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» Great Plains Energy Incorporated's CEO Discusses Q4 2011 Results - Earnings Call Transcript
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» Great Plains Energy Incorporated's CEO Discusses Q1 2011 Results - Earnings Call Transcript
Before we begin, I must remind you of the inherent uncertainties in any forward-looking statements in our discussion this morning. Slide 2 and the disclosure in our SEC filings contain a list of some of the factors that could cause future results to differ materially from our expectations.I also want to remind everyone that we issued our earnings release and first quarter 2012 10-Q after the market closed yesterday. These items are available along with today's slides and supplemental financial information regarding the quarter on the main page of our website at www.greatplainsenergy.com. With that, I'll now turn the call over the Mike Chesser. Michael J. Chesser Thanks, Kevin, and good morning, everyone. We appreciate you joining us this morning. I know it's a busy time. I hope you had an opportunity to read the earnings release we issued yesterday. We announced a loss of $9.5 million or $0.07 per share compared with an earnings of $2 million or $0.01 per share last year. Weather during the quarter had a significant impact on our earnings. Heating degree days were down 34% versus last year and down 27% versus normal. In fact, it was the first -- warmest first quarter for the Kansas City region in more than 80 years. We were also negatively impacted by an unplanned outage at Wolf Creek. As we disclosed during our 2011 year-end webcast, a breaker failure in a substation located at Wolf Creek led to an unplanned outage in January. The plant remained offline to address the interruption and implement necessary corrective actions before returning to service in late March. The unit has performed well since returning to service, and particularly, as we head into the peak summer season. Despite these challenges in the first quarter, we believe we are positioned to deliver earnings within our guidance range. As a result, we are affirming our 2012 earnings guidance range of $1.20 to $1.40 per share. As a reminder, the current guidance range was updated in late February when we had a directional view of the first quarter. Jim will provide more detail on the quarter in his comments.
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. Read the rest of this transcript for free on seekingalpha.com