ML20064J899

Application for OL

ML20064J899
Person / Time
Site:	Wolf Creek
Issue date:	02/19/1980
From:	Ellis C, Koester G, Mcphee D KANSAS GAS & ELECTRIC CO.
To:
References
NUDOCS 8003060166
Download: ML20064J899 (114)

Text

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O WOLF CREEK GENERATING STATION UNIT NO.1 1

O LICENSE APPLICATION KANSAS GAS AND ELECTRIC COMPANY KANSAS CITY POWER & LIGHT COMPANY O

KANSAS ELECTRIC POWER COOPERATIVE,INC.

$0030M COPY NO.

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KANSAS QAS M ELECTM COMPANY O

OLEN N L. etOESTER wsCE pattiOtssY Optmassopes February 19, 1980 Mr. Harold R. Denton, Director Office of Nuclear Reactor Regulation U.S. Nuclear Regulatory Commission Washington, D.C.

20555 KLNRC-022 RE:

Docket Number STN 50-482 REF: Letter (KLNRC-021) from Glenn L. Koester, KGE, dated October 2,1979, to Harold R. Denton, NRC

Dear Mr. Denton:

Kansas Gas and Flectric Company hereby files an Amendment to its Application of April 1,1974, for a Construction Permit and an Operating License for a nuclear plant designated Wolf Creek Gen-erating Station, Unit No.1.

This amended application for the issua.'ce of an operatini License consists of: (1) the general information required by 10C1350.33 (2) the technical information required by 10CFR50.34 and 50.34a, in the form of the Wolf Creek Generating Station Site Addendum to the SNUPPS Final Safety Analysis Report (FSAR) ; and (3) the Environ-mental Report required by 10CFR51.21. The Wolf Creek Generating Station Physical Security Plan and Safeguards Contingency Plan and Antitrust Review information are submitted under separate cover.

Pursuant to 10CFR50, furnished herewith are:

1)

Three signed originals and ten copies of that portion of the information specified in 10CFR50.33 excluding the financial information requested in 10CFR50.33(f).

The financial information will be supplied'in June, 1981; however, copies of the 1978 Annual Reports of the station co-owners are included as Exhibits 1 through 3 of the License Application.

2)

Fifteen copies of that portion of the application containing the information specified in 10CFR50.34(b) and 50.34a(c) consisting of the Wolf Creek Generating Station, Unit No. 1, Site Addendum to the SNUPPS FSAR.

Os The SNUPPS FSAR was previously incorporated into the Wolf Creek application by the Reference.

i 201 N. Market - Wichits, Kansas - Mail Address: P.O. Box 200 / Wehite Kansas 67201 - Telephone: Area Code (316) 2614451

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Mr. Harold R. Denton February 19, 1980 0

3) Twenty copies of the information required by 10CFR51.21 (Environmental Report - Operating License Stage).

An acknowledgment of the Commission's receipt of this Application would be appreciated.

Very respectfully, 1

GLK:bb Attachments O

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BEFORE THE UNITED STATES NUCLEAR REGULATORY COMMISSION l

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DOCKET NO. STN 50-482 i

In the Matter of e

KANSAS GAS AND ELECTRIC COMPANY KANSAS CITY POWER & LIGHT COMPANY j

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KANSAS ELECTRIC POWER COOPERATIVE, INC.

j APPLICATION FOR LICENSES UNDER THE ATOMIC ENERGY ACT OF 1954 Q

AS AMENDED l

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for f

I WOLF CREEK GENERATING STATION Unit No.1 r

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t February 19, 1980 U

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EEEORE THE INITED STATES NUC2AR REGULA'ICRY CIM4ISSION Docket No. 50-482 i

In the Matter of f

KAEAS GAS AND ELEX3'RIC OWPANY r

KANSAS CITY POWER & LIGIT (DMPANY AND KANSAS ELECTRIC POWER CDOPERATIVE, INC.

APPLICMION FOR LICEEES Kansas Gas and Electric Cmpany (hereinafter sometimes refer-red to as "KG&E"), Kansas City Power & Light Ccurpany (hereinafter sme-f times referred to as "KCPL"), and Kansas Electric Power Cooperative, Inc.

(hereinafter smetimes referred to as KEPCo)

(collectively sometimEE referred to as " Applicants") hereby make application, pursuant to the provisions of the Atmic Energy Act of 1954, as amended, and the Nuclear Regulatory Comnission's Rules and Regulations thereunder, for l

the necessary licenses to own, use and operate the utilization facil-ities hereinafter described as an integral part of a nuclear electric generating plant to be located in coffey County, Kansas, and to be known as the " Wolf Creek Generating Station, Unit No.1" (NCGS). PG&E has primary responsibility for the operation and maintenance of the facil-ities and for the prosecution of this application and all related activities and proceedings before the Nuclear Regulatory Ccmnission.

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KG&E, on behalf of itself, KCPL, and KEPOo will hereafter submit all O

further inform tion reeeested in conneceton ith this.ogiic eien.

This application consists of the following four parts:

(a) the general information required by 10 CFR 50.33, whidi is set out herein; (b) the tedinical information and safety analysis r@ ort required by 10 CFR 50.34 and 50.34a, which is set out in a separate doctment entitled

" Kansas Gas and Electric Ccznpany, Kansas City Power and Light Ccmpany, and Kansas Electric Power Cooperative, Inc., Wolf Creek Generating l

Station, Unit No.1, Final Safety Analysis Report," subnitted herewith, and the ' Standardized Nuclear Unit Power Plant System (SNUPPS) Final Safety Analysis Report subnittal to the NRC on October 2,1979; (c) selected material filed by Westinghouse Electric Corporation and Bechtel Power Corporation indeperdent of this application but made a part hereof i

O where specifically referenced in Applicants' Final Safety Analysis Report; and (d) " Applicants' Environmental Report-Operating License l

Stage" as required by 10 CFR 51.21.

The Security Plan required by 10 i

CFR 50.34 is submitted at this time as a separate doctment.

i GENERAL INFORMATION j

a.

Names of Applicants (1) Kansas Gas and Electric Compal y (2) Kansas City Power & Light CcInpany (3) Kansas Electric Power Cooperative, Inc.

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Addresses of Applicants I

O (1) o=== 2o8 201 North Market Street Wicitita, Kansas 67201 l

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P.O. Box 679 1330 Baltimore Avemie i

Kansas City, Misso d 64141

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(3) 5709 West 21st Street l

P.O. Box 4267 t

Gage Center Station Topeka, Kansas 66604 c.

Description of business or ornwtion of Applicants KG&E is an electric utility engaged in the generation, trans-i nission and distribution of electricity in the southeast portion of the State of Kansas.

Its service area covers approximately 8,100 square miles and has a population of over one-half million.

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KGE serves approximately 220,0'00 retail customers.

It also i

sells power at wholesale to 8 rural electric cooperatives and 25 ccm-

nunities, i

KGE owns and cperates five steam electric generating stations f

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and is part owner in two other stations.

KG&E owns a 50% undivided I

interest (with KCPL owning the other 50%) in the two unit Lacygne Station and a 20% interest in the Jeffrey Energy Center whicti has one j

operating unit and three others planned and under construction. All of f

i EG&E's capacity is interconnected and located in the State of Kansas

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with an aggregate net capability of 1,883,000 kw. This capability con-l sists of 861,000 kw from coal-fired plants and 1,022,000 kw fran gas-l fired plants with oil standby.

The maximan net demand on BG&E's systen was 1,532,600 kw.

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Auar.ps. mis have been made by KG&E to participate in the O

ownership in three coal-fired units adeduled for ccmpletion in 1980, 1983, and 1985, with M &E's ownership consisting of 408,000 kw.

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KG&E's transmission lines consist of approKimately 2,159 pole miles of various voltages and types of structure, of which approximately 1,169 miles are lines using 138,000 volts or more.

Distribution lines i

i consist of @ proximately 7,473 miles of wood pole lines and 371 miles of l

underground lines.

l KG&E maintains fifteen intersus&tions with other public 1

utilities at voltages ranging frcan 345 KV to 69 KV.

KG&E is a msnber of l

the Missouri-Kansas Power Pool (MOK;N) and the Southwest Power Pool (SPP).

'Ihe EKAN Power Pool is a nultiple contractual arrangement i

among nine utilities in western Missouri and Kansas.

Its purIxm is to C

enhance reliability of service and econey of operation, to coordinate planning, the sharing of reserve capacity and electric intercfiange transactions including emergency and standby ervice. The SPP is one of

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the nine coordinating groups of the National Electric Reliability Council.

KG&E has been issued a Certificate of Convenience and Author-ity frca the Kansas Corporation Cmmission authorizing KG&E's ownership, operation and maintenance of the generating and transmission facilities at and frcun NCGS.

KCPL is an electric public utility engaged in the generation, transmission, distribution and sale of electric energy in a 5700 square mile area located in portions of 23 counties in northwest Missouri and northeast Kansas, including the Kansas City Metrcpolitan Area.

Elec-L tricity is served at retail to 94 incorporated ccrminities and at whole-4

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sale to eight ccrrunities.

Stee heat is furnished in downtown Kansas 1

O Citv, m - ri.

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• ti-ser - hv xcet is e er teiv -

million. W Kansas City Metrcpolitan Area has a diversified econany as l

a recicnal ecuercial center for wholesale, retail and service com-panies. Area industry includes inportant auto assembly plants, a large t

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steel mill, and significant metal fabricating.

In addition, Kansas City is a center for air, rail and truck transportation.

The net generating capability of KCPL's electric system is approximately 2,560,000 kw under sumer corditions.

KCPL's existing i

generating capacity consists primarily of five fossil fueled steam generating stations, three of which are located in Kansas City, Mis-souri, one located in Henry County, Missouri, and one located in Linn County, Kansas.

The latter station, La Cygne, is jointly owned with

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t KG&E (50% each) and has a net generating capacity of 1,450,000 kw.

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Hawthorn Station in Kansas City has five generating units, the last of j

which was ccmpleted in 1969, with a total capacity of gproximately

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760,000 kw. Montrose Station in Henry County has three units with an f

approximate total generating capacity of 527,000 kw.

Northeast and Grand Avenue Stations, located in Kansas City, are used principally j

for peaking purposes and steam production with an @ proximate total generating capacity of 548,000 kw.

KCPL additionally is opening a new f

coal-fired generating station near the ccmunity of Iatan, Missouri, l

some 35 miles northwest of Kansas City, on the Missouri River.

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f Joseph Light & Power Ccepany and The Enpire District Electric Capany will own 18% and 12% interest, respectively, in the first 650,000 kw l

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unit, which is planned for service in 1980.

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KCPL's transmission lines consist of @prmimately 1,644 circuit miles of various voltages and types of structure, of which approximately 1,039 miles are lines using 100,000 volts or more.

Dis-tribution lines consist of approximately 10,982 miles of overhead pri-mary lines,1,823 miles of underground primary lina, and 857 miles of underground secondary lines.

ECPL is a participant in K)KAN and the SPP. KCPL's system is interconrcted with other utilities to permit substantial direct extra high voltage power interdange transactions with other power suppliers in Kansas, Missouri, Iowa, Nebraska and Minnesota.

In connection with Wolf Creek Generating Station (in partici-pation with KC&F a1d KEPCo), subject of this application, KCPL states that on May 9, 1973, Docket No. 98,350-0, the State Corporation Ccm-mission of the State of Kansas issued to KCPL a limited Certificate of Convenien and Authority authorizing KCPL's ownership, operation and maintenance of the generating and transmission facilities at and frm NCGS.

KEPCo is a non-profit cooperative corporation of twenty-six members, as listed in Appendix A.

The members are rural electric dis-tribution cooperatives serving rural areas in Kansas.

Each of the members has been for the most part financed with loans frm the Rural f

Electrification Administration.

KEPOo will be the wholesale power supplier for ead of its members.

At this time KEPCo has neither generation nor transmission facilities, and the ownership cf 17 percent of NOGS will represent KEPCo's first owned generating capacity.

However, in the long term O

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to meet the total power obligation of its msnbers and to meet the 4

reserve requirenents of any pool agreements.

Investigations are con-tinuing on plans for joint ownership of future base load generating capacity and for participation through ownership or purdase in the existing generation capacity of intermediate and peaking units of major Kansas utilities, i

KEPCo prcposes to transmit power purdased fra major util-ities over the transmission lines of other utilities to iritem, iections with msnber cocperatives dich then distribute power over their indi-1 vidually owned distribution networks.

Arraiw; -d.s are being made for coordination transmission and delivery of 90,000 kw of power purdased frce the Southwestern Power Adninistration (SPA) ccumencing in the O

l spring of 1980.

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Organization and management of Applicants KG&E is a corporation organized and existing under the laws of the State of Kansas, and its principal office is located in Wichita, Kansas at the address stated above.

i All of KG&E's principal officers and its directors are citi-i zens of the United States.

Their names and addresses are as follows:

DIREC'IMS Name Address 1

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Rcbert A. Brown Arkansas City, Kansas i

A. Dwight Button Wi&ita, Kansas Wilson K. Ca& nan Wichita, Kansas C. T. Carter Independence, Kansas C. Q. Chandler Wichita, Kansas 7

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Name Mdress Martin K. Eby Wi&ita, Kansas G. W. Evans Wichita, Kansas Ralph P. Fiebad Wichita, Karsas Ral;h Foster Wichita, Kansas George K. Mackie, Jr.

Pittsburg, Kansas t

Glen L. Montague Wichita, Kansas

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Clifton C. Otto Fort Scott, Kansas Dwane L. Wallace Wichita, Kansas Robert L. Williams Wi&ita, Kansas Lyle E. Yost Hesston, Kansas PRINCIPAL CFFI RS Name Mdress O-Ralph P. Fiebach, Chairman of the Board Widita, Kansas and Chief Executive Officer Wilson K. Cadman, President and Chief Wi&ita, Kansas Operating Officer Ralph Foster, Vice President-General Wichita, Kansas Counsel Dennis L. Evans, Vice President-Custcmer Wichita, Kansas i

and Ccemunity Services Glenn L. Koester, Vice President-Operations Wichita, Kansas l

Bernard Ruddick, Vice President-Engineering Wichita, Kansas l

Howard J. Hansen, Vice President-Finance Wichita, Kansas Glen L. Montague, Vice President-Widita, Kansas Administrative Services Robert L. Rives,'Vice President-System Wichits, Kansas Services W. B. Walker, Vice President-Accounting Wichita, Kansas and Secretary O

R. E. Tate, Treasurer Wichita, Kansas 8

4 Name Address O

z. D. ereehre, Contro11er, Assireane Wieita, Kansas Secretary and Assistant Treasurer Jack Skelton, Assistant Secretary Wi&ita, Kansas i

J. F. Klassen, Assistant Treasurer Wichita, Kansas 1

Verna L. Ridgeway, Assistant Vice eresident Wi&ita, Kansas 4

KG&E is not owned, controlled or dominated by any alien, any I

s foreign corporation, or any foreign government.

KG&E is making this application in its own behalf and not as agent or rgrementative of any other person (except as representative for KCPL and KEPCo in certain matters concerning NCGS before tie NRC).

KCPL is a corporation organized and existing under and by virtue of the laws of the State of Missouri, and its principal office is located in Kansas City, Missouri, at the address stated above. KCPL is O

also authorized to transact business as a public utility in the State of Kansas.

All of KCPL's principal officers and its directors are citi-zens of the United States.

'Iheir names and addresses are as follows:

DIRICPORS Name Address Arthur J. Doyle Kansas City, Missouri 3

Cyrus S. Eaton, Jr.

Cleveland, Ohio William D. Grant Kansas City, Missouri Kenneth G. Hovland Kansas City, Missouri l

Robert A. Olson Kansas City, Missouri 9

Name Mdress O

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x a cier, at ri Willis C. 'Iheis Kansas City, Missouri Robert K. Zimerman Kansas City, Missouri PRINCIPAL OFFICERS Nme Address Rcbert K. Zimerman, Chairman of the Board Kansas City, Missouri Arthur J. Doyle, President and 011ef Kansas City, Missouri Executive Officer Kenneth G. Hovland, Senior Vice President Kansas City, Missouri Donald T. McPhee, Vice President-Syste Kansas City, Missouri Power Operation Stanley G. Jameson, Vice President-Kansas City, Missouri Transmission and Distribution System Operations Q

John A. Mayberry, Vice President-Kansas City, Missouri Ccm ercial Operations J. Robert Miller, Vice President-Kansas City, Missouri Achinistration Louis C. Rascussen, Vice President-Kansas City, Missouri Corporate Planning and Finance Donald M. Landes, Vice President-Kansas City, Missouri Comunications Richard W. Fisher, Controller Kansas City, Missouri

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Ice F. Miller, Treasurer Kansas City, Missouri Clare Den Haerynck, Secretary Kansas City, Missouri A. Drew Jennings, General Counsel Kansas City, Missouri William H. Miller, Director of Htnan Kansas City, Missouri Resources Sanuel P. Cowley, Vice President -

Kansas City, Missouri t

Corporute Affairs and Chief Legal Officer 10

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i KCPL is not owned, controlled or dominated by any alien, any i

foreign corporation, or any foreign goverment.

It is making this j

i application in its own behalf and not as agent or representative of any j

3 other person.

KEPCo is a nor@vfit electric ocoperative corporation duly i

organized, validly existing and in good standing under the Electric

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t Cocperative Act, K.S.A. 17-4601, g _seg., and its principal office is I

j located in Topeka, Kansas at the address stated above.

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i he names and business addresses of KEPCo's trustee represen-j tatives and officers, all of whm are citizens of the United States, are

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as follows:

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TRUSTEE REPRESENTATIVES Twin Valley Electric Cooperative Assn., Altamont, Kansas i

L. G. Dulavey, Wayer, Kansas I

Dora Boore, Altament, Kansas i

N.C.K. Electric Cooperative, Inc., Belleville, Kansas Everett Ledbetter, Belleville, Kansas Raymond Trecek, Cuba, Kansas I

Coffey County Rural Electric Cwetive Assn., Burlington, Kansas t

Dean Martin, Princeton, Kansas Lyle Herriott, Burlington, Kansas j

Caney Valley Electric Cooperative Association, Inc., Cedar Vale, Kansas

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Walter David, Dexter, Kansas l

Robert L. Brown, Cedar Vale, Kansas l

Sedgwick County Electric Cooperative Assn., Inc., Geney, Kansas Jack Hutchinson, Cheney, Kansas i

Gene Porter, Viola, Kansas 1

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C & W Rural Electric Cooperative Assn., Inc., Clay Center, Kansas Charles W. Ellis, Clay Center, Kansas Raymond James, Clay Center, Kansas Flint Hills Rural Electric Cooperative Assn., Inc., Council Grove, Kansas Gerald F. Ridenour, Council Grove, Kansas Wilmer Tischhauser, Wilsey, Kansas i

Victory Electric Cooperative Assn., Inc., Dodge City, Kansas R. J. Sprenkle, Dodge City, Kansas Ralph V. Sherer, Mullinville, Kansas 3

Butler Rural Electric Cooperative Assn., Inc., El Dorado, Kansas Wilbur C. Reed, Benton, Kansas Ed Helmer, Burns, Kansas Smoky Hill Electric Cooperative Assn., Inc., Ellsworth, Kansas A. D. Paull, Ellsworth, Kansas Larry D. Kilian, Russell, Kansas Lyon County Electric Cooperatim, Inc., Emporia, Kansas O

n o speece, o ee city, x Larry N. Scott, Emporia, Kansas Radiant Electric Cooperative, Inc., Fredonia, Kansas Howard Sell, Fredonia, Kansas Marvin Freidline, Caney, Kansas Sekan Electric Cooperative Assn., Inc., Girard, Kansas Ray Taylor, Bronson, Kansas Marvin Lewis, Fort Scott, Kansas Central Kansas Electric Cooperative, Inc., Great Bend, Kansas Jack D. Goodnan, Great Bend, Kansas Lavern Becker, Russell, Kansas Brown-Atd11 son Electric Cooperative Assn., Inc., Horton, Kansas Dale Bodenhausen, Muscotah, Kansar Ronald E. Garcher, Norton, Kansas l

Ark Valley Electric Cooperative Assn., Inc., Hutchinson, Kansas p

Wesley Nunemaker, Langdon, Kansas v

Delbert E. Tyler, Hutchinson, Kansas 12

I United Electric Cocperative, Inc., Iola, Kansas l

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Wesley R. Clendenen, Iola, Kansas Elmer Nichols, Colony, Kansas Smoky Valley Electric Cooperative Assn., Inc., Lindsborg, Kansas Verner E. Lundquist, Lindsborg, Kansas Gilbert Bengston, Lindsborg, Kansas Jewell-Mitchell Cooperative Electric Cmpany, Mankato, Kansas Clarence Beck, Mankato, Kansas Jim Gouldie, Mankato, Kansas Leavenworth, Jefferson Elect ric Cooperative, Inc., McLouth, Kansas f

r W. A. Ousdahl, Lawrence, Kansas Fred L. Johnson, McLouth, Kansas CE Electric Cooperative, Inc., Meade, Kansas

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Otes Allison, Meade, Kansas t

H. L. Murphey, Protection, Kansas Norton-Decatur Cooperative Electric Ccnpany, Inc., Norton, Kansas Phillip A. Lesh, Norton, Kansas Lynn Morford, Oberlin, Kansas Ninnescah Rural Electric Cooperative Assn., Inc., Pratt, Kansas Robert Ahrens, Pratt, Kansas Frederic Moore, Iuka, Kansas l

D. S & O. Rural Electric Cooperative Assn., Inc., Solcnon, Kansas James F. Schmidt, Solomon, Kansas Nadine Griffin, Abilene, Kansas P. R. & W. Electric Cooperative Assn., Wamego, Kansas Kenneth L. Erickson, Wamego, Kansas Lester Marten, Alma, Kansas Surmer-Cowley Electric Cooperative, Inc., Wellington, Kansas I

Max Kolarik, Caldwell, Kansas Garland Price, Wellington, Kansas O

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OFFIGRS O

President:

Charles W. Ellis d

Clay Center, } h as Vice President:

James F. Schaidt Solcunon, Kansas Secretary:

Itillip A. Lesh Norton, Kansas Treasurer:

Allen D. Paull Ellsworth, Kansas Executive Otes Allison Comittee Meade, Kansas Menbers:

Wilbur C. Reed Benton, Kansas Max Kolarik Caldwell, Kansas Executive Vice President:

Charles Ross Topeka, Kansas Legal Counsel:

John Philip Kassebaum O

Wichita, Kansas KEPCo is not owned, controlled or dcminated by any alien, any foreign corporation, or any foreign government.

It is making this gplication in its own behalf and not as agent or rgresentative of any other person.

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Cla.1g and pericd of license applied for and use to which facilities will be put The license hersy gplied for is a class 103 operating

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license as defined by 10 CFR 50.22.

It is requested for a period of 4

forty (40) years frczn the issuance of the NOGS construction permit, expiring on May 17, 2017.

Applicants further request such additional l

source, special nuclear, and by-product material licenses as may be O

c ;i te to the vo e to=,

e=a over tioa or the aece 17 or e

licensed facilities.

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he facilities will be used as a part of Applicants' electric O

uti itv r te ror the 9emeretio= or e ectric e=ersv

• er 111 1=c1uae one pressurized water reactor to be known as 5103f Creek Cenerating Station, Unit No. 1".

It is expected that this unit will be capable of an outpt:t of 3425 W t (including 14 Nt contribution frm reactor coolant ptmps) corresponding to a net electrical capability of about 1150 Ne, All physics and core thermal hydraulics information in the attached Final Safety Analysis Report is based upon the reference core design of 3411 Nt.

Site parameters, containment, engineered safe-guards, and the hypothetical accidents are evaluated for a ccre output of 3579 Nt.

%e Westinghouse Electric Corporation will supply the design and fabrication for the first core for the nuclear generating unit.

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Financial Oualifications of Applicants We financial information will be supplied in June, 1981; however, copies of the 1978 Annual Reports of the station co-owners are included as part of this document, g.

Reaulatory Acencies, Area Newspapers and Trade Journals me following regulatory agencies have jurisdiction over the rates and services that would be incident to NOGS:

State Corporation Ccrrtission of Kansas State Office Building Topeka, Kansas 66612 The Public Service Ccmmission of the State of Missouri Jefferson Building Jefferson City, Missouri 65101 Federal Energy Regulatory Ccruission 825 No. Capitol Street, N.E.

s Washington, D.C.

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1 The following is a list of major news publications which O

circulate in the Applicants' tse-state region and will be sufficient to give reasonable notice of this application to any local municipalities, private utilities, public bodies, and cooperatives Wild might have a potential interest in WCGS:

Tcpeka Capitol-Journal 6th & Jefferson Topeka, Kansas 66607 Wi&ita Eagle-Beacon 825 E. Douglas Wi&ita, Kansas 67201 Kansas City Star d imes 1729 Grand Avenue Kansas City, Missouri 64108 Burlington Daily Republican Burlington, Kansas 66839 O

V The following is a list of major trade journals which will be sufficient to give reasonable notice of this application on a nation-wide basis:

Public Power f

American Public Power Association Suite 212 i

2600 Virainia Avenue, N.W.

t Washington, D. C.

20037

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Public Utilities Fortnightly Public Utilities Reports, Inc.

I Suite 520 1828 L Street, N.W.

Washington, D. C.

20036 t

Rural Electrification National Rural Electric Cooperative Asmciation j

1800 Massa dusetts Ave., N.W.

Washington, D. C.

20036 O

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p Flectric Light and Power Q

Technical Publishing Ccmpany i

1301 South Grove Avenue 1

Barrington, Illinois 60010 t

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Restricted Data The @ plication does not contain any Restricted Data or other E

defense information, and it is not expected that any will beccme in-volved.

However, Applicants acree that they will appr@riately safe-guard such information if it does becczne involved and they will not permit any individual to have access to Restricted Data until the Civil Service Ccenission shall ha.ve made an investigation and a report to the Nuclear Regulatory Ccrmission on the character, associations and loyalty 1

of such individual, and the Nuclear Regulatory Ccmnission shall have determined that permitting such person to have access to Restricted Data 0

111 =ot e=a =9er **e c< -== aere ee a ecurier-i i

It is requested that all cawunications pertaining to this

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a @ lication be sent to:

Mr. Glenn L. Koester i

Vice President-Operations Kansas Gas and Electric Coripany l

201 North Market Street P.O. Box 208 Wichita, Kansas 67201 1

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r Additionally it is requested that ctpies of all such comuni-O

- tioa se e e to:

Mr. Donald T. McPhee i

Vice President-Production l

Kansas City Power & Light capany l

1330 Baltinore Avenue P.O. Box 679 I

Kansas City, Missouri 64101

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Mr. Nicholas A. Petrick l

Executive Director, SNUPPS l

5 Choke Cherry Road l

Rockville, Maryland 20850 l

r Mr. Jay Silberg, Esquire Shaw, Pittman, Potts & Tro4 ridge 1800 M Street, N.W.

I Washington, D.C.

20036 Mr. Joe Mulholland Manager of Power Supply and Engineering Kansas Electric Power Cooperative, Inc.

P.O. Box 4267, Gage Center Station Topeka, Kansas 66604 I

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i IN WITNESS WHEREOF, Kansas Gas and Electric Company has bt caused its name to be hereunto signed by Glenn L.

Koester, its Vice President-Operations, and its corporate seal to be af fixed hereto by W.

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Walker, its Vice Pres ident-Accounting and Secretary, on thia 19th day of February, 19_8,0 KANSAS GAS AND ELECTRIC COMPANY By M

Clenn L. Koester Vice President-Operations ATTEST:

W. B. Walker Vice President-Accounting and Secretary STATE OF KANSAS

)) as COUNTY OF SEDGWICK )

O Glenn L. Koester, being first duly sworn, on his oath, states that be is Vice President-Operations of Kansas Gas and Electric Company; that he is authorized on the part of said Company to sign and file with the Nuclear Regulatory Commission this application and exhibits attached he reto ; that he has read all of the statements contained in such appli-cation and the exhibits attached thereto and made a part hereof; and that all such statements made and matters set forth herein are true and correct to the best of his knowledge, information and belief.

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Gl'enn' L. Koester Subscribed and sworn to before me, a Notary Public in and for the State and County above named this 19th day of February

, 19 80,

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Notapublic

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$.y UC ky\\ go.Nission expires:

August 15, 1981 O**.:?,yy_.e>

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IN WITNESS WHERECF, Kansas City Power & Light Cmpany has i

caused its name to be hereunto sicined by Donald T.

McPhee, its Vice hereto by Clare Den Haerynck, its Secretary, on this 8th day of President-System Power Operation, and its corporate seal to be affixed Pehruarv, 19E.

KANSAS CITY POWER & LINT G)MPANY By bf a b

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Donald T. McPhee Vice President-Systs Power Operation ATTEST:

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Clare Den Haerynck Secretary S'IATE OF MISSOURI

)) ss CDUNTY OF JACKSON

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Donald T. McPhee, txting first duly sworn, on his oath, states h'

that he is Vice President-System Power Operation of Kansas City Power

& Light Cortpany; that he is authorized on the part of said Cmpany to sign and file with the Nuclear Regulatory Cmmission this application and exhibits attached hereto; that he has read all of the statments contained in such application and the exhibits attached hereto ard made a part hereof; and that all such statements made and matters set forth herein are true and correct to the best of his knowledge, information and belief.

/Y)

Donald T. McPhee Subscribed and sworn to before me, a Notary Public in and for the State and County above namd this 8th day of February

, 1980.

O f

te n n Ls

]

(BettyBowsfer)

No'tary Public

~

My Ccmnission expires:

September 28, 1980 x

20

IN WITNESS WHEREF, Kansas Electric Pcwer Cooperative, Inc.

has caused its name to be hereunto signed by Charles W. E111s, Presi-O dene, and its corporate sea 1 to he affixed hereto a Phi 111e A. teeh, v

Secretary, on this 7th day of February

, 1980,

i KANSAS ELEUfRIC POWER CDOPERATIVE, INC.

By

/

/

Charles W. Ellis President ATTE3T:

i i

Phillip A. Lesh Secretary S'IATE OF KANSAS

)

) ss COUNTY OF SHAWNEE

)

v)

Charles W. Ellis, being first duly sworn, on his oath, states that he is President, Kansas Electric Power Cooperative, Inc.; that he is authorized on the part of said ccupany to sign and file with the Nuclear Regulatory Ccmnission this application and exhibite attached hereto; that he has read all of the statements contained in such appli-cation and the exhibits attached hereto and made a part hereof; and that all such statements made and matters set forth herein are true and correct to the best of his knowledge, information and belief.

p 0

y Charles W. Ellis Subscribed and sworn to before me, a N Pub 11c in rd for the State and County above named this

,*h day of ebruary

, 1980,

iinnie,,,..

//

p*',q.. G Eg*

Notary Public g @,,.. "'." *...'

h,,/ A ',. S

'$$hl expires: September 13, 1980 2

mV ' p,,a..n ly. -l 21

o,,,

i

i APPENDIX A

{

KANSAS ELECTRIC IGER CDOPERATIVE, INC.

EMIER SYSTEMS Ark Valley Electric Cooperative Leavenworth-Jefferson Electric Cooperative P.O. Box 1246 P.O. Bax 70 South Hutchinson, KS 67505 McLouth, KS 66054 Erown-Atchison Electric Cooperative Lyon County Electlic Cocperative i

P.O. Box 230 P.O. Box 964 Horton, KS 66439 Enporia, KS 66801 Butler Rural Electric Cooperative NCK Electric Cooperative P.O. Box 1242 P.O. Bax 309 4

El Dorado, KS 67042 Belleville, KS 66935 Caney Valley Electric Cooperative Ninnescah Rural Electric Cocperative i

P.O. Box 308 P.O. Bax 967 Cedar Vale, KS 67024 Pratt, KS 67124 CE Electric Cooperative Norton-Decatur Cooptive Electric Conpany P.O. Box 740 P.O. Bax 360 Meade, KS 67864 Norton, KS 67654 O

Coffey County Rural P.R.&W. Electric Cooperative V

Electric Cooperative P.O. Bax 5 P.O. Bax 229 Wamego, KS 66547 Burlington, KS 66839 C & W Rural Electric Cocperative Radiant Electric Cocperative P.O. Box 513 P.O. Bax 390 Clay Center, KS 67432 Fredonia, KS 66736 D.S.60. Rural Electric Cooperative Sedgwick County Electric Cooperative P.O. Box 286 P.O. Box 220 Solomon, KS 67480 Cheney, KS 67025 Flint Hills Rural Electric Cooperative Sekan Electric Cogerative l

P.O. Box B P.O. Box 40 Council Grove, KS 66846 Girard, KS 66743 Jewell-Mitchell Cooperative Smoky Hill Electric Cooperative Electric Carpany P.O. Bar 125 P.O. BaK 307 Ellsworth, KS 67439 Mankato, KS 66965 Smokey Valley Electric Cocperative Strnner-Cowley Electric Cocperative P.O. Box 469 P.O. Box 220 Lindsborg, KS 67456 Wellington, KS 67152 O

22

l l

l APPENDIX A (Sheet 2)

{

O Twin Valley Electric Cooperative United Electric Cooperative l

P.O. Box 385 P.O. Box 326 Altamont, KS 67330 Iola, KS 66749 Victory Electric Cocperative Central Kansas Electric Cooperative P.O. Bax 1335 1025 Patton Road Dodge City, KS 67801 Great Bend, KS 67530 l

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CONTENTS Cessna Citation jets Learjets near comph move along an at the Wic.

assembly hne in Wichita.

Cates Leariet plc Management Letter... Our goals

' '" ~~ ~

remain the same, but change dom-inates society and our company.

b Page 2.

Financial Results.. Net income

-+

~

was up S4.3 million. For the 23rd

.k time in as many years common stock dividends were increased.

Fuel.

For the first time since 1937 natural gas accounted for ig-less than half the fuel we used in our power plants.

• q Page 6.

j Construction Our expendi-tures in 1978 were a record $134

/

l i

million, mostly for new generat-T*

l ing facilities.

[l Q

Page 8.

1 Load Management Finding Jetliner components Both mihtory c ways to control the time when are built in Wichita civilian planes electricity is used is one way we by Boeing.

built by Beech Aircr are working at becoming more efficient.

Page 10.

Financing.. Sales of securities and a novel borrowing p!an helped raise almost $120 million in 1978.

Page 12.

Regulation.. Two commist!ons Aboet The Cover have major responsibility for reg-An antique biplane settles to a out two-thirds of the world's i l

ulatmg KG&E rates and practices.

sunset landing at a country air-craft each year and among th l

Page 13.

port near Wichita.

employ 35.000 persons.

l People Employees continue On December 17,1903, the Wright Although aircraft are import to be an important factor in Brothers launched man into the to Kansas and to L,&E's sen KG&E's success.

age of powered flight. Kansas area, the regmn's economy is Page 14.

and airplanes have grown up to-markably balanced. Other ma gather and we are pleased to ac-f act u ring, agriculture a

Financials.. Management's dis.

knowledge the Diamond Jubilee minerals help keep the sta:

cussion; current financial state.

Anniversary of this important in-economic base secure.

ments: comparative financial dustry in 1978. Even now, the Kansas' unemployment was statements; and comparative elec.

Wichita plants of Beech, Boeing.

nation's lowest in 1978 and i tric statements.

Cessna and Gates Learjet turn 2.7% of tht' work force at ve(

Pages 16-27.

end. Trends continue to 'pc toward continued progress Officers and Directors..Page 28.

the area which KG&E serves.

System Map.. Page 29.

i j

l l

HIGHLIGHTS FOR 1978 4

b 19 Year Annual

% Increase Compound 1979 19n Over 19M 1968 Growth Rate Operating Revenues

$238,459,676

$196,235,824 21.5

$ 60,808,297 14.6 Nrt income

$ 28,964,461

$ 24,650,034 17.5

$ 9,840,509 11.4 Earnings Per Share of Common Stock

$2.28

$2.28

$1.91 1.8 Annual Common Stock Dividend Rate (Year End)

$1.90

$1.80 5.6

$1.36 3.4 Avrilable Capability l

(Kilowatts) 2,031,000 2,020,000 6.2 1,278,000 4.7 System Peak (Kilowatts) 1,532,600 1,423,400 7.7 923,400 5.2 Average Use Per Residential Customer (Kilowatt-Hours) 10,136 9,413 7.7 5,842 5.7 Average Price Per Kilowatt-Hour

[

(Residential) 3.78f 3.43(

10.2 2.09r 6.1 Number of Customers at End of Year 217,649 212,491 2.4 183,779 1.7 Total Utility Plant (Net]

$753,786,668

$639,405.763 17.9

$194,350,648 14.5 b

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MANAGEMENT LETTER Our Boals remain the same, but change dominates society and our company.

Change continues to dominate Before the early 1970s, almost the scarcity of natural ga both our society and company.

our entire production of elec-some growth also plays a ro' Stih our goals in 1978 con-tricity was in plants that used in making future plans. Du tinued to be to:

gas as fuel. But the Energy ing last summer's heat ot

• hiaintain adequate, reliable Act generaHy oudaws the use system peak increased almo:

service for our customers at f gas in large boilers like ours 8%. Energy sold during th af ter the 1980s. And that year to customers we serv equitable rates consistent with costs.

change dictates that we build directly also was up 8%

new plants where other fuels p;

g gg

• Offer investors a return con-like coal or uranium can be sistent with the risk they used.

we must have to meet custon take with their savings.

ers' needs remains a challenge Actually, we had begun years

~ First mortgage bonds, pre

• Provide employees with age to plan plants that can use ferred stock and commo good, safe working condi-fuels other than gas. In 1978 stock all were issued durin tions, equitable pay and we completed our third mod-1978. Both Afoody's and Star.

equal opportunity, ern coal-fueled facility, the dard & Poor's changed to /

first unit at Jeffrey Energy from AA and AA-their rai

• Operate in a socially re-Center which we own jointlr ings of company bonds durin sponsible way.

with three other utilities. That 1978.

lP ant adds 136 megawatts of Even though we were operat-ing in a climate of change in coal capability to our system To provide more flexibility i-1978, revenues and net income and brings to 908 megawatts meeting our needs for capita' a $100 milh.on 5-year jcan a

increased. Earnings per aver.

our total coal-fueled generat-age share of common stock ing capability. As recently as arranged with a group of _t were $2.28, the same as in 1972 our coal-fueled capability pign and domestic ban s.

1977, although almost 1.7 mil.

was only 47 megawatts.

ing h o s

s o ye hon new shares were issued Three other coal fueled units volving fund. Any balanci during the year.

still are to be completed. One after two years becomes a 3 Common stock dividends were of them, to be in use in 1980,is year term loan. We borrowet increased by 2%c per quarter under construction. The other

$50 million under this loai effectivc with the final pay.

two are still being planned for agreement in 1978. Interest i:

ment for the year. The annual completion later in the 1980s.

calculated based on the Irvint rate now is $1.90 compared All three will be owned in Trust prime rate and the fed with $1.80 previously. This Partnership with other electric eral funds rate.

was the 23rd time in as many utilities.

Having new facilities in oper years when common stock dw-To help assure our customers ation has resulted in highei idends have been increased.

of reliable electric energy, we operating costs. In turn, tha One major change in 1978 was also are constructing a nuclear dictates a need for rate relief adoption by the federal gov-Plant to be in use by 1983.

ernment of the National En.

Work was 27% complete at Our rates were m. creased on!3 t

ergy Act. Although it may be the end of the year. We plan slightly m 1978 - ess t ar l

Years before its full impact is to own 41%% of that plant's 1%. That was in mi -year or felt, it emphasized again the 1,150 megawatt capacity.

orders from the Kansas Cor-gg need to construct power plants Although our new plants are also made permanent a 9% in-l that can use fuel other than needed largely to help offset crease that had been granted natural gas.

the fuel shortage caused by on an interim basis in 1977.

In December we requested a

$38.9 million retail rate in-crease. $21.4 million of it on0 2

ft

)

Ralph P. Fiebach, chairman of the board and president, speaks at the annual meeting of stockholdus.

an emergency interim basis.

m%

)

Based on our understanding

.N N. NYN IC'/,

of federal anti-inflation guide-

" >[];"jr VM.l lines, we believe the proposed

_ >m increase complies. However, N k' f

^r if further study indicates a f'

change is needed, we'll make

,f*

l the change.

- 1_y IIcarings were completed in 1978 on a request for a $5.3 l

million increase in wholesale j

rates. However, at year's end i

the Federal Energy Regulatory I

Commission had not issued its f

ruling on the request which was filed in September 1977.

g Rural electric. cooperatives y' '

f and municipally owned elec-tric utilities are the customers

,3 generally affected by the pro-1 posed change.

One of our major efforts in

y gg g...y

['

4978 continued to be improv-Our service area remained many times during the past

' efficiency in our own op-

.tions and in the use of en-economically strong in 1978.

year. For that effort and sup-In the Wichita metropolitan port we are particularly grate-ergy by our customers. In fact, area, the work force was ful. We also appreciate very the two often go hand in hand.

203,100 at the end of 1978, up much the support and under-By managing the use of elec-11,150 from a year earlier.

standing of our stockholders.

tricity in such a way that cus-Unemployment at the end of We.o h. ve the future of the tomers more fully utilize our the year was 3.1% of the work company is good and we will investment in production and force, well below the national continue to work toward serv-distribution equipment, we average. The company gained ing the mterests of our own-can operate more profitably more than 5,000 customers, ers, employees, customers and and help hold down costs that bringing to more than 23.500 the communities we serve.

ultimately are paid by custom-the number gained in the past ers. As a very real additional five years. Indications are that benefit, the national goal of growth will continue in 1979.

On beh,;lf of the board of wise energy use also is served.

I One change was made on the directors, i

Through research and aggres-board of directors in 1978.

sive promotion of control G. M. Ross, of Newton, retired

)

strategies, including conserva-president of Ross Industries.

l tion, we work to improve the retired as a director af ter serv-l company s system load factor ing since 1952. We appreciate

[

f

-the means used to measure his many contributions. IIis J

the efficiency with which our successor is Wilson Cadman, facilities are used. Continued executive vice president of the Ralph P. Fiebach Chairman of the Board j

long-term improvement is an company.

and President important goal of the com-Our great strength is our pany.

people. Supervisors and other February 12, 1979 employees have proved their loyalty, dedication and value 1

3 l

f i

i

~ ' ~ ^ ^ -----

FINANCIAL RESULTS r3e sali neats t3e yoaisceg, at an indoor soccer gan Net income was up S4.3 in the Kansas Colisem million. For the 23rd time in at Wichita. Like many oth, as many years common stock large new facilitiesd dividends were increased.

320,000 square foot corn 5 is electrically heate 7":

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pperating revenues increased Earnings per average outstand-dential revenues were up 21' d42.2 million to $238.5 mulion ing share of common stock in to $73.7 million. Commercia n 1978. Greater sales, higher 1978 were S2.28, the same as revenues increased 17% t s

'ra tes and increases in fuel in 1977. This level was main-

$53.6 million and industri, l adjustment charges accounted tained even though the aver-revenues of $73.8 million wei l for the increase.

age number of shares out-21% over 1977.

j standing increased 20%.

)

Net income was $29 milh.on.

Electricity sold to other util up S4.3 million over 1977. Dur-Common stock dividends were ties pro'duced revenues (

ing the year S134 million was raised 2%c per quarter effec-S35 million compared wit i invested in new facilities so tive with the final payment of

$28.8 million the precedin j l

while net income increased, the year. This was the 23rd year. There has been increa: I a

the rate of return on invest-time in the past 23 years that ing reliance on our service b l I

ment actually decreased.

the rate was raised. The new municipal utilities that ofte annual rate is St.90 compared find they can buy electricit !

with $1.80 at the end of 1977.

for less than they can generai l it with their own plants.

Revenues from all categories of customers increased. Resi-Customers we serve directl used 7.1 billion kilowatt-houi 4

4

i i

l i

in 1978, an increase of 8%

over 1977. Residential usage KG&E's Diversified Industrial Revenues I

was up 10%, commercial sales iThousands of dollars)

% Increase increased 5% and industrial ters 1977 over ts;7 i

use increased 9%. Unusually j

warm summer weather and ENERGY PRODUCTION entremely cold winter weather l

both contributed to this in-31% of total l

crease. Total sales of electric-Petroleum Refining

$ 13,257

$ 10,592 25.2 ity in 1978, including that sold Petroleum and Gas Production 4,154 3,647 13.9 to other utilities, was up 11%

Pipeline Pumping 4,169 3,629 14.9 over 1977.

Coal hiining 600 618 (3.0)

Operating expenses were up Subtotal 22,180 18,486 19.9 l

22% to $199.5 million. In-l creased fuel costs continued NATURAL RESOURCE l

to be the largest contributor 29% of total to the gain.

l Chemical 13,579 10,750 26.3 Fuel cost $102.1 million, up Sand, Stone, Clay and 43% from 1977. Higher fuel Cement Products 5,901 4.966 18.8 prices and increased genera-tion both affected the total Plastics 2,020 1.630 23.9 spent for fuel.

Subtotal 21,500 17.346 23.9 Power purchased from other ities decreased from $14.5 MANUFACTURING nullion in 1977 to $4.2 million 24% of total in 1978. We buy power from Aircraft 7,529 5,861 28.4 other utilities in emergencies hiachinery 5,588 4,695 19.0 and when it is cheaper to buy than to generate. Depending hietal Fabricating 2,687 2,259 18.9 l

upon the cost of available fuel.

Other hianufacturing Production 1,642 1,401 17.2 purchased power often bene-Subtotal 17,446 14,216 22.7 fits our customers by helping hold down fuel costs and cus-AGRICULTURAL, FOOD AND tomers' bills.

KINDRED PRODUCTS l

hiaintenance costs in 1978 11% of total l

were $15.3 million, an increase Grain hiill Products 3,111 2,739 13.6 l

of 39% over 1977.

Prepared Foods 2,035 1,768 15.1 Wages and benefits charged to Afeat Products 2,552 2,157 18.3 I

operation increased 9% in Dairy Products 377 336 12.2 1978. They amounted to $18.6 milhon.

Subtotal 8,075 7,000 15.4 Taxes for the year were $30.9 SERVICE RELATED million, up $4.4 million from INDUSTRIES 1977-5% of total 3,647 2,930 24.5 TOTAL INDUSTRIAL REVENUES

. $ 72,848

$ 59.978 21.5 5

FUEL For the first time since 1937, natural gas accounted for less Raillines bring umt trains than half the fuel we used filled with coal f in our power plants.

Wyoming mines to Jef Energy Center in Konsus.

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i As planned, our use of natural 1970 coal units in 1978 gener.

Additional gas from out o gas as power plant fuel con-ated electricity at fuel costs of state continues to be availabl tinued to decline in 1978. Dur-about 9 mills per kilowatt-at times. However, no ga ing the year it accounted for hour while our lowest-cost has been available from inter only 42% of the fuel we used gas-fueled kilowatt-hour cost state pipelines during winte l 1

to operate our plants com-about 13 mills in 1978.

months.

j pared with 53% in 1977 and Uranium promises to benefit Residual oil can be used in ou 99% as recently as 197.

consumers because of its low gas-fueled plants. However,.

j While gas usage declined, coal cost compared with other is more expensive, involve 1

use increased. With three new fuels. By 1983 when W olf more maintenance, handlin coal-fueled generating units in Creek Station comes on line, and storage facilities and has service, one of them for less we expect the cost of uranium, greater environmental impact than half the year in 1978, coal per British thermal unit, to be Although we strive to mim provided 45% of the electric-much less than the cost of mize ur il use, it is an im I

ity we generated for our cus-other fuels available to us.

portant alternative fuel an<

l tomers to use. The remaining About two-thirds of the gas will continue to be in th.

13% was generated using re-we had available in 1976 was future. Part of our needs ari sidual oil as fuel, intrastate gas produced in met by spot market purchase Changing fuels also changes Kansas. This gas has not been and part under contract with at the economics of power pro-subject to curtailment under ares refinery. company storag duction. In the past, gas was federal rules. However. the capacity is 1,070.000 barrels.

the most widely-used fuel be-new National Energy Act for-Coal for existing and planne' cause of its low cost. But no bids the use of gas to fuel plants is being purchased ur more. Coal is cheaper and the large boilers under most cir-der favorable long-term cor lowest-cost electricity we pro-cumstances after the end of tracts. One unit uses c comes from coal-the 1980s.

mined in eastern is'ansas duce now;ts. Our three post-fueled um 6

1 A hunter mvaits morning duck flights at La Cygne Generating Station. Some 5.000 acres of land t# ' water have been turned to state and local government for public recreation.

Considerable research is being

[

done both nationally and lo-cally in an effort to find new fuels or to improve the effi-ciency with which present x-

. m fuels are used.

' s, KG&E has 1. en involved in re-search relatmg to the use of wind as an energy resource and in lessening the environ-mental impact of coal. A test burn of used motor oil also was made during the summer.

13ut the cost and environmen-

,, tyi : +

f k

tal impact are presently too j

fis yW<

great to use it as even a sup-

' ;i plemental energy resource.

The company has also been in-volved with a group of other Kansas utilities in exploring the use of stored compressed air to operate turbine-genera-ators during peak use periods in much the same way that y

ag water is stored m a pumped Bulldozers work to restore Waste motor oil was test storage hydro-electric plant.

4 mined land to its original burned as fuelin 1978. But This could make more efficient contour near La Cygne st proved to be impractical use of generating facilities and a

Station.

to use for economic and environmental reasons.

Permit greater use of large new facilities such as a nu-western hiissouri. Two others of those suits were consoli-clear plant, thus conserving use Wyoming coal transported dated and tried as one case in fossil fuels. This study now is l

by unit train. Three additional which a federal judge already in its second phase.

I units also will use Wyoming has ruled that Westinghouse coal for which contracts al-cannot escape,ts obligation..

Through support of the Elec-tric Power Research Institute, i

ready have been signed. These Our case and two others are the company also is involved l

contracts extend well into the being tried separately with in several other fuel research j

21st century.

the trial to begm m Octob< n projects involving nuclear fu-Uranium will fuel the generat-Because of the legal questioi s sion, magnetohydrodynamics, ing unit being built at Wolf surrounding the Westinghouse fluidized bed coal combustion Creek Generating Station.

contract, KG&E and Kansas and solar generation.

KG&E and its partners have a City Power & Light Company Continued changes in fuel 20-year contract with West-formed a subsidiary called availability and rising energy inghouse Electric Corporation Utility Fuel Company to de-costs wiH have a major impact to supply uranium for fuel.

velop additional uranium sup-on our operations for several Ilowever, Westinghouse has plies. In hiay 1978, the first announced it will not fully uranium from a Cobb Nuclear ye rs. y t onh are fuel costs c niinuing to go up, but the honor the contract because of Corporation mine in New hiex-I" rising uranium prices.

was s ipped to a conver ur es lik co g

r nd uranium to operate power j

As a result, we sued to require first fuel acquired for Wolf P ants has a major effect on l

!stinghouse to honor its Creek through Utility Fuej umtract as did a number of We c mpany and Hs cus-Company.

tomers.

7 other utility companies. hiany E

CONSTRUCTION Our expenditures in 1978 were a record $134 million, Construction of Wolf Creek mostly for new generating Generating Statmn v.gs 27% complete at thd J.

facilities.

of the year.

A record S134 million was

~ - T #'"" [ '

's spent in 1978 for construction.

,,J.-

Previous record was $115 mil-f ).

, Mg' p

lion invested in 1976. Our

~

4 1979 construction investment

.3 is expected to total $133 mil-lion.

9 3 )%

a ti e an In the next five years we ex-pect construction expenditures k),..

3 to total $594 million. Con-8" g %Q = I:

struction costs the past five years were $489 million.

Most of this money is needed e

k a _,

'~l_

^-

~

to pay the cost of building coal

-ry.

l and uranium-fueled generating I

fa'cilities required to offset the 7

lj loss of natural gas as a gener-e g

ating fuel and to meet the

./

y[

. ;.- p g[','14wm 4 s

i growing demands of custom-g,

- +

ers throughout our service l '

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. % im 4'

-,j'.,%f'*,.

4gg... -,\\%

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area.

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Bitter weather over much of "h:";g'

,k [g ;' % l b g d :: 'l

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the country in 1977 and the f

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coal strike of 1978 showed i

g,~~~t ~~f

- p

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why we must develop more c-

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than one ene gy resource. In states that rehed almost wholly on struck coal mines for fuel.

Nuclear Regulatory Commis-KG&E has advised the Nuclear genuine hardship existed.

sion in May 1977. Wolf Creek Regulatory Commission that where generating plants usmg is owned jointly by KG&E and reactor base mat concrete sam-uranium or another fuel wer Kansas City Power & Light ples tested 90 days af ter being available, the hardship was Company. Several Kansas co-poured did not meet design eased. Thus we are planning operatives also have signed a criteria.

both coal and uranium fueled letter of intent to buv 17% of L ter tests by the Portland Ce-the plant. We will bh respon-ment Association tend to con-

"'8' f

End of year status of major sible for operation and will crete str ngth constraction projects was:

own 41.5% of the plant.

hi]that the e

• Wolf Creek Generating Sta-Wolf Creek is one of five tions. However, the NRC says more information is needed tion. scheduled for operation nearly identical nuclear plants in 1983, was 27% complete.

being constructed as part of before the matter can be re-Work was on schedule. The the Standardized Nuclear solved. Additional indepen-construction permit for this Unit Power Plant System dent tests are being made by 1,150.000 kilowatt uranium-(SNUPPS). Standardization is PCA and KG&E has retained fueled unit was issued by the intended to reduce the amount of time and money required for designing, licensing and constructing nuclear power plants.

9 l

l 8

Vice President Walter htondale was featured sr'mker at Ibc dedication l

e ffrey Energy Center i

in 1978.

t

],

Plants We're Building and Planning l

{ry

,kJJ @ ' Y2 l

hh;l ' ';.y p

Capacity (MW)

{

Plant Fuel Total Company's Share f

p~

,f'"

t'*1 J

Jeffrey Energy Center l

Unit No. 2 Coal 680 136 k

Unit No. 3 Coal 680 136 i

Unit No. 4 Coal 680 136 E

Wolf Creek Generating

{:{

Station Unit No.1 Uranium 1.150 477

p, The Kansas Power and Light this 98-mile line is to begin in j

Company. KG&E will own 1981.

j

~

20% of each of the units for These new facilities that are l

a total of 544,000 kilowatts.

needed to meet customers 1

The second unit is scheduled

[

to become operational in 1980.

needs do increase the cost of providing service. Thus our

~

the others in the middle 1980s.

needs are carefully monitored

[

• Purchase of right-of-way be-and our forecasts revised as i

gan in 1978 for a new 345 kV needed to minimize construc-transmission line between tion. Completion dates can be

[

Wolf Creek Generating Sta-and are changed to meet chang-l tion and Rose Hill Substation ing needs.

an independent consultant t near Wichita. Construction on I

review the matter.

i Based on information avail-l able now-including the ad-l Vice of the plant's contractor l

and architect-engineer and our t

consultant - the company be-(

lieves base mat concrete does f

meet design criteria and that I

the matter ' vill be resolved

(

without material adverse ef-i fect on the company. But if it j

should not be resolved to the r

satisfaction of NRC construc-(

tion could be deiayed and the cost increased. However, the

[

j final outcome cannot yet be determined.

• Jeffrey Energy Center Unit No.1 was completed in July 1978. This is the first of four 680,000 kilowatt coal-fueled j

'ts being constructed by

[

I l

9 I

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1 1

LOAD MANAGEMENT 4

i Finding ways to control the A radio-controlled switch i:

i time when electricity is used installed on on air conditioner 1

is one way we are working part of a test desi 1 l

at becoming more efficient.

to control peak dem 4 l

for electric power flow can energy be used mort Up c

efficiently? How can we most N

efficiently use our over $700 g

million investment in generat-i\\

y 4

ing capacity, lines and other

,s facilities? Both questions re-p. 4,.

9, late to load management.

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/)i Demand for electricity changes

,f j

i according to time of year as 7'

m well as time of day. This un-2, a

even demand means equip-l ment needed to serve high-W.

.k i

demand periods is not fully

.A.

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utilized at other times. Our

.,y -

objective is to level off the h_

l high and low demand periods CW=

~ ;h to use our investns.nt more efficiently.

i n

Since it is not practical to i

store large amounts of elec-p' tricity, generating plants and

.a other facilities must be con-

. W, structed to meet high peak electricity needs. If peaks are i

3 reduced, less generating ca-4 pacity ultimately will b re.

high summer temperatures, tricity. Creating consume quired and construction and creating a new peak demand

.twareness of how load man maintenance costs reduced.

of 1,532,600 kilowatts, almost agement affects them receiver

% above the 1977 peak.

continuous attention. Adver The hardest demand fluctua-Lower winter temperatures tising encourages consumen tion to manage exists among also increased demand with to delay high energy use taskt residential users. For example, the winter peak 6% over the until after the traditional peal the peak electricity use m a previous winter. In the past 5 use time of day. Conservatior day is usually between 4 to a years the summer peak has in-is urged through many media p.m. as most svorkers return creased by an average of 5%

hi re than 100 northwest home from their jobs. On an yearly and the winter peak by Wichita homes were meluded annual basis, the highest de-an average of 6%.

mand period for more than 20 m a summer program to deter.

years has been during the hot-The more rapid growth of the mine if air conditioners could 1

test part of the summer when winter peak helped the com-be controlled by radio signal air conditioning is widely pany's " load factor" - the to reduce the high demand used. Winter months, except measure of system-use effi-peak. Each air conditioner at times of s,evere cold, are ciency - improve from 50%

was controlled by the com-relatively low demand periods.

in 1974 to 53.0% in 1977.

pany so the unit would run Growth of the summer peak in only 45 minutes an hour and in 1978 we experienced record 1978 caused the load factor to so only 75 % of the units summer high temperatures drop back to 53.5%, but we would operate at any one with an abnormally cold wm-continue to work toward long-time. The objective was to de-ter. The result demonstrated term improvement.

termine if houses could be the difficulties in controlling comfortably cooled while lim-electricily demand. Use of Several activit.ies are designed iting the demand air condi-electricity soared with the to control both the daily an I tioning placed on our syst annual peak demand for elec-10 rT L

An outdoor sculpture garden Students work on a science is part of the new Wichita Art

?'useum. Electric heating in proicct in electrically heated

. museum helps improve the Cherryvale liigh School that t.'mpany's annualload factor.

was completed in 1978.

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't rie test was generally suc-gards to economic advantages system could reduce electric-cessful and will be extended for the customer.

ity needed for cooling.

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Results of a 12-month test us-With implementation of the o m cial customer in Ing solar energy to heat water National Energy Act, many of

(

summer of 1979.

revealed the need for careful our conservation and efficien-Rate structures influence de-engineering. More than $1,250 cy goals will become matters mand for electricity, and the in materials was installed but of law. Although it still is teo Kansas Corporation Commis-only $3 per month was saved early to predict the exact steps sion has granted KG&E au-in electrical usage. Modifica-we must take, we expect to be

{

thority to test several rate pat-tions will be made in an effort devoting even more resources terns. One such rate is de-to develop a system that is to this area in the future. The signed te learn if customers cost beneficial for the owner.

Kansas Corporation Commis-J sion already is actively pro-will use less electricity or ad-Two projects planned for the moting conservation.

1 just the time when electricity 8"**"'

I 1979 "I8 is used if they receive a lower imed at reducing the summer Our customers have demon-J rate for energy used during electricity demand peak. In strated a willingness to con-such low demand periods as ne, heat from air condition-serve energy through prosen l

night and early morning.

ing refrigerant gases will be techniques and to assist in re-Among places where these used to heat water for house-search. But, the demand for rates are being tested are two hold purposes. Another test electricity continues to grow homes which are cooled dur-will determine the effective-for two reasons: We added ing the day with ice produced ness of water mist to help cool 5.158 new customers in 1978 l

at night. Performance during refrigerant gases in conven-and the average residential the 1978 air conditioning sea-tional cooling systems. The customer increased annual us-son was satisfactory. Testing age from 9.413 kwh in 1977 to 91 continue, especially in re-10,136 kwh in 1978.

l 11 l

t I

d l

2

Financing Sales of securities and a l

novel borrowing plan helped l

raise almost $120 million l

in 1978.

To continue meeting custom-E

?G h

,[

ers' needs for service, con-struction expenditures are at p

gf y

.m 43 j

a record level and the need for P

new capital remains high. The 4a W;a g m

• "' c E.

m a

company in 1978 sold both p E" -

-M

. g; ysy-

=

,.,,1= ", (

f, stock and bonds and arranged bank loans which together asq,,

...g 72%aS amounted to $119.7 million:

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=

4m in f.

- *Mus )

• $10 million in 8 % % pre-Edd ferred stock was sold in R

{4-Alarch.

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i

• S30 million in 8% % first

\\.

mortgage bonds were sold, c

s' fo also in hfarch.

L,n. c -e.

m,c;.

m_

• 1.6 million shares of com-mon stock were sold m, No-pany can borrow up to S100 Participation in the Dividen mill' ion as a revolving loan for Reinvestment Plan continue s r I roceed were ab two-year period. At the end to grow during 1978.

S28 million.

I the two years, any out-Dividends on participante standing balance becomes a

• An additional 97.193 shares three-year term loan. Another stock are automatically rein of common stock were sold

$50 million in addition to that yested each quarter in newi

~

issued common stock at 9 to participants in the divi-already borrowed is available dend reinvestment plan for to the company under terms of m rket price. Particip<

~

abou: St.8 million.

of the loan.

1so may invest as much a

$5.000 in addition each quar

• $50 million was borrowed A series of meetings with ana-ter. That buys stock at marke under a term loan with a lysts and securities dealers in price but without a brokerag, group of domestic and for-several major cities was con-fee. Shares purchased unde eign banks with interest tinued in 1978. With the need the plan in 1978 were mori based on the prime rate and for capital remaining high, the than two and a half times the federal funds rate.

company is providing data to number in 1977 when the plar keep the investment commu-was available only for twt The 5-year bank loan repre-sents a new approach to fi-nity informed of company op-quarters.

erations and progress. Plans nancing being used by the company to provide more flex-are to continue these meetings Dgtails of the plan can be ob ibility in meeting our needs.

in the coming year.

tamed by writing the Secre tary. KG&E, P. O.

Box 208 Under the agreement, the com-Wichita. KS 67201.

htarket Prices and Dividend Rates of Stocks Listed on National Exchanges Type and Exchange 1978 1977 Stock hlarket Statistics 4th Qtr. 3rd Qtr. 2nd Qtr. 1st Qtr.

4th Qtr.

3rd Qtr. 2nd Qtr. 1st Qtr.

Common Stock - NYSE h1arket Price - liigh S19 %

$21

$20%

S21 S21 %

$72 %

S215 $22

- Low 17 %

18 %

18 %

19 %

19 %

21 2038 20 %

Dividend Rate - Per Share

.475

.45

.45

.45

.45

.44

.44

.44 4 % % Preferred - ASE hfarket Price-liigh 48 51 %

51 %

50 %

52 %

55 54 54 3

- Low 44 46 46 50 50 %

50 %

50 50 W Dividend Rate - Per Share 1.125 1.125 1.125 1.125 1.125 1.125 1 125 1.125 12 y

m.

~

1 Regulation j

Two commissions have major responsibility for regulating KG&E rates and practices.

1 There were 32.670 KG&E com-Regulatory bodies are playing Our understanding of Presi-mon stockholders at the end a growing role in the opera-dent Carter's anti-inflation Of 1978, an increase of 4,341 tions of utility companies.

guidelines indicates that our l

over the 20.329 at the close of request complies. If further a

he c mp ny,s r tes nd many study indicates that an adjust-i 1977. In addition, there were f its practices are regulated ment is needed,it will be made.

l 5,619 preferred stockholders.

by the Iansas Corporation about the same as in the pre-Commission, a three member Not heard from yet is the vious year. They live in all 50 states as well as in some for-gr up ppointed by the gov-FERC which has not an-ernor, nd by the Federal En-nounced a decision on the eign countries. No one person ergy Regulatory Commission company's request for a S5.3 or family owns as much as 1%

whose members are chosen by million increase in wholesale of the company's stock.

the president.

rates. Included in this case was an allegation by a group Rising energy costs have f the municipal and coopera-greatly increased the caseload t m. customers of, price of these agencies. And new

~

squeezing, -manipulation by legislation, particularly the the company of its rates so National Energy Act which the wholesale customers retail was passed late m. 1978, are rates would be noncompeti-a [a t orit Ith ugh leg tions and feel they have tive. We have denied these al-i ti 55555555555555 the responsibilities arising from the Energy Act still are

[n ptemb 1977, and h ar not well defined.

a.us ings were concluded late in l

.au w-* W 4 Kansas commissioners in 1978 1978. Delays of this kind are ww2 au i 4 approved a retail rate increase expensive to the company.

of S16.3 million for KG&E.

g.,m Although cities do not directiv n

included m that total,s mak^

i 9

regulate company operations, ing permanent a $14.1 million they do award franchises. Dur-mterim increase that had be-ing 1978, 20-year franchises come effective m July 19u.

,.ere renewed in four cities u,e had requested new rates the company serves, all having ems Q

totaling S32.9 milh,on mclud-populations from 10,000 to ing the m, terim increase.

20.000. - Those four are the r

The commission's ruling on cities of Arkansas City, El Do-the interim case had been rado. Fort Scott, and Pittsburg.

~

challenged in a series of law-Complaints filed with regula-suits brought by a large mdus-tors by cu tomers are one l

trial customer. The district measure of the company's cus-court has upheld the legality tomer relations. That number of the rate change, but that remains low and we work to ruling has been appealed.

maintain harmony with those In December we requested a we serve. The company's rela-

$38.9 million increase in retail tively low rates are one factor rates S21.4 million of it as an in helping to achieve customer emergency mterim increase.

satisfaction. Edison Electric j

Principal reason for needing Institute's last study of elec-1 the new rates is the cost of tric rates for 1978 indicates ng nd oper ting our $67 that 184 electric companies "Y" lion interest in Jeffrey En-charged more for 750 kilowatt-Ten foreign and U. S. banks mil.

are loaning the company

'o millilm. a novel form ergy Center, the new coal-hours m a month than KG&E

.. pnancing that gives fueled generating unit that while only 41 charged less.

the company more flexibility went into service in July.

13 in meeting ccoital needs.

[

~

l People Two hnc department ern <

Employees continue to be an ployees shared a S2.500 important factor in KG&E's suggestion award for devising a lower-cost way to conry -

success.

overhead and undergrot electric hnes.

Employee productivity contin-G ues to be a major factor in the N,.

success of KG&E.

m i

GO High productivity in part is the result of equipping em-

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p 5?

r'.

Eg ployees with efficient equip-ment and modern tools. There y

jQ M

I i

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is almost $600,000 invested in equipment and tools for each W,.

/.9 15

'2 employee's job compared with

$170,000 a decade earher.

Increasing productivity also has meant that the number of employees has increased at a j

w p v&, &

g much lower rate in the past to f/

years than kilowatt-hour sales which have increased 74%

(

/ f I

Employee innovation is an-other factor in the company's

, s.

efficiency. Twelve employees were recognized in 1978 under the Employee Cost Reduction Suggestion Plan. For the first time, a suggestion earned the

-g L

top monetary payment pro-w vided for in the program of S2,500. The award was shared by two Wichita Line Depart-d, -

ment employees-Earl Hern-don, line subforeman with 27 tional opportunities while they each year and have held the years of KG&E service, and continue their jobs.

title as the safest during three of those years. We believe one Harvey Freeman, a journey-hfore than two-thirds of our measure of professionalism of man lineman, a 13-year em.

playee. The men developed a people have more than five our people is reflected in their years experience with the safe performance.

more effective system for con-necting underground and over.

company. Nearly 300 have been with KG&E 25 years or The electric utility industry head lines.

longer. Low turnover reflects today faces many challenges i

During 1978,1 of every 5 em-good morale and is a positive of a social e,d political as well i

i ployees was promoted. Con-asset for the company.

as an economic nature. hian-agement sets a high priority tinued training, education and The safety record of KG&E upon keeping employees in-communication aid employees in self improvement and better employees remains good. At formed about issues and our Ripley Generating Station events which affect the com-job performance. Training ses.

there has not been a lost-time pany and their jobs. Employ-sions are held regularly. A tui.

accident since the plant be-ees receive weekly and month-tion reimbursement plan en.

~

courages employees to take came operationalin 1938. Dur-ly communications from the advantage of formal educa.

mg the past to years, KG&E people have ranked among the four safest similar-sized utility work groups in the nation 0

14

Computers increase A student learns welding in a productivity of skilled class at Wolf Creek Station.

e mloyees. Computer These classes provide trained lities were updated employees for construction in 1978.

work at the plant.

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W' I g entst is yo,, !

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company and all employees ments and aid the less fortu-On hfarch 1, Eldred D. Prothro are involved in irformation na te. This tradition of com-became controller, assistant meetings during the year.

munity betterment and hu-secretary and assistant trea-m ne acts is one which the surer. W. B. Walker, who had Efforts also are being made to build understanding between c mp ny pr udly supports served as vice president, sec-the company and customers.

nd encomages.

retary, and conuok, kcame n,eek m. ht meet:ngs where There is one change to report vice president-accounting and g

senior managers and officers on the board of directors of secretary. Afr. Prothro joined KG&E in 1960 and has been in are available to talk with cus-the company. At the Septem-tomers are m their second ber meeting of the board, accounting since that time.

year. Over a three-year pe-G. hf. Ross, of Newton, an-We were saddened by the un-riod, all residential customers nounced his retirement from timely death of John Hans-j will be invited to attend.

the board after having served berry, vice president-engineer-since 1952. Wilson K. Cad-ing. in August. Bernard Rud-f KG&E employees are known man, executive vice president dick, vice president transmis-j in their home communities and have a solid reputation for of the company, was ap-sion and distribution since 1

being actively involved. They pointed to succeed Afr. Ross.

1973, was reassigned as vice j

volunteer time, money, and ef-president-engineering.

fort for community improve-l 1

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1 i

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i KANSASie ELECTRIC COMPANY l

d Management's Discussion and Analysis of the Income Statement During the three years mission of Kansas, the e nany eliminated deferred ended December 31,1978 the because of commercial opera-accounting and comm following changes in opera, ting tion of La Cygne Unit No. 2 billing feet costs on an es fect upon the comrevenues had a significant ef-in May 1977 and Jeffrey En-mated basis currently.

ergy Center Unit No.1 in July Deprecia' ion has inereas, sults of operations:pany's re-1978.

approximately $2.2 million di The company has a fuel ad-to changes in deprec:atio Revenue Increase (Decrease) Over rates, as allowed by the Kai Corresponding Prior Period sas Corpontion Commissio (Mhns of Dollars) effective July 1,1977. and du Increase in General Business 1s7s ts77 to increases in electric plan 1s7s Fuel Recovery S3

$6

$10 m service creating increase 3 Rate Increases..

12 25 14 of approximately $3 million Sales to Other Utilities and $2.3 million annual depre-3 13 13 Total ciation as a result of placing (1) 9 5

in service La Cygne Unit No 2

. $17

$53 E

Growth in kilowatt-hour and Jeffrey Energy Center Unit sales during the period has justment rider applicable to all No.1, respectively.

been affected by energy con-Allowance for funds of its rate schedules. Fuel

used, during construction has varied servation by customers and costs per million Btu were economic conditions. Growth58.5t in 1975, 67.2e in 1976, sigmfigantly because of fluctu-in kilowatt-hour sales, particu-99.3c in 1977 and 109.3t ination in the amount of t larly to residential and com-Effective September 1 struction work in progress.on-1978.

mercial customers, was dimin-1974, when the company be, ferred dividends increased Interest charges and pre-Ished in 1976 by a warm gan experiencing a sharp in, winter and a cool summer and crease in fuel cost, it adopted substantially during the period because securities were is was enhanced in 1978 by a deferred fuel cost accounting cold winter and a hot summer.

to achieve a better matching to finance the record construc Operating expen the increase in interestt of fuel cost and related rev.

than fuel expense,ses, other for 1977 enue. Effective in August 1978, and 1978 increased primarily in accordance with an order of preferred dividend rates. am the State Corporation Com-See page 24 for a summary j

of operations in Auditors' Opinion 1968-78.

To the Stockholders and the Board of Directors of Kansas Gas and Electric Company:

31,1978 and 1977 and the related statemWe have exam for construction for the years then ended O ents of income, retained earnings, and erally accepted auditing standards and acco di er ur examinations were made in accor and such other auditing procedures as,we con id rce of funds r ngly, included such te:,ts of the accountin As discussed in Note 2 to the financial stat gen-ered necessary in the circumstances.

s increase in 1977 and collected certain rev ords enues subject to refund. The rate inc permanent by the State Corporatio regarding the interim rate increase.n Commission of Kansas in 1978. but a rate at this time.

graph, such financial statements present f as made omer filed a lawsuit e etermined of the litigation discussed in the preced 31,1978 and 1977 and the results ofits o e financial position of the Company at Dec the years then ended, in conformity with perations and the source of its funds for constr consistent basis.

January 25,1979 generally accepted accounting principles appl uction for as Wichita. Kansas on a Deloitte Haskins & Sells

CgClement Of InC0me 1978 1977 toi the Years Ended December 31 (Thousands of dollars)

$ 238,460

$ 196.236 Operating Revenues (Note 2)..

Operating Expenses:

96,017 73,826 Fuel 6,127 (2,461)

Deferred fuel (Note 3)....

4,162 14,523 Purchased power 25,062 22,267 Other operation.........

15,292 11,041 Maintenance 21,924 17,729 Depreciation 12,207 11,036 Texes-other than income taxes Income taxes (Note 8)..

18,697 15,473 199,488 163.434 Total operating expenses 38,972 32,802 Operating Income Other Income and Deductions:

8,716 7,644 Allowance for funds used during construction-other (38)

(47)

Income taxes-net (Note 8) 73 91 Miscellaneous - net 8,751 7,688 Total other income and deductions 47,723 40,490 Income Before Interest Charges Int: rest Charges:

Interest on lor:g-term debt.........

23,746 20,660 1,815 961 pther interest hmortization of debt premium, discount and expense-net.

197 126

" Allowance for funds used during construction -borrowed (6,999)

(5.907)

Total interest charges 18,759 15.840 28,964 24,650 Net Income 7,084 6,471 Preferred Stock Dividends Earnings Applicable to Common Stock

$ 21,880

$ 18,179 Average Shares of Common Stock Outstanding 9,615,051 7,990,579 Earnings Per Average Share of Common Stock

$2.28

$2.28 See notes to financial statements.

i i

l 4

17

KXNSXSWELECTRIU GutsM3H Balance Sheet December 31,1978 and 1977 1978 197 Assets (Thousands of dollars)

Electric Plant at Original Cost:

$719,458

$635,363 Plant in service.................

160,673 140,775 Less accumulated provision for depreciation 558,785 494,588 Net plant in service 188,869 141,452 Construction work in progress 6,133 3,368 Nuclear fuel........

753,787 639,406 Total electric plant-net 180 188 Other Property and Investments - at cost Current Assets:

2,393 1,647 Cash (Note 5)...

3,P10 3,706 Special deposits...

7,200 Temporary cash investments...........

Accounts receivable - net...

16,745 14,251 3,249 Refundable income taxes (Note 8)..

20,650 18,072 Fuel-at average cost.

Materials and supplies-at average cost.

9,046 7,170 422 1,03 Prepayments and other current assets.

60,276 49,1N Total current assets Deferred Debits:

Unamortized debt expense 4,152 3,861 1,347 7,474 Deferred fuel (Note 3).

2,635 2,s71 Cther Total deferred debits...

8,134 13,900

$822,377

$702.694 Total See notes to financial statements.

4 18

\\

1978 1977 bilities (Thousands of dollars)

Capitalization:

Common stock, without par value, authorized 14,000,000 shares; outstanding, 11.054,503 shares and 9,357,310 shares, respectively (No t e 6).......................................

$151,336

$121,656 R;tained earnings.......................

91,015 87,224 Common stock equity 242,351 208,880 l

Preferred stock, including premium (Note 6) 93,993 83,993 Long-term debt (Note 7) 374,071 295,392 Total capitalization.......

710,415 588,265 Current flabilities:

Short-term borrowings (Note 5) 21,700 Long-term debt due within one year............

3,000 5,000 Accounts payable..........

20,061 15,882 Customer deposits..........

1,200 982 Tcxes accrued.............

9,684 9,649 Interest accrued....................

7,862 7,176 Dividends declared......

1,821 1,618

~

Other current liabilities...

92 61 Total current liabilities...................

43,720 62,068 vierred Credits:

Accumulated deferred income taxes (Note 1)..................

38,775 30,981 Accumulated deferred investment tax credit.

27,558 20,246 Customer advances for construction........................

1,026 689 O th e r.................................

619 184 Total deferred credits..................................

67,978 52,100 Reserve for Injuries and Damages 264 261 Total

$822,377

$702,694

)we:,

L

~

19 s

I s

KANSAS 2." ELECTRIC COMPANY Statement of Retained Earnings 1978 1977 for the Years Ended December 31 (Thousands of dollars)'

Balance at Beginning of the Year

$ 87,224

$ 83,6 42 28,964 24.650 Net Income 116,188 103.292 Total Deduct:

Cash Dividends:

7,084 6,471 Preferred stock...

Common stock - $1.825 in 1978; $1.77 in 1977 17,944 14,318 145 279 Capital Stock Expense..

25,173 21.068 Total

$ 91,015

$ 87.224 l

Balance at End of the Year l

t f

Statement of Source of Funds for Construction 1978 19.,..,.

for the Years Ended December 31 (Thousands of dollars)

Source of Funds From Operations:

Net income

$ 28,964

$ 24,650 Non-cash charges (credits) to net income:

Depreciation 21,924 17.729 Deferred income tax and investment tax credit 18,711 16,570 Allowance for funds used during construction (AFC).

(15,715)

(13.551) 53,884 45,398

' Funds from operations..........

Dividends 25,028 20.789 Funds retained in business......'......

28,856 24.609 From Financing:

Long-term debt proceeds.......

81,458 34.815 Long-term debt redemption...................

(5,000)

Preferred stock.....................

10,ono Common stock.....................

29,680 54.750 Increase (decrease) in short-term horrowings.

(21,700)

(7.550) 94,438 82.015 Funds from financing...................

i=

(Increase) decreane in working capital (other than b

short-term horrowings)

(5,730)

(3,540)

[

O ther - n e t............................

7,470 (7.027) 4 N

Total Funds Used for Construction (excludes AFC)

$125,034

$ 96.057 e

i See notes to financial statemsats.

h e

M l

R,.

I b

i; k

R_

M'$

Dii%m, M:T ' d' -

A

NOTES TO FINANCIAL STATEMENTS equivalent to the income tax effect on the bor-T Wed funds portion of the allowance for funds lummary of Significant Accounting Policies used during construction is charged to deferred System of Accounts-The Company is subject taxes under operating expenses and credited to to the jurisdiction of the State Corporation Com-all wance f r funds used during construction.

mission of Kansas (Kansas Commission) and the The Company defers and amortizes the invest-Federal Energy Regulatory Commission (FERC) ment tax credit over the life of the applicable and maintam.s its accounts in accordance with the property, in accordance with an order of the Kan-uniform system of accounts prescribed by these sas Cor'nmission.

regulatory commissions. As a regulated utility the Revenues-Operating revenues and accounts accounting principles applied by the Company dif-receivable include amounts actually billed for ser-fer m certain respects from those applied by non-v ces rendered. The Company does not accrue an regulated business.

estimate for unbilled revenue.

, Electric Plant-The Company performs a por-Deferred Fuel Costs-The Cc npany's rate tion of its construction work and capitalizes gen-schedules include a fuel adjustment clause which eral overhead and engineering expenses related t permits recovery of increases in fuel costs over construction projects. Maintenance and repairs of base period costs. In August 1978, in accordance property and replacements and renewals of items w th an Order of the Kansas Commission, the determmed to be less than units of property are Comoany eliminated deferred fuel accounting and charged to operating expenses. The cost of units commenced billing fuel costs on an estimated basis

~

of property replaced or renewed. plus removal currently. prior to August 1978, increases in fuel costs, less salvage. is charged to the accumulated costs were recovered approximately two months provision for depreciation, and the cost of related after such increases had been incurred and the replacements and renewals is added to electric Company deferred the additional fuel costs in-plant. Betterments are charged to electric plant.

curred until such amounts were billed. Wholesale Allowance for Funds Used During Construction customers are still on a two month lag, but de-

~

- Allowance for funds used durmg construction ferred fuel accounting for these accounts has also (AFC), a non-cash item of non-operating income, been eliminated.

is defmed m the applicable regulatory system of

- ounts as the net cost during the period of con.

2. Revenues-On July 1.1977, the Company re-action of borrowed funds used for construction quested a temporary rate increase of $16.8 million purposes and a reasonable rate on other funds (subsequently amended to $15.5 million) based on when so used.

a historical test year ended May 31.1977. On July This allowance has been added to all major 22.1977, the Kansas Commission issued an order Construction projects at an annual compound rate granting the Company an interim annual rate in-of 7.3% for 1978 and 7.2% for 1977. As these crease of $14.1 million which was collected by the rates apprcximate a net of. tax rate, they yield the addition of a uniform percentage surcharge to each same result as would be obtained by using a gross customer's bill. The Company's application for rate and recording the tax effect as a deferred item.

permanent rate relief filed in September 1977. re-Depreciation-For accounting purposes, the quested erpermanent rate increase of $30.5 million.

Company is depreciating the original cost of prop.

including the $14.1 million interim increase pre-erty by the straight-line method over its estimated viously granted. The Commission issued an order remaining service life, as determined by indepen.

June 8,1978 permitting the Company to increase dent engineers. Depreciation provision stated as a its rates an additional $2.2 million representing a percent of original cost of depreciable property total increase of $16.3 million. An industrial cus-was 3.4% for 1978 and 3.3% for 1977.

tomer has appealed the interim rate case order Income Taxes-In the calculation of income from the District Court, where the Company pre-I taxes, the Company (i) uses liberalized deprecia.

vailed, to the Kansas Court of Appeals and the tion for additions since 1954 and the ADR sys.

matter is pending. Revenues for the year ended l

tem for additions since 1972, and (ii) utilizes December 31,1978 and December 31.1977. include other tax benefits as permitted by the Internal

$7.5 million and $6.2 million. respectively col-Revenue Code, consisting principally of differ.

lected under the interim rate increase, which are l

ences in straight line depreciation and the deduc.

subject to litigation.

I tion currently for interest and taxes capitalized

3. Deferred Fuel Cost-in a September 1977 or-for book purposes. Deferred taxes are provided der, the Kansas Commission allowed the Company for those items included in (i) above as approved to recover through a surcharge the deferred fuel by the Kansas Commission, and for the amortiza-at May 31,1977 over twelve months. The amount of expenses in connection with bond issue unrecovered in connection with the above at De-io.ondings. Beginning in 1977 AFC is recorded in cember 31,1977 amounted to $2,439.146. Deferred Electric Plant on a net basis. However, an amount (Continued on page 22l g

n

o KANSAS na ELECTRIC COMPANY fuel expense for FERC jurisdictional customers at Cumulative Preferred Stock at December 31 December 31, 1977 amounted to $1,323,528 and 1978 and 1977 consisted of the following:

this was amortized during 1978. In an order effec-1s7s is tive August 1978, the Kansas Commission allowed 4% %, $100 par value; (Thousands of dollars) the Company to collect over twelve months its authorized and outstanding, jurisdictional deferred fuel costs since May 1977 82,011 shares

$ 8,201

$ 8.20' and chminate deferred fuel accounting. The de-ferred fuel costs at December 31,1978 and 1977 Serial, $100 par value; authorized. 255,000 shares:

applicable to periods after May 31, 1977 are 4.28% series, outstanding

$1,347,064 and $3,711,373, respectively.

45,000 shares 4,500 4,5 01

4. Retiremed Plan-The Company has a non-4.32% series, outstanding contributory retirement plan for all employees.

60,000 shares 6,000 6,00t The total cost for 1978 and 1977 was $1,958,928 7.44% series, outstanding and $1,710,539, respectively, which includes amor-150,000 shares 15,000 15,004 tization of prior service costs over a ten-year Serial Preferred stock, without period. Of these amounts, $470,998 and $419,492 par value, authorized were included in plant construction costs. The 6,000,000 shares:

Company's policy is to fund pension costs accrued

$2.42 series, outstanding currently. Unfunded past service cost at Decem-800,000 shares......

20,000 20,00i ber 31,1978 was approximately $3,900,000. The

$8.66 series, outstanding actuarially computed value of vested benefits at 300,000 shares 30,000 30,00<

November 30,1978 exceeded the market value of

$8.125 series, outstanding the plan assets on that date by approximately 100,000 shares 10,000

$3,800,000.

Premium on Preferred Stock.

292 29

5. Short-Term Borrowings - The Company has Total

.. $93,993

$83,99 bank lines-of-credit aggregating $54 million at De-cember 31,1978. Generally, in lieu of compensat.

The $2.42 Series and $c.125 Series have man ing balances, a fee of less than 8% of prime is datory sinking fund obligations beginning on A permitted. Occasionally, average compensating 1,1980 and 1989, respectively. The minimum balances, based on bank ledgers, of 10% t.re re-quirements in the number of shares for the $2.

quired. There are no legal restrictions placed on Series and $8.125 Series are 40,000 and 3,333 pe the withdrawal of these funds, year, respectively, with the maximum being 80,00 The Company draws upon the bank lines-of-and 6,666, respectively. The sinking fund obliga credit and sells commercial paper to obtain short-tions are designed to retire the $2.42 Series b term construction funds. There were no short-term April 1,1999 and the $8.125 Series by April 1 borrowings'at December 31,1978. The maximum 2019.

amount outstanding during the year was $38.-

7. Long-Term Debt-Long-term debt at Dr, embe 1

150,000 on March 20, 1978. The average interest 31,1978 consisted of the following:

cost for the year was approximately 9.1% based A'"

on a daily average outstanding loan balance of (Thousands

$18,550,000.

First Mortgage Bonds:

dollars) 2% % series, due 1979...

$ 3,000

6. Capital Stock-A summary of changes in Com-s mon Stock during 1978 and 1977 follows:

'de 983.$

0

,e e Shams 3%% series, due 1985 10,000 Outstanding Annount 3%% series, due 1986 7,000

" d oIi,",y' 4%% series, due 1991 7,000 l

5%% series, due 1996.

16,000 Balance January 1,1977.. 6,716,775 $ 66,906 o se Additional shares sold 2,600,000 53,902

[..

000

, ee e

25,000 Dividend Reinvestment 7%% series, due 2002..

Plan 40,535 848 9%% series, due 2005....

40,000 i

Salance December 31,1977. 9,357.310 121,656 8%% series, due 2006...

25,000 8%% series, due 2007 25,000 Additional shares sold 1,600,000 27,824 6% series, due 2007.......

10,000 Dividend Reinvestruent 5% % series, due 2007.

21, Plan 97,193 1,856 8% % series, due 2008 30, Balance December 31, 1978. 11,054.503 $151,336 Total.........

311,940 22

~ a nu.a Y Y 58 l

Gurrantee of pollution control revenue At December 31, 1978, the Company has un-honds-5%% series, due 2003 15,000 used investment tax credits of approximately $12 50,000 million available for carryforward to future years.

1

.n bank loan l

Unimortized premium and discount -

9. Replacement Cost (Unaudited)-The impact of 131 l

nr.t........

b d ihb wiemd b mM p Le s-urrent maturit,es oflong-term has resulted in replacement costs of productive i

(3,000) capacity that are significantly greater than the his-Total

$374,071 torical costs of such assets reported in the Com-The 6% Series and the 5% % Series, due 2007 Pany's financial statements. In compliance with are pledged as collateral for Pollution Control Re-reporting requirements. estimated replacement cost information will be disclosed in the Com-venue Bonds issued by Kansas municipalities.

The term bank loan is provided through an pany's annual report to the Securities and Ex-l agreement with fourteen domestic and foreign fi-change Commission on Form 10-K.

nincial institutions providing for up to $100 mil-

10. Construction Budget-The construction bud-lion. The loan agreement is comprised of a two-get for 1979, as approved by the Board of Direc-yerr revolving credit and a three year term loan tors, is $133,295,280. The Company-has substan-with right of prepayment at any time without tial purchase commitments in connection with its i

pentity. The effective interest rate on this bor-construction program.

rowing was 12.5% at December 31, 1978.

11. Financing-On January 16, 1979, the Com-l

8. Income Taxes-The effective Federal income pany issued $14.5 million of First Mortgage Bonds, t x rates differ from the amounts computed by 6.8% Series due 2004. The bonds were pledged as applying the Federal statutory rates to income be-collateral for Pollution Control Bonds issued by l

fore m, come taxes. The reasons with the related the City of St. Marys Kansas.

percentage effects are:

1,7, 3,n

12. Other Information-See pages 8 and 13 for Statutory Federal income tax rate 48%,

48 %

Wolf Creek base mat and rate application infor-Deduct income tax effects of t, ming mation.

i differences:

' Allowance for funds used

13. Financial Statistics (Unaudited) during construction 9

10 (Thousands except per share)

Taxes and pensions capitalized. 3 3

1s7s 4th 3rd 2nd tot Other items - net (no one item Qtr.

Qtr.

Qtr.

Qtr.

makes up more than 2%)

Operating

" Effective Federal income tax rete 36 %

35 %

Revenues

$53,609 $70,235 $52,150 $62,466 Income taxes as recorded in the Statement of Operating Income 7,412 13,652 7,578 10,330 iIncome are:

m, Net income 4,374 10,808 5.747 8,035 EIOperating expenses:

(Thousands of dollars)

Ea in

• d Currently payable -

ppl cable

}

to Common 2,554 8,987 3,926 6,413 8

S ate

":' Deferred - Federal 6.772 7,319 O standing 10,255 9,427 9,402 9,377 State 1,02.

1,104 are

$0.25

$0.95

$0.42

$0.68

{ tax ed 3,605 3,043 p

I'"

Investment tax credit -

g net (Note)...........

7,312 5,104 q,,,

9,,,

q,,,

q,,,

Total.............

18,697 15,473 Opernting Revenues

$50,793 $64,586 $40,658 $40,199 Other ince ne and deductions:

Currently payable -

Operating Federal............

33 41 Income 7,765 12,645 5,499 6,893 State 5

6 Net Income 5,137 9,497 3,647 6,369 To tal.............

38 47 Earnings APP cable li Income tax expense to Common 3,519 7,880 2,029 4,751

- net.......... $18,73 5

$15,520 Average Shares

Included in the 1977 Investment tr6 c credits Outstanding.

8,757 8,138 8,117 6,950

- net is $3,249,000 in refundable income taxes Earnings cvailable for carryback to prior years.

Per Share

$0.40

$0.97

$0.25

$0.68 33

KANSAS na ELECTRIC COMPANY Counparativa Financial St:tistics (Thrusands) 1978 1977 1976 1975 Electric Operating Revenues:

$ 73,683

$ 60,849

$ 47,120

$ 42,333 Residential Commercial 53,588 45,890 35,930 32,135 Industrial...................

72,848 59,978 44,828 38,000 Public street and highway lighting 2,034 1,688 1,399 1,301 Sales for resale-municipals and cooperatives...

19,177 16.197 10,889 8.362 General business 221,330 184,602 140,166 122,131 Sales for resale - other electric utilities 15,794 10,580 1,728 3,149 Total sales of electrici'.y.........

237,124 195,182 141,894 125,280 1,336 1,054 879 886 Other Total electric operating revenues.

238,460 196,236 142,773 126,166 Operating Expenses:

Fuel 96,017 73,826 42,658 39,273 6,127 (2,461)

(2,182)

(2,427)

Deferred fuel..

4,162 14,523 9,459 2,824 Purchased power..

25,062 22,267 18,954 16,505 Other operation 15,292 11,041 8,208 7,345 Maintenance Depreciation 21,924 17,729 13,765 13,092 Taxes other than income taxes 12,207 11,036 9,134 8,911

'ncome taxes...

18.697 15,473 13,783 13,031 Total operating expenses 199.488 163,434 113,779 98,554 Operating Income 38,972 32,802 28,994 27,612 Other Income and Deductions:

AFUDC-other (a) 8,716 7,644 AFUDC (7%% in 1976-1970, 9,992 5,090 6%% in 1969,6% in 1968)

Income taxes-net

[38)

(47) 3,171 1,899 Miscellaneous - net 73 91 158 (76)

Income Before Interest Charges 47,723 40,490 42,315 34,525 Interest Charges:

Interest on bonds 23,746 20,660 17,102 13,324 1,815 961 1,859 2,716 Other interest........

Amortization of debt premium, discount and-expense-net 197 126 81 39 (6.999)

(5,907)

AFUDC-borrowed (a).

Net Income 28,964 24,650 23,273 18,446 Preferred Stock Dividends 7.684 6,471 4,537 3,572 Earnings Applicable to Common Stock

$ 21.880

$ 18,179

$ 18,736

$ 14,874 Shares of Common Stock 11,055 9,357 6,717 5,517 Outstanding (End of Year) l Earnings per Average Share of Common Stock

$2.28

$2.28

$2.88

$2.91 l

Cash Dividends Paid per Share

$1.825

$1.77

$1.70

$1.61 On Common Stock (b)

Capitalization: (Amount and Percent)

Long-term debt (less current maturities).

$374,071 52.7 $295.392 50.2 $262,854 52.8 $230.052 56.(

Preferred stock includin8 Premium......

93,993 13.2 83,993 14.3 83,993 16.9 53,993 13.!

l Common equity:

Common stock......

151,336 121,656 66,906 45,738 Retained earnings 91,915 87.224 83,64%

76,352 Total common equity 242,351 34.1 208.880 35.5 150,548 30.3 122.090 30/

$710.415100.0 $588.265100.0 $497.395100.0 $406.135 100.(

Total capitalization Short term Borrowings (End of Year)........ $

$ 21,700

$ 29,250

$ 26,525 Embedded Interest Cost of Long-Term Debt.

7.36%

7.12 %

7.13 %

6.98 %

24 (a) See Ncte 1 to Notes to Financial Statements.

(b) 1978 year-end annual rate $1.90 per share.

I

1974 1973 1972 1971 1970 1939 1968 1,603

$ 27,675

$ 25,615

$ 24,208

$ 24,156

$ 21,902

$ 19,820 24,294 21,403 19,949 18,644 17,934 16,553 15,259 27,740 21,612 19,574 18,660 18,266 18,003 17,508 1,123 978 905 829 765 714 664 5,502 4,368 3,742 3,417 3,272 2,841 2.481 90,262 76,030 69,785 65,758 64,393 60,013 55,732 5,314 3,008 3,589 4,843 5,210 6,568 4,578 95,576 79,044 73,374 70,601 69,603 66,581 60,310 778 660 581 549 554 506 498 96,354 79,704 73,955 71,150 70,157 67,087 60,808 22,331 16,624 14,198 13,952 13,385 13,024 10,712 (404) 2,426 2,138 2,718 1,378 1,886 2,014 1,807 14,862 12,879 11,687 11,194 10,494 9,762 8,964 6,289 S,064 3,723 3,349 3,586 2,747 2,679 11,525 9,925 7,962 7,599 7.133 6,750 6,469 r

8,411 6,812 8,338 8,935 8,328 7,906 7.499 784 7,061 7,920 8,174 9,394 10.360 9,303 72,724 60,503 56,546 54,581 54,206 52,563 47,433 23,630 19,201 17,409 16,569 15,951 14,524 13,375 l

1,362 2,830 5,199 2,951 1,365 406 78 374 889 1.573 854 459 191 48 21 (32) 80 42 (112)

(179)

(111) 25,387 22,888 24,261 20,416 17,663 14,942 13.390 11,329 11,118 10,C46 7,5'*2 5,343 3,344 3,344 2,564 263 228 448 505 592 233 28 27 19 11 1

(28)

(28) 11,466 11,480 13,968 12.425 11,814 11,034 9,841 1,937 1,937 1,686 821 821 821 821

$ 9.529

$ 9,543

$ 12,282

$ 11,604 f.,10,993

$ 10,213

$ 9,020 4,717 4,717 4,717 4,717 4,717 4,717 4,717

$2.02

$2.02

$2.60

$2.46

$2.33

$2.17

$1.91

$1.56

$1.53

$1.49

$1.44

$1.41

$1.37

$1.33

$179.868 56.9 $179,877 57.3 $165,053 55.6 $140,188 55.7 $105,133 49.7 $ 70,427 40.8 $ 86,453 46.7 33,993 10.8 33,993 10.8 33,993 11.5 18,966 7.5 18,966 8.9 18,966 11.0 18,966 10.3 31,770 31,770 31.770 31,770 31,770 31,770 31,770 70.388 68,217 65,891 60.680 55,868 51,526 47,774 102.158 32.3 99,987 31.9 97,661 32.9 92.450 36.8 87,638 41.4 83,296 48.2 79,544 43.0

$316.019 100.0 $313,857100.0 $296,707100.0 $251.604100.0 $211.737100.0 $172,689100.0 $184,963100.0

$ 42,021

$ 12,275

$ 4,300

$ 7,850

$ 15,255

$ 13,660

$ 4,950

.33%

6.33 %

6.37 %

6.17 %

5.52 %

3.83 %

3,83 %

25

/

E

KANSAS 28 ELECTRIC COMPPJ4Y Comparative Electric Statements 1978 1977 1976 1975 Sales in Kilowatt-Hours (Thousands):

Rend en tial....................

1,947,538 1,771,645 1,671,470 1,635 Commercial 1,402,986 1,330,807 1,257,613 1,204,99 Industrial 2,679,630 2,465,928 2,351.631 2,268,20 Public street and highway lighting 62,808 62,085 60,740 58,60 ;

Sales for resale-municipals and cooperatives.....

965,187 888,553 726,546 687,54 General business..

7,058,149 6,519,018 6,068,000 5,854.72 Sales for resale-other electric utilities 921,338 695,285 97,951 247,71 Total kilowatt-hour.- sold 7,979,487 7,214,303 6,165,951 0,102,43 Customers at End of Year:

Residential 194,773 190,174 187,013 180,77 Commercial 18,970 18,510 18,246 18,91 Industrial 3,392 3,311 3,181 2,54 Public street and highway lighting...

413 396 374 32 Sales for resale-municipals and cooperatives....

91 90 89 8

General business.......

217,639 212,481 208,903 202,63 Sales for resale-other electric utilities 10 10 10 1

Total electric customers..

217.649 212.491 208,913 202,64 Residential:

Average kwh per customer.........

10,136 9,413 9,090 9,'15 Average revenue per customer...

$383,49

$323.29

$256.26 S236.8 Average revenue per kwh (cents).....

3.78 3.43 2.82 2.5 Kilowatt Hours Generated and Purchased (Thousands):

Generated (net after station use).....

8,130,424 6,732,339 5,878,673 6,194, Purchased 334,683 947,973 802,413 372,33 Total 8,465,107 7,680,312 6,681,086 6,566,70 Less: Sales for resale-other electric utilities 921,338 695.285 97,951 247,71 Net.

7,543,769 6,985,027 6,583,135 6,318,98 Company use, line loss, etc.........

485.620 466,009 515.135 464,26

(

Energy sold-general business.... ' 7.058.149 6,519,018 6.068,000 5,854,72 l

l Average BTU per Net Kilowatt-Hour l

Generated 10,802 11,048 10,806 10,84 '

Average Fuel Cost per Million BTU (cents).................

109.324 99.256 67.153 58.47 Available Capacity (Kilowatts).......

2,031,000 2,026,000 1,718,000 1,718,00 Maximum Demand (Kilowatts)

(Exclusive of sale to other utilities)..

1,532,600 1,423,400 1,387,000 1,337,40 Utility Plant at Original Cost (Thousands):

Beginning of year

$780,181

$676,554

$563,988

$478,01 Capital expenditures...

137,144 106,565 115,124 88,28' Retirements 2.865 2,938 2,558 2,31( :

End o f year......................

914,460 780,181 676,554 563,98; Accumulated provision for depreciation 160,673 140,775 124,963 113,13(;

Net utility plant

$753,787

$639,406

$551,591

$450,851 :

Employees at Year-End...............

1,385 1,340 1,315 1

l

• Decreased because of a reduction in firm power purchases 28

i 1974 1973 1972 1971 1970 1969 1968 1, 65,571 1,420,678 1,306,894 1,218,515 1,210,616 1,074,492 948,168 1,086,213 1,088,392 1,027,931 950,848 911,967 821,203 735,588 2,233,936 2,045,851 1,887,252 1,797,720 1,782,629 1,779,093 1,733,075 57,123 55,472 52,443 49,657 47,049 44,943 42,947 636,368 547,324 503.616 461,229 468,477 391,893 350,011 5,469,211 5,157,717 4,778,136 4,477,969 4,420,738 4,111,624 3,809,789 380.239 347,549 505,515 737,016 1,109,211 1,423,658 786,856 5,849,450 5,505,266 5,283,651 5,214,985 5,529,949 5,535,282 4.596,645 177,162 172,896 169,761 166,697 165,668 165,424 163,508 18,698 18,573 18,411 18,048 17,923 17,849 17,736 2,462 2,381 2,345 2,327 2,302 2,303 2,297 248 181 177 167 165 160 157 84 82 81 78 77 74 73 198,654 194,113 190,775 187,317 186,135 185,810 183,771 10 8

8 8

8 8

8 198,664 194,121 190,783 187,325 186,143 185,818 183,779 8,338 8,317 7,792 7,343 7,325 6,545 5,842

$181.02

$162.02

$152.73

$145.88

$146.15

$133.40

$122.11 2.17 1,95 1.96 1.99 2.00 2.04 2.09 5,945,844 5,544,119 5,428,111 5,469,259 5,785,520 5,692,076 4,723,762 354,699 386,562 359.501 124,350 155,299 189,245 224,230 6,300,543 5,930,681 5,787,612 5,593,609 5,940,819 5,881,321 4,947,992 380.239 347,549 505,515 737,016 1,109,211 1,423,658 786,856 5,920,304 5,583,132 5,282,097 4,856,593 4,831,608 4,457,663 4,161,136 451.093 425,415

- 503,961 378,624 410.870 346,039 351,347 b,469,211 5,157,717 4,778,136 4.477,969 4,420,738 4,111,624 3,809,789 11,284 11,058 10,710 10,480 10,374 10,345 10,410 33.284 27.116 24.423 24.341 22.303 22.118 21,784 1,728,000 1,728,000 1,318,000 1,318,000 1,318,000 1,318,000 1,278,000 1,324,600 1,201.900 1.137,300 1,079,400 1,076,600 998,400 923,400 I

$432,059

$397,790

$347,961

$306,801

$273,137

$255,068

$247,335 48,094 36,506 51,799 43,196 35,662 20,578 10,760 2,142 2.237 1,970 2,036 1,998 2,509 3.027 478,011 432,059 397,790 347,961 306,801 273,137 255,068 101,817 91,839 83.644 77,317 71,226 65,369 60,717

$376.194

$340,220

$314,146

$270.644

$235,575

$207,768

$194,351

'1,290 1.269 1,238 1,240 1,263 1,237 1,200 27

)

Officers Directors Form 10-K

(

(including their ages and titles)

(and the year they were elected)

The Company's Form 10-K -

Ralph P. Fiebach,61 Robert A. Brown (1953) filed with the Securities and E3 Chairman of the Board and Arkansas City President, change Commission and is avai President The Home National Bank of able from that agency or frm Arkansas City the Secretary of the Compan-George E. Billings,64 Dox 208. Wichita, Kansas 6720 Vice President - Area A. Dwight Button (1976)

Development Wichita, Chairman of the Board, The Fourth National Bank and Wilson K. Cadman,51 Trust Company, Wichita Fiscal Agents Executive Vice President Wilson K. Cadman (1978)

Dennis L Evans,44 Wichita. Executive Preferred Stock: Transfer Agen Vice President - Customer and

\\ ice President of the Company First National Bank in Wk hit Community Services Registrar, The Fourth Nation.

C Bank and Trust Company, Wic!

fAngeles, Howard J. Hansen,57 ice President.

ita.

Vice President - Finance Pipeline Transportation, Glenn L Koester,53 Atlantic Richfield Company Common Stock: Transfer Agent First National Bank in Wichi:

Vice President - Operations C. Q. Chandler (1974) and Irving Trust Company, Ne-Glen L Montague,59 Wichita, Chairman of the Board Y rk: Registrars. The Fourth N Vice President -

and President. First National ti nal Bank and Trust Compan:

Administrative Services Bank in Wichita Wichita, and Registrar and Tran Robut L R.ives,45 Martin K. Eby (1957) fer Compan, New York. Listc Vice President - System Services Wichita, Chairman of the Board, N.Y.S.E., tic er symbol, KCE.

Bernard Ruddick,55 Martin K. Eby Construction Bonds: Trustee. Registrar ar Vice President - Engineering Co., Inc.

Pay ng Agent, Morgan Guaran*

W. B. Walker, 58 G. W. Evans (1947)

Trust Company of New York.

Wichita Consultant and retired Vice President - Accounting Chairman of the Board and Secretary "P"U R. E. Tate, 62 nnua Meeting Ralph P. Fiebach (1967)

Treasurer The annual stockholders' mee E. D. Prothro, 46 and est n e

mpany ing will be held at the Gener Controller, Assistant Secretary and Assistant Treasurer Ralph Foster (1970)

Office of the Company, Wichit W chita, General Counsel for Kansas, May 23, 1979. Proxit Jack Skelton,48 the Company for this meeting will be solicitt Assistant Secretary George K. Mackie, Jr. (1965) by the management. A pro >

statement will be mailed to stoc:

J. F. Klassen, 49 Pittsburg, Chairman of the Board, Assistant Treasurer The Clemens Coal Company holders about April ;"' 1979.

Verna L Ridgeway,51 Glen L Montague (1974)

Assistant Vice President W chita, Vice President -

Administrative Services This report is prepared primari for the information of stockhol.

of the Company ers of,the company and is r.

Clif ton C. Otto (1953) transmitted m connection wi' Fort Scott, retired Chairman of the sale of any securities or off.

the Board The Western to buy any securities.

Insurance Companies Dwane L Wallace (1953)

Wichita, Senior Consultant.

Cessna Aircraft Company Robert L Williams (1968)

Wichita, owner of Imperial Oil Company Lyle E. Yost (1969)

Hesston, Chairman of the Board, Hesston Corporation 4

28

Kansas Gas and Electric Company Bulk Rate P.O. Box 208 88 Wichita, Kansas 67201 Address Correction Requested

,{rmit 1 Return Postage Guaranteed Key Number AR i

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Built early in the 19th century to protect what then was the nation's western frontier. Fort Scott now has been restored as a historic landmark. The old (ott is located in the City of Fort Scott. a modern eastern Kansas city served by the company.

f

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SERVICE AREA

~~

Generating Stations y

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M Capability stated is KGaE allocation.

Map Legend KG&E provides electric ser.

Interconnected f,2] quarters Cities $

vice to approximately 218,000 Utilities g

retail customers in southeast-Associated Electric Electric Lines, ern Kansas including the Wich.

Cooperative, Inc. -

343 ky e

AEC ita Metropolitan Area.

Electric Lines,138 snd The Empire District 161 kv Wholesale service is provided Electric Company -

Electric Lines 69 kv to 25 communities and to 8 EDE rural electric cooperatives. The Kansas City Power a Electric Lines Authorized company owns no gas proper-Liyht Company-ties and has no gas operations.

Electric Interconnections The Kansas Power and The company has all appro-Light Company - KPL

"'*"1 priate franchises and certifi-Oklahoma Gas and cates which are needed to Electric Company -

OCE permit it to provide service throughout the area.

Public Service Company of Oklahoma - PSO Western Power Division of Central Telephone a Utilities Corporation-WPD 29

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Kansas City Power & Light Company Annual Report 1978 Key Events of the Year Earnings climb to $3.55 a share latan, Wolf Creek units construction on schedule Record 138-day strike Management audit finds strengths, makes recommendations Environmental program completed Ownership in latan 1 reduced to 70 percent New financing tools employed 2,170 shareholders enroll in dividend reinvestment program 1978 1977 Financial Highlights (thousands)

Operating revenues

$ 318,663

$ 272,041 Cost of fuel 87,318 72,588 Net interchange and purchased power expense (2,599)

(9.302)

Employees wages and benefits charged to operations 52,183 53,605 Federal, state and local taxes 63,577 53,304 Interest on long-term debt 32,217 26,856 Allowance for funds used during construction ( AFDC) 23,293 13,496 Net income 42,924 32,283 Preferred, preference and common dividends declared 33,644 28,223 Earnings retained in business 9,280 4,060 Earnings per average common snare 3.55 5

3.01 Dividends per common share 2.56 2.46 Average number of common shares 9,644,321 8,216,133 Selected Statistics Electric Plant Data Construction expenditures including AFDC (000's)

$ 188,652

$ 167,287 Gross investment per revenue dollar 3.16 3.53 Fuel Data Percent of coal to total fuel burned 88.1%

87.4 %

Cost per MMBTU (coal) 74.3*

61.5 c Cost per MMBTU (all fuel) 87.8*

74.4(

Contents Letter to Shareholders...

...2

. 3-12 1978 in Review....

Summary and Analysis of Operations..

. 14-15

. 16-27 Financial Statements.

Eleven-Year Summaries......

.28-29 1

l'y. > 'f ' f : f l ? ;1 ?.. ' h x 4

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4

f I-

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_y j For the Company,1978 brought into sharper

):G.,

N(.[

f [

To the focus the challenge of financing record

j. K y ' i g f%

Shareholders *, c nstfudion adivmes dunng a ume of high ff 7, p?

mflation and expanding regulatory controls.

gy,

-.q

• h'1 A '.-

4g Power plant construction expenditures will

% g; p

peak in 1979. V, nile we believe we have faced f' u' }-

this test with a ueative program, we look forward to the relaxed financial demands

.1 H

of the early 1980's.

Earnings for 1978 were 53.55 a share, a 4,,y significant increase over the 53.01 earned in

~ f~~

.,. J

O e-(~

1977 despite 1.4 million additional average y

Q T

7 shares outstanding. As a consequence of the g{g;X 3f heavy construction program, a major portion

'N w

4

.1 %,

a of the increased earnings resulted from the Ay S.

4

.. J. E.i: ' ~. $.,

allowance for funds used during construction.

f ai%.g 8)T#h'Qy P$

f.I Also contributing to the improved earnings Jg J.1 were higher revenues resulting from rate W

. A ~. ~. X. h increases granted in late 1977 and greater F

jM.

kilowatt hour sales reflect.ing particularly the W.. de 9 $4

$,?R' !; -

=.

increased demands for power created by a 4

=g 94 A

cold period early in 1978 and en unusually soberr K zimmennan hot September.

Arthur J. Doyle On February 7,1978,the Board of Directors increased the quarterly dividend on the approaches in 1978 with a private sale of Company's common stock from 61-1/2 cents preference stock and by entering the to 64 cents a share, the equivalent of $2.56 Eurodollar market for an unsecured, limited-annually. This marked tne 19th dividend term loan. In another move to provide the most increase in the last 20 years.

economical source of funds, a secured line-On July 1, the three local unions represent-of-credit was established utilizing a field t

ing the Company's 2,150 bargaining unit warehousing arrangement to finance current employees went on strike and did not return coal and oil inventories through the use of to their jobs until November 16. This 4-1/2 bankers acceptances.

1978 saw the completion of required month strike, the longest in the Company's environmental modifications to existing power history, impacted operaticns for the year and resulted in both deferment of some major plants to bring them in compliance.ith now maintenance projects and delays in achieving effective air quality control regulations. This planned Company-wide programs.

program, begun a decade ago, has required Throughout the strike, service was a significant cash outlay for which there is no increase in the capability or reliability of the maintained by management and temporary Company's systems.

employees with little,if any, inconvenience tu customers. We are proud of this outstanding Construction progressed according to ath,evement by our management employees schedule on latan Station and the Wolf Creek and mindful of their many pemnalsacrifices, nuclear project. With commercial operation We are also aware, however, of the severe of latan scheduled for early 1980, the major impact of a strike on our bargaining unit cash outlays that have been required for power employees and their families.

plant projects during the last few years will in November, the Company received the peak in 1979 and be considerably reduced final report and recommendations on the in the 1980-1985 period.

management audit conducted by Booz-Allen in retrospect, meet g the challenges of G Hamilton as ordered by the Missouri Public the current era have mengthened the Service Commission. In our opinion, the audit Company. The continuing economic and r

was comprehensive and presented an public pressures have caused your manage-objective and helpful analysis of current ment to adapt and adjust. In so doing, we operations and many constructive ideas for have developed a more flexible, competent improving operating performance. We and responsive organization. As a conse-have set up a department and undertaken a quence, we believe the Company will be better formal program to further analyze the report's prepared to face the new and unknown recommendations and to implement those challenges of the future.

b that promise beneficial returns.

M rch 5,1979 in an effort to seek imaginative ways of For the Board of Directors, combating high financing costs and to meet 2

ir terim financing needs, the Cwnpany g

C_

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gp departed from conventional financing Chairn{n'of the Board u

Presid nt

1978 In Review is shared with St. Joseph Light G Powei Company (SJLP)-18 per cent, and The Operations Empire District Electric Conyany (EDE)-

Essential Operations Maintained 12 per cent.

During Strike latan's initial 15-month coal requirement is covered under an agreement and extension The longest strike in the Company's history options with Amax Coal Company, supplier of concluded on November 16 when bargaining coal for La Cygne 2 under a long-term contract.

unit employees returned to work after 138 Coal deliveries will begin in August,1979,with days. The 2,150 employees, represented by two Company-owned 110-car unit trains. A three local unions of the International Brother-third train will be added when the unit r%nes hood of Electrical Workers, walked out July 1, commercial operation.

A 1978, following a breakdown in negotiations of L_

wages and fringe benefits for the final year of existing three-year contracts.

Throughout the strike, some 500 manage-ment and about 150 temporary employees

~ ~s performed essential operating and customer

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s service assignments. All power plants were 1

manned and met four successive new

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customer peak load demand records. Line

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extensions and construction work were com-Q '4 Jr (d. f pleted for service to all customers who were S

ready for occupancy. Customer service and gp-J%:'j-(;'. f,,

. y billing functions were adequately performed.

w About 70 per cent of residential customers

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read their own meters during the strike.

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We also employed about 300 temporary 4, y w,,

construction workers to finish installation of g^

major air pollution control equipment at s..

Hawthorn Station in orderto meet a mandatory a

.v, k$?g-December,1978, deadline.

New plant construction schedules were unaf-1 fected by the long strike, but considerable main-

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O5 tenance work at existing plants was deferred.

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%..Ws Wage Settlements With. Gu. del.ines in i

rating finat shcce ncar the orissourt niver some ss miics The strike ended after employees accepted northwest of dounroun Kansas city the 650.megouart final offers by the Company for the third year coal-lired iaran i unir is scheduzcafor commerc,at operation

'" ^#"% N of the existing contracts and for one-year extensions expiring June 30,1980.

WYMO Seeking Mining Permits The two-year contracts call for total annual wage and benefit increases of 7.2 per cent and We are endeavoring to secure a long-term fuel 7 per cent for both Locals 412 (power plant supply for latan 1 by acquisition of coalleases nd mining permits through our wholly-owned l

workers) and 1464 (linemen and outside workers) and 6.2 per cent and 6 per cent for subsidiary, WYMO Fuels Inc. WYMO antici-Local 1613 (office and clerical workers).

p tes receipt in 1979 of the last of several The overall settlements were within Federal State permits needed to commence mining co I on a 640-acre State lease containing wage guidelines.

estimated recoverable reserves of 44 million latan 1 Nearly Finished tons in Wyoming's Powder River Basin. The In late 1979, we expect to begin trial operation subsidiary has also applied for Federal coal of the 650-megawatt latan 1 generating unit, leases on portions of 4,360 acres of adjacent now over 70 per cent complete. Commercial lands owned by WYMO with reserves esti-operation is planned for May,1980. The unit, mated at 200 million tons.

similar in design to La Cygne 2, will burn up Company investments at year-end in the to 2.4 million tons of low-sulfur coal annually capital stock of WYMO totaled about $5.3 and is equipped with an electrostatic precipi-million. It is anticipated that mining operations tator to control particulate emissions.

on WYMO's properties would be carried out Total cost of our 70 per cent share is pro-through a joint venture or contract arrange-l jected at $205 million, excluding the allowance ment which would assure the Company of a 3

l for funds used during construction. Ownership long-term, reliable supply of low-sulfur coal.

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'W.Eg-7 ' ]"Q #L Y 2.i~%%- v m, F (,"*fe Q. 'A iy M - h - Q c [ 17 Pushed by a tug boatfor most ofits 1.500-milejoumey, the 350. ton %If Carek reactor sessel arrited at the Po

.g Oklahoma. In early January.1979. The barge carried the twsselfmm Chattanooga. Tennessee. otwr seteml untenwys. The 40footdong twssel which made the last leg of the trip by specially designed railmad car, will house the nuclearfission elements to genemte heatfor steam production.

Wolf Creek Construction on Schedule Dr. y~. y. Wg k

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Construction of the Wolf Creek nucleargener-ating unit continued on schedule and reached Qs.

Q

' Q % p ' V t h 's 25 per cent of completion in 1978. The 1,150-

,g p-megawatt unit is targeted for commercial operation in 1983. The Company and Kansas 9.fg '

4 Gas and Electric Company (KGGE) share

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ownership equally, but have committed to sell a 17 per cent interest to a group of Kansas

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2' Y electric cooperatives. KGGE has constructior responsibility for the unit.

Major work began in May,1977, on the project, one of five under construction which 5

is being built to the Standardized Nuclear Unit 7

t.

Power Plant System (SNUPPS) design of j

power block facilities. The SNUPPS agree-l l

ment was developed in 1973 by five electric utilities to expedite the lengthy licensing g.

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process and realize substantial cost savings

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through utilization of common design.

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Cost of our presently planned 41.5 per cent share, totaling 477 megawatts,is estimated Now about 25 per cent completed. the milc,a miert e

occupies a lo.500-acrr site near surfington. hansas. It is l

at $349 million, excluding the allowance the state's largest planned genemting unit and is targeted for funds used during coristruction and for commerrial opemtion in 1983.

nuclear fuel.

Regulatory Commission (NRC) that the reactor I

The project occupies a 10,500-acre site near base mat concrete samples tested 90 days I

Burlington, Kansas, and is the State's largest after being poured did not meet design criteria.

i planned generating unit and its first nuclear Later tests by the Portland Cement Associ-t unit. Construction employment has reached a ation (PCA) tend to confirm that the concrete I

4 peak of 2,450 workers.

strength does meet design specifi ations.

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in October,1978, KGGE advised the Nuclear KGGE has retained an independent consultant

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to review the matter and additional indepen-The coal-fired La Cygne 2 unit continued dent tests are being made by PCA.

its outstanding performance in 1978. La Based upon tho information available now-Cygne 2 went on line in May,1977, and is including the advice of the plant's contractor, owned equally with KGGE. The new unit was architect / engineer and our consultant-available 86 per cent of the time.and operated l

the Company believes that the base mat at 70 per cent of capacity, well above 1

concrete does meet design criteria and the traditional performance for like-sized units i

matter will be resolved without material in the industry. The Company's one-half share i

adverse effect on the Company. If it should of the unit's output represented almost 23 l

not be resolved to the satisfaction of the NrRC, per cent of total generation in 1978.

j construction could be delayed and the cost i

increased. However, the final outcome cannot Management Audit Completed j

yet be determined.

A report of a management audit of the Company conducted by Booz-Allen G Nuclear Fuel Agreements Hamilton was submitted to the Missouri Public Service Commission (MPSC)in Novem-Westinghouse Electric Corporation is under ber. The audit began,n August,1977, and i

contract to supply Wolf Creek's nuclear fuel c vered every department in the Company.

requirement for 20 years. In 1975 Westing.

hause notified the Company that it would not The audit report recognized the Company meet its commitment to supply uranium with has made " major strides toward meeting the respect to the initial core and the first difficult challenges in today's utility environ-six reloads because price increases made ment" The report emphasized steps already in it commercially impracticable to do so.

Progress to strengthen overall operating Connquently, the Company and KGGE filed a efficiency and highlighted our strengths in the f

legal action in Federal district court in Kansas reas of system adequacy and reliability, favor-l against Westinghouse for declaratory able fuel price and supply situations, a j

judgment and damages.

gene Hy g d public image and innovative and aggressive leadership.

in proceedings involving the Company and other utilities, a Federal court in Virginia The report listed 82 recommenda'. ions for ordered Westinghouse to apply uranium improving operations, some cf Weh had presently held or controlled by it to the ful-Iready been adopted. The reme.ning rec mendations are under aaalysis by the fillment of its supply contracts with the utilities, including the Company. As a result newly-f rmed Operational Analysis and of that order, the Company expects Westing-Development Department, which will initiate i

house will deliver up to 700,000 pounds of ction plans so that implementation of cost-the 1,200,000 pound uranium requirement for effective improvements will be accomplished.

i the initial core. Cobb Nuclear Corporation of We are confident that the comprehensive Albuquerque, New Mexico has contracted to recommendations, when put into effect, will j

supply the balance. The Company and KGGE have a meaningful benefit to the efficiency of are negotiating with other uranium ur overall operations.

I suppliers to cover the remaining expected shortfall in Westinghouse deliveries.

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The liability of Westinghouse under its 1

Wolf Creek contract has yet to be determined.

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However, in related uranium supply contracts not involving the Company, the Virginia court recently ruled that Westinghouse was not excused from its contractual obligations to supply uranium to ten other utilities.

.n New Production Records

[W A new one-hour net system peak of 2,097 megawatts was established on August 25, 0

1978. This represented an increase of 5.9 f

per cent over the record set in 1977, and q

also surpassed three other records set in July and August,1978. A new winter season peak of 1,286 megawatts was established Decem-ber 6,1978, and was exceeded on January 8, in the scryy control center, computers rnonitor pouer 5

1979, when the net one-hour system peak piant operutions, are uscafor irrnore controt of substation demand reached 1,312 megawatts.

suirching and eventuairy wiri controi scnerating units.

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l Programs Implemented to improve s> stem in 1978. Natural gas and oil each Efficiency provided six per cent of total fuel requirements Of concern has been a decline in generating nd were utilized mainly for peaking, auxiliary, P ot and flame stabilization purposes.

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efficiency due to the aging of several units, l

use of low-grade coals and operation of air Eleven coal-fired units burned 4.6 million l

quality control devices. The Company has tons of coalin 1978 at an average cost of implemented several programs to improve 74.29 cents per million Btu,21 per cent over generating unit thermal efficiency, increase 1977. Long-term coal contracts normally cover unit output and establish better control over 96 per cent of total coal requirements. During ever-rising production maintenance costs.

the 1978 strike by the United Mine Workers, One such application is a power dispatch the Company covered delivery shortfalls from l

computer installed during 1977 and 1978.The stockpiles.

computer monitors substation loads and The Company burned 967,000 barrels of oil power plant operations and, wnen fully in 1978 as compared to 736,000 barrels in operational, will perform economic analyses in 1977. About one-third of the increase was selection of the most cost effective generating related to increased peaking requirements units to meet system requirements at any and replacement of natural gas, with the particular time.

balance due to sales of energy to other j

utilities. The average price of oil increased Coal Maj.or Base Load Fuel six per cent, from $2.50 per million Btu in Because all of KCPL's base-load generation is 1977 to $2.66 in 1978.

already coal-fired, the Company will not face Natural gas declined in availability during any of the fuel conversion problems con-1978 and we burned only 6.5 million mcf,1.9 fronting many electnc utilities. Coal generated million less than in 1977. The average cost 88 per cent of all electricity produced,n our of gas in 1978 was $1.18 per million Btu,about i

the same as the previous year.

j AVERAGE COAL COST Environmental Program Completed In 1978, we completed our program, begun in mw

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the early 1970s, to achieve compliance with

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environmental regulations affecting all existing y' 47 i N"

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power plants. The milestone event was com-3

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pletion of the new Hawthorn 5 electrostatic gt.'n j 'O !

precipitator designed to remove 99.4 per cent f

e of particulate emissions at a construction 5 -

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cost of $24.9 million. The precipitator which 30 5 it replaced had a design control efficiency

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of 95 per cent and was installed in 1969.

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The high cost of cleon air is dramatized by the llawthom 5

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'O electrostatic precipitator, completed in December 1978. The 1

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o tandem installation on each side of the smokestack is sk l

1968 1969 1970 1971 1972 1973 1974 1975 1976 1977 1978 times the size of the original precipitator buih in 1969. It l

cost almost $25 m:!! ion. Its purpose is to incurase emission l

contml eficieng by 4.4 per cent to 99.4 per cent.

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Our comprehensive program to comply together with adjacent lands have been with stringent, ever-tightening air quality operated under lease by the Missouri State standards includes: the use of more environ-Conservation Commission since 1957. The mentally acceptable low-sulfur coal and the Commission maintains a year-round staff, installation of either wet scrubbers or pre-operates a fishing marina and camping cipitators on all coal-burning boilers to facilities, and conducts both fish and wild control particulate and sulfur dioxide emis-game management programs. The public sions as necessary. The Company's total facilities average over 70,000 visitor days expenditure for air and water quality control each year.

since 1969 is now $90.3 million.

Business Expansions The electrostatic precipitator for the latan 1 Crown Center, the nationally recognized unit under construction is a modified version 25-square-block " City within a City" develop-of that used at La Cygne 2. The Company,s ment of Hallmark Cards, incorporated, near l

70 per cent share of the precipitator s cost is downtown Kansas City, continues to enlarge

$20 million. The device is designed to with the construction of a 750-room Hyatt remove 99.4 per cent of particulate matter and Regency Hotel, scheduled to open in 1980.The represents 10 per cent of the plant's total cost.

privately-financed urban renewal project Demand Curtailment Contract already includes a 730-room luxury hotel, ffice c mplexes,85 retail shops, eight Signed with Armco restaurants,a meeting and audio-visual center A demand curtailment contract with Armco, and 245 apartment and condominium units.

Inc., our largest customer, went into effect When completed in the late 1980s, the in October,1978. The contract calls for 85-acre development will contain more than mandatory reduction by Armco of its electric 50 new buildings for living, working, shopping, load of up to 100 megawatts as requested by recre tion and entertamment.The entire com-the Company. Such curtailment will reduce P ex has become a major attraction for the l

our summer peak capacity responsibility by 120 megawatts, including' reserve require.

City's growing national reputation as a convention center.

ments. Reductions at Armco's option are also provided for in the contract to limit

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power. Should the steelmaker elect not to W."

accept the requested optional reduction, k

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Armco will bear the excess fuel costs involved.

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For Armco, the pact will help lower energy 1

costs per ton of steel produced and improve steel production efficiency.

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i La Cygne Lake Opened for Recreation

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Through the cooperation of Linn County, 7

Kansas, and the Kansas Fish and Game Com-mission,5,500 acres of land and water at Q

the La Cygne generating station are under E

development for public use. Agreements signed in June,1978, provided for the develop-

,,x ment of a 600-acre park on the west side of the k#

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1 lake by Linn County, and establishment of a 4,900-acre wildlife management area by

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, y, the Fish and Game Commission.

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Beginning March 1,1979, portions of these l

lands were opened for public use and over the next few years facilities will be developed for fishing, hiking, sailboating, seasonal hunting and canoeing.

The wildlife management area will allow for growth and control of fish, game and bird populations. Much of the land area including part of the county park, will be encouraged to revert back to its natural state.

'""""**'""""'C#"'""""""d'd' This is the second Pro 9 ram of planned handle increased customer carts, nou ataling almost one y

public use made possible by the Company.

million per year. Ansurrs are expedited through a comput-The 1,500-acre Montrose Station cooling lake crued customer information retricoal system.

_ ~ _ - -

Other facilities under construction in the catalogue of materials for students and Greater Kansas City area are a 1.2-million teachers, including lesson plans, classroom

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square-foot regional distribution center addi-helps and seminars on energy related subjects.

tion by Sears Roebuck & Co. and a 1.1-million Through expanded annual and quarterly square-foot shopping mallin southeastern reports, we are communicating more infor-Kansas City, both scheduled to open in 1980.

mation about the Company to shareholders Several major area companies announced and the investment community. We have expansions during the year including:

increased personal contacts with elected and Employers Reinsurance Corporation and appointed officials through a new legislative Black & Veatch Consulting Engineers, both affairs section with responsibilities for both constructing all-electric office buildings, and the state and federal governmental levels.

the Union Wire Rope division of Armco, Inc.

Recognizing the importance of employees which is expanding facilities for wire rope to the communications process, we have and strand production by 30 per cent.

established programs to increase the upward and downward flow of information within the Energy Management Company.

The Commercial Operations Department has developed programs for all customers focusing on energy management techniques to control ARE N A both energy usage and costs. The two major SLAVE DRIVER TO YOUR objectives of this effort are to control peak demand and develop off-peak load.

Am CONDITIONER?

Through instructive advertising and group g

presentations, the program stresses use of 1-energy efficient appliances, proper insulation

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and conservation practices to help manage

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technical information to all customers,

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provides energy management training pro-I'~f~ C

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r grams fer industrial and commercial customers 0 P.~, ~~?,,'~._" 7EZ,~,,~_ ',".'*;'EE and wods closely with home builders and

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===r-contractors to encourage installation of energy

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_---~n 7 2200 _ FEliCT conserving features in new homes.

ggg u:=..._ ' F " E A stepped-up research effort in 1979 will set

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the stage for testing the effectiveness of peak-F h-C 32.7:EiF

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time interruption of air conditioning and of 3

voluntary reduction of consumption during r _~ ~7..,

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" peak alerts" Also,in conjunction with local E15;."f_= E2"Efi -nid "@

builders, we will analyze the effectiveness of A-

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energy-efficient designs and building

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materials based on data from homes supplied t'r;.C,"~~' :~~' ~2E52 53f=~2r with energy from both conventional and

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alternative systems.

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Communications Programs EEE. ~5" ~d'r me;:-

Take the heat

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ans save.

The impacts of cont.muing high inflat. ion on

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electric bills, of pressures from consumer

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and environmental movements and of anti-

"' "'"Pany s customeHnfonnadon pmgmrn concentmres nuclear interests, all have created significant on ueys customers can help reduce summerpeak demand.

communications challenges for the Company.

To address these challenges, we have in-creased information efforts to all key publics.

l In order to establish understanding among customers for what has been happening to their electric bills, we have developed an l

" Energy Dialogue" program which involves a d

provocative newspaper advertising series and 4

stepped-up speakers bureau activity and personal contacts with opinion leaders. Under 8

"The Subject is Energy" program, we have made available without charge an up-to-date

i l

Corporate and Finance Fuel Leads Operating Expenses Total operating expenses of $263.6 million were $38.6 million above 1977, an increase of i

Higher Rates, Increased Sales Boost 17.2 per cent.

Revenues Fuel expense for the year of $90.6 million, Total operating revenues reached $318.7 the largest expense item, was $15.9 million or million in 1978, up $46.6 million or 17.1 21.3 per cent higher than a year ago. Of this per cent for the year.

increase, $13.1 million was related to higher Three factors contributed to this sub-unit fuel costs.The average cost of fuel burned l

in 1978 was 87.8 cents per million Btu, stantial gain. The full-year effect of rate compared to 74.4 cents in 1977.

increases granted in November,1977, of 6.9 per cent in Missouri and 14.8 per cent in The credit to production expense for net Kansas accounted for $20.1 million of the interchange sales to other utility systems was increase. Approximately $10.8 million was

$2.6 million in 1978 compared to $9.3 million attributable to the recovery of fuel cost in 1977 because of increased purchases of increases experienced during the year.

interchange energy necessary to meet i

Tb-remaining $15.7 million resulted from a increased kilowatt hour sales.

slight increase in steam heat revenues and an Tax expense in 1978 of $64.6 milhon was j

overall increase of 5.8 per cent in kilowatt hour up $10 million from 1977, mainly due to the sales which totaled 8.4 billion in 1978 com-impact of higher revenues on gross receipts l

pared to 7.9 billion a year ago. Electric sales tax payments and increased property and gains by classification were: residential,8 per income taxes. Depreciation expense of $33.2 cent; commercial,3.3 per cent and industrial, million was $2.8 million h&gher in 1978 as a

)

result of property additions during the year.

7.2 per cent.

ELECrRIC REVENUES L.,nATT HoGR SALES

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1968 1969 1970 1971 1972 1973 1974 1975 1976 1977 1978 1968 1969 1970 1971 1972 1973 1974 1975 1976 1977 1978 EARNINGS AND DMDENDS PER SHARE TOTAL COST of FUEL BURNm E L^='A"a^&

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1968 1969 1970 1971 1972 1973 1974 1975 1976 1977 1978 1968 1969 1970 1971 1972 1973 1974 1975 1976 1977 1978 g

Other operation expenses of $47.4 million Federal wage and price guidelines as increased a modest $2.3 million.

applied to regulated utilities are presently Maintenance expense has been increasing being reviewed by the Council on Wage and steadily in recent years in conjunction with Price Stability. Although the guidelines are the Company's heavier reliance on coal for voluntary, interpretations by the state fuel, the increased maintenance requirements regulatory commissions and the resulting of older coal-fired plants, and the sizeable impacts on requests for rate relief are upkeep needs of air qualitycontrolequipment unknown at this time.

mandated by governmentai regulations. While Fuel Adjustment Actions maintenance expense in 1978 of $30.4 million We currently have a fuel adjustment schedule represented an increase of only $860,000 effective m M.issoun which permits recovery from 1977, substantial scheduled power cn a timely basis of increases in the cost of i

plant maintenance work was postponed I burned and the fuel cost component of c

during the strike.

interchange energy purchased from coal and natural gas sources.

Earnings Climb to $3.55 On February 2,1979, the MPSC ordered Totalinterest cnarges in 1978 were $34.5 each regulated electric utility in Missouri million, up $6.3 million for the year, and pre-to adopt a new fuel adjustment schedule ferred and preference dividends of $8.7 based on its estimated annualcost of allfuels, million were $1.2 million higher than 1977.

using an average fuel adjustment factor for The effect of the income credit for the each billing period during the year with allowance for funds used during construction provisions for adjustment during the following in 1978 was $23.3 million, up $9.8 million year. The order, unanimously approved by the from 1977-Commission, became effective on February 16, These factors combined to produce earning s 1979, and will be implemented by the available for common stock of $34.2 million, Company after hearing. While the new l

or $9.5 mdlion more than 1977. Earnings per procedure will permit recovery of increased average common share in 1978, based on 1.4 unit costs of fuels,it will require extremely million additional average shares outstanding, accurate fuel cost forecasting. An annual i

were $3.55 compared to $3.01 in 1977.

audit and formal hearing are required before implementation of any change in the Missouri, Kansas Rate Orders fuel adjustment.

i On March 5,1979, the Missouri Public in Kansas, an energy adjustment schedule Service Commission granted the Company enabling the Company to recover substantially an increase in retail electric revenues of allincreases in the costs of all fuels burned

$26.3 million, including gross receipts taxes, and the energy cost component of purchased or approximately 12.4 per cent annually. The Power, beca me effective on March 1,1978. The increase, which will become effective March new procedure eliminates delays in cost l

16, was about 63 per cent of the amount recovery experienced in the former method and is based on estimates of fuel cost requested in April,1978, based upon the i

test year ending June 30,1978, and adjusted increases subject to monthly adjustment.

l for known changes through January,1979.

Ownership in latan 1 Reduced to Pending before the Kansas Corporation 70 Per Cent j

Commission (KCC)is a final phase in rate On July 31,1978, we closed agreements with l

proceeding s originally filed in Novem ber,1976.

two Missouri utilities which reduced our owner-l The KCC in November,1977, temporarily ship interest in latan 1 to 70 per cent, or 455 granted $9.9 million of the $18.9 million, or megawatts, and our cash outlay for con-28.3 percent, increase originally requested, struction from $246 million to $205 million.

l based on a fully projected test year ending The transactions included an increase of an l

June 30,1978. In April, the KCC ordered additional 3 per cent ownership by St. Joseph I

$9.4 million of the temporary increase to Light G Power Company, bringing its interest become permanently effective.

to 18 per cent, or 117 megawatts, and a trans-In filings in November 1978,to substantiate fer of a 12 per cent ownership interest, or 78 Kansas revenue requirements based on actual megawatts, to The Empire District Electric results of the test year,we requested authority Company.

to make permanent the additional $500,000 This action was related to a series of events from the temporary order and to increase rates which added nearly 300 megawatts to our pro-by the $9 million remaining from the original jected capacity availability in the early 1980s, application. Both requests were considered at including: an MPSC order in June,1977, 10 hearings begun on February 26,1979, and a requiring SJLP to reduce its agreed ownership final order from the KCC is expected soon.

share in latan 1 from 25 to 15 per cent;the fact l

that the City of Independence, Missouri, will o g,cos,o,7o m m not acquire a previously reserved 101 mega-

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l watts in the latan and Wolf Creek units; and t i execution of a demand curtailment contract V W W E *'

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with Armco, Inc., reducing our annual peak capacity responsibility by 120 megawatts.

A g 33 Talks have been terminated with Nebraska WWE 2

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Public Power District concerning any sale by J

the Company of an ownership interest in Wolf

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433y J

3 Creek 1, due to Nebraska State legislative

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restrictions prohibiting out-of-state ownership.

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Still under consideration by NPPD is a possible m

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participation power purchase of 200 mega-

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'gg 23 watts from Wolf Creek for a two-year period 28

, - dg beginning in May,1983.

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i im 1978 Construction Totals $170,8 Million The 1978 construction program required a

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o.s cash outlay of $170.8 million, substantially issa isss ido mi 1972 3973 i9741975197619771978 f

below the $213 million forecast, but still a t

record for the Company. The diherence i

between actual and forecast expenditures l

largely related to the reduction of ownership AVERAGE COST oF TOM PRNUUG STOCK l

So in latan 1. Approximately 30.9 per cent or

• 2

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$52.7 million of the 1978 requirements came EY e@T

.3 7

from internal funds.The remaining $118.1

~ ' #}, '

d j $e 'o r

million was financed mainly from five I

s.3 so external sources.

~

I in March,1.2 million shares of common 53 stock were sold through underwriters to the M

54 s

d 43 public at $28.25 per share. At competitive T

i bidding in June, the Company sold $25 mil-44 lion of first mortgage bonds,914% Series, K 3.s !

due 2008. Proceeds were used to refund $9.6 33; million of maturing 2h% Series bonds with 2.3 l

the balance applied to the construction 2o

[

program.

is i

Environmental Bonds issued for latan, g

os Hawthorn Work i

In July, $31 million of environmental improve-i,se iss, i,7o is7, i,72 i,73 i,74 is7s i,7s i,771978 ment revenue bonds were issueri through the Missouri State Environmental improvement Authority to finance construction of air pol-lution control facilities at both Hawthorn and funds based on the three-month London latan stations The, issues, both 6%% Senes inter-Bank Offered Rate, traditionally lower due 2008, included $21.8 million for the latan than the U.S. floating prime rate. In going electrostatic precipitator and $9.2 miffon of verseas, we will be able to reduce commit-additional funds for replacement of the ment fees and avoid compensating balances Hawthorn 5 precipitator, required by U.S. banks. The Company drew New Financing Tools: Eurodollar,

$21 million against this line-of-credit in Preference Stock, December,1978.

Bankers Acceptances Also in December,250,000 shares of $8.00 Looking ahead to a welcome lull in the Cumulative Preference Stock, the first series construction program and a corresponding of a new class of stock authorized by stock-decline in capital needs in the next few years, holders in May,1978, were privately placed we developed three new sources for construc-with a group of eight institutional buyers. The tion funds in 1978. In November, agreements issue is non-redeema ble through December 1, were completed in London establishing an 1981, but is subject to a mandatory sinking 18-month, $50 million line-of-credit with a fund requirement on December 1 in the years group of international banks. The Eurodollar 1983 through 1988. The issue sold at 11 agreement provides for use of unsecured

$100 per share to yield 8 per cent.

Another line-of-credit opened with Citi-of Arthur Andersen G Co., as independent bank, N.A., utilizes a field warehousing public accountants for 1978. The meeting an angement to finance fuel inventories adjourned and reconvened May 30,1978, i

through the use of bankers acceptances.This at which time votes representing more than agreement, finalized in January,1979, 75 per cent of outstanding shares approved provides for loans up to $40 million an amendment to the Articles of Consolida-secured by coal and fuel oil inventories.

tion authorizing four million shares of Cumu-lative Preference Stock. This stock is not At December 31,1978, total capitalization of $972.8 million was represented by 51.7 subject to coverage restrictions as is preferred per cent long-term debt,14.5 per cent pre-stock and provides more flexibility in financ-ferred and preference stock and 33.8 per cent ing the construction program.

common stock.

The 1979 Annual Meeting is scheduled for 10 aan. Tuesday, April 24,1979, in the to Decl. Construction Pro 9 ram Company s downtown offices,1330 Baltimore Future ine Avenue, Kansas City, Missouri.

As forecast three years ago,1979 is the last Management Changes year of record expenditures in the current five-year construction program and construc-On May 2,1978, the Board of Directors tion needs are projected to decline through elected Arthur J. Doyle president of the 1983.The cash outlay for the 1979 program Company. He succeeds Robert K. Zimmerman, who continues as chairman of the board and is preliminarily estimated at $190.8 million and $578.3 million is targeted for the five chief executive officer. Mr. Doyle joined the years, excluding the allowance for funds used Company in 1973 as general counsel after during construction.

representing the Company as independent legal counsel for 24 years. He was elected a j

2,170 Shareholders Reinvest Dividends vice president in May,1973, to the board in 1

The Dividend Reinvestment and Stock Pur.

1976 and was named executive vice president chase Plan has enrolled 2,170 shareholders in May,1977.

since implementation in July. Under this plan, William D. Webb, former corporate secre-shareholders may have dividends from tary, was named assistant vice president of common, preferred and preference stock communications and was succeeded by Clare reinvested automatically in new shares of Den Haerynck, former assistant secretary.

KCPL common stock at a 5 per cent discount.

Mr. Webb came to KCPL in 1958 and became Participants may also invest cesh together corporate secretary in 1960.

with reinvested dividends or may invest cash (Uss Den Haerynck's career with the Com-for purchase of new common shares at pany began in 1951. She held posit: ens in market value.

various departments prior to joining the in 1978,36,038 new shares were corporate secretary's office in 1968. She purchased for common and preferred share-became assistant secretary in 1974.

holders who reinvested $664,120 in dividends Wi'liam H. Miller joined the Company in and made optional cash payments of November,1978, as director of human re-

$229,400. The proceeds were applied to the sources. Mr. Miller was formerly with Dayton construction program.

Power and Light Ccmpany where he had full A prospectus detailing the plan may be corporate responsibility for all personnel and obtained by writing to Mar:ufacturers Hanover labor relations activities.

Trust Company, Dividend Reinvestment Department, P.O. Box 24850, Church Street ir Station, New York, New York 10242, or to Miss Clare Den Haerynck, Secretary, Kansas p

City Power G Light Company,1330 Baltimore Avenue, Kansas City, Missouri 64141.

O J,

Annual Meeting Draws Record Attendance Over 140 shareholders attended the 1978 q"

Annual Meeting of Shareholders on April 25 at the Company's corporate headouarters in downtown Kansas City, Missouri. More than 80 per cent of the 8,647,092 shares eligible were represented either in person or by proxy.

ms At the meeting, shareholders reelected A record number of shareholders arrended the 1978 12 nine directors and approved the appointment Annual Meeting.

Financial Statements I

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6

Kansas City Power G Light Company Summary of Operations g

Year ended December 31 1978 1977 1976 1975 1974 (thousands)

Operating revenues 5 318,663 $ 272.041

$ 238.540 $ 210.318 $ 172.048 l

l Operating expenses Operation and maintenance 165,809 140,006 115,220 102,749 73,387 Depreciation 33,174 30,356 24,629 21,867 20,648 General taxes 38,511 35,519 31,822 28,537 25,207 Income taxes 26,137 19.144 20.529 16.495 15.204 Total operating expenses 263,631 225.025 192.200 169.648 134.446 Operating income 55,032 47,016 46,340 40,670 37,602 Allowance for equity funds used during construction 12,543 7,592 3,983 2,119 511 Other income and deductions (net)

(874)

(39) 185 1,715_

642 Income before interest charges 66,701 54,569 50,508 44,504 38,755 Interest charges (34,527)

(28,190)

(24,220)

(21,256)

(19,604)

Allowance for borrowed funds used during construction-credit 10.750 5.904 4.022 3.356 1.062 Net income 42,924 32,283 30,310 26,604 20,213 Preferred and preference dividend requirements 8,719 7.545 5.124 4.019 2.842 Earnings available for common stock

$_34,205 $ 24.738 $ 25.186 $ 22.585 $ 17.371 Average common shares outstanding 9,644,321 8,216,133 7,211,536 6,247,092 5,947,092 Earnings per average common share 3.55 $

3.01 3.49 $

3.62 $

2.92 Cash dividends per common share 2.56 $

2.46 $

2.34 $

2.26 $

2.20 I

4 14

Management's Discussion and Analysis of Summary of Operations Operating revenues increased significantly both in 1978 and in 1977. A large portion of Operating the increase in operating revenues for each year was a result of a prior year electric rate increase, effective May,1976 and November,1977, and increased fuel costs recovered Revenues:

through fuel adjustment clauses. Increased energy usage, resulting in part from the severe winter of 1977-78 and increased air cooling loads during the summer of 1978, acccunted for the balance of the 1978 revenue increase.

A 138-day strike in 1978 caused variations in the Company'.s operating conditions. As Operating a res.,lt, operation and maintenance expenses in 1978 may not be directly comparable Expenses:

to those in 1977.

Incree. sed operating expenses offset to a large extent the increased revenues in 1978 and almost entirely offset the increased revenues in 1977. Higher fuel prices and increased electric generation resulted in increased fuel costs which were a significant factor in the higher cost of operations for each year.

In 1978, increased kilowatt hour sales, the purchase of economy energy and a major unit outage due to installation of improved air quality control equipment resulted in increased purchases of interchange energy. Consequently, net interchange sales de-creased in 1978 and contributed to the increased operating expenses.

The continuing rise in the cost of performing maintenance work at generating stations and a general wage increase of 7.5% in 1977 resulted in a significant increase in the cost of maintenance for 1977.During 1978, the postponement of noncritical mainte-nance work during the strike resulted in only a nominal increase in total maintenance expense over 1977.

The MPSC and the KCC approved higher depreciation rates which became effective July 1,1976.The combination of these higher rates and increased amounts of depre-ciable property caused higher depreciation expense both in 1977 and in 1978.

General taxes increased in 1977 and in 1978 primarily due to increased gross receipts Taxes:

taxes on higher operating revenues in each year. An increased property tax base and higher tax rates resulted in increased property taxes.

Income taxes in 1978 increased as a result of greater taxable income during that year and the normalization of the tax effect of the debt component of a greater amount cf the allowance for funds used during construction (AFDC). Although netincon.e increased in 1977, that increase reflected an increase in the equity component of AFDC, a non-taxable item of net income.Therefore,in 1977,the Company's taxable income decreased and resulted in a reduction in income taxes for the year.

Contmued construction expenditures at latan Unit 1 and Wolf Creek Unit 1 have Allowance for Funds Used During resulted in increases in AFDC both in 1977 and in 1978.

Construction:

Financiry requirements for the continuing construction program resulted in the issu-Interest Charges, ante of long-term debt in May and December,1976, October and November,1977, Dividend and June and July,1978, as well as an increase in average short-term indebtedness.

Requirements These increased borrowings, together with higher interest rates, have resulted in in-and Other:

creased interest expense both in 1977 and in 1978. Additional preferred stock was issued in December,1976, and August,1977, which increased preferred dividend requirements both in 1977 and in 1978.

15

Kansas City Power G Light Company Ralance Sheets Assets December 31 1978 1977 (thousands)

Utility Plant, at original cost Electric 5 993,381 $ 946,472 (Notes 1,3 and 9)

Steam heat 4,897 4,774 998,278 951,246 Less-Reserves for depreciation 275,304 245,882 722,974 705,364 Construction work in progress (Note 6) 331.092 194.635 1,054,066 899,999 investments and Nonutility Property (Note 1) 6,029 4,371 Current Assets Cash (Note 2) 9,517 7,970 -

Special deposits 11,328 3,142 Customer accounts receivable,less reserves of $863,000 and $579,000 23,656 19,287 Other receivables 10,236 11,399

(

Federal income tax refund receivable 68 12,540 Fuel inventories, at cost (Note 1) 27,788 27,987 Materials and supplies, at cost (average basis) 14,746 11,573 Prepayments 1.337 1.233 98,676 95,131 7,989 9,313 Deferred Charges

$1,166,760 11,008,814 16 The accompanying notes are an integral part of these finandal statements.

. n.- n

l necember 31 Liabilities 1978 1977 (thousands)

Capitalization (See statements)

Common stock-authorized 16,000,000 shares, without par value

-9,961,794 and 8,647,092 shares outstanding-stated value

$ 182,047 $ 146,029 Retained earnings (Note 4) 143,447 134,167 3.144 3,288 i

Capital surplus 328,638 283,484 Cumulative preferred stock 116,156 116,316 Cumulative preference stock 25,000 l

Long-term debt

_ 503,044 426,803 l'

972,838 826,603 Current Liabilities Notes payable to banks (Note 2) 19,000

(

Unsecured commercial notes 10,000 Current maturities of long-term debt 9,569 l

Accounts payable 32,459 32,098 Accrued taxes 7,935 5,167 Accrued interest 7,483 6,208 l

Dividends declared 2,617 2,147 Accrued payroll and vacations 6,491 5,230 Accrued fuel costs 6,469 1,651 Other 2,508 2,523 75,962 83,593 l

o Reserves and Deferred Credits Deferred income taxes (Note 1) 72,079 63,470 Deferred investment tax credits (Note 1) 44,186 33,635 Other 1.695 1.513 117,960 98,616 i

e Commitments and Contingencies (Notes 6 and 7)

$1,166,760 $1.008.814 I

l

[

I 17

Kansas City Power G Light Company Statements ofIncome Year ended December 31 1978 1977 (thousands)

Operating Revenues Electric

$ 313,787

$ 267,432 (Notes 1 and 5)

Steam heat 4,876 4.609 318,663 272,041 Operating Expenses (Note 1)

Operation Fuel 90,628 74,718 Interchange power (net)

(2,599)

(9,302)

Other 47,421 45,094 Maintenance 30,359 29,496 Depreciation 33,174 30,356 Taxes (See statements)

Income 26,137 19,144 General 38,511 35.519 263,631 225,025 Operating income 55,032 47,016 Other Income and Deductions Allowance for equity funds used daring construction (Note 1) 12,543 7,592 Miscellaneous-net of income taxes (874)

(39) 11,669 7,553 Income Before Interest Charges 66,701 54,569 Interest Charges Long-term debt 32,217 26,856 Short-term notes 1,969 1,066 Allowance for borrowed funds used during construction-credit (Note 1)

(10,750)

(5,904)

Other 341 268 23,777 22,286 Yearly Results Net income 42,924 32,283 Preferred and preference dividend requirements 8.719 7.545 Earnings available for common stock

$_34,2_05

$__24.738 Average number of common shares outstanding 9,644,321 8,216,133 Earnings per average common share 3.55 3.01 l

c 18 The accompanying notts are an integral part of these financial statements.

Kansas City Power G Light Company Ctatements of Sources of Funds for Gross Property Additions Year ended December 31 1978 1977 (thousands)

$ 42,924

$ 32,283 Funds Provided From Operations Net income 33,644 28223 Less dividends declared 9,280 4,060 Earnings retained in business Items not requiring current use of funds 33,174 30,356 Depreciation 12,990 12,323 Deferred income taxes Investment tax credit (net) 9,793 18,697 Allowance for equity funds used (12,543)

(7,592) during construction 52,694 57,844 Funds Provided From issuance of long-term debt 77,000 71,940 Issuance of cumulative preferred stock 22,000 Outside Financing issuance of cumulative preference stock 25,000 Issuance of common stock 36,018 32,291 138,018 126,231 Retirement of long-term debt (9,569)

(19,500)

Increase (decrease) in short-term (9,000) 13,000 notee. payable Net change in special deposits (8.18_6)

(822) 111,263 118,909 Other Funds Provided (Used)

Sale or disposition of property 3,643 (Increase) decrease in receivables, 9,266 (19,114) less reserves 199 (7,008)

(Increase) decrease in fuel inventory Increase (decrease) in accrued taxes 2,768 (2,739) 361 16,594 Increase in accounts payable Allowance for equity funds used 12,543 7,592 during construction increase in materials and supplies (3,173)

(2,417)

Increase in other investments (1,683)

(1,944)

Other current liabilities 4,983 747 (500)

(3,822)

Other (net) 24,764 (8,468)

$188,721

$168,285 Gross Property Additions i

l 19 i

Kansas City Power G L1 ht Company 0

Statements of Capit 4 Stock, Capital Surplus g

and Retained Earnings Cumulative Cumulative Common Preferred Preference Capital Retained Stock Stock Stock Surplus Earnings Year ended December 31,1977 (thousands)

Balance, December 31,1976

$113,738

$ 96,476 1,781

$130,107 Net income for the year 1977 32,283 Dividends declared Cumulative preferred stock (8,304)

Common stock-$2.46 per share (19,919)

Expense related to $2.33 preferred stock issue, December 1,1976 (19)

Issue of 1,100,000 shares of common stock, May 24,1977 32,291 (92)

Issue of 800,000 shares of $2.20 cumulative no par preferred stock, August 4,1977 20,000 (774)

Premium on issuance of 800,000 shares of

$2.20 cumulative no par preferred stock 2,000 Purchase and cancellation of 1,600 shares of 4% cumulative preferred stock (160) 59 Amortization of capital stock expense 333 g

Year ended December 31,1978 (thousands)

Balance, December 31,1977 146,029 116,316 3,288 134,167 Net income for the year 1978 42,924 Dividends declared Cumulative preferred stock (8,580)

Cumulative preference stock (472)

Common stock -$2.56 per share (24,592)

Issue of 1,200,000 shares of common stock, March 22,1978 32,940 (98)

Issue of 78,664 shares of common stock for the Employees' Stock Ownership Plan 2,185 (5)

Issue of 36,038 shares of common stock for the Dividend Reinvestment and Stock Purchase Plan 893 (22)

Issue of 250,000 shares of $8.00 cumulative preference stock, December 6,1978 25,000 (80)

Purchase and cancellation of 1,600 shares (160) 61 of 4% cumulative preferred stock Balance, December 31,1978 (Note 4)

$182.047

$116.156

$ 25.000

$ 3.144

$143.447 4'

i The accompanying notes are an integral part of these finandal statements.

m1

z i

Kansas City Power G Light Company l

Ctatements of Cumulative Preferred and i

Preference Stock and Long-Term Debt December 31 1978 1977 Cumulative Preferred Stock (Note 3)

<tnousands)

$100 Par Value-Authorized 561,557 3.80%- 100,000 shares

$ 10,000

$ 10,000 and 563,157 shares-outstanding: 4%

- 41,557 and 43,157 shares 4,156 4,316 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 l

No Par-Authorized 4,000,000

$10.70-200,000 shares 20,000 20,000 l

shares-outstanding:

$ 2.33-800,000 shares 20,000 20,000

$ 2.20-800,000 shares 20,000 20,000 Total Cumulative Preferred Stock

$116156

$116,316 t

Cumulative Preference Stock (Note 3)

No Par-Authorized 4,000,000 shares-outstanding:

$ 8.00-250,000 shares

$_25,000 Long-Term Debt (Note 3)

First Mortgage Bonds Regular issues l

l 2-7/8% series due 1978

$ 9,569 2-3/4% series due 1980 11,972 11,972 8-7/8% series due 1981 25,000 25,000 l

3-1/4% series due 1983 9,506 9,728 3-1/4% series due 1985 16,000 16,000 5%

series due 1990 20,000 20,000 4-3/4% series due 1995 15,000 15,000 5-3/4% series due 1997 30,000 30,000 l

6-3/4% series due 1998 25,000 25,000 7-1/8% series due 1999 26,000 26,000 9-1/8% series due 2000 35,000 35,000 7-3/4% series due 2001 27,000 27,000 7-5/8% series due 2002 30,000 30,000 8-7/8% series due 2006 40,000 40,000 8-1/8% series due 2006 30,000 30,000 8-1/2% series due 2007 30,000 30,000 9-1/4% series due 2008 25,000 Pledged in support of pollution control bonds 5-7/8% series due 2007 41,940 41,940 6-7/8% series due 2008 31,000 Guaranty of Pollution Control Bonds 5-3/4% series due 2003 15,000 15,000 l

Loan Agreement Due May,1980 21,000 1

Unamortized prernium and discount (net)

(1,374)

(837) 1 503,044 436,372 Less current maturities cf long-term debt 9.569 21 Total Long-Term Debt

$503A44

$42_6,8.03

Kansas City Power G Light Company Statements of Taxes

(

Year ended December 31 1978 1977 (thousands)

Income Tax Expense Currently payable (Refundable) Federal

$ 2,697 $(11,744)

State 1,674 636 Deferred Federal (net)

Depreciation differences and other 7,040 8,654 Debt component of AFDC 4,838 2,734 State (net) 1,112 935 Investment tax credit Provision 11,126 19,703 Amortization (1,333)

(1.006)

Total income tax expense (Note 1) 27,154 19,912 Less income tax expense included in other income 1,017 768 Income tax expense applicable to operating income 26,137 19,144 General Tax Expense Property and reai estate 18,382 17,204 Gross receipts 17,620 15,923 Other 2,509 2,392 Total general tax expense 38,511 35,519 l

Total Tax Expense Applicable

$ 64,648 $_54 663 to Operating Income m

The accompanying notes are an integral part of these financial statements.

Notes to Financial Statements

1. Summary of Utility Plant: Utility plant is stated at historical costs of construction.These costs include Significant payroll related costs such as taxes, pensions and other fringe benefits, and en allowance Accounting for funds used during construction.

Policies Allowance For Funds Used During Construction ( AFDC): AFDC, a noncash item, repre-sents the net cost of borrowed funds used for construction purposes and a reasonable rate upon other funds when sa used. it luharged to construction work in progress during the period of construction. When a construction project is placed in service,the reiated AFDC becomes a part of the original cost of the completed plant which is used to estab-lish rates for utility charges under established regulatory rate practices.

The Federal Energy Regulatory Commission (FERC) has established a formula for computing the maximum AFDC rate.This formula has been used to determine the 1978 and 1977 rates.The rates used to compute AFDC, compounded semi-annually, were 9.02% (E,.95% net of tax) for 1978 and 8.8% (6.9% net of tax) for 1977.(See " income Taxes" below.)

Depreciation and Maintenance: Provisions for depreciation of ele-tric plant and steam heat plant are computed on a straight-line basis pursuant to rates ordered by the Public Service Commission of the State of Missouri (MPSC). Approximate annual composite rates were as follows:

Year Ended December 31 I

1978 1977

]

3.62%

3.61%

Electric.

3.76%

3.68 %

Steam heat.

Depreciation for income tax purposes is computed on different bases and methods as 22 explained in this note under incomc taxes.

The Company charges to maintenance expense the repairs of property and replacement and renewals of items determined to be less than units of property, except for such costs which are charged to clearing accounts and redistributed to various operating, con-struction and other accounts.The cost of renewals and betterments of units of property are charged to the utility plant accounts. property units retired or otherwise disposed of in the normal course of business are charged to the reserves for depreciation, along with removal costs, net of salvage.

The amounts of maintenance and depreciation expense other than those set forth in the Statements of Income are not significant. Rents and lease payments for buildings and similar items are also not significant.

Retirement Plans: The Company has group annuity plans for its employees, including officers, providing for benefits upon retirement, normally at age 65. The Company is obligated to fund benefits of the plan applicable to its management employees.

Contracts with the three local unions of the intemational Brotherhood of Electrical Workers provide for :tated payments by the Company to a trust fund, whose trustees are responsible for administration of the pension fund.The Company's policy is to fund pension costs accrued. The Company's liability for past service costs is not significant.

The annual costs of the plans were $4,700,000 and $5,331,000 for the years 1978 and 1977, respectively.

Revenue and Expense Recognition:The Company utilizes cycle billing and records revenue billed to its customers when meters are read. Residential and smal! commercial and industrial electric customers are bined bimonthly while large commercial and industrial electric customers and steam heat customers are billed monthly. Cost of ser-vice rendered is recognized as incurred. (See biote 5).

Income Taxes: The Company generally r.ormalizes the effects of the differences in tax depreciation and book depreciation. Deferred taxes have been provided for this dif-ference in tax depreciation except for the effect of accelerated depreciation on Missouri property acquired prior to 1972. Accelerated depreciation methods include the use of shorter " Guideline" lives and the use of the Asset Depreciation Range system which permits shorter lives and current deduction of removal cost and repair allowance.

Taxes deferred on property additions for certain prior years are now being credited to income as these timing differences reverse.

The tax effect of the allowance for borrowed funds used during construction,is being normalized in accordance with rate orders issued by the regulatory commissions of the States of Missouri and Kansas. Under such orders, the accumulated deferred income taxes are offset against construction work in progress rather than being shown as a reserve on the balance sheet.The tax effects of certain other costs which are capitalized on the books, including pension costs and taxes, are not normalized. Under regu-latory practices of the Commissions to which the Company is subject,it is expected that income taxes not provided for currently will be recoverable through revenues when such taxes become due.

The Company's effective income tax rates are computed by dividing total income tax expense by the sum of such tax expense and net income.The following table recon-cites the effective tax rates to the statutory Federal income tax rate:

Year Ended December 31 1978 1977 Effective income tax rate as reported.

38.7%

38.1%

Niowance for equity funds used during construction. not taxable income.

8.6 7.0 Differences between book and tax depreciation.

(.9)

(.3 )

Amortization of investment tax credits.

1.9 1.9 1.8 2.2 Taxes and pension costs capitalized.

State income taxes.

(1.9)

( 1.5 )

(.2)

.6 Other.

48.0%

48.0%

Statutory Federal incon'e tax rate.

Investment tax credits have been deferred,when utilized, and are being amortizec' to income over the service lives of the related properties. At December 31,1978, the Company had unused investment tax credits of approximately $9,400,000 which will be available to reduce Federalincome taxes payable through 1985.

23

Motes to Financial Statements (continued)

Subsidiary:The Company has a wholly-owned subsidiary,WYMO Fuels Inc., organized l l for the acquisition and development of coal properties. The Company has accounted for its investment in WYMO Fuels Inc., under the equity method and has r ot prepared consolidated financial statements because the effect of consolidation upon the accom-panying financial statements would not be significant.

Fuel: Prior to January 1,1978, the Company's fuelinventories were priced on a first-in, first-out basis. Since JanLJry 1,1978, fuel inventories have been priced on an average cost basis. The effect of this change on net income for 1978 was not significant.

2. Short term The Company borrows funds primarily for construction purposes from banks under Borrowings line-of-credit agreements and through the sale of commercial paper. These borrowi:,gs are normally arranged on a 30 to 90 day basis at the prime rate then in effect. In connec-tion with the bank loan agreements, the Company has informally agreed to maintain an operating account or a minimum average deposit with the banks. Such amounts are expressed as percentages of the line-of-credit available and the amount of outstanding loans. There are no legal restrictions placed on the withdrawal of these funds. The table below sets out information related to these borrowings during the periods.

Year Ended December 31 1978 1977 Short-term borrowings:

Maximum amount.

545.000.000

$36.500.000 Monthly average.

24,167,000 17,350.000 Unused lines-of-credit. end of period.

56.500,000 36.000,000 Minimum average deposit requirements.

6.850,000 6,700,000 Interest rates:

Weighted daity average.

8.1%

6.6%

End of period.

10.4%

7.8%

3. Capital Stock, Preferred stock may be redeemed at stated prices, except that certain series may not be Bonds and Other redeemed at the option of the Company prior to the date specified through a refunding, Long-term Debt directly or indirectly, by or in anticipation of the incurring of any debt or the issuance of preferred stock which has interest or dividend costs to the Company lower tian the stated minimums:

Redemption Prices Stated Minircum December 31, Restricted Interest or Series.

1978 Redemption Date Dividend Cost 3.80%.

$103.70 4%.

102.25 4.50%.

101.00 4.20%.

102.00 4.35%.

101.00 7.72%.

105.79

$ 2.33.

29.80 December 1,1981 8.76%

$ 2.20.

29.70 August 1,1982 8.26%

$10.70.

110.70 June 1,1985 10.84%

The Company is obligated under the terms of the Purchase Fund Agreement to provide funds sufficient to purchase 1,600 shares of the 4% Cumulative Preferred Stock annually.

The amount of First Mortgage Bonds authorized by the Indenture of Mortgage and Deed of Trust dated as of December 1,1946, as supplemented,is unlimited. The amount of additional bonds which may be issued is subject tocertain restrictive provisions of the Indenture. Substantially all of the Company's utility plant is pledged under +he terms of the indenture.

4 24

---N-L

Scheduled maturities and sinking fund requirements for long-term debt are as follows:

Bonds Sinking Fund Year Elaturlng Requirements Unfulfilled i

1979 5

5430.000

$160.000 1980-11,972.000 280.000 160.000 1981.

25.000.000 280.000 160,000 1982-280.000 266.000 1983.

9.506.000 160.000 160.000 Annual sinking fund requirements of $160,000 may be met by pledging property additions taken at 60% of cost or fair value to the Company, whichever is less.

The holders of the Company's Common Stock approved, on May 30,1978,an amend-ment to the Company's Articles of Consolidation to create a new class of 4,000,000 shares of preference stock, without par value.The preference stock is senior to the Common Stock, but junior to the preferred stock, with respect to dividends and distribu-tions upon any liquidation of the Company.

In December,1978, the Companyissued 250,000 shares of $8.00 Cumulative Preference Stock,non-convertible,with stated value of $100 per share. This stock is non-redeemable through December 1,1981, but may be redeemed thereafter in whole,or in part, ratably from each of the holders of the outstanding shares, at $104 per share throughDecember1,1982, and at $100 per share thereafter. Annualsinkingfundpur-chases of 41,667 shares on December 1 of the years 1983 through 1988 are mandatory.

On May 2,1978, the Company's Board of Directors approved the issuance and sale of up to 350,000 shares of additional Common Stock to participants in the Company's Dividend Reinvestment and Stock Purchase Plan. Such Plan became effective July 13,1978.

The Company has arranged a $50,000,000 line-of-credit through a group of interna-tional banks.This agreement provides for the use of unsecured intermediate-term funds at fluctuating interest rates based on the three-month London Inter-Bank Offered Rate plus a commitment fee of 1/4% per annum on any unused portion of the line-of-credit. This loan agreement, which does not require compensating balances, expires on May 30,1980. On December 29,1978, the Company received a $21,000,000 advance under the terms of this agreement, at the rate of 12-1/4%.

In January,1979, the Company began using a two year financing arrangement with Citibank, N.A. This arrangement enables the Company to borrow up to $40,000,000 through bankers acceptances by collateralizing its coal and oil inventories.

4. Dividend Retained earnings at December 31,1978, included $30,000,000 which was not available for cash dividends on common stock under the provisions of the Articles Restrictions of Consolidation.

5. Rate Matters The Company has fuel adjustment schedules in its effective rate tariffs in both Missouri and Kansas. An energy cost adjustment schedule approved by the Kansas Corporation Commission (KCC) effective March 1,1978, provides procedures for the recovery of energy costs based on monthly estimated costs and sales,with any over or under recovery to be adjusted in a subsequent month. On February 2,1979, the MPSC issued an order which provides for each Missouri electric utility to file new fuel adjustment schedules utilizing a formula prescribed in the order. A fuel adjustment factor, which includes the cost of all fuels, will be established for a 12-month period based upon projected fuelcosts and kilowatt hout sales during that period.Any over or under recovery of fuel costs will be considered in the subsequentyear's fuel adjustment schedule.The Company's present Missouri fuel adjustment schedule remains in effect until a new fuel adjustment schedule is filed with and approved by the MPSC.

In January,1979, the Company began recording recoverable or refundable revenues under the terms of the Kansas schedule and will adopt comparable accounting in Missouri upon acceptance by the MPSC of the Company's new fuel adjustment schedule.

On April 19,1978, the Company filed an application with the MPSC to increase retail electric service revenues by approximately $41.7 million, or 19.5%. The Company expects to receive an order in this case by March 17,1979.

25

Motes to Financial Statements (continued)

On November 5,1976, the Company filed an application with the KCC to make effective new Kansas retail electric rate schedules designed to increase annual revenues by approximately $18.9 million, or about 28.3%, based on projected data for the twelve months ending June 30,1978. Approximately $9.9 million of this request was authorized by an interim order from the KCC and new temporary retail electric service rate schedules were put into effect by the Company on November 16,1977. On April 13, 1978, the KCC permitted the Company to permanently place into effect 95% of the temporary increase.

A hearing to consider the Company's request to make the remainder of the interim increase permanent will be held on February 26,1979, at which time the Company's request for the approximately $9,000,000 of increased revenues originally sought but not granted by the previous order will also be considered.

6. Commitments Total construction commitments at December 31,1978, approximated $269 million.

and Co.7tingencies The Company is participating with other electric utilities in joint construction of fossil fuel and nuclear generating plants. At December 31,1978, construct:on commitments of $226 million and actual expenditures of $148 million, including nuclear fuel and AFDC, relate to Wolf Creek Unit 1, which is jointly owned with Kansas Gas and Electric Company (KGGE). Construction commitments of $25 million and actual expen-ditures of $167 million relate to latan Unit 1, which is jointly owned with St. Joseph Light

& Power Company (SJLP) and The Empire District Electric Company (EDE).

An application has been made before the Nuclear Regulatory Commission (NRC) foran operating license for Wolf Creek Unit 1. On May 17,1977, the NRC issued a permit for the construction of Wolf Creek Unit 1 and has indicated that it will undertake generic rule-making procedures with respect to nuclear waste disposal and reprocessing and that licenses will continue to be issued, but on a conditional basis subject to final court review. The Company assumes a risk of loss in proceeding with the construction of l

Wolf Creek Unit 1, pending results of the generic rule-making. KGGE has advised the NRC that certain sample tests of the concrete base mat for the nuclear reactor at Wolf Creek Unit 1 did not meet one of the quality control design criteria approved by the NRC.

(See " Wolf Creek Construction" page 4, for additional information on this subject).

On July 31,1978, the Company reduced its ownership in latan Unit i from 85% to 70%,

through a 3% increase in the ownership of SJLP and a transfer of a 12% ownership to EDE. As a result of these transactions, which were made at prices based upon the Company's approximate cost, the Company recovered $23 million of its previous construction expenditures and reduced its total obligation for the construction of this unit by approximately $41 million.

7. Litigation On August 25,1977, Peabody Coal Company (Peabody) filed a petition for declaratory judgment and damages asking the Court to construe certain provisions of several contracts under which Peabody supplies coal to the Company. The suit seeks reforma-tion of the contracts, together with alleged actual damages of some $46,000,000 and punitive damages of $150,000,000. It is the opinion of the Company that the suit for i

damages is without merit.

During strikes by Company bargaining unit employees in 1974 and 1978, the Company suspended payment of its contribution to the Unions' health, welfare and annuity plans. As of December 31,1978, the amount of contributions withheld amounted to $2,035,000. Although the unions have contested suspension of the 1974 payments, it is the opinion of the Company that it will have no liabi!ity for any of these amounts.

26

,n--rs

. ~ ~~~7M

8. Quarterly 1st 2nd 3rd 4th Operating 1978 Quarter Quarter Quarter Quarter Results (thousands)

(Unaudited)

Operating revenues.

.5 74,978 5

68,973 96,864 77,848 Operating income.

12,713 10,081 18.341 13,897 Net income.

8,821 7,266 15,459 11,378 Preferred and preference dividend requirements.

2,145 2,145 2,145 2.284 Earnings per everage common share.

0.76 0.52 1.34 0.91 Average common shares outstanding.

8,780,513 9,916,965 9,922,590 9,941,401 1977 Operating revenues.

64,254 60,315 5

81,437 66,035 Operating income.

12,187 7,765 15,143 11,921 Net income.

9,497 3,988 10,756 8,042 Preferred d@d requirements.

1,707 1,707 1,985 2,146 Earnings per average common share.

1.03 0.28 1.01 0.68 Average common shares outstanding.

7,547,092 8,006,433 8,647,092 8.647,092 The rate of inflation experienced in recent years has resulted in a cost of replacement of

9. Current the Company's productive capacity which is substantially higher than the historical Replacement cost of such assets reflected in the Company's Financial Statements. In compliance with Cost (Unaudited) the Securities and Exchange Commission reporting requirements, estimated replacement cost information is disclosed in the Company's Annual Report to the Securi-ties and Exchange Commission en Form 10-K.

Auditors' Report To the Stockholders and the Board of Directors of Kansas City Power G Light Company:

We have examined the balance sheets and statements of cumulative preferred and preference stock and long-term debt of Kansas City Power G Light Company (a Missouri corporation) as of December 31,1978 and 1977, and the related statemente ofincome, taxes, capital stock, capital surplus and retained earnings and sources of funds for gross property additions for the years then ended. Our examination was 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.

In our opinion, the accompanying financial statements present fairly the financial position of Kansas City Power G Light Comparty as of December 31,1978 and 1977,and the results of its operations and the sources of its funds for gross property additions for the years then ended,in conformity with generally accepted accounting principles consistently applied during the periods.

ARTHUR ANDERSEN G CO.

Kansas City, Missouri, January 31,1979.

27

l Kansas City Power G Light Company Eleven-Year Summaries Summary of Eamings 1978 1977 1976 1975 1974 1973 1972 1971 1970 1969 1966 Operating Revenues (000's)

Electric

$ 313.787 $ 267.432 5 235.673 5 207.813 $ 170.249 $ 155.403 $ 137.781 $ 128.774 5119.899 $ 108.9 Other 4.876 4.609 2.867 2.505 1.799 1.736 1.829 1,700 1.807 1,737 1.57t Total operating revenues 318.663 272.04) 238.540 210.318 172.048 157.139 139.610 130.4 M 121.706 110.649 103.552 Operating byenses (000's) e.

Operation 135.450 110.510 92.945 f3555 58.837 55.950 50.538 43.622 40.326 35.282 35.829 Maintenance 30.359 29.496 22.275 s s.194 14.550 13.890 10.659 11.451 10.835 8.413 6.768 Depreciation 33.174 30.356 24.629 21.867 20.648 18.560 14.301 13.489 12.957 11.827 10.477 federalincome tames-Payable currently 1.397 (12296) 6.210 4.556 7.831 2.226 6,720 9.646 9.978 10.235 12.517 investment tan credit (net) 9.793 18.697 6.507 3247 210 2.148 654 (455)

(557) 1.592 164 Deferred until future years (net) 12.273 11229 6.235 7.374 5.899 5.353 1.188 134 98 139 100 l

Property and other tazes 41.185 37.033 33.399 29.855 26.471 23.865. 22.162 21.232 18.797 17.217 14,994 Total operating enpenses 263.631 225.025 192200 169.648 134.446 121.992 106.222 99.119 92.434 84.705 80.849 Opeim.u lncome (000's) 55.032 47.016 46.340 40.670 37.602 35.147 33.388 31.355 29.272 25.944 22.703 Other income and Deductions (000 s1 AllowarKe for equity funds used during construct 6on 12.543 7.592 3.983 2.119 511 1.006 1.893 1.029 337 972 1.490 Miscellaneous tnet)

(874)

(39) 185 1.715 642 214 498 503 402 516 432 Total other income and deductions 11.669 7.553 4.168 3.834 1.153 1.220 2.391 1.532 739 1.488 1.922 income before Interest Charges (000's) 66.701 54.569 50.508 44.504 38.755 36.367 35.779 32.887 30.011 27.432 24.625 Interest Charges (000's)

Interest on long-term debt 32.217 26.856 23.553 19.% 8 17.884 17.473 15.978 13.638 11,060 9.135 7.083 Interest on short-term notes 1.969 1.066 412 1.085 1.592 343 650 672 1.183 767 699 Allowance for borrowed funds used dunng tonstruction-credit (10.750)

(5.904)

(4.022)

(3.356)

(1.062)

(1.554)

(3.102)

(1.686)

(912)

(1.?32)

(1.375 Miscellaneous 341

,268 255 203 128 147 87 82 64 56 51 Total interest charges 23.777 2228C 20,198 17.900 18.542 16.409 13.613 12.706 11.395 8.826 6.458 Net income before Extraordinary items (000's) 42.924 3I283 30.310 26.604 20.213 19.958 22.166 20.181 18.616 18.606 18.167 Extraordinary ltems (000's) 1.342 Net income (000's) 42.924 32283 30.310 26.604 20.213 19.958 22.166 20.181 18.616 18.606 19.509 Preferred Dividend Requirements (000's) 8.719 7,545 5.124 4.019 2.842 2.848 2.854 2.401 1.663 1.370 1.876 Applicable to Common Stoch t000's)

SE205 $ 24.738 $ 25.186 $ 22J85 5 17.371 5 17.110 $ 19.312 5 17.780 5 16.753 $_16 Earnings Per Average Common Share Beforc entraordinary items 5

3.55 $

3.01 5 3.49 $

3625 2.92 $

2.88 5 3.37 $

3265 308 5 3.07 $

2.99 After entraordinary items 3.55 5 3.01 5 3.49 5 3.62 5 2.92 5 2.88 $

3.37 $

326 5 3.08 5 3.07 $

3.24 Cash Dividends Per Share 2.56 5 2.46 $

2.34 $

2.26 5 220 $

2.20 $

2.12 $

2.08 $

2.02 5 1.94 5 1.71 Datio of Earnings to Fixed Charges 3.01 2.83 3.10 3.09 2.82 2.68 2.88 3.07 3.27 4.02 5.03 Capitalization Data Common Stock Equity (000's)

$ 328.638 $ 283.484 $ 245.626 5 215.512 5188.336 5183.934 5179.802 5157.709 5151.539 5145.71 Average shares outstanding 9.644.321 8.216.133 7.211.536 6.247.092 5.947.092 5.947.092 5.738.759 5.447.092 5.447.092 5.

Earnings per share 5

i 3.55 5 3.01 5 3.49 5 3.62 $

2.92 5 2.88 5 3.37 $

3265 3.08 5 3.07 5 2.99 Dividends per share 2.56 5 2.46 5 2.34 5 2.26 5 2205 2.20 $

2.12 5 2.08 5 2.02 $

1.94 $

1.71 Preferred Stock (000's) 5116.156 $ 116,316 5 96.476 5 76.636 $ 56.796 5 56.956 $ 57.116 5 57276 $ 44.436 $ 44.596 5 44.756 Dividend requirements (000's) 5 8.580 $

7.545 $ 5.124 5, 4.019 5 2.842 3 2.848 $ 2.854 5 2.401 5 1.863 5 1.870 5 1.876 Average dividend rate 7.39 %

7.21%

6.56% ' 5 88%

5 00%

5.00%

5.00%

4 63%

4.19%

419%

4.19%

Preference Stock (000's)

$ 25.000 l

D:vidend requirements (000 s) 5 139 Average dividend rate 8J'0%

Long-Term Debt (000's) 5 503.044 5 436,372 $ 354.118 5 343.738 5 324.541 5 299.797 5 28').673 $ 256.520 $ 231.056 $ 196.692 $ 171.373 Interest on debt (000's)

$ 32.217 $ 26.856 5 2J.553 $ 19.968 5 17.884 5 17.473 5 15.978 5 13.638 5 11.060 5 9.135 $ 7.08 Average interest rate 6.98%

6.78%

6.35%

6.12%

5.88%

5.86%

5.78%

5 54 s 5.11%

4.69%

4.28%

Short Term Notes (000's)

$ 10.000 $ 19.000 $ 6.000 $ 9.500 $ 13.500 $ 13.500 $ 12.500 $ 11.500 $ 11.500 $ 20.000 $ 26.10 e

Average effective rate 8.15 %

6.14%

6.46%

7.64%

11.06 %

6.02%

4.78%

Sle%

8.42%

7.87%

5.39%

28 l

ElecidC Sales Statistics 1978 1977 1976 1975 1974 1973 1972 1971 1970 1969 1968 Itevenues t000's)

$ 111.972 5 9M44 $ 84.571 5 79,507 5 62,314 $ 58280 $ 51,533 $ 48.912 5 45,571 $ 40.425 5 37,156 Residential Commercial 124.083 108,293 94.873 83,416 68.273 62.043 54,830 51.112 48,067 44,817 42295 Industnal 61.489 51,424 43.534 34.478 30,927 27,570 24,530 22,487 20372 18223 17303 Pubhc strect and highway hghtin9 6.221 6,409 5.898 52M 4,506 3,949 3,683 3,424 3301 3.169 3 037 Pubhc authontes-power and hghhng 74 67 61 56

!5 49 45 44 45 41 44 Other electrK utihtses 8,369 6.186 5,315 3,765 2.9u 2355 2.123 1.868 1.679 1.463 1339 Total 312208 266.023 234 252 206,427 169,043 154246 136,744 127.847 119.035 108.133 101,174 Other electrK revenues 1,579 1.409 1.421 1386 1206 1.157 1.037 927 864 774 802

$J32815 267,4321235 63 L207.813 $ 170249 $ 155.403 $ 137.781 1R8274 $ 119.899 $ 108.912 5101.976 Total Sales in Kilowatt Hours (OOO's) 2.465,782 2.284.029 2.193.859 2,300,432 2.070,855 2,113326 1,956.111 1,843228 1.735,017 1,544.61:e 1,406,575 3,182,675 3.080.589 2.889.888 2.846,031 2.651,817 2.677.697 2.493,428 2.312.259 2.238.076 2,124.161 2.043.293 Residential InduMnal 2.302,619 2,147,363 1,980.230 1,768.308 1,952.711 1,985,799 M81.876 1,752,072 1.649.857 1.582.389 1,526.815 Comrcial Pubhc street and highway hghting 68,248 68286 66,814 65,260 e,276 64.158 62,331 59,249 55,733 54.403 53.027 Pubhc authoritses-power and hghtW 2.710 2,702 2.657 2/*14 3.313 3,599 3.596 3,665 3,774 3.479 3.850 Other electnc utilities 336,916 317.516 302.842 264A97 235.488 236309 216,280 195.769 182.710 170.097 J53 8,358.950 7.900,485 7,436,290 7 247,442 6,979,660 7,080.888 6,613,622 6.163.242 5.865.167 5.479.148 5,189.141 Total Residential 293.402 288 376 284,296 281,708 278,973 273,532 267320 261.865 256.452 252,354 251,257 Average Number of Customers Commercial 38,713 38343 38.024 37,709 37,575 37,401 36.670 35.897 35.624 35.830 35.591 Industnal 2,121 2,084 2.065 2049 2,063 2.112 2.133 1,843 1/ 68 758 698 Pubhc strect and highway hghting 123 122 125 126 128 128 129 131 132 133 139 Pubbc authontres-power and hghting 12 11 11 11 12 12 12 12 12 12 13 Other electric utiktses 16 16 15 13 13 13 12 12 13 13 13 Total 334,387 328,952 324.536 321,616 318,764 313,198 306276 _299 160 293.701 289.100 287.711 esidential Sales Average kw h per customer 8,404 7,920 7,717 8.166 7,423 7,726 7.317 7.027 6,765 6.121 5,598 Average revenue per kwh-cents 4.541 4.100 3.855 3.456 3.009 2.758 2.634 2.658 2.627 2.617 2 642 Load Stetistics 8.581.224 8.446,189 7,667,221 7203,748 7 225.580 7,212,592 7.225.430 7.078,663 6,754,710 5.913 202 4.545.594 Generated tnet)-kwh t000 s)

Purchased-kwh (000 s) 211,991 188.082 194.250 190,198 161,600 141,759 185.822 156.347 173245 163,006 184321 interchanged (net)-kw h (OOO~s) 218.421 (182.695) 164,936 _N 542 169 272 243.921 (217,235) (593 700) (603.818) (187,099) 821,810 9.011,636 8,451,576 8.026.407 7.857,46d 7.556.452 7.598272 7,174.017 6g1110 6,324.137 SM09 5,551,725 Total-kwh t000's)

Maumum net hourly demand in 1.286.000 1 255.000 1.165,000 1,161.000 1,106300 1,090.900 1,116.800 1.016.700 964.700 897,100 864,100 kilowatts (winter)

Maumum net hourly demand in 2,097.000 1,980.000 ;,9 0.000 1,902.700 1.907 200 1,757,300 1.675.700 1.57 9 00 1.498.900 1,408.800 1,276,100 kilowatts (summer)

Net generating capabihty in 2,560,000 2,641,000 2,361,006 2334.000 2218.000 2224.000 1,813,000 1,684.000 1,686.000 1.694.000 1214.000 k w isummer)

Net purchased capacity in kw (summer) 95,000 (101.000) 118.000 100.000 148.000 (25.000) 163,000 172,000 45,000 (100.000) 289.000 Bru per net kwh qenerated 11.266 11,518 11.331 11.585 11.364 11,521 11,001 11.037 11.065 11.215 10.894 Utility Plant Gross additions (000's)

J_188.721 H58285 } 126.014 $ 89,818 L69,179 $J'8355 $ 70,170 $ 56213 $ 42.656 5 36.097 $ 64.856 e

Employee Data 2.726' 2,572 2.522 2,484 2,477 2,556 2.473 2,444 2393 2.314 2.255 Number of employees Decemtwr 31

$ 54.693 $ 56.380 $ 49,644 5 45305 $ 38,614 $ 40.068 $ 33.867 $ 31,665 $ 29332 $ 26255 $ 22.624 Salanes and wages (000 s)

Pensions and benehts t000's) 6,861 7.878 7.132 6.487 5358 5,870 4285 3,430 3,178 2.790 2,895

$ 61,554 5 64.258 $ 56.776 LS1792 $ 43.972 $ 45,938 $ 38,152 5 35,0951_32,510 $ 29.045 5 25,519 2

' includes 214 temporary employees required for completion of construction project.

l l

l 29

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k Robert A. Olson Kenneth G. Hovland

's Robert K. Zimmerman Er

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Cyrus S. Eaton, Jr.

Herbert H. Wilson l

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g Byron T. Shutz Dutt n Brookfie d

Directors Officers and Executives

/

Dutton Brookfield

• Robert K. Zimmerman President Chairman of the Board and

's Unitog Company Chief Executive Officer

-industrial uniforms D@

Atthur J. Doyle President e-President Kenneth G. Hovland Cyrus S. Eaton, Jr.

Chairman Senior Vice President he*v*ehd Donald T. McPhee io Vice President-System Power

-mining, investments and Operations international trade William D. Grant

• Stanley G. Jameson Chairman of the Board Vice President-Transmission and 4

and Chief Executive Officer Distribution System Operations fy Business Men's Assurance John A. Mayberry r

Company of America Vice President-Commercial

-insurance Operations Arthur J. Doyle Kenneth G. Hovland Senior Vice President J. Robert Miller Vice President-Administration Robert A.Olson*

Honorary Chairman of the Board Louis C. Rasmussen

-retired Vice President-Corporate Byron T. Shutz' Planning and Finance Honorary Chairman of the Board I

The Byron Shutz Company Donald M. Landes Vice President-Communications Q=

<j -

-realtors and mortgage

'M?

Richard W. Fisher Willis C. Thels Controller Chairman of the Board

' v Simonds-Shields-Theis Grain Lee F. Miller Company Treasurer

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2, Chief Executive Officer General Counsel

-grain merchants Clare Den Haerync.k

[

and warehousemen

• • Y Robert K. Zimmerman*

Chairman of the Board and Samuel P. Cowley

• Member of Executive William H. Miller Committee Director of Human Resources William D. Grant Advisory Directors E

Joseph F. Porter, Jr.

Herbert H. Wilson

'E 31 l

l Willis C. Theis

Thc Company Kansas City Power G Light Company, a 2,150 who are represented by three local

(

Missouri corporation, is an electric utility bargaining units of the international Brother-engaged in the generation, transmission, hood of Electrical Workers.

distribution and retail sale of electricity to Five power stations with a total net in-334,000 customers who reside in 94 com-stalled capacity of 2,560 megawatts form the munities in 23 western Missouri and eastern generation system. Within Kansas City are Kansas counties. The Company also serves the five-unit,760 megawatt coal-fired at wholesale eight communities, three Hawthorn Station; the 70 megawatt Grand electric cooperatives and two utilities.

Avenue Station which also provides steam The Company's 4,700-square-mile service service tc 260 downtown buildings; and area has a population of about 1,000,000.

Northeast Station, which generates 80 Missouri customers account for about 75 megawatts from oil or gas in four older units, per cent of total kilowatt hour sales, and nd 398 megawatts from eight combustion Kansas,25 per cent.

Peaking turbines.

Metropolitan Kansas City, source of more Outside the city at mine-mouth locations than 90 per cent of Company revenues,is a are the three-unit Montrose Station, which regional commercial center for wholesale, has a capacity of 527 megawatts, and the retail and service companies and is also a jointly-owned La Cygne Station. Our 50 center for grain marketing and for air, rail Per cent share of La Cygne's two-unit capacity and truck transportation. Kansas City leads is 725 megawatts.

the nation in greeting card and envelope The Company also owns 70 per cent of the production, farm equipment distribution, 650-megawatt latan 1 generating project and frozen food storage and distribution, hard half of the 1,150-megawatt Wolf Creek nu ' ear winter wheat marketing, underground generating project, scheduled for completion storage space and Foreign Trade Zone in 1980 and 1983, respectively. WYMO Fuels space. It ranks second nationally in auto-inc., a wholly-owned subsidiary, and Utility mobile assembly, freight car handling, grain Fuels Inc., owned equally with KGGE, were storage and wheat flour production.

developed as fuel suppliers for these projects.

Kansas City's diversified economy includes The Company participates in the MOKAN a large steel mill, and significant metal fabri-Power Pool, a regional organization designed cating plants. Kansas City is also a growing to enhance reliability and economy in the convention and entertainment center.

operations of its electric utihty members.

Company securities are held by 33,300 The Company has 345-Kv interconnections common; 5,900 preferred and 8 preference with utility systems in Missouri, Kansas, shareholders The workforce totals some Nebraska, Iowa and Minnesota, and 161-Kv 2,650; 500 management employees and interconnections with neighboring utilities.

i Dountoun Kansas City. Missourt.

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KANSAS CIIY POWER 6 LIGHT COMPANY 1330 Baltimore Avenue Kansas City, Missouri 64141 l

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EXHIBIT III j

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i KANSAS ELECTRIC POWER COOPERATIVE, INC.

l TOPEKA KANSAS l

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EXAMINATION REPORT FOR THE PERIOD JANUARY 1.

1978 TO DECEMBER 31.

1978 i

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l SCHMIDT & COMPANY CERTIFIED PUBLIC ACCOUNTANTS KANSAS CITY. MISSOURI t

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i KANSAS ELECTRIC POWER COOPERATIVE, INC.

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Topeka, Kansas t

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i EXAMINATION REPORT For The Period

'f January 1,1978 to December 31, 1978 l

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4 Kansas Electric Power Cooperative, Inc.

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Topeka, Kansas INDEX Page Trustees, Alternates and Executive Committee...................

1 Accountants' Report...................................................

2 Exhibit A Balance Sheet as of December 31, 1978..................

3 Exhibit A-1 Comparative Balance Sheet December 31, 1977 and December 31, 1978................

4 Exhibit A-2 Statement of Changes in Financial Position S tat ement of Changes in Working. Capi t al................

5 Exhibit B Utility Plant..........................................

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H i s t o ry a nd Org a ni za t i on..............................................

7 Balance Sheet Comments...............

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1 Kansas Electric Power Cooperative. Inc.

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Topeka, Kansas BOARD OF TRUSTEES Cooperative Trustee Alternate Altamont, Kansas L. G. Dulavey Lester Murphy, Jr.

'Belleville, Kansas Everett L. Ledbetter F. J. Raleigh Burlington, Kansas Dean Martin Alfred Meyer 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 Tischhauser t

Dodge City, Kansas Ray Sprenkle Ralph V. Sherer El Dorado, Kansas Wilbur C. Reed Wayne Seward Ellsworth, Kanaas A. D. Paull

. Larry D. Kilian 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 Horton, Kansas Dale Bodenhausen Alva Amon Hutchinson, Kansas Wesley Nunemaker Curtis Stubbs Iola, Kansas Wesley R. Clendenen Elmer Nichols Lindsborg, Kansas Verner E. Lundquist Gilbert Bengston.

Mankato, Kansas Clarence Beck Jim Gouldie Meade, Kansas Otes Allison H. L. Murphey McLouth, Kansas W. A. Ousdahl Fred Johnson Norton, Kansas Phil Lesh Lynn Morford Pratt, Kansas Robert Ahrens Frederic Moore Solomon, Kansas James F. Schmidt William McCallum Wamego, Kansas Kenneth L. Erickson Lester Marten Wellington, Kansas Max Kolarik Garland Price EXECUTIVE COMMITTEE Charles W. Ellis President James F. Schmidt Vice-President Phil Lesh Secretary Allen D. Paull Treasurer Max Kolarik Otes Allison

.Wilbur Reed 1

-MANAGEMENT Charles Ross Executive Vice-President SCenstOT S COuramf. CE48+EO NeuC 4CCOUmf 4='t a

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i S CH MI DT & COMPANY m

CERTIF"IED PUBLIC ACCOUNTANTS m r waeos s' 4EE.7 KANSAS CITY, MISSOURI 64108

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f runwnw OF Ct eT*f eE D e*'JSt eC accountants (M ) 48

""'*1 January 29, 1979 Board of Directors Kansas Electric Power Cooperative, luc.

Topeka, Kansas l

Gentlemen:

We have examined the balance sheets of the Kansas Electric Power Cooperative, Inc.

Topeka, Kansas as of December 31, 1978 and 1977 and the related statements of l

changes in financial position for the years then ended. Our examinations were made l

in accordance with generally accepted auditing standards, and accordingly included m

such tests of the accounting records and such other auditing procedures as we l

l considered necessary in the circumstances.

In our opinion, the financial statements referred to above, present fairly the l

financial position of the Kansas Electric Power Cooperative, Inc., Topeka, Kansas, at December 31, 1978 and 1977, in conformity with generally accepted accounting principles applied on a consistent basis.

SCHMIDT & COMPANY l

l W. G. Schmidt, Partner tO v

9C'em0f a cens*any, ef 9'af 'E O PvAC aCCoumf ants

3 Exhibit A Kansas Electric power Cooperative, Inc.

p ks Topaka, Kansas PALANCE SHEET December 31, 1978 ASSETS AND OTHER DEBITF

,i Plant General plant 24,112.72 Less: Accumulated depreciation 11,269.37 Depreciated Value 12,843.35 Investments Equities in other organizations 9,880.50 Current Assets Cash 7,755.67 Accounts receivable 17,439.29 Prepaid expenses 1,440.17 Total Current Assets 26,635.13 Deferred Debits

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Organization expense 1,067.50 Research and development 1,873,827.61 Total Deferred Debits 1,874,895.11 TOTAL ASSETS AND OTHER DEBITS

$1.924,254.09 MEMBERS' EQUITY AND LI ABILITIES Capital Equities Memberships 2,700.00 l

Current Liabilities Notes payable (CFC)

$ 1,352,000. 00 Accounts payable 10,602.62 Accrued property taxes 1,013.59 Accrued withholding tax 635.40 Employee savings 21.88 Total Current Liabilities 1,364,273.49 Deferred Credits Advances for research and development 557,280.60 TOTAL MEMBERS' EQUITY AND LI ABILITIES

$1.924.254.09

,CeseenDT 4 Cots #Amt, Cle?'PhED POSLeC ACCous? Asst $

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Exhibit A-1 I

Kansas Electric Power Cooperative, Inc.

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Topeka, Kansas C(BIPARATIVE BALANCE SHEET December 31 December 31 Increase 1978 1977 (Decrease)

ASSETS Plant General plant 24,112.72 22,524.54

$ 1,588.18 IArss : Accumulated depreciation 11,269.37 6.756.67 4,512.70 Depreciated Value 12,843.35 15,767.87 (2,924.52)

Investments Equities in other organizations 9,880.50 3,649.50 6,231.00 Current Assets Cash 7,755.67 2,648.12 5,107.55 Accounts receivable 17,439.29 17,489.11 '

(49.82)

Prepayments 1,440.17 1,347.67 92.50 Total 26,635.13 21,484.90 5,150.23 Deferred Debits 1,874,895.11 1,502,832.67 372,062.44 TOTAL ASSETS

$1.924.254.09

$1.543.734.94

$380. 519.15 (my MEMBERS' EQUITY AND LI ABILITIES Capital Equities Memberships 2,700.00 2,700.00

$ Current Liabilities Notes payable 1,352,000.90 860,000.00 492,000.00 Accounts payable 10,624.50 26,837.05 (16,212.55)

Accrued taxes 1,648.99 1,312.04 336.95 Total 1,364,273.49 888,149.09 476,124.40 Deferred Credits 557,280.60 652,885.85 (95,605.25)

TOTAL MEMBERS' EQUITY AND LIABILITIES $1.924.254.09

$1.543,734.94

$380. 519.15 OO

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i Exhibit A-2 Kansas Electric Power Cooperative, Inc.

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Topeka, Kansas STATEMENT OF CHANGES IN FINANCI AL POSITION For The Year 1978 FUNDS RECEIVED Loans from CFC

$492,000.00 Total Funds Received

$492.000.00 FUNDS APPLIED Office furniture & equipment

$ 1,588.18 Increase in working capital 21,025.83 Research & Development:

Per Exhibit A-1

$372,062.44 Add:

Member advances applied 95,605.25 Capital credits applied 6,231.00 473,898.69 Deduct:

Depreciation included 4.512.70 Funds devoted to research 469,385.99 O

TOTAL FUNDS APPLIED

$492.000.00 STATEMENT OF CHANGES IN WORKING CAPITAL INCREASE IN WORKING CAPITAL lucrease in cash 5,107.55 Increase in prepaid expenses 92.50 Decrease in accounts payable 16,212.55 Total

$ 21.412.60 DECREASE IN WORKING CAPITAL Decrease in accounts receivable 49.H2 Increase in accrued taxes 336.95 Total 386.7_7_

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SCommOf 4 Conspasev. CE**** ate #veuC ACCousevaasts

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Exhibi t B Kansas Electric Power Cooperative, Inc.

Topeka, Kansas s,

UTILITY PLANT l

Balance Balance 1-1-78 Additions Reti rements 12-31-78 General Plant Transportation equipment

$14,538.92

$ $ $14,538.92 Office furniture & fixtures 7,985.62 1,588.18 9,573.80 Total 22,524.54 1,588.18 24,112.72 Depreciation l

Transportation equipment (1) 5,309.89 3,634.73 8, 9t.4. 62 Of fice furniture & fixtures (2) 1,446.78 877.97 2,324.75 Total 6,756.67 4,512.70

-0 11,269.37 Depreciated Value

$12.843.35 i

(1) 25% declining balance e

(2) 10%

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7 History and Organization Articles of Incorporation adopted by six electric distribution coQperatives of i

Kansas were filed with the Secretary of State, February 13, 1975 for the incorporation 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 with perpetual existence.

Bylaws of the corporation do not reatrict membership to electric cooperatives.

Each active member has a representative on the Board of Trustees. The membership fee is $100 and at audit date the corporation had twenty-six active members.

Balance Sheet Comments Plant Exhibit B, page 6 of this report pre-General plant

$24,112.72 sents a detailed statement of general Less: Depreciation 11,269.37 plant f acilities and changes in the Depreciated Value

$12 843.35 t

plant accounts during 1978. Acquisi-l tions include two calculators, two desks, two chairs and two bookcases.

l Investments Equities in other organiza-I i Equities in other organizations

$9,880.50 tions include the following:

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National Rural Utilities Cooperative Finance Corporation j

Washington, D. C.

Membership

$1,000.00 Capital credits 8,778.00 $9,778.00 Kansas Electric Cooperatives, Inc.

Topeka, Kansas Membership 10.00 National Rural Electric Cooperative Association Washington, D. C.

Membership 10.00 Federated Rural Electric Insurance Corporation Madison, Wisconsin Preferred stock H2.50 Total

$9,880.50 l

Cash The general fund of the coopera-Working fund 50.00 tive is in the custody of the

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g' Fairlawn Plaza State Bank, 6

Topeka, Kansas. We examined all checks honored by the bank during 1978 and traced the checks to detailed computer

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li s ti ngs. Special attention was directed to authorized signatures and to classifi-cation of the expenditures. We reconciled the bank statement with the cooperative's l

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8 books and compared our reconciliation with one prepared by the cooperativo.

Particular attention was directed to the outstanding checks at the beginaing and

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end of the yeart Written confirmation of the bank balance was obtained from the bank, a member of the Federal Deposit Insurance Corporation.

Accounts Receivable

$17,439.29 We reviewed the subsidiary

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ledger of accounts receivable and determined it was in balance with the ledger control account. Accounts re-n ceivable consist primarily of expenses incurred by KEPCo assisting its members in i

wholesale rate cases and travel advances to KEPCo staff members:

Member cooperatives Less-than thirty days old

$14,611.15 k

I Thirty to ninety days old 506.73 Over ninety days old 1,967.60 L

17,085.48 l

Due from KEC 353.81 Total

$17,439.29 f

i Negative confirmation requests were mailed to the extent deemed necessary.

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Prepaid Expenses Insurance policies were i

U linexpired insurance

$ 640.17 examined and the unexpi red Travel advances 800.00 insurance premi ums computed.

$11A0L7 4

Total 2

We li sted the policies, ob-served they were made payable to the cooperative and ascertained all were in ef fect at audit date.

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9 The type of insurance and the amount in effect at audit date were as follows:

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Amount T m of, Insurance V

General public liability Bodily injury

$500/1,000,000 Property damage 200/200,000 Workmen's compensation Statutory Fidelity insurance (blanket crime) 50,000 Automobile Bodily injury 500/1,000,000 Property damage 203,000 Collision

$100 deductible Fire and extended coverage Contents of rented office 7,500 Travel advances included:

Joe Hamman

$150.00

0. W. Taylor 150.00 Jerry Haahr 150.00 Dave Larson 50.00 Joe Mulholland 150.00 Hoburg Lee 150.00 Total

$800.00 Deferred Debits Kansas Electric Power

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Organtration expense 1,067.50 Cooperative, Inc., was Research & development 1.873,827.61 Total

$1. 871. 895.11 additional power. The cooperative selected Southern Engineering Company to provide engineering services and the firm of Kassebaum and Johnson to provide legal services.

It is hoped that this effort will result in acquisition of generation capacity and transmission capabilities in cooperation with other utilities in the state. Costs have been incurred with a number of projects and four projects are involved at audit date, Financing of these projects is provided by member assessments and by short-term loans f rom National Rural Utilities Cooperative Finance Corporation (CFC),

Washington, D, C.

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Until it is determined whether actual construction results from the effort, costs

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are being deferred and consist of the following as of December 31, 1978:

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Research Projects KCPkL KP&L KGE Hydro CTU Labor S 563.85

$ 300,888.22

$ 1,499.83

$ 45,334.03 Payroll taxes 10.48 27,188.71 90.95 4,736.62 Employee benefits 81.29 38,653.84 240.40 5,862.18 Travel 435.79 49,526.71 96.10 9,407.09 Public relations 347.71 2.07 Rent 42.79 9,629.20 91.89 2,119.76 Building costs 35.73 10,355.35 70.34 1,991.56 Leasing & maintenance 14.34 8,994.27 62.84 2,096.35 Depreciation 30.70 19,240.60 90.23 5,946.35 Insurance 7.05 2,170.93 21.07 473.20 Property tax 7.91 3,010.65 71.14 735.02 Meetings 23.65 84,427.37 4,618.38 Engineering 351,131.27

-02 14,722.56 Computer 25,594.57 Supplies 31.65 17,264.26 54.28 2,625.32 Postage 24.64 9,979.79 82.24 1,545.73 Telephone 45.27 19,672.85 132.13 3,355.82 Legal 275.00 509,380.67 5,134.60 Contingencies 725.00 Subscripti ons 87.00 3,648.33 232.43 es Interest 179.96 153,424.90 423.31 863.93 k,)

Auditing 1,300.00 m Personnel costs 5.35 75,173.27 11.05 11,743.26 Consultants 234.82 15,879.82 7,500.00 Total ($1,873,827.61)

$2.484,98

$1 737.258.58

$10.539.86

$123. 544.19 1

Capital Equities Membership certificates have Memberships 42,700.00 been issued to twenty-seven cooperatives in Kansas. One member dropped its membership but the fee was not refunded.

Current Liabilities We examined invoices paid Notes payable

$1,352,000.00 subsequent to the audit date, Accounts payable 10,602.62 made inquiries concerning Accrued property tax 1,013.59 Accrued withholding tax 635.40 possible unrecorded liabili-Employee savings 21.88 Total

$1.364.273.49 the cooperative's attorneys, i

the association had no contingent liabilities at audit date.

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The cooperative has a line of credit with the National Rural Utilities Cooperative Finance Corporation (CFC) in the amount of $2,500,000.00 and at audit date had 1

borrowed $1,352,000.00.

Interest on the short-term loan varies monthly with market l

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and at December 31, 1978 was 11.75%.

The line of credit is arranged on a yearly

[')l to CFC for any amounts basis and both the line of credit and any amounts advanced become due

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1 March 23, 1979 Members of KEPCo have guaranteed payment advanced to KEPCo plus interest. We obtained written confirmation of the notes 1

payable to CFC at audit date.

Interest is paid quarterly, Inasmuch as KEPCo is operaten under common management with KEC, overhead costs incurred by KEC applicable to KEPCo are billed to them at the end of each month.

The amount billed and unpaid at December 31, 1978 amounted to $10,602.62.

PJoperty taxes payable represent one-half of the 1978 taxes assessed per statements on file in the cooperative's office. Withholding tax was withheld from employees during the last quarter of 1978 and is payable to the State of Kansas.

Deferred Credits Advances for research a development

$557,280.60 Capital for KEPCo, formerly KEC's power and energy department, is provided by member assessments and by short-term loans from CFC.

One agreement provided for five assessments of $600.00 per member

(~N plus $0.15 per KWH sold by the member in 1972. Sunflower Electric Cooperative and i'ts members are to pay 75% of this amount.

The other agreement provided for assessments of $0.25 per KW.

The first agreement was to prcvide funds to operate the department, while the second was to fund engineering, legal, etc. costs involved in negotiations with other utilities.

In 1976 the Board of Directors of KEPCo charged $96,649.40 of deferred research and development costs against capital derived under the first agreement and in 1978 KEPCo charged another $95,605.25 against advances provided by members.

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KEC administrative funds.(seven assessments)-

$140;143.50 Less: Board action 1976.

$96,649.40 Assessment not paid.

646.00 Board action 1978 42,848.10 l

$140.143.50 h

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Engineering, legal, etc. (seven assessments)

$610,037.75 l

Less: Board action in 1978 52,757.15 i

i Balance December 31,1978

$557.280.60 j

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