For Immediate Release
PRESS RELEASE
Contact:
Media Contact Investor Relations Contact
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Amy Bass Janet S. Watson
Director of Corporate Communications Secretary/Treasurer
417-625-5100, Ext. 2369 417-625-5100, Ext. 2223
NEW RATES APPROVED FOR
MISSOURI ELECTRIC CUSTOMERS OF
THE EMPIRE DISTRICT ELECTRIC COMPANY
JOPLIN, MO - September 21, 2001 - (NYSE:EDE) Mr. Myron McKinney, President and
CEO of The Empire District Electric Company, announced today that the Missouri
Public Service Commission issued an order granting the Company new rates for its
Missouri electric customers. As a result of the order, the Company will increase
base rates by 8.4 percent. This increase is designed to provide the Company with
approximately $17.1 million in additional revenues per year, based on an
adjusted test period of the 2000 calendar year. In addition, the order
authorizes the Company to collect a $0.0054 per kilowatt-hour Interim Energy
Charge (IEC) for a two-year period which, based on the test period, would amount
to approximately $19.6 million in revenues annually. The IEC is subject to
refund to the extent that the Company's actual fuel and purchased power costs
over that two-year period are less than an agreed upon amount. The new rates
will become effective on October 2, 2001.
The IEC is designed to protect both the Company's customers and shareholders
from volatile natural gas and purchased energy costs by allowing Empire to
recover its prudently incurred actual fuel and purchased power costs to the
extent they exceed the amount included in base rates. The IEC will be listed on
customer bills as a separate item for two years, from October 2001 to October
2003. At the end of the two-year period, the Missouri Public Service Commission
staff and the Office of Public Counsel staff will audit Empire's fuel and
purchased power expenses to determine if a refund is due and, if so, how much is
due to each customer.
If a refund is deemed appropriate, customers will receive interest for the
two-year period plus the time required to complete the audit. The interest rate
will be the prime rate reported in the Wall Street Journal on October 1, 2003.
Any refund will be listed on customer bills as a one-time credit. Checks will be
mailed to former customers who are no longer on service. Checks will not be
issued for amounts less than $3, and any monies that are undeliverable will be
- more -
donated to the American Red Cross Project Help, a local emergency energy
assistance program for the elderly and disabled.
The major components of the increase in base rates are the recovery of
construction expenses for the State Line Combined Cycle generating unit and
increased natural gas costs. The Commission's order allowed the Company to
recover all of the construction expenditures associated with the State Line
Combined Cycle generating unit except for $4.087 million, which were determined
to be in excess of the original estimate. This amount will be written off in the
third quarter of 2001.
Because prices for natural gas and other fuels have been very volatile in
recent years, only a portion of the requested recovery for fuel and purchased
power costs was included in base rates. As a way to deal with this uncertainty,
Empire agreed with the Missouri Public Service Commission to make a portion of
its rate increase refundable--that portion is the IEC.
In announcing the new rates, Mr. McKinney stated, "These new rates will allow us
to recover our investment in the State Line Combined Cycle generating unit and
other plant additions which have been placed in service since our last rate case
in 1997. This combined cycle unit began supplying energy to our customers
earlier this summer and helped us maintain our reliability during periods of
extreme heat. It is designed to be one of the most efficient and environmentally
friendly power plants in the country."
McKinney continued, "Because 55% of our operating expenses are for fuel and
purchased power, these expenses have had a volatile impact on our earnings. We
believe the IEC will minimize this volatility."
"We recognize that the IEC is an interim solution," said McKinney, "and we are
taking steps to implement a long-term resolution. We are accomplishing this
through the implementation of a long-term procurement strategy to make fuel and
purchased power commitments through both physical and financial instruments. We
expect this strategy to introduce more stability into the cost of these
important expense items."
Based in Joplin, Missouri, The Empire District Electric Company (NYSE:EDE) is an
investor-owned utility providing electric service to approximately 150,000
customers in southwest Missouri, southeast Kansas, northeast Oklahoma, and
northwest Arkansas. The Company also offers monitored security, fiber optic
service, and decorative lighting services to its customers, and provides water
service in three incorporated communities in Missouri.
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Certain matters discussed in this press release are "forward-looking statements"
intended to qualify for the safe harbor from liability established by the
Private Securities Litigation Reform Act of 1995. Such statements address future
plans, objectives, expectations, and events or conditions concerning various
matters. Actual results in each case could differ materially from those
currently anticipated in such statements, by reason of the factors noted in our
filings with the SEC, including the most recent Form 10-K and Form 10-Q.