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As filed with the Securities and Exchange Commission May 8, 2001
File No. 70-9861
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
AMENDMENT NO. 1
TO
FORM U-1
APPLICATION/DECLARATION
UNDER THE
PUBLIC UTILITY HOLDING COMPANY ACT OF 1935
-----------------------------------
Great Plains Energy Incorporated
(and subsidiaries identified on signature page)
1201 Walnut Street
Kansas City, Missouri 64106
(Names of companies filing this statement and addresses of
principal executive offices)
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Great Plains Energy Incorporated*
(Name of top registered holding company parent
of each applicant or declarant)
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Bernard J. Beaudoin
Chief Executive Officer
Great Plains Energy Incorporated
1201 Walnut Street
Kansas City, Missouri 64106
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The Commission is requested to mail copies of all orders, notices and
other communications to:
William G. Riggins, Esq. Nancy A. Lieberman, Esq.
General Counsel W. Mason Emnett, Esq.
Kansas City Power & Light Company William C. Weeden
1201 Walnut Street Skadden, Arps, Slate,
Kansas City, Missouri 64106 Meagher & Flom LLP
1440 New York Avenue, N.W.
Washington, D.C. 20008
*Great Plains Energy Incorporated will register as a public utility holding
company upon completion of the reorganization described in Item 1 of this
Application/Declaration.
TABLE OF CONTENTS
Item 1. Description of the Proposed Transaction....................................................2
A. Description of the Applicants..........................................................2
1. KCPL .........................................................................2
2. Nonutility Subsidiaries.......................................................5
B. Capitalization of KCPL and its Subsidiaries............................................9
C. Reasons for the Reorganization........................................................12
D. Description of the Reorganization.....................................................13
E. Post-Reorganization Financing.........................................................14
1. External Financing...........................................................15
2. Guarantees and Other Forms of Credit Support.................................22
3. Hedging Transactions.........................................................23
F. Other Financing Transactions..........................................................24
1. Changes in Capital Stock of Subsidiaries.....................................25
2. Financing Subsidiaries.......................................................25
3. Intermediate Subsidiaries....................................................26
4. Payment of Dividends out of Capital and Unearned Surplus.....................30
G. Intrasystem Service Arrangements......................................................31
H. Certificates of Notification..........................................................32
Item 2. Fees, Commission and Expenses.............................................................33
Item 3. Applicable Statutory Provisions...........................................................34
A. General...............................................................................34
B. Compliance with Rules 53 and 54.......................................................34
Item 4. Regulatory Approvals......................................................................35
Item 5. Procedure.................................................................................36
Item 6. Exhibits and Financial Statements..........................................................36
A. Exhibits..............................................................................36
B. Financial Statements..................................................................37
Item 7. Information as to Environmental Effects...................................................38
Introduction and Request for Commission Action
Kansas City Power & Light Company ("KCPL"), a Missouri
corporation, is a public utility company currently not subject to the
jurisdiction of the Commission pursuant to the Public Utility Holding
Company Act of 1935, as amended (the "Act"). Pursuant to a corporate
reorganization (the "Reorganization"), KCPL proposes to adopt a new
corporate structure in which KCPL will become a wholly-owned subsidiary of
a newly formed holding company. Specifically, KCPL will form a new
subsidiary, Great Plains Energy Incorporated, a Missouri corporation
("Great Plains Energy"), which in turn will form another new subsidiary, KC
Merger Sub Incorporated, a Missouri corporation ("NewCo"). KCPL then will
merge with and into NewCo, with KCPL as the surviving corporation,
resulting in KCPL becoming a wholly-owned subsidiary of Great Plains
Energy. Finally, KCPL will dividend up to Great Plains Energy two of KCPL's
nonutility subsidiaries, KLT Inc. and Great Plains Power, Inc., such that
they also become wholly-owned subsidiaries of Great Plains Energy.
Following completion of the Reorganization, Great Plains Energy will
register as a public utility holding company pursuant to Section 5 of the
Act. (KCPL, Great Plains Energy, and the other KCPL subsidiaries identified
on the signature page are collectively referred to herein as the
"Applicants.")
This Application/Declaration seeks authorization and approval with
respect to certain on-going financial activities of Great Plains Energy and
its subsidiaries following completion of the Reorganization and the
approval of certain affiliate arrangements and other related matters. To
the extent necessary, Great Plains Energy also requests the Commission make
findings under Section 11(b)(1) of the Act that (i) the electric utility
system of Great Plains Energy constitutes an "integrated" electric utility
system within the meaning of Section 2(a)(29) of the Act and (ii) the
nonutility operations of Great Plains Energy and its subsidiaries may be
retained. Finally, Great Plains Energy requests Commission authorization
pursuant to Section 9(a)(1) for KCPL and Great Plains Energy to engage in
certain leasing transactions and authorization pursuant to Sections 12 and
13 for certain intrasystem transactions.
Item 1. Description of the Proposed Transaction
A. Description of the Applicants
1. KCPL
KCPL is an electric utility company engaged in the
generation, transmission, distribution, and sale of electric energy in
Missouri and Kansas. KCPL owns approximately 3,700 MW of generation and
provides retail electric service to approximately 467,000 customers in
Kansas and Missouri, serving retail customers in the region in and around
the Kansas City metropolitan area.(1) The Restated Articles of
Consolidation and By-laws of KCPL are attached hereto at Exhibits A-1 and
A-2, respectively. A map showing the service area of KCPL also is provided
at Exhibit E-1.
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1 KCPL also engages in limited gas brokering activities, as permitted
under Rule 58(b)(v).
KCPL is subject to the regulatory jurisdiction of the
Missouri Public Service Commission ("MPSC") and the Corporation Commission
of the State of Kansas ("KCC") with respect to its retail operations. KCPL
also is subject to regulation of the Federal Energy Regulatory Commission
(the "FERC") with respect to its wholesale and transmission-related
operations and the Nuclear Regulatory Commission (the "NRC") with respect
to licensing and operation of its nuclear generating units.
For the year ended December 31, 2000, KCPL had consolidated
operating revenues of approximately $1.1 billion, resulting in a net income
of approximately $159 million. For the year ended December 31, 2000, KCPL
derived $952 million of its operating revenues from regulated sales of
electricity and electric transmission service. At December 31, 2000, KCPL
had consolidated total assets of approximately $3.3 billion, including
approximately 1,700 miles of transmission lines, approximately 8,900 miles
of overhead distribution lines, and approximately 3,400 miles of
underground distribution lines.
The KCPL system constitutes an "integrated" electric utility
system within the meaning of Section 2(a)(29)(B) of the Act.(2) KCPL serves
a single intercon nected region surrounding the Kansas City metropolitan
area. All of the operations of KCPL, including customer billing, call
center operations, equipment operations and maintenance, and electricity
purchasing, among others, are planned and conducted on a central,
system-wide basis. The principal executive offices of KCPL are located in
Kansas City, Missouri. As described below, KCPL is subject to regulation
with respect to rates, service, and other matters in both of the
jurisdictions in which it operates. Accordingly, the Commission should find
that the area or region served by the Company is not so large as to impair
the advantages of efficient operation, localized management and
effectiveness of regulation.
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2 Under Section 2(a)(29)(A) of the Act, an integrated gas utility system
is defined to mean:
a system consisting of one or more units of generating
plants and/or transmission lines and/or distributing
facilities, whose utility assets, whether owned by one or
more electric utility companies, are physi cally
interconnected or capable of physical interconnection and
which under normal conditions may be economically operated
as a single interconnected and coordinated system confined
in its operations to a single area or region, in one or more
States, not so large as to impair (considering the state of
the art and the area or region affected) the advantages of
localized management, efficient operation, and the
effectiveness of regulation . . . .
KCPL currently leases certain utility assets for use in
providing electric service within its service territory. Two of these
leases are for transmission assets, and one lease is for a combustion
turbine. The first transmission line lease is with Kansas Gas and Electric
Company, a wholly-owned subsidiary of Western Resources, Inc., for the Wolf
Creek/LaCygne transmission line pursuant to a tariff on file with the FERC.
Commitments under this lease total $1.9 million per year through September
2025, unless the lease is otherwise cancelled. The second transmission line
lease is with Associated Electric Cooperative, Inc. for KCPL's share of
certain Joint Facilities, as defined in the Coordinating Agreement by and
among Associated Electric Cooperative, Inc., Kansas City Power & Light
Company, St. Joseph Light & Power Company, Nebraska Public Power Distric,
Omaha Public Power District, City of Lincoln and Iowa Power Inc. for the
Cooper - Fairport - St. Joseph 345 Kilovolt Interconnection. KCPL also
makes payments to St. Joseph Light & Power for certain Joint and Terminal
Facilities related to the Cooper - Fairport - St. Joseph 345 Kilovolt
Interconnection. The total of all payments is less than $0.5 million per
year. Payments associated with this second lease also are made pursuant to
a tariff on file with the FERC. Finally, the combustion turbine lease is
with First Security Bank, N.A. as Owner Trustee which expires in October
2001, unless extended by mutual agreement of KCPL and the lessor. This
lease also may be extended through the execution of alternative leasing
arrangements with other nonaffiliated parties replacing First Security Bank
as Owner Trustee.
KCPL also leases from nonaffiliates a number of railcars for
the purpose of delivering fuel to KCPL's electric generating plants. When
these railcars are not being used by KCPL for its fuel deliveries, KCPL
subleases them to other utilities for purposes of fuel deliveries. Certain
of these subleases are made pursuant to a Unit Train Exchange Agreement,
which effectively aggregates the equipment of participating plant owners to
create a pool of available train equipment at any one particular time.
Charges for using another plant owners' equipment are assessed at a market
specified price on a trip-by-trip basis.(3) In 1998, KCPL also entered into
a sublease for 220 steel railcars for the remaining five years of a 15 year
lease in order to accelerate the acquisition of more economical aluminum
railcars.
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3 The Commission has authorized subsidiaries of registered holding
companies to offer nonassociates equipment and facilities acquired for
their own pur poses during periods of nonutilization. See Indiana &
Michigan Electric Co., Holding Co. Act Release No. 24039 (Mar. 4,
1986) (use of coal transporta tion equipment); Ohio Power Co., Holding
Co. Act Release No. 25427 (Dec. 11, 1991) (railcar repair service).
In addition, KCPL holds contracts for delivery of five
combustion turbines. Following the Reorganization, KCPL may transfer these
contracts to Great Plains Power, an exempt wholesale generator ("EWG")
affiliate described below. In the alternative, KCPL may transfer these
contracts to nonaffiliated parties that, in turn, would lease the delivered
turbines to KCPL or Great Plains Power for use in Great Plains Power's
EWGs. In either case, since the turbines will be used in eligible
facilities within the meaning of Section 32 of the Act, the turbines will
not be utility assets within the meaning of Section 2(a)(18) of the Act.
To the extent any of these activities or leases require
approval of the Commission pursuant to Section 9(a)(1), Section 12, Section
13, or any other Section of the Act or rules thereunder, request for such
authorization is hereby made.
2. Nonutility Subsidiaries
In addition to its regulated utility operations, KCPL
wholly-owns the following Nonutility Subsidiaries:(4) WYMO Fuels, Inc., a
Missouri corporation ("WYMO"); Home Service Solutions, Inc., a Missouri
corporation ("Home Service"); KCPL Receivable Corporation, a Delaware
corporation ("KCPL Receivable"); KLT Inc., a Missouri corporation ("KLT");
and Great Plains Power, Incorporated, Missouri corporation ("Great Plains
Power").(5) During the Reorganization, KCPL will dividend up to Great
Plains Energy its interests in KLT and Great Plains Power, which will
become wholly-owned subsidiaries of Great Plains Energy. KCPL Receivable
will remain a wholly-owned subsidiary of KCPL, as will WYMO and Home
Service until they are dissolved or otherwise disposed of, as discussed
below. To the extent required, KCPL requests the Commission determine that
all of the direct and indirect Nonutility Subsidiaries described herein are
retainable under the standards of Section 11(b)(1) of the Act.
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4 As used in this Application/Declaration, the term Nonutility
Subsidiaries means (i) each of the existing nonutility subsidiaries of
KCPL and their respective subsidiaries and (ii) after Great Plains
Energy registers as a public utility holding company pursuant to
Section 5 of the Act, any direct or indirect nonutility company
acquired or formed by Great Plains Energy or its nonutility
subsidiaries in a transaction that has been approved by the Com
mission or otherwise exempt under the Act or rules thereunder.
5 As described above, KCPL also has formed Great Plains Energy, which in
turn will form NewCo. Great Plains Energy and NewCo are held by KCPL
exclusively for the purpose of effectuating the Reorganization.
For the year ended December 31, 2000, KCPL reported
consolidated operating revenues of $1.1 billion, of which approximately
$952 million (85%) were derived from regulated sales of electricity and
electric transmission service and approximately $164 million (15%) were
derived from activities of the Nonutility Subsidiaries. Applicants request
that investments in Nonutility Subsidiaries prior to the date of the
Reorganization be disregarded for purposes of calculating the dollar
limitation placed on Great Plains Energy for such investments under Rule
58.(6)
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6 The Commission previously has determined that it is appropriate to
disregared existing investments in "energy-related companies" of to-be
registered holding companies for purposes of Rule 58, as such
companies were not subject to the restrictions of Section 11(b)(1) at
the time such investments were made. See, e.g., New Century Energies,
Inc., Holding Co. Act Release No. 26748 (Aug. 1, 1997); Dominion
Resources, Inc., Holding Co. Act Release No. 27113 (Dec. 15, 1999).
a. WYMO
WYMO was established to acquire and develop coal properties
in Wyoming, but is in the process of divesting its assets, upon
consummation of which WYMO will be dissolved.
b. Home Service
Home Service is an intermediate holding company that owns a
100 percent interest in Worry Free Services, Inc., which assists
residential customers in obtaining financing primarily for heating and air
conditioner equipment,(7) and a 49.4 percent interest in R.S. Andrews
Enterprise, Inc., a consumer services company. Home Service currently is in
the process of divesting R.S. Andrews. It is anticipated that following the
divestiture of R.S. Andrews, Home Service will be sold or otherwise
disposed of.
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7 See Rule 58(b)(1)(iv).
c. KCPL Receivable
In 1999, KCPL entered into a revolving agreement to sell all
of its right, title and interest in the majority of its customer accounts
receivable to KCPL Receivable, a special purpose entity established to
purchase customer accounts receivable from KCPL.(8) Accounts receivable sold
under the agreement totaled $108.2 million at December 31, 2000.
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8 See CP&L Energy, Inc., Holding Co. Act Release No. 27284 (2000);
Central and South West Corporation, Holding Co. Act Release No. 23578
(Jan. 22, 1985).
d. KLT
KCPL consolidates the majority of its nonutility business
ventures in KLT, an intermediate holding company.(9) KLT's subsidiaries,
described below, primarily engage in energy-related services and natural
gas development.(10)
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9 The Commission has authorized registered holding companies to form and
capitalize intermediate nonutility subsidiaries to act as holding
companies over other nonutility subsidiaries. See, e.g., The Southern
Company, Holding Co. Act Release No. 27134 (Feb. 9, 2000); Exelon
Corp., Holding Company Act Release No. 27256 (Oct. 19, 2000).
10 KLT also wholly-owns Energetechs, Inc., which currently is inactive.
o KLT Investments Inc. ("KLT Investments") invests, as a limited
partner, in affordable housing partnerships that provide tax benefits
to the consolidated group. KLT Investments's portfolio consists of
interests in over 700 affordable housing projects and approximately
47,000 rental units located in 46 states, the District of Columbia and
Puerto Rico.(11)
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11 The Commission has authorized similar investments by registered
holding companies in a number of cases, most recently in Nisource
Inc., Holding Co. Act Release No. 27263 (Oct. 30, 2000) ("Nisource").
o KLT Investments Inc. II ("KLT Investments II") pursues passive
investments in community, economic development and energy-related
opportunities, primarily through venture capital funds. KLT
Investments II is also a 25% owner of a company that bought and
renovated a historic hotel in downtown Kansas City (now the Kansas
City Marriott hotel).912)
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12 These investments are consistent with recent SEC orders describing
"good citizen" investments and Rule 58 type investments. See, e.g.,
Nisource, supra; Ameren Corp., Holding Co. Act Release No. 26809 (Dec.
30, 1997).
o KLT Energy Services Inc. ("KLT Energy Services") and its subsidiaries
invest in companies which provide products and services to customers
to control the amount, cost and quality of electricity to commercial
and industrial customers, provide demand-side management services,
power supply coordination (including purchasing electricity at
wholesale for resale to end users), gas management, energy consulting,
generation optimization (such as scheduling and dispatching
generation) and wholesale marketing services.(13)
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13 KLT Energy Services and each of its subsidiaries are energy-related
compa nies within the meaning of Rule 58.
o KLT Gas Inc. ("KLT Gas") owns and operates interests in oil and gas
producing properties and invests in companies which in turn own and
operate interests in oil and gas producing properties, some of which
are in or near KCPL's retail electric service territory. KLT Gas'
primary focus is on coal bed methane producing properties, but also
has a 50% working interest in natural gas producing properties in
south Texas. KLT Gas and the companies in which it invests produce and
gather gas, which is then transported on third-party pipelines and
sold at wholesale. KLT Gas and its investments do not own interstate
pipelines or local distribution facilities, and do not sell gas at
retail. KLT Gas also owns FAR Gas Acquisitions Corporation, which
holds limited partnership interests in coal bed methane gas well
properties.(14)
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14 See Rule 58(b)(ix).
o KLT Telecom Inc. ("KLT Telecom") pursues investment opportunities in
telecommunications and wireless technology. KLT Telecom is a 83% owner
of Digital Teleport, Inc., a St. Louis based competitive access
provider and inter-exchange carrier, which is developing a national
fiber optic network.(15)
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15 KLT Telecom will qualify as an exempt telecommunications company under
Section 34 of PUHCA.
e. Great Plains Power
KCPL recently created Great Plains Power, a wholly-owned
subsidiary, to hold interests in EWGs acquired after the reorganization.16
Great Plains Power currently has no assets.
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16 Under Section 32 of the Act and rules thereunder, registered holding
compa nies are authorized to acquire interests in EWGs.
B. Capitalization of KCPL and its Subsidiaries
As of December 31, 2000, KCPL had issued 61,908,726 shares
of common stock without par value. KCPL held 60,841 shares as of December
31, 2000 of its common stock to be used for future distribution resulting
in 61,847,885 shares of common stock outstanding. In addition, as of
December 31, 2000, KCPL has issued and outstanding five series of preferred
stock: 100,000 shares of 3.80% cumulative preferred stock, $100 par value;
100,000 shares of 4.50% cumulative preferred stock, $100 par value; 70,000
shares of 4.20% cumulative preferred stock, $100 par value; 120,000 shares
of 4.35% cumulative preferred stock, $100 par value; and, 6,357 shares of
4.00% cumulative redeemable preferred stock, $100 par value.(17) KCPL's
common stock and three of the five series of KCPL's preferred stock are
listed for trading on the New York Stock Exchange.
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17 One series of KCPL's preferred stock - the 4.00% cumulative preferred
stock - will be redeemed prior to or in connection with consummation
of the Reorganization. As of December 31, 2000, 5,734 of the 6,357
outstanding shares were held by KCPL to meet future sinking fund
requirements.
KCPL has three business trusts formed under the laws of the
State of Delaware (KCPL Financing I, II, and III). These trusts exist for
the sole purpose of issuing Trust Originated Preferred Securities (TOPrs)
and investing the proceeds in an equivalent amount of Junior Subordinated
Deferrable Interest Debentures of KCPL. In 1997, KCPL Financing I (the
"Trust") issued $150,000,000 of 8.3% preferred securities. The sole asset
of the Trust is the $154,640,000 principal amount of 8.3% Junior
Subordinated Deferrable Interest Debentures, due 2037, issued by KCPL. The
terms and interest payments on these debentures correspond to the terms and
dividend payments on the preferred securities. KCPL deducts these payments
for tax purposes. KCPL may elect to defer interest payments on the
debentures for a period up to 20 consecutive quarters, causing dividend
payments on the preferred securities to be deferred as well. In case of a
deferral, interest and dividends will continue to accrue, along with
quarterly compounding interest on the deferred amounts. KCPL may redeem all
or a portion of the debentures after March 31, 2002. If KCPL redeems all or
a portion of the debentures, the Trust must redeem an equal amount of
preferred securities at face value plus accrued and unpaid distributions.
The back-up undertakings in the aggregate provide a full and unconditional
guarantee of amounts due on the preferred securities. Further information
regarding these securities can be found in the Form S-3 filed on December
18, 1996, attached hereto at Exhibit C-1 and incorporated by reference.
KCPL is authorized to issue mortgage bonds under the General
Mortgage Indenture and Deed of Trust dated December 1, 1986, as
supplemented. This indenture creates a mortgage lien on substantially all
utility plant. As of December 31, 2000, mortgage bonds secured $444.8
million of medium-term notes and revenue refunding bonds. KCPL is
prohibited from issuing additional general mortgage bonds while its
unsecured medium-term notes are outstanding and remain unsecured. Further
information regarding this mortgage can be found in the Form 10-K for KCPL,
attached hereto at Exhibit G-1.
During 2000, KCPL issued $200 million of unsecured, floating
rate medium-term notes and $250 million of unsecured senior notes. KCPL is
authorized to issue an additional $150 million of debt securities under its
shelf registration statement dated November 21, 2000, which is attached
hereto at Exhibit C-2 and incorporated by reference.
During 2000, KLT renegotiated its existing $125 million bank
credit agreement collateralized by the capital stock of KLT's direct
subsidiaries from short-term to a three-year revolving credit agreement
that matures in 2003. At December 31, 2000, KLT had repaid amounts borrowed
during 2000 under the new agreement.
The affordable housing notes at KLT Investments are
collateralized by the affordable housing investments. Most of the notes
also require the greater of 15% of the outstanding note balances or the
next annual installment to be held as cash, cash equivalents or marketable
securities.
Short-term borrowings consist of funds borrowed from banks
or through the sale of commercial paper as needed. As of December 31, 2000,
KCPL has $55.6 million of commercial paper outstanding. KCPL has short-term
bank lines of credit totaled $255 million with nine banks under minimal fee
arrangements as of December 31, 2000. KCPL also has a 364-day revolving
credit loan facility for up to $190 million to provide liquidity support
for the remarketing of KCPL's Environmental Improvement Revenue Refunding
Bonds.
As of December 31, 2000, KCPL had entered into two interest
rate swap agreements to limit the interest rate on $30 million of long-term
debt. The swap agreements mature in 2001 (unless otherwise extended, at the
option of the counterparty, for an additional two years) and effectively
fix the interest rate to a weighted-average rate of 3.88%. In 2000, KCPL
also entered into three interest rate cap agreements to limit the exposure
to increases in the interest rate on the $200 million of unsecured
medium-term notes. The cap agreements mature in 2002. These swap and cap
agreements are with highly rated financial institutions and simply limit
KCPL's exposure to increases in interest rates. They do not subject KCPL to
any material credit or market risks. The fair value of these agreements is
immaterial and is not reflected in the financial statements. Although
derivatives are an integral part of KCPL's interest rate management, the
effect on interest expense for each of the last three years was not
material.
Set forth in the table below is a summary of KCPL's
consolidated capital structure as of December 31, 2000:
$ (In Thousands) %
Common Stock Equity $ 921,352 40.03%
Preferred Stock Equity $ 39,062 1.70%
Company-obligated Mandatory
Redeemable Preferred Securities $ 150,000 6.52%
Long-term Debt * $1,135,492 49.33%
Short-term Debt $ 55,600 2.42%
TOTAL: $2,301,506 100.00%
* includes current maturities on long-term debt
Great Plains Energy is authorized under its Articles of
Incorporation, attached hereto at Exhibit A-3, to issue 150,000,000 shares
of common stock, without par value ("Common Stock") and 390,000 shares of
cumulative preferred stock, $100 par value ("Preferred Stock").
Approximately 62 million shares of Great Plains Energy Common Stock and the
390,000 shares of Great Plains Energy Preferred Stock will be issued in the
one-to-one exchange of shares contemplated by the Reorganization.(18) As
described in Item 1.E. below, following the Reorganization Great Plains
Energy intends to establish financing arrangements of its own, which will
be used primarily to fund the operations of and investments in unregulated
subsidiaries.
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18 Great Plains Energy also is authorized t o issue 1,572,000 shares of cumula
tive no par preferred stock without par value and 11,000,000 shares of
preference stock without par value. As of December 31, 2000, there were no
shares of cumulative no par preferred stock or preference stock issued and
oustanding. To the extent such shares may be issued by KCPL prior to the
date of the Reorganization, Great Plains Energy requests authority to issue
corresponding shares of no par preferred stock and preference stock as
necessary to consummate the one-to-one exchange of shares.
C. Reasons for the Reorganization
KCPL is undertaking the Reorganization in response to the
dramatic changes that occurred in the wholesale electric power market
during the 1990s, i.e., the emergence of unregulated competitive
generators, open access to the nation's transmission grid, and the
appearance of competitive retail electricity markets in a significant
percentage of the country. KCPL recognizes it must change the way it does
business to be successful in this new marketplace. KCPL believes that in
this new environment, its greatest opportunities for success lie in the
competitive generation markets. Indeed, its survival as a stand-alone
family of companies may depend on its success in this arena.
The proposed Reorganization will facilitate this success by
distancing Great Plains Power competitive generation ventures from KCPL's
traditional utility operations and thus placing Great Plains on an equal
footing with the competitive operations of other utility holding companies.
This will provide Great Plains with significant benefits, including access
to additional markets and greater flexibility and speed in pursuing
business opportunities. Great Plains will be able to take advantage of
market-based prices, capture and keep savings from improved asset
management, explore strategic partnerships to gain efficiencies, evaluate
selected merchant generation development and joint ventures, and expand
affiliate relationships. KCPL believes that the benefits resulting from
operating in this environment will allow Great Plains quickly to build a
significant portfolio of competitive generation facilities. Finally, the
Reorganization provide similar benefits to KLT's energy related and other
operations by giving them flexibility in responding to changing market
conditions.
D. Description of the Reorganization
As described above, the Reorganization will be accomplished
through (i) the merger of KCPL with and into NewCo, with KCPL as the
surviving corporation and (ii) a dividend up to Great Plains Energy of
KCPL's interests in KLT and Great Plains Power. An organizational chart
showing all of Great Plains Energy's direct and indirect investments in
active subsidiaries following consummation of the Reorganization is
provided at Exhibit E-2. The Reorganization will be governed by an
Agreement and Plan of Merger, to be entered into between KCPL, Great Plains
Energy, and NewCo (the "Reorganization Agreement"), attached hereto at
Exhibit B-1. The Reorganization Agreement is subject to approval of the
FERC, NRC, MPSC and KCC, as well as the Federal Communications Commission
(the "FCC") with regard to the transfer of certain licenses.
Under the Reorganization Agreement, KCPL's common
shareholders will receive one share of Great Plains Energy Common Stock in
exchange for each KCPL common share held immediately prior to the effective
date of the Reorganization, and KCPL's preferred shareholders will receive
one equivalent share of Great Plains Energy Preferred Stock in exchange for
each KCPL preferred share held immediately prior to the effective date of
the Reorganization.(19) The common shares of KCPL will cease to be listed
and traded on the New York Stock Exchange and the Common Stock of Great
Plains Energy will be listed and traded instead. Similarly, three series of
Great Plains Energy Preferred Stock will replace the equivalent three
series of KCPL preferred shares currently listed and traded on the New York
Stock Exchange, with the Great Plains Energy Preferred Stock being listed
and trade on the New York Stock Exchange in their place. Except for the
common shares and preferred shares of Great Plains Energy, no securities
will be issued to implement the Reorganization. All existing KCPL debt
obligations will remain obligations of KCPL after the Reorganization is
consummated.
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19 Thus, upon consummation of the share exchange, (i) all of KCPL's
common shares will be held by Great Plains Energy, (ii) KCPL will
have no preferred shares outstanding, (iii) all of Great Plains
Energy's common shares will be held by the former KCPL common
shareholders, and (iv) all of Great Plains Energy's preferred
shares will be held by the former KCPL preferred share holders
(with the exception of the 4.00% cumulative preferred stock to be
redeemed).
E. Post-Reorganization Financing
Applicants request authority, to the extent such
transactions are not otherwise exempt under the Act, for: (i) a program of
external financing; (ii) intrasystem credit support arrangements; and (iii)
interest rate hedging measures. Applicants are requesting approval for each
of the proposals contained herein for the period through December 31, 2004
(the "Authorization Period"). The proceeds from the financings authorized
by the Commission pursuant to this Application/Declaration will be used for
general corporate purposes, including: (i) financing, in part, investments
by and capital expenditures of Great Plains Energy and its subsidiaries;
(ii) funding of future investments in any exempt wholesale generator
("EWG"), foreign utility company ("FUCO"), exempt telecommunications
company ("ETC"), or energy-related or gas-related company within the
meaning of Rule 58 ("Rule 58 Company"); (iii) the repayment, redemption,
refunding or purchase by Great Plains Energy or any Subsidiary of its own
securities; and, (iv) financing working capital requirements of Great
Plains Energy and its Subsidiaries and for any other lawful corporate
purposes.
The Applicants represent that no financing proceeds will be
used to acquire the securities of or other interest in any company unless
such acquisition has been approved by the Commission in this proceeding, in
a separate proceeding, or in accordance with an available exemption under
the Act or rules thereunder, including Sections 32 and 33 and Rule 58.
Great Plains Energy states that the aggregate amount of proceeds of
financing and guarantees approved by the Commission in this proceeding used
to fund investments in EWGs and FUCOs will not, when added to Great Plains
Energy's "aggregate investment" in all such entities at any point in time,
exceed 50% of Great Plains Energy's "consolidated retained earnings," as
those terms are defined in Rule 58. Further, Great Plains Energy represents
that proceeds of financing and guarantees utilized to fund investments in
Rule 58 Companies following registration by Great Plains Energy will be
subject to the limitations of that Rule. Applicants represent that they
will not seek to recover through higher rates to KCPL's customers losses
attributable to any operations of its Nonutility Subsidiaries. Finally,
Great Plains Energy and KCPL commit to maintain their common equity, as
reflected in the most recent Form 10-K or Form 10-Q and as adjusted to
reflect subsequent events that affect capitalization, at or above 30% of
capitalization.
1. External Financing
a. Great Plains Energy
Great Plains Energy proposes to issue and sell from time to
time Common Stock and, directly or indirectly, short-term and long-term
debt securities and other forms of preferred or equity-linked securities.
In addition, as part of the one-to-one share exchange, Great Plains Energy
also proposes to issue a limited amount of Preferred Stock upon
consummation of the Reorganization. The aggregate amount of all such
securities issued during the Authorization Period will not exceed $450
million.
Common Stock
Great Plains Energy proposes to issue and sell Common Stock
pursuant to underwriting agreements of a type generally standard in the
industry. Common Stock may be issued pursuant to private negotiation with
underwriters, dealers or agents, as discussed below, or effected through
competitive bidding among underwriters. In addition, sales may be made
through private placements or other non-public offerings to one or more
persons. All such Common Stock sales will be at rates or prices and under
conditions negotiated or based upon, or otherwise determined by,
competitive capital markets. Great Plains Energy also proposes to issue
stock options, performance shares, stock appreciation rights ("SARs"),
warrants, or other stock purchase rights that are exercisable for Common
Stock and to issue Common Stock upon the exercise of such options, SARs,
warrants, or other stock purchase rights.
Great Plains Energy may issue and sell Common Stock through
underwriters or dealers, through agents, or directly to a limited number of
purchasers or a single purchaser. If underwriters are used in the sale of
Common Stock, such securities will be acquired by the underwriters for
their own account and may be resold from time to time in one or more
transactions, including negotiated transactions, at a fixed public offering
price or at varying prices determined at the time of sale. Common Stock may
be offered to the public either through underwriting syndicates (which may
be represented by a managing underwriter or underwriters designated by
Great Plains Energy) or directly by one or more underwriters acting alone.
Common Stock may be sold directly by Great Plains Energy or through agents
designated by Great Plains Energy from time to time. If dealers are
utilized in the sale of Common Stock, Great Plains Energy will sell such
securities to the dealers, as principals. Any dealer may then resell such
Common Stock to the public at varying prices to be determined by such
dealer at the time of resale. If Common Stock is being sold in an
underwritten offering, Great Plains Energy may grant the underwriters
thereof a "green shoe" option permitting the purchase from Great Plains
Energy at the same price additional shares then being offered solely for
the purpose of covering over-allotments.
Great Plains Energy also requests authority to issue Common
Stock, performance shares options, SARs, warrants or other stock purchase
rights exercisable for Common Stock in public or privately-negotiated
transactions as consideration for the equity securities or assets of other
existing companies Great Plains Energy is seeking to acquire, provided that
the acquisition of any such equity securities or assets has been authorized
in a separate proceeding or is exempt under the Act or the rules
thereunder. If Common Stock or other securities linked to Common Stock is
used as consideration in connection with any such authorized or exempt
acquisition, the market value of the Common Stock on the day before closing
of the acquisition, or the average high and low market prices for a period
prior to the closing, as negotiated by the parties, will be counted against
the proposed $450 million limitation on financing.(20)
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20 The Commission previously has approved the issuance of common stock as
consideration for assets or securities of other companies acquired in
autho rized or exempt transactions. See, e.g., Interstate Energy
Corp., Holding Co. Act Release No. 27069 (Aug. 26, 1999); SCANA Corp.,
Holding Co. Act Release No. 27137 (Feb. 14, 2000).
In addition, each of the employee and director compensation
plans which provide for investment in KCPL common stock, as in effect
immediately prior to the Reorganization, will be amended to provide for the
issuance of Great Plains Energy Common Stock instead of KCPL common stock.
Currently, KCPL maintains the following employee and director stock plans
(the "Stock Plans"):
o The Dividend Reinvestment and Direct Stock Purchase Plan, which offers
common shareholders, employees and directors of KCPL and its
subsidiaries the opportunity to purchase shares of KCPL's common stock
by reinvesting dividends and/or making optional cash payments. A full
statement of the current provisions of the Dividend Reinvestment and
Direct Stock Purchase Plan is included in the Registration Statement
on Form S-3 in File No. 33-51799 (Exhibit H-1 hereto).
o The Employee Savings Plus Plan, which is a defined contribution plan
qualified under Section 401 of the Internal Revenue Code.
Contributions to the plan will be matched by a KCPL contribution in
cash, KCPL common stock, or a combination thereof, of an amount, up to
three percent of the employee's compensation for any payroll period,
equal to 50% of the amount contributed. A full statement of the
current provisions of the Employee Savings Plus Plan is included in
the Registration Statement on Form S-8 in File No. 33-17403 (Exhibit
H-2 hereto).
o The Long-Term Incentive Plan, which provides for granting to certain
eligible employees of KCPL and its subsidiaries incentive stock
options, awards of limited stock appreciation rights, awards of shares
of KCPL stock subject to certain restrictions on transferability that
lapse after specified periods, and awards of performance shares to be
exchanged for shares of common stock upon the achievement of certain
performance measures. A full statement of the current provisions of
the Long-Term Incentive Plan is included in the Registration Statement
on Form S-8 in File No. 33-45618 (Exhibit H-3 hereto).
Great Plains Energy will file post-effective amendments to
the Registration Statements under the Securities Act of 1933, as amended
(the "1933 Act"), with respect to the Stock Plans described above following
the Reorganization.
Shares of Common Stock for use under the Stock Plans
described above may either be newly issued shares, treasury shares or
shares purchased in the open market. Great Plains Energy will make
open-market purchases of Common Stock in accordance with the terms of or in
connection with the operation of the plans pursuant to Rule 42. Great
Plains Energy also may acquire treasury shares through other open-market
purchases. Great Plains Energy also proposes to issue and/or sell shares of
Common Stock pursuant to the existing Stock Plans and similar plans or plan
funding arrangements hereafter adopted without any additional prior
Commission order. Stock transactions of this variety would thus be treated
the same as other stock transactions permitted pursuant to this
Application/Declaration.
Preferred Stock
Great Plains Energy also requests authorization to issue its
authorized Preferred Stock as necessary to accomplish the one-to-one
exchange of shares contemplated by the Reorganization, as described above.
The dividend rate on any series of Preferred Stock will not exceed at the
time of issuance 500 basis points over the yield to maturity of a U.S.
Treasury security having a remaining term equal to the term of such
securities. Dividends or distributions on such Preferred Stock will be made
periodically and to the extent funds are legally available for such
purpose, but may be made subject to terms which allow the issuer to defer
dividend payments for specified periods. Such Preferred Stock may be
convertible or exchangeable into shares of Common Stock.
Long-term Debt and other
Preferred or Equity-Linked Securities
Great Plains Energy further requests authorization to issue,
directly or indirectly through one or more Financing Subsidiaries,
long-term debt and, indirectly through one or more Financing Subsidiaries,
other types of preferred or equity-linked securities (including,
specifically, trust preferred securities). The proceeds of long-term debt
or other preferred or equity-linked securities will enable Great Plains
Energy to reduce short-term debt with more permanent capital and provide an
important source of future financing for the operations of and investments
in non-utility businesses that are exempt under the Act.(21)
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21 Recently, the Commission approved a similar financing application
filed by Southern Company in which Southern Company requested approval
to issue preferred securities and long-term debt directly or
indirectly through special-purpose financing entities. See The
Southern Company, Holding Co. Act Release No. 27134 (Feb. 9, 2000). In
that case, the Commission took account of the changing needs of
registered holding companies for sources of capital other than common
equity and short-term debt brought about primarily by the elimination
of restrictions under the Act on investments in various types of
non-core businesses (e.g., EWGs, FUCOs, and Rule 58 Companies). The
Commission noted that, without the ability to raise capital in
external markets that is appropriate for such investments, registered
holding companies would be at a competitive disadvantage to other
energy companies that are not subject to regulation under the Act. See
also American Electric Power Co., Inc., Holding Co. Act Release No.
27382 (Apr. 20, 2001).
Preferred or equity-linked securities may be issued by one
or more Financing Subsidiaries in one or more series with such rights,
preferences, and priorities as may be designated in the instrument creating
each such series, as determined by Great Plains Energy's board of
directors. The dividend rate on any series of preferred or equity-linked
securities will not exceed at the time of issuance 500 basis points over
the yield to maturity of a U.S. Treasury security having a remaining term
equal to the term of such securities. Dividends or distributions on
preferred or equity-linked securities will be made periodically and to the
extent funds are legally available for such purpose, but may be made
subject to terms which allow the issuer to defer dividend payments for
specified periods. Preferred or equity-linked securities may be convertible
or exchangeable into shares of Common Stock.
Long-term debt of Great Plains Energy may be in the form of
unsecured notes ("Debentures") issued in one or more series. The Debentures
of any series (i) may be convertible into any other securities of Great
Plains Energy, (ii) will have a maturity ranging from one to 50 years,
(iii) will bear interest at a rate not to exceed 500 basis points over the
yield to maturity of a U.S. Treasury security having a remaining term
approximately equal to the term of such series of Debentures, (iv) may be
subject to optional and/or mandatory redemption, in whole or in part, at
par or at various premiums above or discounts below the principal amount
thereof, (v) may be entitled to mandatory or optional sinking fund
provisions, (vi) may provide for reset of the coupon pursuant to a
remarketing arrangement, and (vii) may be called from existing investors or
put to the company, or both. The Debentures will be issued under an
indenture (the "Indenture") to be entered into between Great Plains Energy
and a national bank, as trustee. Long-term debt of Great Plains Energy also
may be in the form of bank lines of credit. Loans under these bank lines
will have maturities of not more than five years from the date of each
borrowing and the effective cost of such loans will not exceed at the time
of issuance 500 basis points over LIBOR.
Great Plains Energy contemplates that the Debentures would be
issued and sold directly to one or more purchasers in privately-negotiated
transactions or to one or more investment banking or underwriting firms or other
entities that would resell the Debentures without registration under the 1933
Act, in reliance upon one or more applicable exemptions from registration
thereunder, or to the public either (i) through underwriters selected by
negotiation or competitive bidding or (ii) through selling agents acting either
as agent or as principal for resale to the public either directly or through
dealers.
The maturity dates, interest rates, call and/or put options,
redemption and sinking fund provisions and conversion features, if any,
with respect to the Debentures of a particular series, as well as any
associated placement, underwriting or selling agent fees, commissions and
discounts, if any, will be established by negotiation or competitive
bidding and reflected in the applicable supplemental indenture or officer's
certificate and purchase agreement or underwriting agreement setting forth
such terms.
Finally, Great Plains Energy undertakes that without further
Commission authorization it will not issue any preferred or equity-linked
securities or any Debentures that are not at the time of original issuance
rated at least investment grade by a nationally recognized statistical
rating organization.
Short-Term Debt
To provide financing for general corporate purposes, other
working capital requirements and investments in new enterprises until
long-term financing can be obtained, Great Plains Energy may sell, directly
or indirectly through one or more Financing Subsidiaries, commercial paper
or establish bank lines of credit ("Short-term Debt"). The effective cost
of money on Short-term Debt authorized in this proceeding will not exceed
at the time of issuance 500 basis points over LIBOR for maturities of one
year or less.
Specifically, Great Plains Energy may sell directly or
indirectly commercial paper, from time to time, in established domestic or
European commercial paper markets. Such commercial paper would typically be
sold to dealers at the discount rate per annum prevailing at the date of
issuance for commercial paper of comparable quality and maturities sold to
commercial paper dealers generally. Great Plains Energy expects that the
dealers acquiring commercial paper from Great Plains Energy will reoffer
such paper at a discount to corporate, institutional and sophisticated
individual investors. Great Plains Energy anticipates that its commercial
paper will be reoffered to investors such as commercial banks, insurance
companies, pension funds, investment trusts, foundations, colleges and
universities, finance companies and non-financial corporations.
Great Plains Energy also proposes to establish directly or
indirectly bank lines in an aggregate principal amount sufficient to
support projected levels of short-term borrowings and to provide an
alternative source of liquidity. Loans under these lines will have
maturities not more than one year from the date of each borrowing. Great
Plains Energy also may engage directly or indirectly in other types of
short-term financing generally available to borrowers with comparable
credit ratings as it may deem appropriate in light of its needs and market
conditions at the time of issuance.
b. KCPL
KCPL requests authorization to issue and sell from time to
time during the Authorization Period notes and other evidence of
indebtedness having a maturity of one year or less in an aggregate
principal amount outstanding at any one time not to exceed $500 million.
Such short-term financing could include, without limitation, commercial
paper sold in established domestic or European commercial paper markets in
a manner similar to Great Plains Energy, bank lines of credit, and other
debt securities. The effective cost of money on short-term debt of KCPL
authorized in this proceeding will not exceed at the time of issuance 500
basis points over LIBOR for maturities of one year or less. The issuance by
KCPL of commercial paper and other short-term indebtedness having a
maturity of less than 12 months will not be exempt under Rule 52(a) since
it is not subject to approval by both the MPSC and KCC.
c. Nonutility Subsidiaries
As described above in Item 1.A.2, the Nonutility
Subsidiaries are engaged in and expect to continue to be active in the
development and expansion of energy-related or otherwise
functionally-related non-utility businesses. In order to finance
investments in such competitive businesses, it will be necessary for the
Nonutility Subsidiaries to have the ability to engage in financing
transactions which are commonly accepted for such types of investments. In
almost all cases, such financing transactions will be exempt from prior
Commission authorization pursuant to Rule 52(b).
In order to be exempt under Rule 52(b), any loan by Great
Plains Energy to a Nonutility Subsidiary or by one Nonutility Subsidiary to
another must have interest rates and maturities that are designed to
parallel the lending company's effective cost of capital. However, if a
Nonutility Subsidiary making a borrowing is not wholly-owned by Great
Plains Energy, directly or indirectly, and does not sell goods or services
to KCPL, then the Applicants request authority to make loans to any such
associate company at interest rates and maturities designed to provide a
return to the lending company of not less than its effective cost of
capital.(22) Applicants make this request since, if Great Plains Energy or
a Nonutility Subsidiary were required to charge only its effective cost of
capital on a loan to a less than wholly-owned associate company when market
rates were greater, the other owner(s) of such associate company would in
effect receive a subsidy from Great Plains Energy or other lending
Nonutility Subsidiary equal to the difference between the cost of providing
the loan at its effective cost of capital and the other owner(s)
proportionate share of the price at which it would have to obtain a similar
loan on the open market. Great Plains Energy will include in the next
certificate filed pursuant to Rule 24 in this proceeding substantially the
same information as that required on Form U-6B-2 with respect to any such
intra-system loan transaction.
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22 The Commission has granted similar authority to another registered
holding company. See Entergy Corporation, Holding Co. Act Release No.
27039 (June 22, 1999).
2. Guarantees and Other Forms of Credit Support
Great Plains Energy further proposes to enter into
guarantees and other forms of support agreements on behalf or for the
benefit of any Subsidiary(23) during the Authorization Period in an
aggregate principal amount not to exceed $600 million outstanding at any
one time. Applicants also request authorization for Nonutility Subsidiaries
to provide credit support on behalf and for the benefit of other Nonutility
Subsidiaries in an aggregate principal amount not to exceed $300 million
outstanding at any one time, exclusive of any guarantees and other forms of
credit support exempt under Rule 45(b)(7) or Rule 52(b).0
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23 As used in this Application/Declaration, the term "Subsidiary" means
KCPL and the Nonutility Subsidiaries.
a. Great Plains Energy
Great Plains Energy requests authorization to enter into
guarantees and capital maintenance agreements, obtain letters of credit,
enter into expense agreements or otherwise provide credit support
(collectively, "Great Plains Energy Guarantees") on behalf or for the
benefit of any Subsidiary as may be appropriate to enable such Subsidiary
to carry on in the ordinary course of its business, in an aggregate
principal amount not to exceed $600 million outstanding at any one time.
Subject to such limitation, Great Plains Energy may guarantee both
securities issued by and other contractual or legal obligations of any
Subsidiary. Great Plains Energy proposes to charge each Subsidiary a fee
for each guarantee provided on its behalf that is determined by multiplying
the amount of the Great Plains Energy Guarantee provided by the cost of
obtaining the liquidity necessary to perform the guarantee (for example,
bank line commitment fees or letter of credit fees, plus other
transactional expenses) for the period of time the guarantee remains
outstanding.(24)
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24 The Commission previously has authorized registered holding companies
to recoup from any subsidiary the actual cost of obtaining the
liquidity necessary to perform under a guarantee issued on behalf of
such subsidiary. See e.g., Interstate Energy Corporation, Holding Co.
Act Release No. 27069 (Aug. 26, 1999).
b. Nonutility Subsidiaries
In addition, Applicants request authorization for Nonutility
Subsidiaries to provide guarantees and other forms of credit support
("Nonutility Subsidiary Guarantees") on behalf or for the benefit of other
Nonutility Subsidiaries in an aggregate principal amount not to exceed $300
million outstanding at any one time, exclusive of any guarantees and other
forms of credit support that are exempt pursuant to Rule 45(b)(7) and Rule
52(b). The Nonutility Subsidiary providing any such credit support may
charge its associate company a fee for each guarantee provided on its
behalf determined in the same manner as specified above in Item 1.E.1.c
above.
3. Hedging Transactions
Great Plains Energy and, to the extent not exempt pursuant
to Rule 52, the Subsidiaries request authorization to enter into interest
rate hedging transactions with respect to existing indebtedness ("Interest
Rate Hedges"), subject to certain limitations and restrictions, in order to
reduce or manage interest rate cost. Interest Rate Hedges would only be
entered into with counterparties ("Approved Counterparties") whose senior
debt ratings, or the senior debt ratings of the parent companies of the
counterparties, as published by Standard and Poor's Ratings Group, are
equal to or greater than BBB, or an equivalent rating from Moody's
Investors Service, Fitch, or Duff and Phelps.
Interest Rate Hedges will involve the use of financial
instruments commonly used in today's capital markets, such as interest rate
swaps, caps, collars, floors, and structured notes (i.e., a debt instrument
in which the principal and/or interest payments are indirectly linked to
the value of an underlying asset or index), or transactions involving the
purchase or sale, including short sales, of U.S. Treasury obligations. The
transactions would be for fixed periods and stated notional amounts. Fees,
commissions and other amounts payable to the counterparty or exchange
(excluding, however, the swap or option payments) in connection with an
Interest Rate Hedge will not exceed those generally obtainable in
competitive markets for parties of comparable credit quality.
Applicants will comply with the then existing financial
disclosure requirements of the Financial Accounting Standards Board
associated with hedging transactions.(25)
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25 The proposed terms and conditions of the Interest Rate Hedges are
substan tially the same as the Commission has approved in other cases.
See New Century Energies, Inc., Holding Co. Act Release No. 27000
(April 7, 1999); SCANA Corporation, Holding Co. Act Release No. 27137
(February 14, 2000).
F. Other Financing Transactions
Applicants also request authorization, to the extent such
transactions are not otherwise exempt under the Act, for (i) changes to any
wholly-owned Subsidiary's capital stock capitalization; (ii) the
acquisition of the securities of certain specified categories of nonutility
companies; (iii) the payment of dividends out of capital or unearned
surplus by Nonutility Subsidiaries; and, (iv) sales and service agreements
between the Subsidiaries, to the extent no otherwise permitted or exempt by
rule.
1. Changes in Capital Stock of Subsidiaries
The portion of an individual Subsidiary's aggregate
financing to be effected through the sale of stock to Great Plains Energy
or other immediate parent company during the Authorization Period pursuant
to Rule 52 and/or pursuant to an order issued in this proceeding cannot be
ascertained at this time. It may happen that the proposed sale of capital
securities may in some cases exceed the then-authorized capital stock of
such Subsidiary. In addition, the Subsidiary may choose to use capital
stock with no par value or receive a capital contribution without issuing
capital stock. Also, a wholly-owned Subsidiary may wish to engage in a
reverse stock split to reduce franchise taxes. As needed to accommodate
such proposed transactions and to provide for future issues, request is
made for authority to change the terms of any such wholly-owned
Subsidiary's authorized capital stock capitalization by an amount deemed
appropriate by Great Plains Energy or other intermediate parent company in
the instant case. A Subsidiary would be able to change the par value, or
change between par value and no-par stock, without additional Commission
approval. Any such action by a utility subsidiary would be subject to and
would only be taken upon the receipt of any necessary approvals by the
state commissions in the state or states in which such utility subsidiary
is incorporated and doing business.(26)
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26 The Commission has granted similar approvals to other registered
holding companies. See Conectiv, Inc., Holding Co. Act Release No.
26833 (Feb. 26, 1998); New Century Energies, Inc., Holding Co. Act
Release No. 26750 (Aug. 1, 1997).
2. Financing Subsidiaries
Great Plains Energy and the Subsidiaries request authority to
acquire, directly or indirectly, the equity securities of one or more
corporations, trusts, partnerships or other entities (hereinafter, "Financing
Subsidiaries") created specifically for the purpose of facilitating the
financing of the authorized and exempt activities (including exempt and
authorized acquisitions) of Great Plains Energy and the Subsidiaries through the
issuance of debt or equity securities, including but not limited to
company-obligated mandatorily redeemable trust preferred securities, to third
parties. Financing Subsidiaries would loan, dividend or otherwise transfer the
proceeds of any such financing to its parent or to other Subsidiaries, provided,
however, that a Financing Subsidiary of KCPL will dividend, loan or transfer
proceeds of financing only to KCPL. The terms of any loan of the proceeds of any
securities issued by a Financing Subsidiary to Great Plains Energy would mirror
the terms of those securities.(27) Great Plains Energy may, if required,
guarantee or enter into expense agreements in respect of the obligations of any
Financing Subsidiary which it organizes. The Subsidiaries also may provide
guarantees and enter into expense agreements pursuant to Rules 45(b)(7) and 52,
as applicable, if required on behalf of any Financing Subsidiaries which they
organize. If the direct parent company of a Financing Subsidiary is authorized
in this proceeding or any subsequent proceeding to issue long-term debt or
similar types of equity securities, then the amount of such securities issued by
that Financing Subsidiary would count against the limitation applicable to its
parent for those securities. In such cases, however, the guaranty by the parent
of that security issued by its Financing Subsidiary would not be counted against
the limitations on Great Plains Energy Guarantees or Subsidiary Guarantees, as
the case may be, set forth in Item 1.E.2 above. In other cases, in which the
parent company is not authorized herein or in a subsequent proceeding to issue
similar types of securities, the amount of any guarantee not exempt pursuant to
Rules 45(b)(7) and 52 that is entered into by the parent company with respect to
securities issued by its Financing Subsidiary would be counted against the
limitation on Great Plains Energy Guarantees or Subsidiary Guarantees, as the
case may be.
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27 The Commission has previously authorized registered holding companies
and their subsidiaries to create financing subsidiaries, subject to
substantially the same terms and conditions. See New Century Energies,
Inc., Holding Co. Act Release No. 27000 (April 7, 1999); Ameren Corp.,
Holding Co. Act Release No. 27053 (July 23, 1999); The Southern
Company, Holding Co. Act Release No. 27134 (Feb. 9, 2000); American
Electric Power Co., Inc., Holding Co. Act Release No. 27382 (Apr. 20,
2001)..
3. Intermediate Subsidiaries
Great Plains Energy proposes to acquire, directly or
indirectly through a Nonutility Subsidiary, the securities of one or more
new subsidiary companies ("Intermediate Subsidiaries") which may be
organized exclusively for the purpose of acquiring, holding and/or
financing the acquisition of the securities of or other interest in one or
more EWGs, FUCOs, or ETCs ("Exempt Companies"), Rule 58 Companies or other
non-exempt Nonutility Subsidiaries (as authorized in this proceeding or in
a separate proceeding).(28) Great Plains Energy also requests authority for
Intermediate Subsidiaries to provide management, administrative, project
development and operating services to such entities at fair market prices
determined without regard to cost, and therefore requests an exemption (to
the extent that Rule 90(d) does not apply) pursuant to Section 13(b) from
the cost standards of Rules 90 and 91 as applicable to such transactions,
in any case in which the Non-Utility Subsidiary purchasing such goods or
services is:
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28 KCPL does not hold an interest in any EWG or FUCO at this time.
(i) 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;
(ii) An EWG that sells electricity at market-based rates which
have been approved by the FERC, provided that the purchaser
is not KCPL;
(iii) A "qualifying facility" ("QF") within the meaning of the
Public Utility Regulatory Policies Act of 1978, as amended
("PURPA") that sells electricity exclusively (a) at rates
negotiated at arms'-length to one or more industrial or
commercial customers purchasing such electricity for their
own use and not for resale, and/or (b) to an electric
utility company at the purchaser's "avoided cost" as
determined in accordance with the regulations under PURPA;
(iv) 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 thereof is not KCPL; or
(v) A Rule 58 Subsidiary or any other Nonutility Subsidiary that
(a) is partially-owned by Great Plains Energy, provided that
the ultimate purchaser of such goods or services is not KCPL
(or any other entity that Great Plains Energy may form whose
activities and operations are primarily related to the
provision of goods and services to KCPL), (b) is engaged
solely in the business of developing, owning, operating
and/or providing services or goods to Nonutility
Subsidiaries described in clauses (i) through (iv)
immediately above, or (c) 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.
An Intermediate Subsidiary may be organized, among other
things, (i) in order to facilitate the making of bids or proposals to
develop or acquire an interest in any Exempt Company, Rule 58 Company, or
other non-exempt Nonutility Subsidiary; (ii) after the award of such a bid
proposal, in order to facilitate closing on the purchase or financing of
such acquired company; (iii) at any time subsequent to the consummation of
an acquisition of an interest in any such company in order, among other
things, to effect an adjustment in the respective ownership interests in
such business held by Great Plains Energy and unaffiliated investors; (iv)
to facilitate the sale of ownership interests in one or more acquired
nonutility companies; (v) to comply with applicable laws of foreign
jurisdictions limiting or otherwise relating to the ownership of domestic
companies by foreign nationals; (vi) as a part of tax planning in order to
limit Great Plains Energy's exposure to U.S. and foreign taxes; (vii) to
further insulate Great Plains Energy and KCPL from operational or other
business risks that may be associated with investments in non-utility
companies; or (vii) for other lawful business purposes.
Investments in Intermediate Subsidiaries may take the form
of any combination of the following: (i) purchases of capital shares,
partnership interests, member interests in limited liability companies,
trust certificates or other forms of equity interests; (ii) capital
contributions; (iii) open account advances with or without interest; (iv)
loans; and (v) guarantees issued, provided or arranged in respect of the
securities or other obligations of any Intermediate Subsidiaries. Funds for
any direct or indirect investment in any Intermediate Subsidiary will be
derived from (i) financings authorized in this proceeding; (ii) any
appropriate future debt or equity securities issuance authorization
obtained by Great Plains Energy from the Commission; and (iii) other
available cash resources, including proceeds of securities sales by a
Nonutility Subsidiary pursuant to Rule 52. To the extent that Great Plains
Energy provides funds or guarantees directly or indirectly to an
Intermediate Subsidiary which are used for the purpose of making an
investment in any EWG or FUCO or a Rule 58 Company, the amount of such
funds or guarantees will be included in Great Plains Energy's "aggregate
investment" in such entities, as calculated in accordance with Rule 53 or
Rule 58, as applicable.(29)
- ---------------------
29 The Commission has previously authorized registered holding companies
to organize intermediate subsidiary companies to acquire and hold
various non-utility subsidiaries, and for such intermediate companies
to provide adminis trative and development services to such
subsidiaries at market prices. See Entergy Corporation, Holding Co.
Act Release No. 27039 (June 22, 1999); Energy East Corp., Holding Co.
Act Release No. 27228 (Sept. 12, 2000).
Great Plains Energy may determine from time to time to
consolidate or otherwise reorganize all or any part of its direct and
indirect ownership interests in Nonutility Subsidiaries, and the activities
and functions related to such investments, under one or more Intermediate
Subsidiaries. To effect any such consolidation or other reorganization,
Great Plains Energy may wish to either contribute the equity securities of
one Nonutility Subsidiary to another Nonutility Subsidiary or sell (or
cause a Nonutility Subsidiary to sell) the equity securities of one
Nonutility Subsidiary to another one. To the extent that these transactions
are not otherwise exempt under the Act or rules thereunder,(30) Great
Plains Energy hereby requests authorization under the Act to consolidate or
otherwise reorganize under one or more direct or indirect Intermediate
Subsidiaries Great Plains Energy's ownership interests in existing and
future Nonutility Subsidiaries.(31) Such transactions may take the form of
a Nonutility Subsidiary selling, contributing or transferring the equity
securities of a subsidiary as a dividend to an Intermediate Subsidiary or
the acquisition by Intermediate Subsidiaries, directly or indirectly, of
the equity securities of such companies, either by purchase or by receipt
of a dividend. The purchasing Nonutility Subsidiary in any transaction
structured as an intrasystem sale of equity securities may execute and
deliver its promissory note evidencing all or a portion of the
consideration given. Each transaction would be carried out in compliance
with all applicable U.S or foreign laws and accounting requirements, and
any transaction structured as a sale would be carried out for a
consideration equal to the book value of the equity securities being sold.
Great Plains Energy will report each such transaction in the next quarterly
certificate filed pursuant to Rule 24 in this proceeding, as described
below.
- ---------------------
30 Sections 12(c), 32(g), 33(c)(1) and 34(d), and Rules 43(b), 45(b),
46(a) and 58, as applicable, may exempt many of the transactions
described in this paragraph.
31 The Commission has granted similar authority to another holding
company. See Entergy Corporation, Holding Co. Act Release No. 27039
(June 22, 1999).
4. Payment of Dividends out of Capital and Unearned Surplus
Great Plains Energy also proposes, on behalf of each of its
current and future non-exempt Nonutility Subsidiaries, that such companies
be permitted to pay dividends with respect to the securities of such
companies, from time to time through the Authorization Period, out of
capital and unearned surplus (including revaluation reserve), to the extent
permitted under applicable corporate law; provided, however, that, without
further approval of the Commission, no non-exempt Nonutility Subsidiary
will declare or pay any dividend out of capital or unearned surplus if such
Nonutility Subsidiary derives any material part of its revenues from the
sale of goods, services, electricity or natural gas to KCPL. Great Plains
Energy requests that the Commission reserve jurisdiction over dividends
paid by any such non-exempt Nonutility Subsidiary.(32)
- ---------------------
32 The Commission has granted similar approvals, subject to such
reservation of jurisdiction, to other registered holding companies.
See The Southern Com pany, Holding Co. Act Release No. 26738 (July 2,
1997).
Great Plains Energy anticipates that there will be
situations in which one or more Nonutility Subsidiaries will have
unrestricted cash available for distribution in excess of any such
company's current and retained earnings. In such situations, the
declaration and payment of a dividend would have to be charged, in whole or
in part, to capital or unearned surplus. As an example, if an Intermediate
Subsidiary of Great Plains Energy were to purchase all of the stock of a
Rule 58 Company, and following such acquisition the Rule 58 Company incurs
non-recourse borrowings some or all of the proceeds of which are
distributed to the Intermediate Subsidiary as a reduction in the amount
invested in the Rule 58 Company (i.e., return of capital), the Intermediate
Subsidiary (assuming it has no earnings) could not, without the
Commission's approval, in turn distribute such cash to Great Plains Energy
or its other parent.
Similarly, using the same example, if an Intermediate
Subsidiary, following its acquisition of all of the stock of a Rule 58
Company, were to sell part of that stock to a third party for cash, the
Intermediate Subsidiary would again have substantial unrestricted cash
available for distribution, but (assuming no profit on the sale of the
stock) would not have current earnings and therefore could not, without the
Commission's approval, declare and pay a dividend to its parent out of such
cash proceeds. Further, there may be periods during which unrestricted cash
available for distribution by a Nonutility Subsidiary exceeds current and
retained earnings due to the difference between accelerated depreciation
allowed for tax purposes, which may generate significant amounts of
distributable cash, and depreciation methods required to be used in
determining book income. Finally, even under circumstances in which a
Nonutility Subsidiary has sufficient earnings, and therefore may declare
and pay a dividend to its immediate parent, such immediate parent may have
negative retained earnings, even after receipt of the dividend, due to
losses from other operations. In this instance, cash would be trapped at a
subsidiary level where there is no current need for it.
Great Plains Energy, on behalf of each current and future
non-exempt Nonutility Subsidiary, represents that it will not declare or
pay any dividend out of capital or unearned surplus in contravention of any
law restricting the payment of dividends. In this regard, it should be
noted that all U.S. jurisdictions limit to one extent or another the
authority of corporations to make dividend distributions to shareholders.
Most State corporation statutes contain either or both an equity insolvency
test or some type of balance sheet test. Great Plains Energy also states
that its subsidiaries will comply with the terms of any credit agreements
and indentures that restrict the amount and timing of distributions to
shareholders.
G. Intrasystem Service Arrangements
KCPL has been providing administrative, management,
technical, legal and other support services to its subsidiaries for some
years, subject to regulation by the MPSC and KCC. KCPL has billed its
subsidiaries directly for all identifiable costs related to the particular
transactions involved. Other elements of costs, such as taxes, interest,
other overhead and compensation for the use of capital procured by the
issuance of capital stock, is allocated according to ratios designed to
recover an equitable share of these costs.
KCPL is in the process of evaluating the most economical and
effective manner of providing support services to affiliate companies
following the Reorganization. Currently, KCPL intends to file with the
Commission not later than October 1, 2001, an application/declaration
seeking authority to create a service company and to implement the final
support service structure for the Great Plains Energy system. Until such
time as that application/declaration is made effective, Applicants request
authorization pursuant to Section 13(b) of the Act and rules thereunder for
KCPL and the Nonutility Subsidiaries, after consummation of the
Reorganization, to provide on an interim basis services, as well as sell
goods, to each other and to Great Plains Energy (as well as services and
goods of a substantially similar nature). The provision of such services or
sale of goods may be on a basis other than "cost," provided such pricing
arrangements are consistent with applicable Missouri and Kansas statutes
and regulations. Reference is made to the form of service agreement between
KCPL and the Nonutility Subsidiaries attached at Exhibit B-2. KCPL requests
that this interim authority extend until December 31, 2001, by which time
KCPL intends to implement the final service company structure for the Great
Plains Energy system.
H. Certificates of Notification
Great Plains Energy proposes to file certificates of
notification pursuant to Rule 24 that report each of the transactions
carried out in accordance with the terms and conditions of and for the
purposes represented in this Application/Declaration. Such certificates of
notification would be filed within 60 days after the end of each of the
first three fiscal quarters, and 90 days after the end of the last fiscal
quarter, in which transactions occur. The Rule 24 certificates will contain
the following information for the reporting period:
(i) The sales of any Common Stock by Great Plains Energy and the
purchase price per share and the market price per share at
the date of the agreement of sale;
(ii) The total number of shares of Common Stock issued or
issuable under options granted during the quarter under any
Stock Plan or otherwise;
(iii) If Common Stock has been transferred to a seller of
securities of a company being acquired, the number of shares
so issued, the value per share and whether the shares are
restricted to the acquiror;
(iv) The amount and terms of any long-term debt, Preferred Stock,
or other forms of preferred or equity-linked securities
issued directly or indirectly during the quarter by Great
Plains Energy;
(v) The amount and terms of any Short-term Debt issued by Great
Plains Energy or KCPL during the quarter;
(vi) The name of the guarantor and of the beneficiary of any
Great Plains Energy Guarantee or Nonutility Subsidiary
Guarantee issued during the quarter, and the amount, terms
and purpose of the guarantee;
(vii) The amount and terms of any financings consummated by any
Nonutility Subsidiary during the quarter that are not exempt
under Rule 52;
(viii) The notional amount and principal terms of any Interest
Rate Hedge entered into during the quarter and the identity
of the parties to such instruments;
(ix) The name, parent company, and amount invested in any new
Intermediate Subsidiary or Financing Subsidiary during the
quarter;
(x) A list of Form U-6B-2 statements filed with the Commission
during the quarter, including the name of the filing entity
and the date of the filing; and
(xi) Consolidated balance sheets as of the end of the quarter,
and separate balance sheets as of the end of the quarter for
each company, including Great Plains Energy, that has
engaged in any jurisdictional financing transactions during
the quarter.
Item 2. Fees, Commission and Expenses
The fees, commissions and expenses incurred or to be
incurred in connection with the transactions proposed herein are in the
process of being estimated. The above fees do not include underwriting fees
and other expenses incurred in consummating financings covered hereby. The
Applicants estimate that such fees and expenses will not exceed 5% of the
proceeds of any such financings.
Item 3. Applicable Statutory Provisions
A. General
Sections 6(a) and 7 of the Act are applicable to the
issuance of Common Stock and Preferred Stock and to the direct or indirect
issuance of Debentures or other forms of preferred or equity-linked
securities by Great Plains Energy, and to the issuance of Short-term Debt
by Great Plains Energy and KCPL. In addition, Sections 6(a) and 7 of the
Act are applicable to Interest Rate Hedges, except to the extent that they
may be exempt under Rule 52. Section 12(b) of the Act and Rule 45(a) are
applicable to the issuance of Great Plains Energy Guarantees and to
Nonutility Subsidiary Guarantees, to the extent not exempt under Rules
45(b) and 52. Sections 9(a)(1) and 10 of the Act are applicable to the
acquisition by Great Plains Energy's or any Nonutility Subsidiary's of the
equity securities of any Financing Subsidiary or Intermediate Subsidiary
and to Great Plains Energy's investment in existing or new subsidiaries to
engage in financing of energy-related equipment, products or services.
Section 9(a)(1) and 10 of the Act also are applicable to the KCPL's
acquisition by lease of transmission lines and to KCPL's participation in
the railcar leasing activities described in Item 1.A.1. Section 12(c) of
the Act and Rule 46 are applicable to the payment of dividends from capital
and unearned surplus by any Nonutility Subsidiary. Section 13(b) of the Act
and Rules 80 through 92 are applicable to the performance of services and
sale of goods among KCPL and Nonutility Subsidiaries, but may be exempt
from the requirements thereof in some cases pursuant to Rules 87(b)(1),
90(d) and 92, as applicable.
B. Compliance with Rules 53 and 54
The transactions proposed herein are also subject to Rules
53 and 54. Under Rule 53(a), the Commission shall not make certain
specified findings under Sections 7 and 12 in connection with a proposal by
a holding company to issue securities for the purpose of acquiring the
securities of or other interest in an EWG, or to guarantee the securities
of an EWG, if each of the conditions in paragraphs (a)(1) through (a)(4)
thereof are met, provided that none of the conditions specified in
paragraphs (b)(1) through (b)(3) of Rule 53 exists. Rule 54 provides that
the Commission shall not consider the effect of the capitalization or
earnings of subsidiaries of a registered holding company that are EWGs or
FUCOs in determining whether to approve other transactions if Rule 53(a),
(b) and (c) are satisfied. These standards are met.
Rule 53(a)(1): Following the Reorganization, Great Plains Energy will
not hold any interest in any EWG or FUCO.
Rule 53(a)(2): Great Plains Energy will maintain books and records
enabling it to identify investments in and earnings from each EWG and FUCO
in which it directly or indirectly acquires and holds an interest. Great
Plains Energy will cause each domestic EWG in which it acquires and holds
an interest, and each foreign EWG and FUCO that is a majority-owned
subsidiary, to maintain its books and records and prepare its financial
statements in conformity with U.S. generally accepted accounting principles
("GAAP"). All of such books and records and financial statements will be
made available to the Commission, in English, upon request.
Rule 53(a)(3): No more than 2% of KCPL employees will, at any one
time, directly or indirectly, render services to EWGs and FUCOs.
Rule 53(a)(4): Great Plains Energy will submit a copy of the
Application/Declaration in this proceeding and each amendment thereto, and
will submit copies of any Rule 24 certificates required hereunder, as well
as a copy of Great Plains Energy's Form U5S, to each of the public service
commissions having jurisdiction over the retail rates of KCPL.
In addition, Great Plains Energy states that the provisions of Rule
53(a) are not made inapplicable to the authorization herein requested by
reason of the occurrence or continuance of any of the circumstances
specified in Rule 53(b). Rule 53(c) is inapplicable by its terms.
Item 4. Regulatory Approvals
Approval of the MPSC is required prior to the encumbrance of
KCPL's assets or the issuance by KCPL of long-term (one year or longer)
evidences of indebtedness. Approval of the KCC is required before KCPL may
enter into management, construction, engineering, or similar contracts with
its affiliates. To the extent transactions between Great Plains Energy and
KCPL affect utility charges, approval of the KCC also may be required for
such transactions. Except as stated above, no state commission, and no
federal commission other than this Commission, has jurisdiction over any of
the transactions proposed herein.
Item 5. Procedure
Applicants respectfully request the Commission issue and
publish not later than May 11, 2001, 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 6, 2001, by which comments may be
entered and a date not later than June 15, 2001, 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 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 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 Restated Articles of Consolidation of KCPL dated as of May 5, 1992
(previously filed as Exhibit 4 to Registration Statement in File No.
33-54196 and incorporated herein by reference)
A-2 By-laws of KCPL, as amended and in effect on November 7, 2000
(previously filed as Exhibit 3-b to Exhibit G-1 hereto and
incorporated herein by reference)
A-3 Articles of Incorporation of Great Plains Energy*
A-4 By-laws of Great Plains Energy
B-1 Agreement and Plan of Merger**
B-2 Form of Service Agreement between KCPL and Nonutility Subsidiaries
C-1 Registration Statement on Form S-3 (previously filed on December 18,
1996 in File No. 333-18139 and incorporated herein by reference)
C-2 Registration Statement on Form S-3 (previously filed on November 21,
2000 in File No. 333-50396 and incorporated herein by reference)
E-1 Map of KCPL service area*
E-2 Post-Reorganization Organizational Chart*
F-1 Preliminary Opinion of Counsel**
F-2 Past-Tense Opinion of Counsel**
G-1 KCPL's Annual Report on Form 10-K for the fiscal year ended December
31, 2000 (previously filed on February 28, 2001 in File No. 001-00707
and incorporated by reference)
H-1 Dividend Reinvestment and Direct Stock Purchase Plan (previously filed
in Registration Statement on Form S-3 in File No. 33-51799 and
incorporated herein by reference)
H-2 Employee Savings Plus Plan (previously filed in Registration Statement
on Form S-8 in File No. 33-17403 and incorporated herein by reference)
H-3 Long-Term Incentive Plan (previously filed in Registration Statement
on Form S-8 in File No. 33-45618 and incorporated herein by reference)
I-1 Form of Notice
* Previously filed
** To be filed by amendment
B. Financial Statements
FS-1 KCPL Consolidated Balance Sheet as of December 31, 2000 (previously
filed in KCPL's Annual Report on Form 10-K for the year ended December
31, 2000 (Exhibit G-1 hereto) and incorporated by reference)
FS-2 KCPL Consolidated Statement of Income for the 12 months ended December
31, 2000 (previously filed with the Commission in KCPL's Annual Report
on Form 10-K for the year ended December 31, 2000 (Exhibit G-1 hereto)
and incorporated by reference)
Item 7. Information as to Environmental Effects
The transactions proposed herein will not involve major
federal action 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. ss. 4321 et seq. Second, consummation of these
transactions will not result in changes in the operations of Great Plains
Energy or its subsidiaries that would have any significant impact on the
environment. To the Applicants' knowledge, no federal agency is preparing
an environmental impact statement with respect to this matter.
SIGNATURES
Pursuant to the requirements of the Public Utility Holding Company
Act of 1935, the undersigned Applicants have duly caused this Amendment No.
1 to their Application/Declaration on Form U-1 to be signed on their behalf
by the undersigned thereunto duly authorized.
GREAT PLAINS ENERGY INCORPORATED
1201 Walnut Street
Kansas City, Missouri 64106
/s/ Bernard J. Beaudoin
- -------------------------------- Date: May 8, 2001
Name: Bernard J. Beaudoin
Title: Chief Executive Officer
KANSAS CITY POWER AND LIGHT COMPANY
1201 Walnut Street
Kansas City, Missouri 64106
/s/ Bernard J. Beaudoin
- -------------------------------- Date: May 8, 2001
Name: Bernard J. Beaudoin
Title: President and
Chief Executive Officer
KLT INC.
10740 Nall Street, Suite 230
Overland Park, Kansas 66211
/s/ Gregory J. Orman
- -------------------------------- Date: May 8, 2001
Name: Gregory J. Orman
Title: President and CEO
GREAT PLAINS POWER, INCORPORATED
1201 Walnut Street
Kansas City, Missouri 64106
/s/ Stephen T. Easley
- -------------------------------- Date: May 8, 2001
Name: Stephen T. Easley
Title: President and CEO
KCPL RECEIVABLE CORPORATION
1201 Walnut Street
Kansas City, Missouri 64106
/s/ Andrea F. Bielsker
- -------------------------------- Date: May 8, 2001
Name: Andrea F. Bielsker
Title: President
Exhibit A-4
By-Laws of Great Plains Energy
GREAT PLAINS ENERGY INCORPORATED
BY-LAWS
MARCH 13, 2001
GREAT PLAINS ENERGY INCORPORATED
BY-LAWS
ARTICLE I
Offices
Section 1. The registered office of the Company in the State of
Missouri shall be at 1201 Walnut, in Kansas City, Jackson County, Missouri.
Section 2. The Company also may have offices at such other places
either within or without the State of Missouri as the Board of Directors
may from time to time determine or the business of the Company may require.
ARTICLE II
Shareholders
Section 1. All meetings of the shareholders shall be held at such
place within or without the State of Missouri as may be selected by the
Board of Directors or Executive Committee, but if the Board of Directors or
Executive Committee shall fail to designate a place for said meeting to be
held, then the same shall be held at the principal place of business of the
Company.
Section 2. An annual meeting of the shareholders shall be held on
the first Tuesday of May in each year, if not a legal holiday, and if a
legal holiday, then on the first succeeding day which is not a legal
holiday, at ten o'clock in the forenoon, for the purpose of electing
directors of the Company and transacting such other business as may
properly be brought before the meeting.
Section 3. Unless otherwise expressly provided in the Restated
Articles of Consolidation of the Company with respect to the Cumulative
Preferred Stock, Cumulative No Par Preferred Stock or Preference Stock,
special meetings of the shareholders may only be called by the Chairman of
the Board, by the President or at the request in writing of a majority of
the Board of Directors. Special meetings of shareholders of the Company may
not be called by any other person or persons.
Section 4. Written or printed notice of each meeting of the
shareholders, annual or special, shall be given in the manner provided in
the corporation laws of the State of Missouri. In case of a call for any
special meeting, the notice shall state the time, place and purpose of such
meeting.
Any notice of a shareholders' meeting sent by mail shall be deemed
to be delivered when deposited in the United States mail with postage
thereon prepaid addressed to the shareholder at his address as it appears
on the records of the Company.
In addition to the written or printed notice provided for in the
first paragraph of this Section, published notice of each meeting of
shareholders shall be given in such manner and for such period of time as
may be required by the laws of the State of Missouri at the time such
notice is required to be given.
Section 5. Attendance of a shareholder at any meeting shall
constitute a waiver of notice of such meeting except where a shareholder
attends a meeting for the express purpose of objecting to the transaction
of any business because the meeting is not lawfully called or convened.
Section 6. At least ten days before each meeting of the
shareholders, a complete list of the shareholders entitled to vote at such
meeting, arranged in alphabetical order with the address of and the number
of shares held by each, shall be prepared by the officer having charge of
the transfer book for shares of the Company. Such list, for a period of ten
days prior to such meeting, shall be kept on file at the registered office
of the Company and shall be subject to inspection by any shareholder at any
time during usual business hours. Such list shall also be produced and kept
open at the time and place of the meeting and shall be subject to the
inspection of any shareholder during the whole time of the meeting. The
original share ledger or transfer book, or a duplicate thereof kept in the
State of Missouri, shall be prima facie evidence as to who are the
shareholders entitled to examine such list or share ledger or transfer book
or to vote at any meeting of shareholders.
Failure to comply with the requirements of this Section shall not
affect the validity of any action taken at any such meeting.
Section 7. Each outstanding share entitled to vote under the
provisions of the articles of consolidation of the Company shall be
entitled to one vote on each matter submitted at a meeting of the
shareholders. A shareholder may vote either in person or by proxy executed
in writing by the shareholder or by his duly authorized attorney-in-fact.
No proxy shall be valid after eleven months from the date of its execution,
unless otherwise provided in the proxy.
At any election of directors of the Company, each holder of
outstanding shares of any class entitled to vote thereat shall have the
right to cast as many votes in the aggregate as shall equal the number of
shares of such class held, multiplied by the number of directors to be
elected by holders of shares of such class, and may cast the whole number
of votes, either in person or by proxy, for one candidate, or distribute
them among two or more candidates as such holder shall elect.
Section 8. At any meeting of shareholders, a majority of the
outstanding shares entitled to vote represented in person or by proxy shall
constitute a quorum for the transaction of business, except as otherwise
provided by statute or by the articles of consolidation or by these
By-laws. The holders of a majority of the shares represented in person or
by proxy and entitled to vote at any meeting of the shareholders shall have
the right successively to adjourn the meeting to a specified date not
longer than ninety days after any such adjournment, whether or not a quorum
be present. The time and place to which any such adjournment is taken shall
be publicly announced at the meeting, and no notice need be given of any
such adjournment to shareholders not present at the meeting. At any such
adjourned meeting at which a quorum shall be present, any business may be
transacted which might have been transacted at the meeting as originally
called.
Section 9. The vote for directors and the vote on any other
question that has been properly brought before the meeting in accordance
with these By-laws shall be by ballot. Each ballot cast by a shareholder
must state the name of the shareholder voting and the number of shares
voted by him and if such ballot be cast by a proxy, it must also state the
name of such proxy. All elections and all other questions shall be decided
by plurality vote, unless the question is one on which by express provision
of the statutes or of the articles of consolidation or of these By-laws a
different vote is required, in which case such express provision shall
govern and control the decision of such question.
Section 10. The Chairman of the Board, or in his absence the
President of the Company, shall convene all meetings of the shareholders
and shall act as chairman thereof. The Board of Directors may appoint any
shareholder to act as chairman of any meeting of the shareholders in the
absence of the Chairman of the Board and the President, and in the case of
the failure of the Board so to appoint a chairman, the shareholders present
at the meeting shall elect a chairman who shall be either a shareholder or
a proxy of a shareholder.
The Secretary of the Company shall act as secretary of all
meetings of shareholders. In the absence of the Secretary at any meeting of
shareholders, the presiding officer may appoint any person to act as
secretary of the meeting.
Section 11. At any meeting of shareholders where a vote by ballot
is taken for the election of directors or on any proposition, the person
presiding at such meeting shall appoint not less than two persons, who are
not directors, as inspectors to receive and canvass the votes given at such
meeting and certify the result to him. Subject to any statutory
requirements which may be applicable, all questions touching upon the
qualification of voters, the validity of proxies, and the acceptance or
rejection of votes shall be decided by the inspectors. In case of a tie
vote by the inspectors on any question, the presiding officer shall decide
the issue.
Section 12. Unless otherwise provided by statute or by the
articles of consolidation, any action required to be taken by shareholders
may be taken without a meeting if a consent in writing, setting forth the
action so taken, shall be signed by all of the shareholders entitled to
vote with respect to the subject matter thereof.
Section 13. No business may be transacted at an annual meeting of
shareholders, other than business that is either (a) specified in the
notice of meeting (or any supplement thereto) given by or at the direction
of the Board of Directors (or any duly authorized committee thereof), (b)
otherwise properly brought before the annual meeting by or at the direction
of the Board of Directors (or any duly authorized committee thereof) or (c)
otherwise properly brought before the annual meeting by any shareholder of
the Company (i) who is a shareholder of record on the date of the giving of
the notice provided for in this Section 13 and on the record date for the
determination of shareholders entitled to vote at such annual meeting and
(ii) who complies with the notice procedure set forth in this Section 13.
In addition to any other applicable requirements, for business to
be properly brought before an annual meeting by a shareholder, such
shareholder must have given timely notice thereof in proper written form to
the Secretary of the Company.
To be timely, a shareholder's notice to the Secretary must be
delivered to or mailed and received at the principal executive offices of
the Company not less than sixty (60) days nor more than ninety (90) days
prior to the date of the annual meeting of shareholders; provided, however,
that in the event that less than seventy (70) days' notice or prior public
disclosure of the date of the meeting is given to shareholders, notice by
the shareholder to be timely must be so received not later than the close
of business on the tenth (10th) day following the day on which such notice
of the date of the annual meeting was mailed or such public disclosure of
the date of the annual meeting was made, whichever first occurs.
To be in proper written form, a shareholder's notice to the
Secretary must set forth as to each matter such shareholder proposes to
bring before the annual meeting (i) a brief description of the business
desired to be brought before the annual meeting and the reasons for
conducting such business at the annual meeting, (ii) the name and record
address of such shareholder, (iii) the class or series and number of shares
of capital stock of the Company that are owned beneficially or of record by
such shareholder, (iv) a description of all arrangements or understandings
between such shareholder and any other person or persons (including their
names) in connection with the proposal of such business by such shareholder
and any material interest of such shareholder in such business and (v) a
representation that such shareholder intends to appear in person or by
proxy at the annual meeting to bring such business before the meeting.
No business shall be conducted at the annual meeting of
shareholders except business brought before the annual meeting in
accordance with the procedures set forth in this Section 13, provided,
however, that, once business has been properly brought before the annual
meeting in accordance with such procedures, nothing in this Section 13
shall be deemed to preclude discussion by any shareholder of any such
business. If the Chairman of an annual meeting determines that business was
not properly brought before the annual meeting in accordance with the
foregoing procedures, the Chairman shall declare to the meeting that the
business was not properly brought before the meeting and such business
shall not be transacted.
ARTICLE III
Board of Directors
Section 1. The property, business and affairs of the Company shall
be managed and controlled by a Board of Directors which may exercise all
such powers of the Company and do all such lawful acts and things as are
not by statute or by the articles of consolidation or by these By-laws
directed or required to be exercised or done by the shareholders.
Section 2. The Board of Directors shall consist of ten directors
who shall be elected at the annual meeting of the shareholders. Each
director shall be elected to serve until the next annual meeting of the
shareholders and until his successor shall be elected and qualified.
Directors need not be shareholders.
Section 3. In case of the death or resignation of one or more of
the directors of the Company, a majority of the remaining directors, though
less than a quorum, may fill the vacancy or vacancies until the successor
or successors are elected at a meeting of the shareholders. A director may
resign at any time and the acceptance of his resignation shall not be
required in order to make it effective.
Section 4. The Board of Directors may hold its meetings either
within or without the State of Missouri at such place as shall be specified
in the notice of such meeting.
Section 5. Regular meetings of the Board of Directors shall be
held as the Board of Directors by resolution shall from time to time
determine. The Secretary or an Assistant Secretary shall give at least five
days' notice of the time and place of each such meeting to each director in
the manner provided in Section 9 of this Article III. The notice need not
specify the business to be transacted.
Section 6. Special meetings of the Board of Directors shall be
held whenever called by the Chairman of the Board, the President or three
members of the Board and shall be held at such place as shall be specified
in the notice of such meeting. Notice of such special meeting stating the
place, date and hour of the meeting shall be given to each director either
by mail not less than forty-eight (48) hours before the date of the
meeting, or personally or by telephone, telecopy, telegram, telex or
similar means of communication on twenty-four (24) hours' notice, or on
such shorter notice as the person or persons calling such meeting may deem
necessary or appropriate in the circumstances.
Section 7. A majority of the full Board of Directors as prescribed
in these By-laws shall constitute a quorum for the transaction of business.
The act of the majority of the directors present at a meeting at which a
quorum is present shall be the act of the Board of Directors. If a quorum
shall not be present at any meeting of the directors, the directors present
may adjourn the meeting from time to time, without notice other than
announcement at the meeting, until a quorum shall be present. Members of
the Board of Directors or of any committee designated by the Board of
Directors may participate in a meeting of the Board or committee by means
of conference telephone or similar communications equipment whereby all
persons participating in the meeting can hear each other, and participation
in a meeting in this manner shall constitute presence in person at the
meeting.
Section 8. The Board of Directors, by the affirmative vote of a
majority of the directors then in office, and irrespective of any personal
interest of any of its members, shall have authority to establish
reasonable compensation for directors. Compensation for nonemployee
directors may include both a stated annual retainer and a fixed fee for
attendance at each regular or special meeting of the Board. Nonemployee
members of special or standing committees of the Board may be allowed a
fixed fee for attending committee meetings. Any director may serve the
Company in any other capacity and receive compensation therefor. Each
director may be reimbursed for his expenses, if any, in attending regular
and special meetings of the Board and committee meetings.
Section 9. Whenever under the provisions of the statutes or of the
articles of consolidation or of these By-laws, notice is required to be
given to any director, it shall not be construed to require personal
notice, but such notice may be given by telephone, telecopy, telegram,
telex or similar means of communication addressed to such director at such
address as appears on the books of the Company, or by mail by depositing
the same in a post office or letter box in a postpaid, sealed wrapper
addressed to such director at such address as appears on the books of the
Company. Such notice shall be deemed to be given at the time when the same
shall be thus telephoned, telecopied, telegraphed or mailed.
Attendance of a director at any meeting shall constitute a waiver
of notice of such meeting except where a director attends a meeting for the
express purpose of objecting to the transaction of any business because the
meeting is not lawfully called or convened.
Section 10. The Board of Directors may by resolution provide for
an Executive Committee of said Board, which shall serve at the pleasure of
the Board of Directors and, during the intervals between the meetings of
said Board, shall possess and may exercise any or all of the powers of the
Board of Directors in the management of the business and affairs of the
corporation, except with respect to any matters which, by resolution of the
Board of Directors, may from time to time be reserved for action by said
Board.
Section 11. The Executive Committee, if established by the Board,
shall consist of the Chief Executive Officer of the Company and two or more
additional directors, who shall be elected by the Board of Directors to
serve at the pleasure of said Board until the first meeting of the Board of
Directors following the next annual meeting of shareholders and until their
successors shall have been elected. Vacancies in the Committee shall be
filled by the Board of Directors.
Section 12. Meetings of the Executive Committee shall be held
whenever called by the chairman or by a majority of the members of the
committee, and shall be held at such time and place as shall be specified
in the notice of such meeting. The Secretary or an Assistant Secretary
shall give at least one day's notice of the time, place and purpose of each
such meeting to each committee member in the manner provided in Section 9
of this Article III, provided, that if the meeting is to be held outside of
Kansas City, Missouri, at least three days' notice thereof shall be given.
Section 13. At all meetings of the Executive Committee, a majority
of the committee members shall constitute a quorum and the unanimous act of
all the members of the committee present at a meeting where a quorum is
present shall be the act of the Executive Committee. All action by the
Executive Committee shall be reported to the Board of Directors at its
meeting next succeeding such action.
Section 14. In addition to the Executive Committee provided for by
these By-laws, the Board of Directors, by resolution adopted by a majority
of the whole Board of Directors, (i) shall designate, as standing
committees, an Audit Committee, a Compensation Committee and a Governance
Committee, and (ii) may designate one or more special committees, each
consisting of two or more directors. Each standing or special committee
shall have and may exercise so far as may be permitted by law and to the
extent provided in such resolution or resolutions or in these By-laws, the
responsibilities of the business and affairs of the corporation. The Board
of Directors may, at its discretion, appoint qualified directors as
alternate members of a standing or special committee to serve in the
temporary absence or disability of any member of a committee. Except where
the context requires otherwise, references in these By-laws to the Board of
Directors shall be deemed to include the Executive Committee, a standing
committee or a special committee of the Board of Directors duly authorized
and empowered to act in the premises.
Section 15. Each standing or special committee shall record and
keep a record of all its acts and proceedings and report the same from time
to time to the Board of Directors.
Section 16. Regular meetings of any standing or special committee,
of which no notice shall be necessary, shall be held at such times and in
such places as shall be fixed by majority of the committee. Special
meetings of a committee shall be held at the request of any member of the
committee. Notice of each special meeting of a committee shall be given not
later than one day prior to the date on which the special meeting is to be
held. Notice of any special meeting need not be given to any member of a
committee, if waived by him in writing or by telegraph before or after the
meeting; and any meeting of a committee shall be a legal meeting without
notice thereof having been given, if all the members of the committee shall
be present.
Section 17. A majority of any committee shall constitute a quorum
for the transaction of business, and the act of a majority of those
present, by telephone conference call or otherwise, at any meeting at which
a quorum is present shall be the act of the committee. Members of any
committee shall act only as a committee and the individual members shall
have no power as such.
Section 18. The members or alternates of any standing or special
committee shall serve at the pleasure of the Board of Directors.
Section 19. If all the directors severally or collectively shall
consent in writing to any action which is required to be or may be taken by
the directors, such consents shall have the same force and effect as a
unanimous vote of the directors at a meeting duly held. The Secretary shall
file such consents with the minutes of the meetings of the Board of
Directors.
Section 20. Only persons who are nominated in accordance with the
following procedures shall be eligible for election as directors of the
Company, except as may be otherwise provided in the Restated Articles of
Consolidation of the Company with respect to the right of holders of
Preferred Stock to nominate and elect a specified number of directors in
certain circumstances. Nominations of persons for election to the Board of
Directors may be made at any annual meeting of shareholders (a) by or at
the direction of the Board of Directors (or any duly authorized committee
thereof) or (b) by any shareholder of the Company (i) who is a shareholder
of record on the date of the giving of the notice provided for in this
Section 20 and on the record date for the determination of shareholders
entitled to vote at such annual meeting and (ii) who complies with the
notice procedures set forth in this Section 20.
In addition to any other applicable requirements, for a nomination
to be made by a shareholder, such shareholder must have given timely notice
thereof in proper written form to the Secretary of the Company.
To be timely, a shareholder's notice to the Secretary must be
delivered to or mailed and received at the principal executive offices of
the Company not less than sixty (60) days nor more than ninety (90) days
prior to the date of the annual meeting of shareholders; provided, however,
that in the event that less than seventy (70) days' notice or prior public
disclosure of the date of the meeting is given to shareholders, notice by
the shareholder in order to be timely must be so received not later than
the close of business on the tenth (10) day following the day on which such
notice of the date of the annual meeting was mailed or such public
disclosure of the date of the annual meeting was made, whichever first
occurs.
To be in proper written form, a shareholder's notice to the
Secretary must set forth (a) as to each person whom the shareholder
proposes to nominate for election as a director (i) the name, age, business
address and residence address of the person, (ii) the principal occupation
or employment of the person, (iii) the class or series and number of shares
of capital stock of the Company that are owned beneficially or of record by
the person and (iv) any other information relating to the person that would
be required to be disclosed in a proxy statement or other filings required
to be made in connection with solicitations of proxies for election of
directors pursuant to Section 14 of the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), and the rules and regulations promulgated
thereunder; and (b) as to the shareholder giving the notice (i) the name
and record of such shareholder, (ii) the class or series and number of
shares of capital stock of the Company that are owned beneficially or of
record by such shareholder, (iii) a description of all arrangements or
understandings between such shareholder and each proposed nominee and any
other person or persons (including their names) pursuant to which the
nomination(s) are to be made by such shareholder, (iv) a representation
that such shareholder intends to appear in person or by proxy at the
meeting to nominate the persons named in the notice and (v) any other
information relating to such shareholder that would be required to be
disclosed in a proxy statement or other filings required to be made in
connection with solicitations of proxies for election of directors pursuant
to Section 14 of the Exchange Act and the rules and regulations promulgated
thereunder. Such notice must be accompanied by a written consent of each
proposed nominee to being name as a nominee and to serve as a director if
elected.
No person shall be eligible for election as a director of the
Company unless nominated in accordance with the procedures set forth in
this Section 20. If the Chairman of the annual meeting determines that a
nomination was not made in accordance with the foregoing procedures, the
Chairman shall declare to the meeting that the nomination was defective and
such defective nomination shall be disregarded.
ARTICLE IV
Officers
Section 1. The officers of the Company shall include a Chairman of
the Board, a President, one or more Vice Presidents, a Secretary, one or
more Assistant Secretaries, a Treasurer and one or more Assistant
Treasurers, all of whom shall be appointed by the Board of Directors. Any
one person may hold two or more offices except that the offices of
President and Secretary may not be held by the same person.
Section 2. The officers of the Company shall be appointed annually
by the Board of Directors. The office of Chairman of the Board may or may
not be filled, as may be deemed advisable by the Board of Directors.
Section 3. The Board of Directors may from time to time appoint
such other officers as it shall deem necessary or expedient, who shall hold
their offices for such terms and shall exercise such powers and perform
such duties as the Board of Directors or the Chief Executive Officer may
from time to time determine.
Section 4. The officers of the Company shall hold office until
their successors shall be chosen and shall qualify. Any officer appointed
by the Board of Directors may be removed at any time by the affirmative
vote of a majority of the whole board. If the office of any officer becomes
vacant for any reason, or if any new office shall be created, the vacancy
may be filled by the Board of Directors.
Section 5. The salaries of all officers of the Company shall be
fixed by the Board of Directors.
ARTICLE V
Powers and Duties of Officers
Section 1. The Board of Directors shall designate the Chief
Executive Officer of the Company, who may be either the Chairman of the
Board or the President. The Chief Executive Officer shall have general and
active management of and exercise general supervision of the business and
affairs of the Company, subject, however, to the right of the Board of
Directors, or the Executive Committee acting in its stead, to delegate any
specific power to any other officer or officers of the Company, and the
Chief Executive Officer shall see that all orders and resolutions of the
Board of Directors and the Executive Committee are carried into effect.
During such times when neither the Board of Directors nor the Executive
Committee is in session, the Chief Executive Officer of the Company shall
have and exercise full corporate authority and power to manage the business
and affairs of the Company (except for matters required by law, the By-laws
or the articles of consolidation to be exercised by the shareholders or
Board itself or as may otherwise be specified by orders or resolutions of
the Board) and the Chief Executive Officer shall take such actions,
including executing contracts or other documents, as he deems necessary or
appropriate in the ordinary course of the business and affairs of the
Company. The Vice Presidents and other authorized persons are authorized to
take actions which are (i) routinely required in the conduct of the
Company's business or affairs, including execution of contracts and other
documents incidental thereto, which are within their respective areas of
assigned responsibility, and (ii) within the ordinary course of the
Company's business or affairs as may be delegated to them respectively by
the Chief Executive Officer.
Section 2. The Chairman of the Board shall preside at all meetings
of the shareholders and at all meetings of the Board of Directors, and
shall perform such other duties as the Board of Directors shall from time
to time prescribe, including, if so designated by the Board of Directors,
the duties of Chief Executive Officer.
Section 3. The President, if not designated Chief Executive
Officer, shall perform such duties and exercise such powers as shall be
assigned to him from time to time by the Board of Directors or the Chief
Executive Officer. In the absence of the Chairman of the Board, or if the
position of Chairman of the Board be vacant, the President shall preside at
all meetings of the shareholders and at all meetings of the Board of
Directors.
Section 4. The Vice Presidents shall perform such duties and
exercise such powers as shall be assigned to them from time to time by the
Board of Directors or the Chief Executive Officer.
Section 5. The Secretary shall attend all meetings of the
shareholders, the Board of Directors and the Executive Committee, and shall
keep the minutes of such meetings. He shall give, or cause to be given,
notice of all meetings of the shareholders, the Board of Directors and the
Executive Committee, and shall perform such other duties as may be
prescribed by the Board of Directors or the Chief Executive Officer. He
shall be the custodian of the seal of the Company and shall affix the same
to any instrument requiring it and, when so affixed, shall attest it by his
signature. He shall, in general, perform all duties incident to the office
of secretary.
Section 6. The Assistant Secretaries shall perform such of the
duties and exercise such of the powers of the Secretary as shall be
assigned to them from time to time by the Board of Directors or the Chief
Executive Officer or the Secretary, and shall perform such other duties as
the Board of Directors or the Chief Executive Officer shall from time to
time prescribe.
Section 7. The Treasurer shall have the custody of all moneys and
securities of the Company. He is authorized to collect and receive all
moneys due the Company and to receipt therefor, and to endorse in the name
of the Company and on its behalf when necessary or proper all checks,
drafts, vouchers or other instruments for the payment of money to the
Company and to deposit the same to the credit of the Company in such
depositaries as may be designated by the Board of Directors. He is
authorized to pay interest on obligations and dividends on stocks of the
Company when due and payable. He shall, when necessary or proper, disburse
the funds of the Company, taking proper vouchers for such disbursements. He
shall render to the Board of Directors and the Chief Executive Officer,
whenever they may require it, an account of all his transactions as
Treasurer and of the financial condition of the Company. He shall perform
such other duties as may be prescribed by the Board of Directors or the
Chief Executive Officer. He shall, in general, perform all duties incident
to the office of treasurer.
Section 8. The Assistant Treasurers shall perform such of the
duties and exercise such of the powers of the Treasurer as shall be
assigned to them from time to time by the Board of Directors or the Chief
Executive Officer or the Treasurer, and shall perform such other duties as
the Board of Directors or the Chief Executive Officer shall from time to
time prescribe.
Section 9. The Board of Directors may, by resolution, require any
officer to give the Company a bond (which shall be renewed every six years)
in such sum and with such surety or sureties as shall be satisfactory to
the Board for the faithful performance of the duties of his office and for
the restoration to the Company, in case of his death, resignation,
retirement or removal from office, of all books, papers, vouchers, money
and other property of whatever kind in his possession or under his control
and belonging to the Company.
Section 10. In the case of absence or disability or refusal to act
of any officer of the Company, other than the Chairman of the Board, the
Chief Executive Officer may delegate the powers and duties of such officer
to any other officer or other person unless otherwise ordered by the Board
of Directors.
Section 11. The Chairman of the Board, the President, the Vice
Presidents and any other person duly authorized by resolution of the Board
of Directors shall severally have power to execute on behalf of the Company
any deed, bond, indenture, certificate, note, contract or other instrument
authorized or approved by the Board of Directors.
Section 12. Unless otherwise ordered by the Board of Directors,
the Chairman of the Board, the President or any Vice President of the
Company (a) shall have full power and authority to attend and to act and
vote, in the name and on behalf of this Company, at any meeting of
shareholders of any corporation in which this Company may hold stock, and
at any such meeting shall possess and may exercise any and all of the
rights and powers incident to the ownership of such stock, and (b) shall
have full power and authority to execute, in the name and on behalf of this
Company, proxies authorizing any suitable person or persons to act and to
vote at any meeting of shareholders of any corporation in which this
Company may hold stock, and at any such meeting the person or persons so
designated shall possess and may exercise any and all of the rights and
powers incident to the ownership of such stock.
ARTICLE VI
Certificates of Stock
Section 1. The Board of Directors shall provide for the issue,
transfer and registration of the certificates representing the shares of
capital stock of the Company, and shall appoint the necessary officers,
transfer agents and registrars for that purpose.
Section 2. Until otherwise ordered by the Board of Directors,
stock certificates shall be signed by the President or a Vice President and
by the Secretary or an Assistant Secretary or the Treasurer or an Assistant
Treasurer, and sealed with the seal of the Company. Such seal may be
facsimile, engraved or printed. In case any officer or officers who shall
have signed, or whose facsimile signature or signatures shall have been
used on, any stock certificate or certificates shall cease to be such
officer or officers of the Company, whether because of death, resignation
or otherwise, before such certificate or certificates shall have been
delivered by the Company, such certificate or certificates may nevertheless
be issued by the Company with the same effect as if the person or persons
who signed such certificate or certificates or whose facsimile signature or
signatures shall have been used thereon had not ceased to be such officer
or officers of the Company.
Section 3. Transfers of stock shall be made on the books of the
Company only by the person in whose name such stock is registered or by his
attorney lawfully constituted in writing, and unless otherwise authorized
by the Board of Directors only on surrender and cancellation of the
certificate transferred. No stock certificate shall be issued to a
transferee until the transfer has been made on the books of the Company.
Section 4. The Company shall be entitled to treat the person in
whose name any share of stock is registered as the owner thereof, for all
purposes, and shall not be bound to recognize any equitable or other claim
to or interest in such share on the part of any other person, whether or
not it shall have notice thereof, except as otherwise expressly provided by
the laws of Missouri.
Section 5. In case of the loss or destruction of any certificate
for shares of the Company, a new certificate may be issued in lieu thereof
under such regulations and conditions as the Board of Directors may from
time to time prescribe.
ARTICLE VII
Closing of Transfer Books
The Board of Directors shall have power to close the stock
transfer books of the Company for a period not exceeding seventy days
preceding the date of any meeting of shareholders or the date for payment
of any dividend or the date for the allotment of rights or the date when
any change or conversion or exchange of shares shall go into effect;
provided, however, that in lieu of closing the stock transfer books as
aforesaid, the Board of Directors may fix in advance a date, not exceeding
seventy days preceding the date of any meeting of shareholders, or the date
for the payment of any dividend, or the date for the allotment of rights,
or the date when any change or conversion or exchange of shares shall go
into effect, as a record date for the determination of the shareholders
entitled to notice of, and to vote at, any such meeting, and any
adjournment thereof, or entitled to receive payment of any such dividend,
or to any such allotment of rights, or to exercise the rights in respect of
any such change, conversion or exchange of shares, and in such case such
shareholders and only such shareholders as shall be shareholders of record
on the date of closing the transfer books or on the record date so fixed
shall be entitled to notice of, and to vote at, such meeting and any
adjournment thereof, or to receive payment of such dividend, or to receive
such allotment of rights, or to exercise such rights, as the case may be,
notwithstanding any transfer of any shares on the books of the Company
after such date of closing of the transfer books or such record date fixed
as aforesaid.
ARTICLE VIII
Inspection of Books
Section 1. A shareholder shall have the right to inspect books of
the Company only to the extent such right may be conferred by law, by the
articles of consolidation, by the By-laws or by resolution of the Board of
Directors.
Section 2. Any shareholder desiring to examine books of the
Company shall present a demand to that effect in writing to the President
or the Secretary or the Treasurer of the Company. Such demand shall state:
(a) the particular books which he desires to examine;
(b) the purpose for which he desires to make the examination;
(c) the date on which the examination is desired;
(d) the probable duration of time the examination will require;
and
(e) the names of the persons who will be present at the
examination.
Within three days after receipt of such demand, the President or the
Secretary or the Treasurer shall, if the shareholder's purpose be lawful,
notify the shareholder making the demand of the time and place the
examination may be made.
Section 3. The right to inspect books of the Company may be
exercised only at such times as the Company's registered office is normally
open for business and may be limited to four hours on any one day.
Section 4. The Company shall not be liable for expenses incurred
in connection with any inspection of its books.
ARTICLE IX
Corporate Seal
The corporate seal of the Company shall have inscribed thereon the
name of the Company and the words "Corporate Seal", "Missouri" and "1922".
ARTICLE X
Fiscal Year
Section 1. The fiscal year of the Company shall be the calendar
year.
Section 2. As soon as practicable after the close of each fiscal
year, the Board of Directors shall cause a report of the business and
affairs of the Company to be made to the shareholders.
ARTICLE XI
Waiver of Notice
Whenever by statute or by the articles of consolidation or by
these By-laws any notice whatever is required to be given, a waiver thereof
in writing signed by the person or persons entitled to such notice, whether
before or after the time stated therein, shall be deemed equivalent to the
giving of such notice.
ARTICLE XII
Amendments
The Board of Directors may make, alter, amend or repeal By-laws of
the Company by a majority vote of the whole Board of Directors at any
regular meeting of the Board or at any special meeting of the Board if
notice thereof has been given in the notice of such special meeting.
Nothing in this Article shall be construed to limit the power of the
shareholders to make, alter, amend or repeal By-laws of the Company at any
annual or special meeting of shareholders by a majority vote of the
shareholders present and entitled to vote at such meeting, provided a
quorum is present.
FORM OF AGREEMENT
GENERAL SERVICES AGREEMENT
BETWEEN
SERVICE COMPANY
AND
HOLDING COMPANY
KANSAS CITY POWER AND LIGHT COMPANY
KLT, INC.
GREAT PLAINS POWER COMPANY
THIS AGREEMENT, made and entered into this __ day of _________,
2001, by and between the following Parties: SERVICE COMPANY (hereinafter
sometimes referred to as "Service Company"), a Missouri corporation;
HOLDING COMPANY, and its subsidiaries, KANSAS CITY POWER AND LIGHT COMPANY
and its subsidiaries; KLT, INC. and its subsidiaries, GREAT PLAINS POWER
COMPANY and its subsidiaries, hereinafter sometimes referred to
collectively as "Client Companies");
WITNESSETH:
WHEREAS, Client Companies, including HOLDING COMPANY, which has
filed for registration under the terms of the Public Utility Holding
Company Act of 1935 (the "Act") and its other subsidiaries, desire to enter
into this agreement providing for the performance by Service Company for
the Client Companies of certain services as more particularly set forth
herein;
WHEREAS, Service Company is organized, staffed and equipped and
has filed with the Securities and Exchange Commission (the "SEC") to be a
subsidiary service company under Section 13 of the Act to render to HOLDING
COMPANY, and other subsidiaries of HOLDING COMPANY, certain services as
herein provided; and
WHEREAS, to maximize efficiency, and to achieve reorganization
related savings, the Client Companies desire to avail themselves of the
advisory, professional, technical and other services of persons employed or
to be retained by Service Company, and to compensate Service Company
appropriately for such services;
NOW, THEREFORE, in consideration of these premises and of the
mutual agreements set forth herein, the Parties agree as follows:
Section 1. Agreement to Provide Services
Service Company agrees to provide to Client Companies and their
subsidiaries, if any, upon the terms and conditions set forth herein, the
services hereinafter referred to and described in Section 2, at such times,
for such period and in such manner as Client Companies may from time to
time request. Service Company will keep itself and its personnel available
and competent to provide to Client Companies such services so long as it is
authorized to do so by the appropriate federal and state regulatory
agencies. In providing such services, Service Company may arrange, where it
deems appropriate, for the services of such experts, consultants, advisers
and other persons with necessary qualifications as are required for or
pertinent to the provision of such services.
Section 2. Services to be Provided
The services expected to be provided by Service Company hereunder
may, upon request by a Client Company, include the services as set out in
Schedule 2, attached hereto and made a part hereof. In addition to those
identified in Schedule 2, Service Company shall provide such additional
general or special services, whether or not now contemplated, as Client
Companies may request from time to time and Service Company determines it
is able to provide.
Notwithstanding the foregoing paragraph, no change in the
organization of the Service Company, the type and character of the
companies to be serviced, 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 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 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 3. New Subsidiaries
New direct or indirect subsidiaries of HOLDING COMPANY, which may
come into existence after the effective date of this Service Agreement, may
become additional client companies of Service Company and subject to this
General Services Agreement with Service Company. The parties hereto shall
make such changes in the scope and character of the services to be provided
and the method of assigning, distributing or allocating costs of such
services as may become necessary to achieve a fair and equitable
assignment, distribution, or allocation of Service Company costs among
associate companies including the new subsidiaries.
Section 4. Compensation of Service Company
As compensation for such services rendered to it by Service
Company, Client Companies hereby agree to pay Service Company the cost of
such services, computed in accordance with applicable rules and regulations
(including, but not limited to, Rules 90 and 91) under the Act and
appropriate accounting standards.
The factors for assigning or allocating Service Company costs to
Client Company, as well as to other associate companies, are set forth in
Schedules 1 and 2 attached hereto. Attachment A and Schedules 1 and 2 are
each expressly incorporated herein and made a part hereof.
Section 5. Securities and Exchange Commission Rules
It is the intent of the parties to this Agreement that the
determination of the costs as used in this Agreement shall be consistent
with, and in compliance with, the rules and regulations of the SEC, as they
now read or hereafter may be modified by the Commission.
Section 6. Service Requests
The services described herein or contemplated to be provided
hereunder shall be directly assigned, distributed or allocated by activity,
project, program, work order or other appropriate basis.
Section 7. Payment
Payment shall be by making remittance of the amount billed or by
making appropriate accounting entries on the books of the companies
involved. Invoices shall be prepared on a monthly basis for services
provided hereunder.
Section 8. Holding Company
Except as authorized by rule, regulation, or order of the SEC,
nothing in this Agreement shall be read to permit HOLDING COMPANY, or any
person employed by or acting for HOLDING COMPANY, to provide services for
other Parties, or any companies associated with said Parties.
Section 9. Client Companies
Except as limited by Section 8, nothing in this Agreement shall be
read to prohibit Client Companies or their subsidiaries from furnishing to
other Client Companies or their subsidiaries services herein referred to,
under the same terms and conditions as set out for Service Company.
Section 10. Effective Date and Termination
This Agreement is executed subject to the consent and approval of
all applicable regulatory agencies, and if so approved in its entirety,
shall become effective as of the date the reorganization of KCPL is
completed, and shall remain in effect from said date unless terminated by
mutual agreement or by any Party giving at least 60 days' written notice to
the other Parties prior to the beginning of any calendar year, each Party
fully reserving the right to so terminate this Agreement.
This Agreement may also be terminated or modified to the extent
that performance may conflict with any rule, regulation or order of the SEC
adopted before or after the making of this Agreement.
Section 11. Access to Records
For the seven years following a transaction under this Agreement,
the Client Company may request access to and inspect the accounts and
records of the Service Company, provided that the scope of access and
inspection is limited to accounts and records that are related to such
transaction.
Section 12. Assignment
This Agreement and the rights hereunder may not be assigned
without the mutual written consent of all Parties hereto.
IN WITNESS WHEREOF, the Parties hereto have caused this Agreement
to be executed and attested by their authorized officers as of the day and
year first above written.
SERVICE COMPANY
By
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Title
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HOLDING COMPANY
By
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Title
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KANSAS CITY POWER AND LIGHT COMPANY
By
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Title
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KLT, INC.
By
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Title
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GREAT PLAINS POWER COMPANY
By
--------------------------------------------------
Title
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Service Agreement Schedule 1
Allocation Ratios:
General:
Direct charges shall be made so far as costs can be identified and related
to the particular transactions involved with out excessive effort or
expense. Other elements of cost, including taxes, interest, other overhead,
and compensation for the use of capital procured by the issuance of capital
stock shall be fairly and equitably allocated using the ratios set forth
below.
Revenue (Billings) Related Ratios:
Revenues
Expenditure Related Ratios:
Total Expenditures
Capital Allocation:
Capital - all debt
Capital - equity/preferred stock
Capital - debt average
Labor/Payroll Related Ratios:
Labor/Payroll - 12 months ended
Labor/Payroll - current period
Number of Employees
Units Related Ratios:
Number of Telephones
Number of Personal Computers
Number of Square Feet (total/occupied)
Number of Hours Security Service Administered
Volume of Document Processing
Percentage of Disc Space Assigned
Number of Lines Accounts Payable Distribution
Number of Lines Purchase Order Distribution
Assets Related Ratios:
Total Assets
Composite Ratios:
Mail Services (Number Mail Runs, Distance to Mail Drops, Misc. Postage)
Massachusetts Method (Capital Assets, Revenue, Payroll)
Service Agreement Schedule 2
Services Including But Not Limited To:
General:
Direct charges shall be made so far as costs can be identified and related
to the particular transactions involved with out excessive effort or
expense. Other elements of cost, including taxes, interest, other overhead,
and compensation for the use of capital procured by the issuance of capital
stock shall be fairly and equitably allocated using the ratios set forth in
Schedule 1.
Corporate and Financial Services Including But Not Limited To:
Corporate Secretary
Strategic Planning
Environmental Services
Audit Services
Research and Development
Corporate Security Services
Shareholder Relations
Corporate Communications
Governmental Affairs
Treasury
Corporate Accounting
Tax Planning/Compliance
Corporate Budgeting
Expected allocation ratios: Revenue Related, Expenditure Related,
Labor/Payroll Related, Capital Allocation, Units Related; Assets Related,
Composite
Employee Services Including But Not Limited To:
Leadership Development
Diversity Initiatives
Employee Benefits
Employee Relations
Employee Compensation
Employee Involvement
Employee Training
Safety/Medical
Expected allocation ratios: Labor/Payroll Related, Composite
Support Services Including But Not Limited To:
Legal Services
Mail Services
Document Processing Services
Print Shop
Creative Services
Accounts Payable
Payroll Processing
Customer Billing
Cashier Services
Cash Management Services
Insurance Administration
Service Level Arrangement Management
Expected allocation ratios: Revenue Related, Expenditure Related,
Labor/Payroll Related, Capital Allocation, Units Related; Assets Related,
Composite
Purchasing Services Including But Not Limited To:
Identification/Qualification of Vendors
Initiation of Quotation Requests
Management of Investment Recovery
Management of Procurement/T&E Cards
Monitoring Vendor Performance
Negotiation/Administration of Vendor Contracts
Processing Vendor Invoices
Resolving Vendor Inquiries
Resolving Non-compliant Goods
Expected allocation ratios: Revenue Related, Labor/Payroll Related, Units
Related, Composite
Facilities Management Services Including But Not Limited To:
Construct Facilities
Maintain Facilities
Expected allocation ratios: Revenue Related, Labor/Payroll Related, Units
Related, Composite
Information Technology Services Including But Not Limited To:
Mapping & Drafting Services
Network Services
IT Security
System Delivery
System Operations
Infrastructure Management
Expected allocation ratios: Revenue Related, Labor/Payroll Related, Units
Related, Composite
Telecommunications Services Including But Not Limited To:
Data and Voice Infrastructure
Radio Services
Communications Hubs
Videoconferencing
Telephone Services
Pager/Cellular Phone Services
Expected allocation ratios: Revenue Related, Labor/Payroll Related, Units
Related, Composite
Exhibit I-1
UNITED STATES OF AMERICA
before the
SECURITIES AND EXCHANGE COMMISSION
PUBLIC UTILITY HOLDING COMPANY ACT OF 1935
Release No. / , 2001
- ------------------------------------
)
In the Matter of )
)
Great Plains Energy Incorporated )
1201 Walnut Street )
Kansas City, Missouri 64106 )
)
(70- ) )
)
- -----------------------------------)
Great Plains Energy Incorporated, a Missouri corporation
("Great Plains Energy"), has filed an Application/Declaration on Form U-1
requesting authorization and approval with respect to certain on-going
financial activities of Great Plains Energy and its subsidiaries following
the registration of Great Plains Energy as a holding company under the
Public Utility Holding Company Act of 1935, as amended (the "Act"). Great
Plains Energy also requests authorization and approval for certain
affiliate arrangements and other related matters.
The registration of Great Plains Energy as a holding company
under PUHCA will result from a reorganization of Kansas City Power & Light
Company ("KCPL"), a Missouri corporation. KCPL is a public utility company
currently not subject to the jurisdiction of the Commission under the Act.
Pursuant to a corporate reorganization (the "Reorganization"), KCPL
proposes to adopt a new corporate structure in which KCPL will become a
wholly-owned subsidiary of Great Plains Energy. Specifically, KCPL will
form Great Plains Energy as a new subsidiary, which in turn will form
another new subsidiary, KC Merger Sub Incorporated, a Missouri corporation
("NewCo"). KCPL then will merge with and into NewCo, with KCPL as the
surviving corporation, resulting in KCPL becoming a wholly-owned subsidiary
of Great Plains Energy. Finally, KCPL will dividend up to Great Plains
Energy two of KCPL's nonutility subsidiaries, KLT Inc. and Great Plains
Power, Inc., such that they also become wholly-owned subsidiaries of Great
Plains Energy. Following completion of the Reorganization, Great Plains
Energy will register as a public utility holding company pursuant to
Section 5 of the Act.
The Application/Declaration seeks authorization for Great
Plains Energy, for the period through December 31, 2004 (the "Authorization
Period"), to issue and sell from time to time Common Stock and, directly or
indirectly, short-term and long-term debt securities and other forms of
preferred or equity-linked securities. In addition, Great Plains Energy
requests authorization to issue directly a limited amount of Preferred
Stock, as necessary to consummate an exchange of KCPL Preferred Stock and
Great Plains Energy Preferred Stock contemplated by the Reorganization. The
aggregate amount of all such securities issued during the Authorization
Period will not exceed $450 million.
To the extent necessary, Great Plains Energy also requests
the Commission make findings under Section 11(b)(1) of the Act that (i) the
electric utility system of Great Plains Energy constitutes an "integrated"
electric utility system within the meaning of Section 2(a)(29) of the Act
and (ii) the nonutility operations of Great Plains Energy and its
subsidiaries may be retained. Finally, Great Plains Energy requests
Commission authorization pursuant to Section 9(a)(1) for KCPL and Great
Plains Energy to engage in certain leasing transactions and authorization
pursuant to Sections 12 and 13 for certain intrasystem transactions.
The Application/Declaration and any amendments thereto are
available for public inspection through the Commission's Office of Public
Reference. Interested persons wishing to comment or request a hearing
should submit their vies in writing by __________, 2001, to the Secretary,
Securities and Exchange Commission, Washington, D.C. 20549, and serve a
copy on Great Plains Energy at the address specified above. 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 shall identify
specifically the issues of fact or law that are disputed. A person who so
requests will be notified of any hearing, if ordered, and will receive a
copy of any notice or order issued in the matter. After said date, the
Application/Declaration, as filed or as amended, may be granted and/or
permitted to become effective.
For the Commission, by the Division of Investment
Management, pursuant to delegated authority.
Jonathan G. Katz
Secretary