Exhibit
10.1
BEFORE
THE PUBLIC SERVICE COMMISSION
OF
THE STATE OF MISSOURI
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In
the Matter of the Application of Kansas City
Power
& Light Company for Approval to Make
Certain
Changes in its Charges for Electric
Service
to Continue the Implementation of its
Regulatory
Plan
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)
)
) Case
No. ER-2008-0089
)
)
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NON-UNANIMOUS STIPULATION
AND AGREEMENT
COME NOW
Kansas City Power & Light Company (“KCP&L” or “Company”), the Staff of
the Missouri Public Service Commission (“Staff”), the Office of the Public
Counsel (“OPC”), Praxair, Inc. and Midwest Energy Users Association (“Industrial
Intervenors”), U.S. Department of Energy, and the U.S. Nuclear Security
Administration, on the behalf of themselves and all other affected Federal
Executive Agencies (“DOE/NNSA”), Ford Motor Company, Missouri Industrial Energy
Consumers (“MIEC”), and Missouri Department of Natural Resources (“MDNR”) and
state the following for this Non-unanimous Stipulation and Agreement (“2009
Stipulation”) to resolve all issues in this case. For ease of reference, the
term “Signatory Party” or “Signatory Parties” refers to a party that has signed
this 2009 Stipulation or all of the parties that have signed this 2009
Stipulation, respectively. The term “Non-Utility Signatory” or “Non-Utility
Signatories” refers to a party other than KCP&L that has signed this 2009
Stipulation or all of the parties other than KCP&L that have signed this
2009 Stipulation, respectively.
1.
Revenue
Requirement
KCP&L
shall be authorized to file revised tariff sheets containing rate schedules for
electric service designed to produce an increase in overall Missouri
jurisdictional
gross
annual electric revenues, exclusive of any applicable license, occupation,
franchise, gross receipts taxes or other similar fees or taxes, of $95.0
million, effective for electric service rendered on and after September 1, 2009,
provided however, that the Iatan 1 Air Quality Control System (“AQCS”)
facilities meet the Staff’s in-service criteria which are attached to the Direct
Testimony of Brent Davis as Schedule BCD-2 by May 30, 2009. $10.0 million of the
$95 million rate increase shall be comprised of “Additional Amortizations to
Maintain Financial Ratios” (“Additional Amortizations”), as that term is defined
in the Stipulation And Agreement reached in the Company’s proceeding to approve
its
Experimental Regulatory
Plan,
Case No. EO-2005-0329, as approved by the Commission (“2005
Stipulation”). Exemplar revised tariff sheets designed to implement this 2009
Stipulation are attached as Schedule 1 (to be late-filed). The rates reflected
in Schedule 1 have been calculated based on the billing determinants developed
by Staff in this proceeding. Subject to the provisions herein, the stipulated
rate increase resolves all revenue requirement issues in this case.
2.
Rate
Design
The
Signatory Parties agree that the rate design shall be on an equal percentage,
across-the-board basis for each rate class. Within the Large Power Service
(“LPS”) class, however, no change will be made to the tail block energy charge
and, instead, the entirety of the rate increase shall be spread on an equal
percent across the board basis between the first two energy blocks, and all
demand and service charges, as contained in the exemplar revised tariff sheets
contained in Schedule 1. The rates for separately metered space heating and the
winter energy rate blocks on the all-electric rates for the general service
classes shall be increased by an additional five (5%) percentage points above
the equal
2
percentage
increase. The Signatory Parties agree that the date for the determination of the
interest rate to be paid on deposits should be changed to the first business day
of December of the preceding calendar year rather than the last business day of
the preceding calendar year.
3.
Customer Class Cost of
Service Study
KCP&L
agrees to file a Customer Class Cost of Service Study case with the Commission
by December 31, 2009.
4.
Vegetation Management and
Infrastructure Inspection
The
Signatory Parties agree that there shall be no tracker for vegetation management
or infrastructure inspection activities as a result of this instant proceeding,
but that KCP&L shall create sub-accounts for each where the costs for these
activities shall be booked for KCP&L. KCP&L shall submit quarterly
reports detailing the vegetation management activities and expenses in the
KCP&L Missouri jurisdictional service territory to the Commission’s Energy
Department. KCP&L agrees to maintain records to separately identify the
costs to implement the Commission’s new Vegetation Management regulations
between Missouri and Kansas using Federal Energy Regulatory Commission accounts
593000 (distribution) and 571005-571006 (transmission), department 252.
KCP&L states that it is in the process of setting up appropriate accounts to
track infrastructure and reliability reporting costs.
5.
Prudence and In-Service
Timing of Iatan 1
No
Signatory Party to this 2009 Stipulation shall argue that anyone is prohibited
from arguing or presenting evidence in the next KCP&L general rate case
challenging the prudence of any Iatan 1 construction cost or that KCP&L
should have had this unit
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operating
at full generation capacity sooner than the actual date that Iatan 1 is found to
be fully operational and used for service, provided however, that any proposed
disallowance of rate base for imprudence under this paragraph shall be limited
to a maximum amount of Missouri jurisdictional rate base no greater than $30
million inclusive of Iatan common costs. KCP&L represents that Iatan 1 and
Iatan common costs will not exceed $733 million on a total project basis. Should
the Commission find that KCP&L, respecting any Non-Utility Signatory’s
construction audit of these costs, (a) failed to provide material and relevant
information which was in KCP&L’s control, custody, or possession, or which
should have been available to KCP&L through reasonable investigation, (b)
misrepresented facts relevant to charges to Iatan 1 or Iatan common costs, or
(c) engaged in the obstruction of lawful discovery, said Non-Utility Signatory
is not bound to proposing a disallowance to KCP&L’s Missouri jurisdictional
rate base no greater than $30 million inclusive of Iatan common costs in
aggregate amount with regard to such construction audit. KCP&L shall
maintain Caseworks for the use of the Non-Utility Signatories. The Non-Utility
Signatories may continue their construction audits of Iatan 1 and Iatan 2 prior
to KCP&L filing its Iatan 2 rate case. KCP&L will facilitate the
resolution of all outstanding discovery disputes with the Non-Utility
Signatories and cooperate with them in any construction audits of Iatan 1 and
Iatan 2. KCP&L shall have the right to object, or to continue to object, to
discovery of the Non-Utility Signatories under applicable law or Commission
rule. KCP&L and the other Non-Utility Signatories will seek the timely
resolution of discovery disputes. KCP&L will provide DOE/NNSA the Iatan
portion of all reports provided to the Signatory Parties to the 2005
Stipulation.
6.
Allocations of Common Plant
for Iatan 1 and 2
(a) The
Non-Utility Signatories agree that the Company can record as a regulatory asset
the depreciation and carrying costs associated with the Iatan 1 AQCS plant and
identified Iatan common facilities costs appropriately recorded to Electric
Plant in Service that are not included in rate base in the current rate case.
Depreciation and carrying costs will continue to be deferred to the regulatory
asset until the date new rates become effective resulting from the Company’s
next general rate case. Amortization of the accumulated deferred costs will
begin at that time based on the depreciable life of the Iatan 1 AQCS
plant.
(b) The
determination of the value of the owners of Iatan 1 due from other owners of
Iatan 2 joining as additional owners of common plant already paid for by the
Iatan 1 owners has not been calculated.
(c)
If Staff’s
in-service criteria are met by May 30, 2009, the Signatory Parties agree to
“construction accounting” for remaining Iatan 1 prudent costs incurred post
true-up cut-off as “construction accounting” is defined in the 2005 Stipulation
at page 43, Section III.3.d.vii., subject to the agreement of the Signatory
Parties of the amount to include in rates in this case and the agreement of the
Signatory Parties of the date by which invoices are timely booked or approved
for payment. Any deferred depreciation expense and carrying costs will be offset
by accumulated deferred income taxes on this plant. The deferred depreciation
expense will be charged to the depreciation reserve as required by normal
accounting. The deferred expenses will receive rate base treatment, and
consistent with the Commission treatment of these type of deferrals, the
deferred income taxes will be included in rate base. KCP&L agrees to
calculate the amount due
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from the
other Iatan 2 owners and reflect that amount as an offset to the common plant
costs. The carrying costs will be calculated at the rate used for Iatan
2.
7.
Additional Amortizations To
Maintain Financial Ratios
The total
Additional Amortization that will be reflected in rates beginning with the
billing month beginning September 1, 2009 as a result of this 2009 Stipulation
and the Commission determinations in Case Nos. ER-2006-0314 and ER-2007-0291
shall be $42,402,888. The Additional Amortization amount due to the settlement
of the instant Case No. ER-2009-0089 shall be the last Additional Amortization
under the 2005 Stipulation.
8.
AFUDC
Rate
For
purposes of determining the Allowance for Funds Used During Construction
(“AFUDC”) rate for Iatan 2 and the carrying cost rate for any Accounting
Authority Order established from this case for Iatan 1, the AFUDC equity rate
will be the lower of 8.25% or 250 basis points less than the return on equity
ordered in the pending KCP&L Greater Missouri Operations Company rate case,
Case No. ER-2009-0090.
9.
Surveillance
Reporting
For
surveillance reporting purposes, until changed by agreement of the Signatory
Parties, the following jurisdictional allocations shall be used:
(a) All
environmental-related production assets shall be allocated with the same
allocator used for the production facility where those environmental-related
production assets are installed, for the life of those environmental-related
production assets;
(b) Off-System
Sales margins shall be allocated using the energy allocator;
(c) All
non-fuel production and transmission operations and maintenance (“O & M”)
shall be allocated using the 4 CP demand allocator (June, July, August and
September); and
(d) Transmission
and production facilities shall be allocated using the 4 CP demand allocator
(June, July, August and September).
10.
Economic Relief Pilot
Program (“ERPP”)
The
Non-Utility Signatories agree that the Company can defer 50% of the ERPP costs
in a regulatory asset until the next KCP&L rate case, with cost recovery to
be determined at that time. The remaining 50% of such cost will be borne by the
Company’s shareholders. The Company agrees to address all concerns raised by
Staff in rebuttal testimony, specifically related to the language regarding
discontinuation of customer participation, and the language regarding
reinstatement of former participants, as contained in Attachment Schedule ADD-2
to Company witness Allen Dennis’s Surrebuttal Testimony. The Signatory Parties
agree that this program should be implemented, but that it should not be
considered a demand side management program.
11.
Wolf Creek Refueling
Cost
The
Signatory Parties agree that $1,570,581 (Missouri jurisdictional) of Outage #16
O & M refueling costs will be deferred in a regulatory asset account and
amortized over five years beginning with the date new rates become effective in
this case, with one-fifth of this cost included in cost of service in this case.
The unamortized balance will not be included in rate base.
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12.
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Surface Transportation
Board (“STB”) Litigation
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The
Signatory Parties agree that the Missouri jurisdictional excess of STB
litigation proceeds over un-recovered STB litigation costs of $1,017,593 will be
deferred in a regulatory liability account and amortized over ten years
beginning with the date new rates become effective in this case, with one year’s
amortization included in cost of service in this case. The unamortized balance
will not be included in rate base.
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13.
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Off-System Sales
(“OSS”) Margins—Excess Over 25th Percentile for 2007 and
2008
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The
Signatory Parties agree that the $1,082,974 (Missouri jurisdictional) excess of
2007 OSS margins over the amount included in rates in Case No. ER-2006-03 14 and
the $2,947,332 (Missouri jurisdictional) excess of 2008 OSS margins over the
amount included in rates in Case No. ER-2007-0291, together with interest
(Missouri jurisdictional), will be deferred in a regulatory liability account
and amortized over ten years beginning with the date new rates become effective
in this rate case, with one year’s amortization included in cost of service in
this case. The unamortized balance will not be included in rate
base.
14.
Deferred DSM Advertising
Costs
The
Signatory Parties agree that $279,521 (Missouri jurisdictional) of 2007
advertising costs will be deferred in a regulatory asset account and amortized
over ten years beginning with the date new rates become effective in this rate
case, with one-tenth of this cost included in cost of service in this case. The
unamortized balance will not be included in rate base as agreed to in the 2005
Stipulation.
15.
Off-System Sales
Tracker
KCP&L’s
OSS margins at the 25th percentile shall be set at $30 million, and shall be
used for tracking purposes. Such tracker will reflect a pro-ration, on a monthly
basis, of this amount for any partial years consistent with the percent of
actual OSS realized in each month of 2008. All OSS margins will be tracked
against the $30 million baseline. The Signatory Parties reserve the right to
assert a position regarding the appropriate definition of OSS in the Company’s
next general rate case.
16.
Rate Case
Expense
The
Signatory Parties agree that any over-recovery of the amortization of the
Company’s rate case expense in Case No. ER-2006-03 14 will be used to offset the
deferral of rate case expense in this case.
17.
Miscellaneous Costs Not
Included in Rates
The
Signatory Parties agree that the following costs are not included in the rate
levels contained in this agreement: Sporting events, golf events, Worlds of Fun
tickets, dues and donations, lobbying, image or institutional advertising,
spousal travel, local meal expenses, officer expense reports, and catering
expense. The Signatory Parties reserve the right to seek inclusion or oppose
inclusion of these costs in a future rate case.
18.
Demand-Side
Managment
KCP&L
agrees in its next IRP filing to include at least one alternative resource plan
that demonstrates energy reductions from demand side resources of at least 1% of
the projected retail energy requirements per year over the 20-year planning
horizon, assuming a net-to-gross ratio of 1.0.
19.
Supplemental Weatherization
and Minor Home Repair Program
KCP&L
agrees to present the Supplemental Weatherization and Minor Home Repair Program
to the customer program advisory group (“CPAG”) at the earliest opportunity.
KCP&L remains committed to the program but believes input from the CPAG
would be beneficial to the finalization and implementation of the
program.
20.
Low Income/Weatherization
Issues
KCP&L
agrees to take an active role in the coordination of the exchange of information
between the City of Kansas City, Missouri and the state agencies that administer
the LIHEAP programs to facilitate the referral of customers who might benefit
from the Company’s low-income weatherization program.
21.
Pension
Agreements
KCP&L
and Staff will file a separate Non-Unanimous Stipulation And Agreement Regarding
Pensions and OPEB’s in this proceeding.
GENERAL PROVISIONS OF
STIPULATION
22. The
Staff may file suggestions, a memorandum or other pleading in support of this
2009 Stipulation. KCP&L and any other Non-Utility Signatory shall have the
right to file responsive suggestions, memorandum or other pleading in response.
The contents of any such suggestions, memorandum or other pleading provided by
any Signatory Party will be its own.
23. This
2009 Stipulation is being entered into solely for the purpose of disposing of
Case No. ER-2009-0089. Except as expressly and specifically addressed otherwise
in this 2009 Stipulation, none of the Non-Utility Signatories to this 2009
Stipulation shall be deemed to have approved, accepted, agreed, consented, or
acquiesced in, including without limitation, any procedural principle, question
of Commission
authority,
accounting authority order principle, cost of capital principle or methodology,
capital structure principle or methodology, decommissioning methodology,
ratemaking principle, valuation methodology, cost of service methodology or
determination, depreciation principle or method, rate design methodology, cost
allocation principle or methodology, cost recovery principle or methodology, or
prudence question that may underlie this 2009 Stipulation, or for which
provision is made in this 2009 Stipulation.
24. This
2009 Stipulation represents a negotiated settlement. Except as specified herein,
the Signatory Parties to this 2009 Stipulation shall not be prejudiced, bound
by, or in any way affected by the terms of this 2009 Stipulation: (a) in any
future proceeding; (b) in any proceeding currently pending under a separate
docket; and/or (c) in this proceeding should the Commission decide not to
approve this 2009 Stipulation, or in any way condition its approval of
same.
25. The
provisions of this 2009 Stipulation have resulted from extensive negotiations
between the Signatory Parties and are interdependent. In the event that the
Commission does not approve and adopt the terms of this 2009 Stipulation in
total, it shall be void and none of the Signatory Parties shall be bound,
prejudiced, or in any way affected by any of the agreements or provisions
hereof, unless otherwise agreed to by the Signatory Parties.
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.
If approved and adopted by
the Commission, this 2009 Stipulation shall constitute a binding agreement among
the Signatory Parties. The Signatory Parties shall cooperate in defending the
validity and enforceability of this 2009 Stipulation and the operation of this
2009 Stipulation according to its terms.
27. This
2009 Stipulation does not constitute a contract with the Commission. Acceptance
of this 2009 Stipulation by the Commission shall not be deemed as constituting
an agreement on the part of the Commission to forego the use of any discovery,
investigative or other power which the Commission presently has. Thus, nothing
in this 2009 Stipulation is intended to impinge or restrict in any manner the
exercise by the Commission of any statutory right, including the right to access
information, or any statutory obligation.
28. If
the Commission does not unconditionally approve this 2009 Stipulation without
modification, and notwithstanding its provision that it shall become void
thereon, neither this 2009 Stipulation, nor any matters associated with its
consideration by the Commission, shall be considered or argued to be a waiver of
the rights that any Signatory Party has to a hearing on the issues presented by
this 2009 Stipulation, for cross-examination, or for a decision in accordance
with Section 536.080 RSMo 2000 or Article V, Section 18 of the Missouri
Constitution, and the Signatory Parties shall retain all procedural and due
process rights as fully as though this 2009 Stipulation had not been presented
for approval, and any suggestions, memoranda, testimony or exhibits that have
been offered or received in support of this 2009 Stipulation shall thereupon
become privileged as reflecting the substantive content of settlement
discussions and shall be stricken from and not be considered as part of the
administrative or evidentiary record before the Commission for any further
purpose whatsoever, unless otherwise agreed to by the Signatory
Parties.
29. In
the event the Commission accepts the specific terms of this 2009
Stipulation,
the Signatory Parties waive their respective rights to
cross-examine
witnesses;
their respective rights to present oral argument and written briefs pursuant to
Section 53 6.080. 1 RSMo 2000; and their respective rights to judicial review
pursuant to Section 386.5 10 RSMo 2000. The Signatory Parties agree that the
pre-filed testimony and exhibits of the Signatory Parties shall be entered into
the record without the necessity of the witnesses taking the witness
stand.
WHEREFORE,
for the foregoing
reasons, the Signatory Parties respectfully request that the Commission issue an
Order approving the terms and conditions of this Stipulation and
Agreement.
Respectfully
submitted,
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STAFF
OF THE MISSOURI PUBLIC SERVICE COMMISSION
/s/
Nathan Williams by JMF
Kevin
A. Thompson, MBE #36288 General Counsel
Steven
Dottheim, MBE #29 149
Chief
Deputy General Counsel
Nathan
Williams, MBE #355 12
Deputy
General Counsel
Missouri
Public Service Commission
P.O.
Box 360
Jefferson
City, MO 65102
(573)
751-8702 (Voice - Williams)
(573)
751-7489 (Voice - Dottheim)
(573)
751-2690 (Voice - Thompson)
(573) 751-9285 (Fax)
nathan.williams@psc.mo.gov
steve.dottheim@psc.mo.gov
kevin.thompson@psc.mo.gov
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KANSAS
CITY POWER & LIGHT COMPANY
/s/
William G. Riggins by JMF
William
G. Riggins, MBE #42501
General
Counsel
Curtis
Blanc, MBN#5 8052
Managing
Attorney - Regulatory
Kansas
City Power & Light Company (816) 556-2785
(816)
556-2787 (Fax)
bill.riggins@kcpl.com
curtis.blanc@kcpl.com
James
M. Fischer, MBE #27543 Fischer & Dority, P.C.
101
Madison Street, Suite 400 Jefferson City, MO 65101
(573)
636-6758
(573)
636-0383 (Fax)
jfischerpc@aol.com
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Karl
Zobrist, MBN #28325
Roger
W. Steiner, MBN #39586 Sonnenschein Nath & Rosenthal LLP 4520 Main
Street, Suite 1100
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Kansas
City, MO 64111 (816) 460-2545
(816) 531-7545 (Fax)
kzobrist@sonnenschein.com
rsteiner@sonnenschein.com
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OFFICE
OF THE PUBLIC COUNSEL
/s/
Lewis R. Mills, Jr. by JMF
Lewis
R. Mills, Jr., MBE #35275 Public Counsel
P.O.
Box 2230
Jefferson
City, MO 65102 (573) 751-1304
(573)
751-5562 (Fax)
lewis.mills@ded.mo.gov
PRAXAIR,
INC. and MIDWEST ENERGY USERS ASSOCIATION
/s/
David L. Woodsmall by JMF
David
L. Woodsmall, MBE #40747 Stuart W. Conrad, MBE # 23966 428 E. Capitol,
Suite 300
Jefferson
City, MO 65101
(573)
635-2700
(573)
635-6998 (Fax)
dwoodsmall@fcplaw.com
THE
EMPIRE DISTRICT ELECTRIC COMPANY
Diana
C. Carter, MBE #50527
Brydon,
Swearengen & England P.C. 312 E. Capitol Avenue
P.O.
Box 456
Jefferson
City, MO 65102
(573)
635-7166
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MISSOURI
DEPARTMENT OF NATURAL RESOURCES
/s/
Harry Bozoian by JMF
Harry
Bozoian, MBE # 37535 Deputy General Counsel
P.O.
Box 176
Jefferson
City, MO 65102 (573) 751-0323
(573)
526-3444 (Fax)
harry.bozoian@dnr.mo.gov
U.S.
DEPARTMENT OF ENERGY, NATIONAL NUCLEAR SECURITY ADMINISTRATION and OTHER
AFFECTED FEDERAL EXECUTIVE AGENCIES
/s/
Arthur Perry Bruder by JMF
Arthur
Perry Bruder
U.S.
Department of Energy 1000 Independence Ave. SW Washington, DC
20585
(202)
586-3409
(202)
586-3409 (Fax)
arthur.bruder@hq.doe.gov
MISSOURI
GAS ENERGY
Diana
C. Carter, MBE #50527
Brydon,
Swearengen & England P.C. 312 E. Capitol Avenue
P.O.
Box 456
Jefferson
City, MO 65102
(573)
635-7166
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(573)
634-7431 (Fax)
dcarter@brydonlaw.com
CITY
OF KANSAS CITY, MISSOURI
Mark
W. Comley, MBE #28847 Newman, Comley & Ruth P.C.
601
Monroe Street, Suite 301
P.O.
Box 537
Jefferson
City, MO 65 102-0537 (573) 634-2266
(573)
636-3306 (Fax)
FORD
MOTOR COMPANY and MISSOURI INDUSTRIAL ENERGY CONSUMERS
/s/
Diana M. Vuylsteke by JMF
Diana
M. Vuylsteke, MBE #42419
Bryan
Cave LLP
One
Metropolitan Square, Suite 3600
St.
Louis, MO 63102
(314)
259-2543
(314)
552-8543 (Fax)
dmvuylsteke@bryancave.com
UNION
ELECTRIC CO., d/b/a AMERENUE
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(573)
634-7431 (Fax)
dcarter@brydonlaw.com
MISSOURI
JOINT MUNICIPAL ELECTRIC UTILITY COMMISSION
Douglas
Healey, MBE #5 1630 939 Boonville Suite A
Springfield,
MO 65802
(417)
864-8800
dhealy@mpua.org
Duncan
E. Kincheloe, MBE #
1808
I-70 Dr. SW
Columbia,
MO 65203
(573)
445-3279
(753)
445-0680 (Fax)
dkincheloe@mpua.org
TRIGEN-KANSAS
CITY ENERGY CORP.
Jeffrey
Keevil, MBE #33 825
Charles
Brent Stewart, MBE #34885 Stewart & Keevil, LLC
4603
John Garry Drive, Suite 11 Columbia, MO 65203
(573)
499-0635
(573)
499-0638 (Fax)
per594@aol.com
stewart499@aol.com
HOSPITAL
INTERVENORS
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James
B. Lowery, MBE #40503 Smith Lewis, LLP
111
South Ninth St., Suite 200
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James
P. Zakoura
Smithyman
& Zakoura, Chartered 750 Commerce Plaza
II
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P.O.
Box 918
Columbia
MO 65205-0918
(573)
443-3141
(573)
442-6686 (Fax)
lowery@smithlewis.com
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7400
W. 110
th
Street
Overland
Park KS 66210-2346
(913)
661-9800
(913)
66109863 (Fax)
zakoura@smizak-law.com
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CERTIFICATE OF
SERVICE
I do
hereby certify that a true and correct copy of the foregoing document has been
hand delivered, emailed or mailed, postage prepaid, this 24th day of April,
2009, to all counsel of record.
/s/ James M.
Fischer
James M.
Fischer
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