Item 8.01. Other Events
In January 2022, Evergy Missouri West, Inc. (“Evergy Missouri West”), a Delaware corporation and wholly-owned subsidiary of Evergy, Inc., filed an application with the Missouri Public Service Commission (the “MPSC”) to request an increase to its retail revenues of $27.7 million before rebasing fuel and purchased power expense, with a return on equity of 10% and a rate-making equity ratio of 51.81%. The request reflects increases related to higher property taxes and the recovery of infrastructure investments made to improve reliability and enhance customer service and were also partially offset by significant customer savings and cost reductions created since the Great Plains Energy, Inc. and Evergy Kansas Central, Inc. merger in 2018. Evergy Missouri West also requested an additional $32.1 million increase associated with rebasing fuel and purchased power expense, the implementation of tracking mechanisms for both property tax expense and credit loss expense, the creation of a storm reserve, and the full return of and return on its unrecovered investment related to the 2018 retirement of Sibley Station as part of its application with the MPSC.
During the third quarter of 2022, Evergy Missouri West, MPSC staff and other intervenors in the case reached several non-unanimous partial stipulations and agreements to settle certain issues in the case. The partial stipulations and agreements provide for an increase to Evergy Missouri West’s retail revenues of $42.5 million after rebasing fuel and purchased power expense and were exclusive of certain items which were resolved by the MPSC in its final order, including the return of and return on Evergy Missouri West’s unrecovered investment related to the 2018 retirement of its Sibley Station, among other items. The resolution of these items, as described below, will have an impact on the final revenue requirement approved in the case. Evergy Missouri West also agreed to withdraw its request for the creation of a storm reserve. In September 2022, the MPSC issued an order approving the partial non-unanimous stipulations and agreements.
In November 2022, the MPSC issued a final rate order. The rates established by the order are expected to take effect on December 6, 2022. The final order determined that Evergy Missouri West will be allowed to collect the return of but not the return on its unrecovered investment related to the 2018 retirement of Sibley Station. Further, in determining the value of Evergy Missouri West’s unrecovered investment in Sibley Station, the MPSC accepted an intervenor’s position which resulted in a $182.3 million unrecovered investment in Sibley Station to be recovered from customers. This unrecovered investment in Sibley Station will be recovered from customers over four years. In the fourth quarter of 2022, Evergy Missouri West expects to record an approximately $17 million decrease to operating revenues for the additional deferral to its Sibley Accounting Authority Order (AAO) regulatory liability of revenues collected from customers for return on investment in Sibley Station since December 2018 based on the higher unrecovered investment in Sibley Station determined by the MPSC in its order. Evergy Missouri West also expects to record an impairment loss on Sibley Unit 3 on its consolidated statements of income for the three months ended and year ended December 31, 2022 of approximately $8 million and $14 million, respectively, as a result of the provisions of the MPSC’s final rate order.
The increase to Evergy Missouri West’s revenue requirement as determined in the final rate order will be finalized following collaboration with the MPSC staff and other intervenors in the case prior to the expected effective date of new rates on December 6, 2022 and the increase will be subject to applicable limitations under Missouri’s plant-in service accounting (PISA) legislative mechanism.
Forward Looking Statements
Statements made in this Current Report on Form 8-K 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, statements relating to Evergy, Inc.’s strategic plan, including, without limitation, those related to earnings per share, dividend, operating and maintenance expense and capital investment goals; the outcome of legislative efforts and regulatory and legal proceedings; future energy demand; future power prices; plans with respect to existing and potential future generation resources; the availability and cost of generation resources and energy storage; target emissions reductions; and other matters relating to expected financial performance or affecting future operations. Forward-looking statements are often accompanied by forward-looking words such as “anticipates,” “believes,” “expects,” “estimates,” “forecasts,” “should,” “could,” “may,” “seeks,” “intends,” “proposed,” “projects,” “planned,” “target,” “outlook,” “remain confident,” “goal,” “will” or other words of similar meaning. Forward-looking statements involve risks, uncertainties and other factors that could cause actual results to differ materially from the forward-looking information.
In connection with the safe harbor provisions of the Private Securities Litigation Reform Act of 1995, Evergy, Inc. and its subsidiaries (collectively, the “Evergy Companies”) are providing a number of risks, uncertainties and other factors that could cause actual results to differ from the forward-looking information. These risks, uncertainties and other factors include, but are not limited to: economic and weather conditions and any impact on sales, prices and costs; changes in business strategy or operations; the impact of federal, state and local political, legislative, judicial and regulatory actions or developments, including deregulation, re-regulation, securitization and restructuring of the electric utility industry; decisions of regulators regarding, among other things, customer rates and the prudency of operational decisions such as capital expenditures and asset
