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Great Plains Energy Incorporated's CEO Discusses Q1 2012 Results - Earnings Call Transcript

We remain focused on executing our 2013 target to reduce regulatory lag of 50 basis points of allowed ROE. Last month, we filed a general rate case in Kansas with a requested increase in rates of approximately $64 million. We recognized these are difficult economic times and asking for a rate increase is not something we take lightly. We are seeking recovery to maintain a reliable electric system and make renewable energy and environmental investments needed to meet future state and federal renewable energy and emission control mandates. Terry will provide more details around the rate case filings in his comments.

Last month was an active month for us as we also announced the formation of Transource Energy, a joint venture with American Electric Power. Transource will pursue competitive transmission projects that fall within the scope of FERC Order 1000. The order facilitates competition, and will foster a national perspective of the market. The initial focus of Transource, of which we own 13.5% share, will be on new projects in the Southwest Power Pool, Midwest Independent Transmission System Operator and PJM Interconnection, with expansion to other regional transmission organizations, or RTOs, as markets mature.

In addition to exclusively agreeing to pursue new FERC Order 1000 projects, we will also seek regulatory approval to novate 2 of our Southwest Power Pool regional projects to Transource. We believe that by partnering with AEP, a recognized leader in the transmission business, Great Plains Energy will be well positioned to compete in the emerging competitive transmission market, while very importantly, further diversifying our earnings and footprint.

So with that, I'd like to introduce Terry, who will provide an update on regulatory and operational activities.

Terry Bassham

Thanks, Mike, and good morning, everyone. Turning to Slide 6. I will spend a few minutes here discussing our rate case filings, performance at our plants and customer consumption. As Mike indicated in April, we filed a rate case in Kansas requesting an increase of approximately $64 million, reflecting an ROE of 10.4%. The test during the case is a 12-month period ending December 31, 2011, where certain non-immeasurable changes projected through June 30, 2012. New rates are anticipated to be effective January 1, 2013. Equity ratio of approximately 51.8% is slightly lower than the ratio in our Missouri rate cases, reflecting a different true-up date. The rate base included in this filing is approximately $40 million higher than at the conclusion of the last rate case, reflecting an increase of approximately 2%. This increase includes approximately $66 million for construction work in progress, or CWIP, on La Cygne environmental upgrade and approximately $51 million for the Kansas jurisdictional share of our 48 megawatts Spearville 2 Wind Facility. Additions to rate base were partially offset by an increased in accumulated deferred income tax as a result of bonus depreciation.

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