ML20003H543

Annual Financial Rept 1980.KS Electric Power Cooperative,Inc Exam Rept Encl

ML20003H543
Person / Time
Site:	Wolf Creek
Issue date:	03/01/1981
From:	KANSAS CITY POWER & LIGHT CO.
To:
Shared Package
ML20003H539	List: ML20003H538 ML20003H542 ML20003H543
References
NUDOCS 8105060296
Download: ML20003H543 (55)

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Kansas City Power & Light Company Annual Report 1980 1980 Highlights * !atan Unit goes commercial; most effident coal-fired unit.

• Summer heat storm produces gains in sales, revenue; confirms need for latan Unit.

• !atan Unit investment exc uded from Missouri rate base; MPSC action challenged.

• Revenue increases of $49.6 million granted in Missouri; interim increase of $24.5 million in Kansas.

• Wolf Creen Unit 70 percent finished; completion date delayed to 1984.

• KCC approves KEPCo purchase of Wolf Creek Unit share; but conditions may prohibit sale.

Percent Operating increase Highiights Electric Utility Data (000s) 1980 1979 (Decrease)

E!ectnc Revenues S 440,182 $ 365.084 20.6 %

Grcss Ada;ticrs to P! ant S 156,604 5 234.758 (33 3%)

Tctal Diant S 1,287,913 S 1.036.161 24.3 %

Constructicn Work + Progress S 419,171 5 516.845 (18 9%)

Total Company Data Earnings for Cornmon Stock (000s) S 56,283 5 33.180 69 6 %

Average Shares Outstana:ng 12,915,770 11.009,407 17 3%

Earnings Per Share S 4.36 5 3 01 449%

Dividends Per Share S 2.69 S 2.635 2.1%

i Ecck Value Per Share (year ena) S 31.68 S 31 95 (08%)

Return on Year End Equity 13.2% 8.9% 48 3%

8,593,595 8.218.385 4.6%

Selected Kilowatt Hour Sales (000s)

Statistics Peak Lead (Kw)

Summer 2,198,000 1,964.000 11.9 %

Winter 1,299,000 1,317.000 (1.4%)

Fuel Mix (%)

Coal 93.5% 88 8% 5.3%

Fuel Oil .9% 3.7% (75.7%)

Natural Gas 5.6% 7.5% (25.3%)

Average Coal Cost (per mit!ien Stu) 100.1C 952C 4.8%

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s 4 On January 28,1981, we announced Robert A. Olson. KCPUs retired ,

plans for a comprehensive study of Chairman of the Board and Chief l vanous alternative and least cost' Executive Officer, who has well methods of supplying our customers served this Company dunng the l electric needs from the mid-1980s past 34 years, is no longer eligible i through the year 2000. This Lcng- under a Board retirement policy i i Range System Expansion Alterna- for nomination by the Board for tives Study will seek to design a reelection as a regular member.

strategy to delay as long as possi- To fill that vacancy. the Board has ,

ble, the construction of additional nominated KCPUs Chief Financial required generating capacity. and Officer. Louis C. Rarmossen, in :ts provide, at the same time, for more slate of nine nomineva for elec-efficient off-peak utilization of our tion at the 1981 annual meeting existing capacity Our purpose will of stockholders. Mr. Olson will be to restrain peak demand growth continue to serve the Company to less than the current annual 3.6 as an Advisory Direc'nr.

percent projection, which will perm;t deferral of our next capacity addition beyond 1989. The study March 1,1981 t

wiil consider vanous load manage.

For the Board of Directors ment programs, ir'cluding remote control of air cociing devices, to reduce on-peak electric usage. I A second part of the study wil!in- . ,

volve promotion of off-peak usage Chairman of the Board of elecinc energy to replace expen- F sive and dwinoling supplies of Pre h natur21 gas and fue! cil. pnncipally in soace heating and the electnc ,p, *'

vehicle. Such fuel switching is in kne with our national energy policy .

l ano will increase the efficient utiliza- [

tion of our existing capacity, there- ' O by minimizing KCPUs future electoc

! service rates.

Integral to the study will be public j input provided by a Citizens Advi- [

sory Planning Group, which will k review available data developed by our consultants and join our in- (% k

[f I

house Planning Committee in devel- ,

g oping our strategy for the fu'ure.  ;

KCPUs average cost per kilowatt .

hour declined throughout this h century poor to 1969. Since then, y [% A i

KCPUs res.dential electric rates ~~

have increased at a rate just about equal to the nse in the Kansas City # ,

Area Consumer Pnce Index or the rate cf inflation. In other words, there has been practically no increase in the real pnce of KCPUs residential e!ectric service. It is our expectation and hope that, with sound strategic planning. we will be able to maintain this result for the decaoe ahead.

i 3

To the Shareholders:

For KCPL.1980 financial results order. On August 6, we fded with vice to customers. This program showed substantialimprovement the Commission for an add.tional has been successful and in major over 1979 because of three maior increase of $45.4 million and re- part. extended indefinitely based factors: quested the $22 million related to on the outstanding response of our e The hottest summerin Kansas latan be made effective after an employees.

City in nearly half a century immediate evidentiary hearing on Cash construction expenditures for caused unprecedented res- the basis,of the new evidence, The 1980 tota!ed $125 million, down idential usage of electncity for Commission refused to grant that heanng and we promptly filed an from $205 rNhon in 1979. reflecting air cooling, in contrast witn the completion of the fatanUnit. For the unseasonably mild 1979 sum- acti n Federal cou o eq first time in almost a decade the mer. KCPL's reeved system peak 9 m as W me map demand of 2,198 megawatts. ter is stdl pendin9 in the Federal appe!! ate court. generating unit under construction.

sat on July 15. was 12 percent As a resuit, construction require-above the 1979 peak. Despite the Higher electric usage combined ments are expected to taper off depressant effect of economic with rate increases produced total over the next several years, recession on commercial and revenues of $446 mdlion, a gain of industrial electnc use. KCPL's 20 percent from $371 mdiionin e ee ear miU.s abat 4 1980 kdowatt hour sales 1979. The most pronounced effect 70 percent complete and commer-increased 4.6% over the al operabm is mw targeted for was on summer electnc bills and pnor year. revenues from residential customers, which in July were 134 percent en cessa ue to a agging

• Electnc retail rate increases construction timetable related to authonzed in 1980. totaling $74.1 aoove 1979.Out of concem for the cbvious impact this would have on a previocsty reported groundless m>llion annually. or about 20 per-concrete basemat problem. cold Cent, were in effect during the family budgets. cn July 15 we insti-weatner work delays, and uncer-high usage period. tuted an automatic pr, ment plan tainty about the acihty of the

• The outstanding 94.7 percent availabihty of our !atan Unit after

$e ay en of 5 per en of Nuclear Regulatory Commission s a @ kense their electric service bills with full it began commercial operation payment due October 15. Some applicanon on a timely bas;s. The on May 5 enabled the Company 17.000 customers took advantage ay am haweped dey to return from a net buyer to a of this plan' nges ave Meased LW es>

net seller position in interchange mated total cost of the project transactions with other efectric The most dramatic improvement to $1.7 billion. On that basis, the systems. The net imorovement in in 1980 financial results was in earn- installed cost of our agreed 41.5 the interchange picture for 1980 ings. W.th 1.9 mi!! ion additional percent. 477-megawatt-share was $48.7 million over 1979. shares outstanding, eamings per would be $1.373 per kilowatt.

Ironically, the Missoun Public Set- common share in 1980 were $4.36. On Octocer 30. the Kansas Corpo-vice Commission in its June 19 per. compared with $3.01 in 1979.

ration Commission authorized the manent rate order excluded some Cash eamings, which exclude the Kansas Electric Power Cooperative.

322 million from KCPUs revenue allowance for funds used dunng Inc., to purchase its planned 17 increase, finding the fatan Unit was construction, represented aoout 70 percent ownership in Wolf Creek.

not needed to serve KCPL's 1980 percent cf the common dividend but the order contained seveM Missouri customer requirermnts. paid. onerous conditions unacceptable However, the 1980 summer neat to tne part:es. In our opir on un!ess storm proved the latan capacity Or November 4. the Board of Directors increased the cuarterly these cmdWms are emsated was absolutely essential to meet- or substantially modified, the safe ing those customer needs and to common stock dividend to 69.5 cents per share, or $2.78 per share camot be consummated. he maintaining the continuity of service Company has joined KEPCo and on an annual basis. up from the on our system. Since then, the KG&E in applicat.ons for judicial Missoun Commission has repeat- pnct level of $2.66. It was the 21st rease s 23 years. review of the Commission s order edly denied the Company a hear- n the Kansas District Court. Addi-ing and an opportunity to present in light of the precipitous decline in tionally. the Kansas Senate has evidence on the record to prove our eamings cunng the last half of 1979 passed a bill which would elim:nate 1980 need for latan capacity On and forecasts for the first ha:f cf the need for KEPCo to secure a July 25, after Commission deniai 1980. we instituted an austenty pro- certificate frem the KCC. if sucn a cf our request for a reheanng, we gram on January 7.1980. to reduce bill is enacted into law. the closing acphed to the Missoun State Court cash expenditures without impairing of the sale to KEPCo could be con-for jucicial review of the June 19 the adecuacy and rehability of ser- cluded short!y thereafter.

2

on that concern, the Company insti- cost of electnc service, must be Commissions have held hearings tuted a plan on July 15 which ena- spread over fewer kilowatt hours and are currenuy considering bled all residential customers to pay use dunng the year. This raises the further adoption of PURPA guide-75 percent of their bills received cost of electric service on a per lines. However, the Act already through September 15, with full kilowatt hour basis and requces has had a significant impact on the payment due by October 15. More more rate increases than othereise application of recent rate increases than 17.000 customers tcok advan- would be necessary. Customer to KCPUs rate schedules. A gen-tage of this automatic extension reaction to the higher electnc rates eral" flattening"of rates has been plan and an equal number were causes more off-peak energy con- ordered by both commissions, sub-granted haroship extensions through servation, and the cycle repeats stantially increasing the electnc normal credit processes. in a ' Catch 22* fashion. The stock- bills of customers with high monthly holder sees wide swings in earn- use because of air cooling and For the four months June through space heating. The intentional pric.

September 1980. KCPUs total ings and the consumer in the amount of his bill ing signals received by KCPUs kilowatt hour sales were 18.8 per-PURPA's Pricing Signals customers in the summer of 1980 cent above 1979. Resider"ial usage may be modest compared to what jumped about 60 percent. but the in the Public Utility Regulatory total increase was tempered by Policies Act of 1978 (PURPA), the 9 9 n P P to a decline in kilowatt hour sales to Congress required state regulatory fully implemented in this area' manufactunng customers of almost commissions to consider changes 20 percent due to general adverse in electric rate designs. which KCPL's Approach economic conditions. During most manipulate pricing of electncity to The Company is opposing those of the remaining eight months of discourage energy usage. Those prooosed residential rate designs the year, customer usage actually required considerations include which, as a practical matter, would tagged sligntly behind 1979. For pricing electricity according to sea- place air cooling or space heating the 12 months. KCPUs total 1980 sonal and time-of-day usage. with beyond the cocket books of all kilowatt hour sales increased 4.6 the objective of stimulating energy but the wealthy. Moreover, during percent over 1979. conservation and reducing the use times of heat storms, this pos-of oil. We believe that such rate sibility would have ominous con-H.gner usage, together with rate designs wiu not induce our cus-increases granted during be year, sequences. In the Commission tomers to conserve electric use dur- heanngs. KCPL has encouraged resuited in annual electne revenues ing actual peak demand penods of $440 million. 21 percent more adoption of rate designs which which, on our system, are caused will continue to make electric ser-than in 1979. Earnings per share by customer air cooling loads- vice available during peak penods for 1980 were $4.36. an increase particularly dunng heat storras of $1.35 per snare above the. at reasonable averaga costs and When air cooling is essential in encourage off-peak use to mini-l previous year. many cases to survive. Such rate

, mize future electric rate increases.

The Peak Demand Dilemma designs may well reduce customer Enforced electric energy conserva-Tre demand, sales, revenues and electnc use both before and after, tion on our system dunng off-peak eamings picture outlined above but not during, the peak demand periods is not in the best interests j :llustrates the dilemma today facing penod. As a result, the Company of our customers, our stockholders

many elecinc utilities which serve must provide the capacity to meet or the Nation. P are endeavoring l

substantial seasonal peak load the customer peak load demand. to make the significance of this l

demand. In response to what is but the capacity will then be under- distinction clear to both the Com-perceived as a national effort, cus- utilized because of general conser- missions and our customers.

(

[ tomers conserve ebM:ty except vation encouraged by some of dunng peak usage pencds, such as such rate designs. When applied the summer air cooling season- to a coal-fired electnc system like a J especially during severe heat KCPUs. the wisdom of those rate storms. More generating caoacity designs must be seriously ques-l is needed to meet those increasing tiened because any off-peak energy

customer ceak loads. but because conservation would only conserve of general energy conservation dur- the use of our plentiful coal, not i ing off-peak penods. that capac.ty oil. Both the Missoun and Kansas es underutilized for the rema

nder cf the year. Therefore. Ine annual faed costs of the investment in the

system capac:ty. wruch presently I amount to nearly two-thirds of the l 5 l

. l l

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Special Report g W4 Heat Storm 1980 M~

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l Kansas Citians willlong remember the " Heat Storm of '80:A stationary

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high pressure system. centered a> 4'. &q C over the Southwest from late June to mid- August. dreN hot desert QA Q i yy ^ \

air out of Mexico and the far West

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bak i ng most of Kansas and Mss- ~

[k g soun in a natural oven. In the two states. 383 people died from the r

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heat. The Kansas City Metrcpohtan ' ',f y y}_

gy ;dg Area was hit the hardest with 192 yQ }L;,_y Q [g3: gg%

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deaths. Economic losses in these states exceeded $2 bilhon s:gnif;cantly. in 1934 there was no 10. July 16 and August 7, when the Kansas Cotians normally expect a comcning M the Kansas C4 manum amoum ot pows avah scme 100 degree days each sum- area. Today some 89 percent of the able for purchase from other inter-mer. June.1980. averaged five residences and most cf the com- Connected systems would have degrees aarmer than usual. Butin **' S * *S*S~'d W #* '"*" '* *

• 9

• US W July the lemperature soared abcve UY ## # #9 'U

• 100 degrees on 22 days with 17 cany creamd as co6ng dwces. capacq consecutive days ranging between H them h d not bew w cooWg m gu,gnm ,7,g,ggenn7gp,,g, 702 and 109 degrees Tne copres- m i e cuic semice had sive neat continued through the **** * ** KCPUs custcmers record electnc peak demand of 2.198 megawatts hrst 10 days c/ August before revet would nave ceen more heat related ea was met. without curtadment. on occurred ansas Q ama Tuesday afternoon, July 15.1980 The Community Response latan Averts Blackouts The temperature was 109 degrees.

The reahty of the heat storm gave cmc umes m@ou w Re new eced was 12 pecem Kansas C,ty a new cerspective ****""*# * * * #' M "

• Its rea! tch was in human Efe espe- impScat'ons E?ectnc demands KCPL had a -Peak Watch" in effect.

crany among the vulnerab!e and s amd @wam e a Wea- one d M Ca%d duMg m heat hidden-the pccr over 65 years of [ums aN set new med peau waw to ask asmes m wb non-l age. The response cf the commu- .hm wem days when an avadade essmial usage dunng prods of nity to the human suffenng tracked generatng un?ts in the area were potential record peak demand.

the heat. Pleas were issued for all cwaMg at mamum outout Mso, in addition to a general down-c:tizens to check their elderly ner,h- nd come of desc sexe mm M iestnal decmc em bcrs Because rebet from the heat w s dependent on purchases from ments throughout an of 1980 due was a key to survival. a fan bank eiednc systems far M We e to W econcmc meesse N was estabiisned to dehver donated nd east. When power was aval- Companyslargest customer had fans and av conditioners to the able for purchase. it was expensive. shut down its efectnc steelmaking elderly and ind: gent. When the d ecmc gmam at @ Waces dag mMy 6 a

( potent:al scoce of tne disaster to emes the cost of coal-fmed scheduled vacation. Had those became apparent. an Emergency gens bon mg seveal cnxal Nmaces been cpeamg. w mc-Command Post was cperated on penods, audidonal power from ord ejectnc peak demand would an around-the-c!cck bas;s to coor- the interconnected systems was have been at least 60 megawatts dinate distnoution of the fans. not avadade fm wchassat highs and had r.dustnai moduc-ny pnce--to back @ the loss of Don bew wmat w peak deand transoortaticn. and transfer of those

n need to cool shelter, med: cal a maje eetnc gevaMg W1 would have been even higner.

assistance and other services. In Had our latan unit nct been avail- Special Bill Payment Plan

, the 12 days cunng the entical able dunng the heat storm. we An earty analysis indicated that.

j eened in wnich the post cperated. would have nad to replace its daily tecause of increased efectnc rates

12.214 cals were answered and genera 0cn with substantially more and high elect'c usage due to the l 4.051 fans were distnouted C

early. expensive generation. inc;uding heat s!crm. KCPUs restdential cus-l t was one of Kansas City's finest oil-fired e:ectnc generation our-I tomer Oills would be at least twice resocnses to community needs. chased frcm the interconnecte $ those of the previous July and ccn.

Tre only previous comcaratie heat gsems. Mme imomtaMy weou sevaW abow me led 6 wbch storm of record was dunng the our latan caoacity. it would have most families had budgeted Based dust-ocw-ndden summer of 1934 been necessary to insDtute rotatng wnen the death tcd due to heat blackouts on our system on July was 209 in Kansas C.ty which then nad a smal;er populaton. But, more 4

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to 554 3 mo:cn for 1979 anc 530 4 rec;; rec :o caf acc:tceal rec! ace- Interust 9 pense for the Year j macn ! r 1978 Tre s na'l cectre r e- e erg /:c serve es can cus- Climbs t. $60.8 Million  !

in 1930 nas C;e to re%ced rna n- temers Anie rna;ct unas here cO*n interes: excenses were 560 3 [

terarce cf c cer un ts. Ancn a e 'cr ma nienarce Net :n:ercnange macc 'cr tre f ear. an ecrease Of j new ess craca! cue to cereased sa'es were 52 6 macn tn 1978. 514 3 racn c.er 1979 arc 526 3 -

a aia:Ltf cf newer arc me e Sta t ng Jure 1.1950. tne Ccmpany mecn c<er is73 Tre rcrease l e"c ent un.:s. c" set .n ca t cy tra scic to Assccatec E!ecirc Coc;er- resuaec from n g e* caeres: rates  !

, f atan Unit s maraenance recu re- a5e. Inc 150 megaaans Of caca - anc sucstarief increased icng- l ments ^~cn ccm enced n Vaf / rcm f re ta:an Unt a-4 La Cygne term cect <r.ctud:ng acc 2cna!  ;

l 1930 Tre 523 9 mc en ncrease Und No 2. Trese caca ef saes f. narc:ng securec cy ccat a-c fuel i in 1979 cver 1978 ret ectec an esd- amountec :o 57 mmen in 1950, and ed c.en: Ores. a-c rieres: accrua:s l mated 51.3 m acn cf prococ:cn are excectec to a~ cur 4 to at !eas: en aceances from Kansas E ecec j ma cienance ce'errec ' rem me 524 macn m '931 aren 300 fra P?Aer Coccerattses. Inc. (KEFCot i I

s:t'<e cf 1978 esca:atng ccs:s cf cacacef ad ce sc:c Tre evel Board Raises Common Dtvidend i cf matenais. as ae'! as m:reasec Of c:ercnange sa es in re fu ure l 44 be cecencent ucen tre Ccm. On W<e ncer 4. 74 ecarc cf l

ma rie a^ce recu: rec fer cicer ccat-feed ecuicment 4. n acced carf s recutrements ar.c cir'er D *ectors ecreasec tre cuaner7 commcn s :ck cyce-c frcm Ec 5 evren~ ental crciec cc sys: ems fae: cts. sucn as feel c s:s. marde.

narce recurements arc forcec .- so = ca~s cer *a a- ~ ec 52 7S

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'cr cameg !ca-grace n'gn asn 08'sna e en an ar.nua! cas s cor ert cea! ge e'ar:ng unt ceages reia'ng l

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• h/ 61 e, cercen: cf eam- l ec.

in 19e.0 :re occat from tre f a an ~ ~q, ..-a C-r~at/ a ~~ oc ~=~" a

g d .7.g mgs asa'ac e 'cr cernmon s:cck Un t a9caec tre Cemcany to aga n was cec:arec n cacercs to rce-ana n a r4: c:e crange sa es ocs- Crer ccernen eccenses were e,s cf ecm cn s::ck H04ever.

cn ascn mcre :can c"se: tra 514 7 mucn n gner man 1979. casn eam ngs we e :ess :~an re nc ease :n f e. excense. F.e: m:er- Amen nac <ncreasec 58 3 m cc cecia ec c v:cercs cecause earn- r trange sa'es were 52i 5 me.cn .er 1972 Tr , cerease c 1980 egs a.asac e for cc~ men s::ck l

.n 19500 as cen:*astec wm re: rc:ucec n.g er wage rates anc re'ec:ec ret AFOC ct 52 47 cer cu enases cf $27 2 mace c 1979 cnarges resuar.g fr:m re cceraico sna'e en e resuit ra t e Ccm-wnen tre fatan Un.; aas not set of tre la an Una. :: es anic pa:ec cany ca;c cy:cencs a~cu-tng to ,

a.aiac e anc tre Ccccany was  :-a: c rer c erat on escenses act 142 ce' ent cf su n casn eamngs. L f

cent;nue c ncrease.

Construction Expenditures  !'

Drop to $125 Million for 1980 Ccrsracten escene t.res. ex:fuc-m~ / FDC'~~ t~a a~ 512' maco n

~

TOTAL COST OF 15M 75 '2 7 74 75 78 77 M 75 to no ;3ecc.cenafrcm1200r - %.cn:n FUEL BURNED tao m no i s79 r_gncs fr:m ece a:;cns crc ,

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e.ca.cm<u A ssa m fg h weed so, 2 m*cn. ancn ts ecua;

O 45 7 ce':ent Cf c a! Cens!'uc*CC I

c4 n 5. recure e *s. An en are re! cf:*e i

So $

so o rete c: cf $20 3 macn as can.a' l l mTustAt cAs sec'e ent ef a ansat aga nst e:At so j# wes:ngneuse E ectr:c Cercera!.cn 28 2 (see Ncte S to Fira-c:a! Sta:e-  ;

io o me-ast Tre ca a ce came from

<EFCc s 5;9 5 men :n casn ac'.arces ::Aa c re '..c.f Cree <  ;

Und. anc ' rem outs:ce scurces. l EARNINGS AND t'n v' 72 7 7' vs vs 77 va vs so " l l

1 DIVIDENDS PER 3 Five-year Construction and l SHARE o Financing Requirements u Ccns: uct en excenc :gres fcr me uee cer cc 1931-:935 are currenOf l EwwGs Psa se9E cr: e:Iec AI ON*O mA.OU. e#ctc r'g [

2_5 $

emceos %c ug /.F C. C' Ss ::at 5251 macn l 6SWE 13 '* w3 ce scent On re 'e'e'C f Creed Un I. f M fc ucMg nuclea' fL e CcrstrucLcn I 83 en::enccu es 'er Wo:f Cree < a e  !

o.o casec en an carersec ce cer: age  !

c' 415 cercer*. AS:n assu"es I f

I 7 $

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1 l Management's Discussion i

j Financial Review and i i

i Analysis

{

) Hot Weather, increased Rates declined 1.7 percent in 1979 from in higher 1980 expenses were Boost Sales, Revenues, Earnings 1978 because of milder weather l

! For the year 1980. net income of increases of $22.6 mdkon of fuel and customer conservation. expense. $14.7 mdlion of other

{ $68.7 mdhon was up $24.9 mdhon Higher kilowatt hour sales and the operation expenses. $6.9 mdlion

from 1979 and $25.8 mdlicn from cf depreciaticn (mostly for the 1

1978. Net income for 1979 included effects of rate increases in 1979 and 1980 increased 1980 revenue latan Unit).and $38.6 million in

$7.2 million resulting from a change taxes, offset mamly by imen to $446 mdhon, up from the $370.9 in the Company s accounting change sales. {

method. Earnings available for com- milhon for 1979 and $318.7 mdhon l for 1978. The $75.1 million ga!n Tntal fuel expense for the year mon stock in 1980 were $56.3 mil-i lion. compared with $33.2 mdhon n 1980 included $18 million attnb- was $125.3 mdlion, uo from $102.7 uted to higner kilowatt hour sa!es. mdlion in 1979 and $90.6 mdhon j in 1979 and $34 2 mdhcn in 1978. l

$61.4 milhon from rate increases. in 1978. Tne 1980 increase mainly '

ou ed o $4 36 for n ea- and a N mWion mease m decM amonal@anWs d based on 12.9 milion average ansas bel a@stmem reveNes coal bumed to meet tne years shares outstand:ng compared with m ver gm W y e s.

$3 01 cn 11 mdhen shares in 1979 e m on nI g w h a mm meam in l and $3.55 on 9.6 million snares in revenues over the previous year. the cost of coal and sharply higher 1978 Cash earnings, which exclude $35 milhon resuted from rate pnces for oil and gas. The average the allowance for funds used during meases and $22 mAon kom cost of fuel bumed M 1980 was construct;on (AFDC). net of associ- meme of fuel cost screases. $1.0o4 per mdlion Stu. This was orjy I

ated deferred income taxes, were offsetting a decrease in revenues 2 percent above the $1.073 cost

$189 in 1980 of $4.8 mdkon due to lower kilowatt in 1979. whicn represented an

$1.69 in 1978.' $0 33 in 1979, and ur sales. Mcmase of 22 peam mer 1978.

This year's mocest increase re-The dramatic increase in 1980 was Operating Expenses Held to f!ected the avadacility of the latan attnbuted to the record summer 9.9 Percent increase Unit and also improved avadabdity heat in contrast with a cool 1979 Operating e<penses of $359.1 of our other newer units, and a summer. rate increases. availabdity mdhon were up $32.3 mdlion cr resultant fuel mix with a higher per-i of energy from the latan unit which about 9 9 pecent over 1979. com-  ;

cent of coal and less oil as com-  !

l went commercial in May.1980. and pared with a 24 percent increase pared to 1979.

l improved availabihty of other major between 1973 arid "979. Inc:uded generating units dunng the year. Maintenance expense for the year f However, results for 1980 should not tota!ed $52.7 mdlion, compared '

be considered indicative of future results.

KILOWATT HOUR 1970 75 72 vs 74 vs vs 77 va vs s0 , ,I SALES Revenues increase 20 Percent

'l The imoact of summer heat boosted  ;' oTHen 1980 sa!es to 8 6 bubon kdowatt hours from the 8 2 bilhon sold in NousiniAL

,g j 1979. Ga:ns .a 1980 were recorded

,g i in residential sales of 19.3 percent couuEnctAL I

• 8 3  !

and commercial sa!es of 4 9 per- AEsioENTIAL 2 r 'nt, whde industnal safes de-c ned 10.1 percent due largely to 1

3  !

0a i tne economic recession. The aver-age residential customer used l 8.923 kilowatt hours, compared w!!h 7.556 in 1979. Overall sa!es ELECTRIC 5,70 7 72 vs 74 vs 7s 77 vs 79 s0  !

REVENUES oTHER -g 350 INDUsTAIAL l

COMMERCIAL

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REstoENTIAL 100 ,

50  !

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_ - - - . - = - - . _ - _ _ . ._ -_ . _ _ _ _ . __ .- -- - _ _ - - . . .

Corporate and Operating Review  ;

MPSC Disallows latan Cost the need for the f atan Unit. which evidence on the Company's need in $49,6 Million Rate increase wer.e implicit in its 1973 cert.ficate of for the latan Unit's capacity to serve On June 19,1980, the Missouri puolic convenience and necessity Missouri customers during the sum-Public Service Commission (MPSC) authorizing construction of the unit, mer heat wave. The Court later dis-authonzed increased rates for Mis- and its subsequent orders relating missed the request, ruling that it soun customers equivalent to addi- to the adjustment of ownership facked jurisd:ction to issue such an tional annual revenues of $49.6 shares in the unit. order. The Company appea!ed the million, or 18.6 percent. The Com- in response to the June 19 order ruling to the U.S. Circuit Court of pany had requested a revenue and subsequent denial for rehear- Appeals on February 2.

increase of $76.4 million in August, We also initiated a new rate filing 1979. In its order, the Commission ng, a petition for judicial review of the Commission order and of its with the MPSC on August 6.1980, disallowed some $22 mil lion of reve- denial of rehearing was filed in termed a " catch-up' rate increase nues associated with the latan Unit. the C;rcuit Court of Cole County, request for additional revenues of The order concluded that the unit Missouri, on July 25. Court action $45.4 million annually. The filing was not needed to provide safe covers the Company's costs related s still pending.

and adequate service to Missouri to the latan Unit, recovery of fuel customers. In addition, a filing in the U.S. Dis-costs through May,1980. fuel-trict Court for the Western District related increases from June,1980, The order, in effect. contradicts the of Missouri requested a court order Commission,s prior affirmations of requiring the MPSC to hear ne'n N@ May. M. Meases M T--

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, The new 670-megawatt. coal-fired latan Unit occupies a 3.000 acre site about 35 mdes northwest of Kansas C,ty on the Missouri River.

)

9

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I completion of the proposed sale methods of financing will be de-to KEPCo. The significance of the pendent upon market conditions five-year construction forecast prevailing at the time the financirq is that yearly expenditures are is required. Short-term borrowings expected to continue to decline. will be utilized between firmncings.

Furthermore, budgeted expendi- It is anticipatea the remaining capi-tures associated with the Com- tal needs will be provided from pany's next generating unit after operatiora.

Wolf Creek have been limited to environmental studies. Uncertainties which affect the degree to which financing require-l Reference is made to Note 8 to ments will be met by funds pro-l the Financ:al Statements for more vided from operations include the detail about the proposed sale of impact of inflation ori operating an interest in the Wolf Creek Unit to 3xpenses, the level of kilowatt-hour KEPCo. the Company's obligation sales, the degree of operating to repay certain amountc to KEPCo efficiencies and availability to be if such safe does not occur and obtained from our generating units, the Company's outstanding con. the demand from other utilities struction commitments related to for interchange power and the Wolf Creek. Company's ability to receive ade-In addition to the construction quate rate relief.

reouirements, dunng the next five it is unlikely that increases in years the Company must retire kilowatt-hour sales and future oper.

576 million of matunng long-term ating efficiencies can offset the rise deot and redeem 517.5 million of in the level of future operating ex-preferred and preference stock to penses; therefore, to a large extent meet sinking fund requirements. tha amount of internally generated Financing these requirements will funds is contingent upon the Com-be met through sales of new com, pany receiving adequate rate relief mon stock, preferred stock. bonds, in the future.

and vanous other financing arrange- See Selected Financial Data

. ments. The amounts, timing and for Financial Data Adjusted for Changing Pnces.

AVERAGE COST OF 1970 71 72 73 74 vs vs 77 vs <n so LONG-TERM DEBT I!

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(NRC). Cach exoenditures upon The Wolf Creek Unitwas described The fatan Unit is practically identical completion and based on a 41.5 as one of the - . souncer nuc! ear to tne second La Cy9m Unit. one percent share, are now estimated at projects underway in the country of the most dependable coerating

$472 millicn including capitalized today . ' n a report by Cresao,

. plants in the country. In its tirst eight property taxes. McCormick and Paget. Inc., months of cperat;on, latan's 94.7 released in November. The KCC. p?rcent availability surpassed the The operating license application soonsored report noted severa! La Cygne 2 record of 92 6 percent.

( vas fdea on February 19.1980 and docketed by the NRC on August oc ortunit es to imorove project Both units burn low-sulfur Wyoming managentent, but said such coal transported by unit trains in

6. Histoncally. the review cycle has improvements are not unusual ccm- Company-owned coal cars, and uti-involved 30-36 months. Fuel load.ng lize electrostatic precipitators and is now scheduled for Apnl.1983. ared with other large, technically complex prciects. tall stacks for emission control A The 1.150-megawatt plant is owncd contract with ARCO Coal Company jointly with Kansas Gas and E!ectnc latan Unit Completed in May; provides for anticipated coal usage Company (KG&E). The sa e of a Sets New Production Record at the latan Unit througn 1985. The 17 percent share to KEPCo is sti:1 Following five months et scneculed Ccmpany is endeavenng ic secure pending While the safe was testing, the 670-megawatt coal. additional low-su! fur coal by acqui-approved by the KCC cn October fired latan Unit began commercial S' tion of coalleases and mining per-

30. the crder contained several con- operation on May 5. The unit was mits tnrough WYMO Fuels Inc.. a citions which were unacceptable completed on schedule and within wholly-owned subsidiary of the to the parties. including require. budget. Cost of our 70 percent Company.

ments when set limits on KEPCo's share was approximately $234 mil-financial responsibility Unless these lien, including financing costs and Coal Provides Over 90 Percent of conditions are substantia:!y mod'- capitalized property taxes. Owner. 1980 Generat. ion Fuel Mix fiec or eliminated, in the opinion of shio is shared with St. Joseph Lignt One cf tne Company's histonc coer.

the Ccmpany the sale is impossble. & Power Comnany 18 percent. ating strengths is its fuel mix for A recuest for reneanng was cenieo and The Empire Distnct Electnc generation. Our onmary source of by the KCC on December 18. On Company 12 percent. KCPL coer. fuel is and will continue to be coal.

January 12. the Company and ates the plant. which is expected to sucoly over KG&E filed a joint petiticn in Distnct Court asking the court to require a mco.iication of the Octcber 30 order.

W .'f Creek Unit Nearly 1m 75 72 m 14 vs vs 77 vs , so,,,

70 Percent Complete SOURCE OF FUEL Dunng the year, comp letion of tne BURNED ,

Wolf Creek Unit progressed to nearly so 70 percent. Several milestones were n ,_

oassed, including the setting of the ,

! o,t u3 reactor vessel and all fc or steam i so 3 generators Water pumping started gas 402 behind the newly-completed dam m ao and the lake now covers over 1.000 surface acres, atout one-fifth of its j design size.

The Company and KG&E began ,

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r3?getec !ci ccmmerc:al ccerat:Cn on Acrti,1984 Sec a: Security taxes. ecu cmen: tre Kansas Ccrcora !cn Ccmm's- .ncrebse. Antcn ccmc.nes :ne

'entaf 'ees cCstat rates anc em- s:Cn (KCC) 's sub,ect :: re'unc. acc'.e amcurt and gereral CWiP c!cies Cav ABCn will ce effec:.ve penc:rg actiCn Cn cermanent ra'es. Hearngs en trese Cases have ceen cy JL!y 1931 anc 'Cr res:Cra: on Cf an Cn is exceC:Oc ! ate :n 1981. Ccnctucea succcr: con r cut:cns for researcn anc ce.e coment work cy :ne E.ec- Wholesale Rate Schedules Wolf Creek Unit Delayed One Year

• r c Pcaer Aesea cn Inst:tute Hear- Pending Before FERC Tre 'n-serece cate of tre Wclf

+rgs are sc ectec 'cr Acr I. '981 Cn January 6.1981. new wnc:esa e Cree < Un.t nas teen ce!avec 'cr

'.rm e ectnc rates ces grec to one year anc :s new set for Acri

! KCC Grants interim increase of .ncrease annua revenues cy 54 7 1984 The re-scnecunng was cue tc S24.5 Million Subject to Refund m men wer: =nto effect. sucjec::: several facters Ccns:ruc:en was E"ecine Jure 1 1980 cur Kansas refunc. as autncricec by tre Fece*al accrcx:mately 11 r crins cen:nc t e

< eta i eiectoc rates :ncreased cy Energy Regu:atcry Ccmm ss;cn earher scnecu:e cecause of crew-25 cercent en an rier m cas s. (FERC) Tre Ccr cany s reques: cusly reccriec concrete test.ng ces g ec ic c ccuce 524 5 m4cn was 'vec cn June 6.1950. anc crcc! ems a.90 cc'c Aea:rer ce:ays.

.n annua! re.erues. Tre Ccmcany nctuces ccnstruct cn acr* :n crcg- A'sc. trere were uncer a rt es ac recuestec n Aug st.1979. ress (CWIP) re'atec tc ccHu::cn regarc ng t:me'y crccess;ng cf :ne ncreasec res.enues c: 527 e micn cer rci'aca t es A!sc cena ng witn ccerat ng hcense acchcatan cy *re Basec cn an c cer ssuec May 28 FERC s a ecuest for a 57 4 mcen Nucear Regu:a: cry Comrn:ss:en

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90 percent of our needs until 1984 Residential Conservation Services EPRI Funds Local Research At that time. its contnbution is Program as presently mandated by Approximately 20 percent of our exoected to drop to 78 percent with the Federal government. Under this EPRI assessments have been the add. tion of Wolf Creek. program. extensive and expensive retained for !ccal research projects.

Long. term ccal supply contracts energy audits wnuld be performed at the request of any KCPL resident;al In the load management area. cur from maior predners provide for remote-controlled air cond.tioning about 90 percent of coal recuire- customer. The audits will measure existing efficiency levels and rec- tests were conducted last summer.

ments for existing units through The tests utilized radio impulses 1986. and 70 percent thereafter ommend apprepnate improvements covering insulation ventilation' to ' switch-off" air conditioning units through 1996. at staggered intervals to control weather stnpping. caulking, fumace summer peak demand. Tentative The Company,s 12 coal-fired gener- systems. thermostat settings. land-ating units. excluding the require- scaping and shading conclusions show that customers ments of joint owners. burned 5.4 with controlled air cond:tioning mill:cn tons of coal in 1980. as com- Since 1977. m re than 35.000 home units could achieve. witnout notice-pared to 4 2 million tons burned energy audits were completed able discomfort. a peak demand in 1979. Our unit costs for coal under a Company initiated program reduction of between 0.2 and 0.7 increased by 4 8 percent to $1.001 offered to residential customers. kilowatts with reduced energy pe ilhon B u this year from 95.o consumption of 1.4 kilowatt hours Company Supports Research and per day.

Development Through EPRI Dunng 1980. coal fueled about 94 Througn annual contnbutions to the in our Paseo Energy Project. the cercent of generation output while Company has coordinated the Electnc Power Researcn Institute.

gas (5 percent) and oil (1 percent) we participate in succorting the insta!!ation of over $22.000 of orovided the balance. The quant;ty industry's ongoing. comprehensive donated energy conserving mate-of cil burned dropped significantly research program. The MPSC did riais and equipment in a 60-year-old from 576.000 barrels in 1979 to not allow the EPRI contnbutions inner-c:ty home. The pnmary func-165.000 in 1980 because of the as an exoense in the June 19 rate tion of this project will be for use avaifabihty of cheaper coal-fired order and the Company has made as a training and worksnco facihty clowatts from the latan Unit. Oil for public demonstrations of how to no 1981 commitment to EPRI based costs averaged $3.815 per million on our Missouri cperat;ons. Because install insulation, weatherstnpping.

Stu, compared with $2.968 last year. our base load system is coal-fired. vacer barriers, caulking. plus solar we expect to benefit from ERR 1 domestic hot water neating. Plans Natural gas usage also cropped are underway to cutf;t a comparable in 1980 The Company bumed 6.4 programs dealing with coal com-bustion systems. energy manage- home nearby to demonstrate the mdhon mcf in 1980 at an average minimal energy conservation orod-cost of 52.23 per milhon Stu. com- ment and utikzation, electncal systems, emrgy analysis and the ucts norma!!y employed in retrofit-pared te 7.1 milhon mcf in 1979 ting an cider home.

at a cost of $1532 cer milhon Stu. environment. EPRI's Nucl ear Power Division program includes projects which adcress problems and neecs KCPL Research Appiles New Labor Agreements Reached Passive Solar Techniques Dunng the year. new two-year labor which are of immeciate concern because of the Wolf Creek Unit. One Our Quail Vauey sciar researen agreements with three local unions cro;ect involves an effort which reoresent;ng 2.130 bargaining un:t such project. the Power Operated Relief Valve test. which was ordered could lead to a reduction in sum-emotoyees were reacned without mer peaks. The project tegan with a work stoppage. The agreements after the Three Mile Island inc: dent' is est: mated to have saved $7 mil- construction cf two new homes in a canec for total eccncmic increases subdivision in Johnson County. Kan-ct 8 percent tn the first year. plus hon in Wolf Creek costs.

sas. The homes are nearty identical uo to one-tenm of 1 percent for The Company also tenefits directly except that the test home incoroo-pension improvements. Provisions from EPRI projects which have rates

• state of the art" passive solar for !ne second year, which begins provided guidehnes for selecting design. combined with cotimum en July 1.1981. incluce increases acceptable discosal methods for energy conserving construction and of 8 percent for Locals 1464 and wastes ccnta:ning polychicrinated 412. and 7 5 percent for Local an active solar hot water heater.

biphenyls (PCBs), identifying prob- The control home conforms to stan-1613. Allinree contracts expire  : ems lead:ng to failures of low-pres- dard area building pract ces.

cn June 30.1982. sure steam turo:ne blaces. and Energy savings in tne solar home developing methocs of reducing are being monitored by a computer.

Residential Energy Audits tree inmming ccsis by contro!bng wnich simulates occupancy by a To Be implemented in 1981 growth of brush. famdy of four.

The Company plans to implement a 12

Energy Update: Assessing Our Options for the Next 20 Years l

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Annual Meeting Set for April 28 Tne 1981 Annua 1 Meeting of Share- Wuham H Mdier director of human Accroximately 80 cercent o! au holders :s scheduled for Tuesaay. resources s,nce Novemoer.1978 common snares outstana:r,, Aere Aor128 commencing at 10 00 a m was named vice presiaent of human

'eoresentea eitner n person or Not.ces of meeting and proxy state- resources effective May 1980 Mr cy orc <y at tne 1980 Annual Meet- ments wdl be maded to aH share- Mdter came to the Company in 1978 og etd Acro 22 at the Comoany s "claers in mid-March from Dayton Power & L.gnt Com-aowntown Kansas Ctty Mssoun. pany wnere ne was resoonsioie for eacauarters At the meeting snare- Management Changes all persnnnel ana :acor relations no6aers e,ected three new d:recicrs Effect>ve Maren 31 Kenneth O activit es George E Nettels Jr cresicent Hoviana. ser ' vice president and On Novemoer 30. C are Den ct the McNany-P ttsourg Manufac- c"iet flnanciar '+ficer ret:rea Mr Haerynck retirea She had served

'ur ng Corcoratton anc pres: cent Houana joinea KCPL .n 1947 as as corocrate secretary s;nce 1978

t M awest %nerals Mc botn assistant controder oecame treas- M;ss Den Haerynck came to the n Ptsourg Kansas Eugene M arer .n 1958 and '.sas prcmotea Comcany ' rom the accounting firm Strauss cres; cent ana treasurer at to vice presicert and treasurer in of Peat Marwick Mitchen .n 1951 me Strauss Fuchs Organization inc . 1960 He was elected to the Boara dansas C t, and Rccert H West She was named assistant corocrate of Directors n '970 anc was narned secretary .n 1974 Samuel P Cowley.

ores; cent and cniet operat ng senior vice pres cent :n 1971 Uoon ace cres: cent of corocrate affairs.

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increase at a rate of 2 to 3 percent doubling of our 1978 domestic indicate that some 45 to 50 percent a year above the projected Free energy supply of 59 quads. of eur total primary energy must World rate of inflation of some 8 to What energy sources will be avail. be used to meet electncity needs.

~ . .. cent a year, or a total of 10 to able in the year 2000? As pointed Th,si will require a 4 percent annual 12 percent annually. In other words, out, we would be fortunate to be increase in the availability of electric foreign oil prices wdl double again able to maintain our 1978 produc. cergy.

by 1987 and akeady deregu(ated tica of comestic oil and natural gas. Achieving Energy independence domestic oil onces will follow in tctating 39 quads. Renewable Are these goals achievable? Can a competitive market. energy sources including additional we be.come energy independent The second primary energy hydro. solar, wind biomass and and meet the growing energy needs resource in our country's inventory geothermal are expected to contnb- of a growing population while main-has been natural gas. After nearly ute significant amounts of supple- taining an acceptable standard four decaces of regulation, it mental energy. But, the most opti- of living for the remainder of this became apparent in the early 1970s mistic projections indicate such century? The answer is ?Yes' with that neither production nor reserves additional sources, taken together, qualifications. To do so, we must:

of this finite fuel would, in the future, will not provide more than 10 per-

• Employ "hard' conservation ethics keep pace with growing demands. cent of our energy supply in 2000. to cut our nation's pre-1973 total Curtadments of natural gas were This would add about 12 quads. energy growth rate by 50 percent.

fol! owed by accelerating price or four hmes their 1978 output. e Double our 1978 productiori of increases. With deregulation The Coal and Nuclear Options domestic pnmary foait neeced to spur exploration, we can The remaining projected energy

• Develop reneweble energy expect even more cramatic future needs of our country at the turn of resources to replace the antici-pnce increases. According to the the century total more than 60 pated reductian from 1978 levels economists. deregulated natural quads. Based on foreseeable tech- of domestic Jil and natural gas gas pnces. now targeted for 1985. nology for the next 20 years, we supplies and suppfement other will tend to follow on a Stu basis have only two energy options left: energy supplies from conven-the competitne pnce of c:1. ccal and uranium which contnbuted tional sources.

less than 20 quads in 1978. Fortu.

• Utilize existing and develoo other it is nou generally accepted that nately, we have these fue!s in abun- new commercially sound technol-even with suostantial price incen- dance. The United States has within ogies to take advantage of the tives, annual production of domes- its borders more than 50 percent nation's most abundant fuel tic oil and natural gas will not of all of the known coal reserves resources: coal and urasm.

exceea 1978 levels in any future and one-third of the " reasonably

• Unshackle the mining and burn-year and by the year 2000 may be assured' uranium reserves of the ing of coal from overly excessive as much as 20 percent less than the Free World. Utilizing these available govemmental regulations and amounts produced in 1978. fuels will require the development expedite the licensing and con-of new synthetic fuel technology struction of nuclear power Supplying Energy by 2000 projects.

and the expansion of existing sys-However. by the year 2000. there

• Provide-on a timely basis-tems wnich convert them into usa.

Mi be more Amencans. about 42 ble energy: coal-fired and nuclear the remaining domest:c energy mdhon more than in 1978 Amenca requirements through coal-fired Mi have a population of some 260 electric generating plants. How can we provide the remaining 40 plus and nuclear electric generating mdlion in the year 2000. each with plants.

quad eauivalent? To meet this need by 2000 wdl require at least a tri- KCPL plans to do its part in supply-and des te to riana d pling of the 1978 coal production ing our share of this country's total prove his standard of hving.

ievel to 2 billion tons annually. for energy needs on a least cost' How much total energy wdl we need an additional 30 quads. and a five- basis. To do so, our planning strat-at that time? That depends upon fold increasein efectnc generation egy will be: to supply a 4 percent how much 'hard' conservation from nuclear power plants, for an per year growth in electric energy Amencans will accept. If we can cut add.tional 10 quads. for our customers. pnmanly dunng in half our nation's histonc rate of Because of its convenience 2.nd off-peak penods. by taking action 1

growth of total energy consumption adaptabihty electricity has already to retard customer peak demand from 3W to 14 percent. we would been assuming a growing responsi. growth and promote customer off-need in the year 2000 a pnmary bihty in the end-use energy mix. In peak energy usage. That strategy energy supply of 118 quads. To 1970. about 22 percent of our pn. will permit us to delay construction accomplish this substantial under- mary fuel consumption was used te of new electnc generating facihties taking and at the same time achieve generate efectncity That compo- and make greater use of our exist-energy independence from foreign nent increased to 32 percent in ing e!ectne facihties. each of which energy sources would require a 1980. By the year 2000, projectiors *'ll minimize our system costs of electnc service.

Kansas City Power & Light Company Balance Sheets December 31 1980 1979 Assets <w Utility Plant, Electric $1,287,913 $1,036.16 I at original cost Steam heat 4,999 4,9M l

(Notes 5,8 and 9) Total 1,292,912 1,041.095 Less-Reserves for depreciation 352,023 308.273 Net utility plant in service 940,889 732,6?2 Construction work in progress ._419,6_39 517,C99 Total 1,360,528 1,249,921

( Investments and Nonutility Property 12,144 9,742 Current Assets Cash (Note 2) 8,27,' 9,198 Special deposits 845 1,579 Receivables Customer accounts receivable, less reserves of $1,241,000 and $907.000 31,963 25,670 Accrued unbilled revenues 14,179 11,654 Other receivables 12,469 8.505 Fuel inventories, at average cost 66,878 46,808 l

Materials and supplies, at average cost 20,507 17.022 Prepayments 2,058 1,816 Total 157,176 122,252 Deferred Charges 9,130 9.123 Total $1,53_8,978_

$1.391,038 Liabilities Capitalization Common stock-authorized 16,000.000 sham: ..ithout par (See statements) value-13,409,663 and 11.682,349 shares 7utstanding-stated value $ 255,128 $ 224,442

. Retained earnings (Note 6) 166,776 145.700

' 3,082 Capital surplus 2,948 Total 424,852 373.224 Camulative preferred stock 112,000 112,000 Cumulative preferred stock (redeemable) 3,836 3,996 Cumulative preference stock (redeemable) 50,000 25,000 Long-term debt 587,477 576.904 l Total 1,178,165 1.091.124 l Current Liabilities Notes payable to banks (Note 2) 31,500 18.300 Commercial paper (Note 2) 6,500 21,000 25,000 11,972

(

1 Current matunties of long-term debt Accounts payable 32,834 37,930 Dividends declared 3,439 2,643 Accrued taxes 9,024 4,028 Accrued deferred income taxes 6,975 6,347 Accrued interest 7,917 7.959 Accrued payroll and vacations 7,436 6.570 Accrued fuel costs 9,689 11.982 Other 3,733 4,624 Total 144,047 133,355 Deferred Credits Deferred income taxes 93,052 74.527 Deferred investment tax credits 49,509 43,729 Advance payment on sale of property (Note 8) 72,495 46.839 Other 1,710 1.464 Total 216,766 166.559 Commitments and Contingencies (Note 8)

Total ~

$ 1,538,978 $ 1,391.038 19

.m,--

Kansas City Power & Ught Company Statements of income Year Ended December 31 1980 1979 1978 (mousams)

Operating Revenues Electric $ 440.132 5 365,084 $ 313,787 Steam heat 6,,783 5,791 4.876 Total 445,965 370,875 318.663 Operating Operation Expenses Fuet 125,297 102,709 90,628 Interchange power (net) (21,528) 27,232 (2,599)

' Other 70,892 56,193 47,421 Maintenance 52,680 54,315 30,359 Depreciation 41,733 34,868 33,174 Taxes (See statements)

Income 42,088 9.569 26,137 General 47,956 41.914 38,511 Total 359,118 326.800 263,631 Operating income 86,847 44,075 55,032 Other income and Allowance for equity funds used dunng Deductions construction 19,775 19,467 12.543 Miscellaneous-net of income taxes (122) 304 (874)

Total 19,653 19,771 11,669 income Before Interest Charges and Other items 106,500 63,846 66,701 Interest Charges Long-term debt 48,864 40.612 32,217 Short-term notes 4,781 3,408 1,969 Altowance for borrowed funds used dunng construction--credit (22,997) (19,211) (10,750)

Miscellaneous 7,151 2.486 341 Total 37,799 27.295 23.777 Yearly Results income before cumulative effect 68,701 36,551 42,924 Cumulative efiect to January 1,1979, '

of changein revenue recognition (Note 1) - 7,202 -

Net income 68,701 43,753 42,924 Preferred and preference stock dividend requirements 12,418 10.573 8.719 Eamings avai!able for common stock $ 56,283 $ 33,180 $ 34.205 Average number of common shares outstanding 12,915,770 11,009,407 9,644,321 Earnings per common share before cumulative effect S 4.36 5 2.36 S 3.55 Cumulative effect to January 1,1979, of change in revenue recognition -

.65 -

Eamings per common share S 4,36 $ 3.01 $ 3.55 Cash dividends per common share S 2.69 $ 2.635 5 2.56 The accompanying Notes to Rnancial Statements are an integral part of these statements.

18 ,._---

. . ,. . - ~ . .

/^ _ _ _

t Kansas City Power & Ught Company Statements of Sources of Funds for Gross Property Additions Year Ended December 31 1980 1979 1978 onousands>

Funds Provided Income before cumulative effect S 68,701 $ 36.551 5 42,924 From Operations Less dividends declared 47,625 40.122 33.644 Total 21,076 (3.571) 9,280 items not requiring current use of funds Depreciation 41,733 34,868 33,174 Deferred income taxes (net)-non current portion 30,426 11,632 12.990 investment tax credit (net) 6,710 (1,463) 9,793 A!!awance for funds used during construction (42,772) (38.678) (23.293)

Total 57,173 2,788 41,944 Cumulative effect of change in revenue recognition --

7.202 -

T al 57,173 9,990 41,944 3

Funds Provided issuance of !cng-term debt 35,500 86,000 77,000 From Outside issuance of cumulative preference Financing stock 25,000 - 25,000 issuance of cominen stock (1,727,314; 1,720.555 and 1.314,702 shares.

respectively) 30,686 42,395 36,018 Advance payment on sale of property including accrued interest 25,656 46.839 -

Tctal 116,842 175,234 138,018 Retirement of long-term debt (11,972) -

(9.569)

Increase (decrease) in short-term borrowings (1,300) 29,300 (9,000)

Total 103,570 204,534 119,449 Decrease (Increase) (Exclusive of short-term borrowings and in Working Capital current matunties) (35,960) (8.833) 7,393 Other 233 (373) 2,017 Total Funds Used For (Net of Westinghouse sett!ement-Gross Property Additions Note 8) 125,ft16 205,318 170,803 Allowance for funds used during construction 42,772 38,678 23,293 Deduction of deferred income taxes related to interest component of AFDC (10,921) (9.178) (5.375)

Gross Property Additions $ 156,867 $ 234.818 S 188.721 Decrease (Increase) Cash and temporary cash investments S 921 3 319 $ (1,547) in Working Special deposits 734 9,749 (8,186)

Capital Receivables (12,782) (11,869) 9,266 Fuel inventones (20,070) (19.020) 199 Materia!s and supplies (3,485) (2,276) (3,173)

Accounts payable (5,096) 5,471 361 Accrued and current deferred income taxes 5,624 3.817 2.768 Accrued interest (#2) 476 1.275 Accrued fuel costs (2,293) 5.513 4.818 Cther 529 (1,013) 1.612 Total $ (351960) $ (8,833) 5 7,393 21

Kansas City Power & Light Company Statements of Taxes Year Ended December 31 1980 1979 1978 (mousanos)

Total income tax expense was less than the amount compute 3 by applying the statutory federal income tax rate of 48% through December 31, *o78, and 46% thereafter, to income before income taxes. The reasons for these differences are as follows:

Taxes computed at statutcry rate on income before income taxes S 50,826 5 27.724 5 33,637 increase (decrease) in taxes resulting from:

Allowance for equay funds used dunng construction (9,097) (8,955) (6,021)

Differences between book and tax depreciation not normalized 472 (592) 679 Amortization of investment tax credit (1,544) (1,463) (1,333)

Taxes and pension costs capitahzed (553) (890) (1.250)

State income taxes 1,969 729 1,449 Other (283) (36) 3 Total income tax expense S 41,790 $ 16.517 5 27.154 Components of income Tax Expense Currently payable Federal S 3,154 S -

$ 2,697 State 872 -

1.674 Total 4,026 -

4.371 Deferred Federal (net) 28,281 16.630 11,878 State (net) 2,773 1.350 1.112 Total 31,054 17.980 12.990 investment tax credit Provision 8,254 -

11.126 Amortization (1,544) (1.463) (1.333)

Total 6,710 (1,463) 9.793 Total income 'ax exr,ense 41,790 16.517 27,154 Less: Deferred income tax 0,7 :umulative effect of cnange in revenue recognition -

6.691 -

Income tax expense deducted from other income (298) 257 1,017 income tax expense applicable to operating income S 42,088 $ 9.569 5 26.137 Deferred income Tax Expense Depreciation differences S 12,687 5 6.610 5 7,429 Debt component of AFDC 10,921 9.178 5.375 Repair allowance 659 735 711 Unbiited revenues 898 5.927 -

Tax loss carryforward 5,751 (5.751) -

Other 138 1.281 (525)

Tctal S 31,054 5 17.980 S 12.990 General Tax Expense Property and real estate S 20,089 $ 18.571 S 18.382 Gross receipts 24,233 20.135 17.620 Other 3,634 3.208 2.509 Total S 47,956 5 41.914 5 38.511 The accompanying Notes to Finanmal Statements are an integral part of these statements 20

... -. _ ~ _ . _

Kansas C.ty Power & Ught Company Statements of Retained Earnings Year Ended December 31' 1980 1979 1978 masando Beginning Balance $ 145,700 $ 142.069 $ 132.789 Net income 66,701 43.753 42.924 214,401 185.822 175.713 Dividends Declared Preferred and preference stock (at required annual rates) 12,949 10.573 9.052 Common stock-

$2.56 per share -

24.592 S2.635 per share 29.549

$2.69 per share 34,676 47,625 40.122 33.644 Ending Ealance (Ncte 6) $ 166,776 $ 145.700 $ 142.069 -

~

Kansas City Power & Ught Compaw Notes to Financial Statements

1. Summary of System of Accounts: The accounung records of the Company are maintaineo in Significant accordance with the Uniform System of Accounts presenbed by the Federal Energy-Accounting Regulatory Ccmmission (FERC) and genemlly accepted accounting principles.

Utility Plant: Utility plant is stated at historical costs of constructen. These costs include taxes, payro!! related ccsts including pensions and other innge benefits, and an allcwance for funds used during constructon.

Allowance For Funds Used During Construction (AFDC): AFDC includes the net cost of borrowed funds used for construction purpcses and a reasonab!e rate upon other (equity) funds. The allowance for borrowed funds represents an allocation of interest costs to con-struction, while the allowance for equity funds is a non-casn item of income. AFDC is charged to constructon work in progress during the pened of construction. When a con-struction project is placed in service. the related AFDC becomes a part of the onginal cost of the completed plant which is used to estaolish rates for utility charges under established regulatcry rate practices. (See Note 7 for discussion of plant in service not included in rate base.) The rates used to compute AFDC. compounded semi-annually, averaged 10.4%

for 1980 and were 9.7% for 1979 and 9.02% for 1978. See income Taxes below.

Depreciation and Maintenance: Provisicns for depreciation are computed on a straigt.t-line basis pursuant to rates ordered by the Missouri Pubhc Service Commission (MPSC).

Approximate annual compos 2te rates were 3.66% in 1980, and 3.62% in 1979 and in 1978.

Depreciation for income tax purposes is computed on different bases and methods as explained in this Note under !ncome Taxes.

The Company charges to maintenance expense the repairs of property and replacement and renewals of items determined to be less than uruts of property, except for such costs which w nharged to cleanng accounts and redstnbuted to vanous operaung, constructen and ot*.ar accounts. The cost of renewals and betterments of urtts cf prcperty are charged to the util.ty plant accounts. Property units retred or otherwise disposed of in the normal course of business are charged to the reserves for depreciation, alcog with removal costs, net of salvage.

The amounts of maintenance and decreciation expense cther than those set forth in the Statements of Income are not significant. Rents and ! ease payments for railroad cars, computer equipment. butidings and similar items are also nct significant.

~

23

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Kansas City Power & Light Company Statements of Cumulative Preferred and Preference Stock and Long-Term Debt December 31 1980 1979 Cumulative Preferred Stock (Note 3) mio-nao

$100 Par Value- Authonzed 520,000 3.80%-100,000 shares $ 10,000 $ 10,000 snares-outstanding: 4.50%-100.000 shares 10,000 10,000 4.20%- 70,000 shares 7,000 7,000 4.35%-120,000 shares 12,000 12,000 7.72%-130,000 shares 13,000 13,000 No Par-Authorized 4,000,000 $10.70-200,000 shares 20,000 20,000 shares-outstanding: S 2.33-800,000 shares 20,000 20,000

$ 2.20-800,000 shares 20,000 20.000 Total 3 112,000

$ 112,000 Cumulative Preferred Stock (Redeemable)(Note 4)

$100 Par Value-Authonzed 38,357 and 39,957 shares--outstanding: 4%-38,357 and 39,957 shares $ 3,836 $ 3.996 Cumulative Preference Stock (Redeemable) (Note 4)

No Par-Authorized 4,000,000 $ 8.00-250,000 shares $ 25,000 $ 25,000 shares-outstanding: $12.75-250,000 shares 25,000 -

Total $ 50,000 $ 25.000 Long-Term Debt (Note 5)

First Mortgage Bonds Regular issues 2%% series due 1980 $ - S 11,972 8%% series due 1981 25,000 25,000 3%% series due 1983 9,506 9,506 3%% series due 1985 16,000 16,000 5% series due 1990 20,000 20,000 4%% series due 1995 15,000 15,000 5%% series due 1997 30,000 30,000 6%% series due 1998 25,000 25,000 7%% series due 1999 26,000 26,000 9%% series due 2000 35,000 35,000 7%% series due 2001 27,000 27,000 4 7%% series due 2002 30,000 30,000 8%% series due 2006 40,000 40,000 8%% series due 2006 30,000 30,000 8%% series due 2007 30,000 30,000 9%% series due 2008 25,000 25,000 12 % series due 2009 50,000 50,000 Pledged in support of pollution control bonds 8.20% series due 1983 25,500 -

l 5%% series due 2007 21,940 21,940 5%% series due 2007 20,000 20,000 6%% senes *A* due 2008 9,200 9,200

. 6%% senes *B* due 2008 21,800 21,800 Guaranty of Pollution Control Bonds 5%% series due 2003 15,000 15,000 Other Loan Agreements 67,000 57,000 i

Uramortized Premium and Discount (net) (1,469) (1,542)

Total 612,477 588,876 Less Current Maturities of Long-Term Debt 25,000 11.972

! Total $ 587,477 $ 576.904 l

i The accompanying Notes to Financial Statements are an integral part of these statements.

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y  ; investment tax credits have been deferred when utilized and are being amortized to income gg '

, over the service lives of the related properties. At December _31,1980, the Company hadm.W.u unused and ur. recorded investment tax credits of approximately $36.9 million; winch will be ? W C

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.*T Subsidiary: The Company has a wholly-owned subsidiary, WYMO Fuels Inc., organized for9 Q. ,

the acquisition and development of coal properties. The Company has accounted forithevt...o .

investment in WYMO Fuels Inc., under the equrty method and has not prepared consoudated, ' 'S s financial statements because the effect of consolidation upon the accompanying financial c .+w .

N%U-statements would not be significant. '

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2. Short-Term -The Company borrows short-term funds from banks and through the sale of commercial' 5.%;7 Borrowings . paper as needed between financings. An average of approximately $7 mi' lion is on deposit J hen as bank compensating balances which support $57 million bank lines of credit. back-up 'VA for commercial paper and certain services rendered by the banks for the Company, There: ,  :

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- , y ' ,. , directfy or indirectly,. by orin anticipation of the incurring et any debt or the issuance of,M hWSM

< ' , - L - s preferred stock which has-interest or dividend costs to tnetCompany'!ower.than the statedn$.UAM

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Redemption Prices W 3 Restricted - Stated "^ a Minimunth*fR;)

ilaterest or . M(yp), ;

_ _ - " Series - gu December 31,196_0 - Redemption Date . , Dividend Cost egM

..q' ' - 7j 3.80W .C ja;?$103.70M , N, % :nWWh N.y @-E 3 hg N

. 4.50%

4 i W i. , n101.00. , , _  ; c ;;* l*2 c -:-i /cm " '

, CMt;'

B. "

^ MG.D

'102.00

.D'.T D.*

• ' 4;20% N 101.00 ' , ' A

1. ' ". : D. N_W

'e-35 % v.. m  %., ..

4 M6mW,:% &, ? % ,@*- @,%",A ML

-7.72% J Mn

. . :, s

, ; $ 2.33 ~ ~ J N& 105.79 s

- :? '$ 2.20 ^ ~7?' *29.80 7 29.70 " E *1

• Decembeff,'1987 August li1982 ,

• • • I%8:76%Y 8.26 % ~ b. fMM'

^ ~ ' June t.1985 2

' ~

' $10 70~ ' ' 110.70 ~

a'm .

M, ,, _ ' A 10.84. .% MW~

~~c.

~ .

' 4. Redeemable

~.

.. Th'e Company is oblig'ated unde? the terrns of the Pursbasefund'Agreeme5t to provideg~.,_;g , $m,. g Preferred and o

_The funds sufficient t. purchase 1,600fshares cf the 4% Cumulative Preferred Stock

. Preference Stock redemption price of this preferred stock at December 31.1980, was',$102.25mMn . 2 -

,3; _

y - . . -  ; w , c . . y. , cygfgp

.k The $8.00dumulative Pref'e ienc'e Stock (issu.ed in.1978), with stated value of $100 per share;J ;3pw S.; :w 9

^' O; 'is non-redaemable through December.1.1981; but may be redeemed thereafter in wtic

,I E in part ratably from each of the holders of the outstanding sharesiat $104 peisbare throughdr$gh December 1,1982, and at $100 per share thereafter. Annual sinking fund purchases lof;41,66CGSg

, , ' } shares on Decembe t ingyears 1983 through 1988 are mandato,rygggg.ggy gpq ~

y>- -

JThe $12.75 CumulatNe Preference Stock (issued in 1980)f with stated value of $100 ps.r L ;JM.$ '

. j 3 y share, is non-redeemable *Mrough May 31.1983,1but may be redeemed thereafterin whole, or ..y Md. s

i. M ,j

%lin part ratably from each of the hofders of the fundoutstanding shares,at tirpes and prices f >- specified in the purchase agreement / A'nnual sinking J J qe, ; DJune 1 in.theiyears;1985 through 1990 are' mandatory . W Qpurchases of 41,667 sh

" ,;,**. Schedufed , :y,ns. 3redem, 7 .y.g pr.4g ption,and  % qr3 sinkmg y.+W.W fund ,

p.gh'Mrequirements. a m; l 3~ ; ' '? , ._s

' ' rred and.. AMQ's , l

' preference stock for the next five years are as follows:(1981 and 1982, $160,000 eachi,1983 W 6~ 1 M N'  %

, ) and 1984, $4.327,000 each; and for 1985. $8;493,000; , M:m , t.m WP.S J d.tm 2.%

. ;v .

c .t- w -

,s w . . : ~. m

if any dividends en is preferred or preference. stock are not declared'and paid when?( %

2 d **

_ scheduled, the Company could not declare.or' pay dividends on its common stock or- l 4

% acquire any shares thereof for consideration? lf the amount ol'any such unpaid.dividendsi %

l c, - equals four or more full quarterly dividends, the holders of preferred or preference stock. , ,. / l as the case may be. voting by the classes prescribed for this purpose,could elect represen- *

, tatives on the Company's Board of Directors.! -

'M' , -

5. Long-Term Debt First Mortgage Bonds:The amount of First Mortgage' Sonds a' uthorized by the Indenture -

of Mortgage and Deed of Trust dated as of December 1,1946;as suppfemented, is unlimiteda The amount of additional bonds which may be issued is subject to certain restrictive ., , ,

.(, l provisions of the indenture. Substantially all of the Company's' utility plant is pledged u'nder -

the terms of the Indenture. The 3n% series due 1985 has an annualsinking fund requirement .

of $160I00 which will be met by pl edging property additions taken at 60% of cost or fair value to the Company, whichever is less. - . .

. e

,-7 ..*

n '

,.g +

• f'4 ? $f ? ?,.

~

s + .p s *

N J , '- *)'~ ,:e y ,

4 4 y a h 4^

, , [ s ,' + it, *- g* , [. 4%, > [ah h ,T"l Q (( y- ~ ;y, 2 p . ~ ,h*

2 ., , ;..? . . r_ g5

,8 hm ' M -

- .~.

my.m7.r,.pmg,y -- v .

m -.w.mg w.-.y m, ~

. >,. .m g77 s' ,s . de .'SM .

N W L^- i

's,- -

< - . ,).f 3 % : b':'G y 3 WT' L ,- ,l

< " ,Mincluding officers providing for benefits upon retirement normally at age 65~

~

< requirements of the Employeet Retirement income Secunty Act of 1974 (ERISA), the 4' ~ Company is oblegated to fund Ine benefits of the plans. The Company's policy.is to fund - '

pension costs accrued. Liability for past service costs is not significant. The annual costs .

^ ' of the plans were $7.3 million in 1980. $6.5 mittion in 1979 and $4.7 mi!! ion in 1978.

The costs in 1978 nere abnormally low due to a lengthy strike, during which contributions were not made to the plan for bargaining unit employees. Other factors causing the 1979 and 1980 increases were increased contnbutions because of salary and age changes and to

- = meet ERISA requirements.- -

_ At October 1.1980, the date of the most recent actuarial repcrt, the actuarial present values

. of vested and non-vested accumulated plan benefits were $102 miriion and $3 million, respectively, and the plan net assets avadable for benefits were $102 million. A 6% rate of return was assumed in determining the actuarial present values of vested and non-vested accumulated plan benefits. -

~ Row nue and Expense Recognition: The Company utilizes cyc!e billing and in years prior to 1979 recognized revenues bd!ed to its customers when meters were read. Costs of service .

rendered. including fuel consumed, are recognized as incurred. Due to increases in sales, rate leve!s and costs, the effect on operating results from the difference in timing between the current recognition of costs and the delayed reporting of revenues increased under such method of accounting in order to match more closely revenues and expenses and because the Company expected to change and did change in October,1979. from bi-momly meter reading for residential and small commercial customers to monthly rneter reading for all customers, the Company changed its method of accounting effective as of January 1.1979, to accrue the amount of revenue for sa:es unbilled at the end of each reccrting pencd. The effect of the change after considering the effect of the change from bi-monthly to monthly billing, net of income taxes, was to increase 1979 reported net income by $8.4 million (50.76 per average share) of wnich a net increase of $1.2 million ($0.11 per average share) was reflected in operat:ons and $7.2 mi!Uon ($0.65 per average share) represents the cumulative effect of the change as of January 1.1979. The effect on 1978 coerating results, assuming this change were to be applied retroactively, would not be significant.

Prior to 1979, fuel and purchased power costs in excess of those reflected in base rates were recovered subsequent to the period in which such excess costs were incurred through fuel adjustment clauses. Orders from the MPSC and the State Corporation Commission of the ,

State of Kansas (KCC) providec lor revisions in the Company's fuel adjustment schedules and new fuel adjustment revenue recognition procedures were implemented in the first j quarter of 1979 to record currently the revenue to be collected under such clauses. Because - .

of a ruling of the Missouri Supreme Court, the Company terminated its fuel adjustment clause $'

for Missouri retail customers effective October 1.1979c income Taxes:The Company generally normalizes the effects of the use of acce!erated tax depreciation methods. Deferred income taxes have been provided for the differences between back and tax depreciation except for the effect of accelerated depreciation on

- Missouri property acquired prior to 1972. Accelerated depreciation methods include the use of the Asset Depreciation Range system, which permits snorter lives and current deduction Lof removal cost and repair allowance. Taxes deferred on property additions for certain prior years are now being restored to income as the timing differences reverse.

In accordance with rate orders issued by the MPSC and KCC, the tax effect of the interest component of AFDC is being normalized and the related accumulated deferred income taxes are being cred:ted to construction work in progress rather than being shown as

~ deferred income taxes on the balance sheet.

Prior to March 31,1979, the tax effects of currently deducting certain costs which were capitalized on the books were not normalized. Effective Apni 1.1979, the Company was authorized by the MPSC to normahze the tax effect of pension costs payroll taxes and property taxestwhich are capitalized on the books but deducted currently for income tax purposes and to flow through the effect of the current deduction of removal costs for income taxes..These changes in income tax accounting procedures resulted from rate proceedings which also adjusted revenues accordingly. The procedures in Kansas remain unchanged.

At December 31,1979, the Company had a net tax operating loss carry. forward of approximately $11.7 millicn with an estimated tax benefit of $5.8 million which was used to reduce the 1979 provision for deferred income taxes. All of such amount of deferred income

- taxes was restored during 1980 as the net tax operating loss was utilized and eliminated.

~

9, .

._ ...m. - ._ _. . . .$ l ) , _ _ . . _. g. . . .

,, 4 . e .-- - - . - ,v ,yy 7.,,9 y , 3:.3 : w.,.n. ~. ~ . . ,,. . - , , -

p y&y y w ,(;T 77_ o ,

%, y " w :' ',O..

J

q [ , , ' ~

c. . .. ; ., . - , - . .

M J ~, sale agreement. Such additionalinterest, $3.8 million at December 31,1980, would be 6

~

capitaiized.There can be no assurance that the contractual conditions for closing the m ,.. sale will be satisfied,'and it is possible that, under c rtain conditions such final ,

a closing date or repayment date could be extended by mutual agreement to .

s -accommodate the parties.f ,t'- %, e '

', , J.

-,' included in construction work in progress at December 31,1980, is approximately $409 r mittion for the Wolf Creek Unit. The Company's share of total construction commitments at December 31,1980, for the Wolf Creek Unit was approximately $276 million (including $232 '

millicn for nuclear fuel) 3 c e

~

' ^ '

An application is pendir g bdfbe the Nuclear ~ Regulato'ry Commission for an operating j license for the Wolf Creek Unit. Wrthout such a license. the Company assumes a nsk of foss

, , in proceeding with the construction of the Wolf Creek Unit. . .

^ in February 1980, the Cornpany and KG&E se'ttled their long-standing uranium supply U,

'. litigation with Westinghousec.The s'ettlement provides tisat the owners of the Wolf Creek Unit together will receive benefits having a then present total value of $94.1 million comprised of ,

$38 million cash received in March 1980, other future benefitsvalued at the time of settlement 0m

. at $48.6 million (consisting of discounts oncuranium, rebates on fuel fabrication services, T A' , '- D j.7

+ 5" y ' '.$7.5 licensing and engineering million representing the,then present services, valueand of a equipment contingent interest and granted relatedbyservices)

West- and an estimate

• ' T; 1

" inghouse to the Ccmpany and KG&E in any proceeds received by Westinghouse from an antitrust suit against certain uranium suppliers;The Company cannot predict when or to what ' " T.

extent Westinghouse, and thus the Company, may receive any such proceeds. Upon the s.

' consummation of the sale of a portion bf theWoji Creek Unit to KEPCo, the Company's inter- y[f est in the proceeds of the Westinghouse settlement would be reduced from 50% to 41 %.  ;',

6 9. Jointly-Owned The Company has, under joint'owriership agreements'with other utilities. an undivided

, , Electric Utility . interest at December 31 1980, in three electric generating stations as fo lows: O m Plants -

,m/ n R% ~ "n W ~ '

'm"

. . . s ._ La Cygne latan v ,

iu

. s . a 1,; -

Dk --Units (thousands)

Unit

?' . Utility plant.in service $ j..y~ ',;'.7.fic,M.*.1 . .. $226,322 .$233,832  %' l Accumulated depreciation b . ' '. *

~i

- (Production plant only)f, b,%$ 3 2/M id?I.$49,528 ~ 5,'857- U

.f < Total accredited capacity-MW ug._.c. c. c. g;O - ; . c, . . .

Company's share-percent z. m. . . ...w e .;,;. 2/.O. .r. sc. .c c 50.0%

1;370 670' 70.0 % f

[ .k < See Note 8 -;.,._~.. for Wolf CreekUnitinfdrNiation.M, . E%M,W i . i M$

ya 3 ,

Each participant must provide its own financing The Company's share of direct expenses

, , is included in the corresponding operating expenses on the Statements of income.

,3

, . f. Q 2: , . h;?R ^ ' TC ' ,:k

,[

^

'? ^

Auditors' Report 1 To the Stockholders and the Board of Directo. rs.y, TM4K6@AAM@- of .Ne " dr ;

c.Nq m"e J '. '

,a, '

.]

Kansas City Power & Light Company .y { Q gy. i

? We have examined the balance sheets and statements of cumulative-preferred and a #--

preference stock and long-term debt of Kansas City Power & Ught Company'(a Missouri '

corporation) as of December 31,1980 and 1979, and the related statements of income; taxes, retained earnings and sources of funds for gross property additions for each of the three~

years in the penod ended December 31,1980. Our examinations were made in accordance with generally accepted auditing standards and. accordingly _ included tuch tests of the accountmg records and such other auditing procedures as we considemd necessary in the circumstances. . g  ;.,-

'In our opinion, the financial statements referred to above present fairfy the f:nancial position of Kansas City Power & Light Company as of December 31,1980 and 1979, and the results of its operations and the sources of its funds for gross property additions for each of the three years in the period ended December 31,1980, in conformity vath generally accepted .

accounting principles, which, except for the change (with which we ccncur) in the method cf

, revenue recognition to accrue revenues for sales unbilled at the end of each reporting period as indicated in Note 1 to the fin .ncial statements, have been applied on a consist %t basis.

Ka 'sas City, Missouri, 'a

^ ', , January 30,1981. , j ARTHUR ANDERSEN & CO.

L .,

{ hgF 8 *

[ . -4

- $.' h : ";';ll%' &, *) &f l*Q 4;!.k

f . ..,..

• % ~' .

,. l

.n f -

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l L . - s - ' - '

)

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.- . . Q . OC ' , . M -

_ y d WO{[.b&h;l ~ N

~

~

~

~ Lylye Other Loon groupAgreements:The Company has for a $50 million line-of-credit, funds at expiring J

-11982; with a of intemational banks which provides the use of unsecured

- M- interest rates adjusted quarterly based on the three-month London inter-Bank Offered Rate.

. a p,hjAt December 31; 1980, $27 rniuion at 18%% was outstanding

~

' 1.CThe Company has a financing arrangement with a bank, expiring January 16,1983, which

% enables the Company to borrow up to $50 million by collateralizing its coal and fuel oil 9 ' inventories at rates based upon the current bankers' acceptance discount rate plus an

, ,a acceptance charge. At December 31,1980, $40 million at 20.9% was outstanding ($50 -

7 million at January 31,1981).

m r.~ , , .

1^ iThe company expects these agreements to be extended.

- Scheduled Maturities:The aggregate amounts of matunties during the next five

years of long-term debt outstanding at December 31,1980. (exclusive of the other loan age ements) is $25 million in 1981, $35 million in 1983 and $16 mdlion in 1985.

6. Dividend ' Retained eamings at December 31,1980, included $11 million which was not available Restrictions . for cash dividends under the provisions of the Indenture of Mortgage.

7. Rate Matters - In an Order entered June 19,1980, the MPSC found that the Company's fatan Unit was not then needed to provide safe and adequate service to the Company's Missouri rate payers, s . and denied inclusion in the Company's rate base of the $164 milhon Missouri junsdictional .

' portion of the Company's investment in such unit. The Company has initated judicial reviews of the MPSC Order.The Company cannot predict the outcome of these proceedings.

"The MPSC Order also authorized the Company (for Missouri jurisdictional purposes) to continue to accrue AFDC on the latan Unit. However, because of the questionable propriety of recording such AFDC amounts for financial statement purposes, the Company has not done so at this time and is following the normal accounting practice. At such time as the

. MPSC issues a rate order permitting the latan Unit to be included in rate base, the Company will conform its 1980 financial statements for any AFDC amounts a!! owed in the rate order.

AFDC~ accruals on the fatan Unit were terminated and depreciation accruals were commenced, eacn effectve as of May 5,1980, the date the f atan Unit was declared commercially operable by the Company.

'On May 28,1980, the' KCC authorized the Company to place ir'to effect on June 1,1980,

, interim rates designed to increase its annual Kansas revenues by abcut $24.5 million, subject to refund pend ng action by the KCC on new permanent rate schedules. The Company cannot predict whether, when or to what extent the KCC may perm:t such revenues to become permanent. However. in the opinion cf the Ccmpany's General Counsel, it is not ,

L  ; probable that the Company will be required to make refunds of a material amount of 4 J revenues collected on an interim basis if the KCC applies the same pnnciples in its action on l

. 'new permanent rate schedules as it has applied in the Company's past rate proceedings. 4

, . xincluded in 1980 revenues is an estimated $17.2 million of such interim revenues which are l subject to refund.

8. Wolf Creek Unit; ' The Company and Kansas Gas and Electric Company (KG&E) each presently own 50% of r the 1.150-MW Wolf Creek Unit being constructed in Coffey County, Kansas. However, the l  ; E comparies have agreed to sell to Kansas Electric Power Cooperative. Inc. (KEPCo), an

, ' organization consisting of 27 distnbution cooperatives operating in Kansas, a 17% (8.5%

from each company) ownership interest in the Unit. Under the agreement, the sale is subject f ta (i) receipt of' regulatory approvals and (ii) KEPCo's permanent financing. On October 30,

) 1980, the KCCissued its Order granting a certficate and authorizing KEPCo to purchase the

~

.17% interest in the Wolf Creek Unit. However, the Order contains numerous conditions which l

Late unacceptable to the parties, and, unless these conditions are substantially modified or

. Q ehminated, the sale is, in the opinion of the Company, imoossible. The Company, KG&E and AlKEPCo initiated judicial review of the KCC Order in the Distnct Court of Shawnee County, Kansas, on grounds that the Order was unlawful and unreasonable. The Legislature of the State of Kansasis considenng a oill which would remove from KCC jurisdiction any authonty it may have had over the proposed sa!e to KEPCo. The Company cannot predict the out-j come of such review or legislation or whether or when such sale may occur. KEPCo has i

7 made advance payments to the Company which at December 31,1980, amounted to $84.5 r million and as of February 17,1981, amounted to $72 miflion which, together with interest

. accrued by the Company on the advance, would be applied against the purchase pnce

. obligations of KEPCo upon closing of the sale. At December 31,1980, such interest amounted to $8 md! ion. If the sale is not closed by April 30,1981, the Company would be required to repay (through use of available credit lines and the proceeds from the sales of

, secunties or borrowings from other sources) to KEPCo, by July 31,1981, the advance pay-

. O rnents made by KEPCo to KCPL with additional interest thereon at a rate established in the 26 _

$?$Mt '$ } T ;.S

__ ,f Rwwwd[.n._._. a. _ _ .

,,, ._v,,-w.- n

- . - -,,,mc

. m-g,y n. 3 m m-

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z M< . e,%'>.3 q ..o.

r s -

w-w e- m .W ,. W n -3: ~

M(Certain y hThcusands Financial of Average 1980 Data Adjusted Dodars) - For Effects . :-of Changing e. cu- .- PricesVdMIINP m ?;;^:f, - -

gp+ .,

. Year Ended December 31

~~ '

qggg -

,7 ~ _ ..

3979 , 397g. - " 1977 -

1976' -

N . Average consumer pnce index (national) ' . 246.8 est. 2217.4 a195.4- > -181.5; 170.5 -

f.  ; .p: r 3 ,; ,

g.; y - '

p Gene _ rat informat on . n .

. ;; ~

,a . Operating revenues . .5 445,965 5 421,030 .5402,487 . 5368.041 $343.297 i i, Gain from dechne in purchasing power of . - <

{; 3 net amounts owed . . $ 102.199 S 113.274 " 6 . . / , -- 3

- ~ ' Cash divicends declared per common share ~-

S'. 2.69 S. 2.99 c 5 3.23 - 5 ' 3.35 $ 3.39 A  ; Market pnce per common share at year-end i 15 , 19.22 $~ ;23.757 SL 29.34" S f 38.29 5 41.95

^ J. . , m - .:  :, s. E : .~

Q i Hestctcal cost informat on adjusted for . . -

.? ' - M C . O .i:f A '[N. s ,

~ '

3 9Generalinflat:en - .

' " ^~ " l' ?% M '1. .

; U. Income * *

^

lT l 3 . 23.48'1 5 ' 3,771, ' i 47 M.1 4 V income Coss)* per common sbare' -

'S C O.86'i$2 (0.75): [ % 7 1 ~ -e

^'

j:qNet assets at year.end at net recoverable cost; * . e $ 405,780 *: $ 398,6016 $h;.1 1 , . _  : ;< ~ '?'

5:6L . . ,oAC -~% . w.,~ -

d M j.m >;c.omh@;d e .E'. , Eh WCurrent ccst infctmation ' . L :M ' b~ W ~

Mincome" ; . '. 7CNE .W M T3012.2487 $ (10 491)ZWPDW24 LT.1- . " df D *

'G W =Wa4 % G W W W " ' - ~ * .:**-

" ' "~

.N income (loss)* oer common snare t '

a- -

A. + Excess of increase in general pnce tevel over > - $ m- 8(001)' + ev S ~ .-(2.04)W:a n' W w e'iW b- ~

H o increase in specifc paces after reduction ,;y F- S'" TCMVf,@ ' C'i _ . - y . - ,, a 7

r ito net recoverable cost - >

" ,$ (96 799). $(119,045) ?;M;.np

. .-J J' -

A

, Net assets at year.end at net recoverable cost..

7.. 5405.780 . $ 398.601 ,,jL , .

. , y; ..

. . . , , t -.~.

MExcluding reduction to net recoverable cost. The year 1979 is before cumulative effect of change in revenue c

• * ~

-"- '*;E * *

V recogn<tw t ' '.'=.

y ,'....g ~2 ' " ' "* 'Ve ' ' ' h+ ~ . . '

-+ y ,b .- s' . c- -

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n

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ry ~ 3. . T

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a; s"'z'-

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y-

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, , ,  ;& r : - a  ;,?k- , f~" . **

• 1.. a > x c _- . m.; . -

4 ,

4 ,, Notes to the Financial Date Adjusted for Changing Price . s .g _s. _ u- .M-a,; . A.yA. ~ y.M e. .m,ammy'-

1. m. -

~

4

'~

- ; A Ttte information presented above is supplied in accordance with the requirements? M~:.V ' N ~ ' 's 4 7of FASB Statement No. 33.

• Financial Pecorting and Changmg Pnces.* for the purpose of GT N.~ '2 g provicmg certain informaten about the effects of changing prices. It should be viewed as arr ^MW W ." " '

4 f cstimate of the approximate e'fect of inflation. ratt er than as a precise measure. 7 Oa.' Constant dollar amounts represent histoncat costs stated in terms of dollars of equal-l s ,. . . . n. . ; . s a< -

q l ,

4- / purchasing power as measured by the Ccnsumer Pnce Index for A!I Urtaan ConsumersXTD, .,

f(CPf-U). Current cost amounts reffect the changes in specific pnces cf p! ant frcrn the date ', jQ _ , .

.y the olant was acquired to the present, and differ frcm constant do!!ar amcunts to the extent.: , O- . ,

4that specific pnces have rncreased more cr less raoidly than pnces in generalyTte current 9., , ' , ,

,b fcost of plant was determined byindexing the surviving plant t., the Handy. Whitman _Incex ofM v'M -

1 Pubfrc Utility Construcron Costs. Since utihty plant is not expected to be replaced precisely $ ; 7 .

i fjn hnd, current cost does roi necessarity represent thereplacement cost of the Company's G f i i 2

! . productive capacity.The current year's prevision for depreciatica en the constant dollar and" ' *

~

- current cost amounts cf decreciacte plant was cetermined by applying the Company's l

composite depreciabon rate to the average, depreciable plant amount calculated on a - ~ ,

'.,. constant coilar and current cost basis. ,

- . . . .. . .-3 s M, ~i Since regulation limits a recovery of fuet costs in base rate senedules to actual costs;  ;

b fuel inventor,es are effect:yety monetary assets and nave, tnerefore, not been resta!ed frcm y' their histcncal cost in nominal deitars. Also, preferred stock nas been treated as a monetary 1

stern y Since enty histenca! ccsts are deduct:bte for income tax purposes, tocome tax expense 3_ _ _

has not been adlusted. o l

j O Under the ratemaung presenbed by the regulatcry commissions to which the Company -

4. is sub;ect. cnty tne h:stoncal cost cf plant :s receverable in revenues as depreciation. - "

Therefore. the excess of tre cost cf piant stated in terms of constant dc6 tars or current costs

! . .that exceed the nistencai ccst of otant is nct cresentry recoveracle in rates as ceprec:ation, ,

l iand is refected as a reduct:on to net recoverab e ccsts. To prcperty ref'ect the eccnomics cf

' rata regulaton en the determinat;cn of income, tt e reduction of net plant to net recoverable- .,'(.

l ,F;Icest pn . nas been- offset b. y .the gaerem the deckne in purchasmg y, y -power of a.net. amounts owede m. ;;pe. , - --

am , .

s, 29 g_ [' _

-_1."

7~ .

n. m .. y 7 p- v.- q ,-.g 7,v ~ , . .

~r - ,. ,. y ,,m - - m

.m,97

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, s. ; .... m . . ,

o we

,i: M3.;Q; . m $.;'y .- - j;,,,@, g M F ,

. ..%,~.

. .[-^

. Kansas City Power & Ught Company %,a NWC ' 7 l ' *

? ? D. '

Supplementary Financial Information '

7 Quarterly Operating Results ; 7y.g <

m '

' 4, a , , u .

m - 3 <

y ,

_ . . t 1st. '. J, 1. 2nd 3rd 4th (,

'. . Quarter. - . . ..

Quarter : .

Quarter Quarter ..

,Q '19803 y1979(a);, 1980 1979 1980 1979(b) . 1980 1979, er 4, .4 (thousands)

Operating revenues [ ' $87,805 . $89,907 [$99,032 $91,732 $153,627 $98.264 $105.501 $90.971 Operating income '12,7941 i9.377. s 16.480 11,641 37,648 11,992 19.925 11,064  ?

Net income . ;"W 10 775 9?14 482 : , . .

-11 , 458 ' - 9,531 32.408 10.367 14,060 9,372: q Earnings per common share ' $~ L .69 ? $ ~ .1.19 .$ , .65 $- .64 $ 2.18 $ .66 $ .80 $ .58.

i;  : - ,

The business of the Company is subject to seasonal fluctuations with peak periods occurring dunng summer months. ,[ ,

~

, T (a) income before cumulative effect of changein revenue recognition of $7,280.000 ($.47 per common share) was' ~

reported in the f.irst quarter of 1979 y,..w 's a. w, - . J,.3

~ . #,.3.2 a (b) Net income for the third quarter of 1979 was reduced by approximately $3.7 million ($2.7 million and $1 million * ,

i' recorded in the first and second quarters, respectively) because of the reversalin the third quarter of unrecovered @

fueladjustment revenue caused.by a ruling of the Missouri Supreme Court. .

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Financial Data Adjusted For Changing Prices '

. y~e-, ,

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(Thousands) < ,.m-mn., ,. , ,: w ,

- >s Year Ended December 31,1980 : ~ .

- o. - Constant Doilar Current Cost . .

. i.- . ' 7 ' .~rp.. . ,~.e  :.a J Average Average' s ..;

,.o y -N 1980 Dollars 1980 Dollars? M4 Net income before book depreciation of $41,7336, , , m , $ 110.434 -

Adjusted depreciation "C. ' - """ G." c' 86.953 $ 110,434.

98,186- '- wad -

M .; ,, rg ~

_ , $ 23.481 (a) $ 12.248 [NV

, L ' ': ~. . . w ' @, c's

. increase in specific pri ces (current cost) of property, , .

1i plant and aquipment held during the. year 93 r ;'" ' ' $ 287,803

Reduction Effect to r.at recoverable of increasO in general cost priceleveIX:th;,Qy/df QW- m .c i ? b , -

$(108,032) (94,005)

MQ (290,597)

Excess of increase $ generai' price l'evei.o7e'r'inEreas5 in specific-

^

,' 7 I prices after reductinto net recoverable cost ~? N O. . (96,799)(b) e v .4 Gain from decline in purchasing powbr of net amour ts' owed 102,199 102,199 < ,

3;b Net 5 i 5%

b,c e . . , $ (5.833) $ 5.400' -U W .&

.M' d N$7 @Yg.hs. FL. WJMk yyx p.?q;:.g fmsll%. % : W n

, i, (a) including the reduction to' net recoverable cost;the (loss) on a constant dollar basis would hae been $(84,551) .  :/

for 1980. 5i Q.yQ$9 W N g .L -

(b) At December 31f 1980,c'urMnt c$t of util'ty'piant i net of 5ccumulated depreciation was $2,667,0C0 while histoncal cost or net cost recoverable through~ depreciation was $1,363.000. - .

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Electric Seles Statistics 1990 1979 1978 1977 1976 1975 1974 1973 1972 1971 1970 Revenues plX7s)

Reeoorem

- $ 181.973 s 121.170 s 111,9C s $1343 s 84 202 s 73*c7 $ 62.314 s $8280 $ $1.533 $ 46 912 s 41571 Cor snerc.us 176.385 _ 146.120 124 Cas 107.738 S&J06 83 4'6 68273 62.043 54.830 51.112 4&O67 viseena 88,att 78.956 61.489 50.914 43.106 34 478 3L927 27.570 24 530 22.487 2CL372

' 8%ec arens ard rogrimav iorano 8.33E 7 043 & 221 & 398 5 688 1205 4 506 1 949 1 683 3 424 1 301 f%he asoces-power and hgrerg 75 W 74 65 60 56 . 55 49 45 44 43 CR*er seectne wtades 1&A38- 9 994 &3E0 6.186 1 315 1 765 2 9Ee 2.356 2 123 1 868 1 879 b4s 430,33F' . 361352 312.208 , 264 644 232.876 20& 427 ttR043 154246 13&744 . 127.847 119.035 Cenor mecenc iewerus t.SsS 1 732 1579- 1.409 1 421 1Js6 1 206 1.157 1 037 927 E*,

he s_411er s 36sca4 slarsi s__2e6m3 s 2u 2_97 s 207 e'3 $ 00249 s 15s 403 s 137m s v28 na s 119 899 Sense in easeuse temure (000's) ' .

Resoorma 3.8b8,4SE 2254,962 ' 246E782 2.264 029 ~ 2.193.859 2.3tXL432 2.071365 2.111328 1.956.111 'tSatL229 1.731017 Ceriarc.as 3.3a&145 1181710 3.182.675 308tL5aB ~2.889 888 2.846.031 Irshsinar 2 651.817 ' 1 677 897 1 493 428 2.311259 2.23& O78 2.141.000 2.3EL20s 23C2619 2.147383 1.900 230 ' 17583C8 1952711 " 1.98E799 1.38'.870 ' 1.752.072 ' t 649 957 Putec arreer and Ngr eay krerg - 47.172 , , 6& 567 : 6&244-- 68.288 ' 66.814 66 260 -- 65.27S I ' 6&158 < 623k1 59 249 : ; 55.733 6%ec anwees-comer <

• • 'v ' ~

ard aghrmg ' t. Set . 1.378 2.710 2.7c2 2.657 2.914 1513 3 500 1506 3 685 1 774 Otrer escrre saares , _ 3e&164 _ 329 072 _3'6 916 - 317 5?6 302 _842 264 497 _ 2_35 ,498 ' 236309 2*6 2M3 '95 g 192 710 has

~_S.80&S05 gg _9_356_950 _7 900 485_ _7,436 290 724? 442 6 9T360 70_9_0988 6 613 622 _&'_63242 _5 865 16_7 vesen.r se - -

Assuerse 301.417, 298 413 293 402 288 3'6 284296 ;t1.708 278 973 271 532 267 320 261 Sh5 256 452 Cor wearom 38.906 38.372 3 & 713 3& 343 38C24 37.709 - 37.575 . 37.401 . 3& 670 35.897 35 624

• Letram 2.215 2.142 2.121 2.084 2.065 2.049 2 063 2.112 2.133 1 843 1 464 9eec srmee are nigra e, agrumg 123 123 122 725 126 128

^123 126 129 131 132 8%tsc aurncates-cower eiangeng 11 ' it L t2 11 ~ ~ 11~ 11 ' 12 ' ' 12 . 12 '12 12

^

Otter eactns eres d' '

14 14 - 18 16 $5 13 13 ' 13 *2 12 13 Totas

. - 3e2.794 n _339 _075 _ 33_4_38._7 _328. _952 324 53_6 _321 6._16 .

31% 764

_3 31

'98 326 2. _76__293_79_0_ __291_70_1

• 5 Amerage stea percuamer 1931 - 7,5f4 4.404 . 7 320 - 7.71 7 - ~ 8.166 7.423 ; 7,726 -

% rage v,e w cer kom.-. cares s ) 7.3tf 7 027 - &786 -

4.023 5373 4 541 4C87 3 838 3 456 3009 2 756 2 634 2 e68 2627 .

Land Semessee -

Genermed trerW <0017s> 14006.a89 . 7.531591 8.581224 144&189 7967221 7.201 748 7125.580 - 72?2.582 7.221433 7 071663 4 754.710 Astfasers-4=a (0017s) 11.791 ' 79 993 211.991 188.082 194 250 190 t98 161 @ tot 758 - 18E822 1 m 347 171245 mascargeo trueb-=a8110017s)

MJ 1.196 104 21 1 421 (182.895) 164 936 461 542 169 272 243 921 .(237235) c591700p - 4903518) -

TLeon-. awn (0003) '

1&205.8B1 c &811688 1 01_1 638 . & 451.576 _8 C26 407 - 7.a57480 _7.52462_ 7Sa&272[ 7.174017 ,6641310 _&324 137 '

%saacun not nrmesy comarts n '

tapear's (marter) _ g sma m .1.317JXX) 1.28&fX)0 ' 1255 (X)0 1.166.0tX3 '

%damrrwi nst roury cerrerd a 1.161.000 ' t.10&3X3 .1.tM900 - 1.116.atX3 1.016.7tX3 964 700 ,

. , . , s, I

Cs80marfs ts#'mer) 2, ten aam '1.364 000 2.097.000 1.980.000 1.P20.000 1.902.7'X) 1307,200 c 1.757.3tX) .1.671700 1.571800 1.498 900

! Nur gere steg carwv c ,

c:w (arvrer) 1834000 2.56CLOOD 2.560.1X)0 2.641.000 2.381.000 2.134 000 2 21&000

• 1224 000 ' t.811000 1.66s.000 1 68&000 a

es piermeea cacec4v m ke (summer) - - 95000 (101.000) 116 000 100 000 144 000, . 625 000p . 1610to 172 000 45 000 Bha por two **e generared -11,138 - 11.633 .112ti6 , 11 S 8 11.331 11.585 - Il 354

.-  ; 11.521 .. 11.00t 11.037 11 066

, ,. = <

Other Date Ut.arypiers _Geens arweirws (0017 3 e iSteer s 234.818 3 188 721 $ 16&295 1 126.014 S da816 S . 61179 $1 3 & 355 5 7t1170 $ 5 & 213 5 42 656 Truse 4amees (000s) t sua ese 1.391.3n8 . t tes.760 1.00& 814 841.502 - 731530 - ' m *m 7 604.E00~ 575.506- 521.812 477401 Employee Data Sam,ee anc esges(00Cs3 3 71ast s 68 485 s 54 603 s 5& 380 s 49 644 3 41308 $ 3& 614 3 44088 $ 33 867 s 31 666 s 29 332 Person a'd Derears (00tTs) 11.878 ' 9 947 8 861 7 878 7 132 6487 1358 5 870 4 285 3430 3 178 s

_sLiras 8412 s s1.554 s s 25a s_5&_77_6. s Si nr s 43 972 s_. _45 _938 s 3& * $2 $ 35 ce5 $__32510

1. Gmee of errooveen Dece*eer 31 - . 2.85 1888- 1 726 2.5 72 2.522 2.464 ; 2.477 2.556- 2.473 1 444 2.393 m- y  ? '

Soaree na .agostant7s) seamans ano pareers (000 s) s 01400 s 62.569 1 49 755 s StJ16 s 46 491 S 42.748 s 35.272 S Ja130 s 33264 . s 31 665 $ 29 332

_ 18.751 9 292 6 287 7.350, E 754 & 174 5.087 5 729 4 209 3 430 3.178 8 T7.219 s F* 851 $ 56 042 s 59 075 s 53 245 s 44 922 s 41 359 s 44 8E0 s 37 4'3 s 35.095 s 32 510

• seroer ot eweaveseL Cecerwer 31 1938 2.659 2.577 2.414 2.382 2.379 2.375 . 14?3 2.429 2.444 2 393 mme cara smed m annovees asocased e aner carooperts a are omned r isws opermea by KCPL f

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Kansas City Power & Ught Compariy' - N 3, '

@f Eleven-Year Summaries and Selected Financial Data .

' J

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e . , q, y ._~:q , , s f Summary of Emmings - #1900 1979 1978<' 1977 1976 1975 1974 1973 1972 1971 J1970 opereeae Revenue iO009 "

Oecmc S 440,132 S 365 064- S 313.75' S 2E8 053 1 234297 $ 207 813 S 170.249 $ 155 403 $ 137.781 5 126 774 . S 319 899 -

Ste.wn eese -

5.783 - 1791 ~ 4.87 4609 - 2867 2.505 f.799 1.736 - t 629 17th 1J07 7aal 1 445.966 370.875 ' ' 318 6 J ' 270 662 237.164 210 318 172 048 157.139 139 610 130 474

• 121.706'.

Opereerig Empensee {007s) . .

Ormrme 174.001 18& t34- 1131450 ' 11Q510 92945 81555 . 58 837 55 950 50.538 43.622 . 40.324 nacrenero 52.see ' 54 355 ' 31359 , 29.496 22.275 19.194 14.550 13 890 10.659 11.451 14835 Cetweesem 41.733 2 348E8 .'3 814 - J0356 - 24 629 '21.867 20 648 18 560 14 301 11489 ,, 12.95L

' eses . . .

• ~

.[.

Incorne .42.008- 9 58A ) : 26.137- - 1& 455 19 841 ~. 18.495 t1204 10.633 9.349 . 9.952 ' &a54 '"

Gerorm 47.966 41 914 38 511 35 5t9 39.872 28 537 21207 22 959 29.375 20.605 18 482 :

Torm 358.110' 32&900 ' - 2&l63t - 224.336 - 191 512 69148 134 446 121.992 1J&222 99.119 92.434, Opereeng income t000s) 88.847 44 075 51032 46 326 45 652 40 6/0 37602 35.147 31388 31.355 - 25.272 -

Otner encome and Desucsons 1000's) ' ~ '

Anowance 8e equay tuntis aed

' 4?'

T592 ,* - 3 983 dunng coristructe

• 1 19,779 - ,,19 467*, ,.12.543 a 2.119 518 1.006 '.893 1.029 L' L337..,'

henareous (rier) * ' (132P - M4

• V ' [874) 09)' 4 C 185* t.715 642 21 4 498- 503' A ' . 402 f 3 Itta 19,843 a 19 771 ' < 116M 7.553 4.168 3.834 <.153 1220 2291 1.532'. ' 730 7

108.500 63 846* - 6 & 701 51379 '49 82C 44 504 36755 36 367 35 779 32 887 '3a011' I Charges t000s ,

+

L interest Chargee <000ss .

.. , '/

rwerem on eg eer n wel - 4 & S64 40 612 : 32.217 2&856 23.553 19.468 17884 17 473 15 978 11638- - 11.080 . ,

werest on armat4erm roes 4788 . , , ; s.4C8 1.9E - . 1.068 4t2 1 085 1 592 343 660 672'., 11183, anowente W bormoed bres ~

used .ung consruum-c'ed t (22.a47) (19.211) , , 1C< ( 7501 (5.904) (4 022) (3 3%) (1 C62) (1 554) (3 102) (' 606) ' (912) 64 ]

u u.ecaneous 7.151 ' '2 406, " ' 34 ' 25f, - 203 128 147 87 87 -

2ee_ -

form 37.799 27.295 11777 22 286 20,196 t ? 900 18 542 '643 '3913 12.706 11 395 '

income before Cumideelve Eftest (00Cs) 6&701 36 551 42.924 31.5s1 29.622 2&6G4 20.213 19 958 22.'66 2a161 1a 6'e Cumuletree Effect of Change in , f Revenue Recogrween (OLUs) -

7202 , . - -

' b (f ,

sees income (000 u .

88.701, ^ ~ CL751.1 42.924 _31.593 .. 29 822 2& 604 2r1213 19 958 22.166 21181 {S.616y ,

Proeerr.d and Preserence Stoca .

Div63end Requireme98s (00Cs) 12.418

• 10 573 ' ' . ' 8 719 ~ * ' '? 549 ' 5 '24 40'9 2 642 2 849 2854 2 401 " ' ' 1963 r.

8Pt'*"* to Common Stock (000's) S _ 54.283 $ 31?80. $__34 205- -$ .'_24 048 $_24 438 $_22_585 $_17 371 $ 171to S_t9 312 5 t? 790 S 1 & 753

. - - .- - - ~.

. . t - E -

• Betro ceange e revenw reco3Mm ~S 4.36 S. 2JG $- . 1 55 $ 293 5 .3 40 $ 3 62 5 1 92 S 2 88 5 3 37 $ 3 28 Sf %S OS . m,

. Earrorgs rer nrwe . . S , 438 8 1301, S ~ 355 3; -2 93 $' ' 3 40 3 3 62 S 2 92 5 2 88 3 137 $ 3 28 . S . 30t , j i Rano et Earninge to Flued Chargne - f 99 - 3 01 . 2 78 3 04 3 09 2 82 2 68 2 88 3 07 - .327 ,

. 2.80 f . n Capitall2ation Data >

Commen stoca Equery (000's) $ 424.e52 5 371224 5 377.260 $ 282.106 S 244 908 S 2:5 512 S 188 336 S 181 934 S 179 802 S 157700 S 191.5'JD I Aerage snares cutstarong 12.91 &770 11.00E407 f 9 64&321.' : &216133 7 211.536 6.247.3 2 1 947.092 1947."92 5 73& 759 1 447 092 5 447.092 ; ,

Caen ovce ids cor snare 3- 2.es .3. 3835 5.. s 256 5 .; .2 46 3' 2 34 8 2 26 S 220 $ 2 20 3 212 S 2 08 5- 2 02 7.4

, 3 Preserved stach (000's) , ~. S' 112.003 ' SY111000' S 112.000 i t : 112.000 $ 92.000 $ 72000 5 52.000 S, 52.0n0 $ 52000 $ 52 000 3 39.000 '

Dewoond remaremeros (OtXYs) ( S. 2 8.414 8 i 8.414 . S &4t4 S 7.372..S 4945 3 , 3334 S 2.650 5 2 650 & 2650 3 2.190 S 1.646 '

Aerage csveend rme 17.9% ; ' .7 ST.'/ ' -75%3 1 74% , &7%. - 40%.

Su1% 5.1% 51%- *7%

. 34%

Presorred Stock C  :(00Cs) J S . S.838 S.k 4996,S O 4.154 S ' 4J18 3 4.476 1 4 638 3 4.796 3 4.956 S 5.11 6 S- 5.278 5- 1436 ,

Devdere ocperemeres tOO0s) - S' 1931 8 ' 159 ' SS '.166 5- J 173 $ 179 $ 185 3 192 S 198 5 204 S 211 S 217 herage ovcere rare - e

,&O% : ; 40%. 4 0% ' 40% 1 40W 40%- 40% 40% 40% 40% 4.0%

- . . r _ . . , , , . '

Preference Stact (Redeemanset (000's) S4 50.000 .S e 25005 ' S ^ 21000 . .- .- - - - - - -

Dvoere mostenwres (000 sp ,

S 1881 '.S , 2.000 , S-

• 139 ,,, ' . - ' . - - - - - - -

. 8 00% g' . 4 Aresage dmserd rare .! &73% 4005, -

. - n'1 . aC . ' , ,.

Langriierm Dent 4000s3 - . < S 887.4771 $ . S76 900 S' 501044 . S' 436J72 5 384.114 S 343.736 3 324.541 S 299.797 $ 285 673 5 25&520 S 231.056 trwome t.n decs (00ns) 'S' 4&ses*5 44612' S 32.217 S 26.858 .3 23353 5 19 968 S 17.884 S 17473 $ 15 979 $ 13.838 5 11.060-Aerage interem vare 8.40 % 1 17 65 % ' S 98 %

1 678% ' &35% 6 12 % - 586% 5 86 % 1 78 % 5 54 % 111 %

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l Officers and Executives l 1

Arthur J. Doyle Donald M. Landes J. Robert Miller A. Drue Jennings Chairman of the Board, Vice President- Vice President- General Counsel President and Chief Communications Administration p Executive Officer John A. Mayberry William H. Miller Treasurer Samuel P. Cowley Vice President-Commercial Vice President-Human Neil A Roadman Vice President-Corporate Operations Resources Controller Affairs and Secretrry Donald T. McPhee Louis C. Rasmussen Stanley G. Jameson Vice President-System Vice President-Corporate Vice President-Transmission Power Operations Planning and Finance and Distribution System Operations Board of Directors Arthur J. Doyle* George E. Nettels, Jr. Willis C. Theis*

Chairman of the Board President and Chairman of the Board and President Chief Executive Officer Simonds-Shields-Theis Grain McNally Pittsburg Manufacturing Company Cyrus S. Eaton, Jr. Corporation -grain merchants and Chairman of the Board President warehousemen Tower international Midwest Minerals, Inc.

Cleveland, Ohio Pittsburg, Kansas Robert H. West *

- mining, investments and -engineering, manufacturing, President and intemational trade construction mineral Chief Operating Officer processing, and quarry Butler Manufacturing Company William D. Grant

• operations -manufacturer and marketer of I

Chairman of the Board pre-engineered buildings and Chief Executive Officer Robert A. Olson* systems, agricultural Business Men's Assurance Retired Chairman of the Board equipment and energy Company of America management systems.

-insurance Eugents M. Strauss

, Presid<snt and Treasurer Robert K. Zimmerman l Stra iss Fuchs Organization, Inc. Retired Chairman of the Board

-insurance and data processing

. sys' ems marketing

• Member Executive Committee I

i Annual Report on Form 10-K This report, including the financial statements l Copies of the Company's annual report to the contained herein, has been prepared for the Securities and Exchange Commission on generalinformation of shareholders of Kansas Form 10-K will be provided without charge to City Power & Light Company, and is not intended any shareholder or beneficial owner of shares to induce, or for use in connection with, any sale, of the Company's stock upon written request offer for sale, or solicitation of an offer to buy, any to Samuel P. Cowley, Secretary, P. O. Box 679, securities of the Company.

Kansas City, Missouri 64141.

1 32 l

Kansas 54 Kansas Electric Power Cooperative, Inc.

"A Development 9tage Enterprise" Topeka, Kansas O

F EXAMINATION REPORT For The Period f*' January 1, 1980 to December 31, 1980 t,

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Kr:nnna 54 Kansas Electric Power Cooperative, Inc.

"A Development Stage Enterprise" Topeka, Kansas INDEX Page

o Trustees , Alterna tes and Executi ve Commi ttee. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 Accountants' Report .

1 Scope of Examination.................................................... 2 A c c o u n t a n t s ' O pi ni o n . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2-b' Exhibit A Comparative Balance Sheet................................... 3 Exhibit A-1 Statement of Changes in Financial Position Since Inception.. 4 Exhibit B Statement of Revenue and Accumulated Deficit................ 5 Exhibit C Statement of Paid-In Capital................................ 6 No t e s t o Fi na nci a l S t a t em e n t s . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 O t h e r I n f o rm a t i o n . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 Exhibit D.. . Utility P1 ant............................................ 9 0

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Keneen 54 Kansas Electric Power Cooperative, Inc.

"A Development Stage Enterprise" Topeka, Kansas BOARD OF TRUSTEES 0 Alternate Cooperative Trustee Al tamont , Kansas L. G. Dulavey Dora Boore Belleville, Kansas Darold Wulfekoetter Dennis Cooper Burlington, Kansas Dean Martin Lyle Herriott Cedar Vale, Kansas Walter David Robert Brown Cheney, Kansas Jack S. Hutchinson Gene Porter Clay Center, Kansas Charles W. Ellis Raymond James.

Council Grove, Kansas Gerald Ridenour Wilmer Tischbauser Dodge City, Kansas Ray Sprenkle Ralph V. Sherer l

El Dorado, Kansas Wilbur C. Reed Louis Claassen Ellsworth, Kansas A. D. Paull Larry D. Kilian l

Emporia, Kansas R. D. Speece Larry Scott Fredonia, Kansas Howard L. Sell Marvin Freidline Girard, Kansas Ray Taylor Marvin Lewis Great Bend, Kansas Jack D. Goodman LaVern Becker

( Raymond Heer

! Hays, Kansas Arthur J. Schnose Horton, Kansas Dale Bodenhausen Ronald E. Garchar Hutchinson, Kansas Wesley Nunemaker Delbert E. Tyler Iola, Kansas Elmer Nichols Robert L. Schuster l Lindsborg, Kansas Verner E. Lundquist Gilbert Bengston Mankato, Kansas Clarence Beck Jim Gouldie Meade, Kansas H. L. Murphey Jerry Rumbaugh McLouth, Kansas W. A. Ousdahl Fred Johnson Lynn Morford l Norton, Kansas Phillip A. Lesh Pratt, Kansas Robert Ahrens Ben Pritchard i

l Solomon, Kansas James F. Schmidt Nadine Griffin Wamego, Kansas Kenneth L. Erickson 14 ster Marten Wellington, Kansas Max Kolarik Garland Price EXECUTIVE COMMITIEE o .

Charles W. Ellis President _.

Vice-President '

James Schmidt Phillip. A. Imsh Secretary Allen Paull . . Treasurer J

Max Kolarik Wilbur Reed *

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Howard Sell MANAGEMENT .

Charles Ross Executive Vice-President

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I S CH MI D T & CO M PANY CERTIFIED PUBLIC ACCOUNTANTS rest ==*sas sv aret MANSAS CITY, MISSOURI 64108 es =es ** o, 'as .=a mo. . eterwes 1staaro=E 4,. . . . .

o,ca. .% .c.uoo..m (e i.)

Board of Trustees o

Kansas Electric Power Cooperative, Inc.

Topeka, Kansas Gentlemen:

Ce have examined the balance sheets of the Kansas Electric Power Cooperative, Inc., Topeka, Kansas as of December 31,1980 and 1979, the related statements cf revenue, and accumulated deficit since inception, and changes in financial position since inception. Our examinations were made in accordance with generally accepted auditing standards, and accordingly, included such tests of the accounting records and such other auditing procedures as we considered necessary in the circumstances, including those required by REA Bulletin 185.1.

Some of the auditing procedures employed were as f ollows:

Plant Acquisition of general plant items were investigated to determine that entries properly recorded the new values. .

l .

O Ce examined certificates of title to automotive equipment and trailers and le catisfied ourselves as to the existence of other major items of general plant, l

Z Cash Ce counted the working fund during our examination and af ter considering the

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' receipts and deposits since December 31, 1980, determined the working fund was on hand at audit date. Cash expenditures were properly supported by vouchers. We l

l oxamined all checks honored by the bank during the past year for authorized  !

cignatures, classifications of expen'ditures and traced them to the appropriate l records. Our reconciliation of the bank account with the records of the cooperative cas compared with that prepared by the cooperative. We traced the transfer of funds 1

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• by b nk ciro transfor cnd d' rzcted p rticular ettentien to the cutstcnding chicks i

et the beginning and end of the year examined. Written confirmation of the bank bslance was obtained from the bank.

Accounts.and Interest Receivable Our examination disclosed the subsidiary ledgers of accounts receivable were in belance with the ledger control accounts. Confinnations, were mailed to customers.

prepayments Insurance policies were examined and the unexpired insurance premiums computed.

Wo listed thr policies, observed they were made payable to the cooperative and cacertained all were in effect it audit date.

Deferred Debits Charges to deferred debits were reviewed.

Ccpital Equities Us ascertsined the subsidiary record of memberships was in balance with the general 1sdger control account by examination of the membership register.

Current and Accrued Liabilities .

l Ce examined invoices paid subsequent to the audit date, made inquiries concerning l

l p ssible unrecorded liabilities and contacted the project attorneys regarding

! contingent liabilities . Minutes of board meetings were . reviewed for commitments cr agreements which might. constitute liabilities of the cooperative. We reviewed the 1980 property tax, assessment and found the liability for property taxes a rsasonably stated.

lo Operations During our examination of the balance sheet accounts, related operating entries ._

-1 core tested. Journal entries prepared during the period under observation were revi ewed. Per inent provisions of the power contract were noted. Customer energy bills prepared during the audit period were compared with approved wholssale rates cchedules on a selective basis. In tracing cancelled checks to the check register, .

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charg'es to' expense accounts were reviewed. Check vouchers with supporting data ecre examined for representative test periods.

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G n7ral Cafore we completed the examination, all audit entries had been entered on the bcoks of the cooperative. Our examination disclosed the cooperative's accounting rccords have been maintained in a current and generally accurate condition.

In our opinion, the balance sheets of the Kansas Electric Power Cooperative, Inc.,

Tcpeka, Kansas as of December 31,1980 and 1979, the rel,ated statenents of revenue end accumulated deficit since inception and changes in financial position since inception, present f airly the financial position of the cooperative, and the results of its operations and changes in its financial position for the years then ended, in conf ornity with generally accepted accounting principles applied on a consistent basis. .

SCHMIDT Is COMPAhT 4 .

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e Exhibit A i

Kenenn 54 Kansas Electric Power Cooperative, Inc.

"A Development Stage Enterprise" i

Topeka, Kansas COMPARATIVE BALANCE SHEET For The Years Ended December 31,1980. and 1979

'- ASSETS AND OTHER DEBITS 12-31-80 12-31-79 Plant General plant $ 46,868.98 $ 36,720.24 Less: Accumulated depreciation 19,606.29 12,043.91 i Net General Plant 27,262.69 24,676.33 Investments Equities in other organizations 1,245,680.00 17,034.00 l

Current Assets Cash - general 46,468.64 8,022.43 Accounts receivable 91,547.95 33,141.80 Prepayments 1,805.00 1,586.09 I

Total Current Assets 139,821.59 42,750.32

Deferred Debits Organization expense 1,067.50 1,067.50 l

Research and development 26,631,510.34 8,029,868.71 Construction advance 129,000,000.00 90,000,000.00 Total Deferred Debits 155,632,577.84 98,030,936.21 TOTAL ASSETS AND OTHER DEBITS $157. 04 5. 342.12 $ 98.115. 396 . 86 l

• l MEMBERS EQUITY AND LIABILITIES Equities and Margins Memberships $ 2,800.00 $ 2,700.00 Paid in capital 652,885.85 652,885.85 Deficit accumulated during the development stage 97,510.16* 95,605.25*

Total Equities and Margins 558,175.69 559,980.60 ,

1 Current Liabilities Notes payable (CFC) ,156,335,981.08 97,532, L.70. 66 Accounts payable ,

149,153.20 21,807.00 2,032.15 1,338.60 Accrued taxes Total Current Liabilities 156,487,166.43 97,555,416.26 TUfAL MFMRRRS' EQUITY AND LIABILITIES $157. 04 5. 342.12 $ 98.115. 396. 86 See notes to financial statements (page T).

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. . Axntott n-A K7nonc 54 Kansas Electric Power Cooperative, Inc.

"A Development Stage Enterprise" Topeka, Kansas STATEMENT OF CHANGES IN FINANCIAL POSITION SINCE INCEPTION Year Ended Inception

• 12-31-1980 to 12-31-1980 1,904.91* $ 97,510.16*

Deficit accumulated (Exhibit B, page 5) $

Add:

OTHER SOURCES OF FUNDS Depreciation capitalized 7,444.09 19,422.00 118.29 118.29 Deprecia tion 7,562.38 19,540.29 Total Deduct:

Allowance for funds used daring construction 18,352,354.14 23,615,624.80 1,228,646.00 1,244,680.00 Capital credits 19,581,000.14 24,860,304.80 Total Funds from Operations 19,575,342.67* 24,938,274.67*

Add:

Membership fees 100.00 2,800.00 Loan funds from CFC 58,803,710.42 156,335,981.08 Capital transfer (KEC) 652,885.85 Plant salvage 1,433.90 Decrease in working capital 30,968.48 11,363.76 l

TOTAL SOURCES OF FUNDS

$3 9. 259. 4 36. 2_3, $132. 066.189. 92 USES OF FUNDS

$~ $ 1,067.50 Organization CFC membership 1,000.00 Investment in general plant 10,148.74 48,236.88 Research & development 249,287.49 3,015,885.54 l

Construction advance - 39,000,000.00 129,000,000.00' 5 TOTAL dSES OF FUNDS $39.259.436.23 $132. 066.189. 92

• Deficit l

See notes to financisi statements (page 7).

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• Exhibit B Kinnr:1 54 Kansas Electric Power Cooperative, Inc.

"A Development Stage Enterprise" Topeka, Kansas STATEMENT OF REVENUE AND ACCUMUIATED DEFICIT For The Year Ended December 31, 1980 and from Inception Accu:nulated 12-31-80 f rom inception Operating Revenue Sales for resale $291,455.03 $291,455.03 Operating Expenses Purchased power 284,005.03 284,005.03 General & administrative 5,569.23 48,621.19 Special services 68.64 36,593.20 Insurance 39.84 143.68 Employee benefits 324.58. 629.05 Trustees expenses 667.26 5,109.22 Rent 131.60 131.60 Miscellaneous expense 2,232.94 12,397.10 Depreciation 118.29 417.42 Taxes - property 20.41 137.70 Taxes - payroll 182.12 780.00 Total Operating Expenses 293,359.94 388,965.19 Net Margins for Period 1,904.91*

Deficit accumulated through 12-31-79 95,605.25* _

Deficit accumulated during development stage $ 97. 510.16* $ 97. 510.16*

O Deficit 1

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Knnenn 54 Kansas Electric Power Cooperative, Inc.

"A Development Stage Enterprise" l Topeka, Kansas STATEMENT OF PAID-IN CAPITAL Ark Valley Electric Cooperative Association, Inc., Hutchinson, Kansas................

Brown-Atchison Electric Cooperative Association, Inc., Horton, Kansas................

• Butler Rural Electric Cooperative Association, Inc., El Dorado, Kansas...............

Caney Valley F.lectric Cooperative Association, Inc., Cedar Vale, Kansas..............

Central Kansas Electric Cooperative, Inc., Great Bend, Kansas........................

CMS Electric Cooperative, Inc. , Meade, Kansas........................................

Coffey County Rural Electric Cooperative Association, Inc., Burlington, Kansas.......

C & W Rural Electric Cooperative Association, Inc., Clay Center, Kansas..............

• )sniphan Electric Cooperative Associati on, I nc. , Troy, Kansas . . . . . . . . . . . . . . . . . . . . . . . .

D. S. & O. Rural Electric Cooperative Association, Inc. , G olomon Kansas . . . . . . . . . . . . .

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Flint Hills Rural Electric Cooperative Association, In . , Council Grove, Kansas. . . . . .

Groat Plains Electric Cooperative, Inc., Colby, Kansar................................

Jcwell-Mitchell Cooperative Electric Company, Inc., Vankato, Kansas..................

Ka3 Valley Electric Cooperative Company, Inc., Topeka, Kansas........................

Lane-Scott Electric Cooperative, I nc . , Di gh t on , Ka ris m s . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Lenvenworth-Jef ferson Electric Cooperative, Inc., McLouth, Kansas....................

Lyon County Electric Cooperative, I nc . , Em p o ri a , Ka ns a s . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

N.C.K. Electric Cooperative, Inc., Belleville, Kansas................................

Nemaha-Marshall Electric Cooperative Association, Inc., Axtell, Kansas...............

Ninnescah Rural Electric Cooperative Association, Inc., Pratt, Kansas................

Northwest Kansas Electric Cooperative Association, Inc. , Bi rd Ci ty, Kansas . . . . . . . . . . .

Norton-Decatur Cooperative Electric Company, Inc. , Norton, Kansas....................

Pioneer Electric Cooperative, Inc., Ulysses, Kansas..................................

• P. R. & W. Electric Cooperative Association, Inc., Wamego, Kansas.................... .

Rcdi a n t Elec tri c Co ope ra ti ve , Inc . , Fred oni a , Ka ns a s . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Sr.dgwick County Electric Cooperative, Association, I nc . , Cheney, Ka ns a s . . . . . . . . . . . . . .

-Sakan Electric Cooperative Association, Inc., Girard, Kansas.........................

Smoky Hill Electric Cooperative Association, Inc. , Ellsworth, 4ansas . . . . . . . . . . . . . . . . .

Sncky Valley Electric Cooperative Association, Inc., Lindsborg, Kansas............... -

Sumner-Cowley Electric Cooperative, Inc., Wellington, Kansas.........................

Twin Valley Electric Cooperative, Inc., Altamont, Kansas............................. ,

United Electric Cooperative, Inc., Iola, Kansas......................................

Victory Electric Cooperative Association, Inc., Dodge City, Kansas................... q Western Cooperative Electric Association, Inc., WaKeeney, Kansas.....................

Whza tla nd' Electric Coopera tive, Inc. , Scott Ci ty, Kansas. . . ,. . . . . . . . . . . . . . . . . . . . . . . . . .

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. 12-31-80 inception

$ 19,276.91 $ 23,079.70 10,741.62 12,834.94 16,663,75 19,995.29 13,426.25 15,908.77 42,783.04 51,786.45 10,252.17 12,451.01 10,067.67 12,209.35 14,017.55 16,548.87 5,155.95 5,900.33 18,959.51 22,788.17 19,082.82 22,801.37 11,361.06 12,798.24 .

16,058.18 19,186.59 17,876.25 20,153.62

. 12,686.02 14,263.23 11,464.08 13,840.19 8,594.13 10,419.34 13,613.14 16,117.77 13,731.79 15,500.62 12,709.82 15,322.75 8,039.92 9,086.48 19,016.54 21,542.26 31,550.19 . 35,404.78

'7,877.59 9,494.47 10,511.11 '12,773.88 ,

16,963.22 20,299.35 11,956.67 14,319.45 6,831.34 8,260.80 3,348.52 4,053.81 -

16,264.37 19,387.20 6,188.72 7,434.76 11,239.10 13,631.36 13,064.89 15,805.45 --

21,882.03 24,601.61 74,024.68 82,883.59 .

$ 557.280. 60 4

, $652.885.85

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- 1 Krnsan 54 Kansas Electric Power Cooperative, Inc.

"A Development Stage Enterprise" Topeka Kansas 1

NOTES TO FINANCIAL STATEMENTS December 31, 1980 Summary of Significant Accounting Policies:

Caneral Plant The cooperative employs the Uniforu System of Accounts, prescribed by the Federal

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Energy Regulatory Commission. Wage rates are controlled by the Board of Trustee's. .

Transportation expenses are allocated between deferred and operating accounts on the basis of mileage. Plant is depreciated at rates reflected in Exhibit D,'

prge 9.

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I Investments 1

Investments are generally included in the financial statements at cost.

l Deferred Debits Rasearch and development costs are accumulated in accordance with accepted accounting procedures for electric utilities. Allowance for funds used during ccustruction is deferred per Rural Electrification Administration directive.

~ T.tx Status "Ibe cooperative filed income tax returns through 1979. Application for exemption on a non-profit corporation under Section '501c-12 has been submitted to the

' Internal Revenue Service. Form 90' has been filed for 1980.

ADDITIONAL NOTES TO TINANCIAL STATEMENTS

d l Assets Pledged All assets are pledged as security for short-term and intermediate-term debt to the' Sational Rural Utilities Cooperative Finance Corporation.

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Canarni Plant Exhibit D, pigs 9, cf thic rspsrt Cost $46,868.98 presents a detailed statement of Eener8 plant fac es ad cha es pr ia Value $27 6 in the accounts during the period ended December 31, 1980. Activity included the purchase of an automobile and niscellaneous office furniture and equipment.

. Investments . Equities in other Equities in other organizations $1.245.680.00 organizations include the foIlowing:

National Rural Utilities Cooperative Finance Corporation Washington, D. C.

Membership $ 1,000.00 -

Capital credits 1,224,210.00 $1,225,210.00 Federated Rural Electric Insurance Corporation Madison, Wisconsin Prederred stock 450.00 Kansas Electric Cooperatives, Inc.

Topeka, Kansas Membershi p 10.00 l

National Rural Electric Cooperative Association Washington, D. C.

Membership 10.00 Total $1.245.680.00

! Equities in other organizations was increased by capital credits from CFC and Fcderated Rural Electric Insurance Corporation by $1,228,416.00 and $230.00 respectively during the year ended December 31, 1980 C:sh The cooperative maintains a working fund Working fund $ 100.00 for petty cash disbursements and for Gzneral fund 46,368.64 making chenge. The general fund is in Total $46.468.64 the custody of the Fairlawn Plaza State B:nk, Topeka, Kansas. The bank is a member 'of the Federal Deposit Insurance ,

2 Corporati on.

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l Accounts Receivable The cooperative obtained Customer accounts receivable -

-$46,350.00 perinission to sell 30 Other accounts receivable 45,197.95

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Total .

$ 91. 547 . 95 peaking power in the Kansas C s as Ilectric service area " "Ibe Kansas Corporation Commission issued a temporary cortificate of convenience and necessity to allow this sale of power to Empire

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Dictrict Elsctric Comp 3ny. Othor ccccunto rsccivnb'lo cen3ict pricorily cf Gxpenccs l incurred by KEpCo assisting its members in wholesale rate cases. The accounts osras all current. -

Prepaid Expenses Insurance coverage is provided by -

Prepaid insurance $ 655.00 Federated Rural Electric Insurance.

$ 8 Corporatio,n, Madison, Wisconsin. The ot type of insurance and the amcunt in effect at December 31, 1980 were as I

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I follows:

i Type of Insurance Amount General public liability Di rect ors ' , officers' and managers' liability $1,000,000' Bodily injury and property damage 1,000,000' Workaen's compensation Statutory Fidelity insurance (blanket coverage) 60,000 i Autoeobile

! Bodily injury and property damage 1,000,000 Collision $100 deductible Fire and extended coverage Buildings and personal property 15,000 Extra expense 25,000 25,000 Loss of income from customers Rended office building 96,600

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Travel advances were as follows:

Joe Mulholland $ 150.00 Jerry Haahr 150.00 Joe Hamman 150'.00 Bob Bowser -

200.00.

Rick Tyler 50.00

• i Hoburg Lee 150.00 Allan Mee 150.00 Frank Garver 150.00 Total $1.150.00 Deferred Debits .

Kansas Electric Power h

$ 1,067.50 Cooperative, Inc. , was

, Organization expense Research a development 26,631,510.34 rganized to provide po;eer Construction advance 129.000,000.00 Total $155. 632. 57'/ . 84 f or its members. Costs

-- have been incurred with a -

number of projects and four projects are involved at December 31, 1980. .

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Until it in datorminsd chsthsr cetuni conotruction reculto free tho cffert, costo cre being deferred and consist of the following at December 31, 1980: -

Research Projects KCP&L KP&L KGE Hydro C.TU_

Labor $ 584.68 $ 711,504.79 $ 8,42,7.69 $ 45,859.57 Payroll taxes 10.84 53,238.22 564.37 4,788.21 Enployee benefits 83.54 78,414.4,8 952.30 5,917.23 Automobile services ,

2,749.93 72.35 Travel *454.20 106,140.06 1,795.86 9,440.19 Pablic relations 347.71 2,525.64 72.51 Rant 44.01 29,198.54 257.32 2,149.67 Building costs 36.18 25,592.06 305.43 2,002.60 Leasing-maintenance 15.63 22,444.99 265.67 2,127.94 Depreciations 31.30 32,688.14 319.51 5,960.90 Insurance 7.27 6,841.49 95.31 478.67 Property tax 8.13 6,611.21 125.29 740.36 Msetings 22.77 173,999.26 601.36 4,618.38 Engi neering 35,499.01 704,184.57 5,000.00 32,321.60 Computer 70,774.93 Supplies 43.56 34,223.87 299.79 2,632.46 Postage 25.25 20,525.32 289.47 1,560.59 Tolephone 46.71 42,801.99 523.67 3,390.93 Legal 515.00 900,891.56 21,232.55 Centingency 7,786.05 27.90 l 38.15 234.36 l Subscriptions 87.07 9,225.63 l

Interest 200.35 23,180,679.06 10,854.17 1,370.85 Auditing 3,300.00 Personnel costs 5.35 105,808.68 59.99 11,743.26 Consultants 234.82 63,937.48 7,600.58 TOTAL ($26,631,510.34) $38.303.38 $26.396.087.95 $38.548.69 $158. 570. 32 On April 19, 1979, the cooperative entered into an agreement with Kansas Gas and Electric Company, Wichita, Kansas and Kansas City Power & Light Company, Kansas City, Missouri, whereby EEPCo agreed to purchase a 177. undivided ownership interest in the Wolf Creek Nuclear Power Plant. In compliance with the terms of the agreement and subsequent amendments, KEPCo has advanced $64,500,000.00 to KG&E and ,

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$64,500,000.00 to KCP&L. , , ,

Equi ties' and Martins Membership certificates M:mberships = $2 2,800.00 have been issued to twenty-Paid in capital . 652,885.95 C Perames in hasas.

Deficit accumulated during the .

development. stage 97,510.16* One member dropped its .

Total $558.175.69 membership, but the fee w as

- not refunded. Paid in capital resulted fion the transfer of ass: *r and liabilities from members of Kansas Electric Cooperatives, Inc. to IEPCo during 1977.

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Current Liabilities Notes payable (CFC) $156,335,981.08 Accounts payable 149,153.20 Accrued taxes 2,072.15 Total $156. 4 87.16c .4 3 Notes payable consist of the f ollowing:

Short-tern line-of-credit $, 3,589,000.00 Intermediate term note ~

147,081,406.74 Interest payable - CFC 5,665,574.34 Total

$156.335.981.08 The cooperative has a line of credit with the National Rural Utilities Cocperative Finance Corporation (CFC), Washington, D. C., in the amount of $4,500,000.00 and at audit date had borrowed $3,589,000.00. Interest on the short-tern loan varies monthly with market and at December 31,1980 was 20.5%. 'Ibe line of credit is arranged on a yearly basis and both the line of credit and any amounts advanced become due March 20, 1981. Members of KEPCo have guaranteed payment to CFC for any amounts advanced on short-term loans:plus interest.

To fund the construction deposits to KGLE and KCP&L, the cooperative obtained an intermediate tern loan in the amount of $175,000,000.00 from CIC. Interest rate varies monthly with the market and at December 31,1980 was 20.5%. The note was cxecuted March 21, 1980 and expires March 20, 1981. Interest accrues quarterly and is added to the principal of the note.

Accounts payable were as follows: ,

Xassebaum & Johnson ,

$ 16,769.33 Miller, Balis, O'Neil, P. C. 8,274.89 Southern Engineering Company 17,480.14 l

S .W .'P. A . (Power interchange) 91,650.00 l Others 14,978.64

! Total 3.149.153.20 t

m Contingent Liabilities and Commitments The cooperative has entered into an agreement to purchase 17% of the Wolf Creek

' facilities from IGEE and KCP&L. Advances totaling $129,000,000.00 have been made toward this agreement and amendments to the agreement. According'to'the last czendment executed December 24, 1980, EEPCo is to close the sale on April 30, 1981 Exact figures will not be available until the closing date; however, the original loan estimate submitted to the Rural Electrification Administration (REA) was in the amount of $318,000,000.00. _ This estimate is subject to revision. If EEPCo is w , _ - - - -- - - . _ w _ -._ _

r 3,  % 7-e unsblo to cbtain long-tsra financing prier to April 30, 1981, oil necunto praviously received ( KGLE and KCPLL, respectively, as' advance payments from KEPCo on account of the r , chare, together with interest from the date of the draw will be repaid by KGkt sr.e w?LL. If the agreement is closed, KEPCo is to pay its pro rata share of all addi tional construction costs. Upon completion of the project, KEPCo is to wo 17% of the site, common f acilities, and Wolf Creek Generating Unit n'/1.

. Upon closing, KG&E and KCP&L will transfer to KEPCo 17% of the then outstanding otock of Utility Fuel Company--included in the purchase price. . EEPCo agrees that citer closing it will purchase from Utility Fuel Company 17% cf all additional shares of capital stock issued for the purpose of funding the company.

Pension Plan The cooperative has a contributory defined benefit pension plan for its employees.

The plan is administered by the National Rural Electric Cooperative Association (NRECA) through a trustee whereby annuities ef fective upon retirement will be cvailable to participants in the plan. It is a funded plan and the total pension ecsts for the years ended December 31, 1980 and December 31,1979 were $10,042.98 cnd $8,662.68 respectively.

Ralated-Party Transactions EEPCo is operated under co.amon management with Kansas Electric Cooperatives, Inc.,

Overhead costs incurred by KEC applicable to KEPCo are billed at the end of each conth. No transactions 'of a material amount other -than payment of allocated cverhead costs occured during the period ended December 31, 1980 f

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- 'e' 8 Kansas 54 Kanras Electric Power Cooperative, Inc.

"A Development Stage Enterprise" l

Topeka, Kansas OTHER IhTORMATION Accountants' Comments

• The audited financial statements of the cooperative and our report thereon are presented in the preceding section of this report. The following financial information and comments were derived from the accounting records tested by us as e part of the auditing procedures used in our examination of the financial statement of December 31, 1980 and December 31, 1979 and in our opinion is fairly presented in all material respects in relation to the financial statements taken as a whole.

This information is not necessary for a fair presentation of the financial statements.

History and Organization The Rural Electrification Act was passed by Congress and signed by President Franklin D. Roosevelt on May 20, 1936. It authorized REA to finance the construction of generation, transmission and distribution facilities to provide electric energy to rural areas not receiving central station electricity.

Cooperative farm organizations and rural public power districts became the principal borrowers under the REA program. The National Rural Utilities Cooperative Finance Corporation (CFC) was incorporated April 10, 1969 to provide supplemental financing

, for REA borrowers. -

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Articles of Incorporation adopted by six electric distribution cooperatives of Kansas were filed with the Secretary of State, February 13, 1975 for the Incorporation 5 of Kansas Electric Power Cooperative, Inc., pursuant to the Electric Cooperative Act, K. S. A. 17-4601 and other applicable laws.. It is a nonprofit cooperative a , a with perpetual existence. Bylaws of the-corporation do not restrict membership to electric cooperatives. Each active member has a representative on the Board of Trustees. "Ihe membership fee is $100 and nt Tudit date the corporation had twenty--

l geven active members.

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• 9 MMD Knnv3 54 Kansas Electric Power Cooperative, Inc.

"A Development Stage Enterprise" Topeka, Kansas ITTILITY FLAhT t Balance . Balance 1-1-80 Addi ti ons Reti rements 12-31-80 General Plant Transportation equipment (1) $22,235.36 $ 6,298.13 $ $28,533.49 Office furniture & fixtures 10% 14,484.88 3,850.61 18,335.49 Total 36,720.24 10,148.74 46,868.98 Deprecia ti on Transportation equipment 7,334.20 6,116.06 13,450.26 Office furniture & fixtures 4,709.71 1,446.32 6,156.03 Total 12,043.91 7,562.38 19,606.29 Depreciated Value $24.676.33 $27.262.69 (1) Cost less estimated salvage over three and four years.

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