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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM U-1
APPLICATION/DECLARATION
UNDER THE
PUBLIC UTILITY HOLDING COMPANY ACT OF 1935
________________________________
Great Plains Energy Incorporated
Kansas City Power & Light Company
Great Plains Energy Services Incorporated*
1201 Walnut Street
Kansas City, MO 64106
Wolf Creek Nuclear Operating Corporation
1550 Oxen Lane N.E.
P.O. Box 411
Burlington, KS 66839-0411
(Names of companies filing this statement and addresses of
principal executive offices)
_________________________________
Great Plains Energy Incorporated
(Name of top registered holding company of each applicant or
declarant)
_______________________________
Bernard J. Beaudoin
Chairman of the Board, President and Chief Executive Officer
Great Plains Energy Incorporated
1201 Walnut Street
Kansas City, MO 64106
______________________________
The Commission is requested to mail copies of all orders,
notices and other communications to:
William G. Riggins, Esq.
General Counsel
Great Plains Energy
Incorporated
1201 Walnut Street
Kansas City, MO 64106
____________
*To be formed upon approval of the Commission
ITEM 1. DESCRIPTION OF THE PROPOSED TRANSACTIONS
A. INTRODUCTION AND GENERAL REQUEST
1. GENERAL
Pursuant to the Commission's Order Authorizing Corporate
Reorganization and Financing Transactions; Reservation of
Jurisdiction (the "Order"), dated September 7, 2001 (HCAR 27436),
on October 1, 2001, Great Plains Energy Incorporated ("GPE") and
Kansas City Power & Light Company ("KCPL") consummated an
Agreement of Merger and Reorganization (the "Reorganization")
that resulted in GPE becoming a holding company over KCPL, Great
Plains Power Incorporated and KLT Inc.
Prior to the Reorganization, KCPL provided to certain of its
subsidiaries services such as accounts payable, information
technology, investor relations, legal, office space and other
general administrative and support services. In their U-1
Application/Declaration seeking authorization for the
Reorganization, the applicants stated that KCPL was then in the
process of evaluating the most economical and effective manner of
providing support services to affiliate companies following the
Reorganization, and that KCPL intended to file with the
Commission not later than April 30, 2002, an
application/declaration seeking authority to create a service
company and to implement the final support service structure for
the Great Plains Energy system.
The Order (at pages 15-16) noted KCPL's intention to file an
application/declaration seeking authority to create a service
company ("Future Service Company Application") and to implement
the final support service structure for the GPE holding company
system. The Order authorized KCPL and the nonutility
subsidiaries, until the Future Service Company Application is
made effective, to provide support services on an interim basis,
as well as sell goods, to each other and to GPE consistent with
current practice (as well as services and goods of a
substantially similar nature) (the "Interim Period").
2. GENERAL REQUEST
This Application/Declaration seeks the authorization and
approval by the Commission with respect to the provision of intra-
system services and goods following the expiration of the Interim
Period, pursuant to Section 13 of the Public Utility Holding
Company Act of 1935, as amended (the "Act") and the
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Rules thereunder. Specifically, GPE requests that the Commission
approve the designation of Great Plains Energy Services
Incorporated ("GPES") as a subsidiary service company in
accordance with the provisions of Rule 88 under the Act and the
Service Agreement (as defined below) and find that GPES is so
organized and will conduct its operations so as to meet the
requirements of Section 13 of the Act and the Commission's Rules
under the Act. GPE also requests authority, to the extent not
exempted under Rules 81 and 87, for its subsidiaries to provide
certain services and goods among themselves, as more fully
described below.
B. DESCRIPTION OF THE PARTIES TO THE TRANSACTION
GPE is a registered holding company under the Act. GPE
currently has three direct subsidiaries: KCPL, KLT Inc. and Great
Plains Power Incorporated ("GPP"). KCPL is the only public
utility company in the GPE system, and provides electricity at
retail in portions of Kansas and Missouri and at wholesale.
GPE's direct and indirect utility and nonutility subsidiaries are
referred to in this Application/Declaration individually as a
"Subsidiary" and collectively as "Subsidiaries".
GPE proposes to create GPES as a direct, wholly-owned
subsidiary of GPE. GPES, as a subsidiary service company, will
enter into service agreements (each a "Service Agreement") with
GPE, KCPL, KLT Inc., and certain other subsidiaries, associates
and affiliates of associates (subsidiaries, associates and
affiliates of associates who execute Service Agreements are
referred to as "Clients"). A copy of the proposed form of the
Service Agreement and the proposed form of Great Plains Energy
Services Incorporated Service Agreement Procedures are filed as
Exhibits B-1 and B-2, respectively.(1) Following the Commission's
authorization, GPES will provide the Clients with a variety of
administrative, management, environmental and support services,
either directly or through agreements with associate or non-
associate companies, as needed.
It is anticipated that GPES will be incorporated as a
Missouri corporation and have a minimal equity capitalization -
not more than 1,000 shares with total equity capital of not more
____________
(1) The Service Agreement between GPES and KCPL must be filed with
the Kansas Corporation Commission (the "KCC") to be effective,
pursuant to K.S.A. 66-1402. No KCC approval is required for the
Service Agreement to be effective; however, the KCC may, after
hearing, disapprove the agreement if it finds the agreement is
not in the public interest.
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than $10,000. It is anticipated that GPES will finance its
business through the issuance of debt securities exempted under
Rule 52(b) to associate companies or unaffiliated parties, or as
otherwise authorized by the Act, Rules and Commission orders.
C. INTRA-SYSTEM PROVISION OF SERVICES
1. GPES
In order to ensure adequate oversight and realize economies
of scale, certain administrative and service functions for the
GPE system will be consolidated and provided, either in whole or
in part, through GPES. As a general rule, the individual system
companies will maintain services that can benefit from
individualized application at the company level, with GPES
offering system-wide coordination and strategy, compliance,
oversight and other services where economies can be captured by
the centralization of services. In particular, it is anticipated
that, subject to the requirements or limitations of state and
federal law, the following classes of service may be offered by
GPES, through departments that will be established following its
formation and that may offer more than one class of services, to
system companies.(2) These classes are grouped into two
categories: corporate services and shared services. Clients will
be required to take the services in the first category; Clients
may choose which services to take in the shared services
category, subject to the terms and conditions of the Service
Agreement.
A. CORPORATE SERVICES
1. CORPORATE SECRETARY
These services include maintaining corporate
documents; preparing and filing all documents
necessary to maintain the corporate existence of
Clients; and preparing and filing all necessary
documents with the Securities Exchange Commission
____________
(2) These classes of services, with a more detailed explanation of
each service, are contained in Appendix A to the Service
Agreement, Exhibit B-1.
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2. CORPORATE ETHICS & GOVERNANCE
These services include developing and
administering strategies that create a work
climate of high ethics and respect for others.
3. LEGAL LIABILITY ASSESSMENT AND PUHCA
These services include corporate liability
assessment of contracts and agreements and legal
services respecting matters under the Act.
4. EXECUTIVE BENEFITS
These services include supplemental benefits to
the executives of GPE and its Subsidiaries.
5. INTERNAL AUDITS
These services include the identification, review,
and prioritization of corporate risks, controls,
and governance processes.
6. INVESTOR RELATIONS
These services include responses to investor
inquiries (current and potential) and to the
financial analyst community and monitoring and
maintaining of all GPE stock records.
7. CORPORATE COMMUNICATIONS
These services include the preparation and
dissemination of information to associates,
customers, governmental agencies, communities and
the media.
8. CORPORATE FINANCE
These services include recommending, coordinating
and administering of all financial decisions
affecting GPE and its Subsidiaries, including
capital structure, financings, investments and
dividends; manages system-wide risk.
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9. EXTERNAL REPORTING
These services include development and reporting
of the GPE system's external financial filings.
10. EXECUTIVE SERVICES
These services include executive management,
service on Client boards of directors and general
administrative services.
11. ENVIRONMENTAL SERVICES
These services include managing, monitoring, and
providing guidance on compliance with all
environmental legislation and regulations;
developing and recommending environmental
programs; performing remediation; and obtaining
required environmental permits.
12. CORPORATE SECURITY SERVICES
These services include developing and monitoring
associate, physical asset, and information
technology security policies and standards.
13. GOVERNMENTAL AFFAIRS SERVICES
These services include providing legislative
support and guidance on governmental matters.
14. COMMUNITY RELATIONS
These services include coordinating and monitoring
corporate contributions and corporate volunteer
programs.
15. CORPORATE ACCOUNTING SERVICES
These services include the provision of accounting
guidance, properly recording all known financial
transactions in the period incurred, and providing
and maintaining accounting systems, including book
and tax property systems, with adequate and
accessible detail to provide sufficient reporting.
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16. CORPORATE DEVELOPMENT AND STRATEGIC
PLANNING
These services include resource planning and
business analysis services, strategic planning,
assisting GPE and its Subsidiaries to develop
business plans and actions, consulting services
related to cost reduction opportunities, strategic
acquisitions and investments, and process
enhancements to GPE and its subsidiaries.
17. TAX SERVICES
These services include managing all GPE and
Subsidiary tax issues, the preparation and filing
of all federal, state and local tax returns, and
the accounting for such taxes.
18. CORPORATE BUDGETING
These services include creating, coordinating,
analyzing, and revising all capital and operating
budgets for GPE and its Subsidiaries.
19. INSURANCE SERVICES
These services include managing the insurance
programs of GPE and its Subsidiaries.
20. LEADERSHIP SERVICES
These services include identifying and developing
talent throughout the GPE system.
21. DIVERSITY SERVICES
These services include the promoting of equity and
fairness throughout the GPE system.
22. ASSOCIATE SERVICES
These services include employee issue resolution
services.
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B. SHARED SERVICES
1. ASSOCIATE BENEFITS SERVICES
These services include developing, designing and
administering associate benefit programs.
2. ASSOCIATE RELATIONS SERVICES
These services include negotiating union labor
contracts, advising on labor contract compliance,
facilitating the associate selection process
(union and non-union positions), and administering
skills testing.
3. ASSOCIATE COMPENSATION SERVICES
These services include designing and administering
compensation programs (base salary and incentive
plans) and maintaining the associate master
information file.
4. ASSOCIATE COMMUNICATION SERVICES
These services include providing information to
associates.
5. EMPLOYMENT INVOLVEMENT SERVICES
These services include facilitating associate
participation in work teams, committees, task
forces, future search teams, and decision making.
6. ASSOCIATE TRAINING SERVICES
These services include developing and
administering technical, job performance, and
associate development skills training.
7. SAFETY & MEDICAL SERVICES
These services include providing information,
education and training for associates to comply
with governmental regulations and corporate
policy, providing electrical safety information
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to the public, providing medical services for
treatment of associates sustaining work related
injuries and illnesses and administering physical
exams.
8. MAIL SERVICES
These services include mail receipt, sorting and
delivery service.
9. DOCUMENT PROCESSING SERVICES
These services include document publishing and
document distribution services, graphic design
capabilities and design, layout and production of
signage and posters.
10. FACILITY SERVICES
These services include operating, maintaining,
leasing and subleasing facilities and maintaining
building grounds and equipment at acceptable and
approved industry standards.
11. LEGAL SERVICES
These services include client contract and
procedural review and negotiation, litigation,
bankruptcy and collection, regulatory, employment
and labor relations, and other legal services.
12. SECURITY SERVICES
These services include personal and physical
security services including facilities, property
ingress/egress, investigations, and background
checks.
13. PURCHASING SERVICES
These services include processing requisitions for
stock and non-stock materials, labor and
contractors requested by Clients; negotiating
material and contract labor contracts, disposition
of obsolete assets, and managing business credit
card programs.
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14. OPERATIONAL AUDIT SERVICES
These services include consulting services
focusing on efficiency, effectiveness and economy,
assistance in designing control systems, and
related business planning.
15. TELECOMMUNICATION SERVICES
These services include monitoring and operating
the wide area network infrastructure, voice and
data networks, telephone services, and broadcast
teleconferencing services.
16. NETWORK SERVICES
These services include providing internet,
intranet, and extranet support and services, web-
enablement support and electronic messaging and
calendaring support.
17. MAPPING & DRAFTING SERVICES
These services include creating, revising, and
maintaining maps, drawings, or blueprints related
to generating stations, transmission substations
and systems and the distributions systems, and
maintaining general office structure documents.
18. IT SYSTEM DELIVERY SERVICES
These services include user system support,
maintaining computer systems and developing new
computer applications.
19. IT SYSTEM OPERATION SERVICES
These services include designing and managing
local area networks, procuring and supporting
desktop devices, managing data center, providing
bill insert service, help desk support and
database hardware and software operating systems
monitoring and support.
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20. INFRASTRUCTURE SERVICES
These services include planning, designing,
procuring, building, deploying, supporting,
troubleshooting, operating and maintaining
servers, middleware, and networks.
21. ACCOUNTS PAYABLE SERVICES
These services include the processing of vendor
payments and the coordination and resolution of
vendor inquiries.
22. PAYROLL SERVICES
These services include processing all wage and
labor related payments to active associates,
including the withholding and deposit of all
applicable Federal, State and Local associate and
employer taxes, and preparing associate W-2's.
23. CUSTOMER BILLING SERVICES
These services include printing and mailing of
bills to Clients' customers.
24. CASHIER SERVICES
These services include processing Clients'
customer payments, handling exception items,
including returned checks, and handling the
printing of Client checks.
25. CASH MANAGEMENT SERVICES
These services include managing funds and
liquidity for Clients.
26. CONTRACT MANAGEMENT SERVICES
These services include negotiating and managing
intra-system agreements and agreements between
Clients and third parties.
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27. ACCOUNT MANAGEMENT SERVICES
These services include administering and managing
Service Agreements.
28. INVOICING/CHARGE-BACK SERVICES
These services include developing, recommending
and implementing processes to appropriately bill
Clients for the various services rendered.
Applicants wish to note that no core public utility
operations or functions will be initially performed by GPES.
There is only one public utility - KCPL - currently in the GPE
system, and it is anticipated that no economies would be realized
by transferring these functions and related personnel to GPES at
this time. Changes to the scope or character of the services to
be rendered by GPES shall be done pursuant to the Act and its
regulations.
As compensation for the services to be rendered under the
Service Agreements, Clients shall pay to GPES all costs which
reasonably can be identified and related to particular services
performed by Service Company for or on their behalf. All charges
for services shall be distributed among Clients, to the extent
possible, based on direct assignment. The amounts remaining
after direct assignment shall be allocated among the Clients
using the allocation methods set forth in Appendix B of the
Service Agreement, Exhibit B-1. Thus, charges for all services
provided by GPES to its affiliated utility company and non-
utility companies under the Service Agreements will be on an "at
cost" basis as determined under Rules 90 and 91 of the Act. In
addition, Applicants are requesting that GPES and nonutility
subsidiaries be authorized to enter into other agreements to
provide construction, goods and services to certain associate
companies at their market value, as described in Section C.3. of
Item 1, below.
It is anticipated that GPES will be staffed primarily by
transferring personnel from KCPL. GPES's accounting and cost
allocation methods and procedures are structured so as to comply
with the Commission's standards for service companies in
registered holding company systems. GPES's billing system will
use the "Uniform System of Accounts for Mutual Service
Companies", established by the Commission for holding company
systems, as may be adjusted to use the FERC uniform system of
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accounts. Exhibit B-2 contains the proposed procedures to be
used in implementing and administering the Service Agreements.
It is also anticipated that, coincident with the transfer of
personnel to GPES, KCPL will transfer to GPES a small amount of
tangible personal property, comprised of leasehold improvements
and general office equipment, which will be used by GPES in
providing services to its Clients. Certain enterprise-wide
capitalized software costs will also be transferred to GPES. The
net book value of the property proposed to be transferred to GPES
is approximately $4.9 million.(3) GPES will pay to KCPL the net
book value of the property, pursuant to Rule 90. The payment may
be in the form of cash or a promissory note bearing interest at
the effective cost of capital of KCPL.(4) The proposed transfer of
personal property by KCPL to GPES is subject to the approval of
the Missouri Public Service Commission.(5)
KCPL is currently the lessee of certain office space,
computer hardware, other office equipment and vehicles, and is
the licensee under certain software license agreements. It is
anticipated that GPES, and perhaps other Subsidiaries, will
occupy portions of the leased office space and will use portions
of the leased computer hardware, office equipment and vehicles.
Further, GPES, and perhaps other Subsidiaries, will also use
portions of software currently licensed by KCPL. Applicants
anticipate that, to the extent reasonably allowable under these
leases and licenses, GPES will be substituted for KCPL as the
lessee or licensee, as applicable.(6) GPES would then sublease or
otherwise provide, at cost, office space, computer hardware,
other office equipment and vehicles, and software to itself, GPE,
KCPL and Subsidiaries. GPES may, in the future, enter into
various leases, licenses or other arrangements where such leases,
licenses or other arrangements will pertain to more than a single
company in the GPE system. GPES will charge each affected
associate company for the cost thereof pursuant to the Service
Agreement and the Commission's rules.
____________
(3) Applicants believe that none of the property proposed to be
transferred constitutes "utility assets" as defined by Section
2(18) of the Act. To the extent the property constitutes "goods"
of KCPL, the transfer is permitted by Rule 87(b)(4).
(4) Rule 52(b).
(5) Section 393.190, RSMo.
(6) In certain situations in which KCPL is the predominant user
of the leased or licensed items, KCPL may remain the lessee and
licensee and provide a portion of the leased or licensed items to
GPES and other Subsidiaries. See Section C.2.a. of Item 1,
below.
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No change in the organization of GPES, the type and
character of the companies to be serviced, the methods of
allocating cost to Clients, or in the scope or character of the
services to be rendered subject to Section 13 of the Act, or any
rule, regulation or order thereunder, shall be made unless and
until GPES shall first have given the Commission written notice
of the proposed change not less than 60 days prior to the
proposed effectiveness of any such change. If, upon the receipt
of any such notice, the Commission shall notify GPES within the
60-day period that a question exists as to whether the proposed
change is consistent with the provisions of Section 13 of the
Act, or of any rule, regulation or order thereunder then the
proposed change shall not become effective unless and until GPES
shall have filed with the Commission an appropriate declaration
regarding such proposed change and the Commission shall have
permitted such declaration to become effective.
Rule 88(b) provides that "(A) finding by the commission that
a subsidiary company of a registered holding company . is so
organized and conducted, or is to be so conducted, as to meet the
requirements of Section 13(b) of the Act with respect to
reasonable assurance of efficient and economical performance of
services or construction or sale of goods for the benefit of
associate companies, at cost fairly and equitably allocated among
them (or as permitted by [Rule 90]), will be made only pursuant
to a declaration filed with the Commission on Form U-13-1, as
specified in the instructions for that form, by such company or
the persons proposing to organize it." Notwithstanding the
foregoing language, the Commission has on at least two recent
occasions made findings under Section 13(b) based on information
set forth in an application on Form U-1, without requiring the
formal filing on Form U-13-1. See UNITIL CORP., 51 SEC Docket
562 (April 24, 1992); CINERGY CORP., 57 SEC Docket 2353 (October
21, 1994). The Order as well contemplates that an
application/declaration would be filed by GPE seeking authority
to create a service company (Order at 15). In this
Application/Declaration, GPE has submitted substantially the same
application information as would have been submitted in a Form U-
13-1.
Accordingly, it is submitted that it is appropriate to find
that GPES will be so organized and shall be so conducted as to
meet the requirements of Section 13(b) of the Act, and that the
filing of a Form U-13-1 is unnecessary or, alternatively, that
this Application/Declaration should be deemed to constitute a
filing on Form U-13-1 for purposes of Rule 88.
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2. SERVICES, GOODS AND ASSETS INVOLVING KCPL
A. GENERALLY
KCPL, currently the only public utility in the GPE system,
may provide to associate companies services incidental to its
utility business, including but not limited to leases or
subleases of office or other space with associate companies,
services of personnel with specialized expertise and usage of
KCPL's integrated voice and data communications system. In
addition, to the extent that current leases, licenses and other
arrangements respecting goods and services used by KCPL and one
or more associate companies cannot be reasonably transferred to
GPES, or in situations in which KCPL is the predominant user of
such goods and services, KCPL may make available a portion of the
associated goods and services to associate companies through
leases, licenses or similar arrangements. All such goods and
services will be provided to associate companies in accordance
with Rules 87, 90 and 91. To the extent such matters do not fall
within the exception provided in Rule 87(a)(3), Applicants
request authorization for KCPL to engage in such activities.
Further, KCPL leases certain utility assets, such as
transmission facilities and railcars, and has entered into lease
arrangements for five combustion turbines, as authorized in the
Order and described in the underlying application/declaration.
B. WOLF CREEK NUCLEAR OPERATING CORPORATION
Wolf Creek Nuclear Operating Corporation ("WCNOC"), a
nonutility subsidiary of KCPL, provides operation, maintenance,
repair and decommissioning services at cost solely as agent for
the owners of Wolf Creek Generating Station.(7) WCNOC has been
providing these services to the owners since 1987 pursuant to a
certain Wolf Creek Generating Station Operating Agreement dated
April 15, 1986, attached hereto as Exhibit B-3 (the "Operating
Agreement"). The Operating Agreement provides (in Section 4.02)
that all of the services rendered by WCNOC will be at actual cost
without profit.
Further, the owners of Wolf Creek Generating Station may
from time to time provide services and goods to WCNOC pursuant to
a General Support Services Agreement dated January
____________
(7) KCPL holds an undivided 47% ownership interest in Wolf Creek
Generating Station, and 47% of the voting securities of WCNOC.
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1, 1987, and an Emergency Plan Support Services Agreement dated
January 1, 1987, which are attached hereto as Exhibits B-4 and
B-5, respectively. Goods and services provided to WCNOC
pursuant to those agreements are provided at cost (which is
defined to be direct cost plus percentage indirect cost adders
for applicable fringe benefits and overheads).(8) These
indirect costs adders are subject to periodic adjustment to
reflect the actual costs of each owner providing such goods
and services. Applicants believe these agreements conform to
Rules 90 and 91.
Pursuant to the Order, nonutility subsidiaries were
authorized to provide goods and services to each other, and to
KCPL, during the Interim Period. Applicants request
authorization for WCNOC, as a nonutility subsidiary, to continue
to provide goods and services to KCPL and the other owners of
Wolf Creek Generating Station pursuant to these existing
agreements. Applicants further request, to the extent not
exempted under Rule 87(a)(3), authorization for KCPL to continue
to provide goods and services to WCNOC pursuant to these existing
agreements.
WCNOC, KCPL and Kansas Gas and Electric Company (an owner of
Wolf Creek Generating Station) also have entered into a Service
Reciprocity Agreement dated June 20, 1986, providing for the
recognition of pension service credits earned by employees who
transfer to or from WCNOC, which is attached hereto as Exhibit B-
6. To the extent such agreement may be deemed jurisdictional,
Applicants request authorization for KCPL and WCNOC to continue
with such agreement.
C. LEASE OF EXCESS OFFICE SPACE OR OTHER NONUTILITY
FACILITIES.
KCPL may from time to time lease or sublease excess office
space or other nonutility facilities to unaffiliated third
parties. To the extent such matters are deemed jurisdictional,
KCPL seeks authorization to engage in such activities.(9)
____________
(8) KCPL's provision of goods and services to WCNOC is incidental
to its business as a public utility and thus is exempt under Rule
87(a)(3).
(9) See CENTRAL POWER & LIGHT COMPANY, HCAR 26408 (November 13,
1995).
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3. SERVICES, GOODS AND ASSETS INVOLVING NONUTILITY
ASSOCIATE COMPANIES
In the Order (pp. 12-13), existing and future intermediate
subsidiaries of GPE were authorized to provide management,
administrative, project development and operating services at
fair market prices to certain classes of nonutility subsidiaries.
Applicants hereby request that this existing authorization
be expanded to allow GPES and all other nonutility Subsidiaries
(whether or not such entities are intermediate subsidiaries of
GPE) to enter into agreements to provide construction, goods or
services to certain associate companies enumerated below at fair
market prices determined without regard to cost, and therefore
request an exemption (to the extent that Rule 90(d) of the Act
does not apply) under Section 13(b) from the cost standards of
Rules 90 and 91.
In recent decisions10, the Commission has approved such
relief allowing "at market" pricing for substantially the
following transactions, and Applicants request similar relief, if
the client company is:
(a) a FUCO or foreign EWG that derives no part of its
income, directly or indirectly, from the generation,
transmission or distribution of electric energy for
sale within the United States;
(b) an EWG that sells electricity at market-based rates
which have been approved by the FERC, provided that the
purchaser is not KCPL;
(c) a "qualifying facility" ("QF") within the meaning of
the Public Utility Regulatory Policies Act of 1978, as
amended ("PURPA") that sells electricity exclusively
(i) at rates negotiated at arms' length to one or more
industrial or commercial customers purchasing the
electricity for their own use and not for resale,
and/or (ii) to an electric utility company at the
purchaser's "avoided cost" as determined in accordance
with the regulations under PURPA;
__________
(10) See, e.g., EXELON CORP., Holding Co. Act Release No. 27256
(2000); NEW CENTURY ENERGIES, Holding Co. Act Release No. 27212
(2000); NISOURCE INC., Holding Co. Act Release no. 27265).
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(d) a domestic EWG or QF that sells electricity at rates
based upon its cost of service, as approved by FERC or
any state public utility commission having
jurisdiction, provided that the purchaser is not KCPL;
or
(e) a Rule 58 subsidiary or any other nonutility Subsidiary
that (i) is partially-owned, directly or indirectly, by
GPE, provided that the ultimate purchaser of such goods
or services is not KCPL (or any other entity that GPE
may form whose activities and operations are primarily
related to the provision of goods and services to
KCPL), (ii) is engaged solely in the business of
developing, owning, operating and/or providing services
or goods to nonutility Subsidiaries described in
clauses (a) through (e) immediately above, or (iii)
does not derive, directly or indirectly, any material
part of its income from sources within the United
States and is not a public utility company operating
within the United States.
In addition to the foregoing matters, the nonutility
Subsidiaries (excluding GPES) may provide to one another, and to
GPE, GPES and KCPL, goods and services (including leases and
subleases of office space and other nonutility property) in
accordance with Rules 87, 90 and 91.
ITEM 2. FEES, COMMISSIONS AND EXPENSES.
The fees, commissions and expenses incurred or to be
incurred in connection with the transactions proposed herein are
anticipated to not exceed $50,000.
ITEM 3. APPLICABLE STATUTORY PROVISIONS.
Section 13 of the Act and Rules 88, 90 and 91 are considered
applicable to the proposed transactions.
To the extent that the proposed transactions are considered
by the Commission to require authorization, exemption or approval
under any section of the Act or the rules and regulations other
than those set forth above, request for such authorization,
exemption or approval is hereby made.
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ITEM 4. REGULATORY APPROVALS.
The Missouri Public Service Commission (the "MPSC") has
jurisdiction over the transfer of assets by a public utility,
Section 393.190, RSMo. The MPSC has also enacted rules governing
the transactions among utilities and affiliated companies, 4 CSR
240-20.015.
Kansas law provides that no management, construction,
engineering or similar contracts between a public utility and an
affiliate shall be effective unless first filed with the Kansas
Corporation Commission (the "KCC"), K.S.A. 66-1402. No KCC
approval is required for such contracts to be effective; however,
the KCC may disapprove such contract, after hearing, if it is
found to not be in the public interest.
Pursuant to stipulations approved by the MPSC and the KCC in
Case No. EM-2001-464 and Docket No. 01-KCPE-708-MIS,
respectively, KCPL is required to file with those agencies copies
of all documents that must be filed with the Commission or FERC
relating to the creation of GPES. KCPL also agreed to seek
agreement with those agencies' staffs, and others, concerning an
appropriate notification procedure to be utilized regarding the
transfer of functions from KCPL to GPES. Further, KCPL and its
affiliates agreed in those stipulations that they will not seek
to overturn, reverse, set aside, change or enjoin a decision or
order of those agencies which pertains to recovery, disallowance,
deferral or ratemaking treatment of any expense, charge cost or
allocation incurred or accrued by KCPL respecting a contract,
agreement, arrangement or transaction with any affiliate,
associate, holding, mutual service or subsidiary company on the
basis that such expense, charge, cost or allocation has itself
been filed with or approved by the Commission or was incurred
pursuant to a contract, arrangement, agreement or allocation
method that was filed with or approved by the Commission.
Finally, the stipulations include a contingent jurisdictional
stipulation regarding contracts between KCPL and its affiliate
and associate companies, which shall apply in the exclusive event
that a court invalidates a decision of these state agencies
pertaining to recovery, disallowance, deferral or ratemaking
treatment of any expense, charge, cost or allocation incurred or
accrued by KCPL on the basis that such expense, charge, cost or
allocation has itself been filed with or approved by the
Commission.
19
GPE will file information on any action that may be taken by
either the MPSC or the KCC with respect to these matters in an
amendment to this Application/Declaration. Except as stated
above, no state or deferral regulatory agency other than the
Commission under the Act has jurisdiction over the proposed
transactions.
ITEM 5. PROCEDURE
Applicants/declarants respectfully request the Commission
issue and publish not later than May 15, 2002, the requisite
notice under Rule 23 with respect to the filing of this
Application/Declaration, such notice to specify a date not later
than June 1, 2002, by which comments may be entered and a date
not later than June 15, 2002, as a date after which an order of
the Commission granting and permitting this
Application/Declaration to become effective may be entered by the
Commission.
Applicants/declarants submit that a recommended decision by
a hearing or other responsible officer of the Commission is not
needed for approval of the financing requests made herein. The
Division of Investment Management may assist in the preparation
of the Commission's decision. The Applicants/declarants further
request that there be no waiting period between the issuance of
the Commission's order and the date on which it is to become
effective.
ITEM 6. EXHIBITS AND FINANCIAL STATEMENTS
A. EXHIBITS
A-1 Articles of Incorporation of Great Plains Energy Services
Incorporated (to be filed by amendment)
A-2 Bylaws of Great Plains Energy Services Incorporated (to be
filed by amendment)
B-1 Form of Service Agreement
B-2 Form of Service Agreement Procedures
B-3 Wolf Creek Generating Station Operating Agreement among
Kansas Gas and Electric Company, Kansas City Power & Light
Company, Kansas Electric Power Cooperative, Inc. and Wolf
Creek Nuclear Operating Corporation, dated April 15, 1986.
B-4 General Support Services Agreement among Kansas Gas and
Electric Company, Kansas City Power & Light Company and
Kansas Electric Power Cooperative, Inc., dated January 1,
1987.
20
B-5 Emergency Plan Support Services Agreement among Kansas Gas
and Electric Company, Kansas City Power & Light Company,
Kansas Electric Power Cooperative, Inc. and Wolf Creek
Nuclear Operating Corporation, dated January 1, 1987.
B-6 Service Reciprocity Agreement among Kansas City Power &
Light Company, Kansas Gas and Electric Company and Wolf
Creek Nuclear Operating Corporation, dated June 20, 1986.
F-1 Opinion of Counsel (to be filed by amendment)
F-2 Past Tense Opinion of Counsel (to be filed by amendment)
H-1 Form of Notice
ITEM 7. INFORMATION AS TO ENVIRONMENTAL EFFECTS.
The transactions proposed herein will not involve major
federal actions significantly affecting the quality of human
environment as those terms are used in Section 102(2)(C) of the
National Environmental Policy Act, 42 U.S.C. 4321 et seq.
Second, consummation of these transactions will not result in
changes in the operations of GPE or its subsidiaries that would
have any significant impact on the environment. To the knowledge
of Applicants/declarants, no federal agency is preparing an
environmental impact statement with respect to this matter.
21
SIGNATURES
Pursuant to the requirements of the Public Utility Holding
Company Act of 1935, the undersigned Applicants/Declarants have
duly caused this Application/Declaration on Form U-1 to be
signed on their behalf by the undersigned thereunto duly
authorized.
GREAT PLAINS ENERGY INCORPORATED
1201 Walnut
Kansas City, MO 64106
/s/Bernard J. Beaudoin Date: April 19, 2002
Name: Bernard J. Beaudoin
Title: Chairman of the Board,
President and Chief Executive
Officer
KANSAS CITY POWER & LIGHT COMPANY
1201 Walnut
Kansas City, MO 64106
/s/Bernard J. Beaudoin Date: April 19, 2002
Name: Bernard J. Beaudoin
Title: Chairman of the Board,
President and Chief Executive
Officer
WOLF CREEK NUCLEAR OPERATING CORPORATION
1550 Oxen Lane N.E.
P.O. Box 411
Burlington, KS 66839-0411
/s/Otto L. Maynard Date: April 19, 2002
Name: Otto L. Maynard
Title: Chairman of the Board,
President and Chief Executive
Officer
22
EXHIBIT B-1
SERVICE AGREEMENT
This Service Agreement (the "Service Agreement" or "Agreement")
is made and entered into this ___________, 2002 by and between
____________________, its subsidiaries, affiliates and associates
("Client", and together with other associate companies that have
or may in the future execute this form of Service Agreement, the
"Clients") and Great Plains Energy Services Incorporated("Service
Company").
WITNESSETH
WHEREAS, the Securities and Exchange Commission ("SEC") has
approved and authorized as meeting the requirements of Section
13(b) of the Public Utility Holding Company Act of 1935 ("Act")
the organization and conduct of the business of Service Company,
in accordance herewith, as a wholly-owned subsidiary service
company of Great Plains Energy Incorporated ("GPE"); and
WHEREAS, Client is an associate company of Service Company;
and
WHEREAS, Service Company and Client have entered into this
Service Agreement whereby Service Company agrees to provide and
Client agrees to accept and pay for various services as provided
herein at cost, with cost determined in accordance with
applicable rules and regulations under the Act, which require
Service Company to fairly and equitably allocate costs among all
associate Clients to which it renders services.
NOW THEREFORE, in consideration of the premises and the
mutual agreements herein contained, the parties to this Service
Agreement covenant and agree as follows:
ARTICLE I - SERVICES
SECTION 1.1 Service Company shall supply to Client, as
requested by Client, consistent with the terms and conditions
hereinafter set forth, such of the services described in Appendix
A hereto, at such times, for such periods and in such manner as
Client may from time to time request and that Service Company
concludes it is able to perform. Except with respect to
"Corporate Services", as defined in Article V, the Service
Company shall perform only those services as are requested by the
Client. Service Company shall also provide Client with such
special services, in addition to those services described in
Appendix A hereto, as may be requested by Client and that Service
Company concludes it is able to perform.
Notwithstanding the foregoing paragraph, no change in the
type and character of the companies to be provided services, the
factors for allocating costs to associate companies, or in the
broad general categories of services to be rendered subject to
Section 13 of the Act, or any rule, regulation or order
thereunder, shall be made unless and until the Service Company
shall first have given the Securities and Exchange Commission
(the "SEC") written notice of the proposed change not less than
60 days prior to the proposed effectiveness of any such change.
If, upon the receipt of any such notice, the SEC shall notify the
Service Company within the 60-day period that a question exists
as to whether the proposed change is consistent with the
1
provisions of Section 13 of the Act, or of any rule, regulation
or order thereunder, then the proposed change shall not become
effective unless and until the Service Company shall have filed
with the SEC an appropriate declaration regarding such proposed
change and the SEC shall have permitted such declaration to
become effective.
SECTION 1.2 The cost of the services described herein or
contemplated to be performed hereunder shall be directly
assigned, distributed or allocated by activity, project, program,
work order or other appropriate basis. Subject to the terms of
this Service Agreement, Client shall have the right from time to
time to amend or alter any activity, project, program or work
order provided that (i) any such amendment or alteration that
results in a material change in the scope of the services to be
performed or equipment to be provided is agreed to by Service
Company, (ii) the cost for the services covered by the activity,
project, program or work order shall include any expense incurred
by Service Company as a direct result of such amendment or
alteration of the activity, project, program or work order, and
(iii) no amendment or alteration of an activity, project, program
or work order shall release Client from liability for all costs
already incurred by or contracted for by Service Company pursuant
to the activity, project, program or work order, regardless of
whether the services associated with such costs have been
completed.
SECTION 1.3 Service Company shall use its best efforts to
maintain a staff trained and experienced in the services
described in Appendix A. If necessary, Service Company, after
consultation with the Client, may also arrange for the services
of nonaffiliated experts, consultants and attorneys in connection
with the performance of any of the services supplied under this
agreement.
ARTICLE II - COMPENSATION
SECTION 2.1 As compensation for the services to be
rendered hereunder, Client Company shall pay to Service Company
all costs, which reasonably can be identified and related to
particular services performed by Service Company for or on its
behalf. The methods for assigning or allocating Service Company
costs to Clients, as well as to other Clients, are set forth in
Appendix B. Any charges to Client on account of the use of
capital shall reflect a reasonable and efficient capital
structure.
SECTION 2.2 It is the intent of this Service Agreement
that charges for services shall be distributed among Clients, to
the extent possible, based upon direct assignment. The amounts
remaining after direct assignment shall be allocated among the
Clients using the methods identified in Appendix B. The method
of assignment or allocation of cost shall be subject to review
annually, or more frequently if appropriate. Such method of
assignment or allocation of costs may be modified or changed by
the Service Company without the necessity of an amendment to this
Service Agreement; provided that, in each instance, all services
rendered hereunder shall be at actual cost thereof, fairly and
equitably assigned or allocated, all in accordance with the
requirements of the Act and all applicable rules and orders
promulgated thereunder. The Service Company shall review with
the Client any proposed material change in the method of
assignment or allocation of costs hereunder.
SECTION 2.3 It is the intent of this Service Agreement
that the payment for services
2
rendered by Service Company to Clients under Service Agreements
shall cover all the costs of its doing business (less the cost
of services provided to non-clients) including, but not limited
to, salaries and wages, office supplies and expenses, outside
services employed, property insurance, injuries and damages,
employee pensions and benefits, miscellaneous general expenses,
rents, maintenance of structures and equipment, depreciation
and amortization, and compensation for use of capital.
SECTION 2.4 Labor and labor-related costs will likely be
the most significant costs that Service Company incurs.
Accordingly, Service Company will maintain and use a time-entry
system that enables Service Company employees to accurately
assign hours worked to the appropriate Accounting Codes. Time-
entries will be entered as required by payroll schedules.
SECTION 2.5 In the event disputes arise between Service
Company and the Client, representatives of the Service Company
and Client will attempt to resolve the issues. Unresolved
disputes will be referred to the GPE Advisory Committee
(comprised of the GPE executives and presidents of Clients using
services provided by the Service Company) for final disposition.
SECTION 2.6 Services provided by Service Company to the
Client under this Agreement shall be evidenced by one or more
Service Requests signed by both parties. Service Company and
Client shall, simultaneously with the execution of this
Agreement, execute Service Requests covering all services
initially to be provided to the Client. Each Service Request
will contain one or more accounting codes (each a "Project ID")
which will be used to accumulate the costs to the Service Company
of providing the services under the Service Request. A new
Service Request will be executed by Service Company and Client in
the event a new service category is added to Appendix A (subject,
however, to the provisions of Section 1.1). A new Service
Request, establishing new or different Project IDs, may be also
appropriate for a project or activity falling within the
categories of services contained in Appendix A. However, the
cost of the activity or project may be able to be captured in an
existing Service Request. The following items, among others, may
be considered in determining the need for a new Service Request:
1. No existing Service Request uses a billing methodology
that is appropriate for the activity or project.
2. No existing Service Request distributes costs to GPE,
the desired Client Company or affiliates for the activity
or project.
3. The total estimated annual cost of the activity or project
is greater than $100,000.
4. There is a regulatory or corporate requirement to allocate
or accumulate costs in a specific manner for an activity
or project.
SECTION 2.7 Service Company shall render a monthly
statement to Client. Payment shall be made by remittance of the
amount billed within thirty (30) days of the dated of the
statement or by making appropriate accounting entries on Service
Company's and Client's books. Statements submitted to the Client
will contain the following information:
- Client Name
- Type of Service Provided: Corporate or Shared
3
- Project ID
- Description of Service Provided
- Total Amount of Charges
Detailed information such as source documents, labor hours and
accounts charged are also available on Service Request detailed
charge reports. This information will also be made available on
hard copy reports and on-line computer report screens.
ARTICLE III - TERM
This Service Agreement shall become effective as of the date
first written above and shall continue in force until terminated
by Service Company or Client, upon not less than one year's prior
written notice to the other party. This Service Agreement shall
also be subject to termination or modification at any time,
without notice, if and to the extent performance under this
Service Agreement may conflict with the Act or with any rule,
regulation or order of the SEC or other regulatory body adopted
before or after the date of this Service Agreement. Further,
this Service Agreement shall be terminated with respect to any
Client immediately upon such Client ceasing to be an associate
company of the Service Company. The parties' obligations under
this Service Agreement which by their nature are intended to
continue beyond the termination or expiration of this Service
Agreement shall survive such termination or expiration.
ARTICLE IV -SERVICE REVIEW
SECTION 4.1 On an annual basis, the Service Company and
the Client shall meet to assess the quality of services being
provided pursuant to this Service Agreement and to determine the
continued need therefor and shall, subject to Section 1.1, above,
amend the scope of services, delete services entirely from this
Service Agreement, and/or decline services which are not
"Corporate Services" as defined in Article V, below, as they
determine to be necessary or desirable.
SECTION 4.2 The Internal Audit Department will conduct
periodic audits of the Service Company administration and
accounting processes. The audits will include examinations of
Service Agreements, accounting systems, source documents,
allocation methods and billings to determine if services are
authorized and properly accounted for. In addition, Service
Request and Service Agreement policies, operating procedures and
controls will be evaluated annually.
ARTICLE V - CORPORATE SERVICES
Whether or not requested by the Client, the Service Company
may provide to the Client, and the Client shall pay Service
Company for, "Corporate Services". Corporate Services consist of
those activities and services reasonably determined to be
necessary for the lawful and effective management of GPE
businesses. Corporate Governance Services may include, but are
not limited to, the services set forth under the heading
"Corporate Governance Services" in Appendix A.
4
ARTICLE VI - MISCELLANEOUS
SECTION 6.1 New direct or indirect subsidiaries,
affiliates or associates of GPE, which may come into existence
after the effective date of this Service Agreement, may become
additional Clients of Service Company and subject to a service
agreement with Service Company. The parties hereto shall make
such changes in the scope and character of the services to be
rendered and the method of assigning, distributing or allocating
costs of such services as specified in Appendix A, subject to the
requirements of Section 2.1, as may become necessary to achieve a
fair and equitable assignment, distribution, or allocation of
Service Company costs among all Clients.
SECTION 6.2 Service Company shall permit Client access to
its accounts and records including the basis and computation of
allocations.
SECTION 6.3 Service Company and each Client shall comply
with the terms and conditions of all applicable contracts managed
by the Service Company for such Client Companies, including
without limitation terms and conditions preserving the
confidentiality and security of proprietary information of
vendors.
SECTION 6.4 No amendment, change, or modification of this
Service Agreement shall be valid, unless made in writing and
signed by all parties hereto.
SECTION 6.5 Except as limited by law or order of the SEC,
Client Companies, their subsidiaries, affiliates and associates
may provide services described herein to other Client Companies,
their subsidiaries, affiliates and associates on the same terms
and conditions as set out for the Service Company.
SECTION 6.6 The following paragraph shall apply in the
event Kansas City Power & Light Company ("KCPL") is a signatory
to this Service Agreement:
Neither KCPL nor any of its affiliates, will seek to
overturn, reverse, set aside, change or enjoin, whether
through appeal or the initiation or maintenance of any
action in any forum, a decision or order of the Commission
which pertains to recovery, disallowance, deferral or
ratemaking treatment of any expense, charge, cost (including
cost of capital) or allocation incurred or accrued by KCPL
in, or as a result of, a contract, agreement, arrangement or
transaction with Service Company on the basis that such
expense, charge, cost (including cost of capital) or
allocation has itself been filed with or approved by the SEC
or was incurred pursuant to a contract, arrangement,
agreement or allocation method that was filed with or
approved by the SEC.
As used in this Section, "Commission" shall be deemed to mean
both the Missouri Public Service Commission and the Kansas
Corporation Commission.
[signature page follows]
5
IN WITNESS WHEREOF, the parties hereto have caused this
Service Agreement to be executed as of the date and year first
above written.
CLIENT _______________ GREAT PLAINS ENERGY SERVICES INCORPORATED
By: By:
____________________ ____________________
Name Name
____________________ ____________________
Print Name and Title Print Name and Title
____________________ ____________________
Date Date
6
APPENDIX A
DESCRIPTION OF EXPECTED SERVICES
TO BE PROVIDED BY GREAT PLAINS ENERGY SERVICES INCORPORATED AND
THE EXPECTED METHOD/BASIS OF BILLING
Descriptions of the expected services to be provided by Service
Company are detailed below. The descriptions are deemed to
include services associated with, or related or similar to, the
services contained in such descriptions.
For purposes of explanation, there are two classifications of
service costs: Corporate Services and Shared Services. Each
classification is described below.
There are two methods of billing Service Costs. The first is
DIRECT SERVICE BILLING (DSB), where the costs can be directly
assigned (i.e. charged directly to Project IDs specifically
assigned to a client company). The second is INDIRECT SERVICE
BILLING (ISB), where assigning the costs directly is impractical,
but the service provided has an easily identifiable causative
driver.
CORPORATE SERVICES
CORPORATE SERVICES are those related to corporate governance
and management and may not be refused by the Client. The
allocation method for each of the Corporate Services
provided, when not billed directly, is Capitalization Ratio.
1. CORPORATE SECRETARY
Service Description - maintains corporate documents;
prepares and files all documents necessary to maintain
corporate existence for Great Plains Energy and its
subsidiaries; assists, prepares and files all necessary
documents with the Securities Exchange Commission;
complies with listing requirements of the New York Stock
Exchange; acts as a liaison between the managements of
the Clients and their respective Boards of Directors.
2. CORPORATE ETHICS & GOVERNANCE
Service Description - reinforces corporate values by
promoting strategies that create a work climate of high
ethics and respect for others.
3. LEGAL LIABILITY ASSESSMENT AND PUHCA
Service Description - provides corporate liability
assessment of contracts and agreements; provides legal
services respecting compliance and other matters under
the Public Utility Holding Company Act of 1935 ("PUHCA").
7
4. EXECUTIVE BENEFITS
Service Description - costs of administering supplemental
benefits provided to the executives of GPE and its
affiliates; includes the cost of supplemental benefits
provided to the executives of Service Company.
5. INTERNAL AUDITS
Service Description - identifies, reviews, and
prioritizes corporate risks, controls, and governance
processes.
6. INVESTOR RELATIONS
Service Description - responds to investor inquiries
(current and potential) and to the financial analyst
community and monitors and maintains all GPE stock
records.
7. CORPORATE COMMUNICATIONS
Service Description - enhances the relations of GPE and
its subsidiaries with shareholders, community, federal,
state and local governments, and GPE associates through
written and verbal communications.
8. CORPORATE FINANCE
Service Description - recommends, coordinates and
administers all financial decisions affecting GPE and its
subsidiaries, including capital structure, financings,
investments and dividends; manages enterprise-wide risk;
assists Investor Relations in educating and updating the
financial community on financial matters relating to GPE
and its subsidiaries.
9. EXTERNAL REPORTING
Service Description - develops and reports the Company's
external financial filings which include the quarterly
Financial Analysis for the Board of Directors and the SEC
Form 10-Q, the annual Federal Energy Regulatory
Commission (FERC) Form 1 report, the Consolidated
Financial Statements and footnotes, and management's
discussion and analysis for the Corporate Annual Report
and filings required under the Public Utility Holding
Company Act of 1935; ensures complete and adequate
financial disclosure in accordance with the SEC and
generally accepted accounting principles (GAAP) through
authoritative knowledge, research, and communication of
new exposure drafts and accounting pronouncements.
10. EXECUTIVE SERVICES
Service Description - provides executive management
services, service on Client boards of directors, and
general administrative services.
8
11. ENVIRONMENTAL SERVICES - (Total Billing Ratio)
Service Description - manages, monitors, and provides
guidance on ensuring continuous compliance with all
environmental legislation and regulations; develops and
recommends environmental programs; performs remediation;
obtains required environmental permits.
12. CORPORATE SECURITY SERVICES - (Capitalization Ratio)
Service Description - develops and monitors associate,
physical asset, and information technology security
policies and standards.
13. GOVERNMENTAL AFFAIRS SERVICES - (Capitalization Ratio)
Service Description - provides legislative support and
guidance on governmental matters.
14. COMMUNITY RELATIONS (Capitalization Ratio)
Service Description - coordinates and monitors corporate
contributions and corporate volunteer programs.
15. CORPORATE ACCOUNTING SERVICES (Total Billing Ratio)
Service Description - provides guidance regarding the
application of GAAP, SEC and/or FERC regulations; records
all known financial transactions in the period incurred;
provides and maintains accounting systems, including book
and tax property systems, with adequate detail to provide
sufficient reporting; allows for analysis of costs,
support of asset and liability balances and preparation
of tax returns; trains Client associates in the
analytical tools available to analyze their costs and
assist them in the understanding of the results of those
analyses.
16. CORPORATE DEVELOPMENT AND STRATEGIC PLANNING
(Capitalization Ratio)
Service Description - provides resource planning and
business analysis services, strategic planning, assist
GPE and its subsidiary companies to develop fundamental
short- and long-term business plans and actions which are
consistent or complementary throughout the system; assess
and adjust the decisions and direction of system
companies in response to changes in the marketplace;
provide consulting services related to cost reduction
opportunities, strategic acquisitions and investments,
and process enhancements to GPE and its subsidiaries.
17. TAX SERVICES - (Total Billing Ratio)
9
Service Description - manages all GPE and subsidiary tax
issues, including research and analysis to quantify tax
opportunities, the preparation and filing of all federal,
state and local tax returns, and the accounting for such
taxes.
18. CORPORATE BUDGETING - (Capitalization Ratio)
Service Description - creates, coordinates, analyzes, and
revises all capital and operating budgets for all of GPE
and its subsidiaries.
19. INSURANCE SERVICES - (Capitalization Ratio)
Service Description - designs, implements and administers
insurance programs for GPE and its subsidiaries.
20. LEADERSHIP SERVICES - (Head Count Ratio)
Service Description - identifies and develops talent
throughout the organization.
21. DIVERSITY SERVICES - (Capitalization Ratio)
Service Description - fosters an environment that
promotes equity and fairness and encourages all
associates to succeed.
22. ASSOCIATE SERVICES - (Head Count Ratio)
Service Description - provides employee issue resolution
services, including but not limited to the ACCESS
program.
SHARED SERVICES
Shared Services are negotiable and may be amended, deleted
or declined pursuant to the terms of the Service Agreement.
The expected allocation method for each of the Shared
Services provided, when not billed directly, is indicated.
1. ASSOCIATE BENEFITS SERVICES - (Head Count Ratio)
Service Description - develops and designs associate
benefit programs and administers the programs fairly and
consistently.
2. ASSOCIATE RELATIONS SERVICES - (Head Count Ratio)
Service Description - negotiates union labor contracts,
advises on labor contract compliance, facilitates the
associate selection process (union and non-union
positions), and administers skills testing.
3. ASSOCIATE COMPENSATION SERVICES - (Head Count Ratio)
10
Service Description - designs and administers
compensation programs (base salary and incentive plans);
maintains associate master information file.
4. ASSOCIATE COMMUNICATION SERVICES - (Head Count Ratio)
Service Description - provides written and oral
communication materials and programs for Client
associates.
5. EMPLOYMENT INVOLVEMENT SERVICES- (Head Count Ratio)
Service Description -facilitates associate participation
in work teams, committees, task forces, future search
teams, and decision making.
6. ASSOCIATE TRAINING SERVICES - (Capitalization Ratio)
Service Description - develops, administers, and presents
a variety of technical, job performance, and associate
development skills training.
7. SAFETY & MEDICAL SERVICES - (Head Count Ratio)
Service Description - provides information, education and
training for associates to comply with governmental
regulations and corporate policy and to provide
electrical safety information to the public; provides
medical services for treatment of associates sustaining
work related injuries and illnesses and administers
physical exams.
8. MAIL SERVICES - (Head Count Ratio)
Service Description - provides mail receipt, sort and
delivery service inside and outside the corporation.
9. DOCUMENT PROCESSING SERVICES - (Head Count Ratio)
Service Description - provides document publishing and
document distribution services and provides graphic
design capabilities and design, layout and production of
signage and posters.
10. FACILITY SERVICES - (Square Footage Ratio)
Service Description -operates, maintains, leases and
subleases facilities and maintains building grounds and
equipment at acceptable and approved industry standards.
To the extent that leasing or subleasing arrangements are
established between Service Company and/or GPE and its
subsidiaries, lease costs will include rent for space
occupied and applicable services, such as operation and
maintenance of structures, capital improvements, interior
space planning, security and janitorial.
11
11. LEGAL SERVICES - (Capitalization Ratio)
Service Description - provides client contract and
procedural review and negotiation, litigation, liability
assessment, financing support for bankruptcy and
collection, regulatory support through representation and
rule interpretation, and employment and labor relations
investigations, union contracting, EEOC issues, and other
associate matters.
12. SECURITY SERVICES - - (Square Footage Ratio)
Service Description - provides a variety of personal and
physical security services including facilities, property
ingress/egress, investigations, and background checks;
provides associate security awareness including workplace
violence prevention, emergency planning, drug abuse, and
security alerts; facilitates disaster recovery planning
and drills.
13. PURCHASING SERVICES - (Purchase Order Ratio)
Service Description - processes requisitions for stock
and non-stock materials, labor and contractors requested
by business units; negotiates material and contract labor
contracts to ensure quality and delivery of product and
services; disposes of obsolete assets; manages corporate
procurement and travel & entertainment card programs.
14. OPERATIONAL AUDIT SERVICES - (Capitalization Ratio)
Service Description - provides internal consulting
services focusing on efficiency, effectiveness and
economy to Clients; assists in designing control systems
to manage key business risks and related business
planning.
15. TELECOMMUNICATION SERVICES - (Head Count Ratio)
Service Description - monitors and operates the wide area
network infrastructure, voice and data networks,
telephone services, and broadcast teleconferencing
services.
16. NETWORK SERVICES - (PC Ratio)
Service Description - provides internet, intranet, and
extranet support and services, as well as web-enablement
support and electronic messaging and calendaring support.
17. MAPPING & DRAFTING SERVICES - (Total Billing Ratio)
Service Description - creates, revises, and maintains
maps, drawings, or blueprints related to generating
stations, transmission substations and systems, and the
distributions systems; maintains general office structure
documents.
18. IT SYSTEM DELIVERY SERVICES - (Total Billing Ratio)
12
Service Description - provides user system support;
maintains computer systems by providing data fixes, ad-
hoc reporting, application extensions, program fixes,
interface monitoring/controls, and process exception
handling; develops new computer application systems by
gathering system requirements, software evaluation,
software installation and coding, data conversions,
system testing, system training, and system
implementation.
19. IT SYSTEM OPERATION SERVICES - (Total Billing Ratio)
Service Description - designs and manages local area
networks; procures and supports desktop devices; manages
data center; provides bill insert service; help desk
support; and database hardware and software operating
systems monitoring and support.
20. INFRASTRUCTURE SERVICES - (PC Ratio)
Service Description - plans, designs, procures, builds
and deploys, supports, troubleshoots, operates and
maintains servers, middleware, and networks.
21. ACCOUNTS PAYABLE SERVICES - (Invoice Ratio)
Service Description - processes vendor payments;
coordinates and resolves vendor inquiries; accrues
invoice sales & use tax; resolves invoice match
exceptions; corrects account distribution errors;
reconciles vendor statements; prepares and analyzes
daily, weekly, and monthly reports; prepares required
year-end reports; maintains data controls and data
integrity and compliance with applicable policies and
procedures; provides consultation and training.
22. PAYROLL SERVICES - (Head Count Ratio)
Service Description - processes all wage and labor
related payments to active associates, including the
withholding and deposit of all applicable Federal, State
and Local associate and employer taxes; prepares
associate W-2's, maintains associate deduction selections
and subsequent disbursements, provides various labor cost
reporting and resolves miscellaneous information
requests.
23. CUSTOMER BILLING SERVICES - (Total Billing Ratio)
Service Description - produces and mails customer bills.
24. CASHIER SERVICES - (Total Billing Ratio)
Service Description - processes payments and ensures
proper posting to customers' accounts; handles exception
items, including returned checks; handles the printing of
all checks; reconciles payments to the customer
information system.
13
25. CASH MANAGEMENT SERVICES - (Capitalization Ratio)
Service Description - manages funds including monitoring
the daily cash position and movement of funds; manages
liquidity including short-term borrowing and temporary
investments; manages bank relationships, including
compensation for banking services; forecasts cash
requirements, including projections for future cash
shortages and surpluses; evaluates, recommends and
implements cash management system alternatives to improve
available working capital.
26. CONTRACT MANAGEMENT SERVICES - (Total Billing Ratio)
Service Description - negotiates and manages intra-system
agreements and agreements between Clients and vendors.
27. ACCOUNT MANAGEMENT SERVICES - (Total Billing Ratio)
Service Description - provides close interaction with the
subsidiaries to ensure service levels (performance) are
in accordance with service level agreements and
anticipates service needs; resolves service level issues
and manages relationships with subsidiaries; provides
accountability reports to the service groups and
subsidiaries.
28. INVOICING/CHARGE-BACK SERVICES - (Total Billing Ratio)
Service Description - develops, recommends, and
implements appropriate and efficient processes to
appropriately bill clients of Service Company for the
various services rendered, adhering to guidelines
established by the SEC in accordance with the Public
Utilities Holding Company Act of 1935; maintains and
records necessary statistical information to allow the
creation of Service Company billings each month; provides
monthly billings to client companies on a timely basis,
with adequate detail to identify the service provided and
the associates providing such service.
14
APPENDIX B
DESCRIPTION OF BASIS TO BE USED FOR INDIRECT SERVICE BILLINGS
Below are the various Ratios to be used to bill costs when the
Direct Service Billing methodology cannot be employed.
HEAD COUNT RATIO
A ratio where the numerator is the headcount of a Client and
the denominator that is the headcount of all Clients. These
ratios will be revised quarterly, based on figures as of
March 31, June 30, September 30 and December 31.
PURCHASE ORDER RATIO
A ratio where the numerator is the number of purchase order
lines (of selected PO types) created for the Client and the
denominator that is the total combined number of purchase
order lines created for all Clients. These ratios will be
developed monthly, using the current month data.
INVOICE RATIO
A ratio where the numerator is the number of voucher lines
(of selected types of vouchers) entered for the Client and
the denominator that is the total combined number of voucher
lines entered for all Clients. These ratios will be
developed monthly, using the current month data.
SQUARE FOOTAGE RATIO
A ratio where the numerator is the actual square footage of
a Client and the denominator is the total square footage of
the shared facility. The ratio will be revised annually,
based on figures as of December 31.
PC RATIO
A ratio where the numerator is the number of personal
computers assigned to a Client and the denominator is the
total number of personal computers assigned to all Clients.
These ratios will be revised quarterly, based on figures as
of March 31, June 30, September 30 and December 31.
15
TOTAL BILLING RATIO
A ratio where the numerator is the actual expense charged to
a Client by the Service Company and the denominator that is
the total actual expenses charged to all Clients by the
Service Company. This ratio will be revised monthly based
upon prior month data.
CAPITALIZATION RATIO
A ratio where the numerator is the total capitalization
(total common stockholder's equity, preferred stock, and
long-term debt) of the Service Company or Client, and the
denominator that is the total combined capitalization (total
common stockholder's equity, preferred stock, and long-term
debt) of the Service Company and Clients. This ratio will
be revised quarterly based upon figures as of March 31, June
30, September 30, and December 31.
16
EXHIBIT B-2
==============================================================
GREAT PLAINS ENERGY
SERVICES INCORPORATED
SERVICE AGREEMENT
PROCEDURES
==============================================================
_______, 2002
1
INTRODUCTION
Great Plains Energy Services Incorporated ("GPES") will provide a
variety of administrative, management and support services to
Great Plains Energy Incorporated ("GPE") and other GPE system
companies and business units (Client Companies). GPES will be
subject to the rules and regulations of the Securities and
Exchange Commission (SEC) pursuant to the Public Utility Holding
Company Act of 1935 (PUHCA), and in particular, to Section 13
thereof.
SERVICE AGREEMENTS AND SERVICE REQUESTS
GPES will enter into a Service Agreement with a Client Company
that is substantially similar to the Service Agreement attached
hereto as Exhibit A. The Service Agreement will set forth in
general terms the services to be performed by GPES directly or
indirectly for a Client Company. GPES and each Client Company
will prepare work orders, in the form of Service Requests, to
specify the services to be performed by GPES for a Client
Company. A sample Service Request is attached hereto as Exhibit
B. Additional documentation of work to be performed pursuant to
Service Requests may be used by the parties.
The purpose of the Service Request is to establish service
expectations between GPES and each Client Company. Each Service
Request will be reviewed and agreed upon on an as needed basis by
authorized representatives of GPES and each Client Company. In
conjunction with this review of Service Requests, the allocation
methods and ratios presented in Service Agreement Appendices A
and B shall be reviewed and agreed upon by the parties.
Each Service Request is approved by the individual(s) authorized
to represent GPES and the Client Company related to the services
to be provided.
ACCOUNTING PROCEDURES
GPES will maintain a process which allows it to accumulate costs
in Project IDs. Where possible, these costs will be charged out
to Client Companies using direct charging methodologies,
including time and materials. Project IDs collect resource costs
for services and activities described in the Service Request.
This process supports the philosophy of billing costs to the
Client Company on an appropriate basis. GPES will use this
process to maintain accounting systems to record all of its
costs.
Costs will be billed to Client Companies as work is performed and
costs are incurred. The GPES Accounting Division is responsible
for ensuring that all of the billing methodologies are consistent
with the Service Agreement approved by the SEC.
DIRECT COSTS are defined as those that can be identified as being
applicable to services performed for a single Client Company or
group of Client Companies. Direct costs include the fully
distributed cost of providing that particular service. The fully
distributed costs include labor costs, labor related costs (such
as pensions and benefit costs, and facility costs), IT costs,
outside services where applicable, back office support costs of
running GPES, and other non-labor costs
2
such as materials and supplies. Direct Costs will be charged
to the Client Company or Client Companies responsible for the
activity.
INDIRECT COSTS include those costs of a general nature such as
general services, and other support costs which cannot be
specifically identified to a client company or companies or to a
specific service and therefore must be allocated. An example of
Indirect Costs is Corporate Services, which consists of, for
example, functions such as corporate finance, corporate
secretary, internal audits, investor relations, external
reporting and corporate communications. The allocation to
Client Companies will be based on factors identified in Appendix
B attached to the Service Agreement.
SERVICES AND SERVICE REQUESTS
Initially, GPES and the Client Companies will have the
responsibility to determine which services will be provided by
GPES, except for Corporate Services (as defined in the Service
Agreement), which shall be provided by the Service Company and
cannot be declined by the Client Companies. Thereafter, Client
Companies will have the responsibility to request new or
additional services from GPES.
Services provided will be reviewed on an as needed basis by GPES
and Client Companies. Service Requests will be prepared for on-
going or special services which benefit one or more Client
Companies. Examples of on-going services are payroll processing
and IT desktop support. Examples of special services include
requests to prepare FERC Form 1 schedules, projects and special
studies and analyses. Service Requests will be approved by the
individual(s) authorized to represent GPES and each Client
Company in accordance with applicable policies and procedures. In
all cases, the authorized approvers representing GPES and the
Client Company will be different individuals.
Each Service Request will contain one or more Project IDs which
will be used to accumulate the costs to the Service Company of
providing the services under the Service Request. A new Service
Request will be executed by Service Company and Client in the
event a new service category is added to Appendix A of the
Service Agreement (subject, however, to the provisions of Section
1.1 of the Service Agreement). A new Service Request,
establishing new or different Project IDs, may be also
appropriate for a project or activity falling within the
categories of services contained in Appendix A. However, the
cost of the activity or project may be able to be captured in an
existing Service Request. The following items, among others, may
be considered in determining the need for a new Service Request:
1. No existing Service Request uses a billing methodology that
is appropriate for the activity or project.
2. No existing Service Request distributes costs to GPE, the
desired Client Company or affiliates for the activity or project.
3. The total estimated annual cost of the activity or project
is greater than $100,000.
4. There is a regulatory or corporate requirement to allocate
or accumulate costs in a specific manner for an activity or
project.
3
SERVICE REQUEST MONITORING AND CONTROL
GPES Accounting Division is responsible for reviewing, monitoring
and maintaining the Service Request system. GPES Accounting
Division will also authorize new Service Requests.
ALLOCATION FACTORS UPDATE AND REVISIONS
Allocation factors will be based on cost drivers specifically
applicable to the service provided.
GPES Accounting Division will have the primary responsibility for
ensuring that allocation factors are correct, accurate and
current. Allocation factors utilized by GPES must be approved by
the SEC.
GPES Accounting Division will be responsible for evaluating new
allocation methodologies and will coordinate SEC approval efforts
with the Legal Department. Changes to allocations require
advance written notice to the SEC of not less than 60 days prior
to the proposed effective date of the change. If a formula is
used to allocate costs, then changes to the formula require
advance notice to the SEC as described. Updates to variables in
the formula do not require SEC notification.
A list of current allocations will be filed annually with the SEC
on Form U-13-60.
TIME REPORTING
All GPES employees, including executives, shall keep, within
reasonable cost, time records supporting labor charged to
separately identifiable goods and services performed for Client
Companies.
Employees will record time daily in a minimum of half-hour
increments. The employee's supervisor or authorized delegate
will review and approve time reports. Time records will be
maintained in accordance with record retention requirements set
forth in 17 CFR 257, but in any event, will be maintained for at
least six years.
BILLING AND REVIEW
GPES shall prepare a monthly invoice detailing the work performed
by Service Request for each Client Company. Payment shall be
made by the Client Company by making remittance or by making
(offsetting) accounting entries of the amount billed. Payment
term (or appropriate offsetting accounting entries) is thirty
days of receipt.
DISPUTE RESOLUTION PROCEDURE
In the event there is a dispute between the Client Company and
GPES regarding a billing methodology and/or amount, GPES
Accounting Division and representatives of the Client Company
will meet to discuss the issue. If a resolution cannot be
reached among the parties, the issue will be referred to the GPE
Advisory Committee for final disposition.
4
INTERNAL AUDIT CONTROL
Audit Services, under the direction of the Senior Vice President
- - Corporate Services, will conduct periodic reviews of GPES's
business processes and systems to ensure that the services
provided are properly documented and charged to the Client
Companies on an appropriate basis. Reviews shall be performed
such that all major service areas are evaluated over time. Audit
Services will also conduct reviews of transactions and Service
Request charge methods to assess whether they comply with SEC
requirements.
Audit Services maintains an independent role and has direct
contact to GPE's Audit Committee. Audit findings, recommendations
and progress toward resolution of findings are reported to the
Audit Committee and senior management as appropriate.
BUDGETING
After the transition phase, budgeting for GPES will be a joint
effort between it and other Client Companies. Renewal / revision
of Service Requests for the upcoming budget period will provide
the basis for preparing budgets.
EVALUATION
GPES will review its costs for competitiveness on a regular
basis. Benchmarking and other measurement techniques will be
used to the extent deemed appropriate and agreed-to between GPES
and Client Companies. Additionally, GPES will also initiate a
customer review process to gauge the value and quality of the
services provided. Results will be shared with the Client
Companies to allow them to evaluate cost effectiveness and assess
alternate options.
5
EXHIBIT A
SERVICE AGREEMENT
6
EXHIBIT B
SERVICE REQUEST NO.______
BETWEEN GREAT PLAINS ENERGY SERVICES INCORPORATED AND [CLIENT
COMPANY]
_________________________________________________________________
GENERAL INFORMATION
PURPOSE
TERM OF SERVICE
SCOPE OF SERVICES
SERVICE RESPONSIBILITY MATRIX
(beginning of box table)
SERVICES, TASKS
_________________________________ _______ _____
(end of box table)
SERVICE COSTING SCHEDULE
(beginning of box table)
SERVICE/TRANSACTION ALLOCATION FACTOR(S)
___________________ ____________________
(end of box table)
BILLING TABLE:
(beginning of box table)
SERVICE/TRANSACTION ESTIMATED MONTHLY BILLING
___________________ _________________________
(end of box table)
B-1
(beginning of box table)
SIGNATURES __________________________________________________
Great Plains Energy Services Name (Client)
Incorporated Title
___________________ ______ ___________________ ______
Signature Date Signature Date
___________________ ___________________
Name Name
___________________ ___________________
Title Title
(end of box table)
B-2
EXHIBIT B-3
WOLF CREEK GENERATING STATION
OPERATING AGREEMENT
among
KANSAS GAS AND ELECTRIC COMPANY
KANSAS CITY POWER & LIGHT COMPANY
KANSAS ELECTRIC POWER COOPERATIVE, INC.
and
WOLF CREEK NUCLEAR OPERATION CORPORATION
This AGREEMENT made and entered into on this 15TH day of
APRIL, 1986 among Kansas Gas and Electric Company ("KG&E"), Kansas
City Power & Light Company ("KCPL"), Kansas Electric Power
Cooperative, Inc. ("KEPCo") and Wolf Creek Nuclear Operating
Corporation ("Operating Corporation").
W I T N E S S E T H :
WHEREAS, KG&E, KCPL and KEPCo (hereinafter referred to
collectively as "Owners" and individually as an "Owner") each own, as
tenant in common with the others, an undivided interest in the Wolf
Creek Generating Station (hereinafter referred to as the "Station")
in accordance with the provisions of the Wolf Creek
Station Ownership Agreement (the "Ownership Agreement") executed on
December 28, 1981, the present undivided tenant in common interests
("Ownership Shares") being 47% in the case of KG&E, 47% in the case
of KCPL and 6% in the case of KEPCo;
WHEREAS, for the purpose of this Operating Agreement, the term
"Station" shall mean (i) the Site as defined in the Ownership
Agreement, (ii) all common facilities at the Wolf Creek Station Site,
(iii) Wolf Creek Unit #1 and (iv) all functions related to the
operation, maintenance, repair, decommissioning and decontamination
of (i) through (iii) above including, without limitation, all design,
engineering, safety, licensing, fueling, security, technical,
corporate and general services, both on and off-Site, it being
understood that for purposes of this Operating Agreement, the term
"Station" shall not include any Additional Unit(s) as provided under
Section 1.1(d) of the Ownership Agreement; and
WHEREAS, it is desirable and to the mutual advantage of the
Owners that the Operating Corporation be engaged, under the terms and
conditions hereinafter set forth, to operate, maintain, repair,
decontaminate and decommission the Station and make any necessary
modifications and additions thereto and retirements therefrom on
behalf of the Owners.
NOW, THEREFORE, in consideration of these premises, the parties
hereto do hereby agree as follows:
-2-
ARTICLE 1
SHARING OF CAPACITY AND ENERGY; SCHEDULING
SECTION 1.01. The Ownership Agreement specifies, subject
to the conditions therein set forth, the respective Capacity
Entitlement and Energy Entitlement of each Owner. Subject to those
provisions and the policies adopted by the Board of Directors of the
Operation Corporation, each Owner (i) may schedule up to its pro rata
share of the maximum operating capability of the Station which shall
be determined by the Operating Corporation in accordance with Section
1.02 hereof and (ii) shall schedule its share of the minimum
operating capability of the Station, all in accordance with the
provisions of this Article of the Agreement.
SECTION 1.02. The Operating Corporation shall determine
the maximum and minimum operating capability of the Station at all
times, taking into consideration regulatory requirements and the
characteristics of the Station. An Owner's pro rata share of the
maximum and minimum operating capability of the Station shall be
equivalent to its Ownership Share in the Station.
SECTION 1.03. An Owner may schedule less than its pro rata
share of the minimum operating capability of the Station, provided
that another Owner has agreed to schedule, and does
-3-
schedule, more than its share of the minimum operating capability of
the Station in an amount sufficient to offset such deficiency, and
has so advised the Operating Corporation.
SECTION 1.04. The Operating Corporation shall make
available for scheduling and dispatch the Station operating
capability in accordance with standard dispatching methods customary
in the industry. The Operating Corporation shall make a good faith
effort to provide energy to each Owner in accordance with the
schedules provided by each Owner. Scheduled load changes will be
permitted when it would not jeopardize the safe operation of the
Station. If a reduction in the maximum operating capability occurs
at the Station, for whatever reason, then each Owner's schedule shall
be adjusted to take into account, in accordance with its respective
Ownership Share, such reduction in operating capability.
SECTION 1.05. If the net hourly output of the Station is
negative, then each Owner shall provide (from other energy resources
available to it or by prearranged purchases from another Owner) its
share of the hourly Wolf Creek Station electricity used, based upon
its Ownership Share. If the net hourly output of the Station is
positive, the Station's hourly electricity uses shall be allocated
among the Owners on the basis of each Owner's scheduled deliveries
divided by total scheduled deliveries. The Station's use
-4-
of electricity shall included transformer losses at the Station. So
long as the Station has only one unit installed, energy entitlements
under Section 4.2 of the Ownership Agreement shall be measured on the
basis of the net output at the transmission side of the step-up
transformers in the substation of the Station.
SECTION 1.06. Operating capability of the Station
available to but not scheduled by an Owner shall be subject to the
interchange provisions of Section 4.5 of the Ownership Agreement.
SECTION 1.07. The Operating Corporation shall, to the
extent consistent with safe and reliable operation of the Station,
coordinate the scheduled maintenance and fueling outages of the
Station with each of the Owners.
ARTICLE 2
SERVICES TO BE PROVIDED BY THE OPERATING CORPORATION
SECTION 2.01. Consistent with its duties and responsi-
bilities (i) under the Operating License for the Station issued by
the Nuclear Regulatory Commission, (ii) as Operating Agent under the
Ownership Agreement and (iii) pursuant to the policies of the Owners
as reflected by actions taken by the Board of Directors of the
Operating Corporation, the Operating Corporation shall provide and be
responsible for the operation, maintenance, repair, deconta-
-5-
mination and decommissioning of the Station in a safe and reliable
manner in accordance with all applicable, lawful licenses and permits
and requirements of state and federal regulatory agencies and the
generation of power and energy at the Station as economically as is
reasonably practicable to meet the Owners' system requirements and
economics. The Operating Corporation shall make such further
modifications of and additions to and retirements from the Station as
shall be consistent with such operation, maintenance, repair,
decontamination and decommissioning. Such services and construction
may be provided by the Operating Corporation through its own
personnel or in part by others under contractual or other
arrangements. In furtherance of the foregoing, the Operating
Corporation shall, on behalf of the Owners, among other things and
without limitation:
(a) Select, hire, control and discharge
personnel, who will be employees solely of the
Operating Corporation, and select and retain the
services of contractors and consultants and/or
direct, supervise and control certain employees of
one or more of the Owners if such Owner or Owners
shall agree to such direction, supervision and
control;
(b) Arrange for the procurement on behalf
-6-
of the Owners of nuclear fuel including uranium
and provide for the enrichment, conversion and
fabrication thereof and storage and/or disposal or
reprocessing of such fuel (as permitted by law or
regulation);
(c) Arrange for the purchase on behalf of
the Owners of materials, services and supplies for
the Station;
(d) Design, construct, start-up and test
modifications of, and additions to, the Station;
(e) Determine and stipulate inventory levels
of material and equipment for the Station;
(f) Keep the Owners informed in a reasonable
and timely manner concerning the operation,
maintenance, repair, decontamination and
decommissioning activities at the Station and of
additions or modifications to the Station and
retirements therefrom;
-7-
(g) Prepare, or arrange for the preparation
of, in accordance with normal and customary
procedures, annual budgets and forecasts for the
Station costs, capital expenditures and
retirements to be submitted to the Owners. Such
budgets and forecasts shall be revised from time
to time to reflect material changes in
circumstances;
(h) Perform any services and take any
action, on behalf of the Owners where appropriate,
related to the operation, maintenance, repair,
decontamination, and decommissioning of the
Station and of additions, modifications and
retirements pertaining to the Station as may be
necessary or appropriate to comply with the
provisions of the Atomic Energy Act, as amended or
as it may be amended, or any other applicable
statute, rules, regulations, guidelines or similar
criteria, and any provisions or conditions of
construction permits and operating licenses or
similar authorizations granted or that may be
granted in connection with the Station and as such
permits, licenses or other authorizations may
hereafter be amended;
-8-
(i) In its capacity as operator of the
Station and as agent for the Owners, provide
communications to, and receive communications
from, the Nuclear Regulatory Commission and/or any
successor governmental agency, as well as any
other governmental agency having jurisdiction with
respect to any aspect of the Station's operation,
maintenance, repair, decontamination and
decommissioning and of additions thereto and
retirements therefrom and, in such capacities,
represent (or engage others to represent) the
Owners;
(j) Perform, or, if deemed desirable by the
Operating Corporation, contract on behalf of the
Owners with others (including agencies of
Government or their contractors) for materials or
services required to place and/or keep the Station
in safe and efficient operating condition, to
protect the Station property, to conduct research
and development with respect thereto and disburse
or receive funds in connection therewith. Such
work shall be subject to normal and customary
review and approval procedures of the Operating
Corporation;
-9-
(k) Arrange for the maintenance, in
accordance with normal and customary procedures,
of such necessary books of record, books of
account and memoranda of transactions and for the
provision of such reports with respect thereto to
the Owners as each Owner shall desire to meet its
accounting and statistical requirements and to
conform to the applicable lawful rules,
regulations and requirements of all regulatory
bodies having jurisdiction over the Owners. The
costs for the Station shall be accumulated in a
separate set of accounts;
(l) Provide, or arrange for the provision
of, such other data or information with respect to
the Station as may be reasonably requested by the
Owners from time to time; and
(m) Perform any additional services
pertaining to the Station, or any portion thereof,
all of which shall be consistent with the intent
of this Section 2.01, as may be approved by the
Board of Directors of the Operating Corporation.
-10-
SECTION 2.02. Matters and questions arising in connection
with the Station which are not within the scope of the authority
delegated to the Operating Corporation under this Agreement and are
not specifically provided for in this Agreement shall be determined
from time to time by the Owners pursuant to Section 3.3 of the
Ownership Agreement.
SECTION 2.03. During operating conditions which the
Operating Corporation in its sole judgment deems abnormal, the
Operating Corporation shall take such action as it deems appropriate
for the public health and safety and the safety of personnel and
equipment.
SECTION 2.04. In order that the safe operation of the
Station is assured, the Owners shall not effect any operating or
physical changes to their respective transmission and distribution
facilities which may affect the safe operation of the Station
without prior consultation and concurrence of the Operating
Corporation.
ARTICLE 3
WORKING FUND
SECTION 3.01. The Owners shall establish and maintain a
Working Fund from which the Operating Corporation shall make
-11-
payments for all costs pursuant to its services and responsibilities
hereunder. The Owners, in consultation with the Operating
Corporation, shall determine, initially and from time to time during
the term of this Agreement, the amount or amounts required to
maintain a satisfactory balance in the Working Fund, and shall be
liable in proportion to their respective Ownership Shares for any
such additional amounts required to maintain the agreed-upon
balance. The Owners shall reimburse the Working Fund promptly on
receipt of notice from the Operating Corporation of their respective
obligations for reimbursement.
SECTION 3.02. On termination of this Agreement, as
hereinafter provided, any residual unexpended balance in the Working
Fund shall be credited to the Owners in proportion to their
respective Ownership Shares.
ARTICLE 4
CHARGES, FINANCIAL STATEMENTS AND BILLINGS
SECTION 4.01. The Operating Corporation shall arrange for
reporting to the Owners for each month, promptly following the end
of such month, by written statements the following:
(a) The costs on an accrual basis of
operation, maintenance, repair, decontamination
and decommissioning of the Station, and the cost
-12-
of any Station additions, modifications and
retirements including applicable cost of removal
and salvage, classified as required to meet the
Operating Corporation's obligations under Section
2.01(k) above.
(b) A summary statement of the operation
during that month of the Working Fund, showing
beginning balance, receipts, disbursements and
closing balance.
SECTION 4.02. Except as otherwise provided in Sections
1.05 and 4.03 hereof, the costs incurred or accrued from all sources
during each calendar month in operating, maintaining, repairing,
decontaminating and decommissioning the Station and in making
additions or modifications to, and retirements from, the Station
shall be liabilities of the Owners when incurred or accrued and
shall be borne by the Owners in proportion to their Ownership
Shares. All such costs shall be determined in accordance with sound
accounting practices, and shall include reasonable and appropriate
indirect costs including overheads. All of the services rendered
hereunder by the Operating Corporation will be at actual cost
thereof, without profit to the Operating Corporation. Direct
charges will be made for services where a direct allocation of cost
is appropriate and equitable.
-13-
SECTION 4.03. When the net hourly output of the Station
is positive, nuclear fuel costs and spent fuel disposal costs will
be shared among the Owners on the basis of the percentage take of
kilowatt hours by each Owner. The percentage take of kilowatt hours
shall be calculated by dividing the number of kilowatt hours
delivered to that Owner by the total number of kilowatt hours
delivered to all Owners. A true up shall be carried out
periodically (but not less frequently than annually) which shall
adjust each Owner's inventory of nuclear fuel to equal each Owner's
Ownership Share. In truing up accounts among the Owners at the end
of each period, an Owner or Owners whose percentage take during the
period after adjustment for scheduled interchanges under Section 4.5
of the Ownership Agreement, is higher than its Ownership Share
(hereinafter "Debit Owner(s)"), shall reimburse an Owner or Owners
whose percentage take is less than its Ownership Share (hereinafter
"Credit Owner(s)"), for using their fuel. The price to be charged
to the Debit Owner shall be the Credit Owner's nuclear fuel cost.
"Nuclear fuel cost" is defined as the amortization of costs
described by the Federal Energy Regulatory Commission in its Uniform
System of Accounts, Account 120, adjusted by adding back (i) the
income tax effect of the debt component of Allowance for Funds Used
During Construction (AFUDC) and (ii) the benefits realized by reason
of such Credit Owner's share of the Uranium Agreement of Settlement
among KG&E, KCPL and Westinghouse Electric Corporation, dated
February 21, 1980, and shall include DOE disposal costs.
-14-
SECTION 4.04. In recognition of the fact that each Owner
has an interest in being assured that the other Owners have made
adequate provision for the funding of its Ownership Share of the
Station decommissioning costs as contemplated by Section 4.02, each
Owner undertakes to utilize its best efforts to provide such
assurance to the other Owners, recognizing that there are at the
present time some impediments toward achieving that objective. Each
Owner shall provide to each other Owner within four months after the
end of its fiscal year a report identifying the provision it has
made for that year and on a cumulative basis for its share of
Station decommissioning costs. If, and to the extent that,
requirements have been or are hereafter imposed on an Owner by a
federal or state authority in a final order or regulation which
specifies that provision be made for decommissioning costs for the
Station in a particular manner or manners, such Owner will promptly
take such action on its part as may be necessary to comply with such
requirements.
SECTION 4.05. It is the intent of the Owners that so far
as possible each Owner shall separately report, file returns with
respect to, be responsible for and pay all real property, franchise,
business or other taxes, except payroll and sales or use taxes,
arising out of its Ownership Share of the Station and that such
taxes shall be separately levied and assessed against each Owner.
However, to the extent that such taxes may be levied on or assessed
against the Station, or its operation, or the
-15-
Owners in such a manner as, in the opinion of the Owners, to make
impossible or inequitable the carrying out of said intent, then such
taxes shall be deemed a part of the costs of operating and
maintaining the Station and shall be apportioned among the Owners
under this Agreement in accordance with their respective Ownership
Shares; provided that the Operating Corporation shall join with the
Owners in executing and filing with the Internal Revenue Service
such documents as may be appropriate to effect the election required
by Section 6.5 of the Ownership Agreement.
SECTION 4.06. The Owners shall have the right, during the
term of this Agreement and thereafter as long as the books, records
and memoranda referred to in Section 2.01 shall be preserved, to
inspect all such items and to make reasonable audits thereof at
their own cost as they may deem necessary to protect their
interests.
SECTION 4.07. In the event an Owner shall question any
statement rendered according to the provisions of Sections 4.02 or
4.03 hereof, it shall nevertheless promptly pay the amount indicated
in such statement but such payment shall not be deemed to prevent
such Owner from claiming or pursuing an adjustment of any statement
rendered.
-16-
SECTION 4.08. If it shall be determined that an Owner has
paid more or less than its proper share of the operating and capital
costs of the Station for the month covered by such statement, an
appropriate correcting credit or charge shall be made by the
Operating Corporation to the accounts of each of the Owners.
ARTICLE 5
COMPLIANCE WITH PROVISIONS OF PERMITS
AND REQUIREMENTS OF GOVERNMENTAL AGENCIES
SECTION 5.01. Without limiting in any way the authority
and responsibility of the Operating Corporation under Section 2.01,
the Owners and the Operating Corporation shall cooperate in taking
whatever action may be necessary to comply with the terms and
provisions of permits and licenses for the Station and with all
applicable lawful requirements of any Federal or State agency or
regulatory body having jurisdiction in the premises.
ARTICLE 6
TRANSFERS OF PERSONNEL FROM OWNERS TO OPERATING CORPORATION
SECTION 6.01. The employees of the Operating Corporation
initially will consist of (i) those KG&E employees who are assigned
to its Nuclear Department, (ii) such other KG&E employees who are
not in its Nuclear Department but are assigned full-time to Station
matters, (iii) such KCPL and KEPCo employees who are assigned full-
time to the Station and (iv) such other KG&E em-
-17-
ployees who perform, on a part-time basis, services related to
KG&E's Nuclear Department if any such employee performing part-time
services is requested by the Operating Corporation and is willing to
accept transfer to the Operating Corporation and KG&E is willing to
transfer such employee to the Operating Corporation; provided that
nothing herein shall prohibit the Operating Corporation from
contracting with any Owner or with any other party for any services
required for the operation, maintenance, repair, decontamination and
decommissioning of the Station or any portion thereof; provided,
further, that any such services provided by an Owner and charged to
the Operating Corporation shall be at the Owner's costs thereof, for
which the Owner shall be reimbursed by the Operating Corporation,
and the costs for such services provided by an Owner shall be
determined in accordance with sound accounting practices, shall
include reasonable and appropriate indirect costs, including
overheads, and shall be provided without profit to that Owner.
SECTION 6.02. It is the objective of the Owners that the
Operating Corporation will assume, as of the date when an individual
is transferred from the employ of an Owner to the Operating
Corporation, the obligations, if any, of such Owner to such employee
for accrued benefits under the Owner's employee benefit plans in
effect at the time of such transfer and the transferring employer
will make appropriate provision (by the transfer of funds to a
trustee under a plan established by the Operating Corporation, the
reservation of funds in its existing
-18-
trust fund or otherwise) for the payment of such accrued benefits to
the extent that they have been funded as of the date approximating
the date of such transfer. Consistent with that objective, the
Owners anticipate that, in determining benefits payable by the
Operating Corporation under any employee benefit plan established by
it to an employee transferred to it by an Owner, the Operating
Corporation will give credit for service by such employee with such
transferring Owner as if such service had been performed by such
transferred employee for the Operating Corporation unless the
transferring Owner shall make provision for the direct payment by it
of such benefits to the transferred employee. The plans and
documentation to achieve this objective shall be established by the
board of directors of the Owners and of the Operating Corporation.
ARTICLE 7
OWNERSHIP OF PROPERTY RELATED TO STATION; OTHER PROPERTY
SECTION 7.01. The Operating Corporation shall own no
property which is, or could properly be, classified as "utility
property" within the meaning of K.S.A. 66-104. Any and all utility
property related to the Station which is now owned by one or more of
the Owners shall continue to be owned by such Owner or Owners
subject to the provisions of the Ownership Agreement, and this
Agreement shall not effect any change in such ownership.
SECTION 7.02. Any non-utility property utilized in the
operation, maintenance, repair, decontamination and decommissioning
of the Station may be transferred to the Operating Corporation
-19-
upon the approval of the transferring Owner and the Operating
Corporation, after obtaining such regulatory authorization, if any, as
shall be required.
SECTION 7.03. (a) Any contract covering the design,
engineering, procurement, construction and installation services and
major components of the Station and all other contracts relating to
operation, maintenance, repair, decontamination and decommissioning of
the Station, including contracts for the acquisition of materials,
inventories, supplies, spare parts, equipment, fuel or services
therefor, heretofore executed solely by KG&E in its own name or as
Operating Agent or by all Owners shall be assigned to the Operating
Corporation to the extent allowed by those contracts.
(b) Any contract which cannot be assigned to the Operating
Corporation shall be administered by the Operating Corporation, and all
rights, duties and responsibilities associated with said contract shall
be carried out by the Operating Corporation as if the contract had been
assigned to the Operating Corporation. Each Owner shall support the
Operating Corporation to the extent necessary to protect and defend the
Owners' interest in said contract. Any Owner incurring costs to provide
such support shall be reimbursed by the Operating Corporation and the
other Owners in the manner provided by Section 4.02 hereof.
(c) Future contracts executed by the Operating Corporation
will be signed in the name of the Operating Corporation, as agent for
the Owners, and Owners will be severally, but
-20-
not jointly, obligated by such contracts in proportion to their
Ownership Shares.
ARTICLE 8
INSURANCE; DAMAGES TO PERSONS OR PROPERTY; PENALTIES; FINES
SECTION 8.01. Each Owner and the Operating Corporation will
procure and maintain such physical damage, public liability and
workers compensation insurance with respect to all losses, damages,
liabilities and claims arising out of its ownership interest or the
construction or operation of the Station and provision of services
hereunder (other than losses, damages, liabilities and claims in the
name and/or on behalf of such Owner, hereafter collectively referred
to in this Article 8 as a "derivative claim") and the premium costs
thereof shall be Station costs to be borne by the Owners separately
(but not jointly) in proportion to their Ownership Shares, or, in the
alternative upon concurrence of each party hereto, the Owners and the
Operating Corporation will jointly procure and maintain such physical
damage, public liability, workers compensation and other insurance as
they may deem appropriate with respect to all losses, damages,
liabilities and claims arising out of their respective ownership
interests or the construction or operation of the Station and
provision of services hereunder other than derivative claims and the
premium costs thereof shall be Station costs to be borne by the Owners
-21-
separately (but not jointly) in proportion to their Ownership
Shares. All insurance shall contain a waiver of subrogation clause
against the other parties hereto.
SECTION 8.02. Claims cognizable under workers
compensation acts or temporary disability benefits laws or any other
benefits under workers compensation or analogous statutes and the
expenses of defending or disposing of the same, attributable to the
ownership or operation of the Station, which are not covered in full
by insurance procured in accordance with the preceding paragraph
shall (to the extent not covered by such insurance) be treated as
Station costs to be borne by the Owners separately (but not jointly)
in proportion to their Ownership Shares.
SECTION 8.03. All losses, damages, expenses, penalties,
liabilities and claims (including those in respect of property
damages and personal injury but not including derivative claims)
asserted by third parties in connection with, or arising out of, the
construction, operation, maintenance, repair, decontamination and
decommissioning of the Station or any portion thereof, and the
expenses of defending against or disposing of the same, attributable
to any property, policy, system, design or process in existence at
or prior to the time that responsibility for the operation,
maintenance, repair, decontamination or decommissioning of the
Station is transferred to the Operating Corporation or is developed
-22-
after the transfer, or which is attributable to any employee
transferred to the Operating Corporation by any Owner, or by any
employee hired by the Operating Corporation after the transfer of
authority to the Operating Corporation, and which are not covered in
full by insurance procured in accordance with the Insurance
Memorandum executed by the Owners on December 28, 1981 (or any
successor insurance arrangement) shall (to the extent not covered by
such insurance) be treated as Station costs to be borne by the
Owners severally (but not jointly) in proportion to their Ownership
Shares.
SECTION 8.04. The Owners have heretofore been acting for
their mutual benefit, at cost and without opportunity for profit, in
connection with the Station, pursuant to the terms of the Ownership
Agreement. In recognition of that fact, the Owners accept "AS IS"
the condition of the property of the Station, the employees
transferred to the Station and any policy, system, design or process
developed for the construction, operation, maintenance, repair,
decontamination and decommissioning of the Station. Each of the
Owners hereby expressly waives (on behalf of itself and its
successors and assigns and anyone claiming an interest on behalf of
or through said Owner) any right it may have to recover for any
cause (including negligence), from any other Owner for any losses,
damages, liabilities, penalties, fines, claims or expenses
(including, without limitation, damages to the property of the
Station, purchase of replacement power, and the costs of
-23-
repairing, decontaminating or decommissioning such property)
including, but not limited to, those caused by any property, policy,
system, design or process in existence at or prior to the time that
responsibility for the operation, maintenance, repair,
decontamination or decommissioning of the Station is transferred to
the Operating Corporation, or by any employee transferred to the
Operating Corporation by any Owner.
SECTION 8.05. Each Owner shall take all action necessary
and appropriate to provide indemnification proportionate to its
Ownership Share to the Operating Corporation and to all directors,
officers, employees and agents of the Operating Corporation to the
full extent permitted by law. The action taken by each Owner shall
be subject o the approval of the other Owners.
SECTION 8.06. If any Owner, by reason of joint or several
liability or otherwise, shall be required to make any payment or
incur any obligations attributable to the construction, operation,
maintenance, repair, decontamination or decommissioning of the
Station in excess of its respective Ownership Share, the other
Owners shall indemnify and reimburse such Owner proportionately to
their Ownership Shares to the extent of any such excess together
with interest on such excess (for the period between the payment by
the Owner to be so indemnified and its receipt of such
indemnification), at a rate substantially equivalent and pursuant
-24-
to the indemnified Owner's overall rate of return allowed in the
last rate case of such Owner; except that with respect to KEPCo
(inasmuch as it has no overall rate of return) such rate shall be
substantially equivalent and pursuant to KEPCo's total cost of
funds.
ARTICLE 9
MISCELLANEOUS
SECTION 9.01. Nothing in this Agreement shall be deemed
to create or constitute a partnership, joint venture or association
among the parties hereto or any of them, the sole purpose of this
Agreement being limited to provision for the orderly and efficient
operation, maintenance, repair, decontamination and decommissioning
of the Owners' respective separate and undivided tenancy-in-common
interests in the Station.
SECTION 9.02. Any notice, demand, or request for consent,
provided for in this Agreement or made in connection herewith, shall
be deemed to be properly served upon an Owner or the Operating
Corporation if given in writing and delivered in person or sent by
registered or certified mail, postage prepaid, addressed to the
chief executive officer of the Owner or the Operating Corporation at
its then principal office.
SECTION 9.03. Each Owner shall determine the basis and
method it will use for purposes of depreciation and other matters
where investment in Station property is relevant.
-25-
ARTICLE 10
BINDING EFFECT; AMENDMENTS AND MODIFICATIONS
SECTION 10.01. This Agreement shall become effective as
provided for in Section 10.03 hereof. This Agreement shall terminate
concurrently with the termination of the Ownership Agreement, unless
it shall have been previously terminated by the unanimous agreement of
the Owners; provided, however, that this Agreement shall be amended
and modified as necessary or appropriate to accommodate an Additional
Unit(s) at the Station Site if Ownership Interests in the Common
Facilities at the Station are to be adjusted to reflect the Additional
Unit(s) pursuant to the provisions of the Ownership Agreement.
SECTION 10.02. Any Owner may propose in writing an
amendment, modification or supplement to this Operating Agreement. No
amendments, modifications or supplements shall be effective unless and
unless so proposed to and considered by the Owners, reduced to
writing, approved and executed by all the Owners and the Operating
Corporation, and each of the Owners and the Operating Corporation
shall have obtained, in form satisfactory to it and to the other
parties hereto, any and all authorization from governmental bodies
having jurisdiction over it (or them) for such of the matters provided
for in such amendment, modification or supplement as such Owner and/or
the Operating Corporation shall deem necessary or appropriate. No
amendments affecting the Operating License of the Station shall be
effective unless and until approved by the Nuclear Regulatory
Commission or any successor agency.
-26-
SECTION 10.03. This Agreement shall become effective upon
its execution and when the boards of directors and/or executive
committees of each of the Owners and of the Operating Corporation
shall have authorized or ratified this Agreement and authorized its
implementation, but this Agreement shall not become operative until
I. each of the Owners and the Operating Corporation
shall have obtained any and all authorization from governmental
bodies having jurisdiction over it (or them) for such of the
matters provided for in this Agreement as such Owner and/or the
Operating Corporation shall deem necessary or appropriate; or
II. 12:01 A.M., January 1, 1987, whichever shall last
occur. Each of the Owners shall advise the other Owners and
the Operating Corporation when these conditions applicable to
said Owner shall have been satisfied.
ARTICLE 11
SUCCESSORS AND ASSIGNS
SECTION 11.01. This Agreement shall inure to the benefit
of and be binding upon the successor and assigns of each Owner, and
of the Operating Corporation, provided, however, that rights and
obligations of an Owner in, or arising from, this Agreement shall
not be assigned except in connection with the transfer by an Owner
-27-
of an Ownership Share in all or any portion of the Station, in which
event the Owner shall assign and shall cause such transferee to
assume the related portion of its rights and obligations under this
Agreement, all as provided for in Paragraph 3.8 of the Ownership
Agreement, and to acquire from such Owner the related shares of
capital stock of the Operating Corporation.
ARTICLE 12
GOVERNING LAW
SECTION 12.01. This Agreement has been executed and
delivered in the State of Kansas and is intended to be construed in
accordance with, and to be governed by, the laws of that State.
-28-
IN WITNESS WHEREOF, the parties hereto have caused these
presents to be executed and delivered as of the day and year first
above written.
ATTEST: KANSAS GAS AND ELECTRIC COMPANY
/s/ Eldred D. Prothro By: /s/ Wilson K. Cadman
Asst. Secretary
ATTEST: KANSAS CITY POWER & LIGHT COMPANY
/s/ S. P. Cowley By: /s/ Arthur J. Doyle
Secretary
ATTEST: KANSAS ELECTRIC POWER COOPERATIVE, INC.
/s/ R. D. Speece By: /s/ Charles D. Eller
Secretary
ATTEST: WOLF CREEK NUCLEAR OPERATING CORPORATION
/s/ A. Drue Jennings By: Forrest T. Rhodes
Secretary
-29-
EXHBIT B-4
WOLF CREEK
GENERAL SUPPORT SERVICES AGREEMENT
This Wolf Creek General Support Service Agreement is made and
entered into this 1 day of JANUARY , 198 7 , by and between
Kansas Gas and Electric Company (hereinafter referred to as "KG&E") and
Kansas City Power & Light Company (hereinafter referred to as "KCPL")
and Kansas Electric Power Cooperative, Inc. (hereinafter referred to as
"KEPCo").
WITNESSETH:
WHEREAS, KG&E, KCPL AND KEPCo (hereinafter referred to
collectively as "Owners" and individually as "Owner") each own as
tenant in common with the others, an undivided interest in the Wolf
Creek Generating Station (hereinafter referred to as the "Station") and
WHEREAS, the Owners agreed to establish Wolf Creek Nuclear
Operating Corporation (hereinafter referred to as "WCNOC") to serve as
the Operating Agent for the Station and the duties and responsibilities
of WCNOC and the Owners are set out in the Wolf Creek Generating
Station Operating Agreement among Kansas Gas and Electric Company,
Kansas City Power & Light Company, Kansas Electric Power Cooperative,
Inc., and Wolf Creek Nuclear Operating Corporation dated April 15,
1986, and
WHEREAS, the Owners recognize that certain services relating to
Station facilities can more economically be provided by the Owners; and
WHEREAS, the Owners are willing to perform such services on behalf
of themselves and the other Owners.
NOW, THEREFORE, in consideration of these premises, the parties
hereto do hereby agree as follows:
1. WCNOC is authorized to issue from time to time to the
Owners a request to bid upon the furnishing of services
and/or materials to WCNOC whether for a specific service or
services of an ongoing nature. Upon evaluation of the
responses to such request, WCNOC may then issue to the
successful bidding Owner an Owner Work Order (hereinafter
referred to as "OWO"). The OWO shall, among other things,
contain a detailed description of the services and/or
materials
to be provided and the labor and material rates and costs,
and shall be signed by authorized representatives of WCNOC
and the successful bidding Owner. Each OWO shall be
considered a supplement to this agreement and is
incorporated herein by reference.
2. The Owner shall perform those services identified in the
OWO on behalf of itself and the other Owners at the rates
and charges set forth in Exhibits A-1 through A-3 and any
successors thereto. These rates and charges shall be
determined in accordance with sound accounting practices,
shall include reasonable and appropriate indirect costs,
including overheads, and shall be determined without profit
to the Owner. The rates and charges set forth in Exhibits
A-1 through A-3 shall be in effect from January 1, 1987
through December 31, 1987. The rates and charges shall be
adjusted on an annual basis upon the mutual agreement of
the Controllers of each Owner with the first adjustment
being effective January 1, 1988.
3. Except as WCNOC and the Owner providing such service under
the OWO may otherwise agree, WCNOC shall be responsible for
determining the procedures to be followed relative to the
furnishing of such assistance and for making any reports to
governmental authorities, except as prohibited or required
by Title 10 of the Code of Federal Regulations or any other
applicable governmental regulations or laws.
4. Each Owner, on a monthly basis, shall furnish the other
Owners with a detailed statement of all costs and expenses
paid or incurred by that Owner in connection with the
services enumerated in each OWO issued to it for which it
has performed work during that billing month. Statements
for costs and expenses shall be addressed to:
Kansas Gas and Electric Company
P.O. Box 208
Wichita, Kansas 67201
Attention: Vice President-Nuclear
Kansas City Power & Light Company
1330 Baltimore Avenue
Kansas City, Missouri 64141
Attention: Senior Vice President
System Power Operations
Kansas Electric Power Cooperative, Inc.
P.O. Box 4877
Topeka, Kansas 66604
Attention: Executive Vice President
-2-
Statements for costs and expenses shall also be forwarded
to WCNOC at the following address for verification:
Wolf Creek Nuclear Operating Corporation
P.O. Box 411
Burlington, Kansas 66839
Attention: Purchasing
The Owner receiving services shall make payment within
thirty days after receipt of the bill.
5. If the services are to be performed by employees of an
Owner at a location different from their regular place of
employment, the services shall be deemed to commence when
the employee begins preparation to depart from his regular
work location to perform the services requested. The
services shall be deemed to have terminated when the
employee has returned to his regular work location.
6. All time sheets and work records pertaining to services
performed under this agreement shall be retained by each
Owner at least as long as required by the Federal Energy
Regulatory Commission Regulations To Govern The
Preservation of Records of Public Utilities and Licensees.
Each Owner will, during normal working hours and upon
reasonable notice, make available as appropriate, all such
time sheets and work records, to appropriate personnel of
the Owners and WCNOC upon written request by the Owners and
WCNOC. The Owners acknowledge that for obligations which
may arise under the terms of this agreement, the Owners
shall be severally, but not jointly, liable in proportion
to their ownership shares in the Station.
7. Each Owner hereby expressly waives (on behalf of itself and
its successors and assigns and anyone claiming an interest
on behalf of or through it) any right it may have to
recover for any cause (including negligence) from any Owner
and its employees for any losses, damages, liabilities,
penalties, fines, claims or expenses which may occur in
connection with or arise out of the services performed
under this Agreement. Each Owner shall indemnify and hold
each Owner and its employees harmless from claims asserted
by third parties (including claims asserted by other
Owners) for losses, damages, liabilities, penalties, fines,
claims or expenses which may occur in
-3-
connection with or arise out of the services performed under
this agreement even if such services were negligently
performed. Provided, however, that nothing in this section
shall relieve any Owner of any of its duties or obligations
under Section 6.4 of the Wolf Creek Generating Station
Ownership Agreement, dated as of December 28, 1981, and
under Section 8.3 of the Wolf Creek Generating Station
Operating Agreement dated April 15, 1986.
8. This Agreement shall become effective upon its execution
but shall not become operative until (a) each of the Owners
and WCNOC shall have obtained any and all authorizations
from governmental bodies having jurisdiction over it (or
them) necessary for the transfer of responsibility of the
Station from KG&E to WCNOC or (b) 12:01 a.m. January 1,
1987, whichever shall last occur.
9. EXCEPT AS SPECIFICALLY SET FORTH IN THE AGREEMENT, EACH
OWNER MAKES NO WARRANTY OF ANY KIND, EXPRESS OR IMPLIED,
WITH RESPECT TO THE GOODS AND/OR SERVICES PROVIDED
HEREUNDER, AND EXPRESSLY MAKES NO WARRANTY OF
MERCHANTABILITY OR OF FITNESS FOR ANY PARTICULAR PURPOSE.
10. The failure of any Owner at any time to require performance
by the other party of any provision of this Agreement shall
in no way affect the right of such party thereafter to
enforce the same, nor shall the waiver by either party to
any breach of any provision of this agreement by the other
party be taken or held to be a waiver by such party of any
succeeding breach of such provision or a waiver of the
provision itself, nor shall such waiver affect the
enforceability of any other provision in this Agreement.
11. In the event any provision of this Agreement or the
application thereto to any person or circumstance shall be
held to be invalid under any final decision by a court
having jurisdiction in the premises, the remainder of the
agreement and its application to persons or circumstances,
other than those to which it was held invalid, shall not be
affected thereby.
12. The validity, interpretation, and performance of the
agreement and each of its provisions shall be governed by
the laws of the State of Kansas.
-4-
13. This Agreement shall be for an initial term of one year
beginning January 1, 1987, and from year to year thereafter
until terminated. Each party, upon ninety (90) days prior
written notice to the other party may terminate this
agreement at the expiration date of any successive one year
term. Such termination shall not affect any obligation
incurred hereunder prior to the effective date of such
notice, which obligation arises out of events occurring
prior to that date.
14. This agreement contains the entire agreement among the
Owners and no amendment, modification or supplement hereto
shall be binding unless in writing.
15. This agreement shall not be assigned by any Owner without
the prior written consent of the other Owners.
IN WITNESS WHEREOF the Owners have caused this Agreement to be
executed by duly authorized officers as of the day and year first
written above.
ATTEST: KANSAS GAS AND ELECTRIC COMPANY
/s/ Richard D. Terrell By /s/ Glenn L. Koester
Secretary Vice President-Nuclear
ATTEST: KANSAS CITY POWER & LIGHT COMPANY
/s/ Jeanie Sell Latz By /s/ J. M. Evans
Secretary Senior Vice President-System Power
Operations
ATTEST: KANSAS ELECTRIC POWER COOPERATIVE, INC.
/s/ R. D. Speece By /s/ Alvin L. Zwick
Secretary Alvin L. Zwick, President
WCNOC acknowledges receipt of a copy of the above agreement, and
consents to the provisions applicable to it.
ATTEST: WOLF CREEK NUCLEAR OPERATING CORPORATION
/s/ Warren B. Wood By /s/ B. D. Withers
Secretary President
-5-
EXHIBIT A-1
RATES FOR GENERAL SUPPORT SERVICES AGREEMENT
KG&E
The rates for General Support Services to be provided by KG&E are set
out below and shall be adjusted by the Controllers of the Owners
quarterly.
KG&E labor shall be billed at actual labor rates.
Fringe benefit costs shall be billed at 19% of the labor cost.
Service overhead costs shall be billed at 12.98% of the labor costs.
Materials shall be billed at cost plus 17% for purchasing and stores
overheads.
EXHIBIT A-2
RATES FOR GENERAL SUPPORT SERVICES AGREEMENT
KCPL
The rates for General Support Services to be provided by KCPL are set
out below and shall be adjusted by the Controllers of the Owners
quarterly.
KCPL labor shall be billed at actual labor rates.
Fringe benefit costs shall be billed at 18.8% of the labor cost.
Service overhead costs shall be billed at 21.3% of the labor costs.
Materials shall be billed at cost plus 25% for purchasing and stores
overheads.
EXHIBIT A-3
RATES FOR GENERAL SUPPORT SERVICES AGREEMENT
KEPCO
The rates for General Support Services to be provided by KEPCO are set
out below and shall be adjusted by the Controllers of the Owners
quarterly.
KEPCo labor shall be billed at actual labor rates.
Fringe benefit costs shall be billed at 33.58% of the labor cost.
Service overhead costs shall be billed at 18.14% of the labor costs.
EXHIBIT B-5
EMERGENCY PLAN
SUPPORT SERVICES AGREEMENT
This Emergency Plan Support Services Agreement is made and
entered into this 1 day of JANUARY , 1987, among Kansas Gas
and Electric Company (hereinafter referred to as "KG&E") Kansas City
Power & Light Company (hereinafter referred to as "KCPL") Kansas
Electric Power Cooperative, Inc. (hereinafter referred to as "KEPCo")
and Wolf Creek Nuclear Operating Corporation (hereinafter referred to
as "WCNOC").
WITNESSETH:
WHEREAS, KG&E, KCPL and KEPCo (hereinafter referred to
collectively as "Owners" and individually as "Owner") each own as
tenant in common with the others, an undivided interest in the Wolf
Creek Generating Station (hereinafter referred to as the "Station");
and
WHEREAS, the Owners agreed to establish WCNOC to serve as the
Operating Agent for the Station and the duties and responsibilities
of WCNOC and the Owners are set out in the Wolf Creek Generating
Station Operating Agreement among Kansas Gas and Electric Company,
Kansas City Power & Light Company, Kansas Electric Power Cooperative,
Inc. and Wolf Creek Nuclear Operating Corporation dated April 15,
1986; and
WHEREAS, WCNOC desires that the owners provide certain services
related to the Radiological Emergency Response Plan (RERP) of the
Station, which services are more fully set out herein.
NOW, THEREFORE, in consideration of these premises, the parties
hereto do hereby agree as follows:
1. The Owners shall perform those services and make available
those personnel enumerated in Exhibit A and any successor
thereto at the rates and charges set or referenced therein.
The rates and charges shall be adjusted annually upon the
mutual agreement of WCNOC and the Owners. The rates and
charges set forth or referenced in Exhibit A and any
successor thereto shall be at each Owner's cost, which cost
shall be determined in accordance with sound accounting
practices, shall include reasonable and appropriate
indirect costs, including overheads, and shall be
determined without profit to each Owner.
2. Requests for those services or personnel enumerated in
Exhibit A or any successor thereto shall be by a written
WCNOC purchase order. During an actual emergency as
defined in the RERP, it will not be necessary to issue a
purchase order prior to performing any services or
supplying personnel under this Agreement. The purchase
order shall specify the services to be performed, or the
personnel to be supplied, the rates to be charged for said
services and personnel and any other material items
necessary to perform said services. Each purchase order
shall be considered a supplement to this agreement and is
incorporated herein by reference.
3. Except as WCNOC and the Owners may otherwise agree, WCNOC
shall be responsible for determining the procedures to be
followed relative to the services provided under this
agreement and for making any reports to governmental
authorities, except as prohibited or required by Title 10
of the Code of Federal Regulations or any other applicable
governmental regulations or laws.
4. If the services are to be performed by employees of an
Owner at a location different from their regular place of
employment, the services shall be deemed to commence when
the employee begins preparation to depart from his regular
work location to perform the services requested. The
services shall be deemed to have terminated when the
employee has returned to his regular work location.
5. Each Owner shall, on a monthly basis, furnish WCNOC with a
detailed statement of all costs and expenses paid or
incurred by that Owner in connection with the services
provided to WCNOC under this agreement and such statement
shall be paid by WCNOC within 30 days after receipt.
Statements for costs and expenses shall be addressed to:
Wolf Creek Nuclear Operating Corporation
P.O. Box 411
Burlington, Kansas 66839
Attention: Purchasing
Payment for all costs and expenses shall be made to the
Owners at the following addresses:
Kansas Gas and Electric Company
P.O. Box 208
Wichita, Kansas 67201
Attention: Vice President-Nuclear
-2-
Kansas City Power & Light Company
1330 Baltimore Avenue
Kansas City, Missouri 64141
Attention: Senior Vice President
System Power Operations
Kansas Electric Power Cooperative, Inc.
P.O. Box 4877
Topeka, Kansas 66604
Attention: Executive Vice President
6. All time sheets and work records pertaining to services
performed under this agreement shall be retained by each
Owner at least as long as required by the Federal Energy
Regulatory Commission Regulations To Govern The
Preservation of Records of Public Utilities and Licensees.
Each Owner will, during normal working hours and upon
reasonable notice, make available as appropriate, all such
time sheets and work records, to appropriate personnel of
WCNOC upon written request by WCNOC.
7. The Owners and WCNOC acknowledge that for obligations which
may arise under the terms of this agreement, the Owners
shall be severally, but not jointly, liable in proportion
to their ownership shares in the Station.
8. WCNOC hereby expressly waives (on behalf of itself and its
successors and assigns and anyone claiming an interest on
behalf of or through it) any right it may have to recover
for any cause (including negligence) from any Owner and its
employees for any losses, damages, liabilities, penalties,
fines, claims or expenses which may occur in connection
with our arise out of the services performed under this
Agreement. WCNOC shall indemnify and hold each Owner and
its employees harmless from claims asserted by third
parties (including claims asserted by other Owners) for
losses, damages, liabilities, penalties, fines, claims or
expenses which may occur in connection with or arise out of
the services performed under this agreement even if such
services were negligently performed. Provided, however,
that nothing in this section shall relieve any Owner of any
of its duties or obligations under Section 6.4 of the Wolf
Creek Generating Station Ownership Agreement, dated as of
December 28, 1981, and under Section 8.3 of the Wolf Creek
Generating Station Operating Agreement dated April 15,
1986.
9. This Agreement shall become effective upon its execution
but shall not become operative until (a) each of the Owners
and WCNOC shall have obtained any
-3-
and all authorizations from governmental bodies having
jurisdiction over it (or them) necessary for the transfer
of responsibility of the Station from KG&E to WCNOC or
(b) 12:01 a.m. January 1, 1987, whichever shall last occur.
10. The failure of either WCNOC or the Owners at any time to
require performance by the other party of any provision of this
Agreement shall in no way affect the right of such party
thereafter to enforce the same, nor shall the waiver by either
party to any breach of any provision of this agreement by the
other party be taken or held to be a waiver by such party of
any succeeding breach of such provision or a waiver of the
provision itself, nor shall such waiver affect the
enforceability of any other provision in this Agreement.
11. In the event any provision of this Agreement or the application
thereto to any person or circumstance shall be held to be
invalid under any final decision by a court having jurisdiction
in the premises, the remainder of the agreement and its
application to persons or circumstances, other than those to
which it was held invalid, shall not be affected thereby.
12. The validity, interpretation, and performance of the agreement
and each of its provisions shall be governed by the laws of the
State of Kansas.
13. This Agreement shall be for an initial term of one year
beginning January 1, 1987, and from year to year thereafter
until terminated. Each party, upon ninety (90) days prior
written notice to the other party may terminate this agreement
at the expiration date of any successive one year term. Such
termination shall not affect any obligation incurred hereunder
prior to the effective date of such notice, which obligation
arises out of events occurring prior to that date.
14. All notices, communications, correspondence and billings which
are to be addressed and/or delivered to those individuals
identified in this Agreement and Exhibit A attached hereto,
shall be delivered accordingly. Any other notice,
communication or correspondence shall be addressed to:
Wolf Creek Nuclear Operating Corporation
P.O. Box 2908
Wichita, Kansas 67201
Attention: Manager, Emergency Planning
Kansas Gas and Electric Company
P.O. Box 208
Wichita, Kansas 67201
Attention: Vice President-Nuclear
-4-
Kansas City Power & Light Company
1330 Baltimore Avenue
Kansas City, Missouri 64141
Attention: Senior Vice President
System Power Operations
Kansas Electric Power Cooperative, Inc.
P.O. Box 4877
Topeka, Kansas 66604
Attention: Director, Power Supply & Engineering
15. This agreement contains the entire agreement between the Owners
and WCNOC with respect thereto and no amendment, modification
or supplement hereto shall be binding unless in writing.
16. This agreement shall not be assigned by either WCNOC or the
Owners without the prior written consent of the other.
IN WITNESS WHEREOF the parties have caused this Agreement to be
executed by duly authorized officers as of the day and year first written
above.
ATTEST: KANSAS GAS AND ELECTRIC COMPANY
/s/ Richard D. Terrell By /s/ Glenn L. Koester
Secretary Vice President-Nuclear
ATTEST: KANSAS CITY POWER & LIGHT COMPANY
/s/ Jeanie Sell Latz By /s/ J. M. Evans
Asst. Secretary Senior Vice President-System Power
Operations
ATTEST: KANSAS ELECTRIC POWER COOPERATIVE, INC.
/s/ R. D. Speece By /s/ Alvin L. Zwick
Secretary Alvin L. Zwick, President
ATTEST: WOLF CREEK NUCLEAR OPERATING CORPORATION
/s/ W. B. Wood By /s/ B. D. Withers
Secretary President
-5-
EHXIBIT A
EMERGENCY PLAN SERVICES
1. The Owners shall supply personnel and facilities which are
necessary to carry out the RERP for Wolf Creek. The personnel
supplied shall attend training sessions, participate in drills and
carry out their duties as detailed in the RERP during actual
emergencies.
2. Each Owner shall designate in writing an individual or
group of individuals (hereinafter referred to as Contact Personnel)
who shall report directly to the WCNOC Manager of Emergency Planning
(hereinafter referred to as Manager E.P.). Contact Personnel are
responsible for coordinating each Owners RERP activities at the
direction of the Manager E.P. Each Owner shall notify the Manager
E.P. in writing when Contact Personnel are changed.
3. All communications with the state of Kansas, Coffey County,
and any other governmental, public or private agency or group, as it
relates to public information or emergency planning shall be in the
name of WCNOC.
4. The Manager E.P. shall identify those positions in the
Emergency Response Organization (ERO) which are to be filled with
Personnel of the Owners. The Manager E.P. may increase or decrease
the positions in the ERO to be filled by personnel of the Owners upon
sixty (60) days written notice to Contact Personnel. Positions
initially to be filled in the ERO by personnel of the Owners are the
following:
Wolf Creek Public Information Officer
Media Release Center Manager
Wolf Creek Spokesperson
General Office Information Coordinator
Public Concern Phone Coordinator
Rumor Control Coordinator
Documentation
Media Inquiry Coordinator
Media Monitoring Coordinator
Distribution
Media Inquiry Phone Team (4)
Media Monitoring Team (2)
Public Concern Phone Team
Recording Editor
MRC Assistant Manager
System Control Personnel
General Office Administrative Assistant
Information Clearinghouse Administrative Assistant
Information Clearinghouse Preparation Team
Call Out Personnel
5. Each position on the ERO shall have five (5) persons
assigned to it unless the Manager E.P. requires a different number of
people. Personnel may be assigned to a maximum of two positions.
Contact Personnel shall select and identify, in writing to the
Manager E.P. those personnel (candidates) to fill the positions
identified above. The Manager E.P. shall have the right to reject
any candidate identified by Contact Personnel.
6. Upon acceptance, the personnel of the Owners shall attend
initial training in accordance with the Emergency Plan Implementing
Procedures (EPP) at a time, date and place to be determined by the
Manager E.P. Personnel of the Owners shall attend annual retraining
sessions as specified in the EPP and shall review all training
materials provided to them by the Manager E.P.
7. Drills shall be conducted periodically to test the
procedures of the RERP and the members of the ERO. Contact Personnel
shall identify in writing those employees who are members of the ERO
who shall participate in the drills which may be scheduled or
unscheduled. Those employees who attend drills shall also attend
scheduled briefings and critiques of drill performance.
8. When an actual emergency as defined in the RERP occurs,
members of the ERO shall respond in accordance with the EPP.
9. Contact Personnel shall provide to the Manager E.P. on a
quarterly basis a complete listing of each employee included in the
ERO. Such listing shall include the employees name, title, home
address, work address, home telephone and work telephone. Contact
Personnel shall notify the Manager E.P. on a weekly basis of any
changes to the above information.
10. On a quarterly basis, the Manager E.P. shall identify to
Contact Personnel those positions in each Owner's organization for
which the Manager E.P. will need the name of the individual in that
position, the individuals title, work address, home telephone number
and work telephone number. Contact Personnel of each Owner shall
provide two listings of this information, the first listing to be by
job title of each position; the second listing by alphabetical order
of the individuals who fill these positions.
11. WCNOC shall be responsible for maintaining public
information emergency response facilities described in the EPP, which
are located in the corporate offices of KG&E at 201 North Market in
Wichita and at the Information Clearinghouse and Media Release Center
in Topeka, Kansas. KG&E shall transport any necessary supplies and
audiovisual equipment described in the EPP from the Wichita offices
of KG&E and WCNOC to the Information Clearinghouse and Media Release
Center in Topeka.
12. KG&E's system operations department and customer
information center shall perform the call out functions described in
the EPP. KG&E shall provide and maintain the pager system associated
with the call out function.
13. The scope, nature and extent of services provided herein
shall be mutually agreed upon and set forth in the applicable
purchase order. The charges for said services shall be enumerated in
the purchase order and shall be established in accordance with the
rates set in Exhibits B-1 through B-3.
EXHIBIT B-1
RATES FOR EMERGENCY PLAN SERVICES
KG&E
The rates for Emergency Plan Services to be provided by KG&E are
set out below and shall be in effect on January 1, 1987 and shall be
amended annually thereafter by mutual agreement of the parties to be
effective January 1st.
KG&E labor shall be billed at actual labor rates.
Fringe benefit costs shall be billed at 19% of the labor cost.
Service overhead costs shall be billed at 12.98% of the labor
costs.
Materials shall be billed at cost plus 17% for purchasing and
stores overheads.
EXHIBIT B-2
RATES FOR EMERGENCY PLAN SERVICES
KCPL
The rates for Emergency Plan Services to be provided by KCPL are
set out below and shall be in effect on January 1, 1987 and shall be
amended annually thereafter by mutual agreement of the parties to be
effective January 1st.
KCPL labor shall be billed at actual labor rates.
Fringe benefit costs shall be billed at 18.8% of the labor cost.
Service overhead costs shall be billed at 21.3% of the labor
costs.
Materials shall be billed at cost plus 25% for purchasing and
stores overheads.
EXHIBIT B-3
RATES FOR EMERGENCY PLAN SERVICES
KEPCO
The rates for Emergency Plan Services to be provided by KEPCo
are set out below and shall be in effect on January 1, 1987 and shall
be amended annually thereafter by mutual agreement of the parties to
be effective January 1st.
KEPCo labor shall be billed at actual labor rates.
Fringe benefits costs shall be billed at 33.58% of the labor
cost.
Service overhead costs shall be billed at 18.14% of the labor
costs.
EXHIBIT B-6
SERVICE RECIPROCITY AGREEMENT
This instrument evidences an agreement made and entered into
as of this 20TH day of JUNE, 1986, by and among Kansas City Power
& Light Company (hereinafter called "KCPL"), Kansas Gas and
Electric Company (hereinafter called KG&E"), and Wolf Creek
Nuclear Operating Corporation (hereinafter called "WCNOC"), each
of which shall also be referred to individually as "Corporation"
and collectively, as "Corporations".
WITNESSETH:
WHEREAS, WCNOC is jointly owned by KCPL, KG&E and Kansas
Electric Power Cooperative, Inc., and
WHEREAS, each Corporation has established one or more
pension plans; and
WHEREAS, from time to time the Employees (as hereinafter
defined) of one Corporation may transfer to another Corporation,
with a potential loss or diminution of pension benefits by reason
of the break in service provisions or other limitations set forth
in the documents governing the pension plans established by such
Corporations; and
WHEREAS, the Corporations desire to enter into an agreement
to provide for the recognition of pension service credits earned
by such Employees under Related Plans (as hereinafter defined),
so that pension service may be preserved for such Employees, as
hereinafter provided;
NOW, THEREFORE, in consideration of the mutual undertakings
herein provided, and for other good and valuable consideration,
receipt and sufficiency of which is acknowledged, the
Corporations agreed as follows:
1. DECLARATIONS. Each of the undersigned officers of the
Corporations represents and warrants that he is duly authorized
to enter into this Agreement.
2. PURPOSE. The purpose of this Agreement is (i) to
preserve pension service used in the determination of pension
benefits of Employees who would otherwise receive a reduced
pension or be ineligible for a pension because their years of
service have been divided between or among two or more
Corporations, and (ii) to identify the respective
responsibilities of each Plan for providing pension benefits to
Employees.
3. DEFINITIONS. The following definitions shall apply to
this Agreement unless another meaning is clearly required by the
context; the singular shall include the plural and the masculine,
the feminine as the context may require. In no event will the
Plans be required to incorporate, directly or indirectly the
specific terms or definitions used in this Agreement.
(a) ADMINISTRATOR. The administrator (or its authorized
agent or representative) of each Plan.
(b) AGREEMENT. This Service Reciprocity Agreement.
(c) COMBINED ELIGIBILITY CREDITS. The aggregate total of
an Employee's Primary Eligibility Credits, plus the total of his
Related Eligibility Credits.
(d) COMBINED PENSION CREDITS. The aggregate total of an
Employee's Primary Pension Credits, plus the total of his Related
Pension Credits.
(e) EMPLOYEE. An individual who has service with one or
more of the Corporations.
(f) FUNDING AGREEMENT. The agreement or other document
evidencing the trust or other funding medium of the Plan.
(g) PLAN. A pension plan established and maintained by a
Corporation; provided, however, that pension plans maintained
pursuant to collective bargaining agreements shall not be
included in this definition unless the collective bargaining
agreement expressly so provides.
(h) PRIMARY ELIGIBILITY CREDITS. The total of an
Employee's years of service, or portions thereof, under a Primary
Plan which are counted for purposes of determining his vesting
and eligibility for a pension under the Primary Plan.
(i) PRIMARY PENSION CREDITS. The total of an Employee's
years of service, or portions thereof, under a Primary Plan which
are counted for purposes of determining pension benefit accruals
under the Primary Plan.
(j) PRIMARY PLAN. A Plan with respect to which the
applicable Administrator is determining the application of the
provisions of this Agreement.
(k) QUALIFIED TRANSFER. Transfer of employment by an
Employee from one Corporation to WCNOC or from WCNOC to another
2
Corporation, but only if the Employee accepted employment with
the transferee Corporation prior to leaving employment with the
transferor Corporation.
(l) RELATED ELIGIBILITY CREDITS. Years of service, or
portions thereof, credited to an Employee that are counted for
purposes of determining vesting and eligibility for a pension
under a Related Plan. An Employee will be entitled to Related
Eligibility Credits only if such Employee has engaged in a
Qualified Transfer.
(m) RELATED PENSION CREDITS. Years of service, or portions
thereof, credited to an Employee that are counted for purposes of
determining pension benefit accruals under a Related Plan. An
Employee will be entitled to Related Pension Credits only if such
Employee has engaged in a Qualified Transfer.
(n) RELATED PLAN. With respect to one Plan, any other
Plan.
4. OPERATIVE PROVISIONS.
(a) Each Corporation does hereby recognize the Plans
maintained by the other Corporations as Related Plans. The
Corporations agree that they shall participate in a reciprocal
pension service program in accordance with the provisions of this
Agreement.
(b) In any case in which an Employee has Related
Eligibility Credits and applies for a pension, the Administrator
of the Primary Plan shall calculate the Combined Eligibility
Credits of such Employee and, for the purpose of determining his
vesting and eligibility for pension benefits under the Primary
Plan, shall treat his Combined Eligibility Credits as if their
underlying years of service constituted years of service under
the Primary Plan.
(c) The Administrator of the Primary Plan shall rely upon
the provisions of the Primary Plan and related Funding Agreement
(i) in evaluating Related Eligibility Credits to determined
whether the Employee has had a break in service, or (ii) in
evaluating Combined Eligibility Credits to determine whether the
Employee has sufficient service to be eligible for a benefit, or
(iii) in determining whether the Employee's application for
benefits is timely and otherwise adequate, and (iv) in
determining all other questions relating to vesting and
eligibility.
3
(d) If (i) the Employee was never a participant in a
Related Plan or (ii) the Employee's most recent period of Plan
participation was in a Related Plan, the amount of pension
benefits, if any, payable to such Employee or his beneficiary by
the Primary Plan shall be limited to the benefit accrued by the
Employee while a Participant in the Primary Plan. The amount of
such pension benefit, if any, payable by the Primary Plan, shall
be determined solely by reference to the Primary Plan and related
Funding Agreement. The Primary Plan shall have no liability or
responsibility to pay any Employee for pension benefits accrued
by such an Employee while he was a participant under a Related
Plan, which amount, if any, shall be paid to him solely by the
Related Plan.
(e) IF the Employee's most recent period of Plan
participation was in the Primary Plan, the amount of pension
benefits, if any, payable to such Employee or his beneficiary by
the Primary Plan, shall be calculated based on his total Combined
Pension Credits. In the event such Employee or his beneficiary
shall be eligible to receive retirement benefits under one or
more Related Plans, the amount of the Employee's or beneficiary's
retirement benefits that would be payable at age 65 as a single
life annuity, as determined under the Primary Plan, shall be
reduced by an amount equal to the retirement benefits payable
under the Related Plans, at age 65 as a single life annuity.
(f) All conditions which ordinarily will apply to the
payment of pension benefits by the Primary Plan shall apply in
like manner to any payment of pension benefits by it pursuant to
this Agreement. Nothing in this Agreement shall require the
Administrator to determine an Employee's vesting, eligibility for
pension benefits or accrued pension benefits other than in
accordance with the express terms and provision of the Primary
Plan, which will effect the provisions of this Agreement and may,
but need not, incorporate this Agreement by reference.
(g) In determining Combined Pension Credits, a Primary Plan
shall not recognize more than one year of service in any one of
its Plan years.
5. AMENDMENT.
(a) All rights of Employees now or hereafter claiming
benefits under this Agreement are subject to and conditioned upon
the right of the Corporations, acting jointly, to amend or revoke
this Agreement.
4
(b) Notwithstanding the provisions of the preceding
paragraph, Employees shall not forfeit any service credits earned
by virtue of this Agreement and Employees' accrued benefits shall
not be decreased upon amendment or termination of this Agreement;
nor shall such amendment or termination adversely affect or
prejudice the pensions of those Employees who begin to receive
benefits prior to such amendment or termination.
6. RECORDS AND INFORMATION. Each Corporation agrees to
preserve records of pension service that are counted for purposes
of determining an Employee's eligibility for a pension under the
Plan and other relevant data relating to all its participants,
including those who cease to be covered Employees, as long as may
be necessary to give effect to this Agreement. Each Corporation
agrees to furnish to any other Corporation such data and
information as may be reasonably required by such other
Corporation in order to implement the provisions of this
Agreement. The furnishing of data or information shall be
without charge if it relates to an individual case; but if data
of a general nature is requested, and furnished by and with the
consent of the Related Plan's sponsor (e.g., data for use in
actuarial evaluations or surveys), the cost thereof may be billed
to the Corporation requesting the information.
8. EFFECTIVE DATE. This Agreement shall be effective as
of the effective date of the Retirement Plan For Employees of
Wolf Creek Nuclear Operating Corporation.
IN WITNESS WHEREOF, the Corporations have hereunto set their
hands and seals the day and year first above written.
KANSAS CITY POWER & LIGHT COMPANY
By /s/ Arthur J. Doyle
ATTEST:
/s/ S. P. Cowley
Secretary
5
WOLF CREEK NUCLEAR OPERATING CORPORATION
By /s/ Forrest T. Rhodes
ATTEST:
/s/ A. Drue Jennings
Secretary
KANSAS GAS AND ELECTRIC COMPANY
By /s/ Wilson K. Cadman
ATTEST:
/s/ Richard D. Terrell
Secretary
6
EXHIBIT H-1
Filings Under the Public Utility Holding Company Act of
1935, as amended ("Act")
SECURITIES AND EXCHANGE COMMISSION
April __, 2002
Notice is hereby given that the following filing(s) has/have
been made with the Commission pursuant to provisions of the Act
and rules promulgated under the Act. All interested persons are
referred to the application(s) and/or declaration(s) for complete
statements of the proposed transaction(s) summarized below. The
application(s) and/or declaration(s) and any amendment is/are
available for public inspection through the Commission's Office
of Public Reference.
Interested persons wishing to comment or request a hearing
on the application(s) and/or declaration(s) should submit their
views in writing by _____, 2002, to the Secretary, Securities and
Exchange Commission, Washington, D.C. 20549-0609 and serve a copy
on the relevant applicant(s) and or declarant(s) at the
address(es) specified below. Proof of service (by affidavit or,
in case of an attorney at law, by certificate) should be filed
with the request. Any request for hearing should identify
specifically the issues of fact or law that are disputed. A
person who sho requests will be notified of any hearing, if
ordered, and will receive a copy of any notice or order issued in
the matter. After ______, 2002, the application(s) and/or
declaration(s), as filed or as amended, may be granted and/or
permitted to become effective.
Great Plains Energy Incorporated ("GPE"), Kansas City Power
& Light Company ("KCPL") and Great Plains Energy Services
Incorporated ("GPES"), located at 1201 Walnut, Kansas City,
Missouri 64106, and Wolf Creek Nuclear Operating Corporation
("WCNOC"), located at 1550 Oxen Lane N.E., Burlington, Kansas
66839, (collectively, the "Applicants") have filed an
application/declaration with the Securities and Exchange
Commission under Section 13 and Rules 88, 90 and 91 under the
Act.
GPE is a registered holding company under the Act. KCPL is
an electric utility company and a wholly-owned subsidiary of GPE.
WCNOC is a nonutility subsidiary of KCPL which provides goods and
services to the owners, including KCPL, of the Wolf Creek
Generating Station.
Pursuant to the Commission's order authorizing the corporate
reorganization resulting in GPE becoming a registered holding
company (HCAR 27436), KCPL and the nonutility subsidiaries of GPE
were granted authorization under Section 13(b) of the Act and
rules to provide support services on an interim basis, as well as
sell goods, to each other and to GPE consistent with current
practice, as well as services and goods of a substantially
similar nature), until the Commission granted authority to create
a service company and to implement the final support service
structure for the GPE holding company system. The application
seeking such authority was to be filed by April 30, 2002.
Applicants have filed an application/declaration, as
directed by the Commission order, requesting authorizations with
respect to the activities of GPES, which will be incorporated in
Missouri as a wholly-owned subsidiary of GPE to serve as the
service company for the GPE system. GPES will provide companies
in the GPE system with a variety of administrative, management
and support services. It is anticipated that GPES will be
staffed by a transfer of personnel from KCPL. It is further
anticipated that a small quantity of personal property will be
transferred from KCPL to GPES. Moreover, certain leases and
licenses currently held by KCPL may be assigned to GPES, or may
continue to be held by KCPL and a portion of the goods and
services thereunder may be provided to other system companies.
GPES' accounting and cost allocation methods and
procedures will comply with the Commission's standards for
service companies in registered holding-company systems, and
that GPES' billing system will use the Commission's "Uniform
System of Accounts for Mutual Service Companies and Subsidiary
Service Companies." Except as permitted by the Act or the
Commission, all services provided by GPES to affiliated
companies will be on an "at cost" basis as determined by Rules
90 and 91 of the Act.
In order to ensure adequate oversight and realize economies
of scale, certain administrative and service functions for the
GPE system will be consolidated and provided, either in whole or
in part, through GPES. As a general rule, the individual system
companies will maintain services that can benefit from
individualized application at the company level, with GPES
offering system-wide coordination and strategy, compliance,
oversight and other services where economies can be captured by
the centralization of services.
Applicants request that GPES and all other nonutility
subsidiaries of GPE be authorized to enter into agreements to
provide construction, goods or services to certain associate
companies enumerated below at fair market prices determined
without regard to cost, and therefore request an exemption (to
the extent that Rule 90(d) of the Act does not apply) under
Section 13(b) from the cost standards of Rules 90 and 91:
(a) a FUCO or foreign EWG that derives no part of its
income, directly or indirectly, from the generation,
transmission or distribution of electric energy for
sale within the United States;
(b) an EWG that sells electricity at market-based rates
which have been approved by the FERC, provided that the
purchaser is not KCPL;
(c) a "qualifying facility" ("QF") within the meaning of
the Public Utility Regulatory Policies Act of 1978, as
amended ("PURPA") that sells electricity exclusively
(i) at rates negotiated at arms' length to one or more
industrial or commercial customers purchasing the
electricity for their own use and not for resale,
and/or (ii) to an electric utility company at the
purchaser's "avoided cost" as determined in accordance
with the regulations under PURPA;
(d) a domestic EWG or QF that sells electricity at rates
based upon its cost of service, as approved by FERC or
any state public utility commission having
jurisdiction, provided that the purchaser is not KCPL;
or
(e) a Rule 58 subsidiary or any other nonutility subsidiary
that (i) is partially-owned, directly or indirectly, by
GPE, provided that the ultimate purchaser of such goods
or services is not KCPL (or any other entity that GPE
may form whose activities and operations are primarily
related to the provision of goods and services to
KCPL), (ii) is engaged solely in the business of
developing, owning, operating and/or providing services
or goods to nonutility subsidiaries described in
clauses (a) through (e) immediately above, or (iii)
does not derive, directly or indirectly, any material
part of its income from sources within the United
States and is not a public utility company operating
within the United States.
Applicants request authorization for WCNOC, as a nonutility
subsidiary of KCPL, to provide services and goods to the owners
of Wolf Creek Generating Station at cost under existing
agreements. Applicants also request authorization for KCPL to
provide goods and services to WCNOC at cost under existing
agreements. Applicants further request, to the extent such
transactions are within the scope of the Act, authorization for
KCPL to lease or sublease excess office space or other nonutility
facilities to unaffiliated third parties.
For the Commission by the Division of Investment Management,
pursuant to delegated authority.