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Great Plains Energy Reports Full-Year And Fourth Quarter Results For 2012

Common stock outstanding for the quarter averaged 153.5 million shares, approximately 10 percent higher than the same period in 2011 primarily due to the settlement of the purchase contracts underlying the Equity Units.

Electric Utility Segment Full-Year:

The Electric Utility segment includes KCP&L and the regulated utility operations of GMO. Full-year 2012 net income was $216.6 million or $1.47 per share compared to $199.9 million or $1.44 per share in 2011.

Contributing factors influencing the segment results included the following:
  • A $40.4 million increase in pre-tax gross margin (a non-GAAP financial measure described in Attachment A) mainly due to:
    • An estimated $46 million from the new retail rates in Missouri effective in the second quarter of 2011;
    • Results in 2011 that included an estimated $16 million impact from Missouri River flooding and approximately $11 million for the extended refueling outage at Wolf Creek; and
    • About $6 million from favorable weather.The above factors were partially offset by the following:
    • Approximately $23 million due to unfavorable weather-normalized demand;
    • The estimated impact of about $14 million in other margin from lower KCP&L Missouri wholesale sales margin along with increased fuel and transmission expense, partially offset by favorable purchased power expense at KCP&L in Missouri, where there is no fuel recovery mechanism; and
    • About a $4 million impact from the first quarter 2012 unplanned outage at Wolf Creek.
  • A $2.8 million decrease in pre-tax other operating expenses driven by the following:
    • Approximately $14 million from lower plant operating and maintenance expenses primarily due to planned plant outages, other than Wolf Creek, with longer durations in 2011 than in 2012;
    • Results in 2011 that included (a) an estimated $6 million loss representing KCP&L’s and GMO’s combined share of the impact of disallowed construction costs for the Iatan 1 environmental retrofit and Iatan 2 projects and other costs as a result of MPSC rate case orders issued in 2011; and (b) an estimated $3 million from flood related expenses; and
    • The 2011 results included expenses of $2.7 million associated with solar rebates and in 2012 $3.0 million was deferred to a regulatory asset.The other operating expense factors above were partially offset by an estimated $13 million increase in Wolf Creek operating and maintenance expense and approximately $11 million from higher general taxes.
  • The 2011 results were impacted by a $12.7 million pre-tax expense for an organizational realignment and voluntary separation program. In 2012, $4.3 million of this expense was deferred to a regulatory asset for recovery in rates beginning January 1, 2013, as a result of the rate case order issued in December 2012 by the Kansas Corporation Commission (KCC);
  • A $0.8 million decrease in pre-tax depreciation and amortization expense driven by the absence of approximately $14 million of regulatory amortization to maintain credit metrics for KCP&L in Missouri during the Comprehensive Energy Plan that ceased with the implementation of new retail rates for KCP&L in Missouri in May 2011, almost entirely offset by increased depreciation of about $6 million for Iatan 2 and other capital additions;
  • An $11.2 million increase in pre-tax non-operating expenses driven by the impact of approximately $4 million due to accounting effects at GMO from the rate case order issued in January 2013 by the MPSC as well as other increased expenses from non-regulated activities;
  • A $20.4 million increase in pre-tax interest expense mainly due to the absence of approximately $22 million of Iatan 2 carrying cost; and
  • A $12.7 million increase in income tax expense due to higher pre-tax income.

Overall retail megawatt hour (MWh) sales were down approximately 1.8 percent compared to 2011 with the decline driven by lower weather-normalized demand. On a weather-normalized basis, retail MWh sales decreased an estimated 1.3 percent primarily due to decreases in the residential and commercial sectors.

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