Kansas City Power & Light Company, a subsidiary of Great Plains Energy Incorporated (NYSE: GXP), today filed a rate increase request with the Kansas Corporation Commission (KCC) to increase base rates for electric service in its Kansas service area. The company is seeking to raise rates 12.9%. If approved, the daily increase for a typical residential customer is expected to be $0.41. The rate increase request process takes approximately eight months in Kansas. New rates will not be effective until January 2013.
“While KCP&L continues to manage costs and minimize the amount and impact of any rate increase on our customers, the costs associated with generating and delivering electricity continue to increase,” said Terry Bassham, KCP&L President and Chief Operating Officer. “Specifically, our investments in additional renewable energy and environmental upgrades at our existing facilities are important steps to building a balanced generation portfolio and ensuring that we are doing our part to improve regional air quality.”
Among the drivers for the increase are the significant investments the company has made at its generating facilities that will allow KCP&L to meet future state and federal renewable energy and emissions control mandates. These investments include additional wind generation in Spearville, Kansas and environmental upgrades at its La Cygne Generating Station, one of the company’s largest coal-fired generating facilities.
Wind energy facility in Spearville, Kansas
The company’s first wind facility in Kansas, named Spearville 1, was constructed in 2006 and consists of 67 wind turbines producing 100.5 MW of electricity—enough to serve approximately 33,000 homes. That facility is already reflected in customer rates today.
The Kansas Renewable Energy Standards Act, passed by the Kansas Legislature in 2009, requires KCP&L to have 15% of its capacity provided by renewable resources by 2016 and 20% by 2020.
As a result, the company needed to add additional renewable energy to its portfolio in order to help meet the requirement. KCP&L added an additional 32 wind turbines, producing 48 MW of emission-free electricity. The new facility, known as Spearville 2, has been generating energy and serving customers since late 2010. The cost of this facility is included in this rate increase request.
Environmental upgrades at La Cygne Generating Station
KCP&L is in the process of making significant environmental upgrades at the La Cygne Generating Station, a coal-fired power plant which is jointly owned by KCP&L and Westar. The two units at La Cygne make up the second largest station in KCP&L’s system and produce 1,400 MW of electricity. This station plays a vital role in ensuring that the company can continue to provide affordable, reliable electricity to customers in the future.
Included in this rate increase request are costs that have been incurred to date to construct and install air quality control equipment at the La Cygne station. These upgrades are required to meet future state and federal environmental regulations and include installation of a new chimney to serve both units, baghouses (which reduce particulate matter) and a selective catalytic reduction (SCR) system on Unit 2 (which works to significantly reduce nitrous oxide emissions). A SCR system was installed on La Cygne Unit 1 in 2007.
In order to determine the best way to continue to serve customers’ electricity needs today and for decades to come, KCP&L considered several options for meeting the environmental regulations, including retrofitting the unit for natural gas as a fuel source and shutting down the plant. Making the environmental upgrades and continuing to operate the coal-fired unit proved to be the lowest cost option for customers. The environmental equipment being installed will significantly reduce emissions and improve regional air quality. In August 2011, as part of a predetermination case in Kansas, the KCC approved the project and cost estimates. Construction is underway and the project is expected to be completed in June 2015.
Reliability and other investments
In addition to the significant investments in its generation facilities, KCP&L is requesting to recover costs related to increased investment in and maintenance of its electrical infrastructure. This investment was necessary to maintain reliable service for its Kansas customers. Over the last several years, the company has made infrastructure improvements to the transmission and distribution systems, including improving and modernizing substations, replacing aging equipment and increasing automation. KCP&L customers benefit from reduced outage times and improved reliability in these areas of its system.
As part of this rate case filed today, KCP&L is requesting that the KCC approve a change to depreciation rates to reflect the large increase in plant in service that has been added. In addition, new depreciation rates would more accurately allocate costs to the customers who benefit from the use of the assets. The company is also requesting a change to the current method of allocating costs between its Kansas and Missouri jurisdictions to better reflect the company’s summer peaking business.
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.