ITEM 1. FINANCIAL STATEMENTS
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GREAT PLAINS ENERGY INCORPORATED
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Consolidated Balance Sheets
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(Unaudited)
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March 31
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December 31
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2013
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2012
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ASSETS
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(millions, except share amounts)
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Current Assets
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Cash and cash equivalents
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$
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11.6
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$
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9.3
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Funds on deposit
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2.9
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1.0
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Receivables, net
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137.6
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154.5
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Accounts receivable pledged as collateral
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175.0
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174.0
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Fuel inventories, at average cost
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102.6
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95.1
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Materials and supplies, at average cost
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151.9
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151.3
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Deferred refueling outage costs
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40.5
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11.9
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Refundable income taxes
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9.7
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9.5
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Deferred income taxes
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3.1
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88.5
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Derivative instruments
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1.3
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1.0
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Prepaid expenses and other assets
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28.3
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27.6
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Total
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664.5
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723.7
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Utility Plant, at Original Cost
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Electric
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11,211.0
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11,160.5
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Less - accumulated depreciation
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4,482.2
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4,424.2
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Net utility plant in service
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6,728.8
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6,736.3
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Construction work in progress
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672.9
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584.5
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Nuclear fuel, net of amortization of $160.3 and $157.4
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81.1
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81.3
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Total
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7,482.8
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7,402.1
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Investments and Other Assets
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Nuclear decommissioning trust fund
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164.3
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154.7
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Regulatory assets
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1,101.1
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1,120.9
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Goodwill
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169.0
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169.0
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Derivative instruments
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5.4
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5.5
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Other
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70.6
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71.4
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Total
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1,510.4
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1,521.5
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Total
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$
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9,657.7
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$
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9,647.3
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The accompanying Notes to Consolidated Financial Statements are an integral part of these statements.
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GREAT PLAINS ENERGY INCORPORATED
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Consolidated Balance Sheets
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(Unaudited)
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March 31
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December 31
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2013
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2012
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LIABILITIES AND CAPITALIZATION
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(millions, except share amounts)
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Current Liabilities
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Notes payable
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$
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11.0
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$
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12.0
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Collateralized note payable
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175.0
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174.0
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Commercial paper
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367.0
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530.1
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Current maturities of long-term debt
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257.1
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263.1
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Accounts payable
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235.1
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330.2
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Accrued taxes
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57.5
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27.1
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Accrued interest
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62.0
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41.5
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Accrued compensation and benefits
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37.7
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44.8
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Pension and post-retirement liability
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2.8
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2.8
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Other
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21.5
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23.9
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Total
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1,226.7
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1,449.5
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Deferred Credits and Other Liabilities
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Deferred income taxes
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759.9
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832.4
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Deferred tax credits
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128.4
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128.8
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Asset retirement obligations
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151.7
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149.3
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Pension and post-retirement liability
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556.0
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557.5
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Regulatory liabilities
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291.1
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283.8
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Other
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113.2
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110.2
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Total
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2,000.3
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2,062.0
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Capitalization
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Great Plains Energy common shareholders' equity
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Common stock - 250,000,000 shares authorized without par value
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153,839,967 and 153,779,806 shares issued, stated value
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2,625.4
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2,624.7
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Retained earnings
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750.9
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758.8
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Treasury stock - 121,417 and 250,236 shares, at cost
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(2.6
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)
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(5.1
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)
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Accumulated other comprehensive loss
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(35.2
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)
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(38.4
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)
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Total
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3,338.5
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3,340.0
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Cumulative preferred stock $100 par value
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3.80% - 100,000 shares issued
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10.0
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10.0
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4.50% - 100,000 shares issued
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10.0
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10.0
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4.20% - 70,000 shares issued
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7.0
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7.0
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4.35% - 120,000 shares issued
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12.0
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12.0
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Total
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39.0
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39.0
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Long-term debt (Note 8)
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3,053.2
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2,756.8
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Total
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6,430.7
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6,135.8
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Commitments and Contingencies (Note 9)
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Total
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$
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9,657.7
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$
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9,647.3
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The accompanying Notes to Consolidated Financial Statements are an integral part of these statements.
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GREAT PLAINS ENERGY INCORPORATED
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Consolidated Statements of Income and Comprehensive Income
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(Unaudited)
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Three Months Ended March 31
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2013
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2012
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Operating Revenues
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(millions, except per share amounts)
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Electric revenues
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$
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542.2
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$
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479.7
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Operating Expenses
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Fuel
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132.2
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119.3
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Purchased power
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38.8
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24.7
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Transmission of electricity by others
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11.4
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7.3
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Utility operating and maintenance expenses
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155.2
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163.1
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Depreciation and amortization
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70.2
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67.4
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General taxes
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47.8
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44.5
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Other
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0.5
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4.4
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Total
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456.1
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430.7
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Operating income
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86.1
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49.0
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Non-operating income
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2.5
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0.9
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Non-operating expenses
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(1.3
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)
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(1.8
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)
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Interest charges
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(49.7
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)
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(66.9
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)
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Income (loss) before income tax (expense) benefit and loss from equity investments
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37.6
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(18.8
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)
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Income tax (expense) benefit
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(11.5
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)
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9.5
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Loss from equity investments, net of income taxes
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(0.1
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)
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—
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Net income (loss)
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26.0
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(9.3
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)
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Less: Net loss attributable to noncontrolling interest
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—
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0.2
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Net income (loss) attributable to Great Plains Energy
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26.0
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(9.1
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)
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Preferred stock dividend requirements
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0.4
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0.4
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Earnings (loss) available for common shareholders
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$
|
25.6
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$
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(9.5
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)
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Average number of basic common shares outstanding
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153.4
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135.9
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Average number of diluted common shares outstanding
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153.7
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135.9
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Basic and diluted earnings (loss) per common share
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$
|
0.17
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|
$
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(0.07
|
)
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Cash dividends per common share
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$
|
0.2175
|
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$
|
0.2125
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Comprehensive Income
|
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Net income (loss)
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$
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26.0
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$
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(9.3
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)
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Other comprehensive income
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Derivative hedging activity
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Loss on derivative hedging instruments
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—
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(0.3
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)
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Income tax benefit
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—
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0.1
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Net loss on derivative hedging instruments
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—
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(0.2
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)
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Reclassification to expenses, net of tax
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3.2
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3.1
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Derivative hedging activity, net of tax
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3.2
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2.9
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Defined benefit pension plans
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Amortization of net losses included in net periodic benefit costs
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—
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0.1
|
|
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Change in unrecognized pension expense, net of tax
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—
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|
0.1
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|
|
Total other comprehensive income
|
|
3.2
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|
3.0
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Comprehensive income (loss)
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29.2
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(6.3
|
)
|
|
Less: comprehensive loss attributable to noncontrolling interest
|
|
—
|
|
|
0.2
|
|
|
Comprehensive income (loss) attributable to Great Plains Energy
|
|
$
|
29.2
|
|
|
$
|
(6.1
|
)
|
The accompanying Notes to Consolidated Financial Statements are an integral part of these statements.
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GREAT PLAINS ENERGY INCORPORATED
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Consolidated Statements of Cash Flows
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(Unaudited)
|
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|
|
|
|
|
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|
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Three Months Ended March 31
|
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2013
|
|
|
|
2012
|
|
|
Cash Flows from Operating Activities
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(millions)
|
|
|
Net income (loss)
|
|
$
|
26.0
|
|
|
|
|
$
|
(9.3
|
)
|
|
|
Adjustments to reconcile income to net cash from operating activities:
|
|
|
|
|
|
|
|
|
|
|
Depreciation and amortization
|
|
70.2
|
|
|
|
|
67.4
|
|
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|
Amortization of:
|
|
|
|
|
|
|
|
|
|
|
Nuclear fuel
|
|
2.9
|
|
|
|
|
1.4
|
|
|
|
Other
|
|
14.1
|
|
|
|
|
4.5
|
|
|
|
Deferred income taxes, net
|
|
12.2
|
|
|
|
|
(9.1
|
)
|
|
|
Investment tax credit amortization
|
|
(0.4
|
)
|
|
|
|
(0.6
|
)
|
|
|
Loss from equity investments, net of income taxes
|
|
0.1
|
|
|
|
|
—
|
|
|
|
Other operating activities (Note 2)
|
|
(36.1
|
)
|
|
|
|
(0.2
|
)
|
|
|
Net cash from operating activities
|
|
89.0
|
|
|
|
|
54.1
|
|
|
|
Cash Flows from Investing Activities
|
|
|
|
|
|
|
|
|
|
|
Utility capital expenditures
|
|
(172.2
|
)
|
|
|
|
(126.5
|
)
|
|
|
Allowance for borrowed funds used during construction
|
|
(1.7
|
)
|
|
|
|
(1.5
|
)
|
|
|
Purchases of nuclear decommissioning trust investments
|
|
(44.2
|
)
|
|
|
|
(7.3
|
)
|
|
|
Proceeds from nuclear decommissioning trust investments
|
|
43.3
|
|
|
|
|
6.5
|
|
|
|
Other investing activities
|
|
(3.7
|
)
|
|
|
|
(2.0
|
)
|
|
|
Net cash from investing activities
|
|
(178.5
|
)
|
|
|
|
(130.8
|
)
|
|
|
Cash Flows from Financing Activities
|
|
|
|
|
|
|
|
|
|
|
Issuance of common stock
|
|
1.3
|
|
|
|
|
1.5
|
|
|
|
Issuance of long-term debt
|
|
299.7
|
|
|
|
|
—
|
|
|
|
Issuance fees
|
|
(2.0
|
)
|
|
|
|
(1.9
|
)
|
|
|
Repayment of long-term debt
|
|
(9.3
|
)
|
|
|
|
(13.4
|
)
|
|
|
Net change in short-term borrowings
|
|
(164.1
|
)
|
|
|
|
107.8
|
|
|
|
Net change in collateralized short-term borrowings
|
|
1.0
|
|
|
|
|
15.0
|
|
|
|
Dividends paid
|
|
(33.8
|
)
|
|
|
|
(29.3
|
)
|
|
|
Other financing activities
|
|
(1.0
|
)
|
|
|
|
(3.0
|
)
|
|
|
Net cash from financing activities
|
|
91.8
|
|
|
|
|
76.7
|
|
|
|
Net Change in Cash and Cash Equivalents
|
|
2.3
|
|
|
|
|
—
|
|
|
|
Cash and Cash Equivalents at Beginning of Year
|
|
9.3
|
|
|
|
|
6.2
|
|
|
|
Cash and Cash Equivalents at End of Period
|
|
$
|
11.6
|
|
|
|
|
$
|
6.2
|
|
|
The accompanying Notes to Consolidated Financial Statements are an integral part of these statements.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GREAT PLAINS ENERGY INCORPORATED
|
|
Consolidated Statements of Common Shareholders' Equity and Noncontrolling Interest
|
|
(Unaudited)
|
|
|
|
|
|
|
Three Months Ended March 31
|
2013
|
|
2012
|
|
|
Shares
|
|
Amount
|
|
Shares
|
|
Amount
|
|
Common Stock
|
(millions, except share amounts)
|
|
Beginning balance
|
153,779,806
|
|
|
$
|
2,624.7
|
|
|
136,406,306
|
|
|
$
|
2,330.6
|
|
|
Issuance of common stock
|
60,161
|
|
|
1.3
|
|
|
75,168
|
|
|
1.5
|
|
|
Equity compensation expense, net of forfeitures
|
|
|
|
0.1
|
|
|
|
|
|
0.1
|
|
|
Unearned Compensation
|
|
|
|
|
|
|
|
|
|
|
|
|
Issuance of restricted common stock
|
|
|
|
(1.7
|
)
|
|
|
|
|
(2.8
|
)
|
|
Compensation expense recognized
|
|
|
|
0.5
|
|
|
|
|
|
0.5
|
|
|
Other
|
|
|
|
0.5
|
|
|
|
|
|
0.4
|
|
|
Ending balance
|
153,839,967
|
|
|
2,625.4
|
|
|
136,481,474
|
|
|
2,330.3
|
|
|
Retained Earnings
|
|
|
|
|
|
|
|
|
|
|
|
|
Beginning balance
|
|
|
|
758.8
|
|
|
|
|
|
684.7
|
|
|
Net income (loss) attribu
table to Great Plains Energy
|
|
|
|
26.0
|
|
|
|
|
|
(9.1
|
)
|
|
Loss on reissuance of treasury stock
|
|
|
|
—
|
|
|
|
|
|
(0.2
|
)
|
|
Dividends:
|
|
|
|
|
|
|
|
|
|
|
|
|
Common stock ($0.2175 and $0.2125 per share)
|
|
(33.4
|
)
|
|
|
|
|
(28.9
|
)
|
|
Preferred stock - at required rates
|
|
|
|
(0.4
|
)
|
|
|
|
|
(0.4
|
)
|
|
Performance shares
|
|
|
|
(0.1
|
)
|
|
|
|
|
—
|
|
|
Ending balance
|
|
|
|
750.9
|
|
|
|
|
|
646.1
|
|
|
Treasury Stock
|
|
|
|
|
|
|
|
|
|
|
|
|
Beginning balance
|
(250,236
|
)
|
|
(5.1
|
)
|
|
(264,567
|
)
|
|
(5.6
|
)
|
|
Treasury shares acquired
|
(52,778
|
)
|
|
(1.2
|
)
|
|
(63,145
|
)
|
|
(1.3
|
)
|
|
Treasury shares reissued
|
181,597
|
|
|
3.7
|
|
|
142,644
|
|
|
3.0
|
|
|
Ending balance
|
(121,417
|
)
|
|
(2.6
|
)
|
|
(185,068
|
)
|
|
(3.9
|
)
|
|
Accumulated Other Comprehensive Income (Loss)
|
|
|
|
|
|
|
|
|
|
|
|
Beginning balance
|
|
|
|
(38.4
|
)
|
|
|
|
|
(49.8
|
)
|
|
Derivative hedging activity, net of tax
|
|
|
|
3.2
|
|
|
|
|
|
2.9
|
|
|
Change in unrecognized pension expense, net of tax
|
|
|
—
|
|
|
|
|
|
0.1
|
|
|
Ending balance
|
|
|
|
(35.2
|
)
|
|
|
|
|
(46.8
|
)
|
|
Total Great Plains Energy Common Shareholders' Equity
|
|
|
$
|
3,338.5
|
|
|
|
|
|
$
|
2,925.7
|
|
|
|
|
|
|
|
|
|
|
|
Noncontrolling Interest
|
|
|
|
|
|
|
|
|
|
|
|
|
Beginning balance
|
|
|
|
$
|
—
|
|
|
|
|
|
$
|
1.0
|
|
|
Net loss attributable to noncontrolling interest
|
|
|
—
|
|
|
|
|
(0.2
|
)
|
|
Distribution
|
|
|
|
—
|
|
|
|
|
|
(0.6
|
)
|
|
Ending balance
|
|
|
|
$
|
—
|
|
|
|
|
|
$
|
0.2
|
|
The accompanying Notes to Consolidated Financial Statements are an integral part of these statements.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
KANSAS CITY POWER & LIGHT COMPANY
|
|
Consolidated Balance Sheets
|
|
(Unaudited)
|
|
|
|
|
March 31
|
|
December 31
|
|
|
2013
|
|
2012
|
|
ASSETS
|
(millions, except share amounts)
|
|
Current Assets
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
$
|
4.3
|
|
|
|
|
$
|
5.2
|
|
|
|
Funds on deposit
|
|
1.2
|
|
|
|
|
0.1
|
|
|
|
Receivables, net
|
|
145.5
|
|
|
|
|
163.2
|
|
|
|
Accounts receivable pledged as collateral
|
|
110.0
|
|
|
|
|
110.0
|
|
|
|
Fuel inventories, at average cost
|
|
70.3
|
|
|
|
|
63.6
|
|
|
|
Materials and supplies, at average cost
|
|
110.4
|
|
|
|
|
110.1
|
|
|
|
Deferred refueling outage costs
|
|
40.5
|
|
|
|
|
11.9
|
|
|
|
Refundable income taxes
|
|
4.3
|
|
|
|
|
9.1
|
|
|
|
Deferred income taxes
|
|
—
|
|
|
|
|
4.6
|
|
|
|
Prepaid expenses and other assets
|
|
25.9
|
|
|
|
|
23.8
|
|
|
|
Total
|
|
512.4
|
|
|
|
|
501.6
|
|
|
|
Utility Plant, at Original Cost
|
|
|
|
|
|
|
|
|
|
|
Electric
|
|
7,994.0
|
|
|
|
|
7,971.4
|
|
|
|
Less - accumulated depreciation
|
|
3,416.5
|
|
|
|
|
3,374.4
|
|
|
|
Net utility plant in service
|
|
4,577.5
|
|
|
|
|
4,597.0
|
|
|
|
Construction work in progress
|
|
580.4
|
|
|
|
|
486.5
|
|
|
|
Nuclear fuel, net of amortization of $160.3 and $157.4
|
|
81.1
|
|
|
|
|
81.3
|
|
|
|
Total
|
|
5,239.0
|
|
|
|
|
5,164.8
|
|
|
|
Investments and Other Assets
|
|
|
|
|
|
|
|
|
|
|
Nuclear decommissioning trust fund
|
|
164.3
|
|
|
|
|
154.7
|
|
|
|
Regulatory assets
|
|
833.7
|
|
|
|
|
853.2
|
|
|
|
Other
|
|
29.5
|
|
|
|
|
29.5
|
|
|
|
Total
|
|
1,027.5
|
|
|
|
|
1,037.4
|
|
|
|
Total
|
|
$
|
6,778.9
|
|
|
|
|
$
|
6,703.8
|
|
|
The disclosures regarding KCP&L included in the accompanying Notes to Consolidated Financial Statements are an integral part of these statements.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
KANSAS CITY POWER & LIGHT COMPANY
|
|
Consolidated Balance Sheets
|
|
(Unaudited)
|
|
|
|
|
|
|
|
March 31
|
|
December 31
|
|
|
2013
|
|
2012
|
|
LIABILITIES AND CAPITALIZATION
|
(millions, except share amounts)
|
|
Current Liabilities
|
|
|
|
|
|
|
|
|
Collateralized note payable
|
|
$
|
110.0
|
|
|
|
|
$
|
110.0
|
|
|
|
Commercial paper
|
|
156.0
|
|
|
|
|
361.0
|
|
|
|
Current maturities of long-term debt
|
|
—
|
|
|
|
|
0.4
|
|
|
|
Accounts payable
|
|
202.7
|
|
|
|
|
254.0
|
|
|
|
Accrued taxes
|
|
43.2
|
|
|
|
|
21.9
|
|
|
|
Accrued interest
|
|
41.7
|
|
|
|
|
27.7
|
|
|
|
Accrued compensation and benefits
|
|
37.7
|
|
|
|
|
44.8
|
|
|
|
Pension and post-retirement liability
|
|
1.4
|
|
|
|
|
1.4
|
|
|
|
Deferred income taxes
|
|
5.6
|
|
|
|
|
—
|
|
|
|
Other
|
|
12.2
|
|
|
|
|
12.8
|
|
|
|
Total
|
|
610.5
|
|
|
|
|
834.0
|
|
|
|
Deferred Credits and Other Liabilities
|
|
|
|
|
|
|
|
|
|
|
Deferred income taxes
|
|
831.2
|
|
|
|
|
836.4
|
|
|
|
Deferred tax credits
|
|
125.8
|
|
|
|
|
126.1
|
|
|
|
Asset retirement obligations
|
|
135.2
|
|
|
|
|
133.2
|
|
|
|
Pension and post-retirement liability
|
|
533.1
|
|
|
|
|
534.5
|
|
|
|
Regulatory liabilities
|
|
159.4
|
|
|
|
|
153.0
|
|
|
|
Other
|
|
93.0
|
|
|
|
|
88.2
|
|
|
|
Total
|
|
1,877.7
|
|
|
|
|
1,871.4
|
|
|
|
Capitalization
|
|
|
|
|
|
|
|
|
|
|
Common shareholder's equity
|
|
|
|
|
|
|
|
|
|
|
Common stock - 1,000 shares authorized without par value
|
|
|
|
|
|
|
|
|
|
|
1 share issued, stated value
|
|
1,563.1
|
|
|
|
|
1,563.1
|
|
|
|
Retained earnings
|
|
552.6
|
|
|
|
|
559.4
|
|
|
|
Accumulated other comprehensive loss
|
|
(24.3
|
)
|
|
|
|
(25.8
|
)
|
|
|
Total
|
|
2,091.4
|
|
|
|
|
2,096.7
|
|
|
|
Long-term debt (Note 8)
|
|
2,199.3
|
|
|
|
|
1,901.7
|
|
|
|
Total
|
|
4,290.7
|
|
|
|
|
3,998.4
|
|
|
|
Commitments and Contingencies (Note 9)
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
6,778.9
|
|
|
|
|
$
|
6,703.8
|
|
|
The disclosures regarding KCP&L included in the accompanying Notes to Consolidated Financial Statements are an integral part of these statements.
|
|
|
|
|
|
|
|
|
|
|
|
|
KANSAS CITY POWER & LIGHT COMPANY
|
|
Consolidated Statements of Income and Comprehensive Income
|
|
(Unaudited)
|
|
|
|
|
|
|
|
Three Months Ended March 31
|
|
2013
|
|
2012
|
|
Operating Revenues
|
|
(millions)
|
|
Electric revenues
|
|
$
|
366.7
|
|
|
$
|
327.0
|
|
|
Operating Expenses
|
|
|
|
|
|
|
|
Fuel
|
|
94.5
|
|
|
84.6
|
|
|
Purchased power
|
|
19.1
|
|
|
7.0
|
|
|
Transmission of electricity by others
|
|
8.0
|
|
|
5.0
|
|
|
Operating and maintenance expenses
|
|
108.2
|
|
|
117.9
|
|
|
Depreciation and amortization
|
|
47.6
|
|
|
45.7
|
|
|
General taxes
|
|
37.0
|
|
|
35.2
|
|
|
Total
|
|
314.4
|
|
|
295.4
|
|
|
Operating income
|
|
52.3
|
|
|
31.6
|
|
|
Non-operating income
|
|
1.7
|
|
|
0.5
|
|
|
Non-operating expenses
|
|
(0.4
|
)
|
|
(0.7
|
)
|
|
Interest charges
|
|
(32.0
|
)
|
|
(32.4
|
)
|
|
Income (loss) before income tax (expense) benefit
|
|
21.6
|
|
|
(1.0
|
)
|
|
Income tax (expense) benefit
|
|
(5.4
|
)
|
|
3.3
|
|
|
Net income
|
|
$
|
16.2
|
|
|
$
|
2.3
|
|
|
Comprehensive Income
|
|
|
|
|
|
|
|
Net income
|
|
$
|
16.2
|
|
|
$
|
2.3
|
|
|
Other comprehensive income
|
|
|
|
|
|
|
|
Derivative hedging activity
|
|
|
|
|
|
|
|
Loss on derivative hedging instruments
|
|
—
|
|
|
(0.3
|
)
|
|
Income tax benefit
|
|
—
|
|
|
0.1
|
|
|
Net loss on derivative hedging instruments
|
|
—
|
|
|
(0.2
|
)
|
|
Reclassification to expenses, net of tax
|
|
1.5
|
|
|
1.4
|
|
|
Derivative hedging activity, net of tax
|
|
1.5
|
|
|
1.2
|
|
|
Total other comprehensive income
|
|
1.5
|
|
|
1.2
|
|
|
Comprehensive income
|
|
$
|
17.7
|
|
|
$
|
3.5
|
|
The disclosures regarding KCP&L included in the accompanying Notes to Consolidated Financial Statements are an integral part of these statements.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
KANSAS CITY POWER & LIGHT COMPANY
|
|
Consolidated Statements of Cash Flows
|
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended March 31
|
|
2013
|
|
|
|
2012
|
|
|
Cash Flows from Operating Activities
|
|
(millions)
|
|
|
Net income
|
|
$
|
16.2
|
|
|
|
|
$
|
2.3
|
|
|
|
Adjustments to reconcile income to net cash from operating activities:
|
|
|
|
|
|
|
|
|
|
Depreciation and amortization
|
|
47.6
|
|
|
|
|
45.7
|
|
|
|
Amortization of:
|
|
|
|
|
|
|
|
|
|
|
Nuclear fuel
|
|
2.9
|
|
|
|
|
1.4
|
|
|
|
Other
|
|
8.3
|
|
|
|
|
7.2
|
|
|
|
Deferred income taxes, net
|
|
5.3
|
|
|
|
|
(3.4
|
)
|
|
|
Investment tax credit amortization
|
|
(0.3
|
)
|
|
|
|
(0.5
|
)
|
|
|
Other operating activities (Note 2)
|
|
0.7
|
|
|
|
|
43.9
|
|
|
|
Net cash from operating activities
|
|
80.7
|
|
|
|
|
96.6
|
|
|
|
Cash Flows from Investing Activities
|
|
|
|
|
|
|
|
|
|
|
Utility capital expenditures
|
|
(140.4
|
)
|
|
|
|
(100.5
|
)
|
|
|
Allowance for borrowed funds used during construction
|
|
(1.3
|
)
|
|
|
|
(0.7
|
)
|
|
|
Purchases of nuclear decommissioning trust investments
|
|
(44.2
|
)
|
|
|
|
(7.3
|
)
|
|
|
Proceeds from nuclear decommissioning trust investments
|
|
43.3
|
|
|
|
|
6.5
|
|
|
|
Other investing activities
|
|
(2.3
|
)
|
|
|
|
(2.4
|
)
|
|
|
Net cash from investing activities
|
|
(144.9
|
)
|
|
|
|
(104.4
|
)
|
|
|
Cash Flows from Financing Activities
|
|
|
|
|
|
|
|
|
|
|
Issuance of long-term debt
|
|
299.7
|
|
|
|
|
—
|
|
|
|
Issuance fees
|
|
(2.0
|
)
|
|
|
|
—
|
|
|
|
Repayment of long-term debt
|
|
(2.6
|
)
|
|
|
|
(12.3
|
)
|
|
|
Net change in short-term borrowings
|
|
(205.0
|
)
|
|
|
|
29.0
|
|
|
|
Net change in collateralized short-term borrowings
|
|
—
|
|
|
|
|
15.0
|
|
|
|
Net money pool borrowings
|
|
(3.8
|
)
|
|
|
|
1.6
|
|
|
|
Dividends paid to Great Plains Energy
|
|
(23.0
|
)
|
|
|
|
(25.0
|
)
|
|
|
Net cash from financing activities
|
|
63.3
|
|
|
|
|
8.3
|
|
|
|
Net Change in Cash and Cash Equivalents
|
|
(0.9
|
)
|
|
|
|
0.5
|
|
|
|
Cash and Cash Equivalents at Beginning of Year
|
|
5.2
|
|
|
|
|
1.9
|
|
|
|
Cash and Cash Equivalents at End of Period
|
|
$
|
4.3
|
|
|
|
|
$
|
2.4
|
|
|
The disclosures regarding KCP&L included in the accompanying Notes to Consolidated Financial Statements are an integral part of these statements.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
KANSAS CITY POWER & LIGHT COMPANY
|
|
Consolidated Statements of Common Shareholder's Equity
|
|
(Unaudited)
|
|
|
|
|
|
|
Three Months Ended March 31
|
2013
|
|
2012
|
|
|
Shares
|
|
Amount
|
|
Shares
|
|
Amount
|
|
|
(millions, except share amounts)
|
|
Common Stock
|
1
|
|
|
$
|
1,563.1
|
|
|
1
|
|
|
$
|
1,563.1
|
|
|
Retained Earnings
|
|
|
|
|
|
|
|
|
|
|
|
|
Beginning balance
|
|
|
|
559.4
|
|
|
|
|
|
513.8
|
|
|
Net income
|
|
|
|
16.2
|
|
|
|
|
|
2.3
|
|
|
Dividends:
|
|
|
|
|
|
|
|
|
|
|
|
|
Common stock held by Great Plains Energy
|
|
|
|
(23.0
|
)
|
|
|
|
|
(25.0
|
)
|
|
Ending balance
|
|
|
|
552.6
|
|
|
|
|
|
491.1
|
|
|
Accumulated Other Comprehensive Income (Loss)
|
|
|
|
|
|
|
|
|
|
|
Beginning balance
|
|
|
|
(25.8
|
)
|
|
|
|
|
(31.4
|
)
|
|
Derivative hedging activity, net of tax
|
|
|
|
1.5
|
|
|
|
|
|
1.2
|
|
|
Ending balance
|
|
|
|
(24.3
|
)
|
|
|
|
|
(30.2
|
)
|
|
Total Common Shareholder's Equity
|
|
|
|
$
|
2,091.4
|
|
|
|
|
|
$
|
2,024.0
|
|
The disclosures regarding KCP&L included in the accompanying Notes to Consolidated Financial Statements are an integral part of these statements.
GREAT PLAINS ENERGY INCORPORATED
KANSAS CITY POWER & LIGHT COMPANY
Notes to Unaudited Consolidated Financial Statements
The notes to unaudited consolidated financial statements that follow are a combined presentation for Great Plains Energy Incorporated and Kansas City Power & Light Company, both registrants under this filing. The terms "Great Plains Energy," "Company," "KCP&L" and "Companies" are used throughout this report. "Great Plains Energy" and the "Company" refer to Great Plains Energy Incorporated and its consolidated subsidiaries, unless otherwise indicated. "KCP&L" refers to Kansas City Power & Light Company and its consolidated subsidiaries. "Companies" refers to Great Plains Energy Incorporated and its consolidated subsidiaries and KCP&L and its consolidated subsidiaries. The Companies' interim financial statements reflect all adjustments (which include normal, recurring adjustments) that are necessary, in the opinion of management, for a fair presentation of the results for the interim periods presented.
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Organization
Great Plains Energy, a Missouri corporation incorporated in 2001, is a public utility holding company and does not own or operate any significant assets other than the stock of its subsidiaries. Great Plains Energy's wholly owned direct subsidiaries with operations or active subsidiaries are as follows:
|
|
|
|
•
|
KCP&L is an integrated, regulated electric utility that provides electricity to customers primarily in the states of Missouri and Kansas. KCP&L has one active wholly owned subsidiary, Kansas City Power & Light Receivables Company (KCP&L Receivables Company).
|
|
|
|
|
•
|
KCP&L Greater Missouri Operations Company (GMO) is an integrated, regulated electric utility that primarily provides electricity to customers in the state of Missouri. GMO also provides regulated steam service to certain customers in the St. Joseph, Missouri area. GMO has two active wholly owned subsidiaries, GMO Receivables Company and MPS Merchant Services, Inc. (MPS Merchant). MPS Merchant has certain long-term natural gas contracts remaining from its former non-regulated trading operations.
|
Each of Great Plains Energy's and KCP&L's consolidated financial statements includes the accounts of their subsidiaries. Intercompany transactions have been eliminated.
Great Plains Energy's sole reportable business segment is electric utility. See Note 16 for additional information.
Basic and Diluted Earnings per Common Share Calculation
To determine basic EPS, preferred stock dividend requirements and net loss attributable to noncontrolling interest are deducted from net income (loss) before dividing by the average number of common shares outstanding. The effect of dilutive securities, calculated using the treasury stock method, assumes the issuance of common shares applicable to performance shares, restricted stock and Equity Units. Great Plains Energy settled the Equity Units in June 2012.
The following table reconciles Great Plains Energy's basic and diluted EPS.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended March 31
|
|
2013
|
|
|
|
2012
|
|
|
Income
|
(millions, except per share amounts)
|
|
Net income (loss)
|
|
$
|
26.0
|
|
|
|
|
$
|
(9.3
|
)
|
|
|
Less: net loss attributable to noncontrolling interest
|
|
—
|
|
|
|
|
(0.2
|
)
|
|
|
Less: preferred stock dividend requirements
|
|
0.4
|
|
|
|
|
0.4
|
|
|
|
Earnings (loss) available for common shareholders
|
|
$
|
25.6
|
|
|
|
|
$
|
(9.5
|
)
|
|
|
Common Shares Outstanding
|
|
|
|
|
|
|
|
|
|
|
Average number of common shares outstanding
|
|
153.4
|
|
|
|
|
135.9
|
|
|
|
Add: effect of dilutive securities
|
|
0.3
|
|
|
|
|
—
|
|
|
|
Diluted average number of common shares outstanding
|
|
153.7
|
|
|
|
|
135.9
|
|
|
|
Basic and Diluted EPS
|
|
$
|
0.17
|
|
|
|
|
$
|
(0.07
|
)
|
|
Great Plains Energy had a net loss for the three months ended
March 31, 2012
; therefore, no potential common shares were included in the diluted EPS calculation for that period because the effect is always anti-dilutive.
Anti-dilutive shares excluded from the computation of diluted EPS are detailed in the following table.
|
|
|
|
|
|
|
|
|
|
Three Months Ended March 31
|
2013
|
|
2012
|
|
Performance shares
|
408,707
|
|
|
—
|
|
|
Restricted stock shares
|
78,509
|
|
|
390,322
|
|
|
Equity Units
|
N/A
|
|
|
17,106,364
|
|
Dividends Declared
In
May 2013
, Great Plains Energy's Board of Directors (Board) declared a quarterly dividend of
$0.2175
per share on Great Plains Energy's common stock. The common dividend is payable
June 20, 2013
, to shareholders of record as of
May 30, 2013
. The Board also declared regular dividends on Great Plains Energy's preferred stock, payable September 1, 2013, to shareholders of record as of August 12, 2013.
In
May 2013
,
KCP&L’s Board of Directors declared a cash dividend payable to Great Plains Energy
of
$23 million
payable on June 19, 2013.
2. SUPPLEMENTAL CASH FLOW INFORMATION
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Great Plains Energy Other Operating Activities
|
|
|
Three Months Ended March 31
|
|
2013
|
|
2012
|
|
|
Cash flows affected by changes in:
|
|
(millions)
|
|
|
Receivables
|
|
$
|
17.1
|
|
|
$
|
54.9
|
|
|
|
Accounts receivable pledged as collateral
|
|
(1.0
|
)
|
|
(15.0
|
)
|
|
|
Fuel inventories
|
|
(7.5
|
)
|
|
(19.1
|
)
|
|
|
Materials and supplies
|
|
(0.6
|
)
|
|
(2.6
|
)
|
|
|
Accounts payable
|
|
(70.5
|
)
|
|
(50.2
|
)
|
|
|
Accrued taxes
|
|
30.5
|
|
|
27.9
|
|
|
|
Accrued interest
|
|
20.5
|
|
|
1.1
|
|
|
|
Deferred refueling outage costs
|
|
(28.6
|
)
|
|
4.5
|
|
|
|
Pension and post-retirement benefit obligations
|
|
12.7
|
|
|
3.3
|
|
|
|
Allowance for equity funds used during construction
|
|
(1.3
|
)
|
|
(0.1
|
)
|
|
|
Fuel recovery mechanism
|
|
(4.0
|
)
|
|
3.6
|
|
|
|
Other
|
|
(3.4
|
)
|
|
(8.5
|
)
|
|
|
Total other operating activities
|
|
$
|
(36.1
|
)
|
|
$
|
(0.2
|
)
|
|
|
Cash paid during the period:
|
|
|
|
|
|
|
|
|
Interest
|
|
$
|
23.1
|
|
|
$
|
67.7
|
|
|
|
Income taxes
|
|
$
|
0.1
|
|
|
$
|
—
|
|
|
|
Non-cash investing activities:
|
|
|
|
|
|
|
|
Liabilities accrued for capital expenditures
|
|
$
|
37.0
|
|
|
$
|
42.5
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
KCP&L Other Operating Activities
|
|
Three Months Ended March 31
|
|
2013
|
|
2012
|
|
|
Cash flows affected by changes in:
|
|
(millions)
|
|
Receivables
|
|
$
|
21.5
|
|
|
$
|
61.6
|
|
|
|
Accounts receivable pledged as collateral
|
|
—
|
|
|
(15.0
|
)
|
|
|
Fuel inventories
|
|
(6.7
|
)
|
|
(14.3
|
)
|
|
|
Materials and supplies
|
|
(0.3
|
)
|
|
(1.7
|
)
|
|
|
Accounts payable
|
|
(32.2
|
)
|
|
(16.1
|
)
|
|
|
Accrued taxes
|
|
26.2
|
|
|
24.8
|
|
|
|
Accrued interest
|
|
14.0
|
|
|
13.4
|
|
|
|
Deferred refueling outage costs
|
|
(28.6
|
)
|
|
4.5
|
|
|
|
Pension and post-retirement benefit obligations
|
|
13.4
|
|
|
4.2
|
|
|
|
Allowance for equity funds used during construction
|
|
(1.3
|
)
|
|
—
|
|
|
|
Fuel recovery mechanism
|
|
(1.0
|
)
|
|
(5.8
|
)
|
|
|
Other
|
|
(4.3
|
)
|
|
(11.7
|
)
|
|
|
Total other operating activities
|
|
$
|
0.7
|
|
|
$
|
43.9
|
|
|
|
Cash paid during the period:
|
|
|
|
|
|
|
|
|
Interest
|
|
$
|
15.1
|
|
|
$
|
16.1
|
|
|
|
Income taxes
|
|
$
|
—
|
|
|
$
|
—
|
|
|
|
Non-cash investing activities:
|
|
|
|
|
|
|
|
Liabilities accrued for capital expenditures
|
|
$
|
33.3
|
|
|
$
|
39.2
|
|
|
3. RECEIVABLES
Great Plains Energy's and KCP&L's receivables are detailed in the following table.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
March 31
|
|
December 31
|
|
|
|
2013
|
|
|
|
2012
|
|
|
Great Plains Energy
|
|
(millions)
|
|
|
Customer accounts receivable - unbilled
|
|
$
|
59.3
|
|
|
|
|
$
|
58.3
|
|
|
|
Allowance for doubtful accounts - customer accounts receivable
|
|
(3.5
|
)
|
|
|
|
(2.6
|
)
|
|
|
Other receivables
|
|
81.8
|
|
|
|
|
98.8
|
|
|
|
Total
|
|
$
|
137.6
|
|
|
|
|
$
|
154.5
|
|
|
|
KCP&L
|
|
|
|
|
|
|
|
|
|
|
Customer accounts receivable - unbilled
|
|
$
|
42.7
|
|
|
|
|
$
|
42.9
|
|
|
|
Allowance for doubtful accounts - customer accounts receivable
|
|
(1.9
|
)
|
|
|
|
(1.5
|
)
|
|
|
Intercompany receivables
|
|
33.8
|
|
|
|
|
40.0
|
|
|
|
Other receivables
|
|
70.9
|
|
|
|
|
81.8
|
|
|
|
Total
|
|
$
|
145.5
|
|
|
|
|
$
|
163.2
|
|
|
Great Plains Energy's and KCP&L's other receivables at
March 31, 2013
, and
December 31, 2012
, consisted primarily of receivables from partners in jointly owned electric utility plants and wholesale sales receivables.
Sale of Accounts Receivable – KCP&L and GMO
KCP&L and GMO sell all of their retail electric and steam service accounts receivable to their wholly owned subsidiaries, KCP&L Receivables Company and GMO Receivables Company, respectively, which in turn sell an undivided percentage ownership interest in the accounts receivable to Victory Receivables Corporation, an independent outside investor. Each of KCP&L Receivables Company's and GMO Receivables Company's sale of the undivided percentage ownership interest in accounts receivable to Victory Receivables Corporation is accounted for as a secured borrowing with accounts receivable pledged as collateral and a corresponding short-term collateralized note payable recognized on the balance sheets. At
March 31, 2013
, and
December 31, 2012
, Great Plains Energy's accounts receivable pledged as collateral and the corresponding short-term collateralized note payable were
$175.0 million
and
$174.0 million
, respectively. At
March 31, 2013
, and
December 31, 2012
, KCP&L's accounts receivable pledged as collateral and the corresponding short-term collateralized note payable were
$110.0 million
.
KCP&L and GMO each sell their receivables at a fixed price based upon the expected cost of funds and charge-offs. These costs comprise KCP&L's and GMO's loss on the sale of accounts receivable. KCP&L and GMO service the receivables and receive annual servicing fees of
1.5%
and
1.25%
, respectively, of the outstanding principal amount of the receivables sold to KCP&L Receivables Company and GMO Receivables Company. KCP&L and GMO do not recognize a servicing asset or liability because management determined the collection agent fees earned by KCP&L and GMO approximate market value. KCP&L's agreement expires in September 2014 and allows for
$110 million
in aggregate outstanding principal amount at any time. GMO's agreement expires in September 2014 and allows for
$80 million
in aggregate outstanding principal during the period of June 1 through October 31 and
$65 million
in aggregate outstanding principal during the period of November 1 through May 31 of each year.
Information regarding KCP&L's sale of accounts receivable to KCP&L Receivables Company and GMO's sale of accounts receivable to GMO Receivables Company is reflected in the following tables.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended March 31, 2013
|
KCP&L
|
|
KCP&L
Receivables
Company
|
|
Consolidated
KCP&L
|
|
GMO
|
|
GMO
Receivables
Company
|
|
Consolidated Great Plains Energy
|
|
|
(millions)
|
|
Receivables (sold) purchased
|
|
$
|
(334.7
|
)
|
|
|
|
$
|
334.7
|
|
|
|
|
$
|
—
|
|
|
|
|
$
|
(185.4
|
)
|
|
|
|
$
|
185.4
|
|
|
|
|
$
|
—
|
|
|
|
Gain (loss) on sale of accounts receivable
(a)
|
|
(4.2
|
)
|
|
|
|
4.2
|
|
|
|
|
—
|
|
|
|
|
(2.3
|
)
|
|
|
|
2.3
|
|
|
|
|
—
|
|
|
|
Servicing fees received (paid)
|
|
0.6
|
|
|
|
|
(0.6
|
)
|
|
|
|
—
|
|
|
|
|
0.3
|
|
|
|
|
(0.3
|
)
|
|
|
|
—
|
|
|
|
Fees paid to outside investor
|
|
—
|
|
|
|
|
(0.3
|
)
|
|
|
|
(0.3
|
)
|
|
|
|
—
|
|
|
|
|
(0.2
|
)
|
|
|
|
(0.5
|
)
|
|
|
Cash from customers (transferred) received
|
|
(336.7
|
)
|
|
|
|
336.7
|
|
|
|
|
—
|
|
|
|
|
(184.9
|
)
|
|
|
|
184.9
|
|
|
|
|
—
|
|
|
|
Cash received from (paid for) receivables purchased
|
|
332.5
|
|
|
|
|
(332.5
|
)
|
|
|
|
—
|
|
|
|
|
182.6
|
|
|
|
|
(182.6
|
)
|
|
|
|
—
|
|
|
|
Interest on intercompany note received (paid)
|
|
0.1
|
|
|
|
|
(0.1
|
)
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended March 31, 2012
|
|
KCP&L
|
|
KCP&L Receivables
Company
|
|
Consolidated
KCP&L
|
|
|
(millions)
|
|
Receivables (sold) purchased
|
|
|
$
|
(293.5
|
)
|
|
|
|
$
|
293.5
|
|
|
|
|
$
|
—
|
|
|
|
Gain (loss) on sale of accounts receivable
(a)
|
|
|
(3.7
|
)
|
|
|
|
4.1
|
|
|
|
|
0.4
|
|
|
|
Servicing fees received (paid)
|
|
|
0.5
|
|
|
|
|
(0.5
|
)
|
|
|
|
—
|
|
|
|
Fees paid to outside investor
|
|
|
—
|
|
|
|
|
(0.3
|
)
|
|
|
|
(0.3
|
)
|
|
|
Cash from customers (transferred) received
|
|
|
(327.2
|
)
|
|
|
|
327.2
|
|
|
|
|
—
|
|
|
|
Cash received from (paid for) receivables purchased
|
|
|
323.1
|
|
|
|
|
(323.1
|
)
|
|
|
|
—
|
|
|
|
Interest on intercompany note received (paid)
|
|
|
0.1
|
|
|
|
|
(0.1
|
)
|
|
|
|
—
|
|
|
(a)
Any net gain (loss) is the result of the timing difference inherent in collecting receivables and over the life of the agreement will net to zero.
4. NUCLEAR PLANT
KCP&L owns
47%
of Wolf Creek Generating Station (Wolf Creek), its only nuclear generating unit. Wolf Creek is located in Coffey County, Kansas, just northeast of Burlington, Kansas. Wolf Creek's operating license expires in 2045. Wolf Creek is regulated by the Nuclear Regulatory Commission (NRC), with respect to licensing, operations and safety-related requirements.
Spent Nuclear Fuel and High-Level Radioactive Waste
Under the Nuclear Waste Policy Act of 1982, the Department of Energy (DOE) is responsible for the permanent disposal of spent nuclear fuel. KCP&L pays the DOE a quarterly fee of one-tenth of a cent for each kWh of net nuclear generation delivered and sold for the future disposal of spent nuclear fuel. These disposal costs are charged to fuel expense. In 2010, the DOE filed a motion with the NRC to withdraw its then pending application to the NRC to construct a national repository for the disposal of spent nuclear fuel and high-level radioactive waste at Yucca Mountain, Nevada. An NRC board denied the DOE's motion to withdraw its application, and the DOE appealed that decision to the full NRC. In 2011, the NRC issued an evenly split decision on the appeal and ordered the licensing board to close out its work on the DOE's application due to a lack of funding. These agency actions prompted multiple states and a municipality to file a lawsuit in a federal court of appeals asking the court to compel the NRC to resume its review and to issue a decision on the license application. The court has not yet issued a final decision in the case. Wolf Creek has an on-site storage facility designed to hold all spent fuel generated at the plant through 2025, and believes it will be able to expand on-site storage as needed past 2025. Management cannot predict when, or if, an alternative disposal site will be available to receive Wolf Creek's spent nuclear fuel and will continue to monitor this activity.
Low-Level Radioactive Waste
Wolf Creek disposes of most of its low-level radioactive waste (Class A waste) at an existing third-party repository in Utah. Management expects that the site located in Utah will remain available to Wolf Creek for disposal of its Class A waste. Wolf Creek has contracted with a waste processor that will process, take title and dispose in another state most of the remainder of Wolf Creek's low-level radioactive waste (Classes B and C waste, which is higher in radioactivity but much lower in volume). Should on-site waste storage be needed in the future, Wolf Creek has current storage capacity on site for about four years' generation of Classes B and C waste and believes it will be able to expand that storage capacity as needed if it becomes necessary to do so.
Nuclear Decommissioning Trust Fund
The following table summarizes the change in Great Plains Energy's and KCP&L's nuclear decommissioning trust fund.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
March 31
2013
|
|
December 31
2012
|
|
Decommissioning Trust
|
|
(millions)
|
|
|
Beginning balance January 1
|
|
$
|
154.7
|
|
|
|
|
$
|
135.3
|
|
|
|
Contributions
|
|
0.9
|
|
|
|
|
3.3
|
|
|
|
Earned income, net of fees
|
|
0.8
|
|
|
|
|
3.0
|
|
|
|
Net realized gains
|
|
1.1
|
|
|
|
|
1.0
|
|
|
|
Net unrealized gains
|
|
6.8
|
|
|
|
|
12.1
|
|
|
|
Ending balance
|
|
$
|
164.3
|
|
|
|
|
$
|
154.7
|
|
|
The nuclear decommissioning trust is reported at fair value on the balance sheets and is invested in assets as detailed in the following table.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
March 31
2013
|
|
|
December 31
2012
|
|
|
|
Cost
Basis
|
|
Unrealized Gains
|
|
Unrealized
Losses
|
|
Fair
Value
|
|
Cost
Basis
|
|
Unrealized
Gains
|
|
Unrealized
Losses
|
|
Fair
Value
|
|
|
(millions)
|
|
Equity securities
|
$
|
82.0
|
|
|
|
$
|
28.1
|
|
|
|
|
$
|
(1.4
|
)
|
|
|
|
$
|
108.7
|
|
|
|
|
$
|
80.6
|
|
|
|
|
$
|
21.1
|
|
|
|
|
$
|
(1.6
|
)
|
|
|
|
$
|
100.1
|
|
|
|
Debt securities
|
48.3
|
|
|
|
4.4
|
|
|
|
|
—
|
|
|
|
|
52.7
|
|
|
|
|
46.6
|
|
|
|
|
4.9
|
|
|
|
|
(0.1
|
)
|
|
|
|
51.4
|
|
|
|
Other
|
2.9
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
|
2.9
|
|
|
|
|
3.2
|
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
|
3.2
|
|
|
|
Total
|
$
|
133.2
|
|
|
|
$
|
32.5
|
|
|
|
|
$
|
(1.4
|
)
|
|
|
|
$
|
164.3
|
|
|
|
|
$
|
130.4
|
|
|
|
|
$
|
26.0
|
|
|
|
|
$
|
(1.7
|
)
|
|
|
|
$
|
154.7
|
|
|
The
weighted-average matur
ity of debt securities held by the trust at
March 31, 2013
, was approximately
7
years. The costs of securities sold are determined on the basis of specific identification. The following table summarizes the realized gains and losses from the sale of securities in the nuclear decommissioning trust fund.
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended March 31
|
2013
|
|
2012
|
|
|
(millions)
|
|
Realized gains
|
$
|
1.5
|
|
|
$
|
0.5
|
|
|
Realized losses
|
(0.4
|
)
|
|
(0.1
|
)
|
5. PENSION PLANS AND OTHER EMPLOYEE BENEFITS
Great Plains Energy maintains defined benefit pension plans for substantially all active and inactive employees, including officers, of KCP&L, GMO and Wolf Creek Nuclear Operating Corporation (WCNOC) and incurs significant costs in providing the plans. Pension benefits under these plans reflect the employees' compensation, years of service and age at retirement. In addition to providing pension benefits, Great Plains Energy provides certain post-retirement health care and life insurance benefits for substantially all retired employees of KCP&L, GMO and WCNOC.
KCP&L and GMO record pension and post-retirement expense in accordance with rate orders from the Public Service Commission of the State of Missouri (MPSC) and The State Corporation Commission of the State of Kansas (KCC) that allow the difference between pension and post-retirement costs under Generally Accepted Accounting Principles (GAAP) and costs for ratemaking to be recognized as a regulatory asset or liability. This difference between financial and regulatory accounting methods is due to timing and will be eliminated over the life of the plans.
The following table provides Great Plains Energy's components of net periodic benefit costs prior to the effects of capitalization and sharing with joint owners of power plants.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pension Benefits
|
|
Other Benefits
|
|
Three Months Ended March 31
|
|
2013
|
|
2012
|
|
2013
|
|
2012
|
|
Components of net periodic benefit costs
|
|
(millions)
|
|
Service cost
|
|
$
|
10.5
|
|
|
$
|
8.9
|
|
|
$
|
1.1
|
|
|
$
|
0.8
|
|
|
Interest cost
|
|
11.8
|
|
|
12.2
|
|
|
1.9
|
|
|
1.9
|
|
|
Expected return on plan assets
|
|
(11.8
|
)
|
|
(10.7
|
)
|
|
(0.5
|
)
|
|
(0.5
|
)
|
|
Prior service cost
|
|
0.5
|
|
|
1.1
|
|
|
1.8
|
|
|
1.8
|
|
|
Recognized net actuarial loss
|
|
13.7
|
|
|
11.1
|
|
|
0.5
|
|
|
—
|
|
|
Transition obligation
|
|
—
|
|
|
—
|
|
|
—
|
|
|
0.3
|
|
|
Net periodic benefit costs before regulatory adjustment
|
|
24.7
|
|
|
22.6
|
|
|
4.8
|
|
|
4.3
|
|
|
Regulatory adjustment
|
|
(3.6
|
)
|
|
(3.9
|
)
|
|
(0.5
|
)
|
|
0.4
|
|
|
Net periodic benefit costs
|
|
$
|
21.1
|
|
|
$
|
18.7
|
|
|
$
|
4.3
|
|
|
$
|
4.7
|
|
6. EQUITY COMPENSATION
Great Plains Energy's Long-Term Incentive Plan is an equity compensation plan approved by Great Plains Energy's shareholders. The Long-Term Incentive Plan permits the grant of restricted stock, restricted stock units, bonus shares, stock options, stock appreciation rights, limited stock appreciation rights, director shares, director deferred share units and performance shares to directors, officers and other employees of Great Plains Energy and KCP&L. Forfeiture rates are based on historical forfeitures and future expectations and are reevaluated annually.
The following table summarizes Great Plains Energy's and KCP&L's equity compensation expense and the associated income tax benefit.
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended March 31
|
|
2013
|
|
2012
|
|
Great Plains Energy
|
|
(millions)
|
|
Equity comp
ensation expense
|
|
$
|
1.8
|
|
|
$
|
1.0
|
|
|
Income tax benefit
|
|
0.6
|
|
|
0.6
|
|
|
KCP&L
|
|
|
|
|
|
|
|
Equity comp
ensation expense
|
|
$
|
1.3
|
|
|
$
|
0.7
|
|
|
Income tax benefit
|
|
0.4
|
|
|
0.5
|
|
Performance Shares
Performance share activity for the three months ended
March 31, 2013
, is summarized in the following table. Performance adjustment represents the number of shares of common stock related to performance shares ultimately issued that can vary from the number of performance shares initially granted depending on Great Plains Energy's performance over a stated period of time.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Performance
Shares
|
|
Grant Date
Fair Value*
|
|
Beginning balance
|
|
370,560
|
|
|
|
|
$
|
23.05
|
|
|
|
Granted
|
|
224,121
|
|
|
|
|
24.16
|
|
|
|
Earned
|
|
(104,453
|
)
|
|
|
|
23.37
|
|
|
|
Performance adjustment
|
|
(51,542
|
)
|
|
|
|
23.37
|
|
|
|
Ending balance
|
|
438,686
|
|
|
|
|
23.50
|
|
|
* weighted-average
At
March 31, 2013
, the remaining weighted-average contractual term was
2.1
years. The weighted-average grant-date fair value of shares granted was
$24.16
and
$18.71
for the three months ended
March 31, 2013
, and
2012
, respectively. At
March 31, 2013
, there was
$6.3 million
of total unrecognized compensation expense, net of forfeiture rates, related to performance shares granted under the Long-Term Incentive Plan, which will be recognized over the remaining weighted-average contractual term. The total fair value of performance shares earned and paid for the three months ended
March 31, 2013
, was
$2.4 million
. The
re were
no
performance shares earned and paid for the three months ended
March 31, 2012
.
The fair value of performance share awards is estimated using a Monte Carlo simulation technique that uses the closing stock price at the valuation date and incorporates assumptions for inputs of expected volatilities, dividend yield and risk-free rates. Expected volatility is based on daily stock price change during a historical period commensurate with the remaining term of the performance period of the grant. The risk-free rate is based upon the rate at the time of the evaluation for zero-coupon government bonds with a maturity consistent with the remaining performance period of the grant. The dividend yield is based on the most recent dividends paid and the actual closing stock price on the valuation date. For shares granted in
2013
, inputs for expected volatility, dividend yield and risk-free rates were
19%
,
3.88%
and
0.35%
, respectively.
Restricted Stock
Restricted stock activity for the three months ended
March 31, 2013
, is summarized in the following table.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nonvested
Restricted Stock
|
|
Grant Date
Fair Value*
|
|
Beginning balance
|
|
277,439
|
|
|
|
|
$
|
19.03
|
|
|
|
Granted and issued
|
|
74,728
|
|
|
|
|
22.45
|
|
|
|
Vested
|
|
(28,802
|
)
|
|
|
|
17.50
|
|
|
|
Ending balance
|
|
323,365
|
|
|
|
|
19.94
|
|
|
* weighted-average
At
March 31, 2013
, the remaining weighted-average contractual term was
1.8
years. The weighted-average grant-date fair value of shares granted for the three months ended
March 31, 2013
, and
2012
, was
$22.45
and
$19.66
, respectively. At
March 31, 2013
, there was
$3.6 million
of total unrecognized compensation expense, net of forfeiture rates, related to nonvested restricted stock granted under the Long-Term Incentive Plan, which will be recognized over the remaining weighted-average contractual term. The total fair value of shares vested was
$0.5 million
and
$2.0 million
for the three months ended
March 31, 2013
, and
2012
, respectively.
7. SHORT-TERM BORROWINGS AND SHORT-TERM BANK LINES OF CREDIT
Great Plains Energy's $200 Million Revolving Credit Facility
Great Plains Energy's
$200 million
revolving credit facility with a group of banks expires in
December 2016
. The facility's terms permit transfers of unused commitments between this facility and the KCP&L and GMO facilities discussed below, with the total amount of the facility not exceeding $400 million at any one time. A default by Great Plains Energy or any of its significant subsidiaries on other indebtedness totaling more than
$50.0 million
is a default under the facility. Under the terms of this facility, Great Plains Energy is required to maintain a consolidated indebtedness to consolidated capitalization ratio, as defined in the facility, not greater than
0.65
to 1.00 at all times. At
March 31, 2013
, Great Plains Energy was
in compliance
with this covenant. At
March 31, 2013
, Great Plains Energy had
$11.0 million
of outstanding cash borrowings at a weighted-average interest rate of
1.94%
and had issued letters of credit totaling
$1.8 million
under the credit facility. At
December 31, 2012
, Great Plains Energy had
$12.0 million
of outstanding cash borrowings at a weighted-average interest rate of
2.00%
and had issued letters of credit totaling
$1.8 million
under the credit facility.
KCP&L's $600 Million Revolving Credit Facility and Commercial Paper
KCP&L's
$600 million
revolving credit facility with a group of banks provides support for its issuance of commercial paper and other general corporate purposes and expires in
December 2016
. Great Plains Energy and KCP&L may transfer up to $200 million of unused commitments between Great Plains Energy's and KCP&L's facilities. A default by KCP&L on other indebtedness totaling more than
$50.0 million
is a default under the facility. Under the terms of this facility, KCP&L is required to maintain a consolidated indebtedness to consolidated capitalization ratio, as defined in the facility, not greater than
0.65
to 1.00 at all times. At
March 31, 2013
, KCP&L was
in compliance
with this covenant. At
March 31, 2013
, KCP&L had
$156.0 million
of commercial paper outstanding at a weighted-average interest rate of
0.42%
, had issued letters of credit totaling
$5.3 million
and had
no
outstanding cash borrowings under the credit facility. At
December 31, 2012
, KCP&L had
$361.0 million
of commercial paper outstanding at a weighted-average interest rate of
0.48%
, had issued letters of credit totaling
$13.9 million
and had
no
outstanding cash borrowings under the credit facility.
GMO's $450 Million Revolving Credit Facility and Commercial Paper
GMO's
$450 million
revolving credit facility with a group of banks provides support for its issuance of commercial paper and other general corporate purposes and expires in
December 2016
. Great Plains Energy and GMO may transfer up to $200 million of unused commitments between Great Plains Energy's and GMO's facilities. A default by GMO, Great Plains Energy or any of their significant subsidiaries on other indebtedness totaling more than
$50.0 million
is a default under the facility. Great Plains Energy currently guarantees this GMO credit facility. Under the terms of this facility, GMO is required to maintain a consolidated indebtedness to consolidated capitalization ratio, as defined in the facility, not greater than
0.65
to 1.00 at all times. At
March 31, 2013
, GMO was
in compliance
with this covenant. At
March 31, 2013
, GMO had
$211.0 million
of commercial paper outstanding at a weighted-average interest rate of
0.86%
, had issued letters of credit totaling
$15.1 million
and had
no
outstanding cash borrowings under the credit facility. At
December 31, 2012
, GMO had
$169.1 million
of commercial paper outstanding at a weighted-average interest rate of
0.94%
, had issued letters of credit totaling
$15.1 million
and had
no
outstanding cash borrowings under the credit facility.
8. LONG-TERM DEBT
Great Plains Energy's and KCP&L's long-term debt is detailed in the following table.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
March 31
|
|
December 31
|
|
|
Year Due
|
|
2013
|
|
2012
|
|
KCP&L
|
|
|
|
(millions)
|
|
|
General Mortgage Bonds
|
|
|
|
|
|
|
|
|
|
|
4.97% EIRR bonds
(a)
|
2015-2035
|
|
|
$
|
106.9
|
|
|
|
|
$
|
106.9
|
|
|
|
7.15% Series 2009A (8.59% rate)
(b)
|
2019
|
|
|
400.0
|
|
|
|
|
400.0
|
|
|
|
4.65% EIRR Series 2005
|
2035
|
|
|
50.0
|
|
|
|
|
50.0
|
|
|
|
5.375% EIRR Series 2007B
|
2035
|
|
|
73.2
|
|
|
|
|
73.2
|
|
|
|
Senior Notes
|
|
|
|
|
|
|
|
|
|
|
|
|
5.85% Series (5.72% rate)
(b)
|
2017
|
|
|
250.0
|
|
|
|
|
250.0
|
|
|
|
6.375% Series (7.49% rate)
(b)
|
2018
|
|
|
350.0
|
|
|
|
|
350.0
|
|
|
|
3.15% Series
|
2023
|
|
|
300.0
|
|
|
|
|
—
|
|
|
|
6.05% Series (5.78% rate)
(b)
|
2035
|
|
|
250.0
|
|
|
|
|
250.0
|
|
|
|
5.30% Series
|
2041
|
|
|
400.0
|
|
|
|
|
400.0
|
|
|
|
EIRR bonds 4.90% Series 2008
|
2038
|
|
|
23.4
|
|
|
|
|
23.4
|
|
|
|
Other
|
|
|
|
—
|
|
|
|
|
2.6
|
|
|
|
Current maturities
|
|
|
|
—
|
|
|
|
|
(0.4
|
)
|
|
|
Unamortized discount
|
|
|
|
(4.2
|
)
|
|
|
|
(4.0
|
)
|
|
|
Total KCP&L excluding current maturities
(c)
|
|
|
|
2,199.3
|
|
|
|
|
1,901.7
|
|
|
|
Other Great Plains Energy
|
|
|
|
|
|
|
|
|
|
|
|
|
GMO First Mortgage Bonds 9.44% Series
|
2014-2021
|
|
|
9.0
|
|
|
|
|
10.1
|
|
|
|
GMO Pollution Control Bonds
|
|
|
|
|
|
|
|
|
|
|
|
|
0.221% Wamego Series 1996
(d)
|
2026
|
|
|
7.3
|
|
|
|
|
7.3
|
|
|
|
0.221% State Environmental 1993
(d)
|
2028
|
|
|
5.0
|
|
|
|
|
5.0
|
|
|
|
5.85% SJLP Pollution Control
|
|
|
|
—
|
|
|
|
|
5.6
|
|
|
|
GMO 8.27% Senior Notes
|
2021
|
|
|
80.9
|
|
|
|
|
80.9
|
|
|
|
GMO Medium Term Notes
|
|
|
|
|
|
|
|
|
|
|
|
|
7.16% Series
|
2013
|
|
|
6.0
|
|
|
|
|
6.0
|
|
|
|
7.33% Series
|
2023
|
|
|
3.0
|
|
|
|
|
3.0
|
|
|
|
7.17% Series
|
2023
|
|
|
7.0
|
|
|
|
|
7.0
|
|
|
|
Great Plains Energy Senior Notes
|
|
|
|
|
|
|
|
|
|
|
2.75% Series (3.67% rate)
(b)
|
2013
|
|
|
250.0
|
|
|
|
|
250.0
|
|
|
|
6.875% Series (7.33% rate)
(b)
|
2017
|
|
|
100.0
|
|
|
|
|
100.0
|
|
|
|
4.85% Series (7.34% rate)
(b)
|
2021
|
|
|
350.0
|
|
|
|
|
350.0
|
|
|
|
5.292% Series
|
2022
|
|
|
287.5
|
|
|
|
|
287.5
|
|
|
|
Current maturities
|
|
|
|
(257.1
|
)
|
|
|
|
(262.7
|
)
|
|
|
Unamortized discount and premium, net
|
|
|
|
5.3
|
|
|
|
|
5.4
|
|
|
|
Total Great Plains Energy excluding current maturities
(c)
|
|
|
|
$
|
3,053.2
|
|
|
|
|
$
|
2,756.8
|
|
|
|
|
|
|
(a)
|
Weighted-average interest rates at
March 31, 2013
|
|
|
|
|
(b)
|
Rate after amortizing gains/losses recognized in OCI on settlements of interest rate hedging instruments
|
|
|
|
|
(c)
|
Does not include
$39.5 million
EIRR Series 1993B,
$63.3 million
EIRR Series 2007 A-1 and
$10.0 million
EIRR Series 2007 A-2 bonds because the bonds had been repurchased and were held by KCP&L
|
Fair Value of Long-Term Debt
The fair value of long-term debt is categorized as a Level 2 liability within the fair value hierarchy as it is based on quoted market prices, with the incremental borrowing rate for similar debt used to determine fair value if quoted market prices are not available. At
March 31, 2013
, the book value and fair value of Great Plains Energy's long-term debt, including current maturities, were
$3.3 billion
and
$3.8 billion
, respectively. At
December 31, 2012
, the book value and fair value of Great Plains Energy's long-term debt, including current maturities, were
$3.0 billion
and
$3.5 billion
, respectively. At
March 31, 2013
, the book value and fair value of KCP&L's long-term debt, including current maturities, were
$2.2 billion
and
$2.5 billion
, respectively. At
December 31, 2012
, the book value and fair value of KCP&L's long-term debt, including current maturities, were
$1.9 billion
and
$2.2 billion
, respectively.
KCP&L Senior Notes
In March 2013, KCP&L issued, at a discount, $300.0 million of 3.15% unsecured Senior Notes, maturing in 2023.
EIRR Bond Remarketing
On April 1, 2013, KCP&L remarketed the following series of Environmental Improvement Revenue Refunding (EIRR) bonds:
|
|
|
|
•
|
secured Series 1992 EIRR bonds maturing in 2017 totaling
$31.0 million
at a fixed rate of 1.25% through maturity;
|
|
|
|
|
•
|
secured Series 1993B EIRR bonds totaling
$39.5 million
and previously held by KCP&L and 1993A EIRR bonds totaling
$40.0 million
maturing in 2023 at a fixed rate of 2.95% through maturity;
|
|
|
|
|
•
|
unsecured Series 2007 A-1 and 2007 A-2 EIRR bonds totaling
$10.0 million
and
$63.3 million
, respectively, maturing in 2035 and previously held by KCP&L into one series: Series 2007A totaling
$73.3 million
at a variable rate that will be determined weekly; and
|
|
|
|
|
•
|
unsecured Series 2007B EIRR bonds maturing in 2035 totaling
$73.2 million
at a variable rate that will be determined weekly.
|
In connection with the remarketing of the bonds, the municipal bond insurance policies issued by Syncora
Guarantee Inc. relating to the Series 1992 EIRR bonds and the Series 1993 EIRR bonds and by Financial Guaranty Insurance Company (FGIC) relating to the Series 2007 EIRR bond were cancelled. In connection with the cancellation of the policy relating to the Series 2007 EIRR bonds, KCP&L’s Mortgage Bond Series 2007 EIRR Insurer due 2035 was retired. The mortgage bond, in the amount of
$146.5 million
, was issued and delivered to FGIC in 2009 to collateralize FGIC’s claim on KCP&L under the related insurance agreement.
9. COMMITMENTS AND CONTINGENCIES
Environmental Matters
Great Plains Energy and KCP&L are subject to extensive federal, state and local environmental laws, regulations and permit requirements relating to air and water quality, waste management and disposal, natural resources and health and safety. In addition to imposing continuing compliance obligations and remediation costs, these laws, regulations and permits authorize the imposition of substantial penalties for noncompliance, including fines, injunctive relief and other sanctions. The cost of complying with current and future environmental requirements is expected to be material to Great Plains Energy and KCP&L. Failure to comply with environmental requirements or to timely recover environmental costs through rates could have a material effect on Great Plains Energy's and KCP&L's results of operations, financial position and cash flows.
The following discussion groups environmental and certain associated matters into the broad categories of air and climate change, water, solid waste and remediation.
Air and Climate Change Overview
The Clean Air Act and associated regulations enacted by the Environmental Protection Agency (EPA) form a comprehensive program to preserve and enhance air quality. States are required to establish regulations and programs to address all requirements of the Clean Air Act and have the flexibility to enact more stringent
requirements. All of Great Plains Energy's and KCP&L's generating facilities, and certain of their other facilities, are subject to the Clean Air Act.
Great Plains Energy's and KCP&L's current estimate of capital expenditures (exclusive of AFUDC and property taxes) to comply with the currently-effective Clean Air Interstate Rule (CAIR), the replacement to CAIR or the Cross-State Air Pollution Rule (CSAPR), the best available retrofit technology (BART) rule, the SO
2
National Ambient Air Quality Standard (NAAQS), the industrial boiler rule and the Mercury and Air Toxics Standards (MATS) rule, (all of which are discussed below) is approximately
$1 billion
. The actual cost of compliance with any existing, proposed or future rules may be significantly different from the cost estimate provided.
The approximate
$1 billion
current estimate of capital expenditures reflects the following capital projects:
|
|
|
|
•
|
KCP&L's La Cygne No. 1 scrubber and baghouse installed by June 2015;
|
|
|
|
|
•
|
KCP&L's La Cygne No. 2 full air quality control system (AQCS) installed by June 2015;
|
|
|
|
|
•
|
KCP&L's Montrose No. 3 full AQCS installed by approximately 2020; and
|
|
|
|
|
•
|
GMO's Sibley No. 3 scrubber and baghouse installed by approximately 2017.
|
In September 2011, KCP&L commenced construction of the La Cygne projects and at
March 31, 2013
, had incurred approximately
$275 million
of cash capital expenditures, which is included in the approximate $1 billion estimate above. Other capital projects at KCP&L's Montrose Nos. 1 and 2 and GMO's Sibley Nos. 1 and 2 and Lake Road No. 4/6 are possible but are currently considered less likely. The Companies are continuously evaluating the approximate
$1 billion
estimate and the capital projects contained therein. Any capacity and energy requirements resulting from a decision not to proceed with the less likely projects are currently expected to be met through renewable energy additions required under Missouri and Kansas renewable energy standards, demand side management programs, construction of combustion turbines and/or combined cycle units, and/or power purchase agreements.
The approximate
$1 billion
current estimate of capital expenditures does not reflect the non-capital costs the Companies incur on an ongoing basis to comply with environmental laws, which may increase in the future due to current or future environmental laws. The Companies expect to seek recovery of the costs associated with environmental requirements through rate increases; however, there can be no assurance that such rate increases would be granted. The Companies may be subject to materially adverse rate treatment in response to competitive, economic, political, legislative or regulatory factors and/or public perception of the Companies' environmental reputation.
Clean Air Interstate Rule (CAIR) and Cross-State Air Pollution Rule (CSAPR)
The CAIR requires reductions in SO
2
and NO
x
emissions in
28
states, including Missouri, accomplished through statewide caps. Great Plains Energy's and KCP&L's fossil fuel-fired plants located in Missouri are subject to CAIR, while their fossil fuel-fired plants in Kansas are not.
In July 2008, the U.S. Court of Appeals for the D.C. Circuit (D.C. Circuit Court) vacated CAIR in its entirety and remanded the matter to the EPA to promulgate a new rule consistent with its opinion. In December 2008, the court issued an order reinstating CAIR pending EPA's development of a replacement regulation on remand. In July 2011, the EPA finalized the CSAPR to replace the currently-effective CAIR. The CSAPR required states within its scope to reduce power plant SO
2
and NO
x
emissions that contribute to ozone and fine particle nonattainment in other states. Compliance with the CSAPR was scheduled to begin in 2012. Multiple states, utilities and other parties, including KCP&L, filed requests for reconsideration and stays with the EPA and/or the D.C. Circuit Court. In August 2012, the D.C. Circuit Court issued its opinion in which it vacated the CSAPR and remanded the rule to the EPA to revise in accordance with its opinion. The D.C. Circuit Court directed the EPA to continue to administer the CAIR until a valid replacement is promulgated.
Best Available Retrofit Technology (BART) Rule
The EPA BART rule directs state air quality agencies to identify whether visibility-reducing emissions from sources subject to BART are below limits set by the state or whether retrofit measures are needed to reduce emissions. BART applies to specific eligible facilities including KCP&L's La Cygne Nos. 1 and 2 in Kansas; KCP&L's Iatan No. 1, in which GMO has an 18% interest, and KCP&L's Montrose No. 3 in Missouri; GMO's Sibley Unit No. 3 and Lake Road Unit No. 6 in Missouri; and Westar Energy, Inc.'s (Westar) Jeffrey Unit Nos. 1 and 2 in Kansas, in which GMO has an 8% interest. Both Missouri and Kansas have approved BART plans.
KCP&L has a consent agreement with the Kansas Department of Health and Environment (KDHE) incorporating limits for stack particulate matter emissions, as well as limits for NO
x
and SO
2
emissions, at its La Cygne Station that will be below the presumptive limits under BART. KCP&L further agreed to use its best efforts to install emission control technologies to reduce those emissions from the La Cygne Station prior to the required compliance date under BART, but in no event later than June 1, 2015. In August 2011, KCC issued its order on KCP&L's predetermination request that would apply to the recovery of costs for its 50% share of the environmental equipment required to comply with BART at the La Cygne Station. In the order, KCC stated that KCP&L's decision to retrofit La Cygne was reasonable, reliable, efficient and prudent and the
$1.23 billion
cost estimate is reasonable. If the cost for the project is at or below the $1.23 billion estimate, absent a showing of fraud or other intentional imprudence, KCC stated that it will not re-evaluate the prudency of the cost of the project. If the cost of the project exceeds the $1.23 billion estimate and KCP&L seeks to recover amounts exceeding the estimate, KCP&L will bear the burden of proving that any additional costs were prudently incurred. KCP&L's
50%
share of the estimated cost is
$615 million
. KCP&L began the project in September 2011.
Mercury and Air Toxics Standards (MATS) Rule
In December 2011, the EPA finalized the
MATS Rule that will reduce emissions of toxic air pollutants, also known as hazardous air pollutants, from new and existing coal- and oil-fired electric utility generating units with a capacity of greater than
25
MWs. The rule establishes numerical emission limits for mercury, particulate matter (a surrogate for non-mercury metals) and hydrochloric acid (a surrogate for acid gases). The rule establishes work practices, instead of numerical emission limits, for organic air toxics, including dioxin/furan. Compliance with the rule would need to be achieved by installing additional emission control equipment, changes in plant operation, purchasing additional power in the wholesale market or a combination of these and other alternatives. The rule allows three to four years for compliance.
Industrial Boiler Rule
In December 2012, the EPA issued a final rule that would reduce emissions of hazardous air pollutants from new and existing industrial boilers. The final rule establishes numeric emission limits for mercury, particulate matter (as a surrogate for non-mercury metals), hydrogen chloride (as a surrogate for acid gases) and carbon monoxide (as a surrogate for non-dioxin organic hazardous air pollutants). The final rule establishes emission limits for KCP&L's and GMO's existing units that produce steam other than for the generation of electricity. The final rule does not apply to KCP&L's and GMO's electricity generating boilers, but would apply to most of GMO's Lake Road boilers, which also serve steam customers, and to auxiliary boilers at other generating facilities. The rule allows three to four years for compliance.
New Source Review
The Clean Air Act's New Source Review program requires companies to obtain permits and, if necessary, install control equipment to reduce emissions when making a major modification or a change in operation if either is expected to cause a significant net increase in regulated emissions.
In 2010, Westar settled a lawsuit filed by the Department of Justice on behalf of the EPA and agreed to install a selective catalytic reduction (SCR) system at one of the three Jeffrey Energy Center units by the end of 2014. The Jeffrey Energy Center is
92%
owned by Westar and operated exclusively by Westar. GMO has an
8%
interest in the Jeffrey Energy Center and is generally responsible for its 8% share of the facility's operating costs and capital expenditures. Westar has estimated the cost of this SCR at
approximately
$240 million
. Depending on the NO
x
emission reductions attained by that SCR and attainable through the installation of other controls at the other two units, the settlement agreement may require the installation of a second SCR system on one of the other two units by the end of 2016. Westar has informed the EPA that they believe that the terms of the settlement can be met through the installation of less expensive NO
x
reduction equipment rather than a second SCR system. GMO expects to seek recovery of its share of these costs through rate increases; however, there can be no assurance that such rate increases would be granted.
SO
2
NAAQS
In June 2010, the EPA strengthened the primary NAAQS for SO
2
by establishing a new 1-hour standard at a level of
0.075
ppm and revoking the two existing primary standards of
0.140
ppm evaluated over 24 hours and
0.030
ppm evaluated over an entire year. In July 2011, the MDNR recommended to the EPA that part of Jackson County, Missouri, which is in the Companies' service territory, be designated a nonattainment area for the new 1-hour SO
2
standard. The EPA has not yet made its final designation.
Particulate Matter (PM) NAAQS
In December 2012, the EPA strengthened the annual primary NAAQS for fine particulate matter (PM2.5). With the final rule, the EPA provided recent ambient air monitoring data for the Kansas City area indicating it would be in attainment of the revised fine particle standard. States will now make recommendations to designate areas as meeting the standards or not meeting them with the EPA making the final designation.
Climate Change
The Companies are subject to existing greenhouse gas reporting regulations and certain greenhouse gas permitting requirements. Management believes it is possible that additional federal or relevant state or local laws or regulations could be enacted to address global climate change. At the international level, while the United States is not a current party to the international Kyoto Protocol, it has agreed to undertake certain voluntary actions under the non-binding Copenhagen Accord and pursuant to subsequent international discussions relating to climate change, including the establishment of a goal to reduce greenhouse gas emissions. International agreements legally binding on the United States may be reached in the future. Such new laws or regulations could mandate new or increased requirements to control or reduce the emission of greenhouse gases, such as CO
2
, which are created in the combustion of fossil fuels. The Companies' current generation capacity is primarily coal-fired and is estimated to produce about one ton of CO
2
per MWh, or approximately
25 million
tons and
19 million
tons per year for Great Plains Energy and KCP&L, respectively.
Legislation concerning the reduction of emissions of greenhouse gases, including CO
2
, is being considered at the federal and state levels. The timing and effects of any such legislation cannot be determined at this time. In the absence of new Congressional mandates, the EPA is proceeding with the regulation of greenhouse gases under the existing Clean Air Act. In March 2012, the EPA proposed new source performance standards for emissions of CO
2
for new affected fossil-fuel-fired electric utility generating units. This action pursuant to the Clean Air Act would, for the first time, set national limits on the amount of CO
2
that power plants built in the future can emit. The proposal would not apply to Great Plains Energy's and KCP&L's existing units including modifications to those units.
In addition, certain federal courts have held that state and local governments and private parties have standing to bring climate change tort suits seeking company-specific emission reductions and monetary or other damages. While the Companies are not a party to any climate change tort suit, there is no assurance that such suits may not be filed in the future or as to the outcome if such suits are filed. Such requirements or litigation outcomes could have the potential for a significant financial and operational impact on Great Plains Energy and KCP&L. The Companies would likely seek recovery of capital costs and expenses for compliance through rate increases; however, there can be no assurance that such rate increases would be granted.
Laws have been passed in Missouri and Kansas, the states in which the Companies' retail electric businesses are operated, setting renewable energy standards, and management believes that national clean or renewable energy standards are also possible. While management believes additional requirements addressing these matters will possibly be enacted, the timing, provisions and impact of such requirements, including the cost to obtain and install new equipment to achieve compliance, cannot be reasonably estimated at this time.
A Kansas law enacted in May 2009 required Kansas public electric utilities, including KCP&L, to have renewable energy generation capacity equal to at least
10%
of their three-year average Kansas peak retail demand by 2011 increasing to
15%
by 2016 and
20%
by 2020. A Missouri law enacted in November 2008 required at least
2%
of the electricity provided by Missouri investor-owned utilities (including KCP&L and GMO) to their Missouri retail customers to come from renewable resources, including wind, solar, biomass and hydropower, by 2011, increasing to
5%
in 2014,
10%
in 2018, and
15%
in 2021, with a small portion (estimated to be about
2
MW for each of KCP&L and GMO) required to come from solar resources.
KCP&L and GMO project that they will be compliant with the Missouri renewable requirements, exclusive of the solar requirement, through 2023 for KCP&L and 2018 for GMO. KCP&L and GMO project that the purchase of solar renewable energy credits will be sufficient for compliance with the Missouri solar requirements for the foreseeable future. KCP&L also projects that it will be compliant with the Kansas renewable requirements through 2015.
Greenhouse gas legislation or regulation has the potential of having significant financial and operational impacts on Great Plains Energy and KCP&L, including the potential costs and impacts of achieving compliance with limits that may be established. However, the ultimate financial and operational consequences to Great Plains Energy and KCP&L cannot be determined until such legislation is passed and/or regulations are issued. Management will continue to monitor the progress of relevant legislation and regulations.
Water
The Clean Water Act and associated regulations enacted by the EPA form a comprehensive program to restore and preserve water quality. Like the Clean Air Act, states are required to establish regulations and programs to address all requirements of the Clean Water Act, and have the flexibility to enact more stringent requirements. All of Great Plains Energy's and KCP&L's generating facilities, and certain of their other facilities, are subject to the Clean Water Act.
In March 2011, the EPA proposed regulations pursuant to Section 316(b) of the Clean Water Act regarding cooling water intake structures pursuant to a court approved settlement. KCP&L generation facilities with cooling water intake structures would be subject to a limit on how many fish can be killed by being pinned against intake screens (impingement) and would be required to conduct studies to determine whether and what site-specific controls, if any, would be required to reduce the number of aquatic organisms drawn into cooling water systems (entrainment). The EPA agreed to finalize the rule by June 2013. Although the impact on Great Plains Energy's and KCP&L's operations will not be known until after the rule is finalized, it could have a significant effect on Great Plains Energy's and KCP&L's results of operations, financial position and cash flows.
KCP&L holds a permit from the MDNR covering water discharge from its Hawthorn Station. The permit authorizes KCP&L to, among other things, withdraw water from the Missouri River for cooling purposes and return the heated water to the Missouri River. KCP&L has applied for a renewal of this permit and the EPA has submitted an interim objection letter regarding the allowable amount of heat that can be contained in the returned water. Until this matter is resolved, KCP&L continues to operate under its current permit. KCP&L cannot predict the outcome of this matter; however, while less significant outcomes are possible, this matter may require KCP&L to reduce its generation at Hawthorn Station, install cooling towers or both, any of which could have a significant impact on KCP&L's results of operations, financial position and cash flows. The outcome could also affect the terms of water permit renewals at KCP&L's Iatan Station and at GMO's Sibley and Lake Road Stations.
In April 2013, the EPA proposed to revise the technology-based effluent limitations guidelines and standards regulation to make the existing controls on discharges from steam electric power plants more stringent. The proposal sets the first federal limits on the levels of toxic metals in wastewater that can be discharged from power plants. The new requirements for existing power plants would be phased in between 2017 and 2022. The EPA is under a consent decree to take final action on the proposed rule by May 2014.
The proposal includes a variety of options to reduce pollutants that are discharged into waterways by coal ash, air pollution control waste and other waste from steam electric power plants. Depending on the option, the proposed rule would establish new or additional requirements for wastewaters associated with the following processes and byproducts at certain KCP&L and GMO stations: flue gas desulfurization, fly ash, bottom ash, flue gas mercury control, combustion residual leachate from landfills and surface impoundments, and non-chemical metal cleaning wastes.
The EPA also announced its intention to align this proposal with a related rule for coal combustion residuals (CCRs) proposed in May 2010 under the Resource Conservation and Recovery Act (RCRA). The EPA is considering establishing best management practices requirements that would apply to surface impoundments containing CCRs. The cost of complying with the proposed rules has the potential of having a significant financial and operational impact on Great Plains Energy and KCP&L. However, the financial and operational consequences to Great Plains Energy and KCP&L cannot be determined until the final regulation is enacted.
Solid Waste
Solid and hazardous waste generation, storage, transportation, treatment and disposal is regulated at the federal and state levels under various laws and regulations. In May 2010, the EPA proposed to regulate CCRs under the RCRA to address the risks from the disposal of CCRs generated from the combustion of coal at electric generating facilities. The EPA is considering two options in this proposal. Under the first option, the EPA would regulate CCRs as special wastes under subtitle C of RCRA (hazardous), when they are destined for disposal in landfills or surface impoundments. Under the second option, the EPA would regulate disposal of CCRs under subtitle D of RCRA (non-hazardous). The Companies use coal in generating electricity and dispose of the CCRs in both on-site facilities and facilities owned by third parties. The cost of complying with the proposed CCR rule has the potential of having a significant financial and operational impact on Great Plains Energy and KCP&L. However, the financial and operational consequences to Great Plains Energy and KCP&L cannot be determined until an option is selected by the EPA and the final regulation is enacted.
Remediation
Certain federal and state laws, including the Comprehensive Environmental Response, Compensation and Liability Act (CERCLA), hold current and previous owners or operators of contaminated facilities and persons who arranged for the disposal or treatment of hazardous substances liable for the cost of investigation and cleanup. CERCLA and other laws also authorize the EPA and other agencies to issue orders compelling potentially responsible parties to clean up sites that are determined to present an actual or potential threat to human health or the environment. GMO is named as a potentially responsible party at two disposal sites for polychlorinated biphenyl (PCB) contamination, and retains some environmental liability for several operations and investments it no longer owns. In addition, GMO also owns, or has acquired liabilities from companies that once owned or operated, former manufactured gas plant (MGP) sites, which are subject to the supervision of the EPA and various state environmental agencies.
At
March 31, 2013
, and
December 31, 2012
, KCP&L had
$0.3 million
accrued for environmental remediation expenses, which covers ground water monitoring at a former MGP site. The amount accrued was established on an undiscounted basis and KCP&L does not currently have an estimated time frame over which the accrued amount may be paid.
In addition to the
$0.3 million
accrual above, at
March 31, 2013
, and
December 31, 2012
, Great Plains Energy had
$2.0 million
accrued for the future investigation and remediation of certain additional GMO identified MGP sites and retained liabilities. This estimate was based upon review of the potential costs associated with conducting investigative and remedial actions at identified sites, as well as the likelihood of whether such actions will be necessary. This estimate could change materially after further investigation, and could also be affected by the
actions of environmental agencies and the financial viability of other potentially responsible parties; however, given the uncertainty of these items the possible loss or range of loss in excess of the amount accrued is not estimable.
GMO has pursued recovery of remediation costs from insurance carriers and other potentially responsible parties. As a result of a settlement with an insurance carrier, approximately
$2.6 million
in insurance proceeds less an annual deductible is available to GMO to recover qualified MGP remediation expenses. GMO would seek recovery of additional remediation costs and expenses through rate increases; however, there can be no assurance that such rate increases would be granted.
10. LEGAL PROCEEDINGS
GMO Western Energy Crisis
In response to complaints of manipulation of the California energy market, The Federal Energy Regulatory Commission (FERC) issued an order in July 2001 requiring net sellers of power in the California markets from October 2, 2000, through June 20, 2001, at prices above a FERC-determined competitive market clearing price, to make refunds to net purchasers of power in the California market during that time period. Because MPS Merchant was a net purchaser of power during the refund period, it has received approximately
$8 million
in refunds through settlements with certain sellers of power. MPS Merchant estimates that it is entitled to approximately
$12 million
in additional refunds under the standards FERC has used in this case. FERC has stated that interest will be applied to the refunds but the amount of interest has not yet been determined.
In December 2001, various parties appealed the July 2001 FERC order to the United States Court of Appeals for the Ninth Circuit (Ninth Circuit) seeking review of a number of issues, including expansion of the refund period to include periods prior to October 2, 2000 (the Summer Period). MPS Merchant was a net seller of power during the Summer Period. On August 2, 2006, the Ninth Circuit issued an order finding, among other things, that FERC did not provide a sufficient justification for refusing to exercise its remedial authority under the Federal Power Act to determine whether market participants violated FERC-approved tariffs during the Summer Period. The court remanded the matter to FERC for further consideration. If FERC determines that MPS Merchant violated then-existing tariffs or laws during the Summer Period and that such violations affected market clearing prices in California, MPS Merchant could be found to owe refunds.
11. RELATED PARTY TRANSACTIONS AND RELATIONSHIPS
KCP&L employees manage GMO's business and operate its facilities at cost. These costs totaled
$25.2 million
and
$26.2 million
, respectively, for the three months ended
March 31, 2013
, and
2012
. Additionally, KCP&L and GMO engage in wholesale electricity transactions with each other. KCP&L's net wholesale sales to GMO were
$5.4 million
for the three months ended
March 31, 2013
, and
2012
. KCP&L and GMO are also authorized to participate in the Great Plains Energy money pool, an internal financing arrangement in which funds may be lent on a short-term basis to KCP&L and GMO. The following table summarizes KCP&L's related party receivables and payables.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
March 31
|
|
December 31
|
|
|
|
|
2013
|
|
|
|
2012
|
|
|
|
|
|
(millions)
|
|
|
Net receivable from GMO
|
|
|
$
|
17.1
|
|
|
|
|
$
|
26.2
|
|
|
|
Net receivable from Great Plains Energy
|
|
|
16.7
|
|
|
|
|
13.8
|
|
|
12. DERIVATIVE INSTRUMENTS
Great Plains Energy and KCP&L are exposed to a variety of market risks including interest rates and commodity prices. Management has established risk management policies and strategies to reduce the potentially adverse effects that the volatility of the markets may have on Great Plains Energy's and KCP&L's operating results. Great Plains Energy's and KCP&L's interest rate risk management activities have included using derivative instruments to hedge against future interest rate fluctuations on anticipated debt issuances. Commodity risk management activities, including the use of certain derivative instruments, are subject to the management, direction and control of an internal commodity risk committee. Management maintains commodity price risk management strategies that
use derivative instruments to reduce the effects of fluctuations in fuel and purchased power expense caused by commodity price volatility.
Counterparties to commodity derivatives expose Great Plains Energy and KCP&L to credit loss in the event of nonperformance. This credit loss is limited to the cost of replacing these contracts at current market rates. Derivative instruments, excluding those instruments that qualify for the normal purchases and normal sales (NPNS) election, which are accounted for by accrual accounting, are recorded on the balance sheet at fair value as an asset or liability. Changes in the fair value of derivative instruments are recognized currently in net income unless specific hedge accounting criteria are met, except hedges for GMO's utility operations that are recorded to a regulatory asset or liability consistent with MPSC regulatory orders, as discussed below.
Great Plains Energy and KCP&L have posted collateral, in the ordinary course of business, for the aggregate fair value of all derivative instruments with credit risk-related contingent features that are in a liability position. At
March 31, 2013
, Great Plains Energy and KCP&L have posted collateral in excess of the aggregate fair value of its derivative instruments; therefore, if the credit risk-related contingent features underlying these agreements were triggered, Great Plains Energy and KCP&L would not be required to post additional collateral to their counterparties. For derivative contracts with counterparties under master netting agreements, Great Plains Energy and KCP&L can net all receivables and payables with each respective counterparty.
Commodity Risk Management
KCP&L's risk management policy is to use derivative instruments, as needed, in order to mitigate its exposure to market price fluctuations on a portion of its projected natural gas purchases to meet generation requirements for retail and firm wholesale sales. KCP&L designates these natural gas hedges as cash flow hedges. The fair values of these instruments are recorded as derivative assets or liabilities with an offsetting entry to OCI for the effective portion of the hedge. To the extent the hedges are not effective, any ineffective portion of the change in fair market value would be recorded currently in fuel expense. At March 31, 2013, KCP&L had no hedges for its projected natural gas usage for retail load and firm MWh sales. KCP&L did not record any ineffectiveness on natural gas hedges for the three months ended
March 31, 2012
.
Additionally, KCP&L's risk management policy uses derivative instruments to mitigate exposure to market price fluctuations for wholesale power prices. KCP&L has designated these financial contracts as economic hedges (non-hedging derivatives). The fair values of these instruments are recorded as derivative assets or liabilities with an offsetting entry to the consolidated statements of income.
GMO's risk management policy is to use derivative instruments to mitigate price exposure to natural gas price volatility in the market. The fair value of the portfolio relates to financial contracts that will settle against actual purchases of natural gas and purchased power. At
March 31, 2013
, GMO had financial contracts in place to hedge approximately
83%
,
22%
and
2%
of its expected on-peak natural gas generation and natural gas equivalent purchased power price exposure for
2013
,
2014
and
2015
, respectively. GMO has designated its natural gas hedges as economic hedges (non-hedging derivatives). In connection with GMO's 2005 Missouri electric rate case, it was agreed that the settlement costs of these contracts would be recognized in fuel expense. The settlement cost is included in GMO's Fuel Adjustment Clause (FAC). A regulatory asset has been recorded
to reflect the change in the timing of recognition authorized by the MPSC. Recovery of actual costs incurred will not impact earnings, but will impact cash flows due to the timing of the recovery mechanism.
MPS Merchant, which has certain long-term natural gas contracts remaining from its former non-regulated trading operations, manages the daily delivery of its remaining contractual commitments with economic hedges (non-hedging derivatives) to reduce its exposure to changes in market prices. Within the trading portfolio, MPS Merchant takes certain positions to hedge physical sale or purchase contracts. MPS Merchant records the fair value of physical trading energy contracts as derivative assets or liabilities with an offsetting entry to the consolidated statements of income.
The notional and recorded fair values of open positions for derivative instruments are summarized in the following table. The fair values of these derivatives are recorded on the consolidated balance sheets. The fair values below are gross values before netting agreements and netting of cash collateral.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
March 31
|
|
December 31
|
|
|
2013
|
|
2012
|
|
|
Notional
Contract
Amount
|
|
Fair
Value
|
|
Notional
Contract
Amount
|
|
Fair
Value
|
|
Great Plains Energy
|
(millions)
|
|
Futures contracts
|
|
|
|
|
|
|
|
|
Cash flow hedges
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
1.0
|
|
|
$
|
(0.2
|
)
|
|
Non-hedging derivatives
|
38.5
|
|
|
(2.0
|
)
|
|
17.9
|
|
|
(2.8
|
)
|
|
Forward contracts
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-hedging derivatives
|
67.0
|
|
|
6.5
|
|
|
65.5
|
|
|
6.5
|
|
|
Option contracts
|
|
|
|
|
|
|
|
|
Non-hedging derivatives
|
2.5
|
|
|
0.5
|
|
|
—
|
|
|
—
|
|
|
KCP&L
|
|
|
|
|
|
|
|
|
|
|
|
|
Futures contracts
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash flow hedges
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
1.0
|
|
|
$
|
(0.2
|
)
|
|
Non-hedging derivatives
|
20.3
|
|
|
(1.0
|
)
|
|
—
|
|
|
—
|
|
The fair values of Great Plains Energy's and KCP&L's open derivative positions are summarized in the following tables. The tables contain both derivative instruments designated as hedging instruments as well as non-hedging derivatives under GAAP. The fair values below are gross values before netting agreements and netting of cash collateral.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Great Plains Energy
|
|
|
|
|
|
|
|
|
|
|
|
Balance Sheet
|
|
Asset Derivatives
|
|
Liability Derivatives
|
|
March 31, 2013
|
Classification
|
|
Fair Value
|
|
Fair Value
|
|
Derivatives Not Designated as Hedging Instruments
|
|
|
|
(millions)
|
|
|
Commodity contracts
|
Derivative instruments
|
|
|
$
|
7.6
|
|
|
|
|
$
|
2.6
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2012
|
|
|
|
|
|
|
|
|
|
|
|
|
Derivatives Designated as Hedging Instruments
|
|
|
|
|
|
|
|
|
|
|
|
|
Commodity contracts
|
Derivative instruments
|
|
|
$
|
—
|
|
|
|
|
$
|
0.2
|
|
|
|
Derivatives Not Designated as Hedging Instruments
|
|
|
|
|
|
|
|
|
|
|
|
|
Commodity contracts
|
Derivative instruments
|
|
|
6.5
|
|
|
|
|
2.8
|
|
|
|
Total Derivatives
|
|
|
|
$
|
6.5
|
|
|
|
|
$
|
3.0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
KCP&L
|
|
|
|
|
|
|
|
|
|
|
|
Balance Sheet
|
|
Asset Derivatives
|
|
Liability Derivatives
|
|
March 31, 2013
|
Classification
|
|
Fair Value
|
|
Fair Value
|
|
Derivatives Not Designated as Hedging Instruments
|
|
|
|
(millions)
|
|
|
Commodity contracts
|
Derivative instruments
|
|
|
$
|
—
|
|
|
|
|
$
|
1.0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2012
|
|
|
|
|
|
|
|
|
|
|
|
|
Derivatives Designated as Hedging Instruments
|
|
|
|
|
|
|
|
|
|
|
|
|
Commodity contracts
|
Derivative instruments
|
|
|
$
|
—
|
|
|
|
|
$
|
0.2
|
|
|
The following tables provide information regarding Great Plains Energy's and KCP&L's offsetting of derivative assets and liabilities at
March 31, 2013
, and
December 31, 2012
.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Great Plains Energy
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross Amounts Not Offset in the Statement of Financial Position
|
|
|
|
|
|
Description
|
Gross Amounts Recognized
|
|
Gross Amounts Offset in the Statement of Financial Position
|
|
Net Amounts Presented in the Statement of Financial Position
|
|
Financial Instruments
|
|
Cash Collateral Received
|
|
Net Amount
|
|
March 31, 2013
|
(millions)
|
|
Derivative assets
|
|
$
|
7.6
|
|
|
|
|
$
|
(0.9
|
)
|
|
|
|
$
|
6.7
|
|
|
|
|
$
|
—
|
|
|
|
|
$
|
—
|
|
|
|
|
$
|
6.7
|
|
|
|
Derivative liabilities
|
|
2.6
|
|
|
|
|
(2.6
|
)
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
December 31, 2012
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Derivative assets
|
|
$
|
6.5
|
|
|
|
|
$
|
—
|
|
|
|
|
$
|
6.5
|
|
|
|
|
$
|
—
|
|
|
|
|
$
|
—
|
|
|
|
|
$
|
6.5
|
|
|
|
Derivative liabilities
|
|
3.0
|
|
|
|
|
(3.0
|
)
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
KCP&L
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross Amounts Not Offset in the Statement of Financial Position
|
|
|
|
|
|
Description
|
Gross Amounts Recognized
|
|
Gross Amounts Offset in the Statement of Financial Position
|
|
Net Amounts Presented in the Statement of Financial Position
|
|
Financial Instruments
|
|
Cash Collateral Received
|
|
Net Amount
|
|
March 31, 2013
|
(millions)
|
|
Derivative liabilities
|
|
$
|
1.0
|
|
|
|
|
$
|
(1.0
|
)
|
|
|
|
$
|
—
|
|
|
|
|
$
|
—
|
|
|
|
|
$
|
—
|
|
|
|
|
$
|
—
|
|
|
|
December 31, 2012
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Derivative liabilities
|
|
$
|
0.2
|
|
|
|
|
$
|
(0.2
|
)
|
|
|
|
$
|
—
|
|
|
|
|
$
|
—
|
|
|
|
|
$
|
—
|
|
|
|
|
$
|
—
|
|
|
The following tables summarize the amount of gain (loss) recognized in OCI or earnings for interest rate and commodity hedges.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Great Plains Energy
|
|
|
|
|
Derivatives in Cash Flow Hedging Relationship
|
|
|
|
|
|
|
|
|
|
|
|
Gain (Loss) Reclassified from Accumulated OCI into Income (Effective Portion)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amount of Gain (Loss) Recognized in OCI on Derivatives (Effective Portion)
|
|
Income Statement Classification
|
|
Amount
|
|
Three Months Ended March 31, 2013
|
|
(millions)
|
|
|
|
|
(millions)
|
|
Interest rate contracts
|
|
$
|
—
|
|
|
|
Interest charges
|
|
$
|
(5.0
|
)
|
|
Commodity contracts
|
|
—
|
|
|
|
Fuel
|
|
(0.2
|
)
|
|
Income tax benefit
|
|
—
|
|
|
|
Income tax benefit
|
|
2.0
|
|
|
Total
|
|
$
|
—
|
|
|
|
Total
|
|
$
|
(3.2
|
)
|
|
Three Months Ended March 31, 2012
|
|
|
|
|
|
|
|
|
|
Interest rate contracts
|
|
$
|
—
|
|
|
|
Interest charges
|
|
$
|
(5.1
|
)
|
|
Commodity contracts
|
|
(0.3
|
)
|
|
|
Fuel
|
|
—
|
|
|
Income tax benefit
|
|
0.1
|
|
|
|
Income tax benefit
|
|
2.0
|
|
|
Total
|
|
$
|
(0.2
|
)
|
|
|
Total
|
|
$
|
(3.1
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
KCP&L
|
|
|
|
|
Derivatives in Cash Flow Hedging Relationship
|
|
|
|
|
|
|
|
|
|
|
|
Gain (Loss) Reclassified from Accumulated OCI into Income (Effective Portion)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amount of Gain (Loss) Recognized in OCI on Derivatives (Effective Portion)
|
|
Income Statement Classification
|
|
Amount
|
|
Three Months Ended March 31, 2013
|
|
(millions)
|
|
|
|
|
(millions)
|
|
Interest rate contracts
|
|
$
|
—
|
|
|
|
Interest charges
|
|
$
|
(2.2
|
)
|
|
Commodity contracts
|
|
—
|
|
|
|
Fuel
|
|
(0.2
|
)
|
|
Income tax benefit
|
|
—
|
|
|
|
Income tax benefit
|
|
0.9
|
|
|
Total
|
|
$
|
—
|
|
|
|
Total
|
|
$
|
(1.5
|
)
|
|
Three Months Ended March 31, 2012
|
|
|
|
|
|
|
|
|
|
Interest rate contracts
|
|
$
|
—
|
|
|
|
Interest charges
|
|
$
|
(2.2
|
)
|
|
Commodity contracts
|
|
(0.3
|
)
|
|
|
Fuel
|
|
—
|
|
|
Income tax benefit
|
|
0.1
|
|
|
|
Income tax benefit
|
|
0.8
|
|
|
Total
|
|
$
|
(0.2
|
)
|
|
|
Total
|
|
$
|
(1.4
|
)
|
The following table summarizes the amount of loss recognized in a regulatory asset or earnings for GMO utility commodity hedges. GMO utility commodity derivatives fair value changes are recorded to either a regulatory asset or liability consistent with MPSC regulatory orders.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Great Plains Energy
|
|
|
|
|
|
|
|
|
Derivatives in Regulatory Account Relationship
|
|
|
|
|
|
|
Gain (Loss) Reclassified from Regulatory Account
|
|
|
|
|
|
|
|
|
Amount of Gain (Loss) Recognized in Regulatory Asset on Derivatives
|
|
Income Statement Classification
|
|
Amount
|
|
Three Months Ended March 31, 2013
|
(millions)
|
|
|
|
(millions)
|
|
Commodity contracts
|
|
$
|
1.8
|
|
|
|
Fuel
|
|
$
|
(1.0
|
)
|
|
Total
|
|
$
|
1.8
|
|
|
|
Total
|
|
$
|
(1.0
|
)
|
|
Three Months Ended March 31, 2012
|
|
|
|
|
|
|
|
Commodity contracts
|
|
$
|
(3.0
|
)
|
|
|
Fuel
|
|
$
|
(0.7
|
)
|
|
Total
|
|
$
|
(3.0
|
)
|
|
|
Total
|
|
$
|
(0.7
|
)
|
Great Plains Energy's income statement reflects a loss for the change in fair value of commodity contract derivatives not designated as hedging instruments of
$1.0 million
and
$0.8 million
for the three months ended
March 31, 2013
, and
2012
, respectively. KCP&L's income statement reflects a loss for the change in the fair value of commodity contract derivatives not designated as hedging instruments of
$1.0 million
for the three months ended
March 31, 2013
.
The amounts recorded in accumulated OCI related to the cash flow hedges are summarized in the following table.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Great Plains Energy
|
|
KCP&L
|
|
|
March 31
|
|
December 31
|
|
March 31
|
|
December 31
|
|
|
2013
|
|
2012
|
|
2013
|
|
2012
|
|
|
|
(millions)
|
|
|
Current assets
|
|
$
|
10.4
|
|
|
|
|
$
|
10.6
|
|
|
|
|
$
|
10.4
|
|
|
|
|
$
|
10.6
|
|
|
|
Current liabilities
|
|
(63.1
|
)
|
|
|
|
(68.4
|
)
|
|
|
|
(50.3
|
)
|
|
|
|
(52.8
|
)
|
|
|
Noncurrent liabilities
|
|
—
|
|
|
|
|
(0.1
|
)
|
|
|
|
—
|
|
|
|
|
(0.1
|
)
|
|
|
Deferred income taxes
|
|
20.5
|
|
|
|
|
22.5
|
|
|
|
|
15.6
|
|
|
|
|
16.5
|
|
|
|
Total
|
|
$
|
(32.2
|
)
|
|
|
|
$
|
(35.4
|
)
|
|
|
|
$
|
(24.3
|
)
|
|
|
|
$
|
(25.8
|
)
|
|
Great Plains Energy's accumulated OCI in the table above at
March 31, 2013
, includes
$19.3 million
that is expected to be reclassified to expenses over the next twelve months. KCP&L's accumulated OCI in the table above at
March 31, 2013
, includes
$8.7 million
that is expected to be reclassified to expenses over the next twelve months.
13. FAIR VALUE MEASUREMENTS
GAAP defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. GAAP establishes a fair value hierarchy, which prioritizes the inputs to valuation techniques used to measure fair value into three broad categories, giving the highest priority to quoted prices in active markets for identical assets or liabilities and lowest priority to unobservable inputs. A definition of the various levels, as well as discussion of the various measurements within the levels, is as follows:
Level 1 – Unadjusted quoted prices for identical assets or liabilities in active markets that Great Plains Energy and KCP&L have access to at the measurement date. Assets and liabilities categorized within this level consist of Great Plains Energy's and KCP&L's various exchange traded derivative instruments and equity and U.S. Treasury
securities that are actively traded within KCP&L's decommissioning trust fund and GMO's Supplemental Executive Retirement Plan (SERP) rabbi trusts.
Level 2 – Market-based inputs for assets or liabilities that are observable (either directly or indirectly) or inputs that are not observable but are corroborated by market data. Assets and liabilities categorized within this level consist of Great Plains Energy's and KCP&L's various non-exchange traded derivative instruments traded in over-the-counter markets and certain debt securities and fixed income funds within KCP&L's decommissioning trust fund and GMO's SERP rabbi trusts.
Level 3 – Unobservable inputs, reflecting Great Plains Energy's and KCP&L's own assumptions about the assumptions market participants would use in pricing the asset or liability. Assets categorized within this level consist of Great Plains Energy's various non-exchange traded derivative instruments traded in over-the-counter markets for which sufficiently observable market data is not available to corroborate the valuation inputs.
The following tables include Great Plains Energy's and KCP&L's balances of financial assets and liabilities measured at fair value on a recurring basis at
March 31, 2013
, and
December 31, 2012
.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fair Value Measurements Using
|
|
Description
|
March 31
2013
|
|
Netting
(d)
|
|
Quoted Prices in Active Markets for Identical Assets
(Level 1)
|
|
Significant Other Observable Inputs
(Level 2)
|
|
Significant Unobservable Inputs
(Level 3)
|
|
KCP&L
|
|
(millions)
|
|
|
Assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nuclear decommissioning trust
(a)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity securities
|
|
$
|
108.7
|
|
|
|
|
$
|
—
|
|
|
|
|
$
|
108.7
|
|
|
|
|
$
|
—
|
|
|
|
|
$
|
—
|
|
|
|
Debt securities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S. Treasury
|
|
18.5
|
|
|
|
|
—
|
|
|
|
|
18.5
|
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
U.S. Agency
|
|
3.3
|
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
|
3.3
|
|
|
|
|
—
|
|
|
|
State and local obligations
|
|
3.3
|
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
|
3.3
|
|
|
|
|
—
|
|
|
|
Corporate bonds
|
|
27.6
|
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
|
27.6
|
|
|
|
|
—
|
|
|
|
Other
|
|
0.3
|
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
|
0.3
|
|
|
|
|
—
|
|
|
|
Total nuclear decommissioning trust
|
|
161.7
|
|
|
|
|
—
|
|
|
|
|
127.2
|
|
|
|
|
34.5
|
|
|
|
|
—
|
|
|
|
Total
|
|
161.7
|
|
|
|
|
—
|
|
|
|
|
127.2
|
|
|
|
|
34.5
|
|
|
|
|
—
|
|
|
|
Liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Derivative instruments
(b)
|
|
—
|
|
|
|
|
(1.0
|
)
|
|
|
|
1.0
|
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
Total
|
|
$
|
—
|
|
|
|
|
$
|
(1.0
|
)
|
|
|
|
$
|
1.0
|
|
|
|
|
$
|
—
|
|
|
|
|
$
|
—
|
|
|
|
Other Great Plains Energy
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Derivative instruments
(b)
|
|
$
|
6.7
|
|
|
|
|
$
|
(0.9
|
)
|
|
|
|
$
|
0.6
|
|
|
|
|
$
|
4.6
|
|
|
|
|
$
|
2.4
|
|
|
|
SERP rabbi trusts
(c)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity securities
|
|
0.1
|
|
|
|
|
—
|
|
|
|
|
0.1
|
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
Fixed income funds
|
|
19.7
|
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
|
19.7
|
|
|
|
|
—
|
|
|
|
Total SERP rabbi trusts
|
|
19.8
|
|
|
|
|
—
|
|
|
|
|
0.1
|
|
|
|
|
19.7
|
|
|
|
|
—
|
|
|
|
Total
|
|
26.5
|
|
|
|
|
(0.9
|
)
|
|
|
|
0.7
|
|
|
|
|
24.3
|
|
|
|
|
2.4
|
|
|
|
Liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Derivative instruments
(b)
|
|
—
|
|
|
|
|
(1.6
|
)
|
|
|
|
1.6
|
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
Total
|
|
$
|
—
|
|
|
|
|
$
|
(1.6
|
)
|
|
|
|
$
|
1.6
|
|
|
|
|
$
|
—
|
|
|
|
|
$
|
—
|
|
|
|
Great Plains Energy
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Derivative instruments
(b)
|
|
$
|
6.7
|
|
|
|
|
$
|
(0.9
|
)
|
|
|
|
$
|
0.6
|
|
|
|
|
$
|
4.6
|
|
|
|
|
$
|
2.4
|
|
|
|
Nuclear decommissioning trust
(a)
|
|
161.7
|
|
|
|
|
—
|
|
|
|
|
127.2
|
|
|
|
|
34.5
|
|
|
|
|
—
|
|
|
|
SERP rabbi trusts
(c)
|
|
19.8
|
|
|
|
|
—
|
|
|
|
|
0.1
|
|
|
|
|
19.7
|
|
|
|
|
—
|
|
|
|
Total
|
|
188.2
|
|
|
|
|
(0.9
|
)
|
|
|
|
127.9
|
|
|
|
|
58.8
|
|
|
|
|
2.4
|
|
|
|
Liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Derivative instruments
(b)
|
|
—
|
|
|
|
|
(2.6
|
)
|
|
|
|
2.6
|
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
Total
|
|
$
|
—
|
|
|
|
|
$
|
(2.6
|
)
|
|
|
|
$
|
2.6
|
|
|
|
|
$
|
—
|
|
|
|
|
$
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fair Value Measurements Using
|
|
Description
|
December 31
2012
|
|
Netting
(d)
|
|
Quoted Prices in Active Markets for Identical Assets
(Level 1)
|
|
Significant Other Observable Inputs
(Level 2)
|
|
Significant Unobservable Inputs
(Level 3)
|
|
KCP&L
|
|
(millions)
|
|
|
Assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nuclear decommissioning trust
(a)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity securities
|
|
$
|
100.1
|
|
|
|
|
$
|
—
|
|
|
|
|
$
|
100.1
|
|
|
|
|
$
|
—
|
|
|
|
|
$
|
—
|
|
|
|
Debt securities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S. Treasury
|
|
18.5
|
|
|
|
|
—
|
|
|
|
|
18.5
|
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
U.S. Agency
|
|
2.8
|
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
|
2.8
|
|
|
|
|
—
|
|
|
|
State and local obligations
|
|
3.3
|
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
|
3.3
|
|
|
|
|
—
|
|
|
|
Corporate bonds
|
|
26.8
|
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
|
26.8
|
|
|
|
|
—
|
|
|
|
Other
|
|
0.3
|
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
|
0.3
|
|
|
|
|
—
|
|
|
|
Total nuclear decommissioning trust
|
|
151.8
|
|
|
|
|
—
|
|
|
|
|
118.6
|
|
|
|
|
33.2
|
|
|
|
|
—
|
|
|
|
Total
|
|
151.8
|
|
|
|
|
—
|
|
|
|
|
118.6
|
|
|
|
|
33.2
|
|
|
|
|
—
|
|
|
|
Liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Derivative instruments
(b)
|
|
—
|
|
|
|
|
(0.2
|
)
|
|
|
|
0.2
|
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
Total
|
|
$
|
—
|
|
|
|
|
$
|
(0.2
|
)
|
|
|
|
$
|
0.2
|
|
|
|
|
$
|
—
|
|
|
|
|
$
|
—
|
|
|
|
Other Great Plains Energy
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Derivative instruments
(b)
|
|
$
|
6.5
|
|
|
|
|
$
|
—
|
|
|
|
|
$
|
—
|
|
|
|
|
$
|
4.2
|
|
|
|
|
$
|
2.3
|
|
|
|
SERP rabbi trusts
(c)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity securities
|
|
0.1
|
|
|
|
|
—
|
|
|
|
|
0.1
|
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
Fixed income funds
|
|
20.2
|
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
|
20.2
|
|
|
|
|
—
|
|
|
|
Total SERP rabbi trusts
|
|
20.3
|
|
|
|
|
—
|
|
|
|
|
0.1
|
|
|
|
|
20.2
|
|
|
|
|
—
|
|
|
|
Total
|
|
26.8
|
|
|
|
|
—
|
|
|
|
|
0.1
|
|
|
|
|
24.4
|
|
|
|
|
2.3
|
|
|
|
Liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Derivative instruments
(b)
|
|
—
|
|
|
|
|
(2.8
|
)
|
|
|
|
2.8
|
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
Total
|
|
$
|
—
|
|
|
|
|
$
|
(2.8
|
)
|
|
|
|
$
|
2.8
|
|
|
|
|
$
|
—
|
|
|
|
|
$
|
—
|
|
|
|
Great Plains Energy
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Derivative instruments
(b)
|
|
$
|
6.5
|
|
|
|
|
$
|
—
|
|
|
|
|
$
|
—
|
|
|
|
|
$
|
4.2
|
|
|
|
|
$
|
2.3
|
|
|
|
Nuclear decommissioning trust
(a)
|
|
151.8
|
|
|
|
|
—
|
|
|
|
|
118.6
|
|
|
|
|
33.2
|
|
|
|
|
—
|
|
|
|
SERP rabbi trusts
(c)
|
|
20.3
|
|
|
|
|
—
|
|
|
|
|
0.1
|
|
|
|
|
20.2
|
|
|
|
|
—
|
|
|
|
Total
|
|
178.6
|
|
|
|
|
—
|
|
|
|
|
118.7
|
|
|
|
|
57.6
|
|
|
|
|
2.3
|
|
|
|
Liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Derivative instruments
(b)
|
|
—
|
|
|
|
|
(3.0
|
)
|
|
|
|
3.0
|
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
Total
|
|
$
|
—
|
|
|
|
|
$
|
(3.0
|
)
|
|
|
|
$
|
3.0
|
|
|
|
|
$
|
—
|
|
|
|
|
$
|
—
|
|
|
|
|
|
|
(a)
|
Fair value is based on quoted market prices of the investments held by the fund and/or valuation models. The total does not include
$2.6 million
and
$2.9 million
at
March 31, 2013
, and
December 31, 2012
, respectively, of cash and cash equivalents, which are not subject to the fair value requirements.
|
|
|
|
|
(b)
|
The fair value of derivative instruments is estimated using market quotes, over-the-counter forward price and volatility curves and correlations among fuel prices, net of estimated credit risk.
|
|
|
|
|
(c)
|
Fair value is based on quoted market prices and/or valuation models for equity securities and Net Asset Value (NAV) per share for fixed income funds. The total does not include
$0.1 million
at
March 31, 2013
, and
December 31, 2012
, of cash and cash equivalents, which are not subject to the fair value requirements.
|
|
|
|
|
(d)
|
Represents the difference between derivative contracts in an asset or liability position presented on a net basis by counterparty on the consolidated balance sheets where a master netting agreement exists between the Company and the counterparty. At
March 31, 2013
, and
December 31, 2012
, Great Plains Energy netted
$1.7 million
and
$3.0 million
, respectively, of cash collateral posted with counterparties.
|
The following table reconciles the beginning and ending balances for all Level 3 assets and liabilities, net, measured at fair value on a recurring basis for the three months ended
March 31, 2013
, and
2012
.
|
|
|
|
|
|
|
|
|
|
|
|
Fair Value Measurements Using Significant Unobservable Inputs (Level 3)
|
|
|
Derivative Instruments
|
|
|
2013
|
|
2012
|
|
|
(millions)
|
|
Balance at January 1
|
$
|
2.3
|
|
|
$
|
3.1
|
|
|
Total realized/unrealized gains included in non-operating income
|
2.4
|
|
|
0.2
|
|
|
Settlements
|
(2.3
|
)
|
|
(0.9
|
)
|
|
Balance at March 31
|
$
|
2.4
|
|
|
$
|
2.4
|
|
|
Total unrealized gains (losses) included in non-operating income relating to assets
|
|
|
|
|
|
and liabilities still on the consolidated balance sheet at March 31
|
$
|
0.2
|
|
|
$
|
(0.6
|
)
|
14. ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)
The following tables reflect the change in the balances of each component of accumulated other comprehensive loss for Great Plains Energy and KCP&L for the three months ended
March 31, 2013
.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Great Plains Energy
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gains and Losses on Cash Flow Hedges
(a)
|
|
Defined Benefit Pension Items
(a)
|
|
|
Total
(a)
|
|
|
|
|
(millions)
|
|
Beginning balance January 1, 2013
|
|
|
$
|
(35.4
|
)
|
|
|
|
$
|
(3.0
|
)
|
|
|
|
$
|
(38.4
|
)
|
|
|
Amounts reclassified from accumulated other comprehensive loss
|
|
|
3.2
|
|
|
|
|
—
|
|
|
|
|
3.2
|
|
|
|
Net current period other comprehensive income
|
|
|
3.2
|
|
|
|
|
—
|
|
|
|
|
3.2
|
|
|
|
Ending balance March 31, 2013
|
|
|
$
|
(32.2
|
)
|
|
|
|
$
|
(3.0
|
)
|
|
|
|
$
|
(35.2
|
)
|
|
(a)
Net of tax
|
|
|
|
|
|
|
|
|
|
|
KCP&L
|
|
|
|
|
|
|
|
Gains and Losses on Cash Flow Hedges
(a)
|
|
|
|
(millions)
|
|
Beginning balance January 1, 2013
|
|
|
$
|
(25.8
|
)
|
|
|
Amounts reclassified from accumulated other comprehensive loss
|
|
|
1.5
|
|
|
|
Net current period other comprehensive income
|
|
|
1.5
|
|
|
|
Ending balance March 31, 2013
|
|
|
$
|
(24.3
|
)
|
|
(a)
Net of tax
The following tables reflect the effect on certain line items of net income from amounts reclassified out of each component of accumulated other comprehensive loss for Great Plains Energy and KCP&L for the three months ended March 31, 2013.
|
|
|
|
|
|
|
|
|
|
|
|
|
Great Plains Energy
|
|
|
|
|
|
|
|
Details about Accumulated Other Comprehensive Loss Components
|
|
Amount Reclassified from Accumulated Other Comprehensive Loss
|
|
Affected Line Item in the Income Statement
|
|
Three Months Ended March 31, 2013
|
|
(millions)
|
|
|
|
Gains and (losses) on cash flow hedges (effective portion)
|
|
|
|
|
|
|
|
Interest rate contracts
|
|
|
$
|
(5.0
|
)
|
|
|
Interest charges
|
|
Commodity contracts
|
|
|
(0.2
|
)
|
|
|
Fuel
|
|
|
|
|
(5.2
|
)
|
|
|
Income before income tax expense and loss from equity investments
|
|
|
|
|
2.0
|
|
|
|
Income tax benefit
|
|
Total reclassifications, net of tax
|
|
|
$
|
(3.2
|
)
|
|
|
Net income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
KCP&L
|
|
|
|
|
|
|
|
Details about Accumulated Other Comprehensive Loss Components
|
|
Amount Reclassified from Accumulated Other Comprehensive Loss
|
|
Affected Line Item in the Income Statement
|
|
Three Months Ended March 31, 2013
|
|
(millions)
|
|
|
|
Gains and (losses) on cash flow hedges (effective portion)
|
|
|
|
|
|
|
|
Interest rate contracts
|
|
|
$
|
(2.2
|
)
|
|
|
Interest charges
|
|
Commodity contracts
|
|
|
(0.2
|
)
|
|
|
Fuel
|
|
|
|
|
(2.4
|
)
|
|
|
Income before income tax expense
|
|
|
|
|
0.9
|
|
|
|
Income tax benefit
|
|
Total reclassifications, net of tax
|
|
|
$
|
(1.5
|
)
|
|
|
Net income
|
15. TAXES
Components of income tax expense (benefit) are detailed in the following tables.
|
|
|
|
|
|
|
|
|
|
|
|
Great Plains Energy
|
|
|
|
|
Three Months Ended March 31
|
2013
|
|
2012
|
|
Current income taxes
|
(millions)
|
|
Federal
|
$
|
(0.1
|
)
|
|
$
|
—
|
|
|
State
|
(0.1
|
)
|
|
(0.1
|
)
|
|
Total
|
(0.2
|
)
|
|
(0.1
|
)
|
|
Deferred income taxes
|
|
|
|
|
|
|
Federal
|
9.9
|
|
|
(8.3
|
)
|
|
State
|
2.3
|
|
|
(0.8
|
)
|
|
Total
|
12.2
|
|
|
(9.1
|
)
|
|
Noncurrent income taxes
|
|
|
|
|
|
|
Foreign
|
(0.1
|
)
|
|
0.3
|
|
|
Investment tax credit amortization
|
(0.4
|
)
|
|
(0.6
|
)
|
|
Income tax expense (benefit)
|
$
|
11.5
|
|
|
$
|
(9.5
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
KCP&L
|
|
|
|
|
Three Months Ended March 31
|
2013
|
|
2012
|
|
Current income taxes
|
(millions)
|
|
Federal
|
$
|
(0.3
|
)
|
|
$
|
0.1
|
|
|
Deferred income taxes
|
|
|
|
|
|
|
Federal
|
4.0
|
|
|
(3.3
|
)
|
|
State
|
1.3
|
|
|
(0.1
|
)
|
|
Total
|
5.3
|
|
|
(3.4
|
)
|
|
Noncurrent income taxes
|
|
|
|
|
|
|
Federal
|
0.6
|
|
|
0.4
|
|
|
State
|
0.1
|
|
|
0.1
|
|
|
Total
|
0.7
|
|
|
0.5
|
|
|
Investment tax credit amortization
|
(0.3
|
)
|
|
(0.5
|
)
|
|
Income tax expense (benefit)
|
$
|
5.4
|
|
|
$
|
(3.3
|
)
|
Effective Income Tax Rates
Effective income tax rates reflected in the financial statements and the reasons for their differences from the statutory federal rates are detailed in the following tables.
|
|
|
|
|
|
|
|
|
|
Great Plains Energy
|
|
|
|
|
Three Months Ended March 31
|
2013
|
|
2012
|
|
Federal statutory income tax rate
|
35.0
|
%
|
|
35.0
|
%
|
|
Differences between book and tax depreciation not normalized
|
1.4
|
|
|
(5.7
|
)
|
|
Amortization of investment tax credits
|
(1.1
|
)
|
|
3.5
|
|
|
Federal income tax credits
|
(7.9
|
)
|
|
15.2
|
|
|
State income taxes
|
4.2
|
|
|
3.1
|
|
|
Changes in uncertain tax positions, net
|
(0.7
|
)
|
|
(1.3
|
)
|
|
Other
|
(0.2
|
)
|
|
1.7
|
|
|
Effective income tax rate
|
30.7
|
%
|
|
51.5
|
%
|
|
|
|
|
|
|
|
|
|
|
KCP&L
|
|
|
|
|
Three Months Ended March 31
|
2013
|
|
2012
|
|
Federal statutory income tax rate
|
35.0
|
%
|
|
35.0
|
%
|
|
Differences between book and tax depreciation not normalized
|
1.6
|
|
|
(88.5
|
)
|
|
Amortization of investment tax credits
|
(1.2
|
)
|
|
48.1
|
|
|
Federal income tax credits
|
(13.8
|
)
|
|
279.6
|
|
|
State income taxes
|
4.0
|
|
|
1.3
|
|
|
Other
|
(0.7
|
)
|
|
53.7
|
|
|
Effective income tax rate
|
24.9
|
%
|
|
329.2
|
%
|
Deferred Income Taxes
At March 31, 2013, Great Plains Energy's current deferred income tax asset decreased $85.4 million and noncurrent deferred income tax liability decreased $72.5 million compared to December 31, 2012, primarily due to the reclassification of
$77.8 million
of net operating losses from current deferred income tax asset to noncurrent deferred income tax liability driven by the expected timing of their utilization due to the extension of 50% bonus depreciation with the January 2, 2013, enactment of the American Taxpayer Relief Act of 2012.
Uncertain Tax Positions
At
March 31, 2013
, and
December 31, 2012
, Great Plains Energy had
$21.6 million
and
$21.4 million
, respectively, of liabilities related to unrecognized tax benefits. Of these amounts,
$6.9 million
and
$7.3 million
at
March 31, 2013
, and
December 31, 2012
, respectively, are expected to impact the effective tax rate if recognized.
At
March 31, 2013
, and
December 31, 2012
, KCP&L had
$11.2 million
and
$10.5 million
, respectively, of liabilities related to unrecognized tax benefits.
None
of these amounts are expected to impact the effective tax rate if recognized.
The following table reflects activity for Great Plains Energy and KCP&L related to the liability for unrecognized tax benefits.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Great Plains Energy
|
|
|
|
KCP&L
|
|
|
|
March 31
2013
|
|
December 31
2012
|
|
March 31
2013
|
|
December 31
2012
|
|
|
|
(millions)
|
|
|
Beginning balance January 1
|
|
$
|
21.4
|
|
|
|
|
$
|
24.0
|
|
|
|
|
$
|
10.5
|
|
|
|
|
$
|
8.7
|
|
|
|
Additions for current year tax positions
|
|
0.9
|
|
|
|
|
3.7
|
|
|
|
|
0.9
|
|
|
|
|
3.6
|
|
|
|
Reductions for current year tax positions
|
|
(0.1
|
)
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
Reductions for prior year tax positions
|
|
(0.2
|
)
|
|
|
|
(1.8
|
)
|
|
|
|
(0.2
|
)
|
|
|
|
(1.6
|
)
|
|
|
Statute expirations
|
|
(0.2
|
)
|
|
|
|
(4.7
|
)
|
|
|
|
—
|
|
|
|
|
(0.2
|
)
|
|
|
Foreign currency translation adjustments
|
|
(0.2
|
)
|
|
|
|
0.2
|
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
Ending balance
|
|
$
|
21.6
|
|
|
|
|
$
|
21.4
|
|
|
|
|
$
|
11.2
|
|
|
|
|
$
|
10.5
|
|
|
Great Plains Energy and KCP&L recognize interest related to unrecognized tax benefits in interest expense and penalties in non-operating expenses. At
March 31, 2013
, and
December 31, 2012
, amounts accrued for interest related to unrecognized tax benefits for Great Plains Energy were
$3.2 million
and
$3.5 million
, respectively. Amounts accrued for penalties with respect to unrecognized tax benefits for Great Plains Energy were
$0.6 million
and
$0.7 million
at
March 31, 2013
, and
December 31, 2012
, respectively. At
March 31, 2013
, and
December 31, 2012
, amounts accrued for interest and penalties with respect to unrecognized tax benefits for KCP&L were insignificant.
The IRS is currently auditing Great Plains Energy and its subsidiaries for the 2009 tax year. The Company estimates that it is reasonably possible that
$5.2 million
and
$4.3 million
for Great Plains Energy and KCP&L, respectively, of unrecognized tax benefits may be recognized in the next twelve months due to statute expirations or settlement agreements with tax authorities.
16. SEGMENTS AND RELATED INFORMATION
Great Plains Energy has one reportable segment based on its method of internal reporting, which segregates reportable segments based on products and services, management responsibility and regulation. The one reportable business segment is electric utility, consisting of KCP&L, GMO's regulated utility operations and GMO Receivables Company. Other includes GMO activity other than its regulated utility operations and unallocated corporate charges. The summary of significant accounting policies applies to the reportable segment. Segment performance is evaluated based on net income attributable to Great Plains Energy.
The following tables reflect summarized financial information concerning Great Plains Energy's reportable segment.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
March 31, 2013
|
Electric
Utility
|
|
Other
|
|
Eliminations
|
|
Great Plains
Energy
|
|
|
(millions)
|
|
Operating revenues
|
|
$
|
542.2
|
|
|
|
|
$
|
—
|
|
|
|
|
$
|
—
|
|
|
|
|
$
|
542.2
|
|
|
|
Depreciation and amortization
|
|
(70.2
|
)
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
|
(70.2
|
)
|
|
|
Interest (charges) income
|
|
(47.8
|
)
|
|
|
|
(14.5
|
)
|
|
|
|
12.6
|
|
|
|
|
(49.7
|
)
|
|
|
Income tax (expense) benefit
|
|
(12.6
|
)
|
|
|
|
1.1
|
|
|
|
|
—
|
|
|
|
|
(11.5
|
)
|
|
|
Net income (loss) attributable to Great Plains Energy
|
|
27.6
|
|
|
|
|
(1.6
|
)
|
|
|
|
—
|
|
|
|
|
26.0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
March 31, 2012
|
Electric
Utility
|
|
Other
|
|
Eliminations
|
|
Great Plains
Energy
|
|
|
(millions)
|
|
Operating revenues
|
|
$
|
479.7
|
|
|
|
|
$
|
—
|
|
|
|
|
$
|
—
|
|
|
|
|
$
|
479.7
|
|
|
|
Depreciation and amortization
|
|
(67.4
|
)
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
|
(67.4
|
)
|
|
|
Interest (charges) income
|
|
(50.7
|
)
|
|
|
|
(25.1
|
)
|
|
|
|
8.9
|
|
|
|
|
(66.9
|
)
|
|
|
Income tax benefit
|
|
1.8
|
|
|
|
|
7.7
|
|
|
|
|
—
|
|
|
|
|
9.5
|
|
|
|
Net income (loss) attributable to Great Plains Energy
|
|
4.5
|
|
|
|
|
(13.6
|
)
|
|
|
|
—
|
|
|
|
|
(9.1
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Electric
Utility
|
|
Other
|
|
Eliminations
|
|
Great Plains
Energy
|
|
March 31, 2013
|
|
(millions)
|
|
|
Assets
|
|
$
|
10,038.7
|
|
|
|
|
$
|
46.1
|
|
|
|
|
$
|
(427.1
|
)
|
|
|
|
$
|
9,657.7
|
|
|
|
Capital expenditures
(a)
|
|
172.2
|
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
|
172.2
|
|
|
|
December 31, 2012
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Assets
|
|
$
|
9,910.6
|
|
|
|
|
$
|
122.4
|
|
|
|
|
$
|
(385.7
|
)
|
|
|
|
$
|
9,647.3
|
|
|
|
Capital expenditures
(a)
|
|
610.2
|
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
|
610.2
|
|
|
|
|
|
|
(a)
|
Capital expenditures reflect year to date amounts for the periods presented.
|
17. REGULATORY MATTERS
KCP&L Missouri Rate Case Proceedings
On January 9, 2013, the MPSC issued an order for KCP&L authorizing an increase in annual revenues of
$67.4 million
effective January 26, 2013. Appeals of the January 9, 2013, MPSC order were filed in February 2013 with the Missouri Court of Appeals, Western District (Court of Appeals) by KCP&L and the Missouri Energy Consumers Group regarding various issues.
On January 23, 2013, the MPSC issued an order granting expedited treatment and approving compliance tariffs implementing rates reflecting the increase in annual revenues authorized in the January 9, 2013, order. On February 6, 2013, the Office of Public Counsel (OPC) filed a Writ of Mandamus asking the Court of Appeals to direct the MPSC to vacate and rescind its January 23, 2013, order approving the tariffs because the order did not provide the OPC with a reasonable amount of time to review and/or file a motion for rehearing on the tariffs. On March 13, 2013, the Court of Appeals preliminarily found that OPC may be entitled to the relief it requested. On March 28, 2013, the MPSC requested to the Court of Appeals that the OPC be denied its requested relief. The Missouri Energy Consumers Group also appealed the January 23, 2013, order in February 2013.
The Court of Appeals has not yet issued its decision on the appeals or the Writ of Mandamus. The rates established by the MPSC order are effective unless and until modified by the MPSC or stayed by a court.
GMO Missouri Rate Case Proceedings
On January 9, 2013, the MPSC issued an order for GMO authorizing an increase in annual revenues of
$26.2 million
for its Missouri Public Service division and
$21.7 million
for its L&P division effective January 26, 2013.
Appeals of the January 9, 2013, MPSC order were filed in February 2013 with the Court of Appeals by GMO and the Missouri Energy Consumers Group regarding various issues.
On January 23, 2013, the MPSC issued an order granting expedited treatment and approving compliance tariffs implementing rates reflecting the increase in annual revenues authorized in the January 9, 2013, order. On February 6, 2013, the OPC filed a Writ of Mandamus asking the Court of Appeals to direct the MPSC to vacate and rescind its January 23, 2013, order approving the tariffs because the order did not provide the OPC with a reasonable amount of time to review and/or file a motion for rehearing on the tariffs. On March 13, 2013, the Court of Appeals preliminarily found that OPC may be entitled to the relief it requested. On March 28, 2013, the MPSC requested to the Court of Appeals that the OPC be denied its requested relief. The Missouri Energy Consumers Group also appealed the January 23, 2013, order in February 2013.
The Court of Appeals has not yet issued its decision on the appeals or the Writ of Mandamus. The rates established by the MPSC order are effective unless and until modified by the MPSC or stayed by a court.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
GREAT PLAINS ENERGY INCORPORATED
EXECUTIVE SUMMARY
Description of Business
Great Plains Energy is a public utility holding company and does not own or operate any significant assets other than the stock of its subsidiaries. Great Plains Energy's direct subsidiaries with operations or active subsidiaries are KCP&L and GMO. Great Plains Energy's sole reportable business segment is electric utility for the periods presented.
Electric utility consists of KCP&L, a regulated utility, GMO's regulated utility operations, which include its Missouri Public Service and St. Joseph Light & Power (L&P) divisions, and GMO Receivables Company. Electric utility has
over 6,600
MWs of generating capacity and engages in the generation, transmission, distribution and sale of electricity to approximately
829,300
customers in the states of Missouri and Kansas. Electric utility's retail electricity rates
are comparable to
the national average of investor-owned utilities.
Earnings Overview
For the
three months ended
March 31, 2013
, Great Plains Energy had
earnings
available for common shareholders of
$25.6 million
or
$0.17
per share compared to a
loss
of
$9.5 million
or
$0.07
per share for the same period in
2012
. The
$35.1 million
increase
in earnings was primarily due to the following:
|
|
|
|
•
|
a
$31.4 million
increase
in gross margin driven by
new retail rates
,
favorable weather
,
an increase in weather-normalized retail demand
and the impact from
an unplanned outage at Wolf Creek in the first quarter of 2012
, partially offset by
increased fuel and purchased power expense at KCP&L in Missouri, where there is no fuel recovery mechanism
;
|
|
|
|
|
•
|
a
$10.1 million
decrease in Wolf Creek operating and maintenance expenses primarily due to the unplanned outage at Wolf Creek during the first quarter of
2012
;
|
|
|
|
|
•
|
a
$17.2 million
decrease
in interest expense primarily due to the
repayment of GMO's $500.0 million 11.875% Senior Notes at maturity in July 2012
and the remarketing in March 2012 of subordinated notes underlying Great Plains Energy’s $287.5 million Equity Units, which resulted in recognition of the remaining interest expense related to the notes and a lower interest rate on the refinanced long-term debt; and
|
|
|
|
|
•
|
a
$21.0 million
increase
in income tax expense driven by
increased
pre-tax income.
|
Gross margin is a financial measure that is not calculated in accordance with GAAP. See the explanation of gross margin and the reconciliation to GAAP operating revenues under Great Plains Energy's Results of Operations for further information.
For additional information regarding the increase in earnings, refer to Great Plains Energy Results of Operations and Electric Utility Results of Operations sections within this Management's Discussion and Analysis of Financial Condition and Results of Operations (MD&A).
Wolf Creek Refueling Outage
Wolf Creek's latest refueling outage began on February 4, 2013, and the unit returned to service on April 15, 2013. A mid-cycle maintenance outage is planned for the spring of 2014 with the next refueling outage planned to begin in the first quarter of 2015.
Transmission Investment Opportunities
GMO has an SPP-approved regional transmission project for the Missouri portion of an approximately 175-mile, 345kV transmission line from Sibley, Missouri to Nebraska City, Nebraska with an estimated cost of $380 million for GMO's portion of the line and an expected 2017 in-service date. KCP&L and GMO jointly have an SPP-approved regional transmission project for an approximately 30-mile, 345kV transmission line from KCP&L's and GMO's Iatan generating station to KCP&L's Nashua substation with estimated construction costs of $65 million and an expected 2015 in-service date.
In August 2012, KCP&L and GMO filed a request with the MPSC to authorize the transfer at cost of certain transmission property related to the two SPP-approved regional transmission projects to Transource Missouri, LLC (Transource Missouri), a wholly owned subsidiary of Transource Energy, LLC (Transource). In August 2012, Transource Missouri filed a request with the MPSC seeking a Certificate of Convenience and Necessity (CCN) to construct, finance, own, operate and maintain the projects. In April 2013, KCP&L, GMO, Transource Missouri, MPSC staff and another party to the cases filed a non-unanimous stipulation and agreement with the MPSC requesting that the MPSC approve the KCP&L, GMO and Transource Missouri requests filed in August 2012, subject to certain conditions. The stipulation and agreement is subject to MPSC approval.
Also in August 2012, Transource Missouri filed a request with FERC seeking incentive rate treatment and acceptance of a formula transmission rate to recover the cost of current and future projects. In October 2012, FERC issued an order approving certain incentive rate treatments and conditionally accepting the formula transmission rate for Transource Missouri, subject to the outcome of an administrative hearing or settlement. In February 2013, Transource Missouri and another party to the case filed a settlement with FERC that includes a base return on equity of 9.8% for the formula transmission rate. FERC approved the settlement in May 2013.
Following approvals from the MPSC, KCP&L and GMO must also seek approval from the SPP to novate the projects to Transource Missouri. The SPP will then submit its approval of the novation to FERC for final approval. Great Plains Energy expects that final FERC approval of the novation will be obtained so that the projects can be transferred within three to six months following the MPSC order.
ENVIRONMENTAL MATTERS
See Note 9 to the consolidated financial statements for information regarding environmental matters.
RELATED PARTY TRANSACTIONS
See Note 11 to the consolidated financial statements for information regarding related party transactions.
GREAT PLAINS ENERGY RESULTS OF OPERATIONS
The following table summarizes Great Plains Energy's comparative results of operations.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended March 31
|
|
2013
|
|
2012
|
|
|
|
(millions)
|
|
Operating revenues
|
|
$
|
542.2
|
|
|
$
|
479.7
|
|
|
|
Fuel
|
|
(132.2
|
)
|
|
(119.3
|
)
|
|
|
Purchased power
|
|
(38.8
|
)
|
|
(24.7
|
)
|
|
|
Transmission of electricity by others
|
|
(11.4
|
)
|
|
(7.3
|
)
|
|
|
Gross margin
(a)
|
|
359.8
|
|
|
328.4
|
|
|
|
Other operating expenses
|
|
(203.5
|
)
|
|
(212.0
|
)
|
|
|
Depreciation and amortization
|
|
(70.2
|
)
|
|
(67.4
|
)
|
|
|
Operating income
|
|
86.1
|
|
|
49.0
|
|
|
|
Non-operating income and expenses
|
|
1.2
|
|
|
(0.9
|
)
|
|
|
Interest charges
|
|
(49.7
|
)
|
|
(66.9
|
)
|
|
|
Income tax (expense) benefit
|
|
(11.5
|
)
|
|
9.5
|
|
|
|
Loss from equity investments
|
|
(0.1
|
)
|
|
—
|
|
|
|
Net income (loss)
|
|
26.0
|
|
|
(9.3
|
)
|
|
|
Less: Net loss attributable to noncontrolling interest
|
|
—
|
|
|
0.2
|
|
|
|
Net income (loss) attributable to Great Plains Energy
|
|
26.0
|
|
|
(9.1
|
)
|
|
|
Preferred dividends
|
|
(0.4
|
)
|
|
(0.4
|
)
|
|
|
Earnings (loss) available for common shareholders
|
|
$
|
25.6
|
|
|
$
|
(9.5
|
)
|
|
|
|
|
|
(a)
|
Gross margin is a non-GAAP financial measure. See explanation of gross margin below.
|
For the
three months ended
March 31, 2013
, Great Plains Energy had
earnings
available for common shareholders of
$25.6 million
or
$0.17
per share compared to a
loss
of
$9.5 million
or
$0.07
per share for the same period in
2012
.
Electric utility's
net income
increased
$23.1 million
for the
three months ended
March 31, 2013
, compared to the same period in
2012
driven by:
|
|
|
|
•
|
a
$31.4 million
increase
in gross margin driven by:
|
|
|
|
|
•
|
an estimated
$20 million
increase from
new retail rates in Kansas effective January 1, 2013, and Missouri effective January 26, 2013
;
|
|
|
|
|
•
|
an estimated
$16 million
increase due to
favorable
weather driven by a
41% increase in heating degree days
;
|
|
|
|
|
•
|
an estimated
$4 million
increase due to
an increase in weather-normalized retail demand
;
|
|
|
|
|
•
|
an estimated
$4 million
increase from the impact of an unplanned outage at Wolf Creek in the first quarter of 2012; and
|
|
|
|
|
•
|
an estimated
$13 million
decrease
driven by increased fuel and purchased power expense at KCP&L in Missouri, where there is no fuel recovery mechanism
;
|
|
|
|
|
•
|
a
$4.6 million
decrease
in other operating expenses driven by:
|
|
|
|
|
•
|
a
$10.1 million
decrease in Wolf Creek operating and maintenance expenses primarily due to
an unplanned outage at Wolf Creek in the first quarter of 2012
;
|
|
|
|
|
•
|
a
$3.3 million
increase in general taxes driven by increased property taxes; and
|
|
|
|
|
•
|
a
$3.6 million
increase relating to solar rebates provided to customers;
|
|
|
|
|
•
|
a
$2.9 million
decrease
in interest expense primarily due to the repayment of GMO's $500.0 million 11.875% Senior Notes at maturity; and
|
|
|
|
|
•
|
a
$14.4 million
increase
in income tax expense driven by
increased
pre-tax income.
|
Great Plains Energy's corporate and other activities
loss
decreased
$12.0 million
for the
three months ended
March 31, 2013
, compared to the same period in
2012
primarily due to:
|
|
|
|
•
|
the remarketing in March 2012 of subordinated notes underlying Great Plains Energy's $287.5 million Equity Units, which resulted in recognition of the remaining $3.8 million of after-tax interest expense related to the notes and a $2.2 million decrease in after-tax interest expense as a result of a lower interest rate on the refinanced long-term debt; and
|
|
|
|
|
•
|
the three months ended
March 31, 2012
, included a $1.8 million after-tax loss on the sale of real estate property.
|
Gross Margin
Gross margin is a financial measure that is not calculated in accordance with GAAP. Gross margin, as used by Great Plains Energy and KCP&L, is defined as operating revenues less fuel, purchased power and transmission of electricity by others. Expenses for fuel, purchased power and transmission of electricity by others, offset by wholesale sales margin, are subject to recovery through cost adjustment mechanisms, except for KCP&L's Missouri retail operations. As a result, operating revenues increase or decrease in relation to a significant portion of these expenses. Management believes that gross margin provides a more meaningful basis for evaluating electric utility's operations across periods than operating revenues because gross margin excludes the revenue effect of fluctuations in these expenses. Gross margin is used internally to measure performance against budget and in reports for management and the Board. The Companies' definition of gross margin may differ from similar terms used by other companies.
ELECTRIC UTILITY RESULTS OF OPERATIONS
The following table summarizes the electric utility segment results of operations.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended March 31
|
|
2013
|
|
2012
|
|
|
|
(millions)
|
|
Operating revenues
|
|
$
|
542.2
|
|
|
$
|
479.7
|
|
|
|
Fuel
|
|
(132.2
|
)
|
|
(119.3
|
)
|
|
|
Purchased power
|
|
(38.8
|
)
|
|
(24.7
|
)
|
|
|
Transmission of electricity by others
|
|
(11.4
|
)
|
|
(7.3
|
)
|
|
|
Gross margin
(a)
|
|
359.8
|
|
|
328.4
|
|
|
|
Other operating expenses
|
|
(202.8
|
)
|
|
(207.4
|
)
|
|
|
Depreciation and amortization
|
|
(70.2
|
)
|
|
(67.4
|
)
|
|
|
Operating income
|
|
86.8
|
|
|
53.6
|
|
|
|
Non-operating income and expenses
|
|
1.2
|
|
|
(0.2
|
)
|
|
|
Interest charges
|
|
(47.8
|
)
|
|
(50.7
|
)
|
|
|
Income tax (expense) benefit
|
|
(12.6
|
)
|
|
1.8
|
|
|
|
Net income
|
|
$
|
27.6
|
|
|
$
|
4.5
|
|
|
|
|
|
|
(a)
|
Gross margin is a non-GAAP financial measure. See explanation of gross margin under Great Plains Energy's Results of Operations.
|
Electric Utility Gross Margin and MWh Sales
The following table summarizes electric utility's gross margin and MWhs sold.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues and Costs
|
|
%
|
|
MWhs Sold
|
|
%
|
|
Three Months Ended March 31
|
2013
|
|
2012
|
|
Change
|
|
2013
|
|
2012
|
|
Change
|
|
Retail revenues
|
(millions)
|
|
|
|
(thousands)
|
|
|
|
Residential
|
$
|
226.6
|
|
|
$
|
190.1
|
|
|
19
|
%
|
|
2,354
|
|
|
2,056
|
|
|
14
|
%
|
|
Commercial
|
208.7
|
|
|
188.8
|
|
|
10
|
%
|
|
2,525
|
|
|
2,463
|
|
|
3
|
%
|
|
Industrial
|
44.3
|
|
|
42.8
|
|
|
3
|
%
|
|
706
|
|
|
757
|
|
|
(7
|
)%
|
|
Other retail revenues
|
5.0
|
|
|
5.0
|
|
|
4
|
%
|
|
31
|
|
|
31
|
|
|
—
|
%
|
|
Kansas property tax surcharge
|
0.1
|
|
|
1.5
|
|
|
N/M
|
|
|
N/A
|
|
|
N/A
|
|
|
N/A
|
|
|
Fuel recovery mechanism
|
8.2
|
|
|
6.4
|
|
|
28
|
%
|
|
N/A
|
|
|
N/A
|
|
|
N/A
|
|
|
Total retail
|
492.9
|
|
|
434.6
|
|
|
13
|
%
|
|
5,616
|
|
|
5,307
|
|
|
6
|
%
|
|
Wholesale revenues
|
34.4
|
|
|
33.6
|
|
|
3
|
%
|
|
1,246
|
|
|
1,133
|
|
|
10
|
%
|
|
Other revenues
|
14.9
|
|
|
11.5
|
|
|
29
|
%
|
|
N/A
|
|
|
N/A
|
|
|
N/A
|
|
|
Operating revenues
|
542.2
|
|
|
479.7
|
|
|
13
|
%
|
|
6,862
|
|
|
6,440
|
|
|
7
|
%
|
|
Fuel
|
(132.2
|
)
|
|
(119.3
|
)
|
|
11
|
%
|
|
|
|
|
|
|
|
Purchased power
|
(38.8
|
)
|
|
(24.7
|
)
|
|
57
|
%
|
|
|
|
|
|
|
|
Transmission of electricity by others
|
(11.4
|
)
|
|
(7.3
|
)
|
|
57
|
%
|
|
|
|
|
|
|
|
Gross margin
(a)
|
$
|
359.8
|
|
|
$
|
328.4
|
|
|
10
|
%
|
|
|
|
|
|
|
|
|
|
|
(a)
|
Gross margin is a non-GAAP financial measure. See explanation of gross margin under Great Plains Energy's Results of Operations.
|
Electric utility's gross margin
increased
$31.4 million
for the
three months ended
March 31, 2013
, compared to the same period in
2012
primarily due to:
|
|
|
|
•
|
an estimated
$20 million
increase from
new retail rates in Kansas effective January 1, 2013, and Missouri effective January 26, 2013
;
|
|
|
|
|
•
|
an estimated
$16 million
increase due to
favorable
weather driven by a
41% increase in heating degree days
;
|
|
|
|
|
•
|
an estimated
$4 million
increase due to
an increase in weather-normalized retail demand
; and
|
|
|
|
|
•
|
an estimated
$4 million
increase from the impact of
an unplanned outage at Wolf Creek in the first quarter of 2012
.
|
These
increases
were partially offset by an estimated
$13 million
decrease
driven by increased fuel and purchased power expense at KCP&L in Missouri, where there is no fuel recovery mechanism
.
Electric Utility Other Operating Expenses
(including utility operating and maintenance expenses, general taxes and other)
Electric utility's other operating expenses
decreased
$4.6 million
for the
three months ended
March 31, 2013
, compared to the same period in
2012
driven by a
$10.1 million
decrease in operating and maintenance expenses at Wolf Creek primarily due to an unplanned outage in the first quarter of 2012. This
decrease
was partially offset by a
$3.3 million
increase in general taxes driven by increased property taxes and a
$3.6 million
increase relating to solar rebates provided to customers due to the deferral to a regulatory asset for recovery in future rates of
$3.0 million
during the three months ended March 31, 2012 and
$0.6 million
of regulatory asset amortization in 2013.
Electric Utility Interest Charges
Electric utility's interest charges
decreased
$2.9 million
for the
three months ended
March 31, 2013
, compared to the same period in
2012
primarily due to the
repayment of GMO's $500.0 million 11.875% Senior Notes at maturity in July 2012
.
Electric Utility Income Tax Expense
Electric utility's income tax expense
increased
$14.4 million
for the
three months ended
March 31, 2013
, compared to the same period in
2012
primarily due to
increased
pre-tax income.
GREAT PLAINS ENERGY SIGNIFICANT BALANCE SHEET CHANGES
(
March 31, 2013
, compared to
December 31, 2012
)
|
|
|
|
•
|
Great Plains Energy's deferred income taxes - current assets
decreased
$85.4 million
primarily due to the reclassification to deferred income taxes - deferred credits and other liabilities of $77.8 million of deferred tax assets relating to net operating losses driven by the expected timing of their utilization due to the extension of 50% bonus depreciation with the January 2, 2013, enactment of the American Taxpayer Relief Act of 2012.
|
|
|
|
|
•
|
Great Plains Energy's construction work in progress
increased
$88.4 million
primarily due to a $40.7 million increase for environmental upgrades at KCP&L's La Cygne Station, in addition to normal plant activity.
|
|
|
|
|
•
|
Great Plains Energy's commercial paper
decreased
$163.1 million
due to repayment with proceeds from KCP&L’s issuance of $300.0 million of 3.15% Senior Notes, partially offset by increased borrowings used to support environmental upgrades at KCP&L's La Cygne Station, as well as dividend and interest payments.
|
|
|
|
|
•
|
Great Plains Energy's accounts payable
decreased
$95.1 million
primarily due to the timing of cash payments.
|
|
|
|
|
•
|
Great Plains Energy's accrued taxes
increased
$30.4 million
primarily due to the timing of property tax payments.
|
|
|
|
|
•
|
Great Plains Energy's accrued interest
increased
$20.5 million
primarily due to the timing of interest payments.
|
|
|
|
|
•
|
Great Plains Energy's deferred income taxes - deferred credits and other liabilities
decreased
$72.5 million
primarily due to the reclassification from deferred income taxes - current assets of $77.8 million of deferred tax assets relating to net operating losses driven by the expected timing of their utilization due to the extension of 50% bonus depreciation with the January 2, 2013, enactment of the American Taxpayer Relief Act of 2012.
|
|
|
|
|
•
|
Great Plains Energy's long-term debt
increased
$296.4 million
primarily due to the issuance, at a discount, of KCP&L's $300.0 million of 3.15% Senior Notes in March 2013.
|
CAPITAL REQUIREMENTS AND LIQUIDITY
Great Plains Energy operates through its subsidiaries and has no material assets other than the stock of its subsidiaries. Great Plains Energy's ability to make payments on its debt securities and its ability to pay dividends are dependent on its receipt of dividends or other distributions from its subsidiaries, proceeds from the issuance of its securities and borrowing under its revolving credit facility.
Great Plains Energy's capital requirements are principally comprised of debt maturities and electric utility's construction and other capital expenditures. These items as well as additional cash and capital requirements are discussed below.
Great Plains Energy's liquid resources at
March 31, 2013
, consisted of
$11.6 million
of cash and cash equivalents on hand and $
849.8 million
of unused bank lines of credit. The unused lines consisted of $
187.2 million
from Great
Plains Energy's revolving credit facility, $
438.7 million
from KCP&L's credit facilities and $
223.9 million
from GMO's credit facilities. See Note 7 to the consolidated financial statements for more information on the revolving credit facilities. Generally, Great Plains Energy uses these liquid resources to meet its day-to-day cash flow requirements, and from time to time issues equity and/or long-term debt to repay short-term debt or increase cash balances.
Great Plains Energy intends to meet day-to-day cash flow requirements including interest payments, retirement of maturing debt, construction requirements, dividends and pension benefit plan funding requirements with a combination of internally generated funds and proceeds from the issuance of equity securities, equity-linked securities and/or short-term and long-term debt. Great Plains Energy's intention to meet a portion of these requirements with internally generated funds may be impacted by the effect of inflation on operating expenses, the level of MWh sales, regulatory actions, compliance with environmental regulations and the availability of generating units. In addition, Great Plains Energy may issue equity, equity-linked securities and/or debt to finance growth.
Cash Flows from Operating Activities
Great Plains Energy generated positive cash flows from operating activities for the periods presented. The
$34.9 million
increase
in cash flows from operating activities for Great Plains Energy for the
three months ended
March 31, 2013
, compared to the same period in
2012
is primarily due to net income of
$26.0 million
for the three months ended
March 31, 2013
, as compared to a net loss of
$9.3 million
for the same period in
2012
. Other changes in working capital are detailed in Note 2 to the consolidated financial statements. The individual components of working capital vary with normal business cycles and operations.
Cash Flows from Investing Activities
Great Plains Energy's cash used for investing activities varies with the timing of utility capital expenditures and purchases of investments and nonutility property. Investing activities are offset by proceeds from the sale of properties and insurance recoveries.
Great Plains Energy's utility capital expenditures
increased
$45.7 million
for the
three months ended
March 31, 2013
, compared to the same period in
2012
due to an increase in cash utility capital expenditures primarily related to environmental upgrades at KCP&L's La Cygne Station, in addition to normal plant activity.
Cash Flows from Financing Activities
Great Plains Energy's cash flows from financing activities for the
three months ended
March 31, 2013
, reflect KCP&L's issuance, at a discount, of $300.0 million of 3.15% Senior Notes that mature in 2023, with the proceeds used to repay short-term borrowings.
Great Plains Energy's cash flows from financing activities for the
three months ended
March 31, 2012
, reflect repayment of KCP&L's $12.4 million of 4.00% EIRR bonds at maturity in January 2012 and additional short-term borrowings primarily to support interest and dividend payments.
Financing Authorization
Under stipulations with the MPSC and KCC, Great Plains Energy and KCP&L maintain common equity at not less than 30% and 35%, respectively, of total capitalization (including only the amount of short-term debt in excess of the amount of construction work in progress). KCP&L's long-term financing activities are subject to the authorization of the MPSC. In February 2012, the MPSC authorized KCP&L to issue up to $300.0 million of long-term debt and to enter into interest rate hedging instruments in connection with such debt through December 31, 2013. At
March 31, 2013
, KCP&L
had utilized all
of this authorization.
In October 2012, FERC authorized KCP&L to have outstanding at any time up to a total of $1.0 billion in short-term debt instruments through December 2014, conditioned on KCP&L's borrowing costs not exceeding the greater of: (i) 2.25% over LIBOR; (ii) the greater of 1.25% over the prime rate, 1.75% over the federal funds rate, and 2.25% over LIBOR; or (iii) 2.25% over the A2/P-2 nonfinancial commercial paper rate most recently published by the Federal Reserve at the time of the borrowing. The authorization is subject to four restrictions: (i) proceeds of
debt backed by utility assets must be used for utility purposes; (ii) if any utility assets that secure authorized debt are divested or spun off, the debt must follow the assets and also be divested or spun off; (iii) if any proceeds of the authorized debt are used for non-utility purposes, the debt must follow the non-utility assets (specifically, if the non-utility assets are divested or spun off, then a proportionate share of the debt must follow the divested or spun off non-utility assets); and (iv) if utility assets financed by the authorized short-term debt are divested or spun off to another entity, a proportionate share of the debt must also be divested or spun off. At
March 31, 2013
, there was
$844.0 million
available under this authorization.
In January 2012, FERC authorized GMO to have outstanding at any time up to a total of $750.0 million in short-term debt instruments through March 2014, conditioned on GMO's borrowing costs not exceeding the greater of 2.25% over LIBOR or 1.75% over the prime rate or federal funds rate, as applicable, and subject to the same four restrictions as the KCP&L FERC short-term authorization discussed in the preceding paragraph. At
March 31, 2013
, there was
$539.0 million
available under this authorization.
In November 2011, FERC authorized GMO to issue up to a total of $850.0 million of long-term debt through December 2013. At
March 31, 2013
, there was
$562.5 million
available under this authorization.
KCP&L and GMO are also authorized by FERC to participate in the Great Plains Energy money pool, an internal financing arrangement in which funds may be lent on a short-term basis to KCP&L and GMO. At
March 31, 2013
, GMO had an outstanding payable under the money pool of
$2.7 million
to Great Plains Energy.
Debt Agreements
See Note 7 to the consolidated financial statements for information regarding revolving credit facilities.
Pensions
The Company maintains defined benefit plans for substantially all active and inactive employees of KCP&L, GMO and WCNOC and incurs significant costs in providing the plans. Funding of the plans follows legal and regulatory requirements with funding equaling or exceeding the minimum requirements of the Employee Retirement Income Security Act of 1974, as amended (ERISA). For the
three months ended
March 31, 2013
, the Company contributed
$13.7 million
to the pension plans and expects to contribute an additional
$43.2 million
in
2013
to satisfy the minimum ERISA funding requirements and the MPSC and KCC rate orders, the majority of which is expected to be paid by KCP&L.
Additionally, the Company provides post-retirement health and life insurance benefits for certain retired employees and expects to make benefit contributions of
$18.7 million
under the provisions of these plans in
2013
, the majority of which is expected to be paid by KCP&L.
Management believes the Company has adequate access to capital resources through cash flows from operations or through existing lines of credit to support these funding requirements.
KANSAS CITY POWER & LIGHT COMPANY
MANAGEMENT'S NARRATIVE ANALYSIS OF RESULTS OF OPERATIONS
The following table summarizes KCP&L's consolidated comparative results of operations.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended March 31
|
|
2013
|
|
2012
|
|
|
|
(millions)
|
|
Operating revenues
|
|
$
|
366.7
|
|
|
$
|
327.0
|
|
|
|
Fuel
|
|
(94.5
|
)
|
|
(84.6
|
)
|
|
|
Purchased power
|
|
(19.1
|
)
|
|
(7.0
|
)
|
|
|
Transmission of electricity by others
|
|
(8.0
|
)
|
|
(5.0
|
)
|
|
|
Gross margin
(a)
|
|
245.1
|
|
|
230.4
|
|
|
|
Other operating expenses
|
|
(145.2
|
)
|
|
(153.1
|
)
|
|
|
Depreciation and amortization
|
|
(47.6
|
)
|
|
(45.7
|
)
|
|
|
Operating income
|
|
52.3
|
|
|
31.6
|
|
|
|
Non-operating income and expenses
|
|
1.3
|
|
|
(0.2
|
)
|
|
|
Interest charges
|
|
(32.0
|
)
|
|
(32.4
|
)
|
|
|
Income tax (expense) benefit
|
|
(5.4
|
)
|
|
3.3
|
|
|
|
Net income
|
|
$
|
16.2
|
|
|
$
|
2.3
|
|
|
|
|
|
|
(a)
|
Gross margin is a non-GAAP financial measure. See explanation of gross margin under Great Plains Energy's Results of Operations.
|
KCP&L Gross Margin and MWh Sales
The following table summarizes KCP&L's gross margin and MWhs sold.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues and Costs
|
|
%
|
|
MWhs Sold
|
|
%
|
|
Three Months Ended March 31
|
2013
|
|
2012
|
|
Change
|
|
2013
|
|
2012
|
|
Change
|
|
Retail revenues
|
(millions)
|
|
|
|
(thousands)
|
|
|
|
Residential
|
$
|
136.1
|
|
|
$
|
112.6
|
|
|
21
|
%
|
|
1,362
|
|
|
1,200
|
|
|
14
|
%
|
|
Commercial
|
153.8
|
|
|
138.1
|
|
|
11
|
%
|
|
1,772
|
|
|
1,742
|
|
|
2
|
%
|
|
Industrial
|
26.8
|
|
|
26.9
|
|
|
—
|
%
|
|
396
|
|
|
450
|
|
|
(12
|
)%
|
|
Other retail revenues
|
3.2
|
|
|
3.2
|
|
|
2
|
%
|
|
23
|
|
|
23
|
|
|
—
|
%
|
|
Kansas property tax surcharge
|
0.1
|
|
|
1.5
|
|
|
N/M
|
|
|
N/A
|
|
|
N/A
|
|
|
N/A
|
|
|
Fuel recovery mechanism
|
3.9
|
|
|
7.7
|
|
|
(50
|
)%
|
|
N/A
|
|
|
N/A
|
|
|
N/A
|
|
|
Total retail
|
323.9
|
|
|
290.0
|
|
|
12
|
%
|
|
3,553
|
|
|
3,415
|
|
|
4
|
%
|
|
Wholesale revenues
|
38.3
|
|
|
32.3
|
|
|
19
|
%
|
|
1,401
|
|
|
1,089
|
|
|
29
|
%
|
|
Other revenues
|
4.5
|
|
|
4.7
|
|
|
(5
|
)%
|
|
N/A
|
|
|
N/A
|
|
|
N/A
|
|
|
Operating revenues
|
366.7
|
|
|
327.0
|
|
|
12
|
%
|
|
4,954
|
|
|
4,504
|
|
|
10
|
%
|
|
Fuel
|
(94.5
|
)
|
|
(84.6
|
)
|
|
12
|
%
|
|
|
|
|
|
|
|
Purchased power
|
(19.1
|
)
|
|
(7.0
|
)
|
|
N/M
|
|
|
|
|
|
|
|
|
Transmission of electricity by others
|
(8.0
|
)
|
|
(5.0
|
)
|
|
58
|
%
|
|
|
|
|
|
|
|
Gross margin
(a)
|
$
|
245.1
|
|
|
$
|
230.4
|
|
|
(6
|
)%
|
|
|
|
|
|
|
|
|
|
|
(a)
|
Gross margin is a non-GAAP financial measure. See explanation of gross margin under Great Plains Energy's Results of Operations.
|
KCP&L's gross margin
increased
$14.7 million
for the
three months ended
March 31, 2013
, compared to the same period in
2012
primarily due to:
|
|
|
|
•
|
an estimated
$16 million
increase from
new retail rates in Kansas effective January 1, 2013, and Missouri effective January 26, 2013
;
|
|
|
|
|
•
|
an estimated
$10 million
increase due to
favorable
weather driven by a
41% increase in heating degree days
; and
|
|
|
|
|
•
|
an estimated
$4 million
increase from the impact of
an unplanned outage at Wolf Creek in the first quarter of 2012
.
|
These
increases
were partially offset by an estimated
$16 million
decrease
driven by increased fuel and purchased power expense in Missouri, where there is no fuel recovery mechanism
.
KCP&L Other Operating Expenses
(including operating and maintenance expenses, general taxes and other)
KCP&L's other operating expenses
decreased
$7.9 million
for the
three months ended
March 31, 2013
, compared to the same period in
2012
driven by a
$10.1 million
decrease in operating and maintenance expenses at Wolf Creek primarily due to an unplanned outage in the first quarter of 2012. This
decrease
was partially offset by a
$1.8 million
increase in general taxes driven by increased property taxes and the three months ended
March 31, 2012
, included deferral to a regulatory asset for recovery in future rates of
$1.6 million
of solar rebates provided to customers.
KCP&L Income Tax Expense
KCP&L's income tax expense
increased
$8.7 million
for the
three months ended
March 31, 2013
, compared to the same period in
2012
primarily due to
increased
pre-tax income.
