f8kksstip.htm
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SECURITIES
AND EXCHANGE COMMISSION
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Washington,
D.C. 20549
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FORM
8-K
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Current
Report
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Pursuant
to Section 13 or 15(d) of the
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Securities
Exchange Act of 1934
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Date
of Report (Date of earliest event reported): June 18,
2009
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Commission
File
Number
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Registrant,
State of Incorporation,
Address
and Telephone Number
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I.R.S.
Employer
Identification
Number
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001-32206
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GREAT
PLAINS ENERGY INCORPORATED
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43-1916803
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(A
Missouri Corporation)
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1201
Walnut Street
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Kansas
City, Missouri 64106
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(816)
556-2200
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NOT
APPLICABLE
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(Former
name or former address,
if
changed since last report)
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000-51873
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KANSAS
CITY POWER & LIGHT COMPANY
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44-0308720
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(A
Missouri Corporation)
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1201
Walnut Street
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Kansas
City, Missouri 64106
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(816)
556-2200
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NOT
APPLICABLE
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(Former
name or former address,
if
changed since last report)
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Check the
appropriate box below if the Form 8-K filing is intended to simultaneously
satisfy the filing obligation of the registrant under any of the following
provisions:
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[ ]
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Written
communications pursuant to Rule 425 under the Securities Act (17 CFR
230.425)
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[ ]
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Soliciting
material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
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[ ]
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Pre-commencement
communications pursuant to Rule 14d-2(b) under the Exchange
Act
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(17
CFR 240.14d-2(b))
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[ ]
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Pre-commencement
communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR
240.13e-4(c))
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This
combined Current Report on Form 8-K is being furnished by Great Plains Energy
Incorporated (Great Plains Energy) and Kansas City Power & Light Company
(KCP&L). KCP&L is a wholly owned subsidiary of Great Plains
Energy and represents a significant portion of its assets, liabilities,
revenues, expenses and operations. Thus, all information contained in
this report relates to, and is furnished by, Great Plains
Energy. Information that is specifically identified in this report as
relating solely to Great Plains Energy, such as its financial statements and all
information relating to Great Plains Energy’s other operations, businesses and
subsidiaries, including KCP&L Greater Missouri Operations Company (GMO) does
not relate to, and is not furnished by, KCP&L. KCP&L makes no
representation as to that information. Neither Great Plains Energy
nor GMO has any obligation in respect of KCP&L’s debt securities and holders
of such securities should not consider Great Plains Energy’s or GMO’s financial
resources or results of operations in making a decision with respect to
KCP&L’s debt securities. Similarly, KCP&L has no obligation
in respect of securities of Great Plains Energy or GMO.
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Item
1.01
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Entry
into a Material Definitive
Agreement
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On
September 5, 2008, KCP&L filed a rate increase request with the Kansas
Corporation Commission (KCC), requesting an additional $71.6 million in annual
revenues, with approximately $11.2 million of that amount treated for accounting
purposes as an increase to KCP&L’s depreciation
reserve. KCP&L and certain other parties to the proceedings filed
on June 18, 2009, a Joint Stipulation and Agreement (Agreement) with the KCC,
containing a negotiated settlement of the rate increase request. A
copy of the agreement is attached hereto as Exhibit 10.1 and is incorporated
herein by reference.
The
Agreement provides for, among other things, an increase in annual revenues of
$59 million, with $18 million of that amount treated for accounting purposes as
an increase to KCP&L’s depreciation reserve. The Agreement also
requests that the increase be effective August 1, 2009. Parties may
challenge the prudence of the cost of the Iatan Unit No. 1 environmental project
and the cost of facilities used in common by Iatan Units No.1 and No. 2 in
KCP&L’s next rate case, but the Kansas jurisdictional portion of any
proposed rate base prudence disallowances will not exceed (i) $4.7 million for
costs paid or approved for payment as of April 30, 2009 and in-service as of
July 4, 2009, and (ii) $2.8 million for the first $56 million of costs not paid
or approved for payment as of April 30, 2009. There is no cap as to
the amount of disallowances that may be proposed for costs above this $56
million amount.
The
parties to the Agreement are KCP&L, the Staff of the KCC, the Citizens’
Utility Ratepayer Board and Kansas Electric Power Cooperative,
Inc. Kansas Electric Power Cooperative, Inc. is a co-owner, with
KCP&L and other utilities, of Iatan Unit No. 2 and Wolf Creek Generating
Station.
The
Agreement is subject to KCC approval, and is voidable if the KCC does not
approve and adopt the terms of the Agreement in total. It is possible
that the KCC may approve the Agreement with changes, or may not approve the
Agreement.
The
information set forth under Item 1.01 is incorporated herein by
reference.
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Item
9.01
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Financial
Statements and Exhibits
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(d) Exhibits
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10.1
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Joint
Stipulation and Agreement dated June 17, 2009, among Kansas City Power
& Light Company, the Staff of the Kansas Corporation Commission, the
Citizens’ Utility Ratepayer Board and Kansas Electric Power Cooperative,
Inc.
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FORWARD-LOOKING
STATEMENTS
Statements
made in this report that are not based on historical facts are forward-looking,
may involve risks and uncertainties, and are intended to be as of the date when
made. Forward-looking statements include, but are not limited to, the outcome of
regulatory proceedings, cost estimates of the Comprehensive Energy Plan and
other matters affecting future operations. In connection with the safe harbor
provisions of the Private Securities Litigation Reform Act of 1995, the
registrants are providing a number of important factors that could cause actual
results to differ materially from the provided forward-looking information.
These important factors include: future economic conditions in regional,
national and international markets and their effects on sales, prices and costs,
including, but not limited to, possible further deterioration in economic
conditions and the timing and extent of any economic recovery; prices and
availability of electricity in regional and national wholesale markets; market
perception of the energy industry, Great Plains Energy, KCP&L and GMO;
changes in business strategy, operations or development plans; effects of
current or proposed state and federal legislative and regulatory actions or
developments, including, but not limited to, deregulation, re-regulation and
restructuring of the electric utility industry; decisions of regulators
regarding rates KCP&L and GMO can charge for electricity; adverse changes in
applicable laws, regulations, rules, principles or practices governing tax,
accounting and environmental matters including, but not limited to, air and
water quality; financial market conditions and performance including, but not
limited to, changes in interest rates and credit spreads and in availability and
cost of capital and the effects on nuclear decommissioning trust and pension
plan assets and costs; credit ratings; inflation rates; effectiveness of risk
management policies and procedures and the ability of counterparties to satisfy
their contractual commitments; impact of terrorist acts; increased competition
including, but not limited to, retail choice in the electric utility industry
and the entry of new competitors; ability to carry out marketing and sales
plans; weather conditions including, but not limited to, weather-related damage
and their effects on sales, prices and costs; cost, availability, quality and
deliverability of fuel; ability to achieve generation planning goals and the
occurrence and duration of planned and unplanned generation outages; delays in
the anticipated in-service dates and cost increases of additional generating
capacity and environmental projects; nuclear operations; workforce risks,
including, but not limited to, retirement compensation and benefits costs; the
ability to successfully integrate KCP&L and GMO operations and the timing
and amount of resulting synergy savings; and other risks and
uncertainties.
This list
of factors is not all-inclusive because it is not possible to predict all
factors. Other risk factors are detailed from time to time in Great Plains
Energy’s and KCP&L’s most recent quarterly report on Form 10-Q or annual
report on Form 10-K filed with the Securities and Exchange
Commission. Any forward-looking statement speaks only as of the date
on which such statement is made. Great Plains Energy and KCP&L
undertake no obligation to publicly update or revise any forward-looking
statement, whether as a result of new information, future events or
otherwise.
SIGNATURES
Pursuant
to the requirements of the Securities Exchange Act of 1934, the registrant has
duly caused this report to be signed on its behalf by the undersigned hereunto
duly authorized.
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GREAT
PLAINS ENERGY INCORPORATED
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/s/
Terry Bassham
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Terry
Bassham
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Executive
Vice President- Finance & Strategic Development and Chief Financial
Officer
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KANSAS
CITY POWER & LIGHT COMPANY
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/s/
Terry Bassham
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Terry
Bassham
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Executive
Vice President- Finance & Strategic Development and Chief Financial
Officer
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Date: June
18, 2009.
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Exhibit
Index
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Exhibit
No.
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Title
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10.1
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Joint
Stipulation and Agreement dated June 17, 2009, among Kansas City Power
& Light Company, the Staff of the Kansas Corporation Commission, the
Citizens’ Utility Ratepayer Board and Kansas Electric Power Cooperative,
Inc.
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ex10_1.htm
BEFORE
THE STATE CORPORATION COMMISSION
OF
THE STATE OF KANSAS
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In
the Matter of the Application of Kansas City Power & Light Company to
Modify Its Tariffs to Continue the Implementation of Its Regulatory
Plan.
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)
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Docket
No.: 09-KCPE-246-RTS
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JOINT STIPULATION
AND
AGREEMENT
I. OVERVIEW
As a
result of extensive discussions, the Staff of the State Corporation Commission
of the State of Kansas (“Staff”), Kansas City Power & Light Company
(“KCP&L”); the Citizens’ Utility Ratepayer Board (“CURB”); and Kansas
Electric Power Cooperative, Inc. (“KEPCo”) (collectively, “the Signatory
Parties”) hereby submit to the State Corporation Commission of the State of
Kansas (“Commission”) for its consideration and approval the following Joint
Stipulation and Agreement (“Joint Stipulation”).
II. KCP&L’S
APPLICATION
1. On
September 5, 2008, KCP&L filed an application for a rate change
(“Application”) pursuant to K.S.A. 66-117 and K.A.R.
82-1-231. KCP&L’s Application reflects its investment in plant
and equipment since the last time KCP&L’s rate base was adjusted in Docket
No. 07-KCPE-905-RTS.
2. KCP&L’s
Application was the third in a series of rate cases that are contemplated in the
Rate Plan (Appendix C of the Stipulation (“1025 Stipulation”) in Docket No.
04-KCPE-
1025-GIE
(the “1025 Docket)), in conjunction with KCP&L’s implementation of the
Resource Plan.1
3. The
first rate filing made by KCP&L pursuant to the 1025 Stipulation was
contained in Docket No. 06-KCPE-828-RTS (“828 Docket”), which resulted in a
Stipulation and Agreement (“828 Stipulation”) that was approved by the
Commission on December 4, 2006.
4. The
second rate filing made by KCP&L pursuant to the Rate Plan was contained in
Docket No. 07-KCPE-905-RTS, and resulted in a Stipulation and Agreement that was
approved by the Commission on November 20, 2007 (“905
Stipulation”).
5. The
primary purpose of KCP&L’s current rate case is the recovery of KCP&L's
investment in environmental upgrades to Iatan Unit 1 and in Iatan common
plant. Pursuant to the Appendix C of the 1025 Stipulation, this rate
case was originally scheduled to be filed by March 1, 2008. However,
due to changes in the construction schedule of these environmental upgrades, on
February 6, 2008, KCP&L requested a postponement of this filing deadline. On
March 17, 2008, the Commission granted KCP&L's Motion to Amend Filing Date,
and postponed for sixty days the filing of KCP&L's 2008 rate case, to May 1,
2008, with the remainder of the procedural schedule being pushed back
accordingly. Subsequently, on March 31, 2008, KCP&L filed a Petition for
Reconsideration of Commission's Order Granting KCP&L’s Motion to Amend
Filing Date. Thereafter, in its April 30, 2008 Order, the Commission
granted KCP&L's Petition for Reconsideration and modified the March 31, 2008
deadline, as well as its March 17, 2008 Order, and left open the date by which
KCP&L's Application could be filed.
1 The 1025
Stipulation refers collectively to the “Regulatory Plan” that is comprised of a
Resource Plan set forth in Appendices A and A-1 and the Customer Programs set
forth in Appendices B and B-1, and the Rate Plan set forth in Appendices C, C-1,
and C-2. References to the “Regulatory Plan” with this Stipulation
shall have the same meaning.
6. On
September 5, 2008, KCP&L filed its Application. The schedules
filed with KCP&L’s Application indicated a gross revenue deficiency of
approximately $71.6 million, based upon normalized operating results for the 12
months ending December 31, 2007, adjusted for known and measurable changes in
revenues, operating and maintenance expenses, cost of capital and taxes, and
other adjustments. Pursuant to the Contribution In Aid of Construction (“CIAC”)
mechanism established in the 1025 Stipulation, KCP&L included in this $71.6
million deficiency an additional $11.2 million of CIAC. This
deficiency represents a rate increase of approximately 17.5% based on test year
revenue of approximately $409 million.
7. In
support of its Application, KCP&L submitted the testimony of 16 witnesses
and the schedules required by K.A.R. 82-1-231.
8. Under
the Rate Plan, KCP&L will file one additional rate Application, as described
in Appendix C of the 1025 Stipulation.
III. STAFF
AND OTHER PARTIES’ PRE-FILED POSITIONS
9. Staff,
CURB, and other parties timely filed direct testimony on February 3,
2009. Staff recommended a $53.9 million increase for KCP&L
customers that included $11.2 million of CIAC, but also noted the expectation
that the plant in-service will need to be updated. CURB recommended a
rate increase of $46.8 million that included $23.9 million of pre-tax payment on
plant. MUUG’s testimony supported creation of a green tariff,
advocated an equal spread of any rate increase across customer classes, and
suggested that severe economic conditions of the period be considered in
determining revenue requirements.
10. On
February 23, 2009, KCP&L filed its rebuttal testimony, reflecting updates to
the budgeted Iatan Unit 1 Air Quality Control System (“AQCS”) and Iatan common
costs and to certain non-Iatan plant investment. The Iatan Unit 1
AQCS and Iatan common costs included costs through the in-service date of July
4, 2009. The non-Iatan plant update included costs through March 31,
2009.
11. On
March 3, 2009, the Commission held oral arguments on various motions pending in
this docket, including the motions of the Hospital Interveners, CURB, Staff, and
KCP&L. Thereafter, the Commission recessed the hearing to allow
the Signatory Parties an opportunity to explore: the possibility of arriving at
a resolution that would address the Signatory Parties’ concerns regarding the
use of budgeted cost information; the issues raised by KCP&L’s February 23,
2009, rebuttal testimony and February 25, 2009, updated Data Request responses
regarding increased identified common costs; the Company’s concerns regarding
the exclusion of significant plant costs from its revenue requirement in this
case; and concern over the impact of any delays in the existing hearing
schedule.
12. On
March 6, 2009, the Signatory Parties2 filed a Joint Motion for Commission Approval
of Amendment to Procedural Schedule (the “Joint Motion”). As part of
the Joint Motion, the Signatory Parties agreed that:
10.
KCP&L’s Direct Testimony will only include testimony directly related to
actual costs for Iatan Unit 1 and Iatan common costs paid or approved for
payment through April 30, 2009, and directly related to the updated costs on
non-Iatan plant through March 31, 2009, as addressed in KCP&L’s rebuttal
testimony. Such testimony will also detail the effects of these updated costs on
KCP&L’s requested overall increase. No costs incurred, invoiced, or approved
for payment after April 30, 2009 may be included in KCP&L’s Direct
Testimony, and KCP&L may not increase its overall request above the original
application for a $71.6 million increase. KCP&L may not add to or otherwise
materially change the costs presented in this docket related to the costs of
Iatan Unit 1 up to, and included in, the May 5, 2009, Direct Testimony after
such testimony has been filed because KCP&L agrees that the May 5, 2009,
filing is their final position on the aforementioned costs upon which KCP&L
will rely throughout the remainder of this docket. The inclusion of the updated
costs for the non-Iatan plant may be contested by any party and those parties
reserve the right to present their position in that regard in their Direct
Testimony. KCP&L's ability to claim a traditional revenue requirement in
excess of the amount contained in the Company's original Application or a CIAC
less than the amount contained in the Company's original Application may be
contested by CURB or Intervenors and those parties reserve the right to present
their position in that regard in their Direct Testimony; however,
2 As of
the March 6, 2009 Joint Motion, the Cities of Overland Park, Kansas and Mission
Hills, Kansas had not yet petitioned for intervention. As such, they
were not parties to the Joint Motion.
this
provision is not intended to affect Staff in either an enabling or preclusive
manner. The parties also reserve the right to modify or otherwise change their
revenue requirement adjustments, disallowances, and recommendations in light of
and directly related to such updated Iatan Unit 1, common and non-Iatan plant
costs.
13. On
March 13, 2009 the Commission issued its Revised Scheduling Order Granting
Parties’ Joint Motion Filed March 6, 2009.
14. In
its May 5, 2009 Additional Direct Testimony, KCP&L revised its traditional
revenue requirement and its CIAC requirement to approximately $54 million and
$17.6 million, respectively, noting that the CIAC amount is the difference
between the requested increase of $71.6 million and the traditional revenue
requirement component.
15. In
its May 29, 2009, Additional Direct Testimony, Staff revised its traditional
revenue requirement to $42.8 million and left its CIAC unchanged at $11.2
million. In its May 29, 2009 Additional Direct Testimony, CURB revised its
recommended rate increase to $48 million, which included $24 million in pre-tax
payment on plant.
IV.
TERMS OF THE JOINT STIPULATION
16. After
extensive negotiations, the Signatory Parties have agreed upon the following
terms:
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A.
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Stipulated
Revenue Requirement and Customer Advancement/Pre-Tax Payment on Plant
Amount
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17. KCP&L's
overall revenue increase will be fifty-nine million dollars
($59,000,000). To provide KCP&L with sufficient cash flow to
proceed with the Resource Plan as set forth in the 1025 Stipulation, the
Signatory Parties agree that eighteen million dollars ($18,000,000) of the total
revenue increase will be treated for accounting purposes as a pre-tax payment on
plant on behalf of consumers. The $18 million pre-tax payment on
plant shall be treated as an increase to KCP&L’s depreciation reserve and
will be assigned to primary plant accounts in the next rate case.
B. Regulatory
Asset
18. The
Signatory Parties agree that KCP&L can create and utilize a regulatory asset
for depreciation expense and carrying costs of Iatan Unit 1 AQCS and Iatan
common costs included in plant-in-service but not included in rate base in this
case, consistent with that set forth on pp. 8-10 of the May 29, 2009, Additional
Direct testimony of Staff witness Jeff McClanahan. The Commission
should authorize a regulatory asset to include depreciation expense and carrying
costs for the Iatan Unit 1 AQCS and Iatan common plant not included in the
current case. The regulatory asset should be accounted for as
follows:
Ø The
regulatory asset account should start accruing depreciation expense and carrying
costs only when Iatan Unit 1 AQCS and Iatan common costs are paid and
transferred into service.
Ø All
Iatan common costs to be transferred to plant in-service shall use the
allocation ratio of actual cash paid developed and outlined in the Additional
Direct Testimony of Staff witness Justin Grady.
Ø The
equity rate used to calculate carrying costs shall be 8.25%.
Ø Depreciation
Expense shall be separate and distinct from carrying costs and each month's
accrual should be reflected.
Ø The
Iatan Unit 1 AQCS and Iatan common costs included in rate base in this case,
including Allowance for Funds Used During Construction (“AFUDC”) but excluding
any possible disallowances, is as reflected in Staff witness Laura Bowman’s
Updated Exhibits LKB-2(C) and LKB-3 attached to her Additional Direct
Testimony ($178,017,515- Kansas jurisdictional).
C.
In-service Timing of Iatan 1 AQCS and Iatan Common Costs
19. The
Signatory Parties agree that this Joint Stipulation resolves all issues in this
case concerning disallowances related to costs for Iatan Unit 1 AQCS and Iatan
common costs that are included in rate base. There will be no
write-off of costs included in rate base in this case for plant-in-service as of
July 4, 2009.
20. The
disallowance review related to Iatan Unit 1 AQCS and Iatan common costs paid or
approved for payment as of April 30, 2009 and in-service as of July 4, 2009, is
deferred
to the
next rate case and capped at $4.7 million (Kansas jurisdictional, including
AFUDC), strictly as set forth in the testimony of Staff witness Mr. Walter
Drabinski. The $4.7 million cap applies specifically to all costs
paid or approved for payment, including any Risk and Opportunity (“R/O”)
package-related costs, as of April 30, 2009 for Iatan Unit 1 AQCS and Iatan
common costs in-service as of July 4, 2009. To the extent that
additional costs are paid against any R/Os after April 30, 2009 (that were not
already approved for payment as of April 30, 2009), such costs may be considered
for disallowance subject to the provisions of paragraph 22. KCP&L
is not agreeing to any disallowance, but the Signatory Parties are limited to
recommending this amount as it relates to these Iatan Unit 1 AQCS and Iatan
common costs in KCP&L’s next rate case.
21. In
the next rate case there will be no additional testimony by any Signatory Party
and no modifications to the prefiled testimony admitted into the record in
this case related to the Iatan Unit 1 AQCS and Iatan common costs in rate base
in this case, or concerning the amount of, or Staff’s basis for, the $4.7
million disallowance recommended by Staff in this case. However,
nothing herein prevents the Signatory parties from placing the prefiled
testimony admitted into the record in this docket related to the aforementioned
review of Iatan Unit 1 AQCS and Iatan common costs into the record of
KCP&L’s next rate case. Any additional testimony by the Signatory
Parties regarding the Iatan Unit 1 AQCS and Iatan common costs is limited to the
context of explaining the reason for including such testimony in the next case
and how it relates to the calculation of the proposed rate base and revenue
requirement in the next rate case.
22. The
remaining $56 million (Kansas jurisdictional, excluding AFUDC) of potential
costs for Iatan Unit 1 AQCS and Iatan common not paid or approved for payment as
of April 30, 2009 and not included in rate base in this case, will be subject to
a prudence review and the Signatory Parties may recommend an associated
disallowance of no more than $2.8 million
(Kansas
jurisdictional) in the next case. Costs not yet paid nor approved for
payment as of April 30, 2009, attributed to R/Os 94, 125, and 135 (as identified
by Mr. Drabinski in his testimony) specifically fall within the aforementioned
$2.8 million cap on the remaining $56 million of potential
costs. Additionally, any costs in this category in excess of the
noted $56 million will not be capped as to the level of disallowance that may be
recommended by any Signatory Party. The limitations on non-KCP&L
Signatory Parties contained in paragraphs 20, 21, and 22 shall not apply if the
Commission finds that KCP&L failed to provide such Signatory Parties with
material and relevant information in its possession, or which should have been
available to KCP&L through reasonable investigation, or in the event the
Commission finds that KCP&L misrepresented facts relevant to this Joint
Stipulation.
D. Miscellaneous
Stipulated Accounting Provisions
23. As
agreed by the Signatory Parties, the following accounting provisions should be
adopted by the Commission:
Rate
Case Expenses
24. The
Commission authorizes KCP&L to establish a regulatory asset for incremental
rate case expenses through the duration of Docket No. 09-KCPE-246-RTS. KCP&L
currently estimates the Kansas jurisdictional regulatory asset will be
approximately $1.0 million at July 31, 2009, and such final amount will be
subject to review in the next rate case. KCP&L is authorized to
amortize this regulatory asset over four (4) years commencing August 1,
2009. The deferred expenses will not receive rate base treatment in
future rate cases.
Surface
Transportation Board (“STB”) Expenses
25. In
Docket No. 06-KCPE-828-RTS, KCP&L was authorized to establish a regulatory
asset with a five (5) year amortization period beginning January 1, 2007 for the
Kansas jurisdictional portion of STB litigation expenses incurred through
December 31, 2006. In Docket No. 07-KCPE-905-RTS, the Commission
reaffirmed this authorization. It also
reaffirmed
that actual STB expenses incurred after December 31, 2006 could also be charged
to this regulatory asset, to be amortized over a five (5) year period beginning
with rates effective in a future rate case under the Rate Plan. The
deferred expenses would not receive any rate base treatment in future rate
cases.
26. In
the current docket, KCP&L reflected the 2008 receipt and projected 2009
receipt of $3.4 million (total Company) of reparations awarded as a result of
the litigation. The Kansas jurisdictional portion of such reparations
net of the Kansas jurisdictional portion of unamortized litigation costs was
projected to be $703,203 at March 31, 2009. KCP&L proposed that
this amount would be returned to Kansas ratepayers over two (2) years though a
reduction of fuel expense in Account 501 beginning with the rates effective in
this proceeding. Such reduction of fuel expense will be included in
the Energy Cost Adjustment (ECA) mechanism. The Signatory Parties
agree that the July 31, 2009 balance of Kansas jurisdictional reparations less
the unamortized Kansas jurisdictional litigation costs will be amortized as a
reduction to fuel expense over two (2) years beginning August 1,
2009.
SO2
Emissions Allowances
27. The
Commission reaffirms its authorization in the 828 Docket for KCP&L’s sale of
SO2 emission allowances through June 1, 2010, including related coal
premiums. KCP&L will continue to record net sales proceeds to a
regulatory liability (Federal Energy Regulatory Commission (“FERC”) Account 254)
and offset rate base for ratemaking purposes. The regulatory
liability will be amortized over a time period to be determined in the Company’s
next rate case, with such amortization reflected in rates beginning with the
rates resulting from that case.
28. KCP&L
currently purchases coal from vendors under contracts that indicate nominal
sulfur content. To the extent that coal supplied has a lower sulfur
content than specified in the contract, KCP&L pays a premium over the
contract price. As authorized by the
Commission
in the 828 Docket, to the extent that KCP&L pays premiums for lower sulfur
coal, the Company will determine the portion of such premiums, net of joint
partners’ shares, that apply to retail sales and record the proportionate costs
of such premiums in FERC Account 254 as a reduction of the regulatory
liability. But in no event will the charges to the Kansas
jurisdictional portion of FERC Account 254 for these premiums exceed $5,000,000
annually. The portion of premiums applicable to retail will be
determined monthly based on the system-wide percentage of MWhs from coal
generation used for retail sales versus wholesale sales as computed by the
hourly energy costing model. This system-wide percentage will be
applied to premiums invoiced during the same period.
Pension
Costs
29. The
Commission approves the treatment of pension and other post-employment benefit
costs as set forth in the attached Appendix A, which is intended to be
consistent with the treatment of pension costs outlined in Appendix C, paragraph
(E) of the 1025 Stipulation.
AFUDC
Rate on Iatan 2
30. The
Commission authorizes KCP&L for purposes of calculating the equity component
of the Allowance for Funds Used During Construction (“AFUDC”) rate on Iatan 2 to
set the equity rate used in the calculation at 8.25%, beginning August 1,
2009.
Depreciation
Rates
31. The
Commission authorizes KCP&L to continue utilizing the depreciation rates set
forth in the attached Appendix B, which are the same rates set out in Appendix
C-2 of the 1025 Stipulation.
Asset
Retirement Obligations and Cost of Removal
32. The
Commission reaffirms its Order in Docket No. 04-WSEE-605-ACT allowing KCP&L
to defer all costs on the balance sheet, for financial reporting purposes,
associated with the adoption of Statement of Financial Accounting Standards No.
143 (“FAS 143”) and Financial
Accounting
Standards Board Interpretation No. 47 (“FIN 47”), including accretion and
depreciation expenses and amounts included for cost of removal in depreciation
rates set forth in Appendix B.
E. Effective
Date of Rates
33. It
is the Signatory Parties’ intent that the rates resulting from this case go into
effect on August 1, 2009. The Signatory Parties respectfully request
that the Commission issue an Order approving this Joint Stipulation on or before
July 24, 2009 in order to facilitate the requested effective date of rates of
August 1, 2009.
F. Timing
and Process for Next Rate Case
34. As
stated in the 1025 Stipulation, KCP&L is required to make a 2009 rate filing
that proposes new rate schedules with an effective date of June 1,
2010. Specifically, ¶5 of Appendix C to the 1025 Stipulation states
that:
KCPL
shall make a 2009 rate filing that proposes new rate schedules with an effective
date of June 1,2010. Any such filing shall be filed with the KCC on or before
August 15,2009. The test year for this filing will be the 12 months ending June
30,2009. As part of such filing, KCPL will agree to extend the deadline for a
Commission final order on the proposed tariff changes to May 10, 2010, pursuant
to K.S.A. 66-1 17(c). The filing may include new investment in plant that is
anticipated to be in-service as of May 31,2010.
35. Because
of the complexities in process and timing encountered in the current case, and
as originally contemplated in ¶6 of the 1025 Stipulation,3 the Signatory Parties recognize that this
filing date set forth in the 1025 Stipulation is no longer appropriate for the
next rate case. Accordingly, the Signatory Parties agree to
collaborate in advance of the filing of KCP&L’s next rate case in order to
establish a procedure for the next rate case that addresses the in-service,
process, and timing problems realized with this current
proceeding. The Signatory
3 ¶6
states:
Because
of the magnitude of these investments and the length of time of the regulatory
plan, KCPL may need to adjust the timing of the above rate filings to reflect
additional information regarding the construction and timing of investments and
other factors. The Signatory Parties agree to work together to adjust the rate
filing schedule to reflect these needs. Such adjustment(s) shall be submitted to
the Commission for approval.
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Parties
to the 1025 Stipulation expressly acknowledge that the changes contained in this
paragraph do not modify in any other respect the terms and conditions of the
1025 Stipulation, and the parties to this agreement who are not signatories to
the 1025 Stipulation are not further bound by the 1025 Stipulation beyond the
terms contained herein.
36. If
the Signatory Parties are unable to agree on the timing and procedures by
September 1, 2009, the matter will be taken to the Commission for determination
prior to the filing of KCP&L’s next rate case. If the Commission
has not ruled on the matter by October 1, 2009, all Signatory Parties agree that
KCP&L may proceed with the filing of its next rate case.
G. Class
Cost of Service
37. KCP&L
agrees to perform and submit in its next rate case, a class cost of service
study that includes: (1) a breakout of each residential water heating
and space heating subclass from the aggregate Residential Service class; and (2)
a breakout of KCP&L’s total allocated cost of service, by rate class, into
separate summer- and winter-related revenue requirement components.
38. KCP&L
agrees that it will work with Staff, CURB, and any other Party to this case as
it prepares its class cost of service study to ensure that the agreed-upon
cost-of-service modifications are appropriately modeled. KCP&L
agrees to accommodate any reasonable request of a Party to this case for
alternative scenario runs under its model.
H. Rate
Design
39. The
Signatory Parties agree that the rates should be apportioned among the
respective classes of customers on an equal percentage basis to the non-ECA
portion of the revenues for each class; and within each rate class, all energy,
demand and service charges (exclusive of the ECA) shall receive a percentage
increase equal to the overall class increase, i.e., each non-ECA rate element
shall receive the same percentage increase.
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I. Green
Tariff
40. Prior
to the filing of its next rate case, KCP&L agrees to work in a collaborative
fashion together
with MUUG, Staff, CURB, and any other
Signatory Party in this rate case to explore the possibility of developing a
green tariff to accommodate the purchase and development of renewable energy in
Kansas. If such a tariff is developed through the collaborative
process, such tariff may be presented to the Commission for review and, if
appropriate, approval.
V. MISCELLANEOUS
PROVISIONS
A. The
Commission's Rights
41. Nothing
in this Joint Stipulation is intended to impinge or restrict, in any manner, the
exercise by the Commission of any statutory right, including the right of access
to information, and any statutory obligation, including the obligation to ensure
that KCP&L is providing efficient and sufficient service at just and
reasonable rates.
B.
Signatory Parties' Rights
42. The
Signatory Parties, including Staff, shall have the right but not the obligation
to present pre-filed testimony in support of this Joint
Stipulation. Such testimony shall be filed formally in the docket and
presented by witnesses at a hearing on this Joint Stipulation.
C. Negotiated
Settlement
43. This
Joint Stipulation represents a negotiated settlement that fully resolves the
issues addressed in this proceeding. The Signatory Parties represent that the
terms of this Joint Stipulation constitute a fair and reasonable resolution of
the issues addressed herein. Except as specified herein, the Signatory Parties
to this Joint Stipulation shall not be prejudiced, bound by, or in any way
affected by the terms of this Joint Stipulation: (a) in any future proceeding;
(b) in any proceeding currently pending under a separate docket; and/or (c) in
this proceeding, should the Commission decide not to approve this Joint
Stipulation in the instant proceeding. If the
Commission
accepts this Joint Stipulation in its entirety and incorporates the same into a
final order without material modification, the Signatory Parties shall be bound
by its terms and the Commission's order incorporating its terms as to all issues
addressed herein and in accordance with the terms hereof, and will not appeal
the Commission's order on these issues or any other outstanding issues, motions,
or petitions in this case.
D. Interdependent
Provisions
44. The
provisions of this Joint Stipulation have resulted from negotiations among the
Signatory Parties and are interdependent. In the event that the Commission does
not approve and adopt the terms of this Joint Stipulation in total, it shall be
voidable and no Signatory Party hereto shall be bound, prejudiced, or in any way
affected by any of the agreements or provisions hereof. Further, in such event,
this Joint Stipulation shall be considered privileged and not admissible in
evidence or made a part of the record in any proceeding.
E. Submission
Of Documents To The Commission Or Staff
45. To
the extent this Joint Stipulation provides for information, documents or other
data to be furnished to the Commission or Staff, such information, documents or
data shall be filed with the Commission and a copy served upon the Commission's
Director of Utilities. Such information, documents or data shall be marked and
identified with the docket number of this proceeding.
IN
WITNESS WHEREOF, the Signatory Parties have executed and approved this
Agreement, effective as of the 18th day of June 2009, by subscribing their
signatures below.
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Respectfully
submitted,
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WILLIAM
G. RIGGINS (#12080)
Vice
President and General Counsel
VICTORIA
SCHATZ (#17478)
Kansas
City Power & Light Company
1201
Walnut
Kansas
City, MO 64141
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FRANK
A. CARO, JR. (#11678)
ANNE
E. CALLENBACH (#18488)
Polsinelli
Shughart PC
6201
College Boulevard, Suite 500
Overland
Park, Kansas 66211
(913)
451-8788
(913)
451-6205 Fax
fcaro@polsinelli.com
acallenbach@polsinelli.com
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/s/
Glenda Cafer
GLENDA
CAFER (#13342)
Cafer
Law Office, LLC
3321
SW 6th
Street
Topeka,
KS 66606
(785)
271-9991
(785)
271-9993 Fax
gcafer@sbcglobal.net
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COUNSEL
FOR KANSAS CITY POWER &
LIGHT
COMPANY
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/s/
Patrick T. Smith
W.
THOMAS STRATTON, JR., # 11916
Chief
Litigation Counsel
PATRICK
T. SMITH, # 18275
Litigation
Counsel
MELISSA
J. HUNSICKER WALBURN, # 19568
Litigation
Counsel
Kansas
Corporation Commission
1500
SW Arrowhead Rd.
Topeka,
Kansas 66604-4027
Phone:
(785) 271-3196
Fax:
(785) 271-3167
p.smith@kcc.ks.gov
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ATTORNEYS
FOR STAFF
/s/
C. Steven Rarrick
DAVID
SPRINGE (#15619)
NIKI
CHRISTOPHER (#19311)
C.
STEVEN RARRICK (#13127)
Citizens'
Utility Ratepayer Board
1500
SW Arrowhead Road
Topeka,
KS 66604
d.springe@curb.kansas.gov
s.rarrick@curb.kansas.gov
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ATTORNEYS
FOR CURB
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/s/
J. Michael Peters
J.
MICHAEL PETERS (#7457)
KANSAS
ELECTRIC POWER
COOPERATIVE,
INC.
P.
O. Box 4877
Topeka,
KS 66604-0877
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COUNSEL
FOR KANSAS ELECTRIC
POWER
COOPERATIVE, INC.
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