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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2015
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2014
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ASSETS
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(millions, except share amounts)
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Current Assets
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|
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Cash and cash equivalents
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$
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12.2
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$
|
13.0
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Funds on deposit
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4.6
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1.2
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Receivables, net
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142.5
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160.3
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Accounts receivable pledged as collateral
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171.0
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171.0
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Fuel inventories, at average cost
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102.2
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90.1
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Materials and supplies, at average cost
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151.7
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152.7
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Deferred refueling outage costs
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28.1
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12.5
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Refundable income taxes
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3.2
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3.1
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Deferred income taxes
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74.5
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78.1
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Prepaid expenses and other assets
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33.1
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36.9
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Total
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723.1
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|
718.9
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|
Utility Plant, at Original Cost
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|
|
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Electric
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12,652.2
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12,128.7
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Less - accumulated depreciation
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4,834.8
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4,828.3
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Net utility plant in service
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7,817.4
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7,300.4
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Construction work in progress
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510.2
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900.0
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Nuclear fuel, net of amortization of $192.4 and $187.5
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75.8
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79.2
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Total
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8,403.4
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8,279.6
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Investments and Other Assets
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Nuclear decommissioning trust fund
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203.5
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199.0
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Regulatory assets
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1,018.7
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1,034.6
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Goodwill
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169.0
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169.0
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Other
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76.7
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74.6
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Total
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1,467.9
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1,477.2
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Total
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$
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10,594.4
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$
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10,475.7
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The accompanying Notes to Consolidated Financial Statements are an integral part of these statements.
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|
|
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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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|
2015
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2014
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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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10.0
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$
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4.0
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Collateralized note payable
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171.0
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171.0
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Commercial paper
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536.0
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358.3
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Current maturities of long-term debt
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1.1
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15.1
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Accounts payable
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281.0
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388.0
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Accrued taxes
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64.9
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30.4
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Accrued interest
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57.9
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41.3
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Accrued compensation and benefits
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40.4
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35.2
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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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32.2
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24.7
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Total
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1,197.3
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1,070.8
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Deferred Credits and Other Liabilities
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Deferred income taxes
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1,092.7
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1,089.7
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Deferred tax credits
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125.6
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126.0
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Asset retirement obligations
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198.8
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195.9
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Pension and post-retirement liability
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510.8
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508.6
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Regulatory liabilities
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292.9
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282.7
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Other
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80.5
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88.9
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Total
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2,301.3
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2,291.8
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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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154,376,457 and 154,254,037 shares issued, stated value
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2,641.3
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2,639.3
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Retained earnings
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948.3
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967.8
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Treasury stock - 95,095 and 91,281 shares, at cost
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(2.4
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)
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(2.3
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)
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Accumulated other comprehensive loss
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(17.2
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)
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(18.7
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)
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Total
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3,570.0
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3,586.1
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Cumulative preferred stock $100 par value
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3.80% - 100,000 shares issued
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10.0
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10.0
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4.50% - 100,000 shares issued
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10.0
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|
|
10.0
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|
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4.20% - 70,000 shares issued
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7.0
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7.0
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4.35% - 120,000 shares issued
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|
12.0
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|
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|
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12.0
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Total
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39.0
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|
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|
|
39.0
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|
|
Long-term debt (Note 9)
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|
3,486.8
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|
|
|
|
3,488.0
|
|
|
|
Total
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|
7,095.8
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|
|
|
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7,113.1
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|
|
Commitments and Contingencies (Note 10)
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Total
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$
|
10,594.4
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|
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$
|
10,475.7
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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 Comprehensive Income
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(Unaudited)
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Three Months Ended March 31
|
2015
|
|
2014
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Operating Revenues
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(millions, except per share amounts)
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|
Electric revenues
|
$
|
549.1
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|
$
|
585.1
|
|
|
Operating Expenses
|
|
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Fuel
|
107.6
|
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|
135.2
|
|
|
Purchased power
|
45.4
|
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|
45.4
|
|
|
Transmission
|
20.9
|
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|
17.6
|
|
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Utility operating and maintenance expenses
|
171.5
|
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|
180.7
|
|
|
Depreciation and amortization
|
79.8
|
|
|
74.5
|
|
|
General taxes
|
52.7
|
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|
52.8
|
|
|
Other
|
1.1
|
|
|
1.0
|
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Total
|
479.0
|
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|
507.2
|
|
|
Operating income
|
70.1
|
|
|
77.9
|
|
|
Non-operating income
|
6.0
|
|
|
6.4
|
|
|
Non-operating expenses
|
(3.7
|
)
|
|
(3.1
|
)
|
|
Interest charges
|
(47.3
|
)
|
|
(49.4
|
)
|
|
Income before income tax expense and income from equity investments
|
25.1
|
|
|
31.8
|
|
|
Income tax expense
|
(6.5
|
)
|
|
(8.1
|
)
|
|
Income from equity investments, net of income taxes
|
0.3
|
|
|
0.1
|
|
|
Net income
|
18.9
|
|
|
23.8
|
|
|
Preferred stock dividend requirements
|
0.4
|
|
|
0.4
|
|
|
Earnings available for common shareholders
|
$
|
18.5
|
|
|
$
|
23.4
|
|
|
|
|
|
|
|
Average number of basic common shares outstanding
|
154.0
|
|
|
153.7
|
|
|
Average number of diluted common shares outstanding
|
154.4
|
|
|
154.0
|
|
|
|
|
|
|
|
Basic and diluted earnings per common share
|
$
|
0.12
|
|
|
$
|
0.15
|
|
|
|
|
|
|
|
Cash dividends per common share
|
$
|
0.245
|
|
|
$
|
0.23
|
|
|
Comprehensive Income
|
|
|
|
|
Net income
|
$
|
18.9
|
|
|
$
|
23.8
|
|
|
Other comprehensive income
|
|
|
|
|
|
|
Derivative hedging activity
|
|
|
|
|
|
|
Reclassification to expenses, net of tax
|
1.4
|
|
|
2.8
|
|
|
Derivative hedging activity, net of tax
|
1.4
|
|
|
2.8
|
|
|
Defined benefit pension plans
|
|
|
|
|
Amortization of net losses included in net periodic benefit costs, net of tax
|
0.1
|
|
|
0.2
|
|
|
Change in unrecognized pension expense, net of tax
|
0.1
|
|
|
0.2
|
|
|
Total other comprehensive income
|
1.5
|
|
|
3.0
|
|
|
Comprehensive income
|
$
|
20.4
|
|
|
$
|
26.8
|
|
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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Three Months Ended March 31
|
|
2015
|
|
|
|
2014
|
|
|
Cash Flows from Operating Activities
|
(millions)
|
|
Net income
|
|
$
|
18.9
|
|
|
|
|
$
|
23.8
|
|
|
|
Adjustments to reconcile income to net cash from operating activities:
|
|
|
|
|
|
|
|
|
|
|
Depreciation and amortization
|
|
79.8
|
|
|
|
|
74.5
|
|
|
|
Amortization of:
|
|
|
|
|
|
|
|
|
|
|
Nuclear fuel
|
|
4.9
|
|
|
|
|
5.9
|
|
|
|
Other
|
|
12.4
|
|
|
|
|
14.0
|
|
|
|
Deferred income taxes, net
|
|
6.5
|
|
|
|
|
8.3
|
|
|
|
Investment tax credit amortization
|
|
(0.4
|
)
|
|
|
|
(0.4
|
)
|
|
|
Income from equity investments, net of income taxes
|
|
(0.3
|
)
|
|
|
|
(0.1
|
)
|
|
|
Other operating activities (Note 2)
|
|
(22.4
|
)
|
|
|
|
(18.7
|
)
|
|
|
Net cash from operating activities
|
|
99.4
|
|
|
|
|
107.3
|
|
|
|
Cash Flows from Investing Activities
|
|
|
|
|
|
|
|
|
|
|
Utility capital expenditures
|
|
(217.9
|
)
|
|
|
|
(185.2
|
)
|
|
|
Allowance for borrowed funds used during construction
|
|
(2.7
|
)
|
|
|
|
(3.5
|
)
|
|
|
Purchases of nuclear decommissioning trust investments
|
|
(11.8
|
)
|
|
|
|
(8.5
|
)
|
|
|
Proceeds from nuclear decommissioning trust investments
|
|
11.0
|
|
|
|
|
7.6
|
|
|
|
Proceeds from sale of transmission assets
|
|
—
|
|
|
|
|
37.7
|
|
|
|
Other investing activities
|
|
(9.1
|
)
|
|
|
|
(8.4
|
)
|
|
|
Net cash from investing activities
|
|
(230.5
|
)
|
|
|
|
(160.3
|
)
|
|
|
Cash Flows from Financing Activities
|
|
|
|
|
|
|
|
|
|
|
Issuance of common stock
|
|
0.8
|
|
|
|
|
1.3
|
|
|
|
Repayment of long-term debt
|
|
(15.1
|
)
|
|
|
|
(13.4
|
)
|
|
|
Net change in short-term borrowings
|
|
183.7
|
|
|
|
|
105.6
|
|
|
|
Dividends paid
|
|
(38.2
|
)
|
|
|
|
(35.8
|
)
|
|
|
Other financing activities
|
|
(0.9
|
)
|
|
|
|
(1.7
|
)
|
|
|
Net cash from financing activities
|
|
130.3
|
|
|
|
|
56.0
|
|
|
|
Net Change in Cash and Cash Equivalents
|
|
(0.8
|
)
|
|
|
|
3.0
|
|
|
|
Cash and Cash Equivalents at Beginning of Year
|
|
13.0
|
|
|
|
|
10.6
|
|
|
|
Cash and Cash Equivalents at End of Period
|
|
$
|
12.2
|
|
|
|
|
$
|
13.6
|
|
|
The accompanying Notes to Consolidated Financial Statements are an integral part of these statements.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GREAT PLAINS ENERGY INCORPORATED
|
|
Consolidated Statements of Common Shareholders' Equity
|
|
(Unaudited)
|
|
|
|
|
|
|
|
Three Months Ended March 31
|
2015
|
|
2014
|
|
|
|
Shares
|
|
Amount
|
|
Shares
|
|
Amount
|
|
|
Common Stock
|
(millions, except share amounts)
|
|
Beginning balance
|
154,254,037
|
|
|
$
|
2,639.3
|
|
|
153,995,621
|
|
|
$
|
2,631.1
|
|
|
|
Issuance of common stock
|
44,483
|
|
|
1.2
|
|
|
48,945
|
|
|
1.3
|
|
|
|
Issuance of restricted common stock
|
77,937
|
|
|
2.0
|
|
|
71,860
|
|
|
1.8
|
|
|
|
Equity compensation expense, net of forfeitures
|
|
|
|
0.3
|
|
|
|
|
|
0.1
|
|
|
|
Unearned Compensation
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issuance of restricted common stock
|
|
|
|
(2.0
|
)
|
|
|
|
|
(1.8
|
)
|
|
|
Compensation expense recognized
|
|
|
|
0.5
|
|
|
|
|
|
0.5
|
|
|
|
Other
|
|
|
|
—
|
|
|
|
|
|
0.9
|
|
|
|
Ending balance
|
154,376,457
|
|
|
2,641.3
|
|
|
154,116,426
|
|
|
2,633.9
|
|
|
|
Retained Earnings
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Beginning balance
|
|
|
|
967.8
|
|
|
|
|
|
871.4
|
|
|
|
Net income
|
|
|
|
18.9
|
|
|
|
|
|
23.8
|
|
|
|
Dividends:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common stock ($0.245 and $0.23 per share)
|
|
|
(37.8
|
)
|
|
|
|
|
(35.4
|
)
|
|
|
Preferred stock - at required rates
|
|
|
|
(0.4
|
)
|
|
|
|
|
(0.4
|
)
|
|
|
Performance shares
|
|
|
|
(0.2
|
)
|
|
|
|
|
(0.3
|
)
|
|
|
Ending balance
|
|
|
|
948.3
|
|
|
|
|
|
859.1
|
|
|
|
Treasury Stock
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Beginning balance
|
(91,281
|
)
|
|
(2.3
|
)
|
|
(129,290
|
)
|
|
(2.8
|
)
|
|
|
Treasury shares acquired
|
(50,899
|
)
|
|
(1.3
|
)
|
|
(69,129
|
)
|
|
(1.8
|
)
|
|
|
Treasury shares reissued
|
47,085
|
|
|
1.2
|
|
|
109,057
|
|
|
2.4
|
|
|
|
Ending balance
|
(95,095
|
)
|
|
(2.4
|
)
|
|
(89,362
|
)
|
|
(2.2
|
)
|
|
|
Accumulated Other Comprehensive Income (Loss)
|
|
|
|
|
|
|
|
|
|
|
|
|
Beginning balance
|
|
|
|
(18.7
|
)
|
|
|
|
|
(25.3
|
)
|
|
|
Derivative hedging activity, net of tax
|
|
|
|
1.4
|
|
|
|
|
|
2.8
|
|
|
|
Change in unrecognized pension expense, net of tax
|
|
|
0.1
|
|
|
|
|
|
0.2
|
|
|
|
Ending balance
|
|
|
|
(17.2
|
)
|
|
|
|
|
(22.3
|
)
|
|
|
Total Great Plains Energy Common Shareholders' Equity
|
|
|
$
|
3,570.0
|
|
|
|
|
|
$
|
3,468.5
|
|
|
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
|
|
|
2015
|
|
2014
|
|
ASSETS
|
(millions, except share amounts)
|
|
Current Assets
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
$
|
2.8
|
|
|
|
|
$
|
2.7
|
|
|
|
Funds on deposit
|
|
0.9
|
|
|
|
|
0.6
|
|
|
|
Receivables, net
|
|
116.5
|
|
|
|
|
128.9
|
|
|
|
Related party receivables
|
|
51.5
|
|
|
|
|
68.8
|
|
|
|
Accounts receivable pledged as collateral
|
|
110.0
|
|
|
|
|
110.0
|
|
|
|
Fuel inventories, at average cost
|
|
70.4
|
|
|
|
|
58.8
|
|
|
|
Materials and supplies, at average cost
|
|
109.2
|
|
|
|
|
110.1
|
|
|
|
Deferred refueling outage costs
|
|
28.1
|
|
|
|
|
12.5
|
|
|
|
Refundable income taxes
|
|
7.9
|
|
|
|
|
57.5
|
|
|
|
Deferred income taxes
|
|
0.8
|
|
|
|
|
5.0
|
|
|
|
Prepaid expenses and other assets
|
|
29.5
|
|
|
|
|
32.7
|
|
|
|
Total
|
|
527.6
|
|
|
|
|
587.6
|
|
|
|
Utility Plant, at Original Cost
|
|
|
|
|
|
|
|
|
|
|
Electric
|
|
9,211.6
|
|
|
|
|
8,737.3
|
|
|
|
Less - accumulated depreciation
|
|
3,647.8
|
|
|
|
|
3,658.7
|
|
|
|
Net utility plant in service
|
|
5,563.8
|
|
|
|
|
5,078.6
|
|
|
|
Construction work in progress
|
|
421.1
|
|
|
|
|
791.2
|
|
|
|
Nuclear fuel, net of amortization of $192.4 and $187.5
|
|
75.8
|
|
|
|
|
79.2
|
|
|
|
Total
|
|
6,060.7
|
|
|
|
|
5,949.0
|
|
|
|
Investments and Other Assets
|
|
|
|
|
|
|
|
|
|
|
Nuclear decommissioning trust fund
|
|
203.5
|
|
|
|
|
199.0
|
|
|
|
Regulatory assets
|
|
740.2
|
|
|
|
|
745.7
|
|
|
|
Other
|
|
30.3
|
|
|
|
|
29.5
|
|
|
|
Total
|
|
974.0
|
|
|
|
|
974.2
|
|
|
|
Total
|
|
$
|
7,562.3
|
|
|
|
|
$
|
7,510.8
|
|
|
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
|
|
|
2015
|
|
2014
|
|
LIABILITIES AND CAPITALIZATION
|
(millions, except share amounts)
|
|
Current Liabilities
|
|
|
|
|
|
|
|
|
Collateralized note payable
|
|
$
|
110.0
|
|
|
|
|
$
|
110.0
|
|
|
|
Commercial paper
|
|
424.0
|
|
|
|
|
358.3
|
|
|
|
Current maturities of long-term debt
|
|
—
|
|
|
|
|
14.0
|
|
|
|
Accounts payable
|
|
246.6
|
|
|
|
|
305.2
|
|
|
|
Related party payables
|
|
—
|
|
|
|
|
12.6
|
|
|
|
Accrued taxes
|
|
47.3
|
|
|
|
|
23.6
|
|
|
|
Accrued interest
|
|
41.1
|
|
|
|
|
29.0
|
|
|
|
Accrued compensation and benefits
|
|
40.4
|
|
|
|
|
35.2
|
|
|
|
Pension and post-retirement liability
|
|
1.5
|
|
|
|
|
1.5
|
|
|
|
Other
|
|
13.1
|
|
|
|
|
12.4
|
|
|
|
Total
|
|
924.0
|
|
|
|
|
901.8
|
|
|
|
Deferred Credits and Other Liabilities
|
|
|
|
|
|
|
|
|
|
|
Deferred income taxes
|
|
1,022.7
|
|
|
|
|
1,016.9
|
|
|
|
Deferred tax credits
|
|
124.1
|
|
|
|
|
124.3
|
|
|
|
Asset retirement obligations
|
|
180.3
|
|
|
|
|
177.7
|
|
|
|
Pension and post-retirement liability
|
|
487.8
|
|
|
|
|
485.4
|
|
|
|
Regulatory liabilities
|
|
176.2
|
|
|
|
|
172.0
|
|
|
|
Other
|
|
59.1
|
|
|
|
|
59.2
|
|
|
|
Total
|
|
2,050.2
|
|
|
|
|
2,035.5
|
|
|
|
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
|
|
740.0
|
|
|
|
|
726.8
|
|
|
|
Accumulated other comprehensive loss
|
|
(13.5
|
)
|
|
|
|
(14.9
|
)
|
|
|
Total
|
|
2,289.6
|
|
|
|
|
2,275.0
|
|
|
|
Long-term debt (Note 9)
|
|
2,298.5
|
|
|
|
|
2,298.5
|
|
|
|
Total
|
|
4,588.1
|
|
|
|
|
4,573.5
|
|
|
|
Commitments and Contingencies (Note 10)
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
7,562.3
|
|
|
|
|
$
|
7,510.8
|
|
|
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 Comprehensive Income
|
|
(Unaudited)
|
|
|
|
|
Three Months Ended March 31
|
2015
|
|
2014
|
|
Operating Revenues
|
(millions)
|
|
Electric revenues
|
$
|
370.4
|
|
|
$
|
391.0
|
|
|
Operating Expenses
|
|
|
|
|
|
|
Fuel
|
74.8
|
|
|
93.6
|
|
|
Purchased power
|
21.9
|
|
|
18.9
|
|
|
Transmission
|
13.4
|
|
|
10.6
|
|
|
Operating and maintenance expenses
|
118.3
|
|
|
127.2
|
|
|
Depreciation and amortization
|
56.5
|
|
|
51.7
|
|
|
General taxes
|
40.2
|
|
|
41.5
|
|
|
Total
|
325.1
|
|
|
343.5
|
|
|
Operating income
|
45.3
|
|
|
47.5
|
|
|
Non-operating income
|
4.4
|
|
|
6.0
|
|
|
Non-operating expenses
|
(1.7
|
)
|
|
(1.6
|
)
|
|
Interest charges
|
(31.5
|
)
|
|
(30.7
|
)
|
|
Income before income tax expense
|
16.5
|
|
|
21.2
|
|
|
Income tax expense
|
(3.3
|
)
|
|
(4.0
|
)
|
|
Net income
|
$
|
13.2
|
|
|
$
|
17.2
|
|
|
Comprehensive Income
|
|
|
|
|
|
|
Net income
|
$
|
13.2
|
|
|
$
|
17.2
|
|
|
Other comprehensive income
|
|
|
|
|
|
|
Derivative hedging activity
|
|
|
|
|
|
|
Reclassification to expenses, net of tax
|
1.4
|
|
|
1.3
|
|
|
Derivative hedging activity, net of tax
|
1.4
|
|
|
1.3
|
|
|
Total other comprehensive income
|
1.4
|
|
|
1.3
|
|
|
Comprehensive income
|
$
|
14.6
|
|
|
$
|
18.5
|
|
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
|
|
2015
|
|
|
|
2014
|
|
|
Cash Flows from Operating Activities
|
(millions)
|
|
Net income
|
|
$
|
13.2
|
|
|
|
|
$
|
17.2
|
|
|
|
Adjustments to reconcile income to net cash from operating activities:
|
|
|
|
|
|
|
|
|
|
Depreciation and amortization
|
|
56.5
|
|
|
|
|
51.7
|
|
|
|
Amortization of:
|
|
|
|
|
|
|
|
|
|
|
Nuclear fuel
|
|
4.9
|
|
|
|
|
5.9
|
|
|
|
Other
|
|
7.4
|
|
|
|
|
8.2
|
|
|
|
Deferred income taxes, net
|
|
10.3
|
|
|
|
|
1.0
|
|
|
|
Investment tax credit amortization
|
|
(0.2
|
)
|
|
|
|
(0.2
|
)
|
|
|
Other operating activities (Note 2)
|
|
60.2
|
|
|
|
|
26.6
|
|
|
|
Net cash from operating activities
|
|
152.3
|
|
|
|
|
110.4
|
|
|
|
Cash Flows from Investing Activities
|
|
|
|
|
|
|
|
|
|
|
Utility capital expenditures
|
|
(181.8
|
)
|
|
|
|
(160.5
|
)
|
|
|
Allowance for borrowed funds used during construction
|
|
(2.1
|
)
|
|
|
|
(3.2
|
)
|
|
|
Purchases of nuclear decommissioning trust investments
|
|
(11.8
|
)
|
|
|
|
(8.5
|
)
|
|
|
Proceeds from nuclear decommissioning trust investments
|
|
11.0
|
|
|
|
|
7.6
|
|
|
|
Proceeds from sale of transmission assets
|
|
—
|
|
|
|
|
4.7
|
|
|
|
Other investing activities
|
|
(6.6
|
)
|
|
|
|
(4.0
|
)
|
|
|
Net cash from investing activities
|
|
(191.3
|
)
|
|
|
|
(163.9
|
)
|
|
|
Cash Flows from Financing Activities
|
|
|
|
|
|
|
|
|
|
|
Repayment of long-term debt
|
|
(14.0
|
)
|
|
|
|
—
|
|
|
|
Net change in short-term borrowings
|
|
65.7
|
|
|
|
|
73.5
|
|
|
|
Net money pool borrowings
|
|
(12.6
|
)
|
|
|
|
(0.2
|
)
|
|
|
Dividends paid to Great Plains Energy
|
|
—
|
|
|
|
|
(18.0
|
)
|
|
|
Net cash from financing activities
|
|
39.1
|
|
|
|
|
55.3
|
|
|
|
Net Change in Cash and Cash Equivalents
|
|
0.1
|
|
|
|
|
1.8
|
|
|
|
Cash and Cash Equivalents at Beginning of Year
|
|
2.7
|
|
|
|
|
4.0
|
|
|
|
Cash and Cash Equivalents at End of Period
|
|
$
|
2.8
|
|
|
|
|
$
|
5.8
|
|
|
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 Common Shareholder's Equity
|
|
(Unaudited)
|
|
|
|
|
|
|
|
Three Months Ended March 31
|
2015
|
|
2014
|
|
|
|
Shares
|
|
Amount
|
|
Shares
|
|
Amount
|
|
|
|
(millions, except share amounts)
|
|
Common Stock
|
1
|
|
|
$
|
1,563.1
|
|
|
1
|
|
|
$
|
1,563.1
|
|
|
|
Retained Earnings
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Beginning balance
|
|
|
|
726.8
|
|
|
|
|
|
636.4
|
|
|
|
Net income
|
|
|
|
13.2
|
|
|
|
|
|
17.2
|
|
|
|
Dividends:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common stock held by Great Plains Energy
|
|
|
|
—
|
|
|
|
|
|
(18.0
|
)
|
|
|
Ending balance
|
|
|
|
740.0
|
|
|
|
|
|
635.6
|
|
|
|
Accumulated Other Comprehensive Income (Loss)
|
|
|
|
|
|
|
|
|
|
|
|
|
Beginning balance
|
|
|
|
(14.9
|
)
|
|
|
|
|
(20.2
|
)
|
|
|
Derivative hedging activity, net of tax
|
|
|
|
1.4
|
|
|
|
|
|
1.3
|
|
|
|
Ending balance
|
|
|
|
(13.5
|
)
|
|
|
|
|
(18.9
|
)
|
|
|
Total Common Shareholder's Equity
|
|
|
|
$
|
2,289.6
|
|
|
|
|
|
$
|
2,179.8
|
|
|
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 significant operations 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 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.
|
Great Plains Energy also wholly owns GPE Transmission Holding Company, LLC (GPETHC). GPETHC owns
13.5%
of Transource Energy, LLC (Transource) with the remaining
86.5%
owned by AEP Transmission Holding Company, LLC (AEPTHC), a subsidiary of American Electric Power Company, Inc. GPETHC accounts for its investment in Transource under the equity method.
Transource is focused on the development of competitive electric transmission projects.
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
17
for additional information.
Basic and Diluted Earnings per Common Share Calculation
To determine basic earnings per common share (EPS), preferred stock dividend requirements are deducted from net income 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 and restricted stock.
The following table reconciles Great Plains Energy's basic and diluted EPS.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended March 31
|
|
2015
|
|
2014
|
|
|
Income
|
(millions, except per share amounts)
|
|
Net income
|
|
$
|
18.9
|
|
|
$
|
23.8
|
|
|
|
Less: preferred stock dividend requirements
|
|
0.4
|
|
|
0.4
|
|
|
|
Earnings available for common shareholders
|
|
$
|
18.5
|
|
|
$
|
23.4
|
|
|
|
Common Shares Outstanding
|
|
|
|
|
|
|
|
|
Average number of common shares outstanding
|
|
154.0
|
|
|
153.7
|
|
|
|
Add: effect of dilutive securities
|
|
0.4
|
|
|
0.3
|
|
|
|
Diluted average number of common shares outstanding
|
|
154.4
|
|
|
154.0
|
|
|
|
Basic and diluted EPS
|
|
$
|
0.12
|
|
|
$
|
0.15
|
|
|
Anti-dilutive shares excluded from the computation of diluted EPS are detailed in the following table.
|
|
|
|
|
|
|
|
|
|
Three Months Ended March 31
|
2015
|
|
2014
|
|
Performance shares
|
—
|
|
|
495,619
|
|
|
Restricted stock shares
|
—
|
|
|
71,573
|
|
Dividends Declared
In
May 2015
, Great Plains Energy's Board of Directors (Board) declared a quarterly dividend of
$0.245
per share on Great Plains Energy's common stock. The common dividend is payable
June 19, 2015
, to shareholders of record as of
May 29, 2015
. The Board also declared regular dividends on Great Plains Energy's preferred stock, payable
September 1, 2015
, to shareholders of record as of
August 11, 2015
.
New Accounting Standards
In May 2014, the Financial Accounting Standards Board (FASB) issued Accounting Standard Update (ASU) No. 2014-09,
Revenue from Contracts with Customers
, which requires an entity to recognize the amount of revenue to which it expects to be entitled for the transfer of promised goods or services to customers. The ASU will replace most existing revenue recognition guidance in Generally Accepted Accounting Principles (GAAP) when it becomes effective. The new standard is effective for the Companies on January 1, 2017. Early application is not permitted. The standard permits the use of either the retrospective or cumulative effect transition method. The Companies are evaluating the effect that ASU No. 2014-09 will have on their consolidated financial statements and related disclosures. The Companies have not yet selected a transition method nor have they determined the effect of the standard on their ongoing financial reporting.
In April 2015, the FASB issued ASU No. 2015-03,
Simplifying the Presentation of Debt Issuance Costs
, which requires that debt issuance costs related to a recognized debt liability be presented on the balance sheet as a direct deduction from the carrying amount of that debt liability, consistent with debt discounts. Great Plains Energy and KCP&L currently include debt issuance costs in Other - Investments and Other Assets on their consolidated balance sheets. The new guidance is effective for interim and annual periods beginning after December 15, 2015 with early adoption permitted. The Companies intend to early adopt ASU No. 2015-03 for the 2015 Form 10-K.
2. SUPPLEMENTAL CASH FLOW INFORMATION
|
|
|
|
|
|
|
|
|
|
|
|
Great Plains Energy Other Operating Activities
|
|
Three Months Ended March 31
|
2015
|
|
2014
|
|
Cash flows affected by changes in:
|
(millions)
|
|
Receivables
|
$
|
17.8
|
|
|
$
|
10.9
|
|
|
Fuel inventories
|
(12.1
|
)
|
|
4.8
|
|
|
Materials and supplies
|
1.0
|
|
|
0.9
|
|
|
Accounts payable
|
(88.0
|
)
|
|
(77.9
|
)
|
|
Accrued taxes
|
34.5
|
|
|
34.6
|
|
|
Accrued interest
|
16.6
|
|
|
16.4
|
|
|
Deferred refueling outage costs
|
(15.6
|
)
|
|
4.1
|
|
|
Pension and post-retirement benefit obligations
|
16.0
|
|
|
22.4
|
|
|
Allowance for equity funds used during construction
|
(3.3
|
)
|
|
(4.7
|
)
|
|
Fuel recovery mechanism
|
8.7
|
|
|
(6.6
|
)
|
|
Solar rebates paid
|
(2.8
|
)
|
|
(12.2
|
)
|
|
Other
|
4.8
|
|
|
(11.4
|
)
|
|
Total other operating activities
|
$
|
(22.4
|
)
|
|
$
|
(18.7
|
)
|
|
Cash paid during the period:
|
|
|
|
|
|
|
Interest
|
$
|
27.4
|
|
|
$
|
26.8
|
|
|
Income taxes
|
$
|
0.1
|
|
|
$
|
0.1
|
|
|
Non-cash investing activities:
|
|
|
|
|
|
Liabilities accrued for capital expenditures
|
$
|
38.7
|
|
|
$
|
37.7
|
|
|
|
|
|
|
|
|
|
|
|
|
|
KCP&L Other Operating Activities
|
|
Three Months Ended March 31
|
2015
|
|
2014
|
|
Cash flows affected by changes in:
|
(millions)
|
|
Receivables
|
$
|
29.7
|
|
|
$
|
13.7
|
|
|
Fuel inventories
|
(11.6
|
)
|
|
1.8
|
|
|
Materials and supplies
|
0.9
|
|
|
0.5
|
|
|
Accounts payable
|
(43.3
|
)
|
|
(45.3
|
)
|
|
Accrued taxes
|
73.3
|
|
|
38.1
|
|
|
Accrued interest
|
12.1
|
|
|
12.1
|
|
|
Deferred refueling outage costs
|
(15.6
|
)
|
|
4.1
|
|
|
Pension and post-retirement benefit obligations
|
16.2
|
|
|
22.0
|
|
|
Allowance for equity funds used during construction
|
(2.7
|
)
|
|
(4.7
|
)
|
|
Fuel recovery mechanism
|
(2.2
|
)
|
|
4.6
|
|
|
Solar rebates paid
|
(2.3
|
)
|
|
(2.7
|
)
|
|
Other
|
5.7
|
|
|
(17.6
|
)
|
|
Total other operating activities
|
$
|
60.2
|
|
|
$
|
26.6
|
|
|
Cash paid during the period:
|
|
|
|
|
|
|
Interest
|
$
|
16.4
|
|
|
$
|
15.5
|
|
|
Non-cash investing activities:
|
|
|
|
|
|
Liabilities accrued for capital expenditures
|
$
|
34.8
|
|
|
$
|
29.4
|
|
3. RECEIVABLES
Great Plains Energy's and KCP&L's receivables are detailed in the following table.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
March 31
|
December 31
|
|
|
|
2015
|
|
|
2014
|
|
|
Great Plains Energy
|
|
(millions)
|
|
|
Customer accounts receivable - billed
|
|
$
|
0.9
|
|
|
|
$
|
1.1
|
|
|
|
Customer accounts receivable - unbilled
|
|
64.1
|
|
|
|
75.3
|
|
|
|
Allowance for doubtful accounts - customer accounts receivable
|
|
(4.3
|
)
|
|
|
(2.8
|
)
|
|
|
Other receivables
|
|
81.8
|
|
|
|
86.7
|
|
|
|
Total
|
|
$
|
142.5
|
|
|
|
$
|
160.3
|
|
|
|
KCP&L
|
|
|
|
|
|
|
|
|
|
Customer accounts receivable - billed
|
|
$
|
0.1
|
|
|
|
$
|
0.6
|
|
|
|
Customer accounts receivable - unbilled
|
|
43.0
|
|
|
|
49.7
|
|
|
|
Allowance for doubtful accounts - customer accounts receivable
|
|
(2.0
|
)
|
|
|
(1.2
|
)
|
|
|
Other receivables
|
|
75.4
|
|
|
|
79.8
|
|
|
|
Total
|
|
$
|
116.5
|
|
|
|
$
|
128.9
|
|
|
Great Plains Energy's and KCP&L's other receivables at
March 31, 2015
, and
December 31, 2014
, 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 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, 2015
, and
December 31, 2014
, Great Plains Energy's accounts receivable pledged as collateral and the corresponding short-term collateralized note payable were
$171.0 million
. At
March 31, 2015
, and
December 31, 2014
, 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 2015 and allows for
$110 million
in aggregate outstanding principal amount at any time. GMO's agreement expires in September 2015 and allows for
$65 million
in aggregate outstanding principal from mid-November 2014 through mid-June 2015 and then increases to
$80 million
through September 2015.
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, 2015
|
KCP&L
|
|
KCP&L
Receivables
Company
|
|
Consolidated
KCP&L
|
|
GMO
|
|
GMO
Receivables
Company
|
|
Consolidated Great Plains Energy
|
|
|
(millions)
|
|
Receivables (sold) purchased
|
|
$
|
(349.8
|
)
|
|
|
|
$
|
349.8
|
|
|
|
|
$
|
—
|
|
|
|
|
$
|
(188.7
|
)
|
|
|
|
$
|
188.7
|
|
|
|
|
$
|
—
|
|
|
|
Gain (loss) on sale of accounts receivable
(a)
|
|
(4.4
|
)
|
|
|
|
4.5
|
|
|
|
|
0.1
|
|
|
|
|
(2.4
|
)
|
|
|
|
2.4
|
|
|
|
|
0.1
|
|
|
|
Servicing fees received (paid)
|
|
0.6
|
|
|
|
|
(0.6
|
)
|
|
|
|
—
|
|
|
|
|
0.3
|
|
|
|
|
(0.3
|
)
|
|
|
|
—
|
|
|
|
Fees paid to outside investor
|
|
—
|
|
|
|
|
(0.2
|
)
|
|
|
|
(0.2
|
)
|
|
|
|
—
|
|
|
|
|
(0.1
|
)
|
|
|
|
(0.3
|
)
|
|
|
Cash from customers (transferred) received
|
|
(359.8
|
)
|
|
|
|
359.8
|
|
|
|
|
—
|
|
|
|
|
(194.8
|
)
|
|
|
|
194.8
|
|
|
|
|
—
|
|
|
|
Cash received from (paid for) receivables purchased
|
|
355.3
|
|
|
|
|
(355.3
|
)
|
|
|
|
—
|
|
|
|
|
192.3
|
|
|
|
|
(192.3
|
)
|
|
|
|
—
|
|
|
|
Interest on intercompany note received (paid)
|
|
0.1
|
|
|
|
|
(0.1
|
)
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended March 31, 2014
|
KCP&L
|
|
KCP&L
Receivables
Company
|
|
Consolidated
KCP&L
|
|
GMO
|
|
GMO
Receivables
Company
|
|
Consolidated Great Plains Energy
|
|
|
(millions)
|
|
Receivables (sold) purchased
|
|
$
|
(353.1
|
)
|
|
|
|
$
|
353.1
|
|
|
|
|
$
|
—
|
|
|
|
|
$
|
(193.8
|
)
|
|
|
|
$
|
193.8
|
|
|
|
|
$
|
—
|
|
|
|
Gain (loss) on sale of accounts receivable
(a)
|
|
(4.5
|
)
|
|
|
|
4.6
|
|
|
|
|
0.1
|
|
|
|
|
(2.5
|
)
|
|
|
|
2.5
|
|
|
|
|
0.1
|
|
|
|
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
|
|
(367.6
|
)
|
|
|
|
367.6
|
|
|
|
|
—
|
|
|
|
|
(200.8
|
)
|
|
|
|
200.8
|
|
|
|
|
—
|
|
|
|
Cash received from (paid for) receivables purchased
|
|
363.0
|
|
|
|
|
(363.0
|
)
|
|
|
|
—
|
|
|
|
|
198.3
|
|
|
|
|
(198.3
|
)
|
|
|
|
—
|
|
|
(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. Wolf Creek paid the DOE a quarterly fee of one-tenth of a cent for each kilowatt hour (kWh) of net nuclear generation delivered and sold for the future disposal of spent nuclear fuel. KCP&L's 47% share of these costs were charged to fuel expense. The Nuclear Energy Institute, a number of individual utilities, and the National Association of Regulatory Utility Commissioners sued the DOE seeking the suspension of this fee. In January 2014, the DOE submitted a proposal to Congress to set the fee at zero, which became effective May 16, 2014.
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. In 2011, the NRC reexamined its decision and ordered the licensing board, consistent with budgetary limitations, to close out its work on the DOE's application. In August 2013, a federal court of appeals ruled that the NRC must resume its review of the DOE's application.
Wolf Creek is currently evaluating alternatives for expanding its existing on-site spent nuclear fuel storage to provide additional capacity prior to 2025. Management cannot predict when, or if, an off-site storage site or 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
2015
|
|
December 31
2014
|
|
Decommissioning Trust
|
|
(millions)
|
|
|
Beginning balance January 1
|
|
$
|
199.0
|
|
|
|
|
$
|
183.9
|
|
|
|
Contributions
|
|
0.8
|
|
|
|
|
3.3
|
|
|
|
Earned income, net of fees
|
|
0.9
|
|
|
|
|
3.6
|
|
|
|
Net realized gains
|
|
0.8
|
|
|
|
|
0.4
|
|
|
|
Net unrealized gains
|
|
2.0
|
|
|
|
|
7.8
|
|
|
|
Ending balance
|
|
$
|
203.5
|
|
|
|
|
$
|
199.0
|
|
|
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, 2015
|
|
|
|
December 31, 2014
|
|
|
|
Cost
Basis
|
|
Unrealized Gains
|
|
Unrealized
Losses
|
|
Fair
Value
|
|
Cost
Basis
|
|
Unrealized
Gains
|
|
Unrealized
Losses
|
|
Fair
Value
|
|
|
(millions)
|
|
Equity securities
|
$
|
88.3
|
|
|
|
$
|
52.0
|
|
|
|
|
$
|
(0.6
|
)
|
|
|
|
$
|
139.7
|
|
|
|
|
$
|
87.2
|
|
|
|
|
$
|
50.6
|
|
|
|
|
$
|
(0.7
|
)
|
|
|
|
$
|
137.1
|
|
|
|
Debt securities
|
58.1
|
|
|
|
4.3
|
|
|
|
|
(0.1
|
)
|
|
|
|
62.3
|
|
|
|
|
55.4
|
|
|
|
|
3.8
|
|
|
|
|
(0.1
|
)
|
|
|
|
59.1
|
|
|
|
Other
|
1.5
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
|
1.5
|
|
|
|
|
2.8
|
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
|
2.8
|
|
|
|
Total
|
$
|
147.9
|
|
|
|
$
|
56.3
|
|
|
|
|
$
|
(0.7
|
)
|
|
|
|
$
|
203.5
|
|
|
|
|
$
|
145.4
|
|
|
|
|
$
|
54.4
|
|
|
|
|
$
|
(0.8
|
)
|
|
|
|
$
|
199.0
|
|
|
The weighted average maturity of debt securities held by the trust at
March 31, 2015
, 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
|
2015
|
|
2014
|
|
|
(millions)
|
|
Realized gains
|
$
|
1.4
|
|
|
$
|
0.2
|
|
|
Realized losses
|
(0.6
|
)
|
|
(0.1
|
)
|
5
. REGULATORY MATTERS
KCP&L Kansas Rate Case Proceedings
In January 2015, KCP&L filed an application with The State Corporation Commission of the State of Kansas (KCC) to request an increase to its retail revenues of
$67.3 million
, with a return on equity of
10.3%
and a rate-making equity ratio of
50.48%
. The request includes costs to install environmental upgrades at the La Cygne Station, upgrades at Wolf Creek and other infrastructure and system improvements made to be able to provide reliable electric service. Testimony from KCC staff and other parties regarding the case is expected May 11, 2015, with an evidentiary hearing to occur in June 2015. New rates will be effective on October 1, 2015.
KCP&L Missouri Rate Case Proceedings
In October 2014, KCP&L filed an application with the Public Service Commission of the State of Missouri (MPSC) to request an increase to its retail revenues of
$120.9 million
, with a return on equity of
10.3%
and a rate-making equity ratio of
50.36%
. The request includes recovery of increased transmission and property tax expenses, costs to install environmental upgrades at the La Cygne Station, upgrades at Wolf Creek and other infrastructure and system improvements made to be able to provide reliable electric service. KCP&L also requested authorization to implement a Fuel Adjustment Clause (FAC).
Testimony from MPSC staff and other parties regarding the case was filed in April 2015. The MPSC staff's testimony recommended a return on equity range from
9.0%
to
9.5%
and a revenue increase range of approximately
$82.4 million
to
$91.3 million
, subject to change following the end of the true-up period of May 31, 2015. The outcome of the KCP&L Missouri rate case will likely be different from either of the positions of KCP&L or MPSC staff, though the decision of the MPSC cannot be predicted. An evidentiary hearing is scheduled to occur in June 2015. New rates will be effective on or around September 30, 2015.
6. 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 and GMO, and its
47%
ownership share of Wolf Creek Nuclear Operating Corporation (WCNOC) defined benefit plans. For the majority of employees, pension benefits under these plans reflect the employees' compensation, years of service and age at retirement; however, for union employees hired after October 1, 2013, the benefits are derived from a cash balance account formula. Effective in 2014, the KCP&L non-union plan was closed to future employees. Great Plains Energy also provides certain post-retirement health care and life insurance benefits for substantially all retired employees of KCP&L, GMO and its 47% ownership share of WCNOC.
KCP&L and GMO record pension and post-retirement expense in accordance with rate orders from the MPSC and KCC that allow the difference between pension and post-retirement costs under 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
|
|
2015
|
|
2014
|
|
2015
|
|
2014
|
|
Components of net periodic benefit costs
|
|
(millions)
|
|
Service cost
|
|
$
|
11.3
|
|
|
$
|
9.1
|
|
|
$
|
0.8
|
|
|
$
|
0.9
|
|
|
Interest cost
|
|
12.6
|
|
|
12.7
|
|
|
1.7
|
|
|
2.0
|
|
|
Expected return on plan assets
|
|
(12.9
|
)
|
|
(12.7
|
)
|
|
(0.7
|
)
|
|
(0.7
|
)
|
|
Prior service cost
|
|
0.2
|
|
|
0.2
|
|
|
0.8
|
|
|
0.8
|
|
|
Recognized net actuarial loss
|
|
12.8
|
|
|
12.4
|
|
|
—
|
|
|
—
|
|
|
Net periodic benefit costs before regulatory adjustment
|
|
24.0
|
|
|
21.7
|
|
|
2.6
|
|
|
3.0
|
|
|
Regulatory adjustment
|
|
(3.2
|
)
|
|
(0.4
|
)
|
|
1.4
|
|
|
1.1
|
|
|
Net periodic benefit costs
|
|
$
|
20.8
|
|
|
$
|
21.3
|
|
|
$
|
4.0
|
|
|
$
|
4.1
|
|
For the three months ended
March 31, 2015
, Great Plains Energy contributed
$9.7 million
to the pension plans and expects to contribute an additional
$69.2 million
in
2015
to satisfy the minimum Employee Retirement Income Security Act of 1974, as amended (ERISA) funding requirements and the MPSC and KCC rate orders, the majority of which is expected to be paid by KCP&L. Also in
2015
, Great Plains Energy expects to make contributions of
$10.2 million
to the post-retirement benefit plans, the majority of which is expected to be paid by KCP&L.
7. 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
|
2015
|
|
2014
|
|
Great Plains Energy
|
(millions)
|
|
Equity compensation expense
|
$
|
(0.2
|
)
|
|
$
|
4.4
|
|
|
Income tax benefit
|
—
|
|
|
1.7
|
|
|
KCP&L
|
|
|
|
|
Equity compensation expense
|
$
|
(0.1
|
)
|
|
$
|
3.1
|
|
|
Income tax benefit
|
—
|
|
|
1.1
|
|
Performance Shares
Performance share activity for the three months ended
March 31, 2015
, is summarized in the following table. Performance adjustment represents the number of shares of common stock issued related to performance shares and 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 January 1, 2015
|
|
534,016
|
|
|
|
|
$
|
25.11
|
|
|
|
Granted
|
|
228,049
|
|
|
|
|
24.06
|
|
|
|
Earned
|
|
(25,844
|
)
|
|
|
|
19.48
|
|
|
|
Performance adjustment
|
|
(77,515
|
)
|
|
|
|
19.48
|
|
|
|
Ending balance March 31, 2015
|
|
658,706
|
|
|
|
|
25.63
|
|
|
* weighted-average
At
March 31, 2015
, the remaining weighted-average contractual term was
1.8
years. The weighted-average grant-date fair value of shares granted was $24.06 and
$29.96
for the three months ended
March 31, 2015
, and
2014
, respectively. At
March 31, 2015
, there was
$11.2 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 was
$0.5 million
and
$2.8 million
for the three months ended
March 31, 2015
, and
2014
, respectively.
The fair value of performance share awards is estimated using the market value of the Company's stock at the valuation date and a Monte Carlo simulation technique that 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
2015
, inputs for expected volatility, dividend yield and risk-free rates were
16%
,
3.72%
and
1.02%
, respectively.
Restricted Stock
Restricted stock activity for the three months ended
March 31, 2015
, is summarized in the following table.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nonvested
Restricted Stock
|
|
Grant Date
Fair Value*
|
|
Beginning balance January 1, 2015
|
|
267,390
|
|
|
|
|
$
|
22.31
|
|
|
|
Granted and issued
|
|
77,937
|
|
|
|
|
26.18
|
|
|
|
Vested
|
|
(98,341
|
)
|
|
|
|
19.77
|
|
|
|
Ending balance March 31, 2015
|
|
246,986
|
|
|
|
|
24.54
|
|
|
* weighted-average
At
March 31, 2015
, the remaining weighted-average contractual term was
1.9
years. The weighted-average grant-date fair value of shares granted was $26.18 and
$25.73
for the three months ended
March 31, 2015
, and
2014
, respectively. At
March 31, 2015
, there was
$3.7 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
$1.9 million
and
$1.2 million
for the three months ended
March 31, 2015
, and
2014
, respectively.
8
. 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
October 2019
. 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, 2015
, Great Plains Energy was
in compliance
with this covenant. At
March 31, 2015
, Great Plains Energy had
$10.0 million
of outstanding cash borrowings at a weighted-average interest rate of
1.69%
and had issued
no
letters of credit under the credit facility. At
December 31, 2014
, Great Plains Energy had
$4.0 million
of outstanding cash borrowings at a weighted-average interest rate of
1.69%
and had issued
no
letters of credit 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
October 2019
. 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, 2015
, KCP&L was
in compliance
with this covenant. At
March 31, 2015
, KCP&L had
$424.0 million
of commercial paper outstanding at a weighted-average interest rate of
0.58%
, had issued letters of credit totaling
$2.7 million
and had
no
outstanding cash borrowings under the credit facility. At
December 31, 2014
, KCP&L had
$358.3 million
of commercial paper outstanding at a weighted-average interest rate of
0.48%
, had issued letters of credit totaling
$2.7 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
October 2019
. 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 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, 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, 2015
, GMO was
in compliance
with this covenant. At
March 31, 2015
, GMO had
$112.0 million
of commercial paper outstanding at a weighted-average interest rate of
0.55%
, had issued letters of credit totaling
$3.0 million
and had
no
outstanding cash borrowings under the credit facility. At
December 31, 2014
, GMO had
no
commercial paper outstanding, had issued letters of credit totaling
$3.2 million
and had
no
outstanding cash borrowings under the credit facility.
9. 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
|
|
2015
|
|
2014
|
|
KCP&L
|
|
|
|
(millions)
|
|
|
General Mortgage Bonds
|
|
|
|
|
|
|
|
|
|
|
2.83% EIRR bonds
(a)
|
2017-2035
|
|
|
$
|
132.4
|
|
|
|
|
$
|
146.4
|
|
|
|
7.15% Series 2009A (8.59% rate)
(b)
|
2019
|
|
|
400.0
|
|
|
|
|
400.0
|
|
|
|
4.65% EIRR Series 2005
|
2035
|
|
|
50.0
|
|
|
|
|
50.0
|
|
|
|
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
|
|
|
|
|
300.0
|
|
|
|
6.05% Series (5.78% rate)
(b)
|
2035
|
|
|
250.0
|
|
|
|
|
250.0
|
|
|
|
5.30% Series
|
2041
|
|
|
400.0
|
|
|
|
|
400.0
|
|
|
|
EIRR Bonds
|
|
|
|
|
|
|
|
|
|
|
0.03% Series 2007A and 2007B
(c)
|
2035
|
|
|
146.5
|
|
|
|
|
146.5
|
|
|
|
2.875% Series 2008
|
2038
|
|
|
23.4
|
|
|
|
|
23.4
|
|
|
|
Current maturities
|
|
|
|
—
|
|
|
|
|
(14.0
|
)
|
|
|
Unamortized discount
|
|
|
|
(3.8
|
)
|
|
|
|
(3.8
|
)
|
|
|
Total KCP&L excluding current maturities
|
|
|
|
2,298.5
|
|
|
|
|
2,298.5
|
|
|
|
Other Great Plains Energy
|
|
|
|
|
|
|
|
|
|
|
|
|
GMO First Mortgage Bonds 9.44% Series
|
2016-2021
|
|
|
6.8
|
|
|
|
|
7.9
|
|
|
|
GMO Senior Notes
|
|
|
|
|
|
|
|
|
|
|
8.27% Series
|
2021
|
|
|
80.9
|
|
|
|
|
80.9
|
|
|
|
3.49% Series A
|
2025
|
|
|
125.0
|
|
|
|
|
125.0
|
|
|
|
4.06% Series B
|
2033
|
|
|
75.0
|
|
|
|
|
75.0
|
|
|
|
4.74% Series C
|
2043
|
|
|
150.0
|
|
|
|
|
150.0
|
|
|
|
GMO Medium Term Notes
|
|
|
|
|
|
|
|
|
|
|
|
|
7.33% Series
|
2023
|
|
|
3.0
|
|
|
|
|
3.0
|
|
|
|
7.17% Series
|
2023
|
|
|
7.0
|
|
|
|
|
7.0
|
|
|
|
Great Plains Energy Senior Notes
|
|
|
|
|
|
|
|
|
|
|
6.875% Series (7.33% rate)
(b)
|
2017
|
|
|
100.0
|
|
|
|
|
100.0
|
|
|
|
4.85% Series
|
2021
|
|
|
350.0
|
|
|
|
|
350.0
|
|
|
|
5.292% Series
|
2022
|
|
|
287.5
|
|
|
|
|
287.5
|
|
|
|
Current maturities
|
|
|
|
(1.1
|
)
|
|
|
|
(1.1
|
)
|
|
|
Unamortized discount and premium, net
|
|
|
|
4.2
|
|
|
|
|
4.3
|
|
|
|
Total Great Plains Energy excluding current maturities
|
|
|
|
$
|
3,486.8
|
|
|
|
|
$
|
3,488.0
|
|
|
|
|
|
|
(a)
|
Weighted-average interest rates at
March 31, 2015
|
|
|
|
|
(b)
|
Rate after amortizing gains/losses recognized in OCI on settlements of interest rate hedging instruments
|
KCP&L General Mortgage Bonds
In March 2015, KCP&L repaid its
$14.0 million
secured Series 2005 Environmental Improvement Revenue Refunding (EIRR) bonds at maturity.
10
. 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.
Great Plains Energy's and KCP&L's current estimates of capital expenditures (exclusive of Allowance for Funds Used During Construction (AFUDC) and property taxes) over the next five years to comply with environmental regulations are in the following table. The total cost of compliance with any existing, proposed or future laws and regulations may be significantly different from these cost estimates provided.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2015
|
2016
|
2017
|
2018
|
2019
|
|
|
(millions)
|
|
Great Plains Energy
|
$
|
117.4
|
|
$
|
41.8
|
|
$
|
129.3
|
|
$
|
102.1
|
|
$
|
113.5
|
|
|
KCP&L
|
105.8
|
|
34.1
|
|
112.4
|
|
87.6
|
|
89.5
|
|
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.
The following discussion groups environmental and certain associated matters into the broad categories of air and climate change, water, solid waste and remediation.
Clean Air Act 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.
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
. In September 2011, KCP&L commenced construction of the La Cygne Station project and at
March 31, 2015
, had incurred approximately
$516 million
of cash capital expenditures. The remaining cash capital expenditures are included in the estimated capital expenditures table above. The environmental equipment was placed in-service at La Cygne No. 2 in March 2015 and at La Cygne No. 1 in April 2015.
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. MATS Rule compliance commenced at KCP&L’s Iatan Station in April 2015 and will commence at KCP&L's La Cygne Station in December 2015. KCP&L’s and GMO’s other affected coal-fired units will be compliant in April 2016. Estimated costs to comply with the MATS Rule are included in the estimated capital expenditures table above.
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 became effective in January 2013 and allows three to four years for compliance. Estimated costs to comply with the Industrial Boiler Rule are included in the estimated capital expenditures table above.
SO
2
NAAQS
In June 2010, the EPA strengthened the primary National Ambient Air Quality Standard (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 2013, the EPA designated a part of Jackson County, Missouri, which is in the Companies' service territory, as a nonattainment area for the new 1-hour SO
2
standard. The Missouri Department of Natural Resources (MDNR) will now develop and submit their state implementation plan to the EPA to return the area to attainment of the standard, which may include stricter controls on certain industrial facilities. The Companies are unable to determine if there will be any financial and/or operational impacts until the state implementation plan is complete.
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, regulations or treaties 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
22 million
tons and
17 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 September 2013, 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, which is anticipated to be finalized in the summer of 2015, would not apply to Great Plains Energy's and KCP&L's existing units including modifications to those units.
In June 2014, the EPA proposed its Clean Power Plan which sets emission guidelines for states to follow in developing plans to address greenhouse gas emissions from existing fossil fuel-fired electric generating units. Specifically, the EPA is proposing state-specific goals based on a rate per ton for CO
2
emissions from the power sector, as well as guidelines for states to follow in developing plans to achieve the state-specific goals. Nationwide, by 2030, the EPA states the rule would achieve CO
2
emission reductions from the power sector of approximately
30%
from CO
2
emission levels in 2005.
The EPA has proposed an interim CO
2
goal rate reduction in Kansas and Missouri (average of 2020-2029) of
19%
and
17%
, respectively, and 2030 targets in Kansas and Missouri of
23%
and
21%
, respectively. The baseline for these reductions is 2012 CO
2
emissions adjusted by the EPA in the proposed rule.
Each state will have the flexibility to design a program to meet its goal in a manner that reflects its particular circumstances and energy and environmental policy objectives. Each state can do so alone or can collaborate with other states on multi-state plans that may provide additional opportunities for cost savings and flexibility. The Clean Power Plan is anticipated to be finalized in the summer of 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.
The Companies are subject to existing renewable energy standards in Missouri and Kansas. Management believes that national renewable energy standards are also possible. The timing, provisions and impact of such possible future requirements, including the cost to obtain and install new equipment to achieve compliance, cannot be reasonably estimated at this time.
Clean Water Act
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 May 2014, the EPA finalized 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 are subject to the best technology available standards based on studies completed to comply with such standards. The rule provides flexibility to work with the states to develop the best technology available to minimize aquatic species impacted by being pinned against intake screens (impingement) or drawn into cooling water systems (entrainment). Estimated costs to comply with Section 316(b) of the Clean Water Act are included in the estimated capital expenditures table above.
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 other technology to cool the water, 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 would set 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 September 2015.
The proposal includes a variety of options to reduce pollutants that are discharged into waterways from 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 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 are regulated at the federal and state levels under various laws and regulations. In December 2014, the EPA finalized regulations to regulate coal combustion residuals (CCRs) under the Resource Conservation and Recovery Act (RCRA) subtitle D to address the risks from the disposal of CCRs generated from the combustion of coal at electric generating facilities. The Companies use coal in generating electricity and dispose of the CCRs in both on-site facilities and facilities owned by third parties. The rule requires periodic assessments; groundwater monitoring; location restrictions; design and operating requirements; recordkeeping and notifications; and closure, among other requirements, for CCR units. The cost of complying with the CCR rule is currently being evaluated and has the potential of having a significant financial and operational impact on Great Plains Energy and KCP&L. The rule was promulgated in the Federal Register on April 17, 2015 and is effective six months after promulgation with various obligations effective at specified times within the rule. Great Plains Energy and KCP&L expect to record an increase in asset retirement obligations with a corresponding increase to utility plant in the second quarter of 2015 but the Companies are still evaluating the impact of the rule and have not yet determined the amount of the increase.
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 a disposal site 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, 2015
, and
December 31, 2014
, 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, 2015
, and
December 31, 2014
, Great Plains Energy had
$1.4 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
$1.4 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.
11. 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.
Due to the uncertainties remaining in the case, the potential refund or range of potential refunds owed by MPS Merchant are not reasonably estimable
.
12
. RELATED PARTY TRANSACTIONS AND RELATIONSHIPS
KCP&L employees manage GMO's business and operate its facilities at cost, including GMO's 18% ownership interest in KCP&L's Iatan Nos. 1 and 2. The operating expenses and capital costs billed from KCP&L to GMO were
$46.0 million
and
$44.6 million
, respectively, for the three months ended
March 31, 2015
, and
2014
. Additionally, KCP&L and GMO engage in wholesale electricity transactions with each other. KCP&L's net wholesale sales to GMO were
$0.1 million
and
$10.4 million
for the three months ended
March 31, 2015
, and
2014
, respectively.
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 from Great Plains Energy and between KCP&L and GMO. At
December 31, 2014
, KCP&L had a money pool payable to GMO of
$12.6 million
. The following table summarizes KCP&L's related party net receivables.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
March 31
|
|
December 31
|
|
|
|
2015
|
|
|
|
2014
|
|
|
|
|
(millions)
|
|
|
Net receivable from GMO
|
|
$
|
30.4
|
|
|
|
|
$
|
38.2
|
|
|
|
Net receivable from Great Plains Energy
|
|
21.1
|
|
|
|
|
18.0
|
|
|
13. 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 wholesale sales, 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 KCP&L's Kansas jurisdiction and GMO's utility operations that are recorded to a regulatory asset or liability consistent with KCC and MPSC regulatory orders.
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, 2015
, Great Plains Energy and KCP&L have posted collateral in excess of the aggregate fair value of their 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 arrangements, 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 uses derivative instruments to mitigate exposure to market price fluctuations for wholesale power. 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.
KCP&L and GMO have Transmission Congestion Rights (TCR) that they utilize to hedge against congestion costs and protect load prices in the Southwest Power Pool, Inc. (SPP) Integrated Marketplace, which began operations in March 2014. These financial contracts have been designated as economic hedges (non-hedging derivatives). The fair values of these instruments assigned to KCP&L's Missouri jurisdiction are recorded as derivative assets or liabilities with an offsetting entry recorded to electric revenue. The fair values of these instruments assigned to KCP&L's Kansas jurisdiction and GMO are recorded as derivative assets or liabilities with an offsetting entry recorded to a regulatory asset or liability. For KCP&L's Kansas jurisdiction and GMO, the settlement costs are included in their fuel recovery mechanisms. A regulatory asset or liability is recorded
to reflect the change in the timing of recognition authorized by KCC and MPSC. Recovery of actual costs will not impact earnings, but will impact cash flows due to the timing of the recovery mechanism.
GMO's risk management policy uses derivative instruments to mitigate price exposure to natural gas price volatility in the market. At
March 31, 2015
, GMO had financial contracts in place to hedge approximately
53%
,
27%
and
9%
of the expected on-peak natural gas generation and natural gas equivalent purchased power price exposure for the remainder of
2015
,
2016
and
2017
, respectively. The fair value of the portfolio will settle against actual purchases of natural gas and purchased power. 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 recovery mechanism. A regulatory asset or liability is recorded
to reflect the change in the timing of recognition authorized by the MPSC. Recovery of actual costs 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 gross notional contract amount 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
|
|
|
2015
|
|
2014
|
|
|
Notional
Contract
Amount
|
|
Fair
Value
|
|
Notional
Contract
Amount
|
|
Fair
Value
|
|
Great Plains Energy
|
(millions)
|
|
Futures contracts
|
|
|
|
|
|
|
|
|
Non-hedging derivatives
|
$
|
30.9
|
|
|
$
|
(4.1
|
)
|
|
$
|
14.9
|
|
|
$
|
(2.4
|
)
|
|
Forward contracts
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-hedging derivatives
|
24.7
|
|
|
3.9
|
|
|
29.7
|
|
|
4.1
|
|
|
Transmission congestion rights
|
|
|
|
|
|
|
|
|
Non-hedging derivatives
|
11.4
|
|
|
(1.9
|
)
|
|
28.3
|
|
|
2.6
|
|
|
Option contracts
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-hedging derivatives
|
2.3
|
|
|
0.2
|
|
|
1.7
|
|
|
0.1
|
|
|
KCP&L
|
|
|
|
|
|
|
|
|
|
|
|
|
Futures contracts
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-hedging derivatives
|
$
|
2.3
|
|
|
$
|
0.1
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
Transmission congestion rights
|
|
|
|
|
|
|
|
|
Non-hedging derivatives
|
8.9
|
|
|
(0.8
|
)
|
|
23.6
|
|
|
3.1
|
|
|
Option contracts
|
|
|
|
|
|
|
|
|
Non-hedging derivatives
|
1.6
|
|
|
0.1
|
|
|
—
|
|
|
—
|
|
The fair values of Great Plains Energy's and KCP&L's open derivative positions and balance sheet classification are summarized in the following tables. 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, 2015
|
Classification
|
|
Fair Value
|
|
Fair Value
|
|
Derivatives Not Designated as Hedging Instruments
|
|
|
|
(millions)
|
|
|
Commodity contracts
|
Other
|
|
|
$
|
6.0
|
|
|
|
|
$
|
7.9
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2014
|
|
|
|
|
|
|
|
|
|
|
|
|
Derivatives Not Designated as Hedging Instruments
|
|
|
|
|
|
|
|
|
|
|
|
|
Commodity contracts
|
Other
|
|
|
$
|
8.6
|
|
|
|
|
$
|
4.2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
KCP&L
|
|
|
|
|
|
|
|
|
|
|
|
Balance Sheet
|
|
Asset Derivatives
|
|
Liability Derivatives
|
|
March 31, 2015
|
Classification
|
|
Fair Value
|
|
Fair Value
|
|
Derivatives Not Designated as Hedging Instruments
|
|
|
|
(millions)
|
|
|
Commodity contracts
|
Other
|
|
|
$
|
1.8
|
|
|
|
|
$
|
2.4
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2014
|
|
|
|
|
|
|
|
|
|
|
|
|
Derivatives Not Designated as Hedging Instruments
|
|
|
|
|
|
|
|
|
|
|
|
|
Commodity contracts
|
Other
|
|
|
$
|
4.0
|
|
|
|
|
$
|
0.9
|
|
|
The following tables provide information regarding Great Plains Energy's and KCP&L's offsetting of derivative assets and liabilities.
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Great Plains Energy
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Gross Amounts Not Offset in the Statement of Financial Position
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Description
|
Gross Amounts Recognized
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Gross Amounts Offset in the Statement of Financial Position
|
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Net Amounts Presented in the Statement of Financial Position
|
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Financial Instruments
|
|
Cash Collateral
|
|
Net Amount
|
|
March 31, 2015
|
(millions)
|
|
Derivative assets
|
|
$
|
6.0
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|
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|
|
$
|
(1.8
|
)
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|
|
$
|
4.2
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|
|
|
|
$
|
—
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$
|
—
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|
$
|
4.2
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|
Derivative liabilities
|
|
7.9
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|
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|
(4.2
|
)
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3.7
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|
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—
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|
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—
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3.7
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December 31, 2014
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Derivative assets
|
|
$
|
8.6
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|
$
|
(1.2
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)
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|
|
$
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7.4
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$
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—
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|
|
$
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—
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|
|
$
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7.4
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Derivative liabilities
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4.2
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|
(3.5
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)
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0.7
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—
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—
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0.7
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KCP&L
|
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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
|
|
Net Amount
|
|
March 31, 2015
|
(millions)
|
|
Derivative assets
|
|
$
|
1.8
|
|
|
|
|
$
|
(1.6
|
)
|
|
|
|
$
|
0.2
|
|
|
|
|
$
|
—
|
|
|
|
|
$
|
—
|
|
|
|
|
$
|
0.2
|
|
|
|
Derivative liabilities
|
|
2.4
|
|
|
|
|
(1.6
|
)
|
|
|
|
0.8
|
|
|
|
|
—
|
|
|
|
|
—
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|
|
|
|
0.8
|
|
|
|
December 31, 2014
|
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|
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|
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|
|
|
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|
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Derivative assets
|
|
$
|
4.0
|
|
|
|
|
$
|
(0.9
|
)
|
|
|
|
$
|
3.1
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|
|
|
|
$
|
—
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|
|
|
$
|
—
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|
|
|
|
$
|
3.1
|
|
|
|
Derivative liabilities
|
|
0.9
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|
|
|
(0.9
|
)
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|
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—
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|
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—
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—
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—
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|
At
March 31, 2015
, and
December 31, 2014
, Great Plains Energy offset
$2.4 million
and
$2.3 million
, respectively, of cash collateral posted with counterparties against net derivative positions.
See Note
15
for information regarding amounts reclassified out of accumulated other comprehensive loss for Great Plains Energy and KCP&L.
Great Plains Energy's accumulated OCI at
March 31, 2015
, includes
$9.2 million
that is expected to be reclassified to expenses over the next twelve months. KCP&L's accumulated OCI at
March 31, 2015
, includes
$8.8 million
that is expected to be reclassified to expenses over the next twelve months.
The following tables summarize the amounts of gain (loss) recognized for the change in fair value of commodity contract derivatives not designated as hedging instruments for Great Plains Energy and KCP&L.
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Great Plains Energy
|
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|
Derivatives Not Designated as Hedging Instruments
|
|
Three Months Ended March 31
|
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2015
|
|
2014
|
|
|
Location of Gain (Loss)
|
|
(millions)
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|
|
Electric revenues
|
|
$
|
(5.2
|
)
|
|
$
|
—
|
|
|
|
Fuel
|
|
(0.5
|
)
|
|
0.4
|
|
|
|
Purchased power
|
|
(0.1
|
)
|
|
1.3
|
|
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|
Regulatory asset
|
|
(6.3
|
)
|
|
—
|
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|
|
Regulatory liability
|
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—
|
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|
1.1
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Total
|
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$
|
(12.1
|
)
|
|
$
|
2.8
|
|
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|
|
KCP&L
|
|
|
|
|
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|
|
Derivatives Not Designated as Hedging Instruments
|
|
Three Months Ended March 31
|
|
2015
|
|
2014
|
|
|
Location of Gain (Loss)
|
|
(millions)
|
|
|
Electric revenues
|
|
$
|
(5.2
|
)
|
|
$
|
—
|
|
|
|
Fuel
|
|
0.2
|
|
|
—
|
|
|
|
Purchased power
|
|
—
|
|
|
0.9
|
|
|
|
Regulatory asset
|
|
(1.4
|
)
|
|
(0.1
|
)
|
|
|
Total
|
|
$
|
(6.4
|
)
|
|
$
|
0.8
|
|
|
14. 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.
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.
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.
Great Plains Energy and KCP&L record cash and cash equivalents and short-term borrowings on the balance sheet at cost, which approximates fair value due to the short-term nature of these instruments.
Great Plains Energy and KCP&L record long-term debt on the balance sheet at amortized cost. The fair value of long-term debt is measured as a Level 2 liability and 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, 2015
, the book value and fair value of Great Plains Energy's long-term debt, including current maturities, were
$3.5 billion
and
$3.9 billion
, respectively. At
December 31, 2014
, the book value and fair value of Great Plains Energy's long-term debt, including current maturities, were
$3.5 billion
and
$3.8 billion
, respectively. At
March 31, 2015
, and
December 31, 2014
, the book value and fair value of KCP&L's long-term debt, including current maturities, were
$2.3 billion
and
$2.6 billion
, respectively.
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. The fair values below are gross values before netting arrangements and netting of cash collateral.
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|
|
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|
|
Description
|
March 31
2015
|
|
|
Level 1
|
|
|
Level 2
|
|
Level 3
|
|
KCP&L
|
|
(millions)
|
|
|
Assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nuclear decommissioning trust
(a)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity securities
|
|
$
|
139.7
|
|
|
|
|
$
|
139.7
|
|
|
|
|
$
|
—
|
|
|
|
|
$
|
—
|
|
|
|
Debt securities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S. Treasury
|
|
25.4
|
|
|
|
|
25.4
|
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
U.S. Agency
|
|
3.4
|
|
|
|
|
—
|
|
|
|
|
3.4
|
|
|
|
|
—
|
|
|
|
State and local obligations
|
|
4.0
|
|
|
|
|
—
|
|
|
|
|
4.0
|
|
|
|
|
—
|
|
|
|
Corporate bonds
|
|
29.0
|
|
|
|
|
—
|
|
|
|
|
29.0
|
|
|
|
|
—
|
|
|
|
Foreign governments
|
|
0.5
|
|
|
|
|
—
|
|
|
|
|
0.5
|
|
|
|
|
—
|
|
|
|
Cash equivalents
|
|
1.5
|
|
|
|
|
1.5
|
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
Total nuclear decommissioning trust
|
|
203.5
|
|
|
|
|
166.6
|
|
|
|
|
36.9
|
|
|
|
|
—
|
|
|
|
Self-insured health plan trust
(b)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity securities
|
|
1.2
|
|
|
|
|
1.2
|
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
Debt securities
|
|
7.1
|
|
|
|
|
—
|
|
|
|
|
7.1
|
|
|
|
|
—
|
|
|
|
Cash and cash equivalents
|
|
6.5
|
|
|
|
|
6.5
|
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
Total self-insured health plan trust
|
|
14.8
|
|
|
|
|
7.7
|
|
|
|
|
7.1
|
|
|
|
|
—
|
|
|
|
Derivative instruments
(c)
|
|
1.8
|
|
|
|
|
0.1
|
|
|
|
|
0.1
|
|
|
|
|
1.6
|
|
|
|
Total
|
|
$
|
220.1
|
|
|
|
|
$
|
174.4
|
|
|
|
|
$
|
44.1
|
|
|
|
|
$
|
1.6
|
|
|
|
Liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Derivative instruments
(c)
|
|
2.4
|
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
|
2.4
|
|
|
|
Total
|
|
$
|
2.4
|
|
|
|
|
$
|
—
|
|
|
|
|
$
|
—
|
|
|
|
|
$
|
2.4
|
|
|
|
Other Great Plains Energy
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Derivative instruments
(c)
|
|
$
|
4.2
|
|
|
|
|
$
|
—
|
|
|
|
|
$
|
3.3
|
|
|
|
|
$
|
0.9
|
|
|
|
SERP rabbi trusts
(d)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity securities
|
|
0.1
|
|
|
|
|
0.1
|
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
Fixed income funds
|
|
17.9
|
|
|
|
|
—
|
|
|
|
|
17.9
|
|
|
|
|
—
|
|
|
|
Total SERP rabbi trusts
|
|
18.0
|
|
|
|
|
0.1
|
|
|
|
|
17.9
|
|
|
|
|
—
|
|
|
|
Total
|
|
22.2
|
|
|
|
|
0.1
|
|
|
|
|
21.2
|
|
|
|
|
0.9
|
|
|
|
Liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Derivative instruments
(c)
|
|
5.5
|
|
|
|
|
4.2
|
|
|
|
|
—
|
|
|
|
|
1.3
|
|
|
|
Total
|
|
$
|
5.5
|
|
|
|
|
$
|
4.2
|
|
|
|
|
$
|
—
|
|
|
|
|
$
|
1.3
|
|
|
|
Great Plains Energy
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nuclear decommissioning trust
(a)
|
|
$
|
203.5
|
|
|
|
|
$
|
166.6
|
|
|
|
|
$
|
36.9
|
|
|
|
|
$
|
—
|
|
|
|
Self-insured health plan trust
(b)
|
|
14.8
|
|
|
|
|
7.7
|
|
|
|
|
7.1
|
|
|
|
|
—
|
|
|
|
Derivative instruments
(c)
|
|
6.0
|
|
|
|
|
0.1
|
|
|
|
|
3.4
|
|
|
|
|
2.5
|
|
|
|
SERP rabbi trusts
(d)
|
|
18.0
|
|
|
|
|
0.1
|
|
|
|
|
17.9
|
|
|
|
|
—
|
|
|
|
Total
|
|
242.3
|
|
|
|
|
174.5
|
|
|
|
|
65.3
|
|
|
|
|
2.5
|
|
|
|
Liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Derivative instruments
(c)
|
|
7.9
|
|
|
|
|
4.2
|
|
|
|
|
—
|
|
|
|
|
3.7
|
|
|
|
Total
|
|
$
|
7.9
|
|
|
|
|
$
|
4.2
|
|
|
|
|
$
|
—
|
|
|
|
|
$
|
3.7
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Description
|
December 31
2014
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
KCP&L
|
|
(millions)
|
|
|
Assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nuclear decommissioning trust
(a)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity securities
|
|
$
|
137.1
|
|
|
|
|
$
|
137.1
|
|
|
|
|
$
|
—
|
|
|
|
|
$
|
—
|
|
|
|
Debt securities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S. Treasury
|
|
22.9
|
|
|
|
|
22.9
|
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
U.S. Agency
|
|
3.5
|
|
|
|
|
—
|
|
|
|
|
3.5
|
|
|
|
|
—
|
|
|
|
State and local obligations
|
|
4.1
|
|
|
|
|
—
|
|
|
|
|
4.1
|
|
|
|
|
—
|
|
|
|
Corporate bonds
|
|
28.1
|
|
|
|
|
—
|
|
|
|
|
28.1
|
|
|
|
|
—
|
|
|
|
Foreign governments
|
|
0.5
|
|
|
|
|
—
|
|
|
|
|
0.5
|
|
|
|
|
—
|
|
|
|
Cash equivalents
|
|
2.3
|
|
|
|
|
2.3
|
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
Other
|
|
0.5
|
|
|
|
|
—
|
|
|
|
|
0.5
|
|
|
|
|
—
|
|
|
|
Total nuclear decommissioning trust
|
|
199.0
|
|
|
|
|
162.3
|
|
|
|
|
36.7
|
|
|
|
|
—
|
|
|
|
Self-insured health plan trust
(b)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity securities
|
|
1.3
|
|
|
|
|
1.3
|
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
Debt securities
|
|
7.6
|
|
|
|
|
—
|
|
|
|
|
7.6
|
|
|
|
|
—
|
|
|
|
Cash and cash equivalents
|
|
6.2
|
|
|
|
|
6.2
|
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
Total self-insured health plan trust
|
|
15.1
|
|
|
|
|
7.5
|
|
|
|
|
7.6
|
|
|
|
|
—
|
|
|
|
Derivative instruments
(c)
|
|
4.0
|
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
|
4.0
|
|
|
|
Total
|
|
$
|
218.1
|
|
|
|
|
$
|
169.8
|
|
|
|
|
$
|
44.3
|
|
|
|
|
$
|
4.0
|
|
|
|
Liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Derivative instruments
(c)
|
|
0.9
|
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
|
0.9
|
|
|
|
Total
|
|
$
|
0.9
|
|
|
|
|
$
|
—
|
|
|
|
|
$
|
—
|
|
|
|
|
$
|
0.9
|
|
|
|
Other Great Plains Energy
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Derivative instruments
(c)
|
|
$
|
4.6
|
|
|
|
|
$
|
—
|
|
|
|
|
$
|
3.4
|
|
|
|
|
$
|
1.2
|
|
|
|
SERP rabbi trusts
(d)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity securities
|
|
0.1
|
|
|
|
|
0.1
|
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
Fixed income funds
|
|
17.8
|
|
|
|
|
—
|
|
|
|
|
17.8
|
|
|
|
|
—
|
|
|
|
Total SERP rabbi trusts
|
|
17.9
|
|
|
|
|
0.1
|
|
|
|
|
17.8
|
|
|
|
|
—
|
|
|
|
Total
|
|
22.5
|
|
|
|
|
0.1
|
|
|
|
|
21.2
|
|
|
|
|
1.2
|
|
|
|
Liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Derivative instruments
(c)
|
|
3.3
|
|
|
|
|
2.4
|
|
|
|
|
0.1
|
|
|
|
|
0.8
|
|
|
|
Total
|
|
$
|
3.3
|
|
|
|
|
$
|
2.4
|
|
|
|
|
$
|
0.1
|
|
|
|
|
$
|
0.8
|
|
|
|
Great Plains Energy
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nuclear decommissioning trust
(a)
|
|
$
|
199.0
|
|
|
|
|
$
|
162.3
|
|
|
|
|
$
|
36.7
|
|
|
|
|
$
|
—
|
|
|
|
Self-insured health plan trust
(b)
|
|
15.1
|
|
|
|
|
7.5
|
|
|
|
|
7.6
|
|
|
|
|
—
|
|
|
|
Derivative instruments
(c)
|
|
8.6
|
|
|
|
|
—
|
|
|
|
|
3.4
|
|
|
|
|
5.2
|
|
|
|
SERP rabbi trusts
(d)
|
|
17.9
|
|
|
|
|
0.1
|
|
|
|
|
17.8
|
|
|
|
|
—
|
|
|
|
Total
|
|
240.6
|
|
|
|
|
169.9
|
|
|
|
|
65.5
|
|
|
|
|
5.2
|
|
|
|
Liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Derivative instruments
(c)
|
|
4.2
|
|
|
|
|
2.4
|
|
|
|
|
0.1
|
|
|
|
|
1.7
|
|
|
|
Total
|
|
$
|
4.2
|
|
|
|
|
$
|
2.4
|
|
|
|
|
$
|
0.1
|
|
|
|
|
$
|
1.7
|
|
|
|
|
|
|
(a)
|
Fair value is based on quoted market prices of the investments held by the fund and/or valuation models.
|
|
|
|
|
(b)
|
Fair value is based on quoted market prices of the investments held by the trust. Debt securities classified as Level 2 are comprised of corporate bonds, U.S. Agency, state and local obligations, and other asset-backed securities.
|
|
|
|
|
(c)
|
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. Derivative instruments classified as Level 1 represent exchange traded derivative instruments. Derivative instruments classified as Level 2 represent non-exchange traded derivative instruments traded in
|
over-the-counter markets. Derivative instruments classified as Level 3 represent non-exchange traded derivatives traded in over-the-counter markets for which observable market data is not available to corroborate the valuation inputs and TCRs valued at the most recent auction price in the SPP Integrated Marketplace.
|
|
|
|
(d)
|
Fair value is based on quoted market prices for equity securities and Net Asset Value (NAV) per share for fixed income funds. The fixed income fund invests primarily in intermediate and long-term debt securities, can be redeemed immediately and is not subject to any restrictions on redemptions.
|
The following tables reconcile the beginning and ending balances for all Level 3 assets measured at fair value on a recurring basis.
|
|
|
|
|
|
|
|
|
|
|
|
Great Plains Energy
|
|
|
|
|
Fair Value Measurements Using Significant Unobservable Inputs (Level 3)
|
|
|
Derivative Instruments
|
|
|
2015
|
|
2014
|
|
|
(millions)
|
|
Net asset at January 1
|
$
|
3.5
|
|
|
$
|
3.3
|
|
|
Total realized/unrealized gains (losses):
|
|
|
|
|
|
|
included in electric revenue
|
(5.2
|
)
|
|
—
|
|
|
included in purchased power expense
|
(0.1
|
)
|
|
1.3
|
|
|
included in non-operating income
|
2.1
|
|
|
7.1
|
|
|
included in regulatory asset
|
(2.0
|
)
|
|
—
|
|
|
Purchases
|
0.2
|
|
|
6.1
|
|
|
Settlements
|
0.3
|
|
|
(10.9
|
)
|
|
Net asset (liability) at March 31
|
$
|
(1.2
|
)
|
|
$
|
6.9
|
|
|
Total unrealized gains (losses) relating to assets (liabilities) still on the consolidated balance sheet at March 31:
|
|
|
|
|
|
included in electric revenue
|
$
|
(1.5
|
)
|
|
$
|
—
|
|
|
included in purchased power expense
|
—
|
|
|
(0.1
|
)
|
|
included in non-operating income
|
(0.1
|
)
|
|
0.1
|
|
|
included in regulatory asset
|
(2.0
|
)
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
KCP&L
|
|
|
|
|
Fair Value Measurements Using Significant Unobservable Inputs (Level 3)
|
|
|
Derivative Instruments
|
|
|
2015
|
|
2014
|
|
|
(millions)
|
|
Net asset at January 1
|
$
|
3.1
|
|
|
$
|
1.1
|
|
|
Total realized/unrealized gains (losses):
|
|
|
|
|
|
|
included in electric revenue
|
(5.2
|
)
|
|
—
|
|
|
included in purchased power expense
|
—
|
|
|
0.9
|
|
|
included in regulatory asset
|
(1.4
|
)
|
|
(0.1
|
)
|
|
Purchases
|
(0.4
|
)
|
|
5.1
|
|
|
Settlements
|
3.1
|
|
|
(3.1
|
)
|
|
Net asset (liability) at March 31
|
$
|
(0.8
|
)
|
|
$
|
3.9
|
|
|
Total unrealized losses relating to assets (liabilities) still on the consolidated balance sheet at March 31:
|
|
|
|
|
|
included in electric revenue
|
$
|
(1.5
|
)
|
|
$
|
—
|
|
|
included in purchased power expense
|
—
|
|
|
(0.1
|
)
|
|
included in regulatory asset
|
(1.4
|
)
|
|
(0.1
|
)
|
15
. 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.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Great Plains Energy
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gains and Losses on Cash Flow Hedges
(a)
|
|
Defined Benefit Pension Items
(a)
|
|
|
Total
(a)
|
|
|
|
|
(millions)
|
|
Three Months Ended March 31, 2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Beginning balance January 1
|
|
|
$
|
(15.8
|
)
|
|
|
|
$
|
(2.9
|
)
|
|
|
|
$
|
(18.7
|
)
|
|
|
Amounts reclassified from accumulated other comprehensive loss
|
|
|
1.4
|
|
|
|
|
0.1
|
|
|
|
|
1.5
|
|
|
|
Net current period other comprehensive income (loss)
|
|
|
1.4
|
|
|
|
|
0.1
|
|
|
|
|
1.5
|
|
|
|
Ending balance March 31
|
|
|
$
|
(14.4
|
)
|
|
|
|
$
|
(2.8
|
)
|
|
|
|
$
|
(17.2
|
)
|
|
|
Three Months Ended March 31, 2014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Beginning balance January 1
|
|
|
$
|
(23.8
|
)
|
|
|
|
$
|
(1.5
|
)
|
|
|
|
$
|
(25.3
|
)
|
|
|
Amounts reclassified from accumulated other comprehensive loss
|
|
|
2.8
|
|
|
|
|
0.2
|
|
|
|
|
3.0
|
|
|
|
Net current period other comprehensive income
|
|
|
2.8
|
|
|
|
|
0.2
|
|
|
|
|
3.0
|
|
|
|
Ending balance March 31
|
|
|
$
|
(21.0
|
)
|
|
|
|
$
|
(1.3
|
)
|
|
|
|
$
|
(22.3
|
)
|
|
(a)
Net of tax
|
|
|
|
|
|
|
|
|
|
|
KCP&L
|
|
|
|
|
|
|
|
Gains and Losses on Cash Flow Hedges
(a)
|
|
|
|
(millions)
|
|
Three Months Ended March 31, 2015
|
|
|
|
|
|
Beginning balance January 1
|
|
|
$
|
(14.9
|
)
|
|
|
Amounts reclassified from accumulated other comprehensive loss
|
|
|
1.4
|
|
|
|
Net current period other comprehensive income
|
|
|
1.4
|
|
|
|
Ending balance March 31
|
|
|
$
|
(13.5
|
)
|
|
|
Three Months Ended March 31, 2014
|
|
|
|
|
|
Beginning balance January 1
|
|
|
$
|
(20.2
|
)
|
|
|
Amounts reclassified from accumulated other comprehensive loss
|
|
|
1.3
|
|
|
|
Net current period other comprehensive income
|
|
|
1.3
|
|
|
|
Ending balance March 31
|
|
|
$
|
(18.9
|
)
|
|
(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.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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
|
|
2015
|
|
2014
|
|
|
|
|
|
(millions)
|
|
|
|
Gains and (losses) on cash flow hedges (effective portion)
|
|
|
|
|
|
|
|
Interest rate contracts
|
|
$
|
(2.3
|
)
|
|
$
|
(4.7
|
)
|
|
Interest charges
|
|
|
|
(2.3
|
)
|
|
(4.7
|
)
|
|
Income before income tax expense and income from equity investments
|
|
|
|
0.9
|
|
|
1.9
|
|
|
Income tax benefit
|
|
|
|
$
|
(1.4
|
)
|
|
$
|
(2.8
|
)
|
|
Net income
|
|
Amortization of defined benefit pension items
|
|
|
|
|
|
|
|
Net losses included in net periodic benefit costs
|
|
$
|
(0.2
|
)
|
|
$
|
(0.2
|
)
|
|
Utility operating and maintenance expenses
|
|
|
|
(0.2
|
)
|
|
(0.2
|
)
|
|
Income before income tax expense and income from equity investments
|
|
|
|
0.1
|
|
|
—
|
|
|
Income tax benefit
|
|
|
|
$
|
(0.1
|
)
|
|
$
|
(0.2
|
)
|
|
Net income
|
|
|
|
|
|
|
|
|
|
Total reclassifications, net of tax
|
|
$
|
(1.5
|
)
|
|
$
|
(3.0
|
)
|
|
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
|
|
2015
|
|
2014
|
|
|
|
|
|
(millions)
|
|
|
|
Gains and (losses) on cash flow hedges (effective portion)
|
|
|
|
|
|
|
|
Interest rate contracts
|
|
$
|
(2.3
|
)
|
|
$
|
(2.2
|
)
|
|
Interest charges
|
|
|
|
(2.3
|
)
|
|
(2.2
|
)
|
|
Income before income tax expense
|
|
|
|
0.9
|
|
|
0.9
|
|
|
Income tax benefit
|
|
Total reclassifications, net of tax
|
|
$
|
(1.4
|
)
|
|
$
|
(1.3
|
)
|
|
Net income
|
16. TAXES
Components of income tax expense are detailed in the following tables.
|
|
|
|
|
|
|
|
|
|
|
|
Great Plains Energy
|
|
|
|
|
Three Months Ended March 31
|
2015
|
|
2014
|
|
Current income taxes
|
(millions)
|
|
Federal
|
$
|
0.5
|
|
|
$
|
0.3
|
|
|
State
|
(0.1
|
)
|
|
0.1
|
|
|
Total
|
0.4
|
|
|
0.4
|
|
|
Deferred income taxes
|
|
|
|
|
|
|
Federal
|
5.1
|
|
|
6.6
|
|
|
State
|
1.4
|
|
|
1.7
|
|
|
Total
|
6.5
|
|
|
8.3
|
|
|
Noncurrent income taxes
|
|
|
|
|
|
|
Foreign
|
—
|
|
|
(0.2
|
)
|
|
Investment tax credit amortization
|
(0.4
|
)
|
|
(0.4
|
)
|
|
Income tax expense
|
$
|
6.5
|
|
|
$
|
8.1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
KCP&L
|
|
|
|
|
Three Months Ended March 31
|
2015
|
|
2014
|
|
Current income taxes
|
(millions)
|
|
Federal
|
$
|
(5.7
|
)
|
|
$
|
2.7
|
|
|
State
|
(1.1
|
)
|
|
0.5
|
|
|
Total
|
(6.8
|
)
|
|
3.2
|
|
|
Deferred income taxes
|
|
|
|
|
|
|
Federal
|
8.3
|
|
|
0.4
|
|
|
State
|
2.0
|
|
|
0.6
|
|
|
Total
|
10.3
|
|
|
1.0
|
|
|
Investment tax credit amortization
|
(0.2
|
)
|
|
(0.2
|
)
|
|
Income tax expense
|
$
|
3.3
|
|
|
$
|
4.0
|
|
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
|
2015
|
|
2014
|
|
Federal statutory income tax rate
|
35.0
|
%
|
|
35.0
|
%
|
|
Differences between book and tax depreciation not normalized
|
(0.7
|
)
|
|
(1.8
|
)
|
|
Amortization of investment tax credits
|
(1.4
|
)
|
|
(1.2
|
)
|
|
Federal income tax credits
|
(10.0
|
)
|
|
(9.1
|
)
|
|
State income taxes
|
3.3
|
|
|
3.8
|
|
|
Changes in uncertain tax positions, net
|
—
|
|
|
(0.6
|
)
|
|
Other
|
(0.7
|
)
|
|
(0.7
|
)
|
|
Effective income tax rate
|
25.5
|
%
|
|
25.4
|
%
|
|
|
|
|
|
|
|
|
|
|
KCP&L
|
|
|
|
|
Three Months Ended March 31
|
2015
|
|
2014
|
|
Federal statutory income tax rate
|
35.0
|
%
|
|
35.0
|
%
|
|
Differences between book and tax depreciation not normalized
|
(0.5
|
)
|
|
(3.7
|
)
|
|
Amortization of investment tax credits
|
(1.6
|
)
|
|
(1.2
|
)
|
|
Federal income tax credits
|
(15.2
|
)
|
|
(13.8
|
)
|
|
State income taxes
|
3.7
|
|
|
3.4
|
|
|
Other
|
(1.7
|
)
|
|
(1.1
|
)
|
|
Effective income tax rate
|
19.7
|
%
|
|
18.6
|
%
|
17
. 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, GPETHC and unallocated corporate charges. The summary of significant accounting policies applies to the reportable segment. Segment performance is evaluated based on net income.
The following tables reflect summarized financial information concerning Great Plains Energy's reportable segment.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended March 31, 2015
|
Electric
Utility
|
|
Other
|
|
Eliminations
|
|
Great Plains
Energy
|
|
|
|
(millions)
|
|
Operating revenues
|
|
$
|
549.1
|
|
|
|
|
$
|
—
|
|
|
|
|
$
|
—
|
|
|
|
|
$
|
549.1
|
|
|
|
Depreciation and amortization
|
|
(79.8
|
)
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
|
(79.8
|
)
|
|
|
Interest (charges) income
|
|
(45.3
|
)
|
|
|
|
(10.0
|
)
|
|
|
|
8.0
|
|
|
|
|
(47.3
|
)
|
|
|
Income tax (expense) benefit
|
|
(7.9
|
)
|
|
|
|
1.4
|
|
|
|
|
—
|
|
|
|
|
(6.5
|
)
|
|
|
Net income (loss)
|
|
20.9
|
|
|
|
|
(2.0
|
)
|
|
|
|
—
|
|
|
|
|
18.9
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended March 31, 2014
|
Electric
Utility
|
|
Other
|
|
Eliminations
|
|
Great Plains
Energy
|
|
|
|
(millions)
|
|
Operating revenues
|
|
$
|
585.1
|
|
|
|
|
$
|
—
|
|
|
|
|
$
|
—
|
|
|
|
|
$
|
585.1
|
|
|
|
Depreciation and amortization
|
|
(74.5
|
)
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
|
(74.5
|
)
|
|
|
Interest (charges) income
|
|
(47.0
|
)
|
|
|
|
(12.6
|
)
|
|
|
|
10.2
|
|
|
|
|
(49.4
|
)
|
|
|
Income tax (expense) benefit
|
|
(9.8
|
)
|
|
|
|
1.7
|
|
|
|
|
—
|
|
|
|
|
(8.1
|
)
|
|
|
Net income (loss)
|
|
26.1
|
|
|
|
|
(2.3
|
)
|
|
|
|
—
|
|
|
|
|
23.8
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Electric
Utility
|
|
Other
|
|
Eliminations
|
|
Great Plains
Energy
|
|
March 31, 2015
|
|
(millions)
|
|
|
Assets
|
|
$
|
10,899.6
|
|
|
|
|
$
|
101.9
|
|
|
|
|
$
|
(407.1
|
)
|
|
|
|
$
|
10,594.4
|
|
|
|
Capital expenditures
(a)
|
|
217.9
|
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
|
217.9
|
|
|
|
December 31, 2014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Assets
|
|
$
|
10,746.1
|
|
|
|
|
$
|
33.1
|
|
|
|
|
$
|
(303.5
|
)
|
|
|
|
$
|
10,475.7
|
|
|
|
Capital expenditures
(a)
|
|
773.7
|
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
|
773.7
|
|
|
(a)
Capital expenditures reflect year to date amounts for the periods presented.
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 sole reportable business segment is electric utility. 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 divisions, and GMO Receivables Company. Electric utility has
approximately 6,600
MWs of generating capacity and engages in the generation, transmission, distribution and sale of electricity to approximately
842,700
customers in the states of Missouri and Kansas. Electric utility's retail electricity rates
are comparable
to the national average of investor-owned utilities.
Great Plains Energy's corporate and other activities not included in the sole reportable business segment includes GMO activity other than its regulated utility operations, GPETHC and unallocated corporate charges.
Earnings Overview
Great Plains Energy's earnings available for common shareholders for the three months ended
March 31, 2015
, decreased to $18.5 million or $0.12 per share from $23.4 million or $0.15 per share for the same period in
2014
driven by:
|
|
|
|
•
|
an $11.7 million decrease in gross margin driven by weather, partially offset by recovery of program costs for energy efficiency programs under the Missouri Energy Efficiency Investment Act (MEEIA), which have a direct offset in utility operating and maintenance expense;
|
|
|
|
|
•
|
a $9.2 million decrease in utility operating and maintenance expenses primarily driven by decreased Wolf Creek operating and maintenance expenses primarily due to decreased refueling outage amortization and a planned mid-cycle maintenance outage that began in the first quarter of 2014; and decreased distribution operating and maintenance expenses; partially offset by increased program costs for energy efficiency programs under MEEIA, which have a direct offset in revenue;
|
|
|
|
|
•
|
a $5.3 million increase in depreciation and amortization expense driven by capital additions; and
|
|
|
|
|
•
|
a $1.6 million decrease in income tax expense primarily due to decreased 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 change in earnings, refer to the Great Plains Energy Results of Operations and the Electric Utility Results of Operations sections within this Management's Discussion and Analysis of Financial Condition and Results of Operations (MD&A).
Regulatory Proceedings
See Note
5
to the consolidated financial statements for information regarding regulatory proceedings.
Impact of Recently Issued Accounting Standards
See Note 1 to the consolidated financial statements for information regarding the impact of recently issued accounting standards.
Wolf Creek Mid-Cycle Maintenance Outage and Refueling Outage
Wolf Creek's latest refueling outage began on February 28, 2015, and ended on May 3, 2015. Wolf Creek had a mid-cycle maintenance outage that began on March 8, 2014, and ended on May 13, 2014. Wolf Creek's next refueling outage is planned to begin in the third quarter of 2016.
ENVIRONMENTAL MATTERS
See Note
10
to the consolidated financial statements for information regarding environmental matters.
RELATED PARTY TRANSACTIONS
See Note
12
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
|
2015
|
|
2014
|
|
|
(millions)
|
|
Operating revenues
|
$
|
549.1
|
|
|
$
|
585.1
|
|
|
Fuel
|
(107.6
|
)
|
|
(135.2
|
)
|
|
Purchased power
|
(45.4
|
)
|
|
(45.4
|
)
|
|
Transmission
|
(20.9
|
)
|
|
(17.6
|
)
|
|
Gross margin
(a)
|
375.2
|
|
|
386.9
|
|
|
Other operating expenses
|
(225.3
|
)
|
|
(234.5
|
)
|
|
Depreciation and amortization
|
(79.8
|
)
|
|
(74.5
|
)
|
|
Operating income
|
70.1
|
|
|
77.9
|
|
|
Non-operating income and expenses
|
2.3
|
|
|
3.3
|
|
|
Interest charges
|
(47.3
|
)
|
|
(49.4
|
)
|
|
Income tax expense
|
(6.5
|
)
|
|
(8.1
|
)
|
|
Income from equity investments
|
0.3
|
|
|
0.1
|
|
|
Net income
|
18.9
|
|
|
23.8
|
|
|
Preferred dividends
|
(0.4
|
)
|
|
(0.4
|
)
|
|
Earnings available for common shareholders
|
$
|
18.5
|
|
|
$
|
23.4
|
|
|
|
|
|
(a)
|
Gross margin is a non-GAAP financial measure. See explanation of gross margin below.
|
Great Plains Energy's earnings available for common shareholders for the three months ended
March 31, 2015
, decreased to $18.5 million or $0.12 per share from $23.4 million or $0.15 per share for the same period in
2014
.
Electric utility's
net income
decreased $5.2 million for the three months ended
March 31, 2015
, compared to the same period in
2014
due to:
|
|
|
|
•
|
an $11.7 million decrease in gross margin driven by:
|
|
|
|
|
•
|
an estimated $13 million decrease due to weather driven by a 13% decrease in heating degree days; and
|
|
|
|
|
•
|
a $4.0 million increase for recovery of program costs for energy efficiency programs under MEEIA, which have a direct offset in utility operating and maintenance expense, primarily due to the implementation of KCP&L's MEEIA programs in August 2014;
|
|
|
|
|
•
|
a $9.3 million decrease in other operating expenses primarily due to:
|
|
|
|
|
•
|
an $8.4 million decrease in Wolf Creek operating and maintenance expenses primarily due to decreased refueling outage amortization of $2.5 million and $4.4 million from a planned mid-cycle maintenance outage that began in the first quarter of 2014;
|
|
|
|
|
•
|
a $2.2 million decrease in distribution operating and maintenance expenses; and
|
|
|
|
|
•
|
a $4.0 million increase in program costs for energy efficiency programs under MEEIA, which have a direct offset in revenue, primarily due to the implementation of KCP&L's MEEIA programs in August 2014;
|
|
|
|
|
•
|
a $5.3 million increase in depreciation and amortization expense due to capital additions; and
|
|
|
|
|
•
|
a $1.9 million decrease in income tax expense primarily due to decreased pre-tax income.
|
Great Plains Energy's corporate and other activities loss decreased $0.3 million for the three months ended
March 31, 2015
, compared to the same period in
2014
.
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. Expenses for fuel, purchased power and transmission, 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
|
|
2015
|
|
2014
|
|
|
|
|
(millions)
|
|
|
Operating revenues
|
|
$
|
549.1
|
|
|
$
|
585.1
|
|
|
|
Fuel
|
|
(107.6
|
)
|
|
(135.2
|
)
|
|
|
Purchased power
|
|
(45.4
|
)
|
|
(45.4
|
)
|
|
|
Transmission
|
|
(20.9
|
)
|
|
(17.6
|
)
|
|
|
Gross margin
(a)
|
|
375.2
|
|
|
386.9
|
|
|
|
Other operating expenses
|
|
(224.5
|
)
|
|
(233.8
|
)
|
|
|
Depreciation and amortization
|
|
(79.8
|
)
|
|
(74.5
|
)
|
|
|
Operating income
|
|
70.9
|
|
|
78.6
|
|
|
|
Non-operating income and expenses
|
|
3.2
|
|
|
4.3
|
|
|
|
Interest charges
|
|
(45.3
|
)
|
|
(47.0
|
)
|
|
|
Income tax expense
|
|
(7.9
|
)
|
|
(9.8
|
)
|
|
|
Net income
|
|
$
|
20.9
|
|
|
$
|
26.1
|
|
|
|
|
|
|
(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
|
2015
|
|
2014
|
|
Change
(c)
|
|
2015
|
|
2014
|
|
Change
|
|
|
Retail revenues
|
(millions)
|
|
|
|
(thousands)
|
|
|
|
|
Residential
|
$
|
223.6
|
|
|
$
|
240.9
|
|
|
(7
|
)
|
|
2,288
|
|
|
2,551
|
|
|
(10
|
)
|
|
|
Commercial
|
219.2
|
|
|
217.2
|
|
|
1
|
|
|
2,661
|
|
|
2,657
|
|
|
—
|
|
|
|
Industrial
|
47.1
|
|
|
46.7
|
|
|
1
|
|
|
751
|
|
|
748
|
|
|
—
|
|
|
|
Other retail revenues
|
5.0
|
|
|
5.0
|
|
|
1
|
|
|
29
|
|
|
29
|
|
|
—
|
|
|
|
Kansas property tax surcharge
|
0.3
|
|
|
1.2
|
|
|
N/M
|
|
|
N/A
|
|
|
N/A
|
|
|
N/A
|
|
|
|
Energy efficiency (MEEIA)
(b)
|
6.6
|
|
|
4.1
|
|
|
N/M
|
|
|
N/A
|
|
|
N/A
|
|
|
N/A
|
|
|
|
Fuel recovery mechanisms
|
3.7
|
|
|
13.4
|
|
|
N/M
|
|
|
N/A
|
|
|
N/A
|
|
|
N/A
|
|
|
|
Total retail
|
505.5
|
|
|
528.5
|
|
|
(4
|
)
|
|
5,729
|
|
|
5,985
|
|
|
(4
|
)
|
|
|
Wholesale revenues
|
28.6
|
|
|
42.4
|
|
|
(33
|
)
|
|
1,173
|
|
|
1,383
|
|
|
(15
|
)
|
|
|
Other revenues
|
15.0
|
|
|
14.2
|
|
|
6
|
|
|
N/A
|
|
|
N/A
|
|
|
N/A
|
|
|
|
Operating revenues
|
549.1
|
|
|
585.1
|
|
|
(6
|
)
|
|
6,902
|
|
|
7,368
|
|
|
(6
|
)
|
|
|
Fuel
|
(107.6
|
)
|
|
(135.2
|
)
|
|
(20
|
)
|
|
|
|
|
|
|
|
|
Purchased power
|
(45.4
|
)
|
|
(45.4
|
)
|
|
—
|
|
|
|
|
|
|
|
|
|
Transmission
|
(20.9
|
)
|
|
(17.6
|
)
|
|
19
|
|
|
|
|
|
|
|
|
|
Gross margin
(a)
|
$
|
375.2
|
|
|
$
|
386.9
|
|
|
(3
|
)
|
|
|
|
|
|
|
|
|
(a)
Gross margin is a non-GAAP financial measure. See explanation of gross margin under Great Plains Energy's Results of Operations.
|
|
|
(b)
Consists of recovery of program costs of $6.7 million and $2.7 million for the three months ended March 31, 2015, and 2014, respectively, that have a direct offset in utility operating and maintenance expenses and recovery (provision for refund) of throughput disincentive of $(0.1) million and $1.4 million for the three months ended March 31, 2015, and 2014, respectively.
|
|
|
|
|
(c)
N/M - not meaningful
|
Electric utility's gross margin decreased $11.7 million for the three months ended
March 31, 2015
, compared to the same period in
2014
driven by:
|
|
|
|
•
|
an estimated $13 million decrease due to weather driven by a 13% decrease in heating degree days; and
|
|
|
|
|
•
|
a $4.0 million increase for recovery of program costs for energy efficiency programs under MEEIA, which have a direct offset in utility operating and maintenance expense, primarily due to the implementation of KCP&L's MEEIA programs in August 2014.
|
Electric Utility Other Operating Expenses
(including utility operating and maintenance expenses, general taxes and other)
Electric utility's other operating expenses decreased $9.3 million for the three months ended
March 31, 2015
, compared to the same period in
2014
primarily due to:
|
|
|
|
•
|
an $8.4 million decrease in Wolf Creek operating and maintenance expenses primarily due to decreased refueling outage amortization of $2.5 million and $4.4 million from a planned mid-cycle maintenance outage that began in the first quarter of 2014;
|
|
|
|
|
•
|
a $2.2 million decrease in distribution operating and maintenance expenses; and
|
|
|
|
|
•
|
a $4.0 million increase in program costs for energy efficiency programs under MEEIA, which have a direct offset in revenue, primarily due to the implementation of KCP&L's MEEIA programs in August 2014.
|
Electric Utility Depreciation and Amortization
Electric utility's depreciation and amortization increased $5.3 million for the three months ended
March 31, 2015
, compared to the same period in
2014
due to capital additions.
Electric Utility Income Tax Expense
Electric utility's income tax expense decreased $1.9 million for the three months ended
March 31, 2015
, compared to the same period in
2014
primarily due to decreased pre-tax income.
GREAT PLAINS ENERGY SIGNIFICANT BALANCE SHEET CHANGES
(
March 31, 2015
compared to
December 31, 2014
)
|
|
|
|
•
|
Great Plains Energy's construction work in progress
decreased
$389.8 million
primarily due to a portion of environmental upgrades at KCP&L's La Cygne Station being placed into service in March 2015.
|
|
|
|
|
•
|
Great Plains Energy's commercial paper
increased
$177.7 million
primarily due to borrowings for capital expenditures and other general corporate purposes.
|
|
|
|
|
•
|
Great Plains Energy's current maturities of long-term debt decreased $14.0 million due to the repayment of KCP&L's $14.0 million secured Series 2005 EIRR bonds at maturity in March 2015.
|
|
|
|
|
•
|
Great Plains Energy's accounts payable decreased $107.0 million primarily due to the timing of cash payments.
|
|
|
|
|
•
|
Great Plains Energy's accrued taxes increased $34.5 million primarily due to the timing of property tax payments.
|
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, 2015
, consisted of
$12.2 million
of cash and cash equivalents on hand and $
702.3 million
of unused bank lines of credit. The unused lines consisted of $
190.0 million
from Great Plains Energy's revolving credit facility, $
173.3 million
from KCP&L's credit facilities and $
339.0 million
from GMO's credit facilities. See Note
8
to the consolidated financial statements for more information regarding 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 short-term debt. From time to time, Great Plains Energy issues equity and/or long-term debt to repay short-term debt or increase cash balances. 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
$7.9 million
decrease
in cash flows from operating activities for Great Plains Energy for the three months ended
March 31, 2015
, compared to the same period in
2014
was primarily due to a $4.9 million decrease in net income. 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
$32.7 million
for the three months ended
March 31, 2015
, compared to the same period in
2014
primarily due to an increase in cash utility capital expenditures related to infrastructure and system improvements partially offset by a decrease in expenditures related to environmental upgrades at KCP&L's La Cygne Station.
In January 2014, KCP&L and GMO completed the sale of two SPP-approved regional transmission projects, at cost, to Transource Missouri, LLC for cash proceeds of $37.7 million.
Cash Flows from Financing Activities
Great Plains Energy's cash flows from financing activities increased $74.3 million for the three months ended
March 31, 2015
, compared to the same period in
2014
due to an increase in the net change in short-term borrowings driven by borrowings for capital expenditures and other general corporate purposes.
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 July 2014, the MPSC authorized KCP&L to issue up to $350.0 million of long-term debt and enter into interest rate hedging instruments in connection with such debt through June 30, 2016. KCP&L has not utilized any of this authorization.
In November 2014, FERC authorized KCP&L to have outstanding at any one time up to a total of $1.0 billion in short-term debt instruments through December 2016, conditioned on KCP&L's borrowing costs not exceeding the greater of: (i) 2.25% over LIBOR; (ii) 1.75% over the prime rate or federal funds rate; 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, 2015
, there was
$576.0 million
available under this authorization.
In January 2014, FERC authorized GMO to have outstanding at any one time up to a total of $750.0 million in short-term debt instruments through March 2016, 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, 2015
, there was
$638.0 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, 2015
, GMO had an outstanding payable to Great Plains Energy under the money pool of
$2.0 million
.
Debt Agreements
See Note
8
to the consolidated financial statements for information regarding revolving credit facilities.
Significant Financing Activities
Great Plains Energy has an effective shelf registration statement for the sale of unspecified amounts of securities with the SEC that was filed and became effective in March 2015 and expires in March 2018.
KCP&L has an effective shelf registration statement providing for the sale of unspecified amounts of investment grade notes and general mortgage bonds with the SEC that was filed and became effective in March 2015 and expires in March 2018.
Pensions
The Company incurs significant costs in providing defined benefit plans for substantially all active and inactive employees of KCP&L and GMO and its 47% ownership share of WCNOC's defined benefit plans. Funding of the plans follows legal and regulatory requirements with funding equaling or exceeding the minimum requirements of ERISA.
For the three months ended
March 31, 2015
, the Company contributed
$9.7 million
to the pension plans and expects to contribute an additional
$69.2 million
in
2015
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
$10.2 million
under the provisions of these plans in
2015
, 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
|
|
2015
|
|
2014
|
|
|
|
(millions)
|
|
Operating revenues
|
|
$
|
370.4
|
|
|
$
|
391.0
|
|
|
|
Fuel
|
|
(74.8
|
)
|
|
(93.6
|
)
|
|
|
Purchased power
|
|
(21.9
|
)
|
|
(18.9
|
)
|
|
|
Transmission
|
|
(13.4
|
)
|
|
(10.6
|
)
|
|
|
Gross margin
(a)
|
|
260.3
|
|
|
267.9
|
|
|
|
Other operating expenses
|
|
(158.5
|
)
|
|
(168.7
|
)
|
|
|
Depreciation and amortization
|
|
(56.5
|
)
|
|
(51.7
|
)
|
|
|
Operating income
|
|
45.3
|
|
|
47.5
|
|
|
|
Non-operating income and expenses
|
|
2.7
|
|
|
4.4
|
|
|
|
Interest charges
|
|
(31.5
|
)
|
|
(30.7
|
)
|
|
|
Income tax expense
|
|
(3.3
|
)
|
|
(4.0
|
)
|
|
|
Net income
|
|
$
|
13.2
|
|
|
$
|
17.2
|
|
|
|
|
|
|
(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
|
2015
|
|
2014
|
|
Change
(c)
|
|
2015
|
|
2014
|
|
Change
|
|
Retail revenues
|
(millions)
|
|
|
|
(thousands)
|
|
|
|
Residential
|
$
|
135.9
|
|
|
$
|
145.0
|
|
|
(6
|
)
|
|
1,333
|
|
|
1,459
|
|
|
(9
|
)
|
|
Commercial
|
162.3
|
|
|
160.8
|
|
|
1
|
|
|
1,878
|
|
|
1,868
|
|
|
—
|
|
|
Industrial
|
28.8
|
|
|
29.1
|
|
|
(1
|
)
|
|
426
|
|
|
434
|
|
|
(2
|
)
|
|
Other retail revenues
|
3.0
|
|
|
3.1
|
|
|
(1
|
)
|
|
22
|
|
|
22
|
|
|
—
|
|
|
Kansas property tax surcharge
|
0.3
|
|
|
1.2
|
|
|
N/M
|
|
|
N/A
|
|
|
N/A
|
|
|
N/A
|
|
|
Energy efficiency (MEEIA)
(b)
|
3.7
|
|
|
—
|
|
|
N/M
|
|
|
N/A
|
|
|
N/A
|
|
|
N/A
|
|
|
Fuel recovery mechanism
|
4.5
|
|
|
(3.1
|
)
|
|
N/M
|
|
|
N/A
|
|
|
N/A
|
|
|
N/A
|
|
|
Total retail
|
338.5
|
|
|
336.1
|
|
|
1
|
|
|
3,659
|
|
|
3,783
|
|
|
(3
|
)
|
|
Wholesale revenues
|
25.5
|
|
|
49.8
|
|
|
(49
|
)
|
|
1,062
|
|
|
1,620
|
|
|
(34
|
)
|
|
Other revenues
|
6.4
|
|
|
5.1
|
|
|
22
|
|
|
N/A
|
|
|
N/A
|
|
|
N/A
|
|
|
Operating revenues
|
370.4
|
|
|
391.0
|
|
|
(5
|
)
|
|
4,721
|
|
|
5,403
|
|
|
(13
|
)
|
|
Fuel
|
(74.8
|
)
|
|
(93.6
|
)
|
|
(20
|
)
|
|
|
|
|
|
|
|
Purchased power
|
(21.9
|
)
|
|
(18.9
|
)
|
|
16
|
|
|
|
|
|
|
|
|
Transmission
|
(13.4
|
)
|
|
(10.6
|
)
|
|
26
|
|
|
|
|
|
|
|
|
Gross margin
(a)
|
$
|
260.3
|
|
|
$
|
267.9
|
|
|
(3
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
(a)
|
Gross margin is a non-GAAP financial measure. See explanation of gross margin under Great Plains Energy's Results of Operations.
|
|
|
|
|
(b)
|
Consists of recovery of program costs of $3.3 million for the three months ended
March 31, 2015
that have a direct offset in operating and maintenance expenses and recovery of throughput disincentive of $0.4 million for the three months ended
March 31, 2015
.
|
KCP&L's gross margin decreased $7.6 million for the three months ended
March 31, 2015
, compared to the same period in
2014
primarily due to:
|
|
|
|
•
|
an estimated $8 million decrease due to weather driven by a 13% decrease in heating degree days; and
|
|
|
|
|
•
|
a $3.3 million increase for recovery of program costs for energy efficiency programs under MEEIA, which have a direct offset in operating and maintenance expense, due to the implementation of KCP&L's MEEIA programs in August 2014.
|
KCP&L Other Operating Expenses
(including operating and maintenance expenses, general taxes and other)
KCP&L's other operating expenses decreased $10.2 million for the three months ended
March 31, 2015
, compared to the same period in
2014
primarily due to:
|
|
|
|
•
|
an $8.4 million decrease in Wolf Creek operating and maintenance expenses primarily due to decreased refueling outage amortization of $2.5 million and $4.4 million from a planned mid-cycle maintenance outage that began in the first quarter of 2014;
|
|
|
|
|
•
|
a $1.8 million decrease in distribution operating and maintenance expenses; and
|
|
|
|
|
•
|
a $3.3 million increase in program costs for energy efficiency programs under MEEIA, which have a direct offset in revenue, primarily due to the implementation of KCP&L's MEEIA programs in August 2014.
|
KCP&L Depreciation and Amortization
KCP&L's depreciation and amortization expense increased $4.8 million for the three months ended
March 31, 2015
, compared to the same period in
2014
due to capital additions.
