Kansas City Power & Light Company and KCP&L Greater Missouri Operations Company (GMO, formerly Aquila, Inc.), subsidiaries of Great Plains Energy Incorporated (NYSE: GXP), today filed rate increase requests with the Missouri Public Service Commission (MPSC) to increase base rates for electric service in its three Missouri service areas. KCP&L’s average retail electric rates range between 10% and 29% below the national average. The rate increase request process takes approximately 11 months in Missouri. New rates are anticipated to be effective in late January 2013.
“We strive to provide the most reliable electric service possible while keeping our rates well below the national average,” said Terry Bassham, KCP&L President and Chief Operating Officer. “The costs to produce and reliably deliver electricity in our region have increased significantly. We know any rate increase impacts our customers, so we have worked hard to minimize the amount of our requests by aggressively managing our costs. We have reduced our operating costs by millions of dollars through reducing our workforce, maintaining operating budgets and creating more efficient work processes throughout our company.”
Despite cost savings measures implemented by KCP&L over the last several years, the costs of doing business have outpaced the company’s ability to maintain its current rates. Among the drivers for the increase are the significant investments the company has made to replace aging infrastructure. These upgrades were needed in order to maintain reliability and reduce outage times. The company also continues to make investments to ensure compliance with state and federal renewable energy and environmental mandates.
KCP&L recognizes that any cost increase presents challenges for customers, particularly low-income and senior customers or those on a fixed income. As a result, KCP&L is seeking to expand its popular Economic Relief Program as a part of this rate increase request. Launched in 2010, the Economic Relief Program was designed to offer bill payment assistance to low-income customers and offers a credit of up to $50 per month for 2,000 qualifying Missouri customers in need of financial assistance. Customers must meet the income requirements and be current on their bill.
Currently, the program is scheduled to end in September 2012. If the expanded program is approved, KCP&L will more than double the number of openings in the program and include a focus on senior citizens.
“The Economic Relief Program has really caught on and has been a tremendous help to thousands of elderly and fixed income households,” said Cheryl Price, Salvation Army Social Services Program Director. “With the $50 savings each month, these families can purchase needed food and prescription medicines they might otherwise forego due to budgetary constraints.”
In addition to the Economic Relief Program, KCP&L offers low-income weatherization, medical customer programs and other energy assistance programs for customers needing help paying their bills. The company also provides payment assistance for all customers, including budget billing, adjustable due dates and flexible payment arrangements.
Rate Increase Requests by Service Area
Each of the Missouri jurisdictions doing business as KCP&L have individual rates and the company has filed separate rate increase requests for each service area. Rate increase requests reflect recovery of actual costs to serve each geographic area. The following table lists the rate increase request information, broken out by jurisdiction:
|Rate Jurisdiction*||Rate Increase|
Daily Increase For
|GMO (MPS)||$58.3 million||10.9%||27 cents|
|GMO (L&P)||$25.2 million||14.6%||36 cents|
|KCP&L (MO)||$105.7 million||15.1%||48 cents|
* Rate Jurisdiction Areas:
- GMO (MPS): Represents the area served by the former Aquila Missouri Public Service division.
- GMO (L&P): Represents the area served by the former Aquila St. Joseph Light & Power division.
- KCP&L (MO): KCP&L Missouri customers (not in former Aquila service territory).
** Based on Missouri Standard Bill Calculation, a typical residential customer uses a monthly average of 1150 kWh in the summer and 760 kWh in the winter.
KCP&L Greater Missouri Operations Company (GMO) – (Former Aquila service areas)
One of the drivers of these rate increase requests is the need for additional generation capacity in the GMO MPS and GMO L&P service areas. Rather than only building additional power plants, KCP&L believes that energy efficiency is the cheapest and cleanest way to meet this customer demand. By offering customers a variety of energy efficiency programs that reduce overall electric use, KCP&L will be able to continue to meet the growing energy needs of these customers using the lowest cost and cleanest resource. At the same time, energy efficiency helps local businesses become more competitive by reducing their costs and over time helps reduce the need for rate increases for all customers. Energy efficiency programs also aid the local economy by providing work for local plumbers, electricians and contractors.
KCP&L is also requesting to recover increased investment in electrical infrastructure. This continuous investment is necessary to maintain reliable electric service for all customers. Over the last few years, KCP&L has spent significant increased amounts of money to improve and modernize substations, replace aging infrastructure and equipment and increase automation. KCP&L customers benefit from reduced outage times and improved reliability in these areas of its system.
In addition to transmission and distribution system investments, the company seeks to recover costs made to meet stricter environmental and renewable energy regulations, including costs to build a landfill gas-to-energy plant in St. Joseph, Mo. and install emissions reduction equipment at several power plants.
In the KCP&L Missouri service area, rising fuel prices, the low cost of natural gas and new environmental and renewable mandates have combined to outpace the company’s ability to maintain its current rates for customers. Despite KCP&L’s efforts to manage internal costs, every year it becomes more expensive to produce and deliver electricity.
For example, transmission costs and fees continue to rise across the region. In order to improve the region’s electrical grid and allow for the delivery of renewable energy to the area, KCP&L needs to invest and build more transmission infrastructure. KCP&L also has invested in additional renewable generation to meet state mandates. Costs related to renewable energy projects, including solar and wind projects, are included in this rate increase request. Missouri’s Renewable Energy Standard requires at least 5% of the electricity provided by investor-owned utilities to their Missouri customers to come from renewable resources by 2014 and 10% by 2018. The projects included in the company’s rate increase request will allow KCP&L to continue to meet the state’s requirement.
KCP&L customers enjoy some of the most reliable electrical service in the country, and the company has been named the most reliable electric utility in our region for four years in a row. In order to maintain this award-winning reliability, KCP&L is constantly making improvements and upgrades to its system. By replacing equipment and improving technology, KCP&L is preparing to meet the energy needs of the future while ensuring it continues to meet demand today.
For decades, KCP&L has been able to maintain some of the lowest rates in the country. However, the energy environment and economy in the region are more challenging than ever. Currently, KCP&L customers receive reduced electric rates when KCP&L sells electricity to other utilities and regions of the country. Since 2007, KCP&L customer rates have been reduced by more than $219 million. A challenging regional economy and low natural gas prices has significantly decreased the amount of electricity KCP&L is able to sell outside of its service territory, which has reduced this benefit to customers.
About Great Plains Energy:
Headquartered in Kansas City, Mo., Great Plains Energy Incorporated (NYSE: GXP) is the holding company of Kansas City Power & Light Company and KCP&L Greater Missouri Operations Company, two of the leading regulated providers of electricity in the Midwest. Kansas City Power & Light Company and KCP&L Greater Missouri Operations Company use KCP&L as a brand name. More information about the companies is available on the Internet at: www.greatplainsenergy.com or www.kcpl.com.
Statements made in this release 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 capital projects and other matters affecting future operations. In connection with the safe harbor provisions of the Private Securities Litigation Reform Act of 1995, Great Plains Energy and KCP&L 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 economic recovery, prices and availability, of electricity in regional and national wholesale markets; market perception of the energy industry, Great Plains Energy and 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, including but not limited to cyber terrorism; 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; the inherent uncertainties in estimating the effects of weather, economic conditions and other factors on customer consumption and financial results; ability to achieve generation goals and the occurrence and duration of planned and unplanned generation outages; delays in the anticipated in-service dates and cost increases of generation, transmission, distribution or other projects; the inherent risks associated with the ownership and operation of a nuclear facility including, but not limited to, environmental, health, safety, regulatory and financial risks; workforce risks, including, but not limited to, increased costs of retirement, health care and other benefits; 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 quarterly reports 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.