally, even if cures were available for Order 55's legal
deficiencies (they are not), the Commission should still, for sound policy
reasons, renounce any efforts to abrogate lawful contracts. Over the longer
term, the Commission has strong interests in seeing that Kansas utilities are
not disabled from being reliable contracting partners. History shows that
depriving individuals or entities of the capacity to enter into binding
agreements inevitably

                                       18



harms the public. See, e.g., Bruno Leoni, Freedom and the Law 143 (1972). Here,
should the Commission continue to assert the right to abrogate agreements that
were lawful when entered, it could seriously weaken Kansas utilities' ability to
serve their Kansas customers effectively. In particular, third-party creditors
and suppliers may well decline to enter contracts with Kansas utilities if those
contracts are later subject to Commission abrogation.

         One case in point is Southern California Edison's recent difficulties
in obtaining an investment-grade credit rating. These difficulties have been
principally caused by the market's skepticism about the reliability of the
California Public Utility Commission's regulatory regime. According to a leading
credit-rating firm, Southern California Edison's crediting rating has remained
low because of "continuing regulatory and political uncertainties." Foster
Electric Report, Report No. 269, 2002 WL 6859436 (Aug. 14, 2002) ("Despite
Southern California Edison Co.'s ... improving credit strength, on 8/7/02
Standard & Poor's ... lowered to non-investment grade -- or "junk" grade -- two
California power projects [because of] regulatory and political uncertainties
looming over SoCal Edison"); Platts Energy Business & Technology, v. 4 n.6, 2002
WL 23501121 (Oct. 1, 2002) (noting that despite upgrading Southern California
Edison's debt ratings, Standard & Poor's concluded that "the continuing
regulatory and political uncertainties that dominate the credit profile for
[SoCal Edison] can no longer support an investment grade rating"). In short,
regulatory uncertainty has directly harmed California's utilities, entailing
adverse consequences for California ratepayers.

         Should the Commission continue to assert authority to abrogate utility
contracts, Kansas utilities and consumers may begin to suffer the fate of their
California counterparts. Specifically, Kansas utilities' contracts, including
credit arrangements, will likely be concluded on less favorable terms for Kansas
utilities and, ultimately, their customers. In the end, the

                                       19



Commission's efforts to "restore [Westar Energy] to financial health," Order No.
51 at (P) 20, and to avoid "the potential for harm to ratepayers and the public
interest," id., will have the exact opposite effects from those the Commission
intended. Cf. Order No. 51 at (P) 43 (noting Commission's goal of restoring
Westar Energy to "a bond rating comparable to utilities facing similar
utility-related risks").

III.     APPLICATION OF ORDER 55 TO THE PROTECTION ONE CONTRACTS WITH WESTAR
         ENERGY WOULD UNLAWFULLY  UNDERMINE THE COMMISSION'S GOALS FOR WESTAR
         ENERGY'S CAPITAL STRUCTURE.

         Protection One shares many of the Commission's goals articulated in
Order 55. But, if implemented without modification, that Order would not only
undermine these goals, it will likely make achieving them impossible. This
mismatch is contrary to the Commission's intentions. It also renders Order 55
legally improper, by putting the Order's stated goals at odds with the
requirements it imposes on Westar Energy.

         The Kansas Act for Judicial Review and Civil Enforcement of Agency
Actions prohibits state agencies from taking action unsupported by substantial,
competent evidence, see K.S.A. (S) 77-621(c)(7), or "otherwise unreasonable,
arbitrary or capricious," K.S.A. (S) 77-621(c)(8). When reviewing agency action,
Kansas courts regularly seek guidance from federal court interpretations of the
federal Administrative Procedure Act. See, e.g., Reiter v. City of Beloit, 263
Kan. 74, 93 (1997) (acknowledging that federal statutes are helpful when
interpreting similarly-worded Kansas statutes); Imler v. Southwestern Bell Tel.
Co., 8 Kan. App. 2d 71, 74 (1982) (noting that "the scope of review applied in
federal courts is substantially identical to that prevailing in the courts of
Kansas"); see also Stock v. Nordhus, 216 Kan. 779, 782 (1975) ("[t]raditionally,
we have followed federal interpretation of federal procedural rules after which
our own have been patterned"). Significantly, it is settled under federal law
that an agency "must articulate a satisfactory explanation for its action
including a rational connection between the

                                       20



facts found and the choice made." Kansas v. United States, 249 F.3d 1213,
1228-29 (10th Cir. 2001) (quoting Motor Vehicle Mfrs. Ass'n v. State Farm Mut.
Auto. Ins., 463 U.S. 29, 43 (1983)). An agency decision that is inconsistent
with its own stated goals cannot stand-- "[r]ational decisionmaking ... dictates
that [an] agency simply cannot employ means that actually undercut its own
purported goals." Office of Communication of the United Church of Christ v. FCC,
779 F.2d 702, 707 (D.C. Cir. 1985).

         Consistent with these bedrock principles, Kansas administrative
procedure requires a reasonable fit between the Commission's goals and the means
used to achieve those goals. In this regard, the Kansas Supreme Court has held
agency action is "unreasonable" if it is "taken without regard to the benefit or
harm to all interested parties." Zinke & Trumbo, Ltd. v. State Corp. Comm'n, 242
Kan. 470, 474-75 (1988); accord Combined Inv. Co. v. Board of County Comm'rs,
227 Kan. 17, 24 (1980).

         Here, abrogating the agreements between Westar Energy and Protection
One would undermine -- rather than advance -- the Commission's goals for Westar
Energy's capital structure. In particular, requiring Westar Energy to abrogate
its contracts would disserve the Commission's goals by, on one hand, diminishing
the value of Protection One as a viable, ongoing (and salable) business and, on
the other, rendering Westar Energy liable to Protection One for damages. Order
55 thus promises to weaken Westar Energy's finances instead of strengthening
them.

         A.  Abrogating Protection One's Contracts Would Undermine The
             Commission's Goals By Weakening Westar Energy's Financial Position.

         It bears mention at the outset that Order 55 misunderstands the nature
of the Protection One agreements, including specifically the Tax-Sharing
Agreement, which the Commission has mistakenly suggested contributes to Westar
Energy's debt. This assumption is wrong, for three

                                       21



basic reasons. First, the Tax-Sharing Agreement does not siphon funds from
regulated utilities to Protection One. Instead, it merely returns to Protection
One the value of the tax benefit accruing to Westar Energy by virtue of Westar
Energy filing a consolidated tax return with Protection One. Second, the
Tax-Sharing Agreement does grant Westar Energy (and by extension the utilities)
significant benefits. Specifically, Westar Energy has been able to take
advantage of Protection One's tax losses throughout the 2002 tax year, while
obliging itself to pay those savings to Protection One only at the end of the
tax year. Westar Energy has thus benefited from the time value of the tax
losses. Third, the Tax-Sharing Agreement is not associated with debt. Order 55
states that there is a "mismatch of burden and benefit" under the Tax-Sharing
Agreement; in fact, however, the Tax-Sharing Agreement only provides Protection
One with remuneration for tax losses used by Westar Energy to which Westar
Energy would not otherwise be entitled. Cf. Order No. 55 at (P) 73. The
Agreement is thus "matched" with taxable profits, not debt.

         More fundamentally, abrogating Protection One's contracts would be
self-defeating because it could place Protection One in a potentially precarious
financial position. Published reports state that Westar Energy intends to sell
its interest in Protection One "to pay down debt." Westar CEO: KCC Order Went
Too Far, The Topeka Capital-journal (Jan. 6, 2003) (available at
http://cjonline.com/stories/010703/bus_haines.shtml). (A copy of this article is
included at Attachment C.) It is therefore in no one's best interest to create a
situation that would make it much more difficult for such a sale to occur, or to
lessen the expected proceeds from a sale. There is little doubt that, for Westar
Energy to sell its ownership stake in the company for the best possible price,
Protection One must be a viable, going concern. There is also little doubt that
the value to a buyer will be undercut if Order 55 creates liquidity or other

                                       22



financial problems. Westar Energy's stated intention, consistent with the
Commission's desires, to sell Protection One places the Commission's interest
squarely on the side of maximizing Protection One's value in the eyes of
prospective buyers and public equity markets. The revisions requested for Order
55 are thus essential to ensuring that the Commission lawfully promotes --
rather than unlawfully undermines -- this interest.

         B.   Abrogating Protection One's Contracts Would Subject Westar Energy
              To Liability For Contract Damages.

         Besides placing Protection One in a precarious financial position,
abrogating Protection One's contracts would also make Westar Energy liable for
contract damages. It has long been recognized that "where a contract is lawful
when made, and a subsequent enactment renders performance of it unlawful,
neither party shall be prejudiced." Louisville & N.R. Co. v. Crowe, 160 S.W.
759, 760 (Ky. 1913). Accordingly, a party may not take "the property of another
under a promise to pay for it," but "not pay for it," even if "by reason of an
enactment of law after the contract is made, such party is prohibited from
making payment." Id. Under these circumstances, where "consideration has not
been fully paid," a party must "pay for it upon equitable terms." Id. Indeed, as
courts have long recognized, even when contracts are "subject to the reserved
authority in the State to modify them in the interest of the public welfare," a
party "suffering loss" as a result of such modification is entitled to recover
compensation. Bond Bros. v. Louisville & Jefferson County Metro. Sewer Dist.,
211 S.W.2d 867, 874 (Ky. 1948). "It jars unpleasantly on one's sense of justice"
to allow a government agency to "destroy or confiscate [a party's] property for
the benefit and advantage" of another party. Schiller Piano Co. v. Illinois N.
Utils. Co., 123 N.E. 631, 633 (Ill. 1919) (holding that the Public Utilities Act
could not be interpreted to destroy plaintiff's private contract rights).

                                       23



         These venerable  principles of the common law form the backdrop for the
equally long-standing Kansas rule that a contracting party may be held liable
for breach, even when performance under a contract has become unlawful. See
Smith v. Missouri State Life Ins. Co., 7 P.2d 65, 67 (Kan. 1932) ("[W]here a
person by an express contract obligates himself absolutely to do an act not
impossible or unlawful at the time, neither inevitable accident nor any other
unforeseen contingency will excuse him"). An administrative order preventing a
party from performing under a contract is not a valid excuse for nonperformance
when the order preventing performance might reasonably "have been provided
against" by the contracting party. Western Drug Supply & Specialty Co. v. Board
of Admin., 187 P. 701, 703 (Kan. 1920). As commentators have recognized,
"[c]ontracting parties owe a duty to take all steps reasonably necessary to
ensure performance," including preventing interference with performance by
third-parties. CORBIN ON CONTRACTS (S) 76.4 (Revised ed. 2002). Hence, "if the
legal proceedings interfering with performance of the promise are in any way due
to the fault of the promisor . . . the interference should constitute no defense
.. . . because the impossibility is primarily due to the promisor's own fault."
WILLISTON ON CONTRACTS (S) 1939 (3d ed. 1978). As Judge Posner puts it, where
administrative orders "might have reasonably been foreseen and guarded against,"
the contracting party must abide by the consequences, including payment of
damages for breach. Western Drug Supply, 187 P. at 704; see also Northern
Indiana Pub. Serv. Co. v. Carbon County Coal Co., 799 F.2d 265, 278 (7th Cir.
1986) (Posner, J.) (noting that "[g]overnment these days is a pervasive factor
in the economy" and refusing to excuse performance even though state commission
orders made the contract uneconomical).

         Here, abrogation of the affected Protection One contracts would require
that Westar Energy pay Protection One appropriate compensation. Westar Energy
has obtained valuable

                                       24



benefits from Protection One under all these agreements-- and may not now simply
walk away from them. Moreover, the severe and unprecedented nature of Order 55
undoubtedly is attributable, in significant part, to the Commission's perception
of Westar Energy's conduct. See, e.g., Order No. 55 at (P) 32; Order No. 51 at
(P) 18. Accordingly, even if the Commission ultimately succeeds in abrogating
Protection One's contracts, Westar Energy will remain responsible to Protection
One for damages-- thereby, undermining any claim that these abrogations will
conserve cash on the Westar Energy books. Once again, allowing Order 55 to stand
would undercut the Commission's clearly stated goals by weakening Westar
Energy's finances, instead of strengthening them.

IV.   THE COMMISSION'S ORDER IS INVALID BECAUSE THE COMMISSION HAS FAILED TO
      PROVIDE A REASONED EXPLANATION FOR ITS DECISION TO ABROGATE PROTECTION
      ONE'S LAWFUL CONTRACTS.

      The issues discussed above raise serious constitutional, statutory, and
administrative law concerns that should persuade the Commission partially to
stay and reconsider its Order. But even aside from their merits, the
Commission's failure to address these issues is itself per se grounds for
granting reconsideration. Kansas administrative law-- as well as the
Commission's own regulations-- requires that the Commission must "express [its]
orders and decisions in formal and explicit findings to the end that review may
be intelligent." City Serv. Gas Co. v. State Corp. Comm'n, 201 Kan. 223, 232
(1968); Gas Service Co. v. State Corporation Commission, 4 Kan. App. 2d 623, 625
(1980). Each Commission order must contain a "concise and specific statement" of
both "the relevant law" and the "basic facts which persuade the [C]ommission in
arriving at its decision." K.A.R. (S) 82-1-232(3). Kansas courts have
"repeatedly emphasized the need for clarity and completeness in basic or
essential findings on which . . . administrative orders rest." City Serv. Gas
Co., 201 Kan. at 231. Absent such clarity

                                       25



and completeness, it "is not possible to issue a valid order," and there is "no
official action-- only the vain show of it." Id. at 232.

         Where (as here) an agency has not provided a reasoned explanation for
its decision, a reviewing court has no authority to supply such findings by
implication. See, e.g., Kansas Pub. Serv. Co. v. State Corp. Comm'n, 199 Kan.
736, 743-44 (1967) (holding a Commission order unlawful because it lacked "basic
findings of fact or conclusions of law."). In short, a court is powerless to
substitute its findings either "for those which the [C]ommission made" or for
those which "the [C]ommission failed to make." City Serv. Gas Co., 201 Kan. at
232; Water Dist. No. 1 of Johnson County v. State Water Auth., 19 Kan. App. 2d
236, 242 (1994) (noting that a "lack of expressed findings . . . may not be
supplied by implication); cf. SEC v. Chenery Corp., 332 U.S. 194, 196 (1947).

         Because of the novel nature of the severe and unprecedented measures
mandated by Order 55, Kansas courts have never before had cause to address an
agency's failure to analyze an abrogation of contracts of the type presented
heren. Nonetheless, federal courts have not hesitated to invalidate agency
actions in analogous situations involving incomplete or legally erroneous agency
analysis of relevant constitutional protections for private property. In
National Wildlife Fed'n v. ICC, 850 F.2d 694 (D.C. Cir. 1988), for example, the
D.C. Circuit struck down Interstate Commerce Commission orders and remanded for
further consideration because the agency's "analysis" of the constitutional
issues raised by one of the parties was insufficient to "support its conclusion"
that rules implementing the national "rails-to-trails" program would not
infringe private property interests. Id. at 708 (emphasis added). As the D.C.
Circuit emphasized, the agency could not "sidestep th[e] cumbersome inquiry into
the effect of its Rules on [private]

                                       26



property rights . . . by stressing that the Rules serve[d] an important rail
regulatory purpose, namely, the preservation of rail transportation corridors
for future rail use." Id. at 706.

         Here, the Commission's Order has thus far failed to address the serious
concerns that abrogating Protection One's contracts (1) violate the
Constitution's Contract Clause; (2) exceed the Commission's authority; (3) lack
support in the record; and (4) arbitrarily and capriciously undermine the very
goals that the Commission states it is seeking to attain. Because the Commission
has duties to analyze these issues and provide "a concise and specific statement
of the relevant law and basic facts," Gas Service Co., 4 Kan. App. 2d at 625,
these omissions are in themselves independent grounds for a partial stay and
limited reconsideration of Order 55.

                                   CONCLUSION

         The Commission should immediately stay Order 55 as it applies to
contracts to which Protection One is a party in order to give itself time to
comply with the constitutional, statutory, and administrative procedure
requirements discussed above. After staying its Order as it applies to
Protection One, the Commission should hold oral argument on the pressing issues
covered by this Petition. Given the importance of these issues, Protection One
believes that oral argument would be helpful to the Commission. Ultimately, the
Commission should modify Order 55 so it no longer purports to abrogate or
interfere with Protection One's contractual arrangements.

                             Respectfully submitted,

             Mitchell F. Hertz                  Teresa J. James
             Robert R. Gasaway                  WALLACE, SAUNDERS,
             KIRKLAND & EllIS                     AUSTIN, BROWN & ENOCHS
             655 Fifteenth Street, N.W.         1900 Epic Center
             Suite 1200                         301 North Main Street
             Washington, D.C. 20005             Wichita, KS  67202-4806
             (202) 879-5000                     (316) 369-2100

DATE:  January 10, 2003

                                       27

EX-99.1

                                   BEFORE THE
                          STATE CORPORATION COMMISSION
                             OF THE STATE OF KANSAS

Before Commissioners:               John Wine, Chair
                                    Cynthia L. Claus
                                    Brian J. Moline

In the Matter of the Investigation of Actions of   )
Western Resources, Inc. to Separate its            )  Docket No. 01-WSRE-949-GIE
Jurisdictional Electric Public Utility Business    )
from its Unregulated Business                      )

                      PETITION FOR SPECIFIC RECONSIDERATION
                     AND FOR RECONSIDERATION FOR SUBMISSION
                             OF ADDITIONAL EVIDENCE

     COMES NOW Westar Energy, Inc., formerly known as Western Resources, Inc.
("Westar Energy" or "Company") and, pursuant to K.A.R. 82-1-235(c)(3), K.A.R.
82-1-235(c)(4), K.S.A. 66-118b and K.S.A. 77-529, respectfully petitions for
specific reconsideration of certain issues of fact or law, limited to those
issues of fact or law specified herein concerning the Commission's December 23,
2002 Order on Petitions for Reconsideration and Clarification (Order No. 55) and
for submission of additional evidence that was not available at the time of the
hearing in this matter. In support of its Petition, Westar Energy states:

                                 I. Introduction

     1.   In Order No. 51, issued November 8, 2002, the Commission found that
financial and corporate restructuring was required in order to achieve a
balanced capital structure for Westar Energy's electric utility business, reduce
excessive debt at Westar Energy which has resulted from investments in
unregulated businesses, prevent interaffiliate practices which harm Westar
Energy's electric utility customers and protect the Company's electric utility
customers from the risk



associated with Westar Energy's non-utility businesses. The Company shares with
the Commission the goals expressed in Order No. 51, fully accepts Order No. 51's
fundamental principles and intends to comply fully with the spirit and intent of
Order No. 51. The Company is presently working on development of a plan to allow
it to meet those goals as expeditiously as possible.

     2.   As the Commission is aware, in November 2002, Westar Energy's Chairman
of the Board, President and Chief Executive Officer resigned. The Company now
has new leadership both in management and on its Board of Directors. Effective
December 9, 2002, James S. Haines, Jr. became President and Chief Executive
Officer of Westar Energy. On December 11, 2002, Charles Q. Chandler IV was named
as the Company's new Chairman of the Board and, effective December 23, 2002,
William B. Moore was named as the Company's new Chief Operating Officer. These
changes have already resulted in a new direction and the process of developing a
new business plan for Westar Energy and fundamentally different approaches to
the issues addressed by the Commission's orders in this docket than under
previous management.

     3.   The new direction of Westar Energy embraces the principles established
in Order No. 51. Thus, Westar Energy, under its new leadership, intends to:

          .   reduce its debt by at least $100 million per year until it has
              achieved a balanced capital structure that is consistent with
              utilities of similar business and operating risk,

          .   protect its electric utility customers from the risks associated
              with the unregulated businesses of its subsidiaries through the
              implementation of appropriate governance and allocation practices,

          .   simplify its corporate structure,

          .   dispose of its unregulated subsidiaries through a process which
              maximizes the value of those assets in order to further the
              Company's debt reduction goals, and

                                       2



          .   return to being a pure Kansas electric utility.

     4.   When the Company requested reconsideration of certain provisions of
Order No. 51, it was not attempting to change the fundamental principles of that
order or to express disagreement with the premises of that order. Rather, Westar
Energy was seeking clarification of specific provisions of Order No. 51 to
enable the Company to develop a plan that would implement the principles of
Order No. 51. In Order No. 55, issued December 23, 2002, however, the Commission
adopted certain measures that establish significant roadblocks, perhaps in some
cases even complete barriers, to successful implementation of the principles
established in Order No. 51.

     5.   Westar Energy plans to attain the goals established in Order No. 51
through a number of means. Central to attainment of the goals of Order No. 51 is
the sale at the best attainable price of stock in ONEOK, Inc. (ONEOK) and other
non-utility assets owned by the Company's Westar Industries, Inc. (Westar
Industries) subsidiary. The sale of such assets for their maximum value will
take time. The establishment by Order No. 55 of fixed, publicly announced
deadlines, however, jeopardizes the Company's ability to generate the maximum
value for debt reduction in such transactions. In order to maximize the proceeds
that can be obtained in anticipated asset sales, Order No. 55 should be modified
to allow Westar Energy to propose a plan for the orderly disposition of various
non-utility assets. Westar Energy emphasizes that removal of such deadlines in
not being requested due to a lack of resolve or as a subterfuge to facilitate
delay. Westar Energy is committed to proceeding promptly consistent with the
goal of maximizing value. Accordingly, in connection with the removal of
deadlines, Westar Energy would file monthly reports concerning its progress

                                       3



with the Commission as the Company implements the plan./1/ Certainly, if at any
time such reports caused the Commission to conclude that Westar Energy was not
proceeding with sufficient resolve or dispatch, the Commission would be free to
consider remedial action, including the reimposition of deadlines.

     6.   While Westar Energy develops and implements its plan, it is essential
that the value of the assets to be sold is maintained. Unfortunately, certain
provisions of Order No. 55 have already had a demonstrable negative effect on
the value of assets that the Company plans to sell as part of its debt reduction
effort. In the short period since the issuance of Order No. 55, the price of
Protection One, Inc. (Protection One) stock has declined by over 30%. That
decline equals a loss in the value of Protection One's equity of over
$60,000,000 in just two weeks. This decline in Protection One's value is almost
certainly tied to portions of Order No. 55/2/ which, as will be discussed, raise
the real possibility that Protection One will not have adequate funding to
operate and maintain its business operations during the time it takes to
consummate a sale. As will be discussed, elimination of those provisions would
likely restore this lost value to Protection One and enhance its value as an
asset that can be sold to assist Westar Energy in debt reduction.

- -------------------------
/1/ Out of necessity, the details of such a plan would be confidential in order
to maximize the value that can be obtained in such sales. Giving potential
buyers information such as deadlines for sales substantially improve their
bargaining positions and drives prices down. Protection of such information from
public disclosure is contemplated by Kansas law. Thus, K.S.A. 66-1220a requires
the Commission to protect trade secrets and confidential commercial information
unless disclosure "is warranted" after consideration of several factors. The
factors to be considered include "the harm or benefit which disclosure will
cause to the public interest" and "the harm the disclosure will cause the
corporation . . . ." Information concerning details of the Company's plans to
sell assets would harm both the public interest and the Company by impairing the
Company's ability to maximize the proceeds of such sales for use in debt
reduction.

/2/ On December 30, 2002, before the stock exchange opened, Protection One
issued a Form 8-K in which it described and discussed Order No. 55.

                                       4



     7.   The Company is hopeful that the Commission will view this and future
filings by Westar Energy in this docket in the light of the Company's commitment
under its new management to implement the provisions of Order No. 51. The
Commission should also understand that the Company's disagreements with some
provisions of Order No. 55 arise from the Company's belief that certain
provisions of Order No. 55 are counter-productive to the attainment of the goals
of Order No. 51 and from the Company's need to reach these goals without
violating its responsibilities to its customers, shareholders or debt holders.

     8.   Certain provisions of Order No. 55 are so disruptive of the Company's
efforts to reduce debt and restructure its business that the Company simply
cannot implement them. For instance, Westar Energy does not have the assets or
other resources that would enable it to reduce its debt by $1.43 billion to
$1.67 billion by August 1, 2003. Also, based on recent discussions with its lead
bank lender and an investment banking firm familiar with the Company's debt,
renegotiations of existing debt indentures to eliminate the link between Westar
Energy's debt and its electric utility assets are not likely to be successful or
practical. Even if such amendments could be obtained, the price that would be
extracted by Westar Energy's lenders would be extremely high and would divert
money that would otherwise be used for debt reduction.

     9.   Debt reduction is one of the Company's major priorities. In 2002,
Westar Energy reduced its long-term utility debt by $38.8 million. The agreement
between Westar Energy and ONEOK concerning the sale of ONEOK stock announced on
January 9, 2003, is designed to provide Westar Energy with a significant amount
of additional cash which will be used exclusively to reduce debt and increased
flexibility to make further sales of ONEOK stock in the future.

                                       5



     10.   Without modification on reconsideration of Order No. 55, the
Company's efforts to reduce debt will be greatly impeded. The Company did not
arrive at its current financial condition overnight; it will take some time to
correct the situation./3/ Westar Energy is concerned that the August 1, 2003
deadline set by the Commission for financial restructuring may not be attainable
on the one hand, and will provide third parties with whom Westar Energy will
negotiate the bargaining advantage of knowing that Westar Energy is under
compulsion to complete a transaction by a date certain, on the other.

     11.   It appears to the Company that Order No. 51 recognized that repair of
the Company's finances will take time. However, Order No. 55 seems to mark a
material change from Order No. 51. By setting a restructuring deadline of August
1, 2003, Order No. 55 appears to show a lack of willingness to give the Company
needed time to restructure its financial affairs. Westar Energy requests that,
on reconsideration, the Commission will adjust its rulings to provide the
Company the time it needs to take the necessary actions and to maintain and
maximize the value of assets to be sold until such transactions can be
accomplished./4/

     12.   The Company's direction under its new leadership and its commitment
to implementation of the principles of Order No. 51 constitute evidence which
was not available at the

- ----------------------------
/3/ For instance, one of the significant actions that led to Westar Energy's
current financial situation occurred in 1997. At that time, the Commission, in
Docket No. 97-WSRE-368-SEC, granted Westar Energy $1.5 billion of additional
borrowing authority. Docket No. 97-WSRE-368-SEC, Order and Certificate, at 4
(February 7, 1997). (The Commission took administrative notice of the order in
this docket. Tr. Vol. 6, at 1563-64.) In the Commission's order approving such
borrowing, the Commission acknowledged that the funds would be used "for general
corporate purposes, repayment of short and long term debt, and the acquisition
of additional business assets or securities of other companies." Docket No.
97-WSRE-368-SEC, Order and Certificate, supra, at 1.

/4/ Also, in connection with the interim standstill requirements adopted by the
Commission, Order No. 55 imposed certain reporting requirements related to
interaffiliate transactions. Westar Energy seeks reconsideration of some of the
reporting requirements and exemptions from other requirements.

                                       6



time of the hearing but which is extremely important to the Commission's
reconsideration of Order No. 55. In order to provide the Commission the
information it will need to act appropriately on reconsideration, Westar Energy
respectfully requests that it be allowed to submit the testimony of James
Haines, Westar Energy's President and Chief Executive Officer. In addition to
topics noted in the text of this pleading, Mr. Haines' testimony will address
the following topics:

              a.   The Company's commitment to restructuring and the reduction
                   of debt, including a discussion of potential asset sales;

              b.   The Company's plan to become a pure electric public utility;

              c.   The Company's progress in debt reduction; and

              d.   The Company's ability to renegotiate its debt indentures and
                   the costs and new terms likely to be associated with such
                   renegotiations.

Of necessity, and for the reasons discussed above, it is anticipated that
portions of Mr. Haines' testimony would be filed confidentially./5/ Mr. Haines
would also be available for questioning by the parties and the Commission.

        13.   On reconsideration of Order No. 55, Westar Energy request that the
Commission:

              .    allow the Company, as part of its February 6, 2003 filing, to
                   provide a proposed schedule for completion of the debt and
                   corporate restructuring required by the Commission in lieu of
                   the August 1, 2003 deadline for completing restructuring;

              .    allow Westar Industries to retain cash in the amount of $10
                   million plus the difference between $230 million and the
                   amount Protection One has drawn against the Credit Facility
                   to fund its Credit Facility with Protection One and to meet
                   Westar Industries' own liquidity requirements;

              .    modify its ruling concerning the intercompany receiveable to
                   require cash payment of interest by Westar Industries on the
                   intercompany receivable only when Westar Industries has cash
                   on hand in excess of the amount described above with interest
                   accruing at other times;

- ---------------------------
/5/ See footnote 1.

                                       7



              .    allow Westar Energy to continue payments to Protection One
                   under its Tax Sharing Agreement with Protection One;

              .    clarify the ability of Westar Energy to access the revolving
                   credit facility under its bank credit agreement for routine
                   short-term borrowings in the ordinary course of business to
                   fund its on-going electric utility operations and meet cash
                   flow and working capital needs of the electric operations,/6/

              .    modify and provide exemptions from certain interim reporting
                   requirements imposed by Order No. 55, and

              .    allow the filing of testimony by James Haines and provide for
                   a hearing at which Mr. Haines would provide his testimony
                   subject to cross-examination by the parties and questions
                   from the Commission.

                            II. Order Nos. 51 and 55

       14.    In its Order, the Commission stated that "the premise of Order 51
was that upon transfer of the KPL division to a new utility subsidiary, Westar
Energy's debt secured by KPL assets would need to be assigned to the new utility
to avoid a default, but the unsecured debt could remain in Westar Energy, the
holding company." Order No. 55, at (P) 8. The Commission further stated that:

              Westar Energy has now filed an Indenture Report which describes a
              situation that is inconsistent with Order 51's underlying premises
              concerning the separation of secured and unsecured debt. Westar
              Energy states that all its debt, not just the secured debt, must
              accompany the KPL assets to the new utility subsidiary. Under
              these circumstances, the Commission finds that it must make
              significant changes to facilitate the implementation of the
              financial and corporate restructuring requirements of Order 51.

Id. at (P) 10.  (Footnotes omitted.)

- ---------------------------
/6/ This matter is the subject of a separate motion for clarification filed on
January 9, 2003. If that motion is granted, this issue will become moot and need
not be addressed on reconsideration.

                                       8



       15.    In Order No. 55, the Commission did "make significant changes" to
the requirements which it had imposed in Order No. 51. Among other things, the
Commission made the following changes:

              a.   By August 1, 2003, the KPL electric utility assets must be
                   held in a utility-only subsidiary and the consolidated debt
                   of the utility (KPL/KGE) may be no more than $1.67 billion.
                   Page 7, at (P) 11.

              b.   Required Westar Energy to revise its Tax Sharing Agreement
                   with Protection One "to reflect [Westar Energy's] obligation
                   to retain for the utility business the benefits of tax losses
                   attributable to the nonutility businesses until the
                   Commission finds that the utility company no longer bears
                   debt associated with the nonutility businesses." Page 31, at
                   (P) 73.

              c.   Required Westar Industries, effective with the month ended
                   December 31, 2002, to pay Westar Energy interest on
                   intercompany receivable in cash by the 10/th/ of the next
                   succeeding month at WI's "incremental cost of debt." Page 33,
                   at (P) 79.

              d.   Required Westar Energy to report within 48 hours of their
                   occurring all transactions of any size between Westar Energy
                   and any of its affiliates. Page 32, at (P) 77.

                        III. Request for Reconsideration

       16.    Westar Energy hereby requests specific reconsideration of elements
of Order No. 55 that would be extremely harmful to the Company's efforts to
restructure to meet the mutual goals of the Company and the Commission. As will
be discussed below, Westar Energy's request for specific reconsideration is
coupled with its request for the submission of additional evidence that was not
available at the time of the hearing in this matter. Such additional evidence,
in the form of testimony by Westar Energy's President and Chief Executive
Officer, James Haines, will complement this filing and explain and provide
evidentiary support for the statements contained herein.

       A.     August 1, 2003 Deadline.

                                       9



     17. In Order No. 55, the Commission required that by August 1, 2003, Westar
Energy hold its KPL electric utility assets in a "utility-only" subsidiary and
that the consolidated debt of the utility -- that is, the KPL and KGE electric
businesses -- have no more than $1.67 billion of debt. Order No. 55, page 7, at
(P) 11. Westar Energy is committed to effectuating the separation of its
electric utility assets from its other assets and to reducing its indebtedness,
as directed by the Commission's Orders. In view of this commitment, the Company
respectfully requests that it be permitted to implement the principles of Order
No. 51 on a time schedule that affords the Company the opportunity to maximize
the value of its assets rather than having to suffer the significant reduction
in the Company's ability to reduce its debt (presumably not intended by the
Commission) that would result from having to meet an August 1, 2003 deadline.

     18. In Order No. 55, the Commission stated that the Company may meet the
requirements of (P) 11 through renegotiating debt indentures, reducing debt
through sales of non-utility businesses, issuing new stock and/or cash flow or a
combination of these or other means "consistent with the principles announced in
the Commission's prior orders." Id. Further, the Commission stated that it "will
reject any proposed corporate structure whose purpose and effect deviates from
the Commission's requirement that total debt be reduced, and that no debt
incurred for the benefit of the nonutility businesses be assigned to the utility
businesses." Order No. 55, page 21, at (P) 43. In summary, the Commission stated
that Westar Energy has two choices. It can either pay down its debt to below
$1.67 billion by August 1, 2003, or renegotiate its debt indentures by that
date. Id., page 23, at (P) 51. However, the Commission stated that the following
options are not available: 1) moving KPL assets to a subsidiary with excess
debt, i.e., debt in excess of $1.67 billion, 2) moving

                                       10



KPL to a subsidiary without excess debt and triggering a default, and 3)
creating a holding company above Westar Energy with debt staying at Westar
Energy. Id., pages 24-25, (P)(P) 53-55./7/

     19. The Company's total consolidated debt and preferred securities
(excluding debt issued directly by Protection One) is approximately $3.1
billion./8/ Consequently, to meet the deadline set in Order No. 55, Westar
Energy would have to reduce its debt by about $1.43 billion before August 1,
2003. Since the debt at issue cannot be redeemed early, to the extent the debt
cannot be repurchased in the market, the only course available to the Company
would be to make provision for repayment of the debt. This would require the
Company to irrevocably post the principal amount of such debt together with
prepaid interest on it with a trustee for payment to the Company's lenders as
payments come due. Westar Energy estimates that, in addition to the principal
amount of debt involved -- $1.43 billion -- it would have to post prepaid
interest of tens (or perhaps, hundreds) of millions of dollars. /9/ Westar
Energy simply does not have sufficient assets, cash or sources of cash to
allow it to

- -------------------------
/7/ As has been stated in previous filings, it is the Company's position that
the Commission is without authority to require the Company to adopt a specific
capital structure or to reorganize its businesses in a particular manner. The
Commission's rejections of particular structures in Order No. 55 and the limits
placed on debt in the utility businesses are also beyond the Commission's
authority.

/8/ Of this amount, approximately $2.4 billion is the legal obligation of Westar
Energy and the remaining $0.7 billion is debt of KGE. This number also excludes
debt for which payment has been provided for and cash deposited with a trustee.
See footnote 9.

/9/ At this time, the Company is not able to determine what debt would be
involved in such a transaction since that would depend on a number of factors
including timing and market prices for Westar Energy's outstanding debt.
Therefore, Westar Energy cannot calculate the amount of prepaid interest that
would have to be posted. However, in light of the amount of the outstanding debt
for which prepayment provisions would be needed and the duration of the
financings under such instruments, Westar Energy believes the amount of prepaid
interest is likely to be in the range stated. In accordance with GAAP
requirements, however, the debt would remain on the Company's books and the
amount posted would be shown on its balance sheet as "restricted cash." This
would not be a good use of Westar Energy's funds since the Company would be
required to post an amount equal to the interest on the outstanding debt based
on the rate stated in the instruments but the posted cash could only be invested
in U.S. Treasury Bonds or similar conservative investments that currently yield
approximately 1%.

                                       11



make such a reduction in its debt in such a short time frame.  Mr. Haines'
testimony will address this issue.

     20. The Commission-set August 1, 2003 deadline would reduce the amount the
Company can obtain in a sale of assets and thereby compound the Company's
problem in meeting the $1.67 billion debt target. Even if Westar Energy's
non-utility assets had a current market value approaching $1.43 billion, the
public announcement of the August 1, 2003 deadline gives potential buyers of any
of Westar Energy's assets great leverage to purchase such assets at low "fire
sale" prices. Thus, the announcement of a deadline is counter-productive to the
goal of maximizing debt reduction. On reconsideration, Westar Energy requests
that the Commission remove the deadline for debt reduction and allow Westar
Energy to provide a plan for the orderly sale of its non-utility assets in its
February 6, 2003 plan filing. The Company will provide monthly progress reports
to the Commission describing its progress in debt reduction and in disposing of
non-utility assets. Due to the sensitivity of this information, this portion of
the plan filing will be provided confidentially.

     21. Renegotiation by the Company of its debt indentures is not a practical
option. Westar Energy does not control its lenders and cannot force them to
renegotiate the terms of its outstanding loans. Westar Energy has been advised
by its investment bankers that a realistic approach to seeking the consent of
the Company's lenders to changes in the Company's debt indentures would have to
include terms that would put those lenders in at least as good a position as
they would be in were the Company to default under the terms of its present debt
instruments. Thus, even if they are willing to change the terms of the debt
indentures, lenders will insist on substantial up-front payments, and would
likely insist on other inducements and economic assurances such as increased
interest

                                       12



payments and collateral for their modified debt instruments. Further, the
Company's lenders would seek covenant assurance that a substantial amount of the
cash flow from the utility business be dedicated to payment of the non-utility
debt -- a circumstance that they currently rely upon for debt service and
repayment./10/

     22.  Although Westar Energy is continuing to develop its options, based on
Westar Energy's investigation to date, it appears unlikely that the Company
would be able to obtain amendments to its debt indentures. Even if such
amendments could be obtained, the cost that would be extracted by Westar
Energy's lenders would likely be extraordinarily high and a wasteful expenditure
of money that could be otherwise used for debt reduction. In the absence of such
amendments, the Company would face expensive legal challenges from its lenders
if it were to attempt to separate its debt from its utility assets. Mr. Haines'
testimony will discuss his experience with lenders under similar circumstances.

     23.  The debt issuances at issue were all authorized by the appropriate
jurisdictional agencies/11/ and money was loaned to Westar Energy based on its
credit and the lenders' expectation that they could rely upon Westar Energy's
assets and cash flow for repayment of that debt. Even if

- ----------------------
/10/ Regardless of where the debt in excess of $1.47 billion ultimately resides,
the debt service will have to be met. The cash flow from non-utility sources is
insufficient to provide for that debt service. Consequently, whether non-utility
debt is held at the utility or at a holding company, some portion of the cash
flow from utility operations will be required to service non-utility debt in
order to avoid a default on those obligations. Lenders who currently look to
utility assets and cash flow to service and repay their debt will not accept
limitations on the utilities' ability to send cash to the parent company to
service debt currently tied to utility assets. The Commission accepted and
relied upon the utility cash flow projection made by Mr. Proctor, Exhibit
JMP-17, which assumed that debt above $1.47 billion was removed from the utility
and therefore did not include any of the debt service for the excess debt in the
utility cash flow calculation. By assuming that none of the cash flow from the
utility would be used to service non-utility debt, Mr. Proctor substantially
overstated utility cash flow. Even in a holding company structure, it would be
necessary (and a requirement which would be imposed by lenders to the holding
company) for the utilities to send cash up to the holding company to avoid debt
defaults.

/11/ See, e.g., footnote 3.

                                       13



the utility operations could be placed in a subsidiary below a holding company
with a significant portion of the debt remaining at the holding company, the
debt will have to be serviced and the main source of cash flow for debt service
remains cash flows from the utility.

     24.  In addition, placing all utility operations in subsidiaries would
represent a significant structural change in the entity in which the Company's
lenders are presently invested. Such a change would have an economic cost to the
Company. Presently, the Company is both an operating entity with significant
assets and operating cash flow of its own and a holding company. This structure
was taken into account by lenders in making their credit assessment of the
Company and supported their decision to lend on the terms which exist today.
Once the Company modifies its structure so that it is solely a holding company,
lenders will view it differently from a credit perspective since absent
significant operations, all of the Company's assets will consist of its equity
interests in its subsidiaries. This feature of the Company's new structure will
prompt lenders to seek new loan provisions, such as those described above,
designed to put the lenders back in the same economic position they presently
enjoy. In short, the thrust of negotiations to separate the Company's debt as
desired by the Commission will, on the lenders' part, be to replicate by other
means the economic status quo -- thus frustrating the goal the Commission wishes
the Company to achieve.

     25.  Order No. 55 rejected the creation of a holding company above Westar
Energy and moving the stock of Westar Industries to the holding company. Order
No. 55, at (P) 55. The Commission would prefer to have the electric utility
assets moved to a subsidiary below the existing Westar Energy with a portion of
the debt staying behind at the holding company level. As has been discussed,
even if such a plan could be implemented, Westar Energy's creditors would insist
on debt

                                       14



indenture provisions that commit cash flow from the electric utility assets to
the existing debt. Moreover, implementation of such a transfer of assets would
require a massive, time-consuming and expensive effort to identify each and
every asset and liability to be moved including all necessary utility-related
contracts, franchises and easements and to obtain consents to assignments in
many cases. Since the debtholders would require continued recourse to utility
assets and cash flow, the expenditure of time and money in identifying and
obtaining consents to move the utility assets and liabilities would buy nothing
in the way of debt reduction or insulation from excess debt for the utility.

     B.   Interest on Intercompany Receivable.

     26.  In Order No. 55, the Commission imposed a requirement that Westar
Industries pay interest to Westar Energy at Westar Industries' incremental cost
of debt on the intercompany receivable owed to Westar Energy./12/ This action
has the effect of turning the intercompany receivable into a repayment
obligation of Westar Industries. The amount of the intercompany receivable is
approximately $1.5 billion. Since the assets of Westar Industries are worth less
than $1.5 billion, the order has the immediate effect of rendering Westar
Industries insolvent. Since Protection One relies on Westar Industries for its
operating line of credit, rendering Westar Industries insolvent will raise
serious concerns as to whether Protection One will be able to continue as a
"going concern." This issue could result in Protection One receiving an
auditor's report that contains a "going concern" modification with respect to
its December 31, 2002 financial statements. If that were to happen, the value of
Protection One in any sale could be greatly reduced.

- -------------------
/12/ Westar Energy maintains that these actions -- converting the account
receivable into a loan and requiring cash payment of interest at Westar
Industries incremental cost of debt -- are beyond the Commission's authority.

                                       15



     27.  Westar Industries currently has about $75 million of cash on hand.
Hypothetically, assuming a cost of debt to Westar Industries of 4.37875% per
year,/13/ Westar Industries' monthly interest liability would be approximately
$5.5 million./14/ Such payments would use up all of Westar Industries' cash in
little over a year. Westar Industries' cash is used to fund the Amended Credit
Facility between Westar Industries and Protection One. If Westar Industries'
cash were depleted, there would be no way for Protection One to fund its
on-going operations. Thus, even if Protection One avoids a "going concern"
modification in its December 31, 2002 auditor's report related to the potential
insolvency of Westar Industries, it would also face such a report modification
due to the depletion of Westar Industries' cash position by intercompany
interest payments. The resulting reduction in the value of Protection One would
cripple the Company's efforts to sell its interest in Protection One at a
reasonable price as part of Westar Energy's debt reduction efforts.

     28.  In order to preserve the value of Protection One and other Westar
Industries subsidiaries for sale in Westar Energy's debt reduction plan, it is
important to avoid a going concern modification in the auditor's report on the
financial statements for those companies. One possible way to avoid such an
outcome would be to allow Westar Industries the ability to retain sufficient
cash to fund the Protection One Credit Facility and Westar Industries' own
liquidity needs. The

- --------------------
/13/ In discussions concerning this matter, Commission Staff suggested that
Westar Energy use the interest rate charged Westar Energy for short-term
borrowings under its Credit Agreement as a proxy for Westar Industries'
incremental cost of debt. The rate for short-term borrowings under Westar
Energy's Credit Agreement is currently 4.37875%. This rate was used for
illustration purposes only. Westar Energy believes that Westar Industries'
actual cost of debt is likely to be higher than 4.37875%. However, even before
issuance of Order No. 55, it was unlikely that Westar Industries could obtain
financing. Since adherence to Order No. 55 would effectively make Westar
Industries insolvent, it clearly would not have access to capital markets.
Consequently, Westar Energy has no way to reasonably estimate an "incremental
cost of debt" for Westar Industries.

/14/ This number is estimated based on the current rate of 4.37875%. used in the
above calculation. However, the interest rate applicable to short-term
borrowings under Westar Energy's Credit Agreement is not fixed. The rate floats
with the London InterBank Offered Rate (LIBOR).

                                       16



maximum amount available to Protection One under the Credit Facility is
currently $280 million and it has drawn approximately $215 million against the
facility. Assuming Protection One continues to receive payments under the Tax
Savings Agreement, Protection One estimates that it needs a credit line of about
$230 million. Westar Industries' additional liquidity needs are about $10
million. In order for Protection One to avoid a going concern report
modification, Westar Industries needs to have sufficient cash to fund Protection
One's needs under the Credit Facility and its own liquidity needs. Therefore, a
going concern report modification may be avoidable if Westar Industries is
allowed to maintain a minimum cash balance of $10 million plus the difference
between $230 million and the amount Protection One has drawn against the Credit
Facility. Accordingly, Westar Energy requests that the Commission modify Order
No. 55 to provide that Westar Industries is required to pay interest on the
intercompany receivable whenever Westar Industries' cash on hand exceeds the sum
of $10 million plus the difference between $230 million and the amount
Protection One has drawn against the Credit Facility. During periods when Westar
Industries' cash on hand is less than that amount, interest would be accrued
rather than paid in cash. Westar Industries and Protection One have agreed to
amend the credit facility to reduce the maximum borrowing amount to $230 million
provided the modification discussed above in this paragraph is made to the
provisions of Order No. 55 and the Commission allows continued payments under
the TSA as discussed below starting at page 18.

     29.  As was noted above, the effect of this provision on the value of
Protection One has already been felt. In the short time since the Commission
issued Order No. 55, the price of Protection One's stock has fallen from $1.99
per share when the stock market closed on December

                                       17



23, 2002 to $1.35 as of market close on January 9, 2003. Since Protection One
has approximately 98 million shares outstanding, that reduction in stock price
drained over $60 million of value from Protection One. Such a loss of value
directly affects Westar Energy's ability to raise cash for debt reduction from
the sale of Protection One. A modification of Order No. 55 as requested herein,
should help to restore that value to Protection One.

     C.   Tax Sharing Agreement with Protection One.

     30.  At page 31, (P) 73 of Order No. 55, the Commission ordered Westar
Energy to revise its Tax Sharing Agreement (TSA) with Protection One "to reflect
[Westar Energy's] obligation to retain for the utility business the benefits of
tax losses attributable to the nonutility businesses until the Commission finds
that the utility company no longer bears debt associated with the nonutility
businesses." However, Westar Energy does not have the authority to unilaterally
modify its contract with Protection One./15/

     31.  Since Protection One has a contractual right to receive payments for
tax benefits under the TSA, Protection One is also permitted to recognize a
deferred tax asset in its financial statements equal to the anticipated tax
benefit of its book/tax differences. Also, payments to Protection One provide a
significant source of operating capital for its business. Elimination of the
payment of tax benefits to Protection One as specified in the TSA would require
Protection One to eliminate the deferred tax asset and record an impairment
charge under generally accepted accounting principles. Elimination of this
source of cash to Protection One would adversely affect

- ----------------------
/15/ Westar Energy also asserts that the Commission does not have the authority
to require a modification of the Tax Sharing Agreement under the provisions of
K.S.A. 66-1401, et seq. or otherwise.

                                       18



its operating capital as well as adversely affect its financial condition. Thus,
a modification of the TSA would be viewed by Protection One's investors as
harmful.

     32.  As the Commission is aware, Westar Industries is the majority owner of
Protection One, holding approximately 88% of Protection One's outstanding
shares. The balance of the stock is publicly traded. A decision to modify the
TSA would have to be approved by the board of directors of Protection One. Under
applicable corporate governance rules and New York Stock Exchange rules/16/ to
which Protection One is subject, a modification of the TSA to benefit Westar
Energy would have to be approved by Protection One's independent directors.
Given the detrimental effect of such a change on Protection One and the exposure
of the independent directors to litigation by the minority shareholders, it is
unlikely that Protection One would agree to such a change. If Westar Energy were
to withhold payments without a change, Westar Energy itself would likely be
subject to suit by Protection One or its minority shareholders for breach of
contract. The requirement to cease payments under the TSA should be reversed on
reconsideration.

     D.   Interim Standstill Provisions

     33.  In Paragraph No. 68 of Order No. 55, the Commission stated "that the
Company has a pre-existing contractual right to borrow, in the form of a line of
credit, in no way diminishes the necessity of Commission review before the
Company increases its indebtedness." In Paragraph No. 69 of Order No. 55, the
Commission referenced its July 20, 2001 Order noting that short-term borrowings
of the sort referred to in paragraph (E) of that Order would be exempt from the
advance review requirement. However, the Commission required the Company to make
a weekly report of its

- ----------------------
/16/ See NYSE Company Manual Rule 307.00

                                       19



short-term borrowings. Although the Company believes the language of Order No.
55 preserves Westar Energy's ability to make short-term borrowings under its
Credit Agreement, as a result of the language in Paragraphs Nos. 68 and 69 of
Order No. 55, the Company's lenders have expressed concern that such borrowings
are subject to the Commission's advance review. It is therefore requested that
the Commission clarify the language of Order No.55 so that the Company may
borrow under its revolving credit facility for the purposes stated in paragraph
(E) of the July 20, 2001 Order./17/

     34.  The Commission in Paragraph 74 of Order No. 55 stated,

          The Commission does not intend this requirement
          (interaffiliate transactions report) to apply to
          interaffiliate transactions that are in the ordinary course of
          the utility's business. A possible example could be sales of
          the utility's receivables to a financing affiliate where the
          terms reflect an arm's-length relationship. The Company may
          request an exemption on this basis. The request should
          identify the type of transaction, the parties to the
          transaction, the underlying contract, the likely number of
          transactions annually and the probable total value of such
          transactions.

Thus, in (P) 74 of Order No. 55, the Commission indicated that certain
interaffiliate transactions "that are in the ordinary course of the utility's
business" would be appropriate for exemption from the advance approval
requirement for cash transfers in excess of $100,000. Also, in (P) 77 of Order
No. 55 stated in part that:

          the Commission will require Westar Energy to report all
          transactions of any size, within 48 hours of their occurring,
          by describing the size, date and purpose. The Commission
          reserves authority to modify Order 51 to cover transactions of
          less than $100,000 in value, should the Commission find a
          pattern of avoiding the limit by breaking large transactions
          into smaller ones. Id., at 77.

- ----------------
/17/ See footnote 6.

                                       20



(Emphasis added.)

     35.  Westar Energy requests that cash transfers in excess of $100,000 under
the following agreements be exempt from the advance approval requirement:

          a.   Transactions under the service agreements with Protection One,

          b.   Transactions under the service agreements with ONEOK,

          c.   Transactions under Owner Work Orders with Wolf Creek,

          d.   Transactions under the purchase power agreement with Westar
               Generating, Inc.,

          e.   Transactions under the Purchase and Sale Agreement and the
               Receivables Purchase Agreement with WR Receivables and

          f.   Transactions with Western Resources Capital I and Western
               Resources Capital II.

     36.  Westar states that the agreements that pertain to these transactions
are on file with the Commission, that all transactions are in the ordinary
course of business, and that the number of transactions are voluminous./18/
Westar is willing to supply staff monthly billings between affiliates or other
documentation on a monthly basis that summarizes this voluminous material, and a
report with information detailing a listing of all transactions in excess of
$100,000 on a monthly basis./19/ Westar Energy will also provide to Staff more
detailed information upon request by Staff. Westar

- --------------------
/18/ The size of the transactions provided to the Commission for the period
between November 8 and December 27 was between 3 and 4 inches of paper with
approximately 40 to 50 lines of data per page.

/19/ The monthly billing to the affiliate is likely to result in the booking of
a receivable or payable in excess of $100,000 but the individual transactions
would be for small amounts. For example, the detail listed 112 pages
approximating 7,000 transactions for services provided by then-affiliate
Protection One Data Services totaling $177,326.

                                       21



Energy discussed the exemptions listed above with Staff. Staff has indicated
that Westar Energy's proposed submittals are acceptable.

     37.  After making its December 27, 2002 filing to comply with (P) 75
(report of affiliate transactions since November 8, 2002), Westar Energy
representatives met with the KCC Staff on January 7, 2003, to review the filing
and to discuss possible exemptions, the 48 hour reporting requirement and the
format of future reports. Staff agreed that the 48 hour reporting requirement
would be unduly burdensome, voluminous and of no practical value to Staff. In
light of these discussions, Westar Energy requests that the 48 hour reporting
requirement of Paragraph 77 be modified on reconsideration to permit monthly
reporting of all affiliate transactions in a format acceptable to Staff. Westar
has visited with Staff regarding this alternative reporting. Staff has indicated
to Westar that it would find this alternative acceptable.

              III. Request for submission of additional evidence

     38.  K.A.R. 82-1-235(c)(4) provides for "reconsideration for submission of
additional evidence that was [] not available . . . at the time of the hearing."

     39.  Testimony by James Haines on the issues faced by the Company and the
Commission in restructuring and the Company's current and future direction is
clearly evidence "that was [] not available . . . at the time of the hearing."
Such testimony is clearly relevant to the Commission's consideration of Westar
Energy's Petition for Reconsideration. Moreover, Mr. Haines' testimony would
greatly assist the Commission in evaluating the Company's commitment to the
corporate and financial restructuring envisioned by the orders in this docket.

                                       22



     40.  The Company requests that, if it is given the opportunity to file such
testimony, it be given two weeks in which to prepare and file it with a hearing
to be convened no sooner than two weeks thereafter in order to allow the parties
discovery concerning the testimony prior to any such hearing.

     WHEREFORE, Westar Energy requests that the Commission modify Order No. 55
on reconsideration to:

     1.   allow the Company, as part of its February 6, 2003 filing, to provide
          a proposed schedule for completion of the debt and corporate
          restructuring required by the Commission in lieu of the August 1, 2003
          deadline for completing restructuring;

     2.   allow Westar Industries to retain cash in the amount of $10 million
          plus the difference between $230 million and the amount Protection One
          has drawn against the Credit Facility to fund its Credit Facility with
          Protection One and to meet Westar Industries' own liquidity
          requirements and to provide for cash payment of interest by Westar
          Industries on the intercompany receivable only when Westar Industries
          has cash on hand in excess of that amount with interest accruing at
          other times;

     3.   allow Westar Energy to continue payments to Protection One under its
          Tax Sharing Agreement with Protection One;

     4.   clarify the ability of Westar Energy to access the revolving credit
          facility under its bank credit agreement for routine short-term
          borrowings in the ordinary course of business to fund its on-going
          electric utility operations and meet cash flow and working capital
          needs of the electric operations,/20/

     5.   modify certain reporting requirements imposed by Order No. 55, and

     6.   allow the filing of testimony by James Haines and provide for a
          hearing at which Mr. Haines would provide live testimony subject to
          cross-examination by the parties and questions from the Commission,
          and

- ------------------------
/20/ See footnote 6.

                                       23



grant such other and further relief as may be appropriate.

                                Respectfully submitted,


                                ------------------------------------------
                                Martin J. Bregman, #12618
                                Executive Director, Law
                                Larry M. Cowger, #11469
                                Director, Law
                                WESTAR ENERGY, INC.
                                818 S. Kansas Avenue
                                Topeka, KS 66612
                                (785) 575-1986; Telephone
                                (785) 575-8136; Fax

                                Michael Lennen, #98505
                                Morris, Laing, Evans, Brock & Kennedy, Chartered
                                200 W. Douglas, 4th Floor
                                Wichita, KS 67202-3084
                                (316) 262-2671; Telephone
                                (316) 262-5991; Fax

                                ATTORNEYS FOR WESTAR ENERGY, INC.

                                       24



                                  VERIFICATION

STATE OF KANSAS     )
                    )       ss:
COUNTY OF SHAWNEE   )


     Martin J. Bregman, being duly sworn upon his oath deposes and says that he
is one of the attorneys for Westar Energy, Inc.; that he is familiar with
PETITION FOR SPECIFIC RECONSIDERATION AND FOR RECONSIDERATION FOR SUBMISSION OF
ADDITIONAL EVIDENCE and that the statements therein are true and correct to the
best of his knowledge and belief.


                                                ________________________________
                                                Martin J. Bregman


       SUBSCRIBED AND SWORN to before me this 10/th/ day of January, 2003.



                                                ________________________________
                                                Notary Public

My Appointment Expires:


__________________________

                                       25



                             CERTIFICATE OF SERVICE

I hereby certify that on this 10/th/ day of January, 2003, the original and
seven copies of the foregoing PETITION FOR SPECIFIC RECONSIDERATION AND FOR
RECONSIDERATION FOR SUBMISSION OF ADDITIONAL EVIDENCE were hand delivered to:

                               Jeffrey S. Wagaman
                               Executive Director
                          KANSAS CORPORATION COMMISSION
                             1500 SW Arrowhead Road
                              Topeka, Kansas 66604

         and that one copy was sent via U. S. Mail, postage prepaid to:

Susan Cunningham                        Joseph White
General Counsel                         Director
KANSAS CORPORATION COMMISSION           KANSAS CORPORATION COMMISSION
1500 SW Arrowhead Road                  1500 SW Arrowhead Road
Topeka, Kansas 66604                    Topeka, Kansas 66604

Timothy E. McKee                        Gary E. Rebenstorf
TRIPLETT WOOLF & GARRETSON, LLC         Joe Allen Lang
2959 North Rock Road                    WICHITA CITY HALL
Suite 300                               455 North Main, 13th Floor
Wichita, Kansas 67226                   Wichita, Kansas 67202

Gregg Ottinger                          Thomas R. Powell
DUNCAN AND ALLEN                        Sarah J. Loquist
1575 Eye Street, NW                     HINKLE ELKOURI LAW FIRM, L.L.C.
Washington, D.C. 20005-1175             301 North Main, Suite 2000
                                        Wichita, Kansas 67202-4820

James P. Zakoura                        Walker Hendrix
Lee M. Smithyman                        Niki Christopher
David J. Roberts                        CITIZENS' UTILITY RATEPAYER
SMITHYMAN & ZAKOURA, Chartered          BOARD
7400 West 110th Street, Suite 750       1500 SW Arrowhead Road
Overland Park, Kansas 66210-2346        Topeka, Kansas 66604-4027

                                       26



Kirk T. May                                David Banks
Matthew T. Geiger                          Energy Manager
ROUSE HENDRICKS GERMAN MAY, PC             USD 259 School Service Center Complex
One Petticoat Lane Bldg.                   3850 North Hydraulic
1010 Walnut, Suite 400                     Wichita, Kansas 67219-3399
Kansas City, Missouri 64106

Glenda Cafer                               James G. Flaherty
CAFER LAW OFFICES, LLC                     ANDERSON, BYRD, RICHESON,
2401 SW Crest Drive                        FLAHERTY & HENRICHS
Topeka, KS 66614                           216 S. Hickory
                                           P. O. Box 17
                                           Ottawa, KS 66067

John Gaberino, Jr.                         Larry Willer
Senior Vice President and General Counsel  Director Rates and Regulation
ONEOK, INC.                                ONEOK, INC.
100 W. 5/th/ Street                        7421 West 129/th/ Street
Tulsa, OK 74103                            Overland Park, KS 66213

John P. DeCoursey                          Karl Zobrist
ONEOK, INC.                                J. Dale Youngs
7421 West 129/th/ Street                   Blackwell Sanders Peper Martin, LLP
Overland Park, KS 66213                    2300 Main Street, 1100
                                           Kansas City, MO 64108
Eric Grimshaw
VP & Associate General Counsel
ONEOK, Inc.
100 W. Fifth Street
Tulsa, OK 74103








                                 _______________________________
                                 Martin J. Bregman

                                       27