f8kmpscsettle.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): April 21,
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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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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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 Aquila, Inc., which does business as KCP&L Greater
Missouri Operations Company (KCP&L 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 KCP&L 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 KCP&L 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 KCP&L
GMO.
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Item
8.01
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Other
Information
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On April
21, 2009, KCP&L and other parties to KCP&L’s pending rate case before
the Missouri Public Service Commission (the “MPSC”) informed the MPSC that they
had reached an agreement in principle to settle the pending rate
case. The document filed with the MPSC setting forth the terms of the
agreement in principle and a press release announcing the agreement in principle
are attached as Exhibits 99.1 and 99.2, respectively and are incorporated herein
by reference. The agreement in principle provides, among other
things, for an increase in annual revenues of approximately $95 million
effective September 1, 2009, with $10 million of that amount treated for
accounting purposes as additional amortization. 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 Missouri jurisdictional portion of any proposed rate
base prudence disallowances will not exceed $30 million in
aggregate.
The
agreement in principle is subject to the parties negotiating and submitting a
stipulation and agreement (the “agreement”) to the MPSC for its
consideration. The agreement will be subject to MPSC approval, and
will be voidable if not approved in its entirety. It is possible that
the MPSC may approve the agreement with changes, or may not approve the
agreement.
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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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99.1
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Terms
of agreement in principle filed with the Missouri Public Service
Commission on April 21, 2009
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99.2
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Press
Release issued April 21, 2009
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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/
Michael W. Cline
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Michael
W. Cline
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Vice
President – Investor Relations and
Treasurer
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KANSAS
CITY POWER & LIGHT COMPANY
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/s/
Michael W. Cline
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Michael
W. Cline
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Vice
President – Investor Relations and
Treasurer
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Date: April
21, 2009.
ex99_1.htm
Exhibit
99.1
KCP&L
1.) Revenue
Requirement
$95
million effective September 1, 2009, with an in-service date of May 30, 2009,
in-service defined by meeting Staff's in-service criteria. $10 million of this
amount would be comprised of Additional
Amortizations.
2.) Rate
Design
Rate
design to be an equal percentage across
the board
for each rate class. ,LPS rate
design to be spread between the first two energy blocks, and all demand and
service charges on an equal percentage basis of the overall class increase.
Separately metered space heating and the winter energy rate blocks of the
all-electric rates for general service classes shall be increased by an
additional 5% above the equal percentage increase. The Company agrees with
changing the interest rate on deposits.
3) Customer
Class Cost of Service Study
KCP&L
agrees to file a Customer Class Cost of Service Study case initiated by
KCP&L making a filing with the Missouri Public Service Commission by
December 31, 2009.
4) Vegetation
Management and Infrastructure Inspection
There
shall be no tracker for vegetation management or
infrastructure
inspection activities, but KCP&L shall create subaccounts for each where the
costs for these activities shall be booked for KCP&L. KCP&L shall
submit
quarterly
reports detailing the vegetation management activities and expenses in the
KCP&L Missouri jurisdictional service territory to the Commission's Energy
Department.
The
Company accepts the Parties' recommendation and agrees to
maintain
records to separately identify the costs to implement the Commission's new
Vegetation Management regulations between Missouri and Kansas using Federal
Energy Regulatory Commission accounts 593000 (distribution) and 571005-571006
(transmission), department 252. The Company is in the process of setting up
appropriate accounts to track Infrastructure and Reliability Reporting
costs.
5.)
Pension expense - Subject to agreement among the Parties.
6.)
Prudency and in-service timing of latan 1
No Party
to this agreement shall argue that anyone is
prohibited
from arguing or presenting evidence in the next KCP&L general rate case
challenging the prudence of any latan 1 construction cost or that KCP&L
should have had this unit operating at full generation capacity sooner than the
actual date that latan 1 is found to be fully operational and used for service,
provided that
any proposed disallowance of rate base for imprudence under this paragraph shall
be limited to a maximum amount of Missouri jurisdictional rate base no greater
than $30 Million inclusive of latan common costs. KCP&L represents that
latan 1 and latan common costs will not exceed $733 Million on a total project
basis. Should the Commission find that KCP&L, respecting any Party's
construction audit of these costs, (a) failed to provide material and relevant
information which was in KCP&L's control, custody, or possession, or which
should have been available to KCP&L through reasonable investigation, (b)
misrepresented facts relevant to charges to latan 1 or latan common costs, or
(c) engaged in the obstruction of lawful discovery, said Party is not bound to
proposing a disallowance to KCP&L's Missouri jurisdictional rate base no
greater than $30 Million inclusive of latan common costs in aggregate amount
with regard to such construction audit. KCP&L shall maintain Caseworks for
the use of the Parties. The Parties may continue their construction audits of
latan 1 and latan 2 prior to KCP&L filing its latan 2 rate case. KCP&L
will facilitate the resolution of all outstanding discovery disputes with the
Parties and cooperate with the Parties in any construction audits of latan 1 and
latan 2. KCP&L shall have the right to object, or to continue to object, to
discovery of the Parties under applicable law or Commission rule. KCP&L and
the Parties will seek the timely resolution of discovery disputes.
KCP&L
will provide to NNSA/DOE/FEA the latan portion of all reports provided to the
KCP&L Regulatory Plan Signatory.
Parties.
7.)
Allocations of common plant for latan 1 and 2
The
Parties agree that the Company can record to a regulatory asset the depreciation
and carrying costs associated with the latan 1 Air Quality Control System
("AQCS") and identified latan common facilities costs appropriately recorded to
Electric Plant in Service that are not included in rate base in the current rate
case. Depreciation and carrying costs will continue to be deferred to the
regulatory asset until the date new rates become effective resulting from the
Company's next general rate case. Amortization of the accumulated deferred costs
will begin at that time based on the depreciable life of the latan 1 AQCS
plant.
The
determination of the value of the owners of latan 1 due from other owners of
latan 2 joining as additional owners of common plant already paid for by the
latan
1 owners
has not been calculated.
If
Staff's in-service criteria are met by May 30, 2009, Staff would agree to
"construction accounting" for remaining latan 1 prudent costs
incurred
post true-up cutoff as "construction accounting" is defined in KCP&L's
Regulatory Plan, page 43, Section III, 3. d. vii, approved by the Commission in
Case No. EO-2005-0329, subject to agreement of the parties of the amount to
include in rates in this case and agreement of parties of date by which invoices
are timely booked or approved for payment. Any deferred depreciation expense and
carrying costs will be offset by accumulated deferred income taxes on this
plant. The deferred depreciation expense will be charged to the depreciation
reserve as required by normal accounting. The deferred expenses will receive
rate base treatment, and consistent with the Commission treatment of these type
of deferrals, the deferred income taxes will be included in rate base. KCP&L
must commit to calculate the amount due from the other latan 2 owners and
reflect that amount as an offset to the common plant costs. The carrying costs
will be calculated at the rate used for latan 2.
8.) Additional
Amortizations
The total
"additional amortization" that will be reflected in
rates
beginning with the billing month beginning September 1, 2009 as a result of the
settlement of the instant Case No. ER-2009-0089 and the
Commission
determinations in Case Nos. ER-2006-0314 and ER-2007-0291 shall be $42,402,888.
The "additional amortization" amount due to the settlement of the instant Case
No. ER-2009-0089 shall be the last "additional amortization" under the KCP&L
Experimental Regulatory. Plan incorporated in the Stipulation and Agreement that
the Commission approved in Case No. EO-2005-0329.
9.) AFUDC
Rate
For
purposes of determining the AFUDC rate for latan 2 and the carrying cost rate
for any Accounting Authority Order established from this case for latan 1, the
AFUDC equity rate will be the lower of 8.25% or 250 basis points less than the
return on equity ordered in the pending KCP&L Greater Missouri Operations
Company rate case, Case No. ER-2009-0090.
10.)
Surveillance reporting
For
surveillance reporting purposes, until changed by agreement of the parties or
order of the Commission, the following jurisdictional allocators shall be
used:
a. All
environmental-related production assets allocated with the same allocator used
for the production facility where those environmental-related production assets
are installed, for the life of those environmental-related production
assets;
b.
Off-System Sales margins allocated using the energy allocator; c. All non-fuel
Production and Transmission O&M allocated using the demand allocator; and d.
Transmission and Production facilities allocated using the 4CP demand allocator
(June, July, August and September).
11.) Economic
Relief Pilot Program ("ERPP")
The
Parties agree that the Company can defer 50% of ERPP costs in a regulatory asset
until the next rate case, with cost recovery to be determined at that time. The
remaining 50% of cost will be borne by the Company's shareholders.
The
Company agrees to address all concerns raised by Staff in rebuttal testimony;
specifically, the language regarding discontinuation of customer participation,
and the language regarding reinstatement of former participants, as contained in
Attachment Schedule ADD-2 to Company witness Allen Dennis's Surrebuttal
Testimony.
12.) Wolf
Creek Refueling Cost
The
Parties agree that $1,570,581 (Missouri jurisdictional) of Outage #16 operations
& maintenance refueling costs will be deferred in a regulatory asset account
and amortized over five years beginning with the date new rates become effective
in this rate case, with one-fifth of this cost included in cost of service in
this case. No rate base treatment of unamortized balance.
13.) Surface
Transportation Board ("STB") Litigation
The
Parties agree that the Missouri jurisdictional excess of STB litigation proceeds
over un-recovered STB litigation costs of $_________ will be
deferred
in a regulatory liability account and amortized over ten years beginning with
the date new rates become effective in this rate case, with one year's
amortization included in cost of service in this case. No rate base treatment of
unamortized balance.
14.) Off-system
Sales ("OSS") Margins – Excess Over 25th Percentile for 2007 and
2008
The
Parties agree that the $1,082,974 (Missouri jurisdictional) excess of 2007 OSS
margins over the amount included in rates in Case No. ER-2006-0314 and the
$2,947,332 (Missouri jurisdictional) excess of 2008 OSS margins over the amount
included in rates in Case No. ER-2007-0291, together with interest (Missouri
jurisdictional), will be deferred in a regulatory liability account and
amortized over ten years beginning with the date new rates become effective
in
this rate
case, with one year's amortization included in cost of service in this case,
Case No. ER-2009-0089. No rate base treatment of unamortized
balance.
15.) Deferred
DSM Advertising Costs
The
Parties agree that $279,521 (Missouri jurisdictional) of 2007 advertising costs
will be deferred in a regulatory asset account and amortized over ten years
beginning with the date new rates become effective in this rate case, with
one-tenth of this cost included in cost of service in this case. No rate base
treatment of unamortized balance as agreed to in the KCP&L Regulatory
Plan.
16.) Off-system
sales tracker
KCP&L's
off-system sales margins at the 25th percentile shall be set at $30 Million, and
shall be used for tracking purposes. Such tracker will reflect a proration,
on a monthly basis, of this amount for any partial years consistent with the
percent of actual off-system sales realized in each month of 2008. All OSS
margins will be tracked against the $30 Million baseline.
What constitutes OSS margins is to be determined in a subsequent rate
case.
17.) Rate
Case Expense
Any
over-recovery of the amortization of the Case No. ER-2006-0314 rate case expense
will be used to offset the deferral of rate case expense in this case, Case No.
ER-2009-0089.
18) The
KCP&L and the Parties agree that the following costs are not included in the
rate levels contained in this agreement:
Sporting
events, golf, Worlds of Fun, dues and donations, lobbying, image or
institutional advertising, spousal travel, local meal expenses, officer expense
reports, and catering expense.
The
KCP&L and the Parties reserve the right to seek inclusion or oppose
inclusion of these costs in a future rate
case.
ex99_2.htm
EXHIBIT
99.2
GREAT
PLAINS ENERGY REPORTS
AGREEMENT
IN PRINCIPLE IN KCP&L MISSOURI RATE CASE
Kansas City, Mo. (April 21, 2009)
— Great Plains Energy (NYSE: GXP) today announced that Kansas
City Power & Light Company (KCP&L) and other parties to KCP&L’s
pending rate case before the Missouri Public Service Commission (MPSC) informed
the MPSC that they had reached an agreement in principle to settle the pending
rate case. The agreement in principle provides, among other things,
for an increase in annual revenues of approximately $95 million effective
September 1, 2009, with $10 million of that amount treated for accounting
purposes as additional amortization. Parties may challenge the
prudence of the cost of the Iatan 1 environmental project and the cost of
facilities used in common by Iatan 1 and 2 in KCP&L’s next rate case, but
the Missouri portion of any proposed rate base prudence disallowance will not
exceed $30 million in aggregate.
The
agreement in principle is subject to the parties negotiating and submitting a
stipulation and agreement to the MPSC for its consideration. The
stipulation will be subject to MPSC approval, and will be voidable if not
approved in its entirety. It is possible that the MPSC may approve
the stipulation with changes, or may not approve the stipulation. The
terms of the agreement in principle have been filed by the Company with the
Securities and Exchange Commission today in an 8-K filing.
“The
settlement filed today reflects the hard work and good faith of the parties,”
said Mike Chesser, Great Plains Energy Chairman and CEO. “We believe
the agreement is a fair settlement for all the parties involved and we look
forward to approval by the Commission.”
This is
KCP&L's third of four rate cases associated with its Comprehensive Energy
Plan (CEP). KCP&L initially sought to increase Missouri annual
revenues by $101.5 million, including $15.1 million in additional amortization
to aid KCP&L with cash flow during the construction phase of the
CEP. KCP&L’s Missouri rates are now about 25-30% percent below
the national average, and are expected to still be among the lowest in the
nation after the new rates become effective.
About The
Companies:
Headquartered
in Kansas City, Mo., Great Plains Energy Incorporated (NYSE: GXP) is the holding
company of Kansas City Power & Light Company and KCP&L Greater Missouri
Operations Company, two of the leading regulated providers of electricity in the
Midwest. Kansas City Power & Light and KCP&L Greater Missouri
Operations use KCP&L as a brand name. More information about the
companies is available on the Internet at: www.greatplainsenergy.com
or www.kcpl.com.
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FORWARD-LOOKING
STATEMENTS
Statements
made in this release 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, Kansas City Power & Light (KCP&L) and KCP&L Greater Missouri
Operations Company (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
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 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. Other risk factors are detailed from time to time in
Great Plains Energy’s and KCP&L’s most recent quarterly reports on Form 10-Q
or annual reports on Form 10-K filed with the Securities and Exchange
Commission. This list of factors is not all-inclusive because it is
not possible to predict all factors.
Great
Plains Energy Contacts:
Investors:
Ellen Fairchild, director investor relations, 816-556-2083,
ellen.fairchild@kcpl.com
Media:
Katie McDonald, manager external communications, 816-556-2365,
katie.mcdonald@kcpl.com
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