Why This Plan Makes Good Financial Sense
Putting all of the elements of this comprehensive plan into place will cost more than $1 billion. To fund these efforts, KCP&L asked regulators in Missouri and Kansas to approve a multi-year plan. The plan recognizes that rate adjustments will be needed in the future to accommodate investments of this magnitude. The first rate case was filed in 2006, with rate adjustments going into effect for customers in 2007. The last rate case defined in the agreements is expected to be filed in 2009, with rates effective around the time the coal plant goes into service. Two additional rate cases could be filed in 2007 and 2008. The Kansas agreement allows KCP&L to recover - on a dollar-for-dollar basis with no profit to the company - fuel and purchased power expense through an energy charge took effect for Kansas in 2007. A similar interim energy charge, based on forecasted costs and subject to refund, took effect for Missouri customers, also in 2007. The agreements allow KCP&L to sell emission allowances and authorizes regulatory treatment of certain revenue and expense items, including pension expenses, designed to support the investment in the plan and the company's credit quality. The actual amount of costs to be recovered through rates will be determined by the Missouri Public Service Commission and Kansas Corporation Commission in these rate cases. KCP&L projects that, if the entire cost of the plan is included in rate base, the rate increases to support the five year energy plan and projected increases in operating costs would average approximately 3-4% annually, over the same period. We continue to be committed to providing customers with electricity rates that are significantly below what consumers pay in other parts of the country.
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