Form 10-Q
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
____________________________
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1995
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 or 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission file number 1-707
KANSAS CITY POWER & LIGHT COMPANY
(Exact name of registrant as specified in its charter)
Missouri 44-0308720
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1201 Walnut, Kansas City, Missouri 64106-2124
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (816) 556-2200
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes (X) No ( )
The number of shares outstanding of the registrant's Common stock at October
27, 1995 was 61,902,083 shares.
PART I - FINANCIAL INFORMATION
ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS
KANSAS CITY POWER & LIGHT COMPANY
CONSOLIDATED BALANCE SHEETS
(thousands of dollars)
September 30 December 31
1995 1994
ASSETS
UTILITY PLANT, at original cost
Electric $3,364,246 $3,330,478
Less-accumulated depreciation 1,134,939 1,092,436
Net utility plant in service 2,229,307 2,238,042
Construction work in progress 63,944 57,294
Nuclear fuel, net of amortization of
$77,662 and $66,773 50,685 40,806
Total 2,343,936 2,336,142
REGULATORY ASSET - DEFERRED WOLF CREEK COSTS 11,101 18,752
REGULATORY ASSET - RECOVERABLE TAXES 120,000 120,000
INVESTMENTS AND NONUTILITY PROPERTY 144,187 98,429
CURRENT ASSETS
Cash and cash equivalents 46,263 20,217
Receivables
Customer accounts receivable 48,451 24,513
Other receivables 22,574 22,604
Fuel inventories, at average cost 20,059 16,570
Materials and supplies, at average cost 44,778 44,953
Prepayments 1,476 5,138
Deferred income taxes 5,444 1,444
Total 189,045 135,439
DEFERRED CHARGES
Regulatory assets
Settlement of fuel contracts 13,912 16,625
KCC Wolf Creek carrying costs 4,787 6,839
Other 22,911 27,909
Other deferred charges 16,705 10,262
Total 58,315 61,635
Total $2,866,584 $2,770,397
LIABILITIES
CAPITALIZATION
Common stock-authorized 150,000,000 shares
without par value-61,908,726 shares issued -
stated value $449,697 $449,697
Retained earnings 451,734 426,738
Capital stock premium and expense (1,725) (1,736)
Common stock equity 899,706 874,699
Cumulative preferred stock 89,000 89,000
Cumulative redeemable preferred stock 1,436 1,596
Long-term debt 835,533 798,470
Total 1,825,675 1,763,765
CURRENT LIABILITIES
Notes payable to banks 0 1,000
Commercial paper 0 31,000
Current maturities of long-term debt 53,762 33,419
Accounts payable 47,258 73,486
Dividends payable 423 423
Accrued taxes 105,285 24,684
Accrued interest 9,195 12,209
Accrued payroll and vacations 21,092 19,594
Accrued refueling outage costs 11,040 2,120
Other 7,837 7,221
Total 255,892 205,156
DEFERRED CREDITS
Deferred income taxes 633,000 644,139
Deferred investment tax credits 72,316 82,840
Other 79,701 74,497
Total 785,017 801,476
COMMITMENTS AND CONTINGENCIES
Total $2,866,584 $2,770,397
The accompanying Notes to Consolidated Financial Statements are an integral
part of these statements.
KANSAS CITY POWER & LIGHT COMPANY
CONSOLIDATED STATEMENTS OF INCOME
Three Months Ended Year to Date Twelve Months Ended
September 30 September 30 September 30
1995 1994 1995 1994 1995 1994
(thousands of dollars)
ELECTRIC OPERATING REVENUES $ 277,670 $ 253,771 $ 681,881 $ 676,174 $ 873,979 $ 877,002
OPERATING EXPENSES
Operation
Fuel 36,113 33,631 103,877 106,971 132,012 142,213
Purchased power 16,387 11,721 30,705 26,268 38,366 35,654
Other 42,823 44,920 136,307 159,933 178,678 204,303
Maintenance 15,876 15,828 59,054 54,758 76,764 76,112
Depreciation 24,325 23,580 72,679 70,362 96,678 93,457
Taxes
Income 40,039 32,794 63,579 56,063 78,465 66,221
General 27,509 26,563 74,047 73,810 96,599 96,055
Amortization of:
MPSC rate phase-in plan 0 0 0 0 0 1,768
Deferred Wolf Creek costs 3,152 3,276 9,703 9,827 12,978 13,102
Total 206,224 192,313 549,951 557,992 710,540 728,885
OPERATING INCOME 71,446 61,458 131,930 118,182 163,439 148,117
OTHER INCOME AND DEDUCTIONS
Allowance for equity funds
used during construction 757 621 1,497 1,733 1,851 2,486
Miscellaneous (4,752) (929) (1,602) (2,814) (2,947) (2,423)
Income taxes 3,786 889 7,521 2,292 9,801 2,546
Total (209) 581 7,416 1,211 8,705 2,609
INCOME BEFORE INTEREST CHARGES 71,237 62,039 139,346 119,393 172,144 150,726
INTEREST CHARGES
Long-term debt 13,315 11,143 38,538 31,910 50,590 43,247
Short-term notes (33) 278 1,058 1,014 1,214 1,102
Miscellaneous 744 1,000 2,001 3,319 2,810 4,410
Allowance for borrowed funds
used during construction (445) (481) (1,490) (1,616) (1,718) (2,120)
Total 13,581 11,940 40,107 34,627 52,896 46,639
PERIOD RESULTS
Net income 57,656 50,099 99,239 84,766 119,248 104,087
Preferred stock
dividend requirements 991 880 3,039 2,522 3,974 3,301
Earnings available for
common stock 56,665 49,219 96,200 82,244 115,274 100,786
Average number of common
shares outstanding 61,902 61,901 61,902 61,904 61,902 61,905
Earnings per common share $0.91 $0.80 $1.55 $1.33 $1.86 $1.63
Cash dividends per
common share $0.39 $0.38 $1.15 $1.12 $1.53 $1.49
<F1>
The accompanying Notes to Consolidated Financial Statements are an integral part of these statements.
KANSAS CITY POWER & LIGHT COMPANY
CONSOLIDATED STATEMENTS OF CASH FLOWS
(thousands of dollars)
Year to Date Twelve Months Ended
September 30 September 30
1995 1994 1995 1994
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $ 99,239 $ 84,766 $119,248 $104,087
Adjustments to reconcile net income
to net cash provided by operating
activities:
Depreciation 72,679 70,362 96,678 93,457
Amortization of:
Nuclear fuel 10,888 7,741 13,283 10,565
Deferred Wolf Creek costs 9,703 9,827 12,978 13,102
MPSC rate phase-in plan 0 0 0 1,768
Other 6,150 7,413 8,345 7,724
Deferred income taxes (net) (15,139) 7,544 (2,159) 3,929
Investment tax credit
amortization and reversals (10,524) (3,259) (11,610) (4,345)
Allowance for equity funds used
during construction (1,497) (1,733) (1,851) (2,486)
Cash flows affected by changes in:
Receivables (23,908) (9,616) (12,749) (4,978)
Fuel inventories (3,489) (97) (5,412) 1,852
Materials and supplies 175 457 (1,078) 302
Accounts payable (26,228) (17,774) 5,611 (3,189)
Accrued taxes 80,601 36,757 40,728 8,224
Accrued interest (3,014) (6,516) 136 (2,544)
Wolf Creek refueling outage
accrual 8,920 2,193 1,585 5,055
Pension and postretirement benefit
obligations (5,835) 30,048 (3,680) 31,924
Other operating activities 626 4,702 (6,936) 4,543
Net cash provided by operating
activites 199,347 222,815 253,117 268,990
CASH FLOWS FROM INVESTING ACTIVITIES
Construction expenditures (89,390) (89,282) (125,073) (130,647)
Allowance for borrowed funds used
during construction (1,490) (1,616) (1,718) (2,120)
Purchases of investments (37,811) (40,396) (64,975) (41,453)
Other investing activities 3,763 4,962 4,425 6,729
Net cash used in investing
activities (124,928) (126,332) (187,341) (167,491)
CASH FLOWS FROM FINANCING ACTIVITIES
Issuance of long-term debt 90,834 86,340 138,287 178,186
Repayment of long-term debt (33,428) (117,170) (86,428) (156,650)
Special deposits 0 60,118 0 0
Net change in short-term borrowings (32,000) (28,000) (1,000) 1,000
Dividends paid (74,243) (71,824) (98,657) (95,497)
Other financing activities 464 602 197 (1,147)
Net cash used in financing
activities (48,373) (69,934) (47,601) (74,108)
NET CHANGE IN CASH AND CASH
EQUIVALENTS 26,046 26,549 18,175 27,391
CASH AND CASH EQUIVALENTS AT BEGINNING
OF PERIOD 20,217 1,539 28,088 697
CASH AND CASH EQUIVALENTS AT END
OF PERIOD $46,263 $28,088 $46,263 $28,088
CASH PAID DURING THE PERIOD FOR:
Interest, net of amount capitalized $41,867 $38,682 $51,431 $46,020
Income taxes $23,074 $35,257 $41,537 $56,683
The accompanying Notes to Consolidated Financial Statements are an integral
part of these statements.
KANSAS CITY POWER & LIGHT COMPANY
CONSOLIDATED STATEMENTS OF RETAINED EARNINGS
(thousands of dollars)
Year to Date Twelve Months Ended
September 30 September 30
1995 1994 1995 1994
Beginning balance $426,738 $418,201 $431,143 $422,553
Net income 99,239 84,766 119,248 104,087
525,977 502,967 550,391 526,640
Dividends declared 74,243 71,824 98,657 95,497
Ending balance $451,734 $431,143 $451,734 $431,143
The accompanying Notes to Consolidated Financial Statements are an integral
part of these statements.
KANSAS CITY POWER & LIGHT COMPANY
Notes to Consolidated Financial Statements
In management's opinion, the consolidated interim financial statements
reflect all adjustments (which include only normal recurring adjustments)
necessary to present fairly the results of operations for the interim periods
presented. These statements and notes should be read in connection with the
financial statements and related notes included in the Company's 1994 annual
report filed with the Securities and Exchange Commission on Form 10-K.
1. CAPITALIZATION
A subsidiary of the Company, KLT Inc., entered into a long-term revolving
line of credit agreement totaling $65 million. The agreement expires in 1998
and is collateralized by the capital stock of KLT Inc.'s direct subsidiaries.
As of September 30, 1995, $9 million had been borrowed against this line of
credit, with an additional $8.5 million borrowed in October 1995.
During 1995, KLT Investments Inc. financed approximately $23 million of
affordable housing limited partnership investments with notes having interest
rates ranging from 8.0% to 9.6% and maturity dates through 2004. As of
September 30, 1995, KLT Investments had subscribed for an additional $3 million
investment in these partnerships. The subscription is reflected in the
Consolidated Balance Sheets as Investments and Nonutility Property with the
related liabilities in Deferred Credits - Other. The subscription was
converted to notes on October 1, 1995.
From December 31, 1994 to September 30, 1995, the amount of Medium-Term
Notes (Notes) outstanding has increased by $29 million. As of September 30,
1995, $98 million of Notes remained available for issuance under a shelf
registration.
2. COMMITMENTS AND CONTINGENCIES
ENVIRONMENTAL MATTERS
During the third quarter, the Company and Interstate Power Company of
Dubuque, Iowa (Interstate) settled a lawsuit filed against the Company under
the Superfund law. The lawsuit related to cleanup costs of hazardous substances
at the site of a demolished gas manufacturing plant previously owned by the
Company. The settlement was not material to the Company's financial condition,
results of operations or cash flows.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
REGULATION AND COMPETITION
The electric utility industry is undergoing fundamental changes in
response to increasing competition. To achieve its desired market position in
this changing environment, the Company is continually modifying its business
processes to operate more efficiently and cost effectively, and is developing
energy related businesses through its subsidiary, KLT Inc. To take advantage
of opportunities presented through increased competition, the Company may
consider various business strategies including partnerships, acquisitions,
combinations, additions to or dispositions of service territory, and
restructuring of wholesale and retail businesses.
The National Energy Policy Act of 1992 (NEPA) gave the Federal Energy
Regulatory Commission (FERC) the authority to require electric utilities to
provide wholesale transmission line access (wholesale wheeling) to independent
power producers (IPPs) and other utilities. Although NEPA prohibits FERC from
ordering retail wheeling (allowing retail customers to select a different power
producer and use the transmission facilities of the host utility to deliver the
energy), it does not prevent the state commissions from doing so. The state
commissions however, may be preempted by other provisions of the Federal Power
Act or relevant provisions of state laws.
Although the Missouri Public Service Commission (MPSC) and the Kansas
Corporation Commission (KCC) have not changed regulatory policy relating to
mandated wholesale or retail competition, certain other state commissions are
actively planning the transition to a competitive environment. If retail
wheeling were allowed or mandated, the competition would present growth
opportunities for low-cost energy producers and risks for higher-cost producers
with large industrial customers able to select less expensive providers. The
loss of major customers could result in under-utilized assets (stranded
investment) placing a costly burden on the remaining customer base or
shareholders if those costs are not recovered from the departing customers as
part of the charge for their transmission service. The Company believes it is
positioned well and has a diverse customer mix with approximately 16% of total
sales derived from industrial customers as compared to the utility average of
approximately 35%. Its industrial rates are competitively priced compared to
the regional average and its rate structure allows flexibility in setting
rates. In addition, long-term contracts are in place or under negotiation for
a significant portion of the Company's industrial sales.
Increased competition could also force utilities to change accounting
methods. Financial Accounting Standards Board (FASB) Statement No. 71-
Accounting for Certain Types of Regulation, applies to regulated entities whose
rates are designed to recover the costs of providing service. An entity's
operations could cease to meet the requirements of FASB 71 for various reasons,
including a change in regulation or a change in the competitive environment for
a company's regulated services. For those operations no longer meeting the
requirements of regulatory accounting, regulatory assets would be written off
and other assets adjusted and evaluated for impairment. In a competitive
environment, asset recoverability would be determined using market-based rates
which could be lower than traditional cost-based rates. The Company has not
had direct competition for retail electric service in its service territory
although there has been competition in the bulk power market and between
alternative fuels. The Company's regulatory assets will be maintained as long
as it continues to meet the requirements of FASB 71.
NON-REGULATED OPPORTUNITIES
KLT Inc. was formed in 1992 as a holding company to pursue non-regulated,
primarily energy related business ventures to supplement the growth from
electric utility operations. As of September 30, 1995, the consolidated assets
of KLT Inc. totaled approximately $129 million, including capital contributions
from Kansas City Power & Light Company of $40 million. Management anticipates
total subsidiary assets of up to $800 million within the next five to ten
years, consisting of approximately $200 million in capital investment from
Kansas City Power & Light Company and the remainder through subsidiary
borrowings.
RESULTS OF OPERATIONS
Three month period: three months ended September 30, 1995
compared with three months ended
September 30, 1994
Nine month period: nine months ended September 30, 1995
compared with nine months ended September
30, 1994
Twelve month period: twelve months ended September 30, 1995
compared with twelve months ended
September 30, 1994
EARNINGS OVERVIEW
EPS for the three month period increased to $0.91 from $0.80. This
increase mainly reflects warmer summer temperatures in 1995. Based on a
statistical relationship between kwh sales and the differences in actual and
normal temperatures, the Company estimates the effect of weather on each period
was as follows:
Increase/(Decrease)
Three Month Nine Month Twelve Month
Period Period Period
1995 1994 1995 1994 1995 1994
Estimated effect
of weather
on EPS $ 0.04 $(0.08) $(0.04) $(0.06) $(0.05) $(0.06)
EPS for the nine month period increased to $1.55 from $1.33 and EPS for
the twelve month period increased to $1.86 from $1.63. These increases are
mainly due to the $0.24 per share early retirement program charges recorded
during the nine months ended September 30, 1994, reduced by a $0.02 per share
adjustment during the fourth quarter of 1994. A net gain of $0.05 per share
realized from the sale of rail cars increased EPS for these periods. Other
items impacting EPS in these periods include decreased bulk power sales, lower
priced industrial sales and several unplanned costs including repairs of June
storm damage, increased fuel costs due to an inventory adjustment, an extended
coal plant maintenance outage and the Company's share of Wolf Creek Generating
Station's (Wolf Creek) voluntary early retirement program costs. Savings
associated with Wolf Creek's early retirement program are expected to offset
program costs in less than two years.
KILOWATT (KWH) SALES AND OPERATING REVENUES
Sales and revenue data:
(revenues in millions)
Increase (Decrease) From Prior Year
Three Month Nine Month Twelve Month
Period Period Period
KWH Revenues KWH Revenues KWH Revenues
Retail Sales:
Residential 18 % 17 6 % 13 5 % 13
Commercial 8 % 8 2 % 6 2 % 5
Industrial - % 2 1 % (2) 1 % (5)
Other (6)% - (5)% - (5)% -
Total Retail 10 % 27 3 % 17 3 % 13
Sales for Resale:
Bulk Power Sales (41)% (3) (26)% (11) (26)% (15)
Other 13 % - (14)% - (19)% (1)
Total Operating
Revenues 24 6 (3)
During April and May of 1995, the classification of approximately 600 net
commercial customers was changed to industrial to more appropriately reflect
their business operations. This change results in the reclassification of
approximately $720,000 (10.6 million kwh sales) from commercial to industrial
in each subsequent month. Prior periods have not been restated.
Effective January 1, 1994, Missouri retail rates were reduced 2.66%, or
approximately $12.5 million annually, resulting from the end of the Wolf Creek
rate phase-in amortization. Approximately two-thirds of the Company's retail
sales are to Missouri customers. Other tariffs have not changed materially
since 1988. However, the amortization of the Regulatory Asset-Deferred Wolf
Creek Costs ends in 1996 and may result in future rate adjustments.
Continued customer growth and above normal temperatures during the summer
of 1995 boosted retail kwh sales and revenues. Twice during July, customer
demand for power reached record one-hour peaks as temperatures exceeded 100
degrees.
Decreases in industrial revenues for the nine and twelve month periods
reflect customized long-term sales contracts with major industrial customers.
Long-term contracts are in place or under negotiation for a significant portion
of the Company's industrial sales. These contracts are designed to enhance the
Company's competitive position and improve overall power generating
efficiencies and load factors, while boosting consumption and providing short-
term and long-term capacity savings.
Bulk power sales vary with generating unit and purchased power
availability, fuel costs and the requirements of other electric systems. A
combination of conditions in 1994 allowed the Company to benefit from record
bulk power sales in that year.
Total revenue per kwh sold varies with changes in the mix of kwh sales
among customer classifications and the effect on certain classifications of
declining price per kwh as usage increases. An automatic fuel adjustment
provision applies to less than 1% of revenues.
Future kwh sales and revenues per kwh will be affected by national and
local economic conditions, weather conditions and customer conservation
efforts. Competitive forces, including alternative sources of energy such as
natural gas, cogeneration, IPPs and other electric utilities, may also affect
future sales and revenues.
FUEL AND PURCHASED POWER
Combined fuel and purchased power expenses increased for the three and
nine month periods and decreased for the twelve month period. The following
items impacted fuel and purchased power expenses for these periods.
Total kwh sales (total of retail, bulk power and other) decreased for the
three, nine and twelve month periods by 0.4%, 5.5% and 6.2%, respectively.
During July 1995, a forced outage occurred at the Company's jointly-owned,
coal-fired LaCygne Generating Station (LaCygne). The Company replaced the
power by increasing the usage of higher-cost, coal-fired units and purchasing
power on the wholesale market. Repairs to LaCygne were insured and completed
during the first week of October. Uninsured, incremental fuel and purchased
power costs approximated $4 million.
The Company has entered into capacity purchase contracts to provide a cost-
effective alternative to constructing new capacity. These purchases contribute
to higher purchased power expenses for all three periods.
Fuel costs reflect $2 million in additional costs resulting from the
difference between coal inventory adjustments during the second quarter of 1995
and 1994.
Reduced freight rates contributed to lower overall coal costs. The
Company's coal procurement strategies continue to provide coal costs well below
the regional average.
Nuclear fuel costs increased for all three periods, yet remain
substantially less than the price of coal. The price of nuclear fuel averaged
only 45% the price of coal over the twelve months ended September 30, 1995, and
38% over the twelve months ended September 30, 1994. Generally, coal
represents approximately 75% of generation and nuclear fuel about 25%.
OTHER OPERATION AND MAINTENANCE EXPENSES
Combined other operation and maintenance expenses for the nine and twelve
month periods decreased primarily due to the costs and subsequent savings from
the 1994 voluntary early retirement program. These decreases were partially
offset by the Company's $2 million share of Wolf Creek's voluntary early
retirement program recorded during the second quarter of 1995. Similar to the
Company's program, this charge is expected to be recovered within two years
through reduced salaries and benefits. Other unplanned costs in the second
quarter of 1995 included repair expenses associated with June storm damage and
the extension of a coal plant maintenance outage. The timing of the Company's
normal maintenance program also caused fluctuations in maintenance expense for
the nine month period.
The Company continues to place increased emphasis on new technologies,
improved methods and cost control. Processes are being changed to provide
increased efficiencies and improved operations. Through the use of cellular
technology, a majority of customer meters will be read automatically by the end
of 1996. These types of changes have allowed the Company to assimilate work
performed by those who elected to participate in the early retirement program.
INCOME TAXES
The increase in income tax expense primarily reflects an increase in
income subject to tax.
During the first quarter of 1995, the Company reached a settlement with
the Internal Revenue Service (IRS) regarding issues arising from an audit of
the 1985 through 1988 tax returns. Based on an internal calculation of the
federal and state liabilities under the terms of the settlement, management
transferred approximately $10 million from deferred income taxes and investment
tax credits to accrued taxes.
Accelerated tax depreciation on Wolf Creek's original construction costs
ended in 1995. This deduction reduced the Company's prior years' tax payments
by approximately $30 million per year.
OTHER INCOME AND DEDUCTIONS
The three month period includes a $2.4 million reduction to the $7.8
million gain recorded on the sale of steel unit train cars during the first
quarter of 1995. The reduction is based on a re-calculation of the steel cars'
net cost. The steel cars were replaced by leased aluminum train cars.
Aluminum cars are lighter-weight and offer more coal capacity contributing to
lower delivered coal prices.
The nine and twelve month periods reflect the $5.4 million net gain on the
sale of steel rail cars. This gain is partially offset by charitable
contributions provided to local organizations and an increase in fees
associated with the sale of customer accounts receivable.
During the first three quarters of 1995 the Company accrued tax credits of
$3 million representing three-fourths of the total expected 1995 credits
related to existing investments in affordable housing partnerships. Non-
taxable increases in the cash surrender value of corporate-owned life insurance
contracts also affect the relationship between miscellaneous income and income
taxes.
INTEREST CHARGES
Interest expense increased during all three periods reflecting higher
average levels of long-term debt outstanding and higher weighted-average
interest rates. The higher average level of outstanding debt is primarily due
to subsidiary investments in affordable housing partnerships. The tax benefits
provided by these investments essentially offset the related increase in
interest expense for the 1995 periods.
WOLF CREEK
Wolf Creek is one of the Company's principal generating facilities
representing approximately 18% of accredited generating capacity. The plant's
operating performance has remained strong, contributing approximately 25% of
the Company's annual kwh generation while operating on average above 80% of
capacity over the last three years. It has the lowest fuel cost of any of the
Company's generating units. The plant's next refueling and maintenance outage
is scheduled for the spring of 1996.
An extended shut-down of Wolf Creek could have a substantial adverse
effect on the Company's business, financial condition and results of
operations. Higher replacement power and other costs would be incurred as a
result. Although not expected, an unscheduled plant shut-down could be caused
by actions of the Nuclear Regulatory Commission reacting to safety concerns at
the plant or other similar nuclear facilities. If a long-term shut-down
occurred, the state regulatory commissions could consider reducing rates by
excluding the Wolf Creek investment from rate base.
Ownership and operation of a nuclear generating unit exposes the Company
to potential retrospective assessments and property losses in excess of
insurance coverage.
CAPITAL REQUIREMENTS AND LIQUIDITY
The Company has reduced its 1995-1999 projected construction expenditures
by $146 million reflecting the removal of three new 136 megawatt combustion
turbines. With increased competition in the generation market, the Company's
strategy for meeting future capacity needs involves fully exploring
alternatives to new construction. For example, the capacity needs provided by
the unit scheduled to be completed in 1997 will now be met through an operating
lease. Other alternatives include entering into additional purchased capacity
contracts.
PART II - OTHER INFORMATION
ITEM 3. LEGAL PROCEEDINGS
Two companion complaints were filed at the Missouri Public Service
Commission on August 23, 1995, and at the Kansas Corporation Commission on
August 31, 1995, in the Inter-City Beverage Company proceeding previously
discussed in Item 3, Legal Proceedings, of the Company's Form 10-K for the
year ended December 31, 1994. The complaints allege the misapplication of
ertain of the Company's electric rate tariffs resulting in overcharges to
industrial and large commercial customers that have been provided service
pursuant to those tariffs. The Company has not yet determined the amount
of the alleged overcharges. The Company believes it will be able to
successfully defend this action.
Concerning Interstate Power Company vs. Kansas City Power & Light
Company, et al. (previously discussed in the Company's Form 10-K for the
year ended December 31, 1994), see Note 2 to the Consolidated Financial
Statements - Commitments and Contingencies, Environmental Matters, on
page 5 of this report.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
(a) Exhibit 10 - Copy of Lease Agreement dated as of October 18,
1995, between First Security Bank of Utah, N.A., and the Company.
(b) No reports on Form 8-K have been filed for the quarter ended
September 30, 1995.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
KANSAS CITY POWER & LIGHT COMPANY
Dated: November 3, 1995
/s/Drue Jennings
(Drue Jennings)
(Chief Executive Officer)
Dated: November 3, 1995
/s/Neil Roadman
(Neil Roadman)
(Principal Accounting Officer)