Great Plains Energy
EEI Financial
Conference Presentation
November 3, 2009
1
Statements made in this presentation that are not based on historical facts are forward-looking, may involve risks and
uncertainties, and are intended to be as of the date when made. Forward-looking statements include, but are not limited to, the
outcome of regulatory proceedings, cost estimates of the Comprehensive Energy Plan and other matters affecting future
operations. In connection with the safe harbor provisions of the Private Securities Litigation Reform Act of 1995, the registrants
are providing a number of important factors that could cause actual results to differ materially from the provided forward-looking
information. These important factors include: future economic conditions in regional, national and international markets and their
effects on sales, prices and costs, including, but not limited to, possible further deterioration in economic conditions and the timing
and extent of any economic recovery; prices and availability of electricity in regional and national wholesale markets; market
perception of the energy industry, Great Plains Energy, KCP&L and GMO; changes in business strategy, operations or
development plans; effects of current or proposed state and federal legislative and regulatory actions or developments, including,
but not limited to, deregulation, re-regulation and restructuring of the electric utility industry; decisions of regulators regarding rates
KCP&L and GMO can charge for electricity; adverse changes in applicable laws, regulations, rules, principles or practices
governing tax, accounting and environmental matters including, but not limited to, air and water quality; financial market conditions
and performance including, but not limited to, changes in interest rates and credit spreads and in availability and cost of capital
and the effects on nuclear decommissioning trust and pension plan assets and costs; impairments of long-lived assets or
goodwill; credit ratings; inflation rates; effectiveness of risk management policies and procedures and the ability of counterparties
to satisfy their contractual commitments; impact of terrorist acts; increased competition including, but not limited to, retail choice in
the electric utility industry and the entry of new competitors; ability to carry out marketing and sales plans; weather conditions
including, but not limited to, weather-related damage and their effects on sales, prices and costs; cost, availability, quality and
deliverability of fuel; ability to achieve generation planning goals and the occurrence and duration of planned and unplanned
generation outages; delays in the anticipated in-service dates and cost increases of additional generating capacity and
environmental projects; nuclear operations; workforce risks, including, but not limited to, retirement compensation and benefits
costs; the ability to successfully integrate KCP&L and GMO operations and the timing and amount of resulting synergy savings;
and other risks and uncertainties.
uncertainties, and are intended to be as of the date when made. Forward-looking statements include, but are not limited to, the
outcome of regulatory proceedings, cost estimates of the Comprehensive Energy Plan and other matters affecting future
operations. In connection with the safe harbor provisions of the Private Securities Litigation Reform Act of 1995, the registrants
are providing a number of important factors that could cause actual results to differ materially from the provided forward-looking
information. These important factors include: future economic conditions in regional, national and international markets and their
effects on sales, prices and costs, including, but not limited to, possible further deterioration in economic conditions and the timing
and extent of any economic recovery; prices and availability of electricity in regional and national wholesale markets; market
perception of the energy industry, Great Plains Energy, KCP&L and GMO; changes in business strategy, operations or
development plans; effects of current or proposed state and federal legislative and regulatory actions or developments, including,
but not limited to, deregulation, re-regulation and restructuring of the electric utility industry; decisions of regulators regarding rates
KCP&L and GMO can charge for electricity; adverse changes in applicable laws, regulations, rules, principles or practices
governing tax, accounting and environmental matters including, but not limited to, air and water quality; financial market conditions
and performance including, but not limited to, changes in interest rates and credit spreads and in availability and cost of capital
and the effects on nuclear decommissioning trust and pension plan assets and costs; impairments of long-lived assets or
goodwill; credit ratings; inflation rates; effectiveness of risk management policies and procedures and the ability of counterparties
to satisfy their contractual commitments; impact of terrorist acts; increased competition including, but not limited to, retail choice in
the electric utility industry and the entry of new competitors; ability to carry out marketing and sales plans; weather conditions
including, but not limited to, weather-related damage and their effects on sales, prices and costs; cost, availability, quality and
deliverability of fuel; ability to achieve generation planning goals and the occurrence and duration of planned and unplanned
generation outages; delays in the anticipated in-service dates and cost increases of additional generating capacity and
environmental projects; nuclear operations; workforce risks, including, but not limited to, retirement compensation and benefits
costs; the ability to successfully integrate KCP&L and GMO operations and the timing and amount of resulting synergy savings;
and other risks and uncertainties.
This list of factors is not all-inclusive because it is not possible to predict all factors. Other risk factors are detailed from time to
time in Great Plains Energy’s and KCP&L’s most recent quarterly report on Form 10-Q or annual report on Form 10-K filed with
the Securities and Exchange Commission. Any forward-looking statement speaks only as of the date on which such statement is
made. Great Plains Energy and KCP&L undertake no obligation to publicly update or revise any forward-looking statement,
whether as a result of new information, future events or otherwise.
time in Great Plains Energy’s and KCP&L’s most recent quarterly report on Form 10-Q or annual report on Form 10-K filed with
the Securities and Exchange Commission. Any forward-looking statement speaks only as of the date on which such statement is
made. Great Plains Energy and KCP&L undertake no obligation to publicly update or revise any forward-looking statement,
whether as a result of new information, future events or otherwise.
Forward Looking Statement
Great Plains Energy
EEI Financial Conference
Presentation
November 3, 2009
Mike Chesser,
Chairman and CEO
Chairman and CEO
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Pro Forma 2008 Revenue by Customer Segment
Pro Forma 2008 Revenue by Utility Jurisdiction
Service Territories: KCP&L and GMO
Business Highlights
• Solid Midwest electric utility - KCP&L brand
• Transformational events in 2008 to focus business model on
fully regulated utility operations
fully regulated utility operations
– Sale of Strategic Energy
– Acquisition of Aquila
• Company attributes post-acquisition
• 820,000 customers / 3,200+ employees
• ~6,000 MW of primarily low-cost baseload generation
• 5-year projected synergies of $723 million
• ~$7.9bn in assets and $3.6bn in rate base at 2008YE
Total: $1.7bn
Total: $1.7bn
Solid Foundation
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Iatan Site Photographs - October 2009
Iatan 2 Fabric Filter
Cooling Tower
Construction Campus
Iatan 1 SCR
Iatan 2 Boiler
Iatan 2 SCR
Gypsum Storage
Reagent Prep Bldg
Iatan 2 Absorber
Recycle Pump Building
Tank Farm and Coal Yard
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KCP&L filed an application for ARRA Stimulus funding to advance energy efficiency and conduct a Smart Grid demonstration
project in the Green Impact Zone. We will invest approximately $14 million and requested Federal matching funds for
approximately $24 million and key partner funds of $10 million for a total estimated project value of $48 million.
project in the Green Impact Zone. We will invest approximately $14 million and requested Federal matching funds for
approximately $24 million and key partner funds of $10 million for a total estimated project value of $48 million.
Advancement of Existing Residential & C&I Energy Efficiency Programs
n Weatherization & Energy Audits
n Efficient Appliances, Lighting and HVAC Equipment
n Efficient Motors, Drives and Data Centers
Smart Grid Demonstration
n Smart Distribution
– Substation
– IP/RF 2-way Field Area Network (FAN)
– Distribution Management System (DMS)
n Generation and Storage
– Commercial Solar and Photovoltaic
– Battery and Thermal Storage
n Smart End-Use
– Residential & Commercial EMS Demonstration
– In-Home Display and Interval Data
– PHEV Charging
– Smart Appliances and Pilot RTP or CPP Rates
Customer/Community Benefits:
Lower utility bills
Increased environmental stewardship
Improved energy information
Increased local energy sector jobs
KCP&L Benefits:
New business model development
Increased reliability
Reduced costs
Greater asset utilization
Environmental
Customer satisfaction
Regional economic development
Green Impact Zone Investments: Benefits
For Customers and KCP&L
For Customers and KCP&L
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• Strong Midwest electric utilities focused on regulated operations in Missouri and Kansas
• Diversified customer base includes 820,000 residential, commercial, and industrial customers
• ~6,000 Megawatts of generation capacity
• Low-cost generation mix - projected 76% coal, 17% nuclear (Wolf Creek) in 2009
100% Regulated
Electric Utility
Operations Focus
Electric Utility
Operations Focus
• Growth and stability in earnings driven by sizable regulated investments as part of the
Comprehensive Energy Plan (“CEP”)
Comprehensive Energy Plan (“CEP”)
• Wind and environmental retrofit components of CEP in place; Iatan 2 baseload coal plant
targeted for completion in late summer 2010
targeted for completion in late summer 2010
• Anticipated growth beyond 2010 driven by additional environmental capex and wind
Attractive Platform
for Long-Term
Earnings Growth
for Long-Term
Earnings Growth
• Successful outcomes in 2006, 2007 and 2008 rate cases in Missouri and Kansas
• Combined annual rate increases from 2008 cases of $59mm in Kansas and $159mm in Missouri;
new rates effective August 1st in Kansas and September 1st in Missouri
new rates effective August 1st in Kansas and September 1st in Missouri
Focused Regulatory
Approach
Approach
• Cash flow and earnings heavily driven by regulated operations and cost recovery mechanisms
• Ample liquidity currently available under $1.5bn credit facilities
• Sustainable dividend and pay-out, right-sized to fund growth and to preserve liquidity
•��Committed to maintaining current investment grade credit ratings
Stable and
Improving Financial
Position
Improving Financial
Position
Strong Platform for Long-Term Growth
William H. Downey,
President and COO
President and COO
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• Iatan 2 construction continues on budget and on schedule with planned completion in
late summer 2010
late summer 2010
• New retail rates effective August 1 in Kansas and September 1 in Missouri
• Next round of rate case filings anticipated in late 2009 in Kansas / early 2010 in
Missouri
Missouri
• Wolf Creek started regularly-scheduled refueling outage on October 10; anticipate
return to service in mid-November
return to service in mid-November
• Solid generation fleet performance in third quarter of 2009, though somewhat below
2008
2008
Operational Highlights
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KCP&L Coal Fleet
KCP&L Nuclear Plant
GMO Coal Fleet
Impact of extended
nuclear refueling outage
Impact of unplanned
coal outages
Q4 08 and Q1 09
Impact of Iatan I unit
overhaul and AQCS tie-ins
overhaul and AQCS tie-ins
Q4 08 and Q1 09 impact
Sibley environmental
upgrade and Iatan I unit
upgrade and Iatan I unit
overhaul and AQSC tie-ins
Plant Performance
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Project description | Comments | |
100 MW plant in Spearville, KS Began construction in 2005 | ü Completed in Q3 2006 ü In rate base from 1/1/2007 ü No regulatory disallowance | |
Selective Catalytic Reduction (SCR) unit at LaCygne 1 plant | ü Completed in Q2 2007 ü In rate base from 1/1/2008 ü No regulatory disallowance | |
Air Quality Control System at Iatan 1 coal plant | ü Completed in Q2 2009 ü In rate base starting 3Q 2009 (KS 08/1 & MO 9/1) ü No regulatory disallowance in 2009 MO and KS cases; minimal exposure in 2010 cases | |
Construction of Iatan 2 super-critical coal plant (850 MW; 73% GXP ownership share)1 | ü On track for completion late summer 2010 ü Expected in rate base Q4 2010 / 1Q 2011 |
Iatan 2
Iatan 1
Environmental
LaCygne
Environmental
Wind
Great Plains Energy has effectively executed all elements of its Comprehensive Energy
Plan to date and received positive, just, and reasonable regulatory treatment
Plan to date and received positive, just, and reasonable regulatory treatment
Comprehensive Energy Plan
1 Includes post-combustion environmental technologies including an SCR system, wet flue gas desulphurization system and fabric
filter to control emissions
filter to control emissions
Strong Track Record of Execution
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2008 rate cases | |||||||||
Company | Last Allowed ROE | Effective Date of Last Allowed ROE | ROE requested1 | Requested revenue increase | Stipulated / settled revenue increase | Tariff implementation | RPS2 | Fuel Clause? | |
10.25% | 6/1/07 | 11.55% | $66mm | $48mm | 9/1/09 | ü | Yes (95%) | ||
10.25% | 6/1/07 | 11.55% | 17mm | $15mm | 9/1/09 | ü | Yes (95%) | ||
—3 | N/A | 11.55% | 1mm | $1mm | 7/1/09 | ü | Yes (85%) | ||
10.75% | 1/1/08 | 11.55% | 102mm | $95mm | 9/1/09 | ü | No | ||
—3 | N/A | 11.40% | 72mm | $59mm | 8/1/09 | ü | Yes (100%) | ||
GMO-MPS
GMO-L&P
GMO-Steam
KCP&L-KS
KCP&L-MO
1 ROE of 10.75% originally requested in all cases; requests increased in rebuttal testimony based on financial market developments. All cases settled; ROE not
disclosed
disclosed
2 Missouri mandatory Renewable Portfolio Standard of 2% by 2011, 10% by 2018 and 15% by 2021;
Kansas has targets of 10% by 2011, 15% by 2016 and 20% by 2020
Kansas has targets of 10% by 2011, 15% by 2016 and 20% by 2020
3 “Black Box” settlement - - ROE not disclosed
Focused Regulatory Approach
Financial Overview
Terry Bassham, CFO
Executive Vice President Finance &
Strategic Development
Executive Vice President Finance &
Strategic Development
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• Electric Utility segment earnings decreased $18.6 million primarily as a result of a) $14.3 million decrease in
operating income driven by lower wholesale revenue, higher operating expenses and depreciation, partially offset by
higher retail revenue and lower purchased power; and b) an $11.6 million increase in interest expense.
operating income driven by lower wholesale revenue, higher operating expenses and depreciation, partially offset by
higher retail revenue and lower purchased power; and b) an $11.6 million increase in interest expense.
• Other segment earnings decreased $7.8 million primarily as a result of increased interest from the equity units issued
in May and a favorable 2008 impact from the reversal of interest expense related to unrecognized tax benefits.
in May and a favorable 2008 impact from the reversal of interest expense related to unrecognized tax benefits.
• A 21.0 million increase in the average number of shares outstanding since the third quarter of 2008 resulted in $0.11
per share dilution
per share dilution
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• Increased Electric Utility segment earnings of $6.7 million mainly attributable to the inclusion of GMO’s regulated utility
operations for the full period in 2009;
operations for the full period in 2009;
• Increased Other segment earnings of $17.6 million including a $16.0 million tax benefit from an audit settlement in
GMO’s non-utility operation;
GMO’s non-utility operation;
• Loss of $2.3 million in 2009 related to the discontinued operations of Strategic Energy compared to earnings of $35.0
million for the first nine months of 2008.
million for the first nine months of 2008.
• Increase of 32.3 million average dilutive shares outstanding resulted in dilution of $0.36 per share.
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Earnings
Key Earnings Drivers:
+ Increased retail revenue of $22.2 million driven by GMO’s inclusion for full quarter in 2009 and new
retail rates partially offset by mild weather and lower weather-normalized demand
retail rates partially offset by mild weather and lower weather-normalized demand
+ Decline in purchased power expense of $24.2 million
+ Increased AFUDC of $2.7 million
- Decline in wholesale revenue of $28.5 million
- Increased depreciation & amortization of $12.5 million; including $3.8 million of additional amortization
- Increased non-fuel operating expense including $7.5 million wind termination fee and $5.2 million
increase for GMO driven by inclusion for a full quarter in 2009
- Increased interest expense, net of AFUDC, of $11.6 million
- Higher shares outstanding caused electric utility segment dilution of $0.12 per share.
(millions except
where indicated)
where indicated)
Earnings Per Share
$83.9
$0.90
$0.62
$102.5
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Earnings Per Share
Earnings
(millions except
where indicated)
where indicated)
Earnings Drivers:
+ GMO utility earnings increased $6.6 million
+ Decreased fuel and purchase power expense of $51.0 million at KCP&L
+ Decreased income taxes of $20.9 million at KCP&L
+ Increase in KCP&L’s AFUDC equity of $8.3 million
- Reduced KCP&L revenues of $58.5 million, including $52.4 million drop in wholesale
- Increased depreciation and amortization of $13.7 million including $3.8 million of
additional amortization at KCP&L
- Increased interest expense, net of AFUDC, of $9.4 million at KCP&L
- Dilution of $0.36 per share caused by additional shares outstanding
$134.1
$1.34
$1.05
$127.4
Electric Utility Year-to-Date Results
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3Q 2009 Compared to 3Q 2008 | YTD 2009 Compared to YTD 2008 | |||||
GPE | Customers | Use/Customer | Change MWh Sales | Customers | Use/Customer | Change MWh Sales |
Residential | 0.2% | -0.1% | 0.1% | 0.4% | -0.4% | 0.0% |
Commercial | -0.4% | -2.2% | -2.5% | 0.1% | -0.5% | -0.4% |
Industrial | -3.5% | -5.0% | -8.2% | -1.5% | -7.7% | -9.1% |
Weighted Avg. | 0.1% | -2.3% | -2.2% | 0.3% | -1.8% | -1.5% |
Retail MWh Sales by Customer Class - Third Quarter 2009
Weather-Normalized Retail MWh Sales and Customer Growth Rates
Note: Includes GMO for full periods presented
Electric Utility Segment
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Earnings
Earnings Per Share
$0.02
$(0.05)
Key Earnings Drivers:
- Increased after-tax interest of $4.6 million from equity units
- Unfavorable comparison to 2008, which included $3.6 million positive earnings impact from
reversal of after-tax interest expense related to unrecognized tax benefits
$(6.0)
$1.8
(millions except
where indicated)
where indicated)
3Q ‘09
3Q ‘08
3Q ‘09
3Q ‘08
Other Segment Third Quarter Results
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Earnings
Key Drivers:
+ $16.0 million first quarter GMO non-utility tax benefit
+ Favorable comparison to 2008, which included an after-tax loss of $5.7 million from a mark-to-
market change on interest rate hedges
market change on interest rate hedges
– Higher after-tax interest expense of $6.8 million
– Negative comparison to 2008, which included $3.4 million after-tax income related to the
release of a legal liability
release of a legal liability
$1.5
$(16.1)
(millions except
where indicated)
where indicated)
YTD ‘09
YTD ‘08
$0.01
$(0.17)
Other Segment Year-to-Date Results
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Great Plains Energy Debt
Long-term Debt Maturities
Credit Ratings
*Includes current maturities
Credit Ratings, Debt, Capital Structure
Great Plains Energy
EEI Financial
Conference Presentation
November 3, 2009