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| 8-K - JOINT FORM 8-K - KANSAS CITY POWER & LIGHT CO | f8kirdeck3-3_10.htm |
Great Plains Energy
Year-end and Fourth Quarter 2009
Earnings Presentation
February 26, 2010
Exhibit
99.1
1
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 and Kansas City Power & Light Company (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 the
companies 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 timing and amount of resulting synergy savings from the
acquisition of KCP&L Greater Missouri Operations Company; 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 and annual report on Form 10-K filed with the Securities and Exchange Commission.
Each forward-looking statement speaks only as of the date of the particular statement. 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.
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 and Kansas City Power & Light Company (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 the
companies 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 timing and amount of resulting synergy savings from the
acquisition of KCP&L Greater Missouri Operations Company; 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 and annual report on Form 10-K filed with the Securities and Exchange Commission.
Each forward-looking statement speaks only as of the date of the particular statement. 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
Great Plains Energy
Year-end and Fourth Quarter 2009
Earnings Presentation
February 26, 2010
Mike
Chesser,
Chairman and CEO
Chairman and CEO
3
Impressive
Reliability
Reliability
Solid Safety Record
Tier 1 Customer Service
Stewards
of
the Environment
the Environment
Reliable,
Economical, and
Safe Nuclear
Generation
Economical, and
Safe Nuclear
Generation
Strong Plant
Performance
4
2010
and Beyond
• Improved earnings
outlook
• Completion of Iatan
2
• Continued focus on
regulatory process
• Continued delivery
of GMO synergies and movement toward Tier 1 costs
across the organization
across the organization
• Sound planning to
effectively position the Company financially and
strategically to meet future generation and network requirements and as an
industry leader in energy efficiency
strategically to meet future generation and network requirements and as an
industry leader in energy efficiency
William
H. Downey,
President and COO
President and COO
6
• Successful
completion of Iatan 1 and Sibley 3 Air Quality Control Systems (AQCS)
and
Iatan 1 overhaul
Iatan 1 overhaul
• Constructive
settlements in five rate cases
• Filed rate case
for KCP&L Kansas with flexible procedural schedule
• Major progress on
Iatan 2 construction
• “Strength at the
Core” in utility operations
• Improved
generation fleet performance compared to 2008
• Successful Wolf
Creek refueling outage
• Continued to
capture synergies from GMO acquisition and identified additional
opportunities
opportunities
2009
Operational and Regulatory Highlights
7
q First Fire on
Oil
q First Fire on
Coal
q Synchronization
q Provisional
Acceptance
Steps
to In-Service Date for Iatan 2
KCP&L
Coal Fleet
KCP&L
Nuclear
GMO
Coal Fleet
Impact
of refueling outages
Impact
of unplanned
coal
outages
Q4
08 and Q1 09
impact
of Iatan 1 unit
overhaul and AQCS tie-ins
overhaul and AQCS tie-ins
Q4
08 and Q1 09 impact of
Sibley
environmental
upgrade and Iatan 1 unit
upgrade and Iatan 1 unit
overhaul
and AQCS tie-ins
*1 2008 reflects GMO results
for the period July 14 through December 31, 2008
Plant
Performance
9
Source:
J.D. Power and Associates 2010 Electric Utility
Business
Customer Satisfaction StudySM
Source:
J.D. Power and Associates 2009 Electric Utility Residential
Customer
Satisfaction StudySM
“Strength at the
Core” Performance Metrics
10
*
Latest available data
Reliability
Safety
*
*
“Strength at the
Core” Performance Metrics
11
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$98M
above initial
projections
above initial
projections
GMO
Acquisition Synergies
Financial
Overview
Terry
Bassham, CFO
Executive Vice President Finance &
Strategic Development
Executive Vice President Finance &
Strategic Development
13
• Increased
Electric Utility segment earnings of $14.7 million mainly attributable to the
inclusion of GMO’s
regulated utility operations for the full period in 2009, new retail rates and lower purchased power expense.
Increase was partially offset by unfavorable weather, decline in weather-normalized customer usage,
decreased wholesale revenues and increased interest expense.
regulated utility operations for the full period in 2009, new retail rates and lower purchased power expense.
Increase was partially offset by unfavorable weather, decline in weather-normalized customer usage,
decreased wholesale revenues and increased interest expense.
• Reduced
Other segment losses of $17.4 million including a $16.0 million tax benefit from
an audit settlement in
GMO’s non-utility operations.
GMO’s non-utility operations.
• Loss
of $1.5 million in 2009 related to the discontinued operations of Strategic
Energy compared to income of
$35.0 million for the full period in 2008.
$35.0 million for the full period in 2008.
• Increase
of 28.6 million average dilutive shares outstanding resulted in dilution of
$0.33 per share.
Note: 2008
reflects GMO results for the period July 14, 2008 through December 31,
2008
(unaudited)
14
• Electric
Utility segment earnings increased $8.0 million primarily as a result of new
retail rates and decreased
purchased power expense. Increase partially offset by unfavorable weather, lower weather-normalized
customer usage and increased depreciation and amortization expense and higher interest expense.
purchased power expense. Increase partially offset by unfavorable weather, lower weather-normalized
customer usage and increased depreciation and amortization expense and higher interest expense.
• A
17.8 million increase in the average number of shares outstanding since the
fourth quarter of 2008 resulted
in $0.02 per share dilution.
in $0.02 per share dilution.
15
$128.9
$125.2
$28.9
$17.9
$0.0
$20.0
$40.0
$60.0
$80.0
$100.0
$120.0
$140.0
$160.0
$180.0
2009
2008
GMO
KCP&L
(millions
except
where indicated)
where indicated)
Key
Earnings Drivers:
+ GMO
utility earnings increased $11.0 million primarily from inclusion for full year
in 2009
+ Decreased
purchased power expense of $48.2 million at KCP&L
+ Decreased
income taxes of $12.9 million at KCP&L
+ Increase
in KCP&L’s AFUDC equity of $8.2 million
- Reduced
KCP&L revenues of $24.8 million, including $55.3 million drop in
wholesale
- Increased
non-fuel O&M of $6.0 million
- Increased
depreciation and amortization of $25.3 million, including $10.8 million
of
additional
amortization at KCP&L
- Increased
interest expense, net of AFUDC, of $12.6 million at KCP&L
- Dilution
of $0.34 per share caused by additional shares outstanding
$157.8
$143.1
$1.22
$1.41
Earnings
Per Share
Earnings
$1.00
$1.24
$0.22
$0.17
$0.00
$0.20
$0.40
$0.60
$0.80
$1.00
$1.20
$1.40
$1.60
2009
2008
Electric Utility
Full-Year Results
16
Key
Earnings Drivers:
+ Increased
retail revenue of $36.5 million driven by new retail rates partially offset by
mild
weather and lower weather-normalized energy consumption
weather and lower weather-normalized energy consumption
+ Decline
in purchased power expense of $27.8 million
- Increased
fuel expense of $14.3 million
- Increased
depreciation & amortization of $13.3 million; including $7.0 million
of
additional amortization
additional amortization
- Increased
interest expense, net of AFUDC, of $4.2 million
- Higher
shares outstanding caused electric utility segment dilution of $0.03 per
share
(millions
except
where indicated)
where indicated)
Earnings
Per Share
$23.7
$15.7
$20.0
$3.7
$16.4
$(0.7)
$0.17
$0.13
$0.14
$0.03
$0.14
$(0.01)
Earnings
17
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4Q
2009 Compared to 4Q 2008
|
YTD
2009 Compared to YTD 2008
|
||||
|
GPE
|
Customers
|
Use/Customer
|
Change
MWh Sales |
Customers
|
Use/Customer
|
Change
MWh Sales |
|
Residential
|
0.3%
|
2.5%
|
2.8%
|
0.4%
|
0.2%
|
0.6%
|
|
Commercial
|
-0.3%
|
-1.2%
|
-1.5%
|
0.0%
|
-0.7%
|
-0.7%
|
|
Industrial
|
-1.5%
|
-3.2%
|
-4.6%
|
-1.5%
|
-6.6%
|
-8.0%
|
|
Weighted
Avg. |
0.2%
|
-0.6%
|
-0.4%
|
0.3%
|
-1.5%
|
-1.2%
|
Retail
MWh Sales by Customer Class - Fourth Quarter 2009
Weather-Normalized
Retail MWh Sales and Customer Growth Rates
Note: Includes
GMO for full periods presented
Electric Utility
Segment
18
Earnings
Earnings
Per Share
Key
Drivers:
+ $16.0
million first quarter GMO non-utility tax benefit
– $11.4
million in after-tax interest expense
2008
included after-tax loss of $5.7 million from a mark-to-market change
on
interest
rate hedges, $3.6 million after-tax income from the reversal of interest expense
and
$3.4
million after-tax income related to the release of a legal
liability
$(7.8)
$(25.2)
(millions
except
where indicated)
where indicated)
2009
2008
2009
2008
$(0.25)
$(0.07)
Other
Segment Full-Year Results
19
Earnings
Earnings
Per Share
$(0.07)
$(0.07)
Key
Earnings Drivers:
+ $2.5
million reduction in losses from GMO non-utility activities
- Increased
after-tax interest of $4.6 million from Equity Units
$(9.3)
$(9.1)
(millions
except
where indicated)
where indicated)
4Q
‘09
4Q
‘08
4Q
‘09
4Q
‘08
Other
Segment Fourth Quarter Results
20
Great
Plains Energy Debt
Long-term
Debt Maturities
Credit
Ratings
*Includes current
maturities
Credit Ratings,
Debt, Capital Structure
21
2010
Earnings Guidance Range
22
• Revenues of
approximately $2.1 - $2.2 billion
• Normal
weather
• Reported retail
MWh sales growth of approximately 1.3% to 2.8%
• Weather-normalized
retail MWh sales decline of approximately 0.2%
• Projected fourth
quarter 2010 approval of KCP&L KS rate request that was
filed in Dec. 2009
filed in Dec. 2009
• Average Equivalent
Availability Factor and Average Capacity Factor for
generation fleet of approximately 85% and 79%, respectively
generation fleet of approximately 85% and 79%, respectively
• Consolidated
capital expenditures of approximately $610 to $680 million
• AFUDC of
approximately $65 to $70 million based on average Construction Work
in
Progress (CWIP) balance of $1.0 - $1.2 billion
• Issuance of
approximately $200 to $400 million in long-term debt; no common
stock issuances
stock issuances
• Effective tax rate
for continuing operations of approximately 30%
Key
2010 Guidance Assumptions
23
Reported
retail MWh sales increase by approximately 1.3 to 2.8 percent
•
Return to normal weather
•
Decrease weather-normalized retail MWh sales of 0.2% compared to
2009
million
MWh
Projected Retail
MWh Sales Assumptions
24
Kansas
• Approval of rate
request filed in December 2009 with new rates effective in 4Q 2010
Missouri
• Expect to file
rate cases in 2Q10 with new rates effective in 2Q11
• New fuel
transportation contract will impact KCP&L MO earnings in 2011 until new
rates are
effective
effective
Requests for
Annual Retail Rate Increases
In
Millions
Effective
Amount
Amount
Rate
Jurisdiction
Date
Requested
Approved
KCP&L-Kansas
8/1/2009
71.6
$
59.0
$
KCP&L-Missouri
9/1/2009
101.5
95.0
GMO-Missouri
Public Service
9/1/2009
66.0
48.0
GMO-St. Joseph
Light & Power (Electric)
9/1/2009
17.1
15.0
GMO-St. Joseph
Light & Power (Steam)
7/1/2009
1.3
1.0
2009
Approved Rate Increases
257.5
$
218.0
$
Pending Rate
Increase: KCP&L - Kansas
4Q
2010
55.2
$
na
Regulatory
Assumptions
25
2010
- 2012 Capital Expenditures
26
• AFUDC anticipated
to represent approximately 30% of consolidated
2010
Earnings Before Taxes
• KCP&L MO and
KS Iatan 2 AFUDC equity rate of 8.25%
2010-2012 CWIP and
AFUDC Assumptions
27
Financing
Requirements - Sources & Uses
of Cash 2010-2012
of Cash 2010-2012
28
Financing:
2010
• $200 - $400
million of new long-term debt
2011
• Refinancing of
approximately $500 million of maturing long-term debt
• $200 - $400
million of new long-term debt
2012
• GXP shares issued
upon conversion of Equity Units
• Proceeds from
Equity Units conversion used to repay portion of maturing $500
million GMO 11.875% issue; balance refinanced with long-term debt
million GMO 11.875% issue; balance refinanced with long-term debt
• Debt component of
equity units remarketed
• Amortization of
GMO debt write-up lowers interest expense by $34 million annually in
2010-11
2010-11
Taxes:
• 39% marginal tax
rate before credits; approximate 33% average effective tax rate across
2010 - 2012, after AFUDC equity and tax credits
2010 - 2012, after AFUDC equity and tax credits
• Utilization of
NOLs reduces cash tax rate to approximately 2% for state and
AMT
payments
Financing and Tax
Assumptions
29
Positioned for
Long-Term Earnings Growth
• Increased rate base
post-Iatan 2;
• Benefit from
economic recovery and increased energy consumption
in our service territory;
in our service territory;
• Continued focus on
strengthening the core; and
• Continued sound
strategic planning to position the Company to meet
future generation and network requirements and as an industry
leader in energy efficiency
future generation and network requirements and as an industry
leader in energy efficiency
Great Plains Energy
Year-end and Fourth Quarter 2009
Earnings Presentation
February 26, 2010