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Great Plains Energy
Wall Street Access and
Berenson & Company
Midwest Utilities Seminar
April 10, 2008
William Downey, CEO
Kansas City Power & Light
Michael Cline, VP - Investor Relations and Treasurer
Great Plains Energy
Exhibit 99.1
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FORWARD-LOOKING STATEMENTS
Statements made in this release 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 regarding projected delivered volumes and margins, 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 the regional, national and international markets, including but not limited to regional and
national wholesale electricity markets; market perception of the energy industry, Great Plains Energy and KCP&L; 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 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
in availability and cost of capital and the effects on pension plan assets and costs; 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
weather-related damage; cost, availability, quality and deliverability of fuel; ability to achieve generation planning goals and
the occurrence and duration of unplanned generation outages; delays in the anticipated in-service dates and cost increases
of additional generating capacity; nuclear operations; ability to enter new markets successfully and capitalize on growth
opportunities in non-regulated businesses and the effects of competition; workforce risks including compensation and
benefits costs; performance of projects undertaken by non-regulated businesses and the success of efforts to invest in and
develop new opportunities; the ability to successfully complete merger, acquisition or divestiture plans (including the
acquisition of Aquila, Inc., and Aquila’s sale of assets to Black Hills Corporation); risks that the transaction for Strategic
Energy, L.L.C. may not close and other risks and uncertainties. Other risk factors are detailed from time to time in Great
Plains Energy’s most recent quarterly report on Form 10-Q or annual report on Form 10-K filed with the Securities and
Exchange Commission. This list of factors is not all-inclusive because it is not possible to predict all factors.
uncertainties, and are intended to be as of the date when made. Forward-looking statements include, but are not limited to,
statements regarding projected delivered volumes and margins, 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 the regional, national and international markets, including but not limited to regional and
national wholesale electricity markets; market perception of the energy industry, Great Plains Energy and KCP&L; 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 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
in availability and cost of capital and the effects on pension plan assets and costs; 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
weather-related damage; cost, availability, quality and deliverability of fuel; ability to achieve generation planning goals and
the occurrence and duration of unplanned generation outages; delays in the anticipated in-service dates and cost increases
of additional generating capacity; nuclear operations; ability to enter new markets successfully and capitalize on growth
opportunities in non-regulated businesses and the effects of competition; workforce risks including compensation and
benefits costs; performance of projects undertaken by non-regulated businesses and the success of efforts to invest in and
develop new opportunities; the ability to successfully complete merger, acquisition or divestiture plans (including the
acquisition of Aquila, Inc., and Aquila’s sale of assets to Black Hills Corporation); risks that the transaction for Strategic
Energy, L.L.C. may not close and other risks and uncertainties. Other risk factors are detailed from time to time in Great
Plains Energy’s most recent quarterly report on Form 10-Q or annual report on Form 10-K filed with the Securities and
Exchange Commission. This list of factors is not all-inclusive because it is not possible to predict all factors.
Forward Looking Statement
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¾ $2.1 billion market capitalization
¾ $4.8 billion in total assets as of 12/31/07
¾ $3.3 billion in revenues as of 12/31/07
¾ $133.4 million of core earnings or $1.57/share in 2007*
Regulated electric utility:
• $146.4 million in core earnings or
$1.72/share in 2007
$1.72/share in 2007
• 506,000 customers in KS and MO
• Total generation capacity: 4,048 MWs
Comprehensive Energy Plan
GXP is expanding its regulated platform with
the proposed Aquila transaction
the proposed Aquila transaction
Competitive retail electricity provider:
• $7.6 million in core earnings or
$0.09/share in 2007
$0.09/share in 2007
• Serving approximately 109,000
accounts & 25,700 customers
accounts & 25,700 customers
GXP announced sale of business
*Also includes $(20.6) million of other earnings that includes the company’s investments in
affordable housing and unallocated corporate charges.
Note: All numbers as of year-end 2007
Great Plains Energy Overview
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GXP - - A Compelling Investment Thesis
• Realizable growth in regulated business:
¾ Focused strategy with anticipated sale of Strategic Energy in Q2 2008
¾ Aquila transaction complements KCP&L and adds scale and scope
¾ Rate base growth at KCP&L driven by Comprehensive Energy Plan
• Low-cost generating platform; high reliability and customer satisfaction
levels in our distribution business
levels in our distribution business
• Attractive investment profile:
¾ Solid dividend with future growth potential - current dividend yield
approximately 6.6%
approximately 6.6%
¾ Solid investment grade rating
¾ Executing our growth plan
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üNovember 2007, GXP announced intent to evaluate strategic
alternatives for Strategic Energy
alternatives for Strategic Energy
üApril 2008, announced definitive agreement for sale of the
business to Direct Energy, a subsidiary of Centrica, plc
business to Direct Energy, a subsidiary of Centrica, plc
¾ Price - $300 million in cash including working capital (approximately
$120 million at 12/31/07); to be adjusted for working capital and
severance adjustments at close
$120 million at 12/31/07); to be adjusted for working capital and
severance adjustments at close
• Expect to complete sale in late Q2 2008
• Cash will be used to offset some of Great Plains Energy’s 2008
anticipated financing needs
anticipated financing needs
Strategic Energy Update
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Impact on Great Plains Energy
Expected Cash Proceeds
Additional Benefits
• In addition to the cash proceeds from
the transaction, there are also several
additional benefits to Great Plains
Energy from the sale of Strategic
Energy:
the transaction, there are also several
additional benefits to Great Plains
Energy from the sale of Strategic
Energy:
¾ Reduction in overall Company
credit support due to fewer letters
of credit and guarantees
outstanding
credit support due to fewer letters
of credit and guarantees
outstanding
¾ Reduced volatility in the GAAP
income statement due to the
elimination of Strategic Energy’s
mark-to-market accounting
income statement due to the
elimination of Strategic Energy’s
mark-to-market accounting
¾ A reduction in imputed debt from
the rating agencies
the rating agencies
¾ Great Plains Energy’s management
team’s sole focus will be the core
utility business
team’s sole focus will be the core
utility business
• The purchase price of $300 million is
subject to various closing adjustments
including working capital (as defined in
the agreement) and severance
adjustments
subject to various closing adjustments
including working capital (as defined in
the agreement) and severance
adjustments
After Tax Cash Proceeds to Great Plains
$269.2
$287.8
Amount ($mm) | |
Purchase Price from Direct Energy* | $300.0 |
Approx. Tax Basis in Strategic** | $225.0 |
Difference | $ 75.0 |
Taxes Due at 38% | $ 29.0 |
Approximate after tax cash proceeds to Great Plains Energy | $271.0* |
* Subject to adjustments for working capital and severance
** As of 12/31/07
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Aquila Acquisition
Update
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+
FORGING A STRONGER
REGIONAL UTILITY
ü Strong support for transaction from
shareholders of both companies
shareholders of both companies
ü FERC approval received
ü Nebraska, Iowa, & Colorado approval of Black
Hills transaction
Hills transaction
ü Kansas approval for Black Hills and Great
Plains Energy transactions
Plains Energy transactions
• Missouri hearings to begin April 21
• Transaction currently anticipated to close in
Q2 2008
Q2 2008
Aquila Transaction Update
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• Allowed recovery of $10 million of transition costs as five-year
amortization starting with rates effective for Iatan 2 case
(anticipated in Fall 2010)
amortization starting with rates effective for Iatan 2 case
(anticipated in Fall 2010)
• Due to regulatory lag, no material synergy give-back until rates
set in the Iatan 2 rate case
set in the Iatan 2 rate case
• No tracking of synergies
• No litigation of merger costs or synergies
Kansas Agreement
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Previous “ask” | Current “ask” |
•Immediate approval for retention of 50% of utility operational synergies ($260 million net of transition costs) over 5 years | •Recovery of utility operational synergies through traditional ratemaking process •Regulatory lag expected to provide opportunity for the retention of approximately 50% of the synergies |
•Recovery of 50% of transition costs ($45 million) over 5 years | •Recovery of 100% of updated transition cost ($58.9 million) over five years |
•Recovery of 100% of the transaction costs ($95 million) over 5 years | •Recovery of 100% of the revised transaction costs ($64.9 million) over 5 years •Company no longer requesting recovery of CIC and Rabbi Trust for Senior Aquila officers |
•Recovery requested of actual interest costs in Aquila customer rates | •No recovery of Aquila actual interest costs in excess of equivalent investment grade costs |
•Authorization to use additional amortizations in Aquila rate cases to meet credit metrics, consistent with KCP&L’s treatment | •Will include as a component in a future regulatory plan for Aquila |
Amounts shown are total amounts before allocations between Missouri and Kansas jurisdictions.
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Great Plains Energy expects to realize $675 million of total savings
and synergies over five years
and synergies over five years
Interest Savings
Corporate Retained
& Merchant Savings
& Merchant Savings
$302
$305
$68
$120
$131
$54
$27
$275
Significant Synergies Expected
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Missouri Hearings,
Approval and Close
Approval and Close
Shareholders
receive benefits
of synergies
receive benefits
of synergies
File rate case
File rate case
Shareholders
receive benefits
of new synergies
receive benefits
of new synergies
Rates effective
Rates effective
Path to Synergy Sharing
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• KCP&L is weathering turbulent markets effectively:
¾ Converted entire auction rate debt portfolio to fixed rate
¾ Issued $350 million of new 10-year bonds at 6.375%
• Proceeds from sale of Strategic Energy to partially offset 2008
financing needs
financing needs
Strong Liquidity and Capital Markets
Access
Access
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William Downey, CEO
Kansas City Power & Light
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• Headquartered in Kansas City,
Missouri
Missouri
• Engage in the generation,
transmission, distribution and sale of
electricity
transmission, distribution and sale of
electricity
• $4.3 billion in assets at year-end 2007
• Serve approximately 506,000
customers located in western Missouri
and eastern Kansas
customers located in western Missouri
and eastern Kansas
• Total generation capacity: 4,048 MWs
• Regulated by commissions in two
states:
states:
KCP&L Service Territory
Coal
Gas
Nuclear
Oil
KCP&L
Missouri:
¾ Public Service Commission of the State of Missouri (MPSC)
¾ KCP&L’s MO jurisdictional revenues averaged 57% over the last 3 years
Kansas:
¾ The State Corporation Commission of the State of Kansas (KCC)
¾ KCP&L’s KS jurisdictional revenues averaged 43% over the
last 3 years
KCP&L Overview
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EEI Edison Award - - Kansas City Power & Light was recognized for distinguished leadership,
innovation and contribution to the advancement of the electric industry for its Comprehensive
Energy Plan collaboration. (June 2007)
innovation and contribution to the advancement of the electric industry for its Comprehensive
Energy Plan collaboration. (June 2007)
EEI Outstanding Customer Service Award voted Kansas City Power & Light the winner of
this award for medium-sized utility. (May 2007)
this award for medium-sized utility. (May 2007)
J.D. Power and Associates recognizes Tier 1 performance. In the Midwest, KCP&L
ranks No. 1 on Communications; No. 2 on Power Quality and Reliability, and Billing and
Payment; and No. 3 in Overall Satisfaction. (February 2007)
ranks No. 1 on Communications; No. 2 on Power Quality and Reliability, and Billing and
Payment; and No. 3 in Overall Satisfaction. (February 2007)
2007 ReliabilityOne™ National Reliability Excellence Award presented by PA Consulting
Group to Kansas City Power & Light as the most reliable electric utility nationwide. (October
2007)
Group to Kansas City Power & Light as the most reliable electric utility nationwide. (October
2007)
EEI Emergency Assistance Award for outstanding efforts to assist fellow utilities in power
restoration during 2007. (January 2008)
restoration during 2007. (January 2008)
2007 Mid-America Regional Council’s Regional Leadership Award presented to Kansas
City Power & Light for its outstanding environmental initiatives in metropolitan Kansas City.
(June 2007)
City Power & Light for its outstanding environmental initiatives in metropolitan Kansas City.
(June 2007)
David Garcia Award for Environmental Excellence presented by Bridging the Gap for the
groundbreaking Collaborative Agreement with Sierra Club and Concerned Citizens of
Platte County. (October 2007)
groundbreaking Collaborative Agreement with Sierra Club and Concerned Citizens of
Platte County. (October 2007)
Recognized Excellence in 2007
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Other
Residential:
• 446,100 customers
• Revenues: $433.8 million
• 5,597 MWh sales
Commercial:
• 57,600 customers
• Revenues: $492.1 million
• 7,737 MWh sales
Industrial:
• 2,300 industrial customers,
• Revenues: $106.8 million
• 2,161 MWh sales
Customer Mix Based on 2007 Revenues
Note: All numbers as of year-end 2007
KCP&L - A Steady Retail Customer Base
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Source: “EEI Typical Bill Rankings Report and Typical Bill/Avg Rates Report for 12 month ended June
2007” Note: all rate actions after June 30, 2007 are not reflected in this chart including KCP&L’s new
annual rate increases in MO and KS that were implemented January 1, 2008
2007” Note: all rate actions after June 30, 2007 are not reflected in this chart including KCP&L’s new
annual rate increases in MO and KS that were implemented January 1, 2008
*
KCP&L Prices Compare Favorably on
National & Regional Basis
National & Regional Basis
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Wind 1%
Natural Gas & Oil - 3%
Nuclear - - 24%
Coal - - 72%
$1.23
$0.45
$7.30
Fuel costs in cents per
Net KWh generated
Fuel Mix
Fuel Costs
Strong, low cost coal and nuclear generation provides KCP&L stable,
competitive generation fleet in a volatile market
Note: All numbers as of year-end 2007
Low-Cost Diverse Generating Fleet
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Q4 2006 - Q4 2007
2005 - - 2007
KCP&L Wholesale Power Performance
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Impact of unplanned
outages in Q1 &Q2
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
Q1 05
Q2 05
Q3 05
Q4 05
Q1 06
Q2 06
Q3 06
Q4 06
Q1 07
Q2 07
Q3 07
Q4 07
Equivalent Availability Factor
Capacity Factor
Base Load Coal Fleet
Equivalent Availability / Capacity
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Spearville Wind Energy Facility
ü 100MW completed on schedule and on budget
LaCygne
ü Phase 1: Unit 1 SCR - Completed on schedule, under budget, and
performing per specification
performing per specification
• Phase 2: Unit 1 - bag house and scrubber environmental upgrades:
¾ Project Definition Report completed in Q3 2007
¾ Revised cost estimates higher than initial estimates
Iatan Unit 1
• AQCS Environmental Project to be completed late 2008 - early 2009
Iatan Unit 2 Construction
• Cost / schedule re-assessment underway; results available in Q2
Comprehensive Energy Plan Progress
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• Develop long range resource plan and file Integrated Resource Plan in
Missouri in August 2008
Missouri in August 2008
• Continue to engage community and regulators to develop energy
efficiency and demand response as resource alternatives:
efficiency and demand response as resource alternatives:
¾ Potential energy efficiency projects designed to reduce annual
electricity demand 100MW by 2010; additional 200MW by 2012
• Continue development of environmental and renewable generation
alternatives
alternatives
• Potential to pursue an additional 400MW wind generation:
¾ 100MW by 2010 and additional 300MW by 2012
• Expected future Phase 3 environmental upgrades at LaCygne Unit 2 for
BART
BART
Developing Collaborative Resource
Strategy
Strategy
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Annual Revenue Increase | ||||||||
Rate Case | Order Date | Traditional | Additional Amortization | Total | Rate Base | Return on Equity | Rate- making Equity Ratio | Rate of Return |
MO | 12/6/07 | $24.6 | $10.7 | $35.3 | $1,298 | 10.75% | 58% | 8.68% |
KS | 11/20/07 | $17.0 | $11.0 | $28.0 | n/a | n/a | n/a | n/a |
$ in millions
•Primary driver of 2007 rate cases was La Cygne Unit 1 SCR
•2007 Kansas rate case:
¾ Negotiated settlement
¾ Energy cost adjustment implemented
¾ Energy efficiency rider implemented
•Missouri and Kansas rate cases expected to be filed in summer 2008;
primary driver will be Iatan Unit 1 AQCS
Regulatory Update
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2009 and beyond: Extend the platform
• Include Iatan 1 AQCS in rates effective in 2009
• Complete Iatan 2 and incorporate into rates in 2010
• Fully integrate Aquila and demonstrate ability to deliver on
synergies
synergies
• Pursue Collaborative Resource Strategy initiatives
A Path to Growth
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Great Plains Energy
Wall Street Access and
Berenson & Company
Midwest Utilities Seminar
April 10, 2008
![](https://capedge.com/proxy/8-K/0001143068-08-000025/exh9927.jpg)
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Core earnings is a non-GAAP financial measure that differs from GAAP earnings because it excludes the effects of certain unusual items and mark-to-market gains and losses on energy
contracts. Great Plains Energy believes core earnings provides to investors a meaningful indicator of its results that is comparable among periods because it excludes the effects of items that
may not be indicative of Great Plains Energy’s prospective earnings potential. Core earnings is used internally to measure performance against budget and in reports for management and the
Board of Directors and are a component, subject to adjustment, of employee and executive incentive compensation plans. Investors should note that this non-GAAP measure involves
judgments by management, including whether an item is classified as an unusual item, and Great Plains Energy’s definition of core earnings may differ from similar terms used by other
companies. The impact of these items could be material to operating results presented in accordance with GAAP. Great Plains Energy is unable to reconcile core earnings guidance to GAAP
earnings per share because it does not predict the future impact of unusual items and mark-to-market gains or losses on energy contracts.
contracts. Great Plains Energy believes core earnings provides to investors a meaningful indicator of its results that is comparable among periods because it excludes the effects of items that
may not be indicative of Great Plains Energy’s prospective earnings potential. Core earnings is used internally to measure performance against budget and in reports for management and the
Board of Directors and are a component, subject to adjustment, of employee and executive incentive compensation plans. Investors should note that this non-GAAP measure involves
judgments by management, including whether an item is classified as an unusual item, and Great Plains Energy’s definition of core earnings may differ from similar terms used by other
companies. The impact of these items could be material to operating results presented in accordance with GAAP. Great Plains Energy is unable to reconcile core earnings guidance to GAAP
earnings per share because it does not predict the future impact of unusual items and mark-to-market gains or losses on energy contracts.