Great Plains Energy
Midwest Investor Meetings
April 2 - 3, 2009
Ellen Fairchild
Director - - Investor Relations
816-556-2083
ellen.fairchild@kcpl.com
Michael Cline
Vice President - Investor Relations
And Treasurer
816-556-2622
michael.cline@kcpl.com
1
FORWARD-LOOKING STATEMENTS
Statements made in this report 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 KCPL Greater Missouri Operations Company (“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; 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.
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 KCPL Greater Missouri Operations Company (“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; 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.
Forward Looking Statement
Overview / Recent Developments
3
Regulated vertically integrated electric utility operations:
• $7.9 billion in assets*
• $1.7 billion in revenues*
• $1.4 billion market cap - NYSE:GXP
• Approx. 820,000 customers in KS and MO
• Low retail utility rates
• Total generation capacity of over 6,000 MWs
Solid Midwest electric utility - KCP&L Brand
Capable, experienced management team
Investment grade credit rating
Building a platform for long-term earnings growth:
Additions to rate base
Synergies from Aquila transaction
MO & KS regulatory process
Annualized dividend of $0.83/share
* Based on year-end 2008 financial statements filed in 10K dated February 27, 2008
Great Plains Energy Business Overview
4
Renewed focus on our utility roots:
Sale of Strategic Energy
Acquisition of Aquila
Significant Progress on our Comprehensive Energy Plan
2008 - A Transformational Year……
5
Growing economic and financial market uncertainty and
deterioration have imposed increasing constraints on availability of
internal capital and cost of external capital
deterioration have imposed increasing constraints on availability of
internal capital and cost of external capital
Internal
– Customer demand growth significantly lower than historical levels
– Cost increases / regulatory lag
External
– Volatile capital markets
– Significant increase in cost of capital
……And a Challenging Year
6
Long-term Flexibility and Positioning
Proactive, Responsive, and Prudent Measures
• Lowered 2009 guidance from $1.30 - $1.60 to $1.10 - $1.40
• Eliminated or deferred additional 2009-10 capital expenditures
• Suspended external hiring for all but essential skills
• Tightly managing O&M expense
• Reduced common stock dividend by 50% effective in 1Q09
7
$ Billions
$3.7
$6.5
$5.9
$5.7
$4.2
• Year-end rate base projections 2009 - 2012
• Environmental at Iatan 1 and Sibley, as well as
Crossroads expected in rate base 3Q09
• Iatan 2 expected in rate base 3Q 2010 (KCP&L-KS and GMO) and 4Q 2010 (KCP&L-MO)
Reinvesting in the Business and
Growing Rate Base
Growing Rate Base
8
• Integration of KCP&L GMO (“GMO”, formerly Aquila) and attainment
of synergy targets
of synergy targets
• Rate base growth through KCP&L’s Comprehensive Energy Plan and
plant investments by GMO and KCP&L
plant investments by GMO and KCP&L
• Rate case filings to include investments in rate base and to share
synergies with customers
synergies with customers
Key Focus Areas
GMO Integration and
Synergy Target Attainment
10
Combined Company
• 820,000 customers across 47 counties in
MO and KS covering 17,934 sq. miles
MO and KS covering 17,934 sq. miles
• 3,259 employees - including 920 new
hires
hires
• 30 office/service center locations
• 9 generation plant sites and 10 peaking
facilities
facilities
• Over 3,000 miles transmission, 24,000
miles distribution lines, and 320
substations
miles distribution lines, and 320
substations
KCP&L Property
GMO Property
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Diverse Generation Fleet
12
2009 Estimated Fuel Mix
Coal 76%
Nuclear 17%
Plant Performance
KCP&L Equivalent Availability Coal
70%
74%
89%
86%
72%
80%
92%
70%
KCP&L Capacity Factor Coal
65%
70%
86%
82%
68%
76%
88%
66%
KCP&L Equivalent Availability Nuclear
100%
100%
100%
100%
79%
50%
100%
100%
KCP&L Capacity Factor Nuclear
100%
100%
100%
100%
79%
50%
100%
100%
GMO Equivalent Availability Coal
94%
48%
GMO Capacity Factor Coal
76%
41%
Generation Fleet Performance
13
2008 Electric Revenues
2008 Electric MWh Sales
Residential - - 37%
Residential - - 29%
Commercial - - 38%
Commercial - - 38%
Wholesale - - 22%
Wholesale - - 14%
Industrial - - 9%
Industrial - - 11%
Other - 2%
Customer Mix
14
No single customer contributes over 2% of Great Plains Energy’s Revenues
* FERC 2008 Large Customer Filing
20 Largest Customers by Revenue
15
Source: Edison Electric Institute (EEI) - “Typical Bills and Average Rates Report Summer 2008”
KCP&L Prices Compare Favorably
on National & Regional Basis
on National & Regional Basis
16
Integration Successes
Infrastructure
• Combined several key systems (accounting, HR) as well as telecom and network platforms into a single version
for each
for each
Operations
• Two Aquila unions consolidated into the three existing KCP&L unions
• Training initiated to align work rules, safety rules, and construction specs
• Integrated T&D
• Work management system up and running
• Supply team actively procuring fuel and purchased power
• Expanded generating fleet is meeting its operational requirements
Customer Service
• Call Center operations integrated
• Customer satisfaction and customer service remain good
Rate Base Growth
18
Projected Capital Expenditures
2009-2011
2009-2011
19
Comprehensive Energy Plan
20
Iatan 1
Iatan 2
Construction Update
• Completed Sibley 3 SCR
• Iatan 1 AQCS expected in-service mid-April
• Iatan 2
- Planned completion summer 2010
- Planned cost re-assessment to be completed
in mid 2009
• LaCygne
- Significant expenditures extended beyond 2010
• Wind
- Entered into an agreement to acquire 32 wind turbines
- KCP&L option to construct 35-turbine project by May 2010
Regulatory / Legislative
22
Company Filing
Commission Staff Position
Summary of Rate Cases
23
JUL AUG SEP OCT NOV DEC JAN FEB MAR APR& #160;MAY JUN JUL AUG SEPT
Filed Rate Case
09/05/08
Outage
Started
10/18/08
Started
10/18/08
Outage
Completed Late
Mar.
Completed Late
Mar.
KS & MO Rate
Case True-up
Case True-up
04/30/09
New Tariffs Effective
MO - 9/5/09
Projected
Provisional
Acceptance
April
Provisional
Acceptance
April
Iatan 1
Sibley 3
Outage
Started
10/28/08
Started
10/28/08
Outage
Completed
12/31/08
Completed
12/31/08
KCPL KS
Hearings
6/22 - 7/2
Hearings
KCPL MO 4/20 - 5/1
GMO Steam 5/4 - 5/7
GMO 5/11 - - 5/15
KCPL KS
Order 8/14
New Tariffs Expected
8/20
8/20
Proposed Findings of Fact and
Conclusions of Law
Conclusions of Law
6/9 KCPL
6/11 GMO
• Change in true-up date from 3/31/09 to 4/30/09 (to accommodate delay in in-service date of Iatan 1
AQCS)
AQCS)
Timeline for Current Rate Cases
24
• Passage of Proposition C (mandatory RPS)
• New Governor
• PSC
• New Chairman
• Two Commissioner appointments expected in
April 2009
April 2009
• Legislation to create mandatory RPS and enable
net metering offered by Governor
net metering offered by Governor
• KCC: Issued an order on Docket 441, “Cost
Recovery and Incentives for Energy Efficiency
Programs”
Recovery and Incentives for Energy Efficiency
Programs”
Missouri
Kansas
Legislative and Regulatory
Conclusion
26
$ Billions
$3.7
$6.5
$5.9
$5.7
$4.2
• Year-end rate base projections 2009 - 2012
• Environmental at Iatan 1 and Sibley environmental, as well as Crossroads expected in rate base
3Q09
3Q09
• Iatan 2 expected in rate base 3Q 2010 (KCP&L-KS and GMO)
and 4Q 2010 (KCP&L-MO)
Solid Rate Base Growth
27
2009 and beyond: Extend the platform
• Re-deployment of capital from dividend reduction to strengthen utility platform
• Integrate GMO and deliver synergies
• Complete and include Iatan 1 AQCS and GMO environmental projects in rates effective in 2009
• Complete Iatan 2
• Entered into an agreement to acquire 32 wind turbines
• KCP&L option to construct 35-turbine project by May 2010
• Additional environmental spending at LaCygne 1, LaCygne 2 and Montrose
• Continue with sound strategic planning to effectively meet future generation requirements and be an
industry leader in energy efficiency
industry leader in energy efficiency
Our Path to Growth remains intact
Path to Growth
Appendix
(financial graphics from year-end
2008 earnings call)
29
2009 Earnings Per Share
Guidance Bridge
Guidance Bridge
30
• Additional 2009-10 capex reduction of $170 million
from November 2008 estimates
Projected Capital Expenditures
2009-2011
2009-2011
31
Financing Requirements - Sources
Uses of Cash 2009 - 2011
Uses of Cash 2009 - 2011
32
Great Plains Energy 2009
Guidance Range $1.10 - $1.40
Revenue:
Normal weather
Retail (weather-normalized)
2009 - Retail MWh sales volume decline of (0.7%) compared to 2008
(previous estimate 0.5% growth)
2010-11 - Retail MWh sales volume growth averages 1.4% annually
(previous estimate ~1% annually, but off a higher assumed ’09 base)
New wholesale margin threshold for KCP&L-MO of $92.5 million (subject to true-
up effective with new rates in August 2009
Key Assumptions
33
Key Assumptions Continued
• Finance
Dividend reduced to $0.83/share
$200 million of total equity issuance in 2009 - 2010; $200 million in 2011
(previous: $200 million of equity in 2009; total $400 additional 2010-2011)
$400 million of new long-term KCP&L debt in 2009;
Issuing $950 million over 2010/2011 ($487 maturing; rest new debt)
(previous: $850 - $950 million of new debt over 2009-11)
No refinancing of GMO debt prior to maturity
Amortization of GMO debt write-up reduces pre-tax interest expense by approximately $32 million per year
in 2009-11
34
Regulatory
Approval of the rate request in Kansas and Missouri with new rates in effect late summer 2009
New rates in “Iatan 2 case” in effect summer 2010 in KS, and fall 2010 in MO
Assumed ROE of 11% (previous 10.75%)
Plant Performance
Equivalent Availability Factor (EAF) and Capacity Factor (CF) for fossil fleet for 2009 of ~80% and 77%,
respectively; in 2010-11, EAF in 80%-85% range and CF relatively constant
respectively; in 2010-11, EAF in 80%-85% range and CF relatively constant
Wolf Creek plant performance at historical levels
Resource and portfolio mix of ~ 86% generation and 14% purchased energy
Fuel Expense
67% covered by FAC
Approximately all of 2009, 60% of 2010, and 40% of 2011’s
coal requirements are under contract
(Previous: approximately 85% of 2009, 45% of 2010, and 15% of 2011)
Key Assumptions Continued
35
Capital Expenditures
Additional reduction of $140 million of 2009-11 capex
Previous cost and schedule disclosures for Iatan 2
No wind in capex projections until 2011
Reduced spending on LaCygne environmental in 2009 - 10
No additional environmental mandates
Tax
The marginal tax rate before credits relatively constant at 38.9%
Tax credits and the non-tax affect of AFUDC equity reduces average effective tax
rate to approximately 30.8%
NOLs - No earnings benefit, but $100 million of NOLs available
annually in 2009 - 2012 to reduce cash taxes
Key Assumptions Continued
36
• Iatan 2 AFUDC equity rates for KCP&L KS and KCP&L MO are
8.30% and 8.25%, respectively, until new rates effective in 2009
CWIP Projections 2009 - 2011
AFUDC Projections 2009 - 2011
CWIP and AFUDC Projections
37
Earnings Per Share By Segment
38
Core Earnings
Key Earnings Drivers:
+7% increase in retail revenue due to new rates
+Increase in KCP&L’s equity component of AFUDC of $6.3 million
- GMO loss of $0.7 million or $(0.01) per share
- 5% lower total KCP&L revenue driven by a $30.7 million decline in wholesale as
a result of lower prices and a 32% decrease in MWh sales (due primarily to Iatan
outage)
- Higher KCP&L O&M costs and higher depreciation and amortization expense
- Dilution of $0.05 caused by shares issued in connection with GMO transaction
$34.7
$15.7
4Q ‘07
4Q ‘08
(millions except
where indicated)
where indicated)
$16.4
KCP&L
KCP&L
GMO
$(0.7)
4Q ‘08 Utility Total
Core Earnings Per Share
$0.40
$0.13
4Q ‘07
4Q ‘08
KCP&L
KCP&L
GMO
$0.14
$(.01)
4Q ‘08 Utility
Total
Total
Electric Utility Fourth Quarter Results
39
Core Earnings
Core Earnings Per Share
$146.4
$162.8
$1.72
$1.61
(millions except
where indicated)
where indicated)
YTD ‘07
YTD ‘08
YTD ‘07
YTD ‘08
Earnings Drivers:
+ GMO contribution of $17.9 million or $0.17 per share in 2008
+ Increase in KCP&L’s equity component of AFUDC of $20.0 million
+ Increased retail revenue of $61.8 million, primarily from new retail rates
at KCP&L effective 1/08
- Mild summer weather with a 27 percent decrease in cooling degree days
- Increased purchased power of $18.0 million due to increased average prices and an
increase in MWh’s purchased resulting from plant outages
- Higher interest expense, higher O&M, and higher fuel
- Dilution of $0.30 per share caused by shares issued in connection with GMO transaction
Includes KCP&L for full-year and GMO results for the period 7/14/08 - 12/31/08
KCP&L
GMO
YTD ‘08 Utility
Total
Total
KCP&L
KCP&L
KCP&L
YTD ‘08 Utility
Total
Total
$0.17
$1.44
$17.9
$144.9
GMO
Electric Utility Year-to-Date Results
40
Core Earnings
Core Earnings Per Share
$(0.05)
$(0.08)
Key Earnings Drivers:
The YTD greater core loss is primarily attributable to a $5.4 million loss
from GMO’s non-utility activities
$(6.4)
$(7.2)
(millions except
where indicated)
where indicated)
4Q ‘07
4Q ‘08
4Q ‘07
4Q ‘08
Core Earnings
$(20.5)
$(24.3)
YTD ‘07
YTD ‘08
$(0.24)
$(0.24)
Includes KCP&L for the full-year and GMO results for the period 7/14/08 - 12/31/08
GXP “Other” Results
41
Liquidity
42
Core earnings is a non-GAAP financial measure that differs from GAAP earnings because it excludes the effects of discontinued operations, certain unusual items and mark-to-market gains and losses on certain
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 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 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.
43
Core earnings is a non-GAAP financial measure that differs from GAAP earnings because it excludes the effects of discontinued operations, certain unusual items and mark-to-market gains and losses on certain
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 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 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.