Attached files
| file | filename |
|---|---|
| 8-K - FORM 8-K - WESTAR ENERGY INC /KS | d8k.htm |
 JP
Morgan Corporate Access March 24, 2011
Boston, MA
JP Morgan Corporate Access
Exhibit 99.1 |
 2
Forward Looking Disclosures
JP Morgan Corporate Access
Forward-looking statements: Certain matters discussed in this presentation are
“forward- looking statements.” The Private Securities Litigation Reform Act of
1995 has established that these statements qualify for safe harbors from liability.
Forward-looking statements may include words like “believe,”
“anticipate,” “target,” “expect,” “pro forma,” “estimate,”
“intend,” “guidance” or words of similar meaning. Forward-looking statements
describe future plans, objectives, expectations or goals. Although Westar Energy believes that
its expectations are based on reasonable assumptions, all forward-looking statements
involve risk and uncertainty. The factors that could cause actual results to differ materially
from these forward-looking statements include those discussed herein as well as (1) those
discussed in the company’s Annual Report on Form 10-K for the year ended Dec. 31, 2010
(a) under the heading, “Forward-Looking Statements,” (b) in ITEM 1. Business, (c)
in ITEM 1A. Risk Factors, (d) in ITEM 7. Management’s Discussion and Analysis of
Financial Condition and Results of Operations, and (e) in ITEM 8. Financial Statements and
Supplementary Data: Notes 13 and 15; and (2) other factors discussed in the company’s
filings with the Securities and Exchange Commission. Any forward-looking statement
speaks only as of the date such statement was made, and the company does not
undertake any obligation to update any forward-looking statement to reflect events or
circumstances after the date on which such statement was made. |
 3
Recent Events
•
Reported strong 2010 results well above last year
•
Issued 2011 earnings guidance of $1.65 to $1.80
•
Dividend
increased
for
7
th
consecutive
year
•
Add $270 million revolving credit facility
•
Issue 2011-2013 capital expenditure forecast
•
New KCC commissioner appointed
•
Outline active 2011 regulatory agenda
JP Morgan Corporate Access |
 4
•
EPS from continuing operations of $1.81 vs. $1.28 last year
•
Retail MWh sales increased 6%
–
Above plan
•
Warmer than normal weather
•
Signs of economic recovery
–
Industrials up 6%
•
Implemented all planned price adjustments (annualized amts):
–
Abbreviated rate case -
$17 million
–
Transmission adjustments -
$16 million
–
Environmental adjustment -
$14 million
–
Energy efficiency adjustment -
$6 million
•
No COLI proceeds in 2010
2010 Results Well Above 2009
JP Morgan Corporate Access |
 5
2011 Earnings Guidance of $1.65 to $1.80
•
Plan price adjustments via tracking adjustments
•
Weather
adjusted
retail
sales
grow
<
1%
•
O&M increase <
2%
•
SG&A flat to decrease <
1%
•
Depreciation increases <
$15 million
•
AFUDC
equity
decreases
<
$2
million
•
COLI proceeds of $0.10 per share
•
Interest
charges
increases
<
$5
million
•
Effective
tax
rate
of
29%
-
31%
•
Funding 2011 construction program
–
Issue 12.7 million shares priced under forward sale agreements
–
Borrowing from revolving credit facilities and/or issuance of debt
JP Morgan Corporate Access |
 6
$0.92
$1.00
$1.08
$1.16
$1.20
$1.24
$1.28
$0.75
$0.85
$0.95
$1.05
$1.15
$1.25
$1.35
2005
2006
2007
2008
2009
2010
2011
Dividend
•
Quarterly dividend increased 3% effective April 1
•
Long-standing dividend payout target of 60%-75% of earnings
–
2011 guidance implies payout at upper end of range
Indicated
annual rate
JP Morgan Corporate Access |
 7
•
Four year maturity
•
2 options to extend term up to 1 year
•
Accordion option allows for increase up to $400 million
•
Increased total credit lines to $1 billion
–
Existing $730 million facility
–
New $270 million facility
New $270 Million Revolving Credit Facility
JP Morgan Corporate Access |
 8
Capital Expenditure Forecast 2011 -
2013
Actual
Forecast
Forecast
Forecast
Forecast
2010
2011
2012
2013
2011 - 2013
Method of Cost Recovery
Generation replacements and other
83.4
$
130.4
$
146.4
$
150.6
$
427.4
$
General Rate Case (GRC)
Westar environmental
107.7
181.1
200.1
154.3
535.5
ECRR
La Cygne environmental
3.9
63.0
171.0
195.1
429.1
ECRR
Nuclear Fuel
35.3
25.1
30.1
41.7
96.9
Fuel adjustment clause
Transmission
197.3
192.7
161.3
164.1
518.1
FERC formula rate/TDC
Distribution
New customers, replacements & other
78.7
95.9
102.2
106.4
304.5
GRC
Smart grid (a)
10.3
13.6
13.6
GRC
Other
23.5
19.8
15.0
11.0
45.8
GRC
Total
540.1
$
721.6
$
826.1
$
823.2
$
2,370.9
$
(a) net of DOE matching grant
In 2011, 2012 and 2013, Westar plans to incur additional expenditures related to
the Prairie Wind Transmission joint venture (not inlcuded in above forecast amounts).
Prairie Wind Transmission joint venture
2.7
$
22.5
$
13.8
$
39.0
$
JP Morgan Corporate Access |
 9
Capital Expenditure Forecast 2011 -
2013
$0
$100
$200
$300
$400
$500
$600
$700
$800
$900
2010
2011
2012
2013
$540
$722
$826
$823
Environmental
Other
Transmission
62%
65%
61%
JP Morgan Corporate Access
57% |
 10
Cash Flow Guidance
JP Morgan Corporate Access
2011E
(Millions)
Net income
205
$
Depreciation and amortization
285
Cash from operations
490
Less: Cash dividends
145
Internally generated cash
345
Less: CapEx
722
Net cash flow
(377)
$
Assumptions and notes:
Net Income –
midpoint of 2011 EPS guidance times average shares outstanding
Average shares assumes issuance of shares priced under forward sale
agreements Cash dividends -
$1.28 indicated annual dividend with 6.5% of common dividend being
reinvested |
 11
•
Mark Sievers appointed by governor to serve 4-year term
–
Attorney and economist
–
Work experience includes telecommunications industry
•
Kansas Corporation Commission
–
Three-member board appointed by governor
–
Serve staggered four year terms
•
Current KCC commissioners
–
Thomas Wright
•
Current chairman
•
Term expires March 2014
–
Ward Loyd
•
Term expires March 2012
KCC Commissioner Appointed
JP Morgan Corporate Access |
 12
Significant Planned Regulatory Agenda
•
Seek predetermination for 370MW of renewables
•
Update TDC tariff
•
KCC docket reviewing retrofit economics for coal plants
•
Request siting authority for Prairie Wind Transmission line
•
Update ECRR tariff
•
Update energy efficiency rider
•
Plan to file general rate case late spring or early summer
JP Morgan Corporate Access |
 13
2011 Plans
JP Morgan Corporate Access |
 14
•
Statute
requires
<
200
MW
additional
renewables
•
Seeking
predetermination
from
KCC
for
<
370
MW
through
PPAs
–
Tentative agreements for 2 projects
•
Post Rock Wind Farm -
201 MW
•
Ironwood Wind Farm –
168 MW
–
Expect both projects to be in-service by end 2012
•
KCC Staff and CURB agree with company’s request
•
Expect decision in May 2011
Seeking Predetermination for 370 MW of Renewables
JP Morgan Corporate Access |
 15
Annualized Rate & Revenue Changes
Actual and Estimated
2010
2011
(Estimated)
2012
(Estimated)
Base rates
$17
million
Feb
(Abbreviated rate case)
TBD
Transmission rates
$16
million
Jan 1
$17
million
Jan 1
<
$17
million
Jan 1
ECRR
$14
million
June 1
<
$10
million
June 1
<
$29
million
June 1
Energy Efficiency
$6 million
November
<
$11 million
November
<
$13 million
November
JP Morgan Corporate Access |
 16
Major Construction Projects Underway
•
Environmental
–
Lawrence Energy Center
•
Install
fabric
filters,
rebuild
scrubbers,
precipitator,
low
NOx
system
–
Jeffery Energy Center
•
Install SCR on 1 unit
–
La Cygne Energy Center
•
Scrubbers, fabric filters, common chimney, SCR and low NOx system
•
Transmission
–
Wichita to Oklahoma 345 kV
–
Planning and design Prairie Wind line
•
SmartStar Lawrence
–
$40 million project reduced by 50% DOE match
•
Advanced outage management
•
Automated metering infrastructure
JP Morgan Corporate Access |
 17
Projected
Rate
Base
2010
–
2015
(in
billions)
2010
2011
2012
2013
2014
2015
Base
Environmental
Transmission
$6.7
$6.3
$5.9
$5.4
$5.0
$4.5
$3.5
$3.5
$3.5
$3.6
$3.7
$3.8
JP Morgan Corporate Access
$0.6
$0.8
$1.0
$1.1
$1.2
$1.4
$0.4
$0.6
$0.9
$1.2
$1.4
$1.5 |
 18
Transmission
JP Morgan Corporate Access |
 19
Major Transmission Investments Underway
•
Rose Hill –
Oklahoma
Under construction
•
Target completion mid 2012
•
Investment < $100
million •
Prairie Wind Transmission
•
50/50 JV with ETA
•
Siting request Feb 2011
•
Begin construction mid 2012
•
Estimated completion 2014
•
Project cost < $225
million JP Morgan Corporate Access |
 20
Prairie Wind Transmission, LLC
•
Joint venture formed between Westar Energy and Electric Transmission
America
–
Venture to develop high voltage transmission in Kansas
–
50% Westar / 50% ETA
•
ETA is joint venture between AEP Transmission Holding Company and MEHC
America
Transco,
LLC
(wholly-owned
subsidiary
of
MidAmerican
Energy
Holdings
Company)
JP Morgan Corporate Access |
 21
Prairie Wind Transmission, LLC
•
Received FERC incentives
–
Abandonment costs
–
Recovery of pre-commercial development costs
–
CWIP recovery in rate base
–
50/50 capital structure
–
Allowed ROE of 12.8%
•
KCC
–
Siting request filed Feb 28, 2011
•
Southwest Power Pool
–
Regional cost allocation approved by FERC
–
“Notice to Construct”
accepted
–
JV became a member of the SPP
–
Awaiting SPP adoption of formula rate
JP Morgan Corporate Access |
 22
Prairie Wind JV Next Steps and Tentative Schedule
•
Obtain siting authority from KCC
•
Engineer and design
•
Acquire rights-of-way
•
Construction
–
Anticipated to start by mid 2012
–
Target completion late 2014
JP Morgan Corporate Access |
 23
Profile
JP Morgan Corporate Access |
 24
Strategic Approach
•
Embrace uncertainty and acknowledge inability to predict the
future
•
Place a high value on flexibility
–
Operational
–
Financial
–
Regulatory
•
Leverage actions and strategies around intrinsic advantages
•
Seek collaborative and constructive approaches to regulation
•
Value proposition
–
Protect against downside while growing investor returns
JP Morgan Corporate Access |
 25
•
Pure-play, vertically integrated, rate-regulated
•
<
7,000 MW of generation
•
6,200 miles transmission
•
687,000 customers
Kansas’
Largest
Electric
Provider
JP Morgan Corporate Access |
 26
Favorable Supply Portfolio
$56.37
$17.45
$6.50
Uranium
Coal
Gas
Ave. Fuel Cost
$18.37/MWh
Fuel Mix
Coal
49%
Gas
39%
Wind
4%
Uranium
8%
MW Capacity
5.0¢
6.0¢
7.0¢
8.0¢
9.0¢
10.0¢
Westar Energy
Kansas City Power
and Light (KS)
Empire District
Electric (KS)
National
Average
7.6¢
8.4¢
8.4¢
Low Rates
Source: Edison Electric Institute 07/01/2010
Coal
74%
Gas
7%
Wind
3%
Uranium
16%
Cost of Fuel
JP Morgan Corporate Access |
 27
Diverse Energy Sales (MWh)
Chemical & oil
Food
processing
Aerospace
Consumer
manufacturing
Other
Commercial
38%
Residential
35%
Industrial
27%
39%
17%
16%
16%
12%
12%
18%
8%
7%
3%
4%
48%
Other
General
merchandise
Grocery/
Convenience
Real estate
Health care
Government
Education
JP Morgan Corporate Access |
 28
Strong Service Territory
•
Overall economic conditions
significantly better than nation
–
No real estate crash
–
State unemployment remains
2+ pts favorable to nation
•
Industrial sales showing signs
of recovery
–
’10 up 6% over ‘09 levels
•
Pentagon awards refueling
tanker contract to Boeing
–
Benefits Wichita and Kansas
economy
JP Morgan Corporate Access
3
4
5
6
7
8
9
10
11
Jan
Feb
Mar
Apr
May
Jun
Jul
Aug
Sep
Oct
Nov
Dec
Unemployment
(latest 12 months)
U.S.
KS |
 29
Capitalization and Liquidity
•
Target <
50/50 capital structure
•
Solid investment grade credit
•
Total credit facility capacity $1 billion
•
No bonds mature before 2014
December 31, 2010
(a)
(millions)
Long-term, net
$2,491
Preferred
21
Common
2,383
Total Capitalization
$4,895
Debt
51%
Equity
49%
Preferred
<1%
Secured
Unsecured
Outlook
Moody's
Baa1
Baa3
Positive
Fitch Ratings
BBB+
BBB
Positive
Standard & Poor's
BBB+
BBB
Stable
(a) Capitalization excludes short-term debt and
adjustments for VIEs
JP Morgan Corporate Access |
 30
Potential for High Voltage Transmission Growth
A.
JEC to Iatan
Energy Center
B.
JEC to Concordia
C.
Concordia to
Salina
D.
Salina to Hays
E.
JEC to Swissvale
F.
Hutchinson to
Spearville
G.
Wichita to Rose
Hill
H.
Wolf Creek to
Emporia
F
G
A
B
C
E
D
H
JP Morgan Corporate Access |
 31
Westar’s Value Proposition
•
Solid, transparent business strategy
•
Strong, experienced utility management team
•
Thoughtful, disciplined approach to operations, capital planning
and financing
•
Constructive regulatory and policy environment
–
Results in lower prices for customers
–
Provides investors clarity
•
Focus on containing risks and maintaining returns
•
Diverse customer base and stable service territory
JP Morgan Corporate Access |
 32
Rates and Regulation
JP Morgan Corporate Access |
 33
Regulatory Approach
•
A sound regulatory and energy policy platform
–
KCC and FERC
•
Ultimately results in lower rates for customers
Time
Traditional GRC
Riders coupled with GRC
Ultimately,
lower rates
JP Morgan Corporate Access |
 34
Methods of Cost Recovery
Revenue Requirement
Method of Recovery
Comment
1.
Fuel, purchased power and
environmental consumables
Quarterly adjustment based on
forecasted cost, with annual true-up
Adjusts prices for actual costs,
protecting both customers and
investors from mispricing
2.
Environmental capital
Environmental Cost Recovery Rider
adjusts annually
Allows annual price adjustment to
reflect capital costs for investments
in emission controls
3.
Transmission rate recovery
FERC formula rate adjusts annually;
companion retail tariff to reflect
current revenue requirement
Timely recovery of transmission
system operating and capital costs
4.
General capital investments
Traditional rate case, but with
predetermination and CWIP
Typical rate case reflects current
level of operating expenses and
most recent plant investment
5.
Property taxes
Annual adjustment to reflect current
property taxes
Allows timely recovery of actual
property tax costs in current rates
6.
Extraordinary storm damages
Traditionally deferred accounting
treatment as rate base
Smoothes period expenses for
extraordinary storm restoration costs
7.
Pension expenses
Deferred as a regulatory asset for
subsequent recovery
Smoothes period expenses in
excess of amount in base rates
8.
Energy efficiency programs
Deferred as a regulatory asset for
subsequent recovery
Smoothes period expenses for
energy efficiency programs
JP Morgan Corporate Access |
 35
Retail Energy Cost Adjustment (RECA)
•
Provides timely price adjustments for fuel and purchased power
costs
•
Retail rates based on forecast of fuel and purchased power costs
and retail sales
–
Set quarterly
–
Difference between forecast and actual is deferred
•
Quarterly approach produces more stable prices
•
Annual settlement of deferred balance
•
RECA also used to rebate wholesale margins as a credit to retail
cost of service
–
Energy Marketing (i.e., non-asset) margins continue to be excluded
from rate setting
JP Morgan Corporate Access |
 36
Environmental Cost Recovery Rider Mechanics
•
ECRR adjusts retail rates annually to reflect capital investments in
emission controls
–
Investments as of December 31 recovered in rates subsequent June
–
Eliminates need to file a rate case to capture rate base additions
•
Return of
and on
capital that is in service December 31
•
Return on
capital not yet placed in service December 31 (i.e., CWIP)
•
ECRR reduces regulatory lag
–
Regulatory lag limited to months, rather than longer lag typically
associated with traditional rate case filings
JP Morgan Corporate Access |
 37
Illustrative ECRR Mechanics
(1)
Illustration reflects only the projects publicly announced and assumes
one-half of annual investment in service at year end (2)
Illustration uses 12% pretax return and 4% depreciation
recovery (3)
Annual ECRR Tariff is effective June 1; assume Jan-May at prior year revenue
requirement and Jun-Dec at new revenue requirement JP Morgan Corporate
Access Clean Air Investment (1)
2008
2009
2010
2011
2012
2013
Year 1 Investment
238.4
$
Year 2 Investment
85.2
$
Year 3 Investment
111.7
$
Year 4 Investment
244.1
$
Year 5 Investment
375.1
$
Year 6 Investment
349.4
$
Environmental Investment
238.4
$
323.6
$
435.3
$
679.4
$
1,054.5
$
1,403.9
$
Accumulated Depreciation Clean Air Investment
Depreciation on Year 1 Investment
4.8
$
9.5
$
9.5
$
9.5
$
9.5
$
9.5
$
Depreciation on Year 2 Investment
1.7
3.4
3.4
3.4
3.4
Depreciation on Year 3 Investment
2.2
4.5
4.5
4.5
Depreciation on Year 4 Investment
4.9
9.8
9.8
Depreciation on Year 5 Investment
7.5
15.0
Depreciation on Year 6 Investment
7.0
Annual Depreciation
4.8
$
11.2
$
15.2
$
22.3
$
34.7
$
49.2
$
Total Accum
Depreciation for Environmental Investment
4.8
$
16.0
$
31.2
$
53.5
$
88.2
$
137.3
$
Environmental Investment, net of Accum. Depreciation
233.6
$
307.6
$
404.1
$
625.9
$
966.3
$
1,266.6
$
Return on
prior YE investment balance (2)
28.0
$
36.9
$
48.5
$
75.1
$
116.0
$
Return of
prior YE investments completed
4.8
11.2
15.2
22.3
34.7
Annual ECRR Revenue Requirement
32.8
$
48.2
$
63.7
$
97.4
$
150.6
$
Estimated calendar year revenue recognition (3)
19.1
$
41.8
$
57.2
$
83.3
$
128.5
$
Cumulative ECRR revenue recognition
19.1
$
60.9
$
118.1
$
201.4
$
329.9
$ |
 38
Transmission Cost Recovery
•
FERC formula transmission rate
–
Changes in cost of service reflected in annual update of FERC tariff
•
Update posted each October using projected test year
–
Capital expenditures
–
O&M
–
Tariff based on year-end consolidated capital structure
•
FERC transmission changes effective January 1
•
Allowed ROE 11.3%
•
Annual true-up compares projected revenue requirement to actual, with
difference incorporated into next update
–
Incentives on recently completed central Kansas line
•
12.3% ROE
•
Accelerated book depreciation of 15 vs. 45 years
•
Transmission Delivery Charge (TDC)
–
Retail rates adjusted to match changes to FERC tariff
JP Morgan Corporate Access |
 39
Transmission Formula Rate Mechanics
•
Fixed formula with changing inputs
–
Updated annually using Form 1 data
–
Established protocols for updates
•
Uses projected test year
–
Rate base (based on 13 month average)
–
O&M, depreciation and taxes
–
Cost of debt
•
Annual true-up
incorporated in subsequent year’s formula inputs
Establish
Proj. 2011
Rev. Req.
Establish
Proj. 2012
Rev. Req.
Start of 2012
Rate Year
Start of 2011
Rate Year
FERC
Form 1
Released
True-up between ’10
Proj. Rev. Req. and
Actual Rev. Req.
Transmission Formula Rate Time Line
JP Morgan Corporate Access |
 40
Statutes for Predetermination and CWIP
•
Predetermination
–
Utilities can obtain order establishing ratemaking principles that will
apply over the life of the asset
•
Construction Work in Progress (CWIP)
–
Utilities can include CWIP in rate cases
JP Morgan Corporate Access |
 41
Pension Tracker
•
Defer as regulatory asset shortfall between funding of GAAP
pension/OPEB expense and pension/OPEB currently authorized
in rates
•
Maintain minimum funding level equal to GAAP pension/OPEB
expense
•
Recover deferred expenses through multi-year amortization as
part of next rate case
JP Morgan Corporate Access |
 42
Energy Efficiency Initiatives
•
SmartStar Lawrence smart grid project
–
Installing
<
48,000
“smart”
meters
–
Advanced outage management system
–
Total
project
cost
of
<
$40
million
•
Reduced by 50% DOE match
–
Expect to implement over 2 -
3 years
•
Deferred accounting for the cost of energy efficiency initiatives,
such as
–
Smart thermostats
–
Customer educational programs
–
Demand response programs
JP Morgan Corporate Access |
 43
Kansas’
Renewable Requirements
•
Renewable Portfolio Standard established
–
Installed capability standard in lieu of energy standard
•
10%
of
peak
load
by
2011,
15%
by
2016
and
20%
after
2020
–
Implies additional 150 to 200 MW for Westar
–
If generated in Kansas, treated at 110% of requirement
–
Relief from standard possible if costs would increase prices >1%
•
Potential to offset with RECs for initial period
•
Limited net metering
–
Limited to 1% of peak demand
–
Customer’s net metered sales can’t produce net negative sales
•
Environmental predictability
–
Legislation precludes state air emission levels from being more
stringent than federal standards
JP Morgan Corporate Access |
 44
Capital Structure for Ratemaking (Per Recent Orders)
Capitalization
Ratio
Cost of
Capital
Weighted Cost
of Capital
Pre-tax Weighted
Cost of Capital
Long-term debt
48.66%
6.55%
3.19%
3.19%
Preferred
0.51
4.55
.02
.04
Common
50.83
10.40
5.29
8.77
100.00%
8.50%
12.00%
Capitalization
Ratio
Cost of
Capital
Weighted Cost
of Capital
Pre-tax Weighted
Cost of Capital
Long-term debt
52.38%
6.13%
3.21%
3.21%
Preferred
0.45
4.52
.02
.03
Common
47.17
11.30
5.33
8.82
100.00%
8.56%
12.06%
KCC
FERC Transmission
(1) Incentive ROE of 12.3% for applicable rate base
(1)
JP Morgan Corporate Access |
 45
Background
JP Morgan Corporate Access |
 46
Westar Energy Legal Structure
Kansas Gas and
Electric Company
Consolidated capital
structure is used for
ratemaking
(Rate regulated utility)
(Rate regulated utility)
Westar Energy, Inc.
Parent
Subsidiary
Combined company
does business under
the name “Westar
Energy”
JP Morgan Corporate Access |
 47
Westar’s Generating Resources
JP Morgan Corporate Access
Indicates proposed facility |
 48
Westar’s Plants
Westar's
MW
Operator
Years Installed
Pulverized coal
Jeffrey Energy Center
1,992
Westar
1978, 1980, 1983
Lawrence Energy Center
531
Westar
1954, 1960, 1971
Tecumseh Energy Center
205
Westar
1957, 1962
LaCygne Station
709
KCPL
1973, 1977
Nuclear
Wolf Creek
544
WCNOC (1)
1985
Gas steam turbine
Gordon Evans Energy Center
539
Westar
1961, 1967
Hutchinson Energy Center
167
Westar
1965
Murray Gill Energy Center
293
Westar
1952, 1954, 1956, 1959
Gas combustion turbine
Abilene Energy Center
68
Westar
1973
Gordon Evans Energy Center
294
Westar
2000, 2001
Hutchinson Energy Center
230
Westar
1974, 1975
Spring Creek Energy Center
279
Westar
2001
Tecumseh Energy Center
37
Westar
1972
Emporia Energy Center
663
Westar
2008, 2009
Gas combined cycle
State Line
201
EDE Co.
2001
Wind
Meridian Way
96
Horizon (2)
2008
Central Plains
99
Westar
2009
Flat Ridge
100
Westar (3)
2009
Available generation
At Dec. 31, 2009
7,047
(1)
Wolf Creek Nuclear Operating Company is a company formed specifically to operate
Wolf Creek for its owners. WCNOC is governed by a board of directors
consisting of the CEO of WCNOC and senior executives of the plant
owners. (2)
100% of generation purchased under Power Purchase Agreement (PPA)
(3)
50% owned and 50% of generation purchased under PPA from BP Alternative
Energy Westar Energy
2010 Results
NERC
5-Year Average
Plant Performance
JP Morgan Corporate Access |
 49
Low-Cost Coal Fleet
•
Very low fuel cost
–
PRB coal
–
Excellent rail arrangements
–
Proximity to mines
•
Low embedded capital cost
•
No high-heat rate obsolete
plants
LAC 2 subject to lease agreement
JP Morgan Corporate Access
$0
$150
$300
$450
$600
Low Embedded
Cost
5,000
7,000
9,000
11,000
13,000
Heat Rate |
 50
Westar Energy Coal Fleet
Unit
Capacity
(MW)
WR Share
(MW)
Age
Heat Rate
(Btu/kWh)
Net Book
Value
(Millions)
$/KW
Jeffrey 2
725
667
30
11,256
200
$
300
$
Jeffrey 1
722
665
32
11,204
216
$
325
$
Jeffrey 3
716
659
27
11,265
325
$
493
$
Lawrence 5
371
371
39
10,713
72
$
194
$
La Cygne 1
736
368
37
10,497
117
$
318
$
La Cygne 2
(a)
682
341
33
10,500
14
$
41
$
Tecumseh 8
129
129
48
11,189
16
$
124
$
Lawrence 4
108
108
50
11,605
41
$
380
$
Tecumseh 7
73
73
53
11,749
28
$
384
$
Lawrence 3
50
50
56
11,707
26
$
520
$
3,431
(a) Subject to lease agreement
JP Morgan Corporate Access |
 51
Westar Coal Fleet Emission Control Equipment
Unit
Scrubber
Precipitator
Fabric Filter
Low NOx
SCR
Jeffrey 1
Yes
Yes
No plans
Yes
Planned
Jeffrey 2
Yes
Yes
No plans
Planned
No plans
Jeffrey 3
Yes
Yes
No plans
Yes
No plans
La Cygne 1
Yes
NA
Planned
Yes
Yes
La Cygne 2
Planned
Yes
Planned
Planned
Planned
Lawrence 3
No plans
Yes
No plans
Planned
No plans
Lawrence 4
Yes
NA
Planned
Planned
No plans
Lawrence 5
Yes
NA
Planned
Planned
No plans
Tecumseh 7
No plans
Yes
No plans
Yes
No plans
Tecumseh 8
No plans
Yes
No plans
Planned
No plans
NA - Not Applicable
No present projects underway for CO2
JP Morgan Corporate Access |
 52
Dramatic Improvement in Air Quality
0
40
80
120
2005
2006
2007
2008
2009
2010
20
40
60
2005
2006
2007
2008
2009
2010
Sulfur
Dioxide
76%
(000 tons)
Nitrogen
Oxide
49%
(000 tons)
JP Morgan Corporate Access |
 53
Westar-operated plant supply (80%)
•
JEC supply under contract through 2020 (10+ million tons/year)
–
70% has no market openers
–
30% reopened on price every 5 years
•
Next re-pricing will occur in 2013
–
All volumes have cost escalators
–
Rail contract through 2013
•
LEC/TEC supply under contract until 2012 (3.5 million tons/year)
–
100% at fixed price or capped through 2012
–
Rail contract through 2013
Co-owned plant supply managed by GXP (20%)
•
LAC supply (3 million tons/year)
Coal
Supply
JP Morgan Corporate Access |