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| 8-K - JOINT FORM 8-K KC SECURITIES ASSN IR DECK - KANSAS CITY POWER & LIGHT CO | f8kkcirdeck.htm |
Great Plains Energy
Kansas City
Securities Association Presentation
November 18, 2009
Exhibit
99.1
1
Terry
Bassham
Executive
Vice President
Finance
& Strategic Development
and
Chief Financial Officer
Ellen
Fairchild, Director
Investor Relations
Investor Relations
816-556-2083
ellen.fairchild@kcpl.com
Michael
Cline, Vice President
Investor
Relations & Treasurer
816-556-2622
michael.cline@kcpl.com
Eula
Jones
Investor
Relations Analyst
816-556-2080
eula.jones@kcpl.com
Company
Representatives
2
Statements made in
this presentation 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 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; impairments of long-lived assets or goodwill; 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.
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 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; impairments of long-lived assets or goodwill; 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.
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
3
• Strong Midwest
electric utilities focused on regulated operations in Missouri and
Kansas
• Diversified
customer base includes 820,000 residential, commercial, and industrial
customers
• ~6,000 Megawatts of
generation capacity
• Low-cost generation
mix - projected 76% coal, 17% nuclear (Wolf Creek) in 2009
100%
Regulated
Electric Utility
Operations Focus
Electric Utility
Operations Focus
• Growth and
stability in earnings driven by sizable regulated investments as part of
the
Comprehensive Energy Plan (“CEP”)
Comprehensive Energy Plan (“CEP”)
• Wind and
environmental retrofit components of CEP in place; Iatan 2 baseload coal
plant
targeted for completion in late summer 2010
targeted for completion in late summer 2010
• Anticipated growth
beyond 2010 driven by additional environmental capex and wind
Attractive
Platform
for Long-Term
Earnings Growth
for Long-Term
Earnings Growth
• Successful outcomes
in 2006, 2007 and 2008 rate cases in Missouri and Kansas
• Combined annual
rate increases from 2008 cases of $59mm in Kansas and $159mm in
Missouri;
new rates effective August 1st in Kansas and September 1st in Missouri
new rates effective August 1st in Kansas and September 1st in Missouri
Focused
Regulatory
Approach
Approach
• Cash flow and
earnings heavily driven by regulated operations and cost recovery
mechanisms
• Ample liquidity
currently available under $1.5bn credit facilities
• Sustainable
dividend and pay-out, right-sized to fund growth and to preserve
liquidity
• Committed to
maintaining current investment grade credit ratings
Stable
and
Improving Financial
Position
Improving Financial
Position
Strong Platform
for Long-Term Growth
4
Pro
Forma 2008 Revenue by Customer Segment
Pro
Forma 2008 Revenue by Utility Jurisdiction
Service
Territories: KCP&L and GMO
Business
Highlights
• Solid Midwest
electric utility - KCP&L brand
• Transformational
events in 2008 to focus business model on
fully regulated utility operations
fully regulated utility operations
– Sale of Strategic
Energy
– Acquisition of
Aquila
• Company attributes
post-acquisition
• 820,000 customers /
3,200+ employees
• ~6,000 MW of
primarily low-cost baseload generation
• 5-year projected
synergies of $723 million
• ~$7.9bn in assets
and $3.6bn in rate base at 2008YE
Total:
$1.7bn
Total:
$1.7bn
Solid
Foundation
5
|
|
Project
description
|
Comments
|
|
100 MW plant
in Spearville, KS
Began
construction in 2005
|
ü Completed in
Q3 2006
ü In rate base
from 1/1/2007
ü No
regulatory disallowance
|
|
|
Selective
Catalytic Reduction (SCR) unit at LaCygne
1 plant |
ü Completed in
Q2 2007
ü In rate base
from 1/1/2008
ü No
regulatory disallowance
|
|
|
Air Quality
Control System at Iatan 1 coal plant
|
ü Completed in
Q2 2009
ü In rate base
starting 3Q 2009 (KS 08/1 & MO
9/1)
ü No regulatory
disallowance in 2009 MO and KS
cases; minimal exposure in 2010 cases |
|
|
Construction
of Iatan 2 super-critical coal plant (850
MW; 73% GXP ownership share)1 |
ü On track for
completion late summer 2010
ü Expected in
rate base Q4 2010 / 1Q 2011
|
Iatan
2
Iatan
1
Environmental
LaCygne
Environmental
Wind
Great
Plains Energy has effectively executed all elements of its Comprehensive
Energy
Plan to date and received positive, just, and reasonable regulatory treatment
Plan to date and received positive, just, and reasonable regulatory treatment
Comprehensive
Energy Plan
1 Includes
post-combustion environmental technologies including an SCR system, wet flue gas
desulphurization system and fabric
filter to control emissions
filter to control emissions
Strong Track
Record of Execution
6
Iatan
Site Photographs - October 2009
Iatan
2 Fabric Filter
Cooling
Tower
Construction
Campus
Iatan
1 SCR
Iatan
2 Boiler
Iatan
2 SCR
Gypsum
Storage
Reagent
Prep Bldg
Iatan
2 Absorber
Recycle
Pump Building
Tank
Farm and Coal Yard
7
|
|
|
|
2008
rate cases
|
|
|
||||
|
Company
|
Last
Allowed
ROE |
Effective
Date of Last Allowed ROE |
ROE
requested1 |
Requested
revenue increase |
Stipulated
/
settled revenue increase |
Tariff
implementation
|
RPS2
|
Fuel
Clause? |
|
|
|
|
10.25%
|
6/1/07
|
11.55%
|
$66mm
|
$48mm
|
9/1/09
|
ü
|
Yes
(95%) |
|
|
|
10.25%
|
6/1/07
|
11.55%
|
17mm
|
$15mm
|
9/1/09
|
ü
|
Yes
(95%) |
|
|
|
—3
|
N/A
|
11.55%
|
1mm
|
$1mm
|
7/1/09
|
ü
|
Yes
(85%) |
|
|
|
10.75%
|
1/1/08
|
11.55%
|
102mm
|
$95mm
|
9/1/09
|
ü
|
No
|
|
—3
|
N/A
|
11.40%
|
72mm
|
$59mm
|
8/1/09
|
ü
|
Yes
(100%) |
||
GMO-MPS
GMO-L&P
GMO-Steam
KCP&L-KS
KCP&L-MO
1 ROE of 10.75%
originally requested in all cases; requests increased in rebuttal testimony
based on financial market developments. All
cases settled; ROE not
disclosed
disclosed
2 Missouri mandatory
Renewable Portfolio Standard of 2% by 2011, 10% by 2018 and 15% by
2021;
Kansas has targets of 10% by 2011, 15% by 2016 and 20% by 2020
Kansas has targets of 10% by 2011, 15% by 2016 and 20% by 2020
3 “Black Box” settlement
- ROE not
disclosed
Focused Regulatory
Approach
8
• Address supply
opportunities including:
• environmental
mandates,
• renewable
portfolio standards
• fuel
alternatives
• Help customers
understand and manage
consumption
• smart
grid
• energy
efficiency
• Explore
transmission in our region
What’s
Next
9
The
Green Impact Zone
Adjacent
to Green Impact
Zone:
Zone:
•
Stowers Institute
•
Midwest Research Institute
(NREL)
(NREL)
•
UMKC Volker Campus
•
Kauffman Foundation
•
Rockhurst University
•
DNR Gorman Center
•
Nelson-Atkins Museum
10
KCP&L
filed an application for ARRA Stimulus funding to advance energy efficiency and
conduct a Smart Grid demonstration
project in the Green Impact Zone. We will invest approximately $14 million and requested Federal matching funds for
approximately $24 million and key partner funds of $10 million for a total estimated project value of $48 million.
project in the Green Impact Zone. We will invest approximately $14 million and requested Federal matching funds for
approximately $24 million and key partner funds of $10 million for a total estimated project value of $48 million.
Advancement of
Existing Residential & C&I Energy Efficiency Programs
n Weatherization
& Energy Audits
n Efficient
Appliances, Lighting and HVAC Equipment
n Efficient Motors,
Drives and Data Centers
Smart Grid
Demonstration
n Smart
Distribution
– Substation
– IP/RF 2-way Field
Area Network (FAN)
– Distribution
Management System (DMS)
n Generation and
Storage
– Commercial Solar
and Photovoltaic
– Battery and Thermal
Storage
n Smart
End-Use
– Residential &
Commercial EMS Demonstration
– In-Home Display and
Interval Data
– PHEV
Charging
– Smart Appliances
and Pilot RTP or CPP Rates
Customer/Community
Benefits:
Lower
utility bills
Increased
environmental stewardship
Improved
energy information
Increased
local energy sector jobs
KCP&L
Benefits:
New
business model development
Increased
reliability
Reduced
costs
Greater
asset utilization
Environmental
Customer
satisfaction
Regional
economic development
Green
Impact Zone Investments: Benefits
For Customers and KCP&L
For Customers and KCP&L
11
• Address supply
opportunities including:
• environmental
mandates,
• renewable
portfolio standards
• fuel
alternatives
• Help customers
understand and manage
consumption
• smart
grid
• energy
efficiency
• Explore
transmission in our region
What’s Next
Continued
Financial
Overview
13
• Electric Utility
segment earnings decreased $18.6 million primarily as a result of a) $14.3
million decrease in
operating income driven by lower wholesale revenue, higher operating expenses and depreciation, partially offset by
higher retail revenue and lower purchased power; and b) an $11.6 million increase in interest expense.
operating income driven by lower wholesale revenue, higher operating expenses and depreciation, partially offset by
higher retail revenue and lower purchased power; and b) an $11.6 million increase in interest expense.
• Other segment
earnings decreased $7.8 million primarily as a result of increased interest from
the equity units issued
in May and a favorable 2008 impact from the reversal of interest expense related to unrecognized tax benefits.
in May and a favorable 2008 impact from the reversal of interest expense related to unrecognized tax benefits.
• A 21.0 million
increase in the average number of shares outstanding since the third quarter of
2008 resulted in $0.11
per share dilution
per share dilution
14
Earnings
Key
Earnings Drivers:
+ Increased retail
revenue of $22.2 million driven by GMO’s inclusion for full quarter in 2009 and
new
retail rates partially offset by mild weather and lower weather-normalized demand
retail rates partially offset by mild weather and lower weather-normalized demand
+ Decline in
purchased power expense of $24.2 million
+ Increased AFUDC of
$2.7 million
- Decline in
wholesale revenue of $28.5 million
- Increased
depreciation & amortization of $12.5 million; including $3.8 million of
additional amortization
- Increased non-fuel
operating expense including $7.5 million wind termination fee and $5.2
million
increase
for GMO driven by inclusion for a full quarter in 2009
- Increased interest
expense, net of AFUDC, of $11.6 million
- Higher shares
outstanding caused electric utility segment dilution of $0.12 per
share.
(millions
except
where indicated)
where indicated)
Earnings
Per Share
$83.9
$0.90
$0.62
$102.5
15
• Increased Electric
Utility segment earnings of $6.7 million mainly attributable to the inclusion of
GMO’s regulated utility
operations for the full period in 2009;
operations for the full period in 2009;
• Increased Other
segment earnings of $17.6 million including a $16.0 million tax benefit from an
audit settlement in
GMO’s non-utility operation;
GMO’s non-utility operation;
• Loss of $2.3
million in 2009 related to the discontinued operations of Strategic Energy
compared to earnings of $35.0
million for the first nine months of 2008.
million for the first nine months of 2008.
• Increase of 32.3
million average dilutive shares outstanding resulted in dilution of $0.36 per
share.
16
Earnings
Per Share
Earnings
(millions
except
where indicated)
where indicated)
Earnings
Drivers:
+ GMO utility
earnings increased $6.6 million
+ Decreased fuel and
purchase power expense of $51.0 million at KCP&L
+ Decreased income
taxes of $20.9 million at KCP&L
+ Increase in
KCP&L’s AFUDC equity of $8.3 million
- Reduced KCP&L
revenues of $58.5 million, including $52.4 million drop in
wholesale
- Increased
depreciation and amortization of $13.7 million including $3.8 million
of
additional
amortization at KCP&L
- Increased interest
expense, net of AFUDC, of $9.4 million at KCP&L
- Dilution of $0.36
per share caused by additional shares outstanding
$134.1
$1.34
$1.05
$127.4
Electric Utility
Year-to-Date Results
17
|
|
3Q
2009 Compared to 3Q 2008
|
YTD
2009 Compared to YTD 2008
|
||||
|
GPE
|
Customers
|
Use/Customer
|
Change
MWh Sales |
Customers
|
Use/Customer
|
Change
MWh Sales |
|
Residential
|
0.2%
|
-0.1%
|
0.1%
|
0.4%
|
-0.4%
|
0.0%
|
|
Commercial
|
-0.4%
|
-2.2%
|
-2.5%
|
0.1%
|
-0.5%
|
-0.4%
|
|
Industrial
|
||||||
|
Weighted
Avg. |
||||||
Retail
MWh Sales by Customer Class - Third Quarter 2009
Weather-Normalized
Retail MWh Sales and Customer Growth Rates
Note: Includes
GMO for full periods presented
Electric Utility
Segment
18
Great
Plains Energy Debt
Long-term
Debt Maturities
Credit
Ratings
*Includes current
maturities
Credit Ratings,
Debt, Capital Structure
19
• Strong Midwest
electric utilities focused on regulated operations in Missouri and
Kansas
• Diversified
customer base includes 820,000 residential, commercial, and industrial
customers
• ~6,000 Megawatts of
generation capacity
• Low-cost generation
mix - projected 76% coal, 17% nuclear (Wolf Creek) in 2009
100%
Regulated
Electric Utility
Operations Focus
Electric Utility
Operations Focus
• Growth and
stability in earnings driven by sizable regulated investments as part of
the
Comprehensive Energy Plan (“CEP”)
Comprehensive Energy Plan (“CEP”)
• Wind and
environmental retrofit components of CEP in place; Iatan 2 baseload coal
plant
targeted for completion in late summer 2010
targeted for completion in late summer 2010
• Anticipated growth
beyond 2010 driven by additional environmental capex and wind
Attractive
Platform
for Long-Term
Earnings Growth
for Long-Term
Earnings Growth
• Successful outcomes
in 2006, 2007 and 2008 rate cases in Missouri and Kansas
• Combined annual
rate increases from 2008 cases of $59mm in Kansas and $159mm in
Missouri;
new rates effective August 1st in Kansas and September 1st in Missouri
new rates effective August 1st in Kansas and September 1st in Missouri
Focused
Regulatory
Approach
Approach
• Cash flow and
earnings heavily driven by regulated operations and cost recovery
mechanisms
• Ample liquidity
currently available under $1.5bn credit facilities
• Sustainable
dividend and pay-out, right-sized to fund growth and to preserve
liquidity
• Committed to
maintaining current investment grade credit ratings
Stable
and
Improving Financial
Position
Improving Financial
Position
Strong Platform
for Long-Term Growth
Great Plains Energy
Kansas City
Securities Association Presentation
November 18, 2009