ML20076D788
| ML20076D788 | |
| Person / Time | |
|---|---|
| Site: | Wolf Creek  |
| Issue date: | 03/01/1983 |
| From: | Doyle A KANSAS CITY POWER & LIGHT CO. |
| To: | |
| Shared Package | |
| ML20076D771 | List: |
| References | |
| NUDOCS 8305230572 | |
| Download: ML20076D788 (46) | |
Text
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I KANSAS CITY POWER & LIGHT COMPANY 1982 ANNUAL REPORT 1982 et a Glance Table of Contents o implementation of KCPLAN starts Letter to Shareholders 2. 3 o Recession. milder weather depress kwh sales KCPL AN Update 4-6 o Earnings dechne 65 cents to $418 per share Corporate and o Electric and steam rates increase in Missoun Operat:ng Review 7-11 o Rate increases sought in Missouri and Kansas Financial Statements 12-20 o Wolf Creek operation targeted for 1985: total cost projected at $2 4 billion Management s Discussion e Five-year construction budgeted at $5391 milhon and Analysis of Financial e 1983 construction and operating budgets cut $33 millinn Condition and Results o Management changes consohdate corporate structure of Operations 21,22 Supplementary Financial information 23.24 Fin ncial Highlights Dividends and Stock Percent increase Pnces 25 1982 1981 (Decrease) Eleven-year Summaries and Selected Total operating revenue (000s) $ 485.629 $ 471.711 30 Financial Data 26.27 Eamings available for common (000s) S 62,748 $ 65.397 (4.1 ) Average number of shares 15.006.912 13.535.149 10 9 Per common share: Earnings S 4.18 $ 4 83 (135) Dividends S 3 01 S 2 825 65 Book value S 32.94 S 33 37 (13) " 9 mef a a ns Net AFDC* $ 3.75 S 310 21.0 contained herein. has been Dividend payout (%) 72 58 24 1 prepared for the goneral Construction expend.tures (000s) 153.160 133.980 14 3 information of shareholders Total utitty plant in service (000s) S 1.321.085 $ 1.308.202 1.0 of Kansas City Power & Light Construction work in progress (000s) S 709.963 5 536.608 32.3 Company and is not intended Return on year-end common equity (%) 11.7 14 2 (176) to induce. or for use in con-nection witn. any safe, offer Capitalization (% total) for sa!e. or sol 1citat<an of an Long-term debt 49.3 51.4 (41) offer to buy any secunties of Common equ:ty 36 0 35 7 .8 the Company Preferred and preference stock 14.7 12.9 14 0 Select .d Statistics Annual Report on Form 10-K Kilowatt hour sales (000s) 8.072.030 8.318.509 (3 0) Peak load - summer (kw) 2.167.000 2.123.000 2.1 Copies of the Company's I Peak load - winter (kw) 1.315.000 1.304,000 8 annual report to the Securi-l ties and Exchange Com-Fuel mix (%) mission on Form 10-K will Coal 96 0 96.1 ( 1) be provided without charge Oil .7 .5 400 to any shareholder or bene-f Natural gas 33 34 (2.9) ficial owner of shares of the l Average fuel cost (cents /million Btu) 1389 123.9 12.1 Company's stock upon l Number of employees 2.957 2.928 1.0 written request to Samuel P. ! Number of stockholders 50.048 46.614 74 Cowley, Secretary, P.O. Box l 679, Kansas City, Missouri l
- Allowance for funds used dunng construction net of associated deferred income taxes 64141.
1
To the Shareholders: There were other noteworthy 1982 accomplishments in May 1982, as the Company commenced its 100th year in our customer relations efforts. A positive change in of electnc service to the pubhC. We were honored by receiving Customer attitudes toward the Company and our electnc service from the Ed: son Electric Institute its most prestigious recognition: rates, as confirmed by professional surveys was achieved THE 1981 EDISON AWARD. Its citation is reprinted on the inside through a straightforward communications program. It demon-front cover of this Report strated f actually there has been no appreciable increase in the realprice of KCPL's residential electric service since its low The Award recognizes the Company's development. in point in 1969. compared to significantly higher increases 1981 of our long-range flexible strategy "to continue to meet the in Social Secur!!y and wage rates and dramatically higher electric requirements of our customers in a reliable manner increases in gasofine and natural gas and on a least-cost basis through the year 2000" It specifically notes that this strategy was developed by Company planners A Dollar-AIDE Program was developed and established in concert with a 17-member Citizens Advisory Group. by the Company to assist the truly needy in paying deknquent energy bills to avoid cut-off of energy supphes. regardless of Our multi-facet strategy. called the KCPLAN. focuses on fuel source. Our Program triggered implementation of several two basic objectives:(a) to minimize summer-peak electnc load other local programs with the same objective With the help of growth and thereby defer as long as possible the construction moderate winter temperatui es these programs. in the aggregate, of costly new generating add;tions; and (b) to promote the off-have been highly successful peak use of electric energy and thus improve year round economic utikzation of the Company's system facihties in the system power operations arena we were pleased with the outstanding performances of our newest generating During 1982. we began to implement the KCPLAN and units La Cygne 2. a 630-Mw coal-fired unit completed in 1977. much has been accomplished: operated 172 consecutive days at 100% availability and fatan. o Pilot testing began on a two-way electronic communications a 670-Mw coal-fired unit completed in 1980. concluded on system desigred to cycle customer air coohng compressors. January 14 of this year a continuous run of 230 days at read customer meters. detect service tarnpering. effect 100% avadabihty service connections and disconnections and assess system One small but important segment of our business is our storm damaoe. steam service which the Company makes avadable in the o An understanding was reached with other participants in the heart of the central business district in downtown Kansas City. MANDAN Project which wdl provide to the Company during summer months 100 Mw of seasonal electric power from the in late 1982. we entered into a contract with CPC International under which KCPL will provide interruptible steam service at its winter-peaking Manitoba Hydro Electnc system in Canada Grand Avenue Station property bne to Corn Products which will for a 20-year penod commencing in the late 1980s. transmit the steam across the Missouri River to its industrial o Under a new long-term arrangement effective later this year, pl nt in North Kansas City This arrangement wdl triple the Associated Electnc Cooperative, a regional winterweaking Company's steam heat sales from Grand Avenue Station and system. will provide to the Company during summer months Pf0 Vide an ooportunity for continued operation of our steam some 40 Mw of hydro-peaking capacity. . service on a prof; table basis and at competitive costs in our o Since 1980. natural gas rates in the Kansas City area m jor downtown service area doubled and both the electric heat pump and its add-on retro version became cost-effective alternatives to natural gas furnaces for space heating The Company has now launched a significant educational and marketing program to encourage and promote the use of electric space heating and has apphed to both the Kansas and Missouri regulatory commissions for authonty to reduce cur effective residential electric space heating rates from 3.74C and 322c per kwh. respectively, to 3C per kwh. 2
s Such cash conservat;on efforts are essential to accommo-date the Company's overall construction program (exclud:ng nuclear fuel) now estimated at $539 million for the f:ve years
< through 1987 (two-thirds of which is targeted for the next two years) About 40% of this cash requirement will be needed for completion of Wolf Creek Nuclear Station The commercial operation date of that project has been delayed approximately ,
# one year to the spring of 1985 This delay wil! increase the cost of the Company's 47% share of the 1.150-Ma unit to $1.1 b: Ikon.
- t. which includes about $750 milhon in cash construction costs and $330 milhon in net AFDC Upon commercial operation of the Wbtf Creek unit, the Company will face the need for signifi-cant electric service rate increases to cover the capital and operating costs of this major plant addition.
Per share earnings for 1982. based on 15 mdhon average additional shares outstand.ng were S418 compared to $4 83 in 1981, w:th respective contnbutions from net AFDC of $3 75 and Arthur J. Doyle
$310 The Board of Directors on November 2 increased the quar-General economic cond1tions and milder than normal terly common stock dividend by five cer,ts a share from 74 summer weather dunng 1982 were mainly responsible for a 3%
cents to 79 cents. or $316 annua!!y It was the 23rd increase in dechne in kwh sales Ga:ns of 149o in residential and 2 7% in 25 years commercial kwh sales were offset by a 15 8% dechne in kwh sa!es to industnal customers. which dechne was pnncipally To accommodate future organizational needs. four cor-related to a 33% reduction in electnc steelmaking operations at p rate groups were established effective January 1.1983. each Armco. Our largest customer. and. to a lesser extent. the clos _ headed by a senior vice president. including System Dower Operations. Dona!d T McPhee Finance and Commerce. Louts ing of Amoco Oil Company's Sugar Creek refinery. Excluding these two industnal loads the Company's total kwh sa!es for C Rasmussen. Transmission and Distr:bution System Opera-1982 would have shown approximately a 1% increase over 1981. tons. J Robert Mmer. and Corporate Affairs. Samue! P Cowley in add. tion. three new vice pres: dents were appo:nted by the Because of cont:nuing econo.mc recession and inadequate Board A. Drue Jennings. who is also General Counsel. rate reket. commencing in August 1982. we replaced our on-J Michael Evans - System Power Operations: and Ronald G going Cost Awareness Program with a more severe Austenty Wasson - Purchasing Program, including immed: ate cuts in travel and overtime Many of these matters. together with add.t:onal comments expenses and a hinng freeze Also. planned construct on on the year and the Company's future d.rection. are d;scussed expend:tures for 1983 were reduced $235 milhon and to a greater extent in the fo!!owing paces of this Report budgeted operat,ng expenses were cut $3 milhon, both in areas which w:ll , nnpa.r service rehabihty Other key actions taken March 1.1983 in 1982 wd resu't in add;tional operating cost reductions, includ- For the Board of D: rectors ing hmiting operations of Grand Avenue Station and the older Hawthorn units 1 through 4 to summer peaking duty, saving
$6 5 milhon annua!!y: and. revision of coal contracts which wd!
b 3 l reduce coalinventones at Hawthorn and Montrose Stat!ons. O 4-saving an estimated S700.000 initially and $75 milhon over the contract penod through 1996 ( Chairman of the Board and President 3
r KCPLAN: A Status Report generating capacity. our residential rates have increased only 160 percent This compares favorably to the 165 percent in 1982, the Company began early phases of the KCPLAN, increase in the Kansas City Consumer Price Index. As shown its new strategy for meeting customers' electric requirements in in this recent advertisement published in Kancas City news l a reliable manner and on a least-cost basis through the year media. Other comparative increases during the same period ! 2000. The plan was developed by Company system planners were 264 percent gaso'ine: 688 percent residential natural gas; i working with a 17-member citizens advisory planning group. 228 percent Social Security benefits; and 208 percent in Kansas I which continues to function in a consulting capacity. City area production worker wages. The targets of this strategy are to manage and restrain peak load growth in order to defer as long as possible construc-tion of new generating capacity. the largest single component Are electric rates f00 hi h? E of increased rates; and to promote off-peak electricity usage COMSider theSe COmpar/ SONS! to improve utilization of existing capacity and minimize KCPL's = m aa ,e g am i average cost per kilowatt hour (kwh) and electric rates l9 =1iflM:5 M T W b-, g- 9 **'d* MM W=3=3 2 n E R :3 = == y M m i.=T. Present System Conditions .q m= MEsg:.p The Company is a summer-peaking electric system with p;E g i 7=- EQ t gg.g
- c. -
a 1982 peak load of 2,167 megawatts (Mw) and winter peak of M .R ; j = x "W 1.315 Mw. With an accredited installed summer capacity ":2 M M~l i of 2.774 Mw. our 1982 reserve was 607 Mw. or 28 percent. M7 l About 75 percent of that capacity or 2.064 Mw. is base-load, N.Mi , coal-fired generation with an average age of 10 years; 12 5 5^ !
@R percent. or 340 Mw. is summer peaking coal and/or gas-fired l Older generation; and the remaining 370 Mw is oil-fired com- @jM '
bustion turbine peaking capacity installed in the 1970s. The Ps M ' l annual fuel mix is about 96 percent coal, three percent natural N:.: t i gas and less than one percent oil. With commercial operation W-W , j of Wblf Creek targeted for 1985. the annual coal requirement will then drop to 75 percent of the fuel mix with nuclear providing M-{ TC_. . l j i 22 percent. J=; , After a dozen years - 1969 to 1980 - of having multrple '5 :0 , generating units simultaneously under construction, KCPL's ! only major construction project is the Wolf Creek nuclear l generating unit. With no further generating additions planned , I for completion prior to 1994. KCPL's construction budget will Jl drop off after 1984 and continue at relatively low levels for several years therea*ter. Rediscover the value at electricity, f(Gl.s l Load Characteristics As a regional commercial center. our customer kwh mix l includes high residential (29 percent). and commercial (41 Under the theme," Rediscover the value of electricity," an adver- ) l percent) and low industrial use (24 percent) KCPL's system tising program was developed last fall in response to customer i today has very little electric space heating load, the historical surveys indicating a growing negative attitude toward higher ) energy prices, including electric rates. This advertisement, availability and low cost of natural gas have encouraged its updated with year-end strtistics, appeared for six weeks in the widespread use for space heating. Kansas City Star /Tl nes in tandem with sirollar messages on While the amount of efectricity to serve fan motors on gas- television and radio. fired furnaces is significant, it is small in comparison to the summer electric demands for air cooling during heat storms prevalent in the midwest. Off Peak Sales Opportunities For these reasons. the annual electnc load characteristics 11 is estimated that in the Kansas City area natural gas of our customers are such that KCPL's system is impacted by rates will double by 1986 and triple by 1990 as compared to its high needle peaks during summer heat storms and relatively 1981 costs. Now, the electric heat pump is fully competitive with l low winter usage resulting in an annual system load factor of natural gas for space heating in the Kansas City area l less than 46 percer" compared to a 1981 national average of These factors - adequate and relatively new base-load l about 61 percent. generating capacity ample reserve margins. a low system ) Our studies indicate that by increasing the use of our load factor. high summer and low winter peaks. historica!!y sta- 1 installed generating capacity. thus spreading fixed charges ble electric rates in realterms. and projected scanng gas rates )' over a greater number of annual kwh sales. we can reduce our - present significant opportunities for the Company in the average cost of service about one percent for each one future. When combined with our favorable fuel mix and low percentage point increase in annual load factor. cost long-term coal supplies and nuclear generation availability. In the last 13 years, while KCPL's coat costs per million Btu the opportunity exists to develop major off-peak loads requiring have increased some 505 percent and we have completed no generating capacity add tions and to make substantial construction of some 1.600 Mw of installed base-load coal-fired improvements in KCPL's annual system load and equivalent capacity factors. l 1 4 j
)
-- _ _ - - ._ - . _ . _ _ _ _ _ _ _ - - - - - - - = _--
l i f Bzsic Elements provide KCPL with the capability of performing several cost- ' Under the basic elements of KCPLAN strategy summanzed effective remote control functions including the cycling of air below. the Company's next generating capacity addition. a cooling compressor units. automatic reading of existing cus-325-Vw share of a larger coal-fired unit, will be deferred until tomer meters for both demand and kwh. automatic service 1994. Based on normal conditions, which include the projected connections and disconnections, surveillance for meter tamper-average annual peak load growth of 2.8 percent through the ing, computerized assessment of storm damage and a related year 2000 on an unmanaged basis, this postponement will be program of service restoration. and other functions which can accomplished through: be facilitated by direct communication with customer facilities.
- Load management programs reducing the estimated annual Educational Programs and Rate Designs peak load growth to 2.2 percent by The KCPLAN projects the gradua! implementation of new
- Remote control cycling of customer central air cooling j
electric rate designs new under development, and educational compressor units; programs between the mid-1980s and 2000 to reduce KCPL's l
- Educational programs and rate design techniques to give system peak demand and thereby. Its future capacity require-customers appropnate pncing signals; and ments by 311 Mw. Use of demand rates ' provide the appro-
- Adoption of alternatives to new capacity add,tions, including priate price signal to the residential cust(
e Diversity power exchange arrangements with winter will be imple- t mented using existing customer meters n,. semand meters peaking electric systems; and by computerized automatic hourly readings through the e Refurbishment of existing older coal-fired generating units TWACS system. to postpone retirements and recapture derated capacity Educational programs to restrain customer peak load These actions. together with the active promotion of electnc demand through use of high efficiency appliances and equip-( energy for off peak usages, constitute the preferred strategy ment, and passive solar applications to promote the off-peak l of the KCPLAN. use of electric service were implemented in 1982. An aggressive Air Conditioner Cycling marketing program to promote the installation of heat pumps, l The system-wide remote control of residental central air including add-on heat pumps. to increase winter kwh sales, l cooling compressor units, beginning in the mid-1980s and began in late 1982. increasing gradually through the year 2000 will result in a in August, the Company filed with both the Missouri and [ permanent avoidance of 186 Mw of new generating capacity Kansas commissions to reduce the separately metered electric ! The technical feasibility of this element of KCPLAN was heating rate to a flat rate of three cents per kwh. demonstrated dunng the record-breaking heat storms in the This integration of educational programs, marketing summer of 1980 by a test conducted on the KCPL system. promotions, rate design changes and other load management After a comprehensive evaluation of available equipment. techniques, including the system-wide control of residential i by this summer we will have installed a 500-unit test of a centra air cooling compressors will restrain our annual peak remote control system called the Two-Way Automatic Control load growth to an estimated 2.2 percent, while improving System. or TWACS. This system will link our central office annual kwh sales growth to 3.6 percent, thus boosting our computer with each customer location by using KCPL's own annual system load factor to nearly 59 percent by the electric distribution conductors for the transmission of electronic year 2000. signals. In a single electronics package, the TWACS system will T
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~~ . has begun on Kansas resi-dences. This typical installa-
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n -,.,,w.., This newspaper advertise-h c [.,.,snmah ment and animated television o.a ; commercials were part of a
. program which launched the l
- consumer education effort for
[ the heat pump and add-on heat pump during 1982. t( k b m 8 YL g KCPL m 5
Se sonal Diversity Exchange eliminating the need for 686 Mw of new capacity Actual re-As a summer peaking system, the Company continued to habilitation will not begin until the late 1980s and is subject to negotiate seasonal diversity agreements with winter peaking more definitive engineering and economic evaluations prior utilities Under such an arrangement, each participant dekvers to initiating work on each specific unit to the other an agreed amount of its system capacity dunng its Summary off-peak season in exchange for an equivalent amount dunng These basic c!ements of KCPLAN will eliminate or post-the other's off peak season. Thus. each system is able to avoid pone the need for 1.400 Mw of new generating capacity by the construction of an equal amount of new generating capacity year 2000 and will permit deferral of any additional new gener-and make effective off-peak use of idle installed capacity. ating capacity until 1994. With a 325-MW share of new capacity The KCPLAN projects that seasonal diversity exchanges will p anned for 1994 and another in 1998. KCPL will be able to provide KCPL with 200 Mw of peak load capacity by the late meet its customer load requirements in a reliable manner. with 1980s- ample reserve margins and at least cost througn the year 2000. l These arrangements also permit each system to operate S nce the price of natural gas is expected to rise at a at an annual capacity factor greater than the annual load factor significantly greater rate than the price of electnc:ty, the cost imposed by its customer load profile. As a resu:t. KCPLs advantage of electric space heating will improve in the years to eouivalent system load factor is estimated to increase further come. In KCPL's system, electric space heating substitutes to about 63 percent. slightly above the present industry average. abun.jant coal and nuclear r. sources for diminishing and more The MANDAN agreement is r,ow in the drafting stage w:th expensive natural gas and fuel oil and provides more and effi-full participation by the Company The project involves construc- cient use of KCPL's instNed generating capacity throughout tion of a 500 kv transmission line by Nebraska Public Power the year l District to interconnect the winter-peak system of Manitob The KCPLAN proi3 cts an annual kwh sales growth through Hydro in Canada with midwest United States summer peak.ing the year 2000 of 3 6 parcent, down from our 1979 projection of systems. To participate. the Company would cnnstruct !ts own four percent. but signif cantly higher than our KCPLAN projection line to the Nebraska border interconnecting with the Nebraska of a 2.2 percent in anr ual peak ! cad grodh. Greater use of utihty which has entatively allocated 100 Mw of MANDAN electricity off-peak, est ecially for space heating. will spread seasonal darsity to the Company. KCPL's total annual fixed charges incurred to meet its annual The Company has also entered into an agreement in pnn- summer peak demand over a greater number of annual kwh ciple with Associated Eiectnc Cooperative. Inc for a similar sales. This basic element of the KCPLAN will minimize KCPL's type seasonal exchange arrangement which is expected to average kwh cost to the public pmvide the Company with up to 40 Mw of summer peaking For stockholders. the absence of major new construction capacity beginning in 1983- will minimize KCPL's financing requirements. avoid equity dilu-Rshabilitation tions enable internally generated funds to reduce outstanding By the 1990s. based on normal wear and tear of units. par- debt and permit KCPL to achieve its capitalization goal of not ticularly those burning highly corrosive and abrasive local less than 40 percent common equity Additionally. with the ceals, we expect significant capacity deratings in the future. projected annual system load and capacity factor improvements. Based on prehminary engineering studies in 1982 conf;rming KCPL will have the opportunity to stabikze and improve its the feasibihty and cost-effectiveness of this program. several earnings and coverages essential to regain credit ratings and older generating units are targeted for rehabilitation. thereby earn a fair and adequate rate of return for stockholders. 1 Manitoba Hydro's Kettle l " Generating Station on the l E - Nelson River is the province's
. _ . _ . _ . 7.4 largest hydroetectric facility
- with a capacity of about 1,720
*^~ , . . 3 megawatts. The unit is part of M the Canadian utility's system x: # ~-
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ih* ' dQ w ' d for hamessing electric power
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l from several rivers in Manitoba. l 4 Under the MANDAN (Manitoba,
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N ment, the Company would I f.JD ~ receive Canadian hydropower I during our summer peak
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7: 3 months through a planned new g
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, 3 system. in return, the Com-
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% amount of generation to the E I ~h - %[ % Canadian system during its f
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. d, in d.h:DN ,k 4 ; winter peak months.
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Ccrporate and Operating Review Kilowatt Hour Sales o Earn!ngs Decline on Lower Sales _ _ m Kilowatt hour sales in 1982 were off three percent as com- 3, _ , g [l[ _ pared to 1981. Industrial usage fell some 16 percent due in (, Q g _ large part to reduced steelmaking activity by Armco and shut- i down of the Amoco Oil Company Sugar Creek refinery Resi- (*----------- dential sales improved more than one percent and commercial 3w sales by nearly three percent. e 3-g <- Higher electric and steam rates increased revenue by ------- - three percent to $4856 million, but after an eight percent nse in E * """ ' - ------- - operating expenses to $407.7 milhon. operating income fell to E +wm e t $77.9 milbon from $94 5 million in 1981. 19 2 73 74 rs rs 77 78 79 80 si 82 Fuel expense totaled $149 9 milhon. some $6 9 milhon less than in 1981. While the average price of fuelincreased to $1.389 per million Btu from $1239 in 1981. total fuel requirements nues w dropped reflecting lower retail and interchange sales. Net inter-i change sales of $20.9 million were $27.3 milhon less than in 1981, mainly due to expiration of a capacity sale agreement with
- j another utthty. Increases of $7.1 million. or 10 percent. were w E E"E" recorded for operation expense other than fuel and interchange. ;N I5 and $82 milhon. or 15 percent for maintenance. Income tax Iw -E Im expense declined $5 6 milhon to $39 9 mm.on, mainly because Im EE jm of a dechne in taxable income, while general taxes of $52.1 E *" _aEE..._
milhon remained level as compared to 1981. y _ E _ Interest expense amounted to $72.7 milkon, an increase of E** m_ ___ [_} _ four percent. Dividend requirements on two new stock issues g %, ,- -- - boosted total preferred and preference dividends to S18 2 milhon in 1982 from $13.7 milhon for 1981. y,, y 7, 7s y 77 ,, y y g y Net income increased to $80.9 million from S79.1 milhon in , 1981 because of the impact of net AFDC which totaled $56 3 ' milhon Earnings available for common stock in 1982 were Total Cost of Fuel Bumed e
$62.7 milhon, down $2.6 mrilion. Per share earnings amounted , m ..m.,m .,m ,
to $4.18 based on 15 mt! hon shares. 65 cents less than the E S4 83 recorded for 1981 on 1.5 milhon fewer shares. Net AFDC represented $3 75 or 90 percent of 1982 earnings per share as a { compared to $310 or 64 percent in 1981. jm At year-end. long-term debt represented 49.3 percent of 3x the $1.5 billion in total capitahzat:on. common stock 36 percent. ; 7s
, and preferred and preference stock 14 7 percent. Book value s ec . ._ , of the common stock was $32.94 per share as compared to e _ _ _ _
Em
$33.37 for 1981. At the end of 1982. the Company's common y _
stock was selling at about 84 percent of book value. well above Ew-m u NEE _ _ _ the 66 percent at this time last year The Company declared $45 million or 72 percent of E "^ 'J M -....._
% y 74 y ,c 7 7 ,3 x y gy earnings in common stock dividends.
Fintncing New Construction Construction expenditures totaled $1532 milhon for 1982, agreement was increased to $100 million from $50 million. In t excluding AFDC. Funds from operations contobuted $21.9 Apnl, the Company entered into a lease for the financing of the l million with external sources providing the balance- costs of up to $80 million of nuclear fuel. And in July. the The Company issued 228.000 shares of $17.05 cumulative Company Jrganized Kansas City Power & Light Finance. NV. i no par preferred stock at $110 per share in February 1982 and a NethE '.2nds Antilles subsidiary formed to facihtate the sale of 300.000 shares of cumulative preference stock at $100 per Eurobonds should that type of financing prove advantag~ eous. share with a dividend rate of $13 25 in September Two miikon shares of common stock were sold inJune at $23 625pershare. Rate increases During the year. an additional 482.516 new common shares Effective July 24.1982. the Missoun Pubhc Service were issued to participants in the Dividend Reinvestment and Commission approved a 4 6 percent increase in M ssouri retail Stock Purchase P;an who provided $11.6 milhon in reinvestment electnc rates designed to generate $14 5 million in add tional funds, including $36 million in the fourth quarter In January annual revenue. The order culminated a proceeding which [ 1983, the Company issued $60 million of First Mortgage Bonds. started in August 1981. in which the Company requested an 13% Series. due 2013 increase of about $62 3 milhon in annual revenue. or 19.9 Three actions were taken in 1982 to enhance financing percent. The order authorized an 1191 percent rate of return flexibihty The Company's kne-of-credit under its Eurodollar on rate base and a 15.76 percent return on equity 7 e
A 193 percent increase in rates went into effect for 204 by both the Kansas and Missouri commissions The reau 31 downtown Kansas City steam heat customers on June 4 The filed with the Kansas Corporation Commission in April. repre-increase is equivalent to about $936.000 in annual revenues. sents an increase of 19 8 percent or $26 3 million in additional On October 12. an adm:nistrative law judge of the Federal annual revenue. An order is expected in April 1983 l Energy Regulatory Commission made permanent $2.3 million The Missouri request was filed in August and called for an of a $4.7 million increase in effect since January 1981, resulting 18 7 percent increase in rates or $57.9 million in revenue. An in refunds to the Ccmpanys wholesale customers. The initial order in this case is expected in late July The Company also decision is subject to FERC approval. On February 17.1983. filed with the MPSC in January 1983 for a 178 percent increase FERC approved an additional $1.6 million increase which had in steam rates designed to generate $965.000 in revenue. been placed into effect on November 21.1982, as a result of a Wolf Creek Over 80 Percent Complete compromise agreement among the wholesale customers. FERC The Wolf Creek nuclear generat:ng unit under construction l and the Company- near Burlington, Kansas, surpassed 80 percent completion dur- ' New Rate Filings ing the your. The Company and Kansas Gas and Electric Responding to the Company's declining financial condition. Company. the plant ~s lead constructor and operator. each own new rate schedules were filed dunng the year for consideration F Eamings and Dividends sso Per Share 1- w_ -~ 32 ar .-w
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The Wolf Creek nuclear generating plant is under construction on a 10,500-acre site 90 miles southwest of Kansas City By the end Average Cost to of 1982, more than half of the 267 systems in the start-up sched- of Long-Term Debt 9 se ute had been completed for testing and the 5,500-acre cooling , _ ll lake was filled. Other significant activities were delivery of the , mEEE on-site training simulator, and completion of the turbine generator. _ _ ggggg i s EEEEEEEEEEE
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5- _ _ _ _ _ Engineers perform final computer software checks in the newly ' - - - - - - - - - completed Wolf Creek control room simulator. The $5.7 million e-- _ _ _ _ _ training simulatoris a nearly exact duplicate of the plant's 2_ _ _ _ _ _ _ actual controls and will be used for continuous hands-on , ~ operator training. { ~ ~ }~{~~ Tr2 73 74 7s 76 77 78 79 80 R' B2 8 l
i 47 percent of the 1.150-Mw unit targeted for commercial oper- spond:ng restructunng of coal deliveries and inventory levels ation in mid-1985 Kansas Electoc Power Cooperative. Inc. Dunng the year. the Company ret: red the 80-Mw cf system
! owns the remaining six percent. generating capacity at Northeast Station insta"ed between When operational, the Company's 541-Mw share will 1917 and 1950. The four older Hawthorn station units (with total represent about 16 percent of total generating capacity capacity of 300 Mw and coastructed between 1951 and 1955)
Based on the present schedule as revised in 1982. the were assigned to summer peaking operat:on as was the 40 Mw plant's cost estimate is $2.4 bdhon The Company's share of the of capacity from Grand Avenue Station The un;t wdl continue budgeted cost is approximately $1.1 bdhon. including $334 to supply year-round steam to steam heat customers. The eight ) million of net AFDC and $21 mdlion of capitakzed property od-fired combustion turbines insta' led at the Northeast s,te in l taxes At the end of 1982, cumulative Wolf Creek expenditures the 1970s wdl cont;nue to serve as summer peaking units l fotaled $541.5 million, excluding AFDC. A new agreement reached with Peabody Coal Company In the licensing process.the Nuclear Regulatory Commission wdl enab!e the Corrpany to reduce sign ficantly fuel inventories i has issued its final environmental statement and heanngs at Montrose and Hawthorn stations Uncer the Contract annual before the Atomic Safety and Licens:ng Board are scheduled min mum dehvenes w:ll drop from 2.025.000 to 1250.000 tons for mid-1983. Rev:sions in the agreements are expected to result in signifi-The initial core and part of the first reload for the nuclear cant cost savings over the contract life. unit will be supplied from uranium received from Msting- Dunng the year. the Company began scheduhng od house Electric Corporation and the Company's nuclear fuel dehvered by barge to its Northeast Station Missouri River dock subsidiary and spot purchases The remainder of the first reload facihty. saving an estimated 5128 000 Historically oil has been , and about 40 percent of additional requ!rements wdl be supphed shipped by pipehne and trucked to storage The dock was budt ( under a long-term contract signed in December with the to provide flexrbihty in purchases of od Saskatchewan Mining Development Corporation. Average Coal Price Rises Generating Units Set Production Records Coal fueled some 96 percent of total generation at an The Company's newest generating units. LaCygne 2 and average pnce of $1284 per mdhon Btu up 10 percent from latan. turned in outstanding operating performances with the the 1981 average of $1167. Natural gas supphed about three latan unit operating continuously for 230 days. surpassing the percent of total fuel and od accounted for the batance of less 172-day record set in 1982 by LaCygno 2. Operational changes than one percent. The average pnce of natural gas rose 35 affect:ng several older generating units were made with corre- percent to S3631 per mdhon Btu whde the average pnce of od rose one percent to $5 402 per mdhon Btu The Company has favorab!e contracts for a major part of Source of Fuel Bumed e its coal requlrements through 1996 except for latan Station The Company formed WYMO Fue!s Inc . a wholly CWned subsid,ary to meet latan s long-term coal requaements To , date. WYMO has acquired a state coal lease on a 640-acre l tract containing some 45 mdhon tons of recoverable low-su! fur l 7 *- - - - - - - coal and fee OAnersh p of 4 360 acres of adjoining ranch lands which contain an est: mated 200 mdhon tons of federal!y j *- - - - - - C- - - - - owned coal reserves. a!I in the Powder River Bas 1n in r_ _ - _ - Wyoming x_ _ _ _ _ _ In November. WYMG received a mine permit from the State bmas u_ _ _ of Wyoming which authonzed construction of planned mine O cm e faches and a four-mdhon ton per year mining operation on the 1972 73 74 75 76 77 78 79 80 Pt 82 state Coallease seClion Issuance of the permit has been appealed by certa n ne:ghbonng ranchers The Company has not finahzed its plans for WYMO s future operat ons and may elect to sell the subsid:ary Average Coal Cost ue _ c E New Labor Agreements in Effect l _,
,g ll On July 1.1982. a two-year labor agreement went into effect for members of the International Brotherhood of Electncal j ]y g_E: ~ Workers Local 412 Under the contract power p! ant workers a - EE received a total increase of 7 786 percent. includ>na a 6 93 f j ec
- -Q_Q percent wage raise w'th the ba'ance apphed to the health and j [
welfare trust. A wage increase of six percent was negotiated ; l o for the second year y C_
- _ [ A two-year pact witn local 1613 caled for a f,rst-year total a_ _ _ _ _ _ __ _ increase of 7 286 percent Of that 6183 percent went toward 0 wages and the ba!ance to the health and welfare trust The m n n 7s 76 n m 79 80 8: e offde and ciencal employees represented by Local 1613 wdl recerve a 5 5 percent wago increase in the second year l
9
I On October 25. the Company without reaching an agree- power operations. and Ronald G Wasson. purchasing division. ment provided a wage increase of 6 904 percent for mernbers The system power operations group includes power plant of Local 1464 and started implementing new work rules de- operations, power supply. system planning and the nuclear signed to improve productivity. This step was taken after months power department The transmission and distribution operations , of negotiations failed to produce a new agreement with Local group is responsible for engineenng delivery of electricity and 1464 which represents transmission and distnbution wcchn :t:r M-' powe plants to customers and internal services Approximately 2.100 of the Company's 2.900 employees activities. All financial and commercial operations fall under the are members of the bargaining units finance and commerce group The corporate affaits group en-R: search and Development compasses the iegal. corporate secretary. legislative affairs. Through contnbutions to The Electric Power Research auditing, purchasing and communications functions. l Institute, most of the Company's research dollars are pooled Donald I McPhee came to the Company in 1956 as a with those of more than 600 other utikties nationwide. Partic- project engineer from Ebasco Services. Inc. He was promoted ipating in EPRI enables us to avoid costly duplication of research to administrative assistant to the production manager in 1958. efforts and to participate in projects far beyond the financial manager of production in 1960. and was elected vice president capabihty of any one utihty of system power operations in 1969. J Rooert Miller began his Dunng 1982 we contnbuted $16 million to EPRI research career with the Company as an electncal engineer in 1948. and development efforts. Overall about 1.400 active research became manager of engineering in 1968 and was promoted to projects are currently under EPRI's management. representing vice president of engineenng in 1971. He served as vice a five-year funding authonzation in excess of $1.6 bilhon. president of administration prior to being named vice president This year's contnbution was allocateo to the following major of transmission and distnbution systems in 1981. Louis C. research categories. Rasmussen joined the Company in 1960 as assistant manager e generation studies to improve existing fossil-fuel and nuclear of rates from Ebasco International Corporation He was ( power generation systems and to develop advanced gener_ promoted to rate department manager in 1965 and elected vice i ating equtpment and technologies: president of corporate planning and economic controls in 1974. i e environmental and health effects of electricity generation and He has served as chief financial officer since 1980 and member transmission, of the board of directors since 1981. Samuel P. Cowley joined e development of new or improved processes, systems and KCPL in 1974 after working for Nevada Power Company as vice equipment to expand the use of clean gaseous. liquid and , , l solid fuels. includ:ng nuclear fuel. *
$d. . 4 e energy management and conservation. and development of N,'
improved information and forecasting methods to aid in energy decision making i The Company participates with five other utihties in the \ Kansas Electric Utihty Research Program which conducts local < 3 research projects of special interest to the participating utihties. 7 and with four other utikties in the Great Plains Utikty Group , which conducts solar research a
- Management Changes Consolidate Corporate Structure M Several changes in senior management effective January N #
1.1983, resulted in consokdation of several Company divisions .g-into four corporate groups. Promoted to the office of senior vice .V; president were Donald I McPhee. system power operations. ; , , Louis C Rasmussen. finance and commerce: J Robert Miller, y p transmission and distubution operations; and Samuel P. Cowicy, UL . = corporate affairs Newly elected vice presidents include A Drue A %. Jennings. law and related areas: J. Michael Evans, system k
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The Company's distribution system sustained the worst damage t .- of its history during the week of June 7 when a series of unusus!!y ! . destructive storms swept the Kansas City area. Some customers were without power for as long as eight days and electric service was off to more than 130,000 customers - about one-third of the 'W Company's customers - at some point during the week. KCPL's restoration force totaled me than 500 and was supplemented by electric crews from as far away as St Louis. The extensive damage and lengthy ou'sge time for customers prompted the Company to develop a comprehensive storm management system in order to handle future severe storms. 10
, president and general counsel His career with KCPL negan as
- assistant general counsel. he served later as general counset.
was promoted to vice president in 1979. and became the com-pany's corporate secretary and chief legal officer in 1980 A. Drue Jenn>ngs came to the Company from private l practice in 1974 and served as staff attorney until 1978 when - l he was appointed assistant general counsel He became .1 l . s ' ~: j 1.' * , Arj ( T L l ', general counsel in 1979 and assumed the additional duties of y, / h ,: .g.,
.: l assistant secretary in 1980 2' > g.. . .. 4 i J M:chael Evans was an engineer for Combt 3 tion Engi- .~%- F ~ ' ' " -
3" f.,- " 1. C.. ' ,,
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neenng. Inc. before joining the Company in 1974 He has held .I~.' , , vanous engineering and management positions associated :.
. .'
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i with the WoM Creek generating station and the start-up of .,.3'-[ E 3] 3 ^. .I d 'c L La Cygr.e 2. Most recently. as Director of System Planning. t 7.. y . 4 ; . ., 4: , he coordinated the Company's Long Range System Expansion , d. W ->t, ~ ,' [ Alternatives Study which developed the KCPLAN . .JT - ' % ~ '. ^- Ronald G Wasson joined KCPL as a sales engineer in ., 3'g },,(i 1966 while completing an electrical engineer.ng degree at the , , . .. T' d Univers:ty of Missouri He has held various posttions in the , e-areas of system planning. corporate planning and economic G< '-
. +. ~o l controls and most recently was a manager of fossil fuels. 4 s . Y~ . , .
Annual Meeting [,;a ' i . .
&. $ )- l The Company's 1982 Annual Meeting of Shareholders was b +. eo
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held Apnl 27.1982. Dunng the meeting shareholders reelected .[? - J .* , f '
. (
nine directors and ratified the appointment of Arthur Andersen ; . . L. - 1- .t i & Co. as the Company's independent accot.ntants for 1982. y . !:f ' , w l ( Of 13.763 217 shares elig: Die to vote. 11.401.022 or 82.8 percent .' s b 1 'c ~ M ' " n ^ ' ' . . 'l t
;,' ' {.fpe
~
I were represented either in person or by proxy . ,Y 7.[ i m. i :, , .
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f.. To commemorate its Centennial year of service, the Company - }D. , -i A - :' l . " restored the decorative lighting of the 97-foot tower of the Power & Light Building to its original appearance as shown in
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. M,.;):
- 4;. i? --
[ this 1930s view. The nightly display of changing lights of the /- - A# ..;'&:A tower's lantern established the building as a downtown landmark for over four decades. The new system re-established v; [ - (;j .~:[
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changing colors - amber, green and white - five times a minute. 'g . , j
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j To celebrate the Centennial, open houses were held last spring
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at various work locations for employees, their families and the .3 -'.".. . N i general public. Employee committees organized and conducted . d ,. . .' ,1 . 4* .
'-~ '
I the activities, including displays, exhibits, guided tours and ' 4 . ? ! '< r. *
- bucket-truck rides. Nearly 10,000 people attended the open A *- . m/,s p g' i f. ' g ,b ( *
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houses, such as this one at La Cygne Station.
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- 11
Kansas City Power & Light Company Statements of Income Year Ended December 31 1982 1981 1980 itnousands) Operating Revenues Electnc $ 475,802 S 4ti5.825 S 440.182 Steam heat 9,827 5.886 5.783 Total 485,629 4'1.711 445.965 Operating Expenses Operation Fuel 149,868 156.761 125.297 Interchange power (net) (20,906) (48.179) (21.528) Other 79,012 71.892 70.892 Maintenance 62,496 54.305 52.680 Depreciation 45,215 44.962 41.733 Taxes (See statements) income 39,946 45.577 42.088 General 52,075 51.908 47.956 Total 407,706 377.226 359.118 Operating income 77,923 94.485 86.847 Other income and Aliowance for equity funds Deductions used during construction 36,089 29.073 19.775 Miscellaneous-net of income taxes (63) 327 (122) Total 36,026 29.400 19.653 Income Before Interest Charges 113,949 123.C85 106.500 Interest Charges Long-term debt 65,260 55.232 48.864 Short-term notes 6,021 3.896 4,781 Allowance for borrowed funds used during construction-credit (39,670) (24.878) (22.997) Miscellaneous 1,397 10.489 7.1 51 Tc al 33,008 44.739 37,799 Yiarly Results Net income 80,941 79.146 68.701 Preferred and preference stock dividend requirements 18,193 13.749 12.418 Earnings available for common stock $ 62,748 S 65.397 $ 56.283 Average number of common shares outstanding 15,006,912 13.535.149 12.915J70 Earnings per common share $ 4.18 S 4.83 $ 4.36 Cash dividends per common share $ 3.01 S 2.825 S 2.69 The accompanying Notes to Financial Statements are an integral part of these Statements I { 12
Kansas C4 Powf & Light Company Balance Sheets December 31 1982 1981 Assets onousanasi utility Plant, Electnc $ 1,315,105 S 1.302.999 at original cost Steam heat 5,980 5.203 (Notes 5 and 6) Total 1,321,085 1.308.202 Less - Reserves for depreciation 417,779 392.060 Net utility plant in service 903,306 916.142 Construction work in progress 709,963 536.608 Total 1,613,269 1,452.750 investments and Nonutility Property 16,610 14.796 Current Assets Cash (Note 2) 1,916 7,181 Special deposits 162 182 Receivables Customer accounts receivable, less reserves of $911,000 and $927.000 31,745 31.848 Accrued unbilled revenues 19,422 16.396 Other receivables 17,205 11.704 Fuel inventories, at average cost 54,118 48.748 Materials and supplies, at average cost 22,846 22.769 Prepayments _ 803 1.244 Total 148,217 140.072 Deferred Charges 14,131 10.163 Total $ 1,792,227 $ 1.617,781 Liabilities Capitalization Common stock - authorized 30.000.000 (See statements) shares without par value - 16.245.733 and 13.763.217 shares outstanding-stated value S 319,920 $ 262.359 Retained earnings (Note 3) 210,402 193.956 Capital surplus 4,670 2.998 Total 535,192 459.313 Cumulative preferred stock 112,000 112.000 Cumulative preferred stock (redeemable) 56,316 3.676 Cumulative preference stock (redeemable) 50,000 50.000 Long-term debt 732,610 662.050 Total 1,486,118 1.287.039 Current Liabilities Notes payable to banks (Note 2) - 70.600 Commercial paper (Note 2) - 18.500 Current matunties of long-term debt 35,006 - Accounts payable 45,280 32.487
- Dividends declared 5,401 3.437 l Accrued taxes 5,449 6.875 t
Accrued deferred income taxes 9,624 8.008 l Accrued interest 7,906 7.860 l Accrued payroll and vacations 8,606 7.823 Other 3,405 5.056 j ! Total 120,677 160 646 . Deferred Credits Deferred income taxes 115,300 104.837 Deferred investment tax credits 68,096 63.054 Other 2,036 2.205 Total 185,432 170,096 Commitments and Contingencies (Note 6) Total S 1,792,227 S 1 617.781 I 13
Kansas City Power & Light Ccmpany Statements of Tzxes Year Ended December 31 1982 1981 1980 l!housands) Total income tax expense was less than the amount computed by applying the statutory federal income tax rate of 46% to income before income taxes The reasons for these difierences are as follows-Taxes computed at statutory rate on income before income taxes $ 55,491 $ 57.335 S 50 826 Increase (decrease)in taxes resulting from: Allowance for equity funds used during construction (16,601) (13374) (9.097) Differences between book and tax depreciation not normahzed 1,142 1.032 1.198 Removal costs (1,080) (797) (726) Amortization of investment tax credit (2,181) (1.754) (1.544) State income taxes 2,088 2.773 1.969 Other 832 281 (836) Total income tax expense $ 39,691 S 45,496 $ 41.799 l Components of income Tax Expense Currently Payable Federal $ 921 $ 4.704 $ 3.154 State 1,135 2.634 872 Total 2,056 7.338 4,026 Def:rred Federal (net) 28,862 22.198 28 281 State (net) 2,731 2.500 2.773 l Total 31,593 24.698 31.054 inv;stment Tax Credit Provision 8,223 15.214 8.254 Amortization (2,181) (1.754) (1,544) Total 6,042 13.460 6.710 Totalincome tax expense 39,691 45.496 41.790 Lcis: locome taxes appbcable to other income (255) (81) (298) Income tax expense applicable to operating income $ 39,946 S 45.577 5 42.088 Deferred income Tax Expense Depreciation differences S 8,468 $ 11.409 $ 12.687 Debt component of AFDC 19,503 12.039 10.921 Repair allowance (810) (549) 659 Unbilled revenues 1,559 1.093 898 Tax loss carryforward - - 5,751 Taxes and pension costs capitalized 2,165 1.465 1.093 CXher 708 (759) (955) Total $ 31,593 $ 24.698 $ 31.054 General Tax Expense Property and real estate $ 20,924 S 22.526 $ 20.089 Gross receipts 26,479 25.243 24.233 Other 4,672 4.139 3,634 Total $ 52,075 S 51.908 $ 47.956 The accon panyrrg Notes to Financ;al Statements are an infecral part of these sta'ements 14 _ _ _ _ _J
l Kansa! City PoAer & Ucht Corr.pany Statements of Sources of Funds for Gross Property Additions Year Ended December 31 1982 1981 1980 (thousands l , Funds Provided Net income $ 80,941 $ 79.146 $ 68.701 From Operations Less dividends declared 64,495 51.966 47.625 Total 16,446 27.180 21.076 Items not requiring current use of funds Depreciation 45,215 44.962 41.733 Deferred income taxes (net) - non-current portion 29,977 23 665 30.426 Investment tax credit (net) 6,042 13.460 6.710 Allowance for funds used dunng construction (75,759) (53.951) (4272) Total 21,921 55.316 57.173 Funds Provided From Issuance of long-term debt 47,003 75.000 35.500 Outside Sources issuance of cumulative preferred stock 55,080 - - Issuance of cumulative preference stock - - 25.000 issuance of common stock (2.482.516,353.554 and 1.727.314 shares. respectively) 57,561 7.231 30.686 Net payment received on sale of a portion of Wolf Creek - (39,128) 25.656 Retirement of long-term debt - (25.000) (11.972) Increase (decrease) in short-term borrowings (including portion to be refinanced) (30,600) 51,100 (1,300) Total 129,044 69.203 103.570 Decrease (Increase) (Exclusive of short-term borrowings in Working Capita! and current matunties) 5,980 7.603 (35.960) Other (3,785) 1.858 233 Tital Funds Used for Gross Property Additions 153,160 133.980 125.016 Allowance for funds used during construction (included in utility plant) 73,381 51.477 42.772 Deduction of deferred income taxes related to interest component of AFDC (19,503) (12.039) (10.921) Gross Property Additions $ 207,038 $ 173.418 $ 156.867 Decrease (Increase) Cash $ 5,265 $ 1.096 $ 921 in Working Capital Special deposits 20 663 734 Receivables (8,424) (1.337) (12.782) Fuel inventones (5,370) 18.130 (20.070) Materials and supplies (71) (2.262) (3485) Accounts payable 12,793 (10.036) (7.389) Accrued and current deferred income taxes 190 (1.116) 5.624 Accrued interest 46 (57) (42) Other 1,537 2.522 529 j Total $ 5,980 $ 7.603 $ (35.960) f 15
. _ _ - _ _ .O
l Knnsas C4 Power & Lcht Company Statements of Cumulative Preferred and Preferenca Stock and Long-Term Debt December 31 1982 1981 Cumulative Preferred Stock (Note 4) onousands)
$100 Par Value 3.80% - 100.000 shares $ 10,000 $ 10 000 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 N3 Par $10 70 - 200.000 shares 20,000 20.000
$ 2.33 - 800.000 shares 20,000 20.000 5 2.20 - 800.000 shares 20,000 20.000 Total $ 112,000 S 112.000 Cumulative Preferred Stock (Redeemable)(Note 4)
$100 Par Value 4% - 35.157 and 36.757 shares $ 3,516 S 3.676 N3 Par $17 05 - 228.000 shares 22,800 -
$13 25 - 300.000 shares 30,000 -
Total $ 56,316 S 3.676 Cumulative Preference Stock (Redeemable)(Note 4) N3 Par S 8 00 - 250.000 shares $ 25,000 $ 25 000
$12.75 - 250.000 shares 25,000 25 000 Total $ 50,000 $ 50.000 Long Term Debt (Note 5)
First Mortgage Bonds Regular issues 3%% series due 1983 $ 9,506 S 9.506 3%% series due 1985 16,000 16.000 5% series due 1990 20,000 20.000 4%% series due 1995 15,000 15.000 5%% series due 1997 30,000 30.000 6%% series due 1998 25,000 25.000 7%% series due 1999 26,000 26.000 9%% series due 2000 35,000 35.000 7M% series due 2001 27,000 27.000 7%% senes due 2002 30,000 30 000 8:i,% series due 2006 40,000 40.000 8%% series due 2006 30,000 30.000 8V% series due 2007 30,000 30.000 9%% series due 2008 25,000 25.000 12% series due 2009 50,000 50.000 16M% series due 2011 50,000 50.000 Pledged in support of pollution control bonds 8 20% senes due 1983 25,500 25.500 SR% series due 2007 21,940 21.940 5 A% series due 2007 20,000 20 000 6N% series "A" due 2008 9,200 9.200 6 %% series "B" due 2008 21,800 21 800 Guaranty of Pollution Control Bonds 5%% series due 2003 15 000 s 15.000 Lean Agreements 94,000 92.000 Nuclear Fuel Lease 45,003 - Short-Term Debt to be Refinanced 58,500 - Unamortized Premium and Discount (net) (1,833) (1.896) Total 767,616 662.050 Less Current Maturities of Long-Term Debt 35,006 - Tota! $ 732,610 $ 662.050 The accorrpavng Not s to hnanc.3 Swements we an entegral pad of these swements 16
1 1 vansas c4 Pem & tom company Stctements of Retained Earnings Year Ended December 31 1982 1981 1980 mousae Beginning Balance $ 193,956 S 166 776 S 145 700 Net income 80,941 79.146 68.701 274,897 245 922 214.401 Dividends Declared Preferred and preference stock (at required annual rates) 19,502 13.748 12 949 Common stock-
$269 per share 34.676
$2.825 per share 38.218 S3 01 per share 44,993 64,495 51.966 47625 I Ending Balance (Note 3) $ 210,402 S 193.956 S 166 776 Nates to Financial Statements
- 1. Summary of Significant System of Accounts: The accounting records of the Company are maintained in accordance Accounting Policies w:th the Uniform System of Accounts presenbed by the Federal Energy Regulatory Commission (FERC) and generally accepted accounttng principles Utility Plant: Utility plant is stated at historical costs of construction These costs include taxes.
payroll related costs including pensions and other innge benefits. and an aMowance for funds used dunng construction. Allowance for Funds Used During Construction (AFDC): AFDC includes the net cost of borrowed funds used for construction purposes and a reasonable rate upon other (equity) fands The allowance for borrowed funds represents an allocation of interest costs to construc-tion, while the allowance for equity funds is a non-cash item of income AFDC is charged ;o construction work in progress dunng the period of construct!on When a construction projeci is placed in service. the related AFDC becomes a par 1 of the onginal cost of the completed plant which is used to establish rates for utility charges under established regulatory rate pract.ces The rates used to compute AFDC. before associated deferred income taxes. are compounded semi-annually and averaged 12.1% for 1982,110% for 1981 and 10 4% for 1980 Depreciation and Maintenance: Provisions for depreciation are compt,ted on a stratght-line basis pursuant to rates ordered by the Missouri Public Service Commission (MPSC) Approximate annual composite rates were 361% in 1982. 363% in 1981 and 366% in 1980 The Company charges to matntenance expense the repairs of properly and replacement and renewals of items determined to be less than units of property. except for such costs which are charged to cleanng accounts and redistributed to vanous operating. construction and other accounts. The costs of renewa!s and betterments of units of prcperty are charged to the utdity plant accounts. Property units ret; rcd or othcrwise disposed of in the normal course of business are charged to the reserves for depreciation. along with removai 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 railroad cars computer equipment. buddings and similiar items are also not significant. Retirement Plans: The Company has group annuity plans for all its regular employees including officers, provid:ng for benefits upon retirement, normal!y at age 65 Under the requirements of the Employee Retirement income Secunty Act of 1974 (ERISA) the Company is ob!rgated to fund the benefits of the plan The Company's policy is to fund pension costs accrued Liabiltty for past service costs is not significant. The annual costs of the p;ans were 59 3 million in 1982.58 1 million in 1981 and $7.3 mdlion in 1980. 17
I At the annual valution date of October 1. the actuarial present value of accumulated plan benefits was approximately $118 million for 1982 and $116 million for 1981, including $3 million of non-vested benefits in both years Plan net assets were approximately $129 million for 1982 and $112 million for 1981. Rates of return of 6 to 7% were assumed in determining benefits. Revenue Recognition: The Company utilizes cycle billing and accrues the amount of revenue for sales unbiled at the end of each reporting period. Income Taxes: The Company generally normalizes the effects of the use of accelerated tax depreciation methods. Deferred income taxes have been provided for the differences between book and tax depreciation except for the effect of accelerated depreciation on Missouri property acquired prior to 1972. Accelerated depreciation methods include the use of the Asset Deprecia-tion Range System and Accelerated Cost Recovery System which permit shorter lives. Taxes deferred on property additions for certain prior years are now being restored to income as the timing differences reverse. The tax effect of the interest component of AFDC is normalized and the related accumulated deferred income taxes are credited to construction work in progress rather than deferred income taxes on the balance sheet. The Company normalizes for all junsdictional purposes. including Kansas after December 1. 1981, the tax effects of pension costs, payroll taxes and property taxes which are capitalized on the books but deducted currently for income tax purposes The effects of the current deduction of removal costs are flowed through. Investment tax credits have been deferred when utilized and are being amortized to income over the service lives of the related properties At December 31,1982. the Company had unused and unrecorded investment tax credits of approximately $35 million, which will be available to reduce Federal income taxes payable through 1997. Subsidiary: The Company has a wholly-owned subsidiary. WYMO Fuels Inc.. organized for the acquisition and development of coal properties. The Company has accounted for its investment in \WMO Fuels Inc , under the equity method and has not prepared consolidated financial statements because the effect of consolidation upon the accompanying financial statements would not be significant. Storm Damage: In June 1982, the Company's electric distnbution facilities were damaged by severe storms The approximately $19 million of operating expenses incurred to restore service have been deferred by the Company, and are being amortized to expense over a five-year period in anticipation that such costs will be recovered in rates.
- 2. Short-Term Borrowings The Company borrows short-term funds from banks and through the sale of commercial paper as needed between financings. Bank lines-of-credit of $100 million back-up for commercial paper and certain services rendered by the banks for the Company, were supported by compensating balances of approximately $69 million and minimal fee arrangements through August 31.1982 and only by minimal fee arrangements thereafter.
- 3. Dividend Restrictions Retained earnings at December 31.1982, included $11.5 million which was not available for cash dividends under the provisions of the Indenture of Mortgage.
- 4. Preferred and The outstanding preferred stock of $112 million may be redeemed at the option of the Company Pedeemable Preferred at prices which in the aggregate total $122 million except that the $10.70 series may not be and Preference Stock redeemed at the current redemption price of $110 70 prior to June 1.1985. through a refunding.
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 than 1084% 18
The Company's Cumulative Preferred and Preference Stock (Redeemable) may be redeemed in whole or in part, ratably from each of the holders of the outstanding shares. at times and prices specified in the purchase agreement for the individual issue. Redemption and sinking fund dates and amounts are as follows: Optional Redemption Annua! Sinking Fund Date Initial Current Initial L Series issued Date Price Date Price Shares i Cumulative Preferred 4% 1948 Currently $102.25 Currently $100(a) 1.600
$17.05 1982(b) 1987 127.05 1988 110 11,400
$1325 1982 Currently (d) 113 25 1988 100(a) 60.000(c)
Cumulative Preference
$ 800 1978 Currently 100.00 1983 100 41.667
$12.75 1980 1983(d) 106.375 1985 100 41.667 (a) May be satisfied by open market purchases in lieu of sinking fund redemption.
(b) Premium at time of issue of $2280.000 was recorded in capital surplus. (c) Company has an option to purchase each year an additional 60.000 shares beginning in 1988 up to a maximum of 150.000 of such additional shares (d) The $13.25 and $12.75 series may not be refunded prior to August 31,1987, and June 1, 1985. respectively, through refunding at an interest cost or dividend rate which is less than the dividend rate of such series. At December 31.1982, the Company was authorized to issue 555.157 shares of Cumulative Preferred Stock at a par value of $100 per share,4.000.000 shares of Cumulative No Par Preferred Stock and 4.000.000 shares of Cumulative Preference Stock without par value. Scheduled redemption and sinking fund requirements for outstanding redeemable preferred and preference stock for the next five years are as follows: 1983 and 1984. $4.327.000 each and for 1985 through 1987. $8.493.000 each year. If any dividends on its preferred or preference stock are not declared and paid when scheduled. the Company could not declare or pay dividends on its common stock or acquire any shares thereof for consideration. If the amount of any such unpaid dividends equals four or more full quarterly dividends. the holders of preferred or preference stock, as the case may be, voting by the classes prescribed for this purpose, could elect representatives on the Company's Board of Directors.
- 5. Long-Term Debt First Mortgage Bonds: The amount of First Mortgage Bonds authorized by the Indenture of Mortgage anc Deed of Trust dated as of December 1.1946. as supplemented. is unlimited. The amount of additional bonds which may be ;ssued is srbject to certain restrictive provisions of the Indenture. Substantially all of the Company's utility plant is pledged under the terms of the Indenture. The 3%% series due 1985 has an annual sinking fund requirement of $160.000 which will be met by pledging property additions taken at 60% of cost or fair value to the Company. whichever is less.
In January 1983 the Company issued $60 million of 13% First Mortgage Bonds due in 2013. The proceeds of the issuance were used primarily to refinance $58.5 million of short-term borrowings. Loan Agreements: The Company has a $100 million line-of-credit, expiring June 30.1985. with a group of international banks which provides for the use of unsecured funds at interest rates adjusted quarterly based on the three-month London Inter-Bank Offered Rate. At December 31.1982. $50 million at 98125% was outstanding The Company has a financing arrangement with a bank. expiring January 16.1984, which enables the Company to borrow up to $50 million by collateralizing its coal and fuel oil inven-tories at rates based upon the current bankers' acceptance discount rate plus an acceptance charge At December 31,1982. $44 million at 9.35% was outstanding 19 r . . . _ _ _
Nuclear Fuel Lease: The Company entered into a lease in 1982 which provides for the financing of the costs of up to 580 milhon of the Company's nuclear fuel The lessor will obtain, through the issuance of commercial p1per backed by letters of credit from commercial banks. or from revolving credit loans. the necessary funds to pt,rchase the fuel and make interest payments when due. The Company is obhgated to reimburse the lessor for all expenditures for nuclear fuel. interest and related costs as the fuelis consumed in the plant The Company is capitahzing the cost. including related interest costs, of the leased nuclear fuel. Scheduled Maturities: The aggregate amounts of maturities dunng the next five years of long-term debt outstanding at December 31.1982 (exclusive of the loan agreements, which the Company expects will be ex* ended. and the nuclear fuel lease) are $35 milhon in 1983 and $16 milhon in 1985.
- 6. Jointly Owned Electric The Company has. under joint ownership agreements with other utihties. undivided interests at Utility Plants December 31 1982. in generating units as' follows:
WoltCreek La Cygne latan Un:t Units Unit Company's share . . .. . . . . . ... . 47.0% 500% 70 0 % (thousands) Utaty plant in servico . .. . . . .. .
$226.030 $234.933 Utety plant under construction .. . .. .. . . . . $685102 $ 9.768 $ 190 Accumulated depreciation (Production plant only) . . . -
$ 67.778 $ 22.591 Company's accred ted capacity-MW . . . . . 541 685 469 Each participant must provide its own financing The Company's share of direct expenses is included in the corresponding operating expenses on the Statements of Income.
At December 31,1982, the Company's shares of Wolf Creek's total construction and nuclear fuel commitments were approximately $60 million and $190 million. respectively. Nuclear fuel commitments include approximately $90 million for uranium concentrates. ennchment and conversion through 1997 and $100 milhon for fabrication through 2010. An appkcation is pending before the Nuclear Regulatory Commission for an operating license for the Wolf Creek Unit Without such a license. the Company assumes a risk of loss in pro-ceeding with the construction of the Wolf Creek Unit. Auditors' Report To the Stockholders and the Board of Directors of Kansas City Power & Light Company We have examined the balance sheets and statements of cumulative preferred and preference stock and long-term debt of Kansas City Power & Light Company (a Missouri corporation) as of December 31.1982 and 1981, and the related statements of income, taxes, retained earnings and sources of funds for gross property additions for each of the three years in the period ended December 31,1982. Our examinations were made in accordance with generally accepted auditing standards and, accordingly, included such tests of the accounting records j and such other auditing procedures as we considered necessary in the circumstances. In our opinion, the financial statements referred to above present fairly the financial position of Kansas City Power & Light Company as of December 31,1982 and 1981 and the results of its operations and the sources of its funds for gross property additions for each of the three years in the period ended December 31.1982, in conformity with generally accepted accounting pnnciples apphed on a consistent basis ARTHUR ANDERSEN & CO. Kansas City, Missoun. January 28.1983. 20
Kansas CJy Peer & L ight Company M:n:g:msnt's Diccuccion end Anclyclo of Fin:ncial Condition and Results of Operations KWH Sales and Operating Revenues Fuel Costs Kwh sales decreased 3% in 1982 and 3 2% in 1981 compared Average fuel cost per milhon Btu increased to S1389 in with the poor years The declines reflect mainly the effect of the 1982 from $1239 in 1981 and $1094 in 1980 because of the recession on the local economy especially in the steel industry higher pnces for coal frerght and natural gas Approximately in 1982. and the milder summers of 1982 and 1981 compared 30% of the fuel cost increases have been recovered through with the record breaking 1980 summer heat. the fuel adjustment clauses applicable to the Company s Sates data for the years. Kansas and wholesa'e sa'es The July 1982 M:ssoun rtte in-inacase toen., ate, crease included $2 milhon to cover a portion of the antcpated Orr Prior Year pnCe increases for Coal and natural gas expected to be used 1982 gggt dunng the succeed:ng twelve months KWH sa!es The components of change in fuel coste-k Resident.al 14% (12 8 /' fro m .a(Der < m $ 31
= '-
The components of changes in operating revenues Inocase (Decrease > Over Poor Yea' interchange Power (Net) 1 82 1981 Interchange power (net) decreased $27.3 mdhon in 1982 a funns) compared with 1981 and increased $26 7 milhon in 1981 Revenues tesclusrve c' a steel manufacturen compared with 1980 pnmanly because of a capacity sale
$ 5 ' agreement with another utd.ty which comn:enced June 1.1980
$$,"g'as s n" a I AeI " 3 Fuel cost recovery throuch fuel adiustment c'auses r 16i 4 and exprred May 31.1982. The level of interchange sales in the Total 21 21 future wdl depend on the Company's system requirements and Steel manufactur er 171 5 other factors such as fuel costs. maintenance requiremer.ts Total $ 14 $ 26 and the avadabihty of generat ng un;ts to the Company and potential purchasing utihties Maintenance Ma ntenance expense increased 151% in 1982 compared to 1981 reflecting increased maintenance requireo at several generating stations and increased transmission and distnbut on maintenance-Interest Expense Interest expense continues to increase because of increased amounts of outstanding debt and higher interest rates %scella-neous interest expense in 1982 was less than 1981 and 1980 because of interest expense incurred in the two poor years for advance payments received poor to the December 1981 safe of an interest in Wolf Creek 21
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a d e Net AFDC . Financing Requirements -~ The Company's Indihoo V captabzing aHowance f or funds In add. tion to financing construction expenditures, the used dunng construction (AFOC)is on a net AFDC basis since Company will require cash dunng the five years ending Decem- 7 thc 'ax effect of the interest component of AFDC is being ber 31,1987. to retire $51 milhon of matunng long-term debt. - normahzed and the related accorrulated deferred income ta xes exclusive of payments on the nuclear fuel lease, and to redeem are credited to construction work in pogress. $341 milhon of preferred and preference stock pursuant to -_ sinking fund obhgations The continuing increases in the arnount of construction work _- in protyess at Wolf Creek and higher AfDC rates caused net it is expected that financing requirements will be met through
' AFDC 'o it. crease 34% 1982 and 32VJn 1981. sales of debt and equity securities and various other financing _
arrangements. Tt'e an.oun!S. timing and methods of financing g wil1 be dependent upon r"arAct conditions prevailing at the time e Earnings Per Share s the financings are required Short-term borrowings will be utilized _ Ean.Yps per common share were signhcantly impacted by detween finareings.11 is anticrpated that funds for the remaining I net Af DC as fonows-CS2 1931 1980 capitat ne(;JS w4l be provdad from operations. fg Uncertatnt,es which Lffect the degrae to which financing y het AF DC (Maons) $56 's - $419 $319 Net AFDC Per shme $3 75 $310 $247 requirements will be met bj funds provided from operations y Ea'nings Per sNye (EPs) $418 $4 83 $4 36 Include other such items as the impact of inflation on operating Net AFDC Pe r Shaw a; a Percent of EPs 90% 64 % 57% expenses, the evel of kwh sales. the demand from other utikties v EPs ocMng not Af DC $ 43 $173 $189 for interchange power and the Company's abihty to receive Tht; significart decrease from 1981 to 1982 in earnings per adequate rate incmases. _ share. 9%u4ng net ACDC is a result of inadequate rate relief See Supplementa*y Financial Information for Financial Data A3 and the effecf Cr he recession on the bc& pconomy Adjusted tur Changng Pnces. "
\'
Projected Construction Expenditures . Projected f.ve-year construction expend;ture) are: L Construct on E mpend tures j 1983 1984 1985 1986 to87 Tem 0.%orrs) - Genera' ng tacht es $145 4 $1117 $ 26 9 $ 80 $ 10L $352 5 Nuc' ear fuel 27 138 18 2 89 71 50 7 Transmssion f acht es 73 21 0 11 8 277 r2 74 0 D strtuta n and generai taot t'es N3 31 4 36 9 34 7 353 162 6 Totais $179 7 $177 9 $ 93 8 $ 79 3 $ 591 $589 8 [ d Of the five-year total for generating f aC Ms. $233 rr:lhon is budgeted for Wolf Creek. After completion of Wolf Creek. wnich --_ is currently scheduled for commercial operation in 1935 ton. I structiot expend,tures are exDected to drop to relatively low k;vek The 1: ming of construction and cost estimates aru subject to 2 continuing review and adjustments, and actual constructiLn expend;tures may vary from such est: mates. l t L Lc
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l 9 Kansas City Power & Lght Company - Supplementary Financial Information Quarterly Operating Results . 1st 2nd 3rd 4th Quarter Quarter Quarter Quarter 1982 1981 1982 1981 1982 1981 1982 1981 h (thousands) Operating revenues $115 347 $106.106 $111.416 $113.252 . $140.683 $139265 $118.183 $113088 c Oparating income 19273 22.065 14.360 20.278 26 071 29.750 18219 22 392 i Net income 16.930 16 080 12.643 14.570 29.195 28.090 22.173 20.406 Eamings per common share $ .94 $ .94 $ .58 $ 83 $ 1 55 $ 1 82 $ 1 04 $ 1 24 The business of the Company is subject to seasonal fluctuations with peak penods occurnng dunng summer months. t
/
Financial Data Adjusted for Changing Prices (Thousands) Year Ended December 31.1982 Constant Dollar Current Cost Ave < age Average 1982 Dollars 1982 Dollars Net income before book depreciation of $45,215 S 126,156 S126,156 Adjusted depreciation . 102.958 111,881 laccme* S 23.198 (a) S 14.275 Increase in specific prices (current cost) of property. plant and equipment held during the year S 27.405 Increase to net recoverable cost S 219 95.267 Effect of increase in general price level (113.530) Total 219 9.142(b) Gain from decline in purchasing power of net amounts owed 37,104 37.104 Net - S 37.323 $ 46.246 (a)lncluding the increase to net recoverable cost, the gain on a constant dollar basis would have been 523.417 for 1982.
. (b)At December 31,1982, current cost of utility plant net of accumulated depreciation was $3.051.000 while historical cost or net cost recoverable through depreciation was $1,615.000.
23
Kansas City Power & Light Company Certain Financial Data Adjusted for Changing Prices (in Thousands of Average 1982 Dollars) Year Ended December 31 1982 1981 1980 1979 1978 Average consumer price index (national) 289.1 272.4 246.8 217.4 195.4 General information Operating revenues $485,629 $500,630 $522.401 $493.192 $471.471 Gain from decline in purchasing power of net amounts owed $ 37,104 $ 85.707 $119.715 $132.688 - Cash dividends declared per common share $ 3.01 $ 3 00 $ 3.15 $ 3 50 $ 3.79 Market price per common share at year-end $ 27.44 $ 22.59 $ 22.66 $ 27.82 $ 34.37 Historical cost information adjusted for-Generalinflation income * $ 23,198 $ 26.779 $ 27.505 $ 4.418 - Income (loss)* per common share $ 0.33 $ 0.90 $ 1.01 $ (0.88) - Net assets at year-end at net recoverable cost $529,152 $471,714 $475.328 $469.331 - Current cost information income * $ 14,275 $ 15.919 $ 14.347 $ (12.289) - locome (loss)* per common share $ (0.26) $ 0.10 $ (0.02) $ (2.39) - Excess of increase in general price level over increase in specific prices after reduction to net recoverable cost $ (9,142) $ 62.876 $113.390 $139,449 - Net assets at year-end at net recoverable cost $529,152 $471,714 $475.328 $469.331 -
- Excluding adjustment to net recoverable cost. The year 1979 is before cumulative effect of change in revenue recognition.
Notes to the Financial Data Adjusted for Changing Prices The information presented above is supplied in accordance with the requirements of FASC Statement No. 33. " Financial Reporting and Changing Prices" for the purpose of providing certain information about the effects of changing prices. It should be viewed as an estimate of the approximate effect of inflation, rather than as a precise measure. Constant dollar amounts represent historical costs stated in terms of dollars of equal purchasing power. as measured by the Consumer Price Index for All Urban Consumers (CPI-U). Current cost amounts reflect the changes in specific prices of plant from the date the plant was acquired to the present and differ from constant dollar amounts to the extent that l specific prices have increased more or less rapidly than prices in general. The current cost of plant was determined by indexing the surviving plant by the Handy-Whitman Index of Public Utility Construction Costs. Since utility plant is not expected to be replaced precisely in kind, current cost does not necessarily represent the replacement cost of the Company's productive capacity The current year's provision for depreciation on the constant dollar and current cost amounts of depreciable pl'qt was determined by applying the Company's composite depreciation rate to the average. depreciable plant amount calculated on a constant dollar and current cost basis. Since regulation limits a recovery of fuel costs in base rate schedules to actual costs, fuel inventories are effectively monetary ascets and have, therefore, not been restated from their historical cost in nominal dollars. Also, preferred stock has been treated as a monetary item. Since only histoncal costs are deductible for income tax purposes, income tax expense has not been adjusted. Under the ratemaking prescribed by the regulatory commissions to which the Cnmoany is subject. only the historical cost of plant is recoverable in revenues as depreciation. Therefore, the excess of the' cost of plant stated in terms of constant doliars or current costs that exceed lhe historical cost of plant is not presently recoverable in rates as depreciation. and is reflected as a reduction to net recoverable cost. To properly reflect the economics of rate regulation in the determination of income. the reduction of net plant to net recoverable cost has been Offset by the gain from the decline in purchasing power of net amounts owed 24
1 1 l Dividends and Stock Prices The Company Ccmmon Stock Price Range Kansas City Power & Light Company is a medium-sized electnc utility and the corporate successor to one of the world's 1982 1981 Qu;rt:r High Low High Low first electnc companies, founded in 1881 Headquartered in First $24 $21% $22% S19y downtown Kansas City Missouri. the Company generates and Second 25% 23% 22 19?e d stributes electricity to about 350.000 customers in a 4.700-Third 26 22M 22K 19% square-mile area located in all or portions of 23 counties in Fourth 28% 24u 24% 19% western Missouri and eastern Kansas. Population of the service Common stock is listed on the New York Stock area is about 825.000. Customers include 308 000 residences. tExchange and the Midwest Stock Exchange. 40.000 commercial firms. and 2.800 industnes. mun<cipa!! ties nd other electnc utikties. About 73 percent of total Kwh sales C mmon Stock Dividends Common stock dividerds were declared as follows: and revenue is derived from customers in Missoun and the Outrtzr 1983 1982 1981 is gensad ad estnWd to about 200 buss First 50.79 $0.74 S0 695 Second nesses in downtown Kansas City and accounts for about two 0.74 0 695 Third 0.74 0.695 percent of total revenue Fourth 0.79 0.74 Generating Capacity and the MOKAN Pool Most of the electricity supphed to customers is generated Prafsrred and Preference Stock Dividends from six power stations with a total capacity of 2.774 megawatts Quarterly dividends on Preferred and Preference Stock were declared in each quarter of 1982 and 1981 as follows- KCPL is one of 11 members of the MOKAN Poel formed in 1962 to share reserve capacity coordnate planning for addi-Cumulative Cumulative No Par tiona! generating units and expand transmission hn'es Trans-Ser s ount Ser es ount m ssion Wemes with numerous utikties in Missoun. Kansas. 3 80 % S 0 95 $10.70 $2.675 Nebraska. Iowa and Minnesota enhance our system rehabihty 4.00% 1.00 S 2.33 0.5825 and have made Kansas City a key center in the national power 4 20 % 1 05 3 2.20 0.55 grid which enables bulk power t ansactions among the inter-4 35% 1.0875 connected ut:hty systems 4 50 % 1.125 Cumulative Economy of the Service Territory 7.72 % 1.93 Preference Stock Most cf the Company's business is denved from Metro-
^*"" p htan Kansas City which is considered to be the world's S $200
$12.75 31875 gnNsess capital. centered around the Kansas City Board of Trade Kansas City leads the naton in farm equ:pment distnbu-Quarterly dividends on Cumulative Preference Stock tion and hard winter wheat marketing ranks second in wheat issued in 1982 were declared as follows:
flour prcJuction and grain elevator storage capacity and is the n s M largest Meda cae maM Seri:s issued 1st 2nd 3rd 4th The metro area has developed into a major retail market.
$17.05 Feb 1982 $50676 $42625 S4 2625 S42625 $13 25 Sept 1982 - -
2.3188 3.3125 r nk.ing sixth among the thirty largest metropohtan areas in per capita retail sales The city is the nation's largest producer of All dividends paid by the Company in 1982 were deter- greeting cards and envelopes. and is a major center for auto-mined to be dividend income and no portion was considered to mobile and truck assembly. rail and truck transportation storage. be return of capital. and distnbution and for regional wholesale and service com-Transf:r Agents and Registrars panies Kansas City is also a rapidly growing convention and l Common Stock entertainment center. ranking among the tcp ten cities in Manufacturers Hanover Trust Company number of conventrons and dollars spent New York. New York 10015 Location of sevc t wreign trade zones in the area has l Hams Trust and Savings Bank estabhshed Kansas City as an internat onal trade center Chicago. Ilknois 60690 The area's location midway between the geographic and United Missouri Bank of Kansas City. N A. population centers of the country will continue to play an Kansas City. Missouri 64141 important role in the area's economic development A review of Fortune's 500 largest f:rms shows that 200 have operations in Pr:f arr:d Stock Metropohtan Kansas City Manufacturers Hanover Trust Company New York. New York 10015 United Missouri Bank of Kansas City, N A. Kansas City. Missoun 64141 I Prtfarznce Stock l Kansas City Power & Light Company l Kansas City. Missoun 64141 l 25
Kansas C.ty Power & Ught Company Eleven-Year Summaries and Selected Financi:1 Data Summary of Eamings 1982 1981 1980 1979 1978 1977 1976 1975 1974 1973 1972 Operating Revenues i000 s) [htr< $ 47$.002 $ 465 825 3 4401P2 $ 365 084 $ 313 787 $ 266 053 $ 234 297 $ 207813 $ 170249 $ 155403 $ 137 781 S't am Nat 9.627 5 886 5783 5 791 4 876 4 609 2 867 2 505 1 799 1 736 1 829 Ynw 445.629 4717t t 445 965 370 875 318663 270 662 237164 210 318 172 048 15?139 #39 610 Operating Espenses <000 s> OLeraNe 207.974 180474 174 661 186134 135 450 110$10 92 945 83 555 58 837 55 950 50 538 Va rtearse 62.496 54 305 52 680 54 315 30 359 29 4 % 22275 19194 14 5W 13890 10 659 Dwn .at no 45.21$ 44 962 41 733 34 868 33174 30 356 24 629 21867 20 648 18 560 14 301 Ta.es
*W 39.946 45 577 42 088 9563 26137 18455 19 841 16 495 15204 10 633 9 349 Gm a' $2.07$ 51 908 47956 41 914 38 511 35 519 3t 822 28537 , 25 207 22 959 21 375 Totaa 407.706 377226 359118 326 800 263 63 t 224 336 19' !'2 169 64R 134 446 121 992 106 222 00erating Income #0 s1 77.923 94 485 86 847 44 075 55032 46 326 45652 40670 37602 35147 33 38R O*her income and Deductions iOOO s)
Amac.c e Nr eVy feds used d#ngrevrmfe 36.069 29 C73 19775 13467 12 543 7 592 3 083 2.119 511 1 006 1 893 M see3 anew met) (63 327 (122) 304 (874) (391 185 1 715 642 2' 4 498 T+af 36.026 29 400 19 653 19 771 11 669 7 65? 4168 3 834 1 153 1220 2 391 income before interest Charges enOO o 113.949 123 885 106 500 63 846 66 701 53879 49 820 44 504 38 755 36 367 35 779 l Interest Charges .000 si l Loco wm det3t 65.260 55232 48 864 40 612 3217 28 856 23 553 19 968 17884 17473 15978
%xi tern rdes 6.021 3 8'46 4 781 3 408 1 96S 1 066 412 1085 1 592 343 650 Arewarme w twrchac turtts usa ung enestn.cfo-cre<t.t (39.670 (24 878) (2: 997) (19 2111 f t0 750s 15 404. t4 0221 (3 356) 11 2625 (1 554) 13 102) v wem.s 1.397 10489 7151 2 486 341 268 255 203 128 147 87 Total 33.000 44 739 37 799 27295 23777 22 2M 20108 17900 18 542 16 409 13613 income before Curr.ulative ttfect f000 si 80.941 79146 68 701 36 551 42924 31 593 29 622 26 604 20 213 19 958 22.166 Cumulative Effect of Change an Owenue Recognition f COC s) - - -
7 202 - - - - - - - niet Income f 000 9 80.941 79146 68 701 43753 42 924 31 593 29 622 26 604 20 213 19958 22 166 Prsterred and Preference Stock DiWdend Requirements iOOO s i 18.193 13 749 12418 10 573 8 719 7 545 5124 4 0t9 2 842 2 848 2 854 Appl 6 cable to Common Stock i300 s) $ 62.746 $ 65 397 $ 56 283 $ 33180 $ 34 205 $ 24 048 ! 24 498 $ 22 585 $ 17 371 $ 17110 $ 19 312 Earnegs Per Common $ hare $ 4.18 $ 4 83 $ 4 36 5 3 01 $ 3 55 $ 2 93 $ 3 40 $ 3 62 $ 2 92 5 2 88 $ 3 37 ktoo of Earnings to Fixed Charges 2.62 2 75 2 80 1 99 3 01 2 78 3 04 3 09 2 82 2 68 2 88 Capitalizatiori Data Common $tock Cquity r000 s; $ $35.192 $ 459 313 5 424 852 $ 373224 $ 327 260 $ 282106 5 244 938 $ 215 512 $ 188 336 $ 183 934 $ 179 802 Ave'aw se res cava^cag ' $.006.912 13 535143 12 915 770 11 009407 9 644 321 8 216133 7 211 536 6247092 5 947 092 5947032 5 738 759 Cas9 1 vends t- stre $ 3.01 $ 2825 $ 2 69 $ 2 635 $ 2 56 $ 2 46 $ 2 34 $ 2 26 $ 2 20 $ 2 20 $ 2 12 Prmered Stock c00 s> $ 112.000 $ 112 000 $ 112 000 $ I t 2 000 $ 112000 $ 112 000 $ 92 000 $ 72 000 $ 52.000 $ $2 000 $ 52 000 0 e1 rewrews < 000 s, S 8.414 $ 8 414 $ 8 414 $ 8 414 $ 8 414 $ 7 372 $ 4 945 $ 3 834 $ 2 650 $ 2 650 $ 2 650 Ac.w- aec rav 7.$% 75% 75% 75% 75% 74% 67% 60% $1% 51% 51% l Ntarred Stock (Redeemable) 4000 si $ $6.316 $ 3676 $ 3 836 5' 39% $ 4156 $ 4 316 $ 4 476 $ 46'i6 $ 4 796 5 4 956 $ 5116 DrMe t ru,eem iOO0 s, S 4 592 $ 148 $ 153 $ 159 $ 166 $ 173 $ 179 $ 185 $ 192 $ 198 $ 204 A e w c,vndera 14.7% 40% 40% 40% 40% 40% 40% 40% 40% 40% 40% PrWrence $ lock (Redeen'able) f 000 sl $ $3.000 $ 50 000 $ 50000 $ ?5000 $ 25000 - - - - - - 0+ ck m me v's <0no si $ $.187 $ $187 3 3 B51 $ 2 000 $ 139 - - - - - - A*w:e d n1eN ra'e 10.38 % 0 38 % 9 73 % 8 00 % 8 00 % - - - - - - l Long-term Debt (including current l moturttles) t000 si $ 767.616 $ 662 050 $ 612 477 $ 588 876 $ 503044 $ 436 372 $ 384118 $ 343 738 $ 324 541 $ 299 757 $ 285673 Hrev v om toco si $ 65.260 $ 55 232 $ 48864 $ 40 612 $ 32 217 $ 26 8s6 $ 23 553 $ 19 % 8 $ 17884 $ 17473 $ 15 978 A*raae .r .= rest ra*e 9.40% 8 88 % 8 2'% 758% 6 98 % 6 78 % 6 35 % 6 12% 5 88 % 5 86 % $ 73% Othir Data U% Fr t- Gw amtm 'OO0 s) $ 207.038 $ 173 418 $ 156 867 $ 234 818 $ 188 721 $ 168 285 $ 126 014 5 89 818 $ 63179 $ 38 355 $ 70170 7?a: Asws o300 s 1.792.227 1 617781 1 538 978 1 391 038 1 166 760 1 008 814 841 502 736 530 662 592 604 930 575 505 l I l 26
m h Electric Sales Statistics 1982 1981 1980 1979 1978 1977 1976 1975 1974 1973 1972 Revenues (000's) Residettat $ 100.364 5 154 916 $ 161.973 $ 121170 $ 111972 $ 93343 $ 84 202 $ 79 507 $ 62 314 5 58280 $ $1533 Commercial 203.904 192 526 176 505 148.120 124 083 107138 94 306 83 416 68 273 62043 54 830 it'dustrial 88.953 94 168 80 821 76 956 61.489 50 914 43105 34478 30 927 27570 24 530 Pubic street and henay Icteg 9.616 9 332 8 325 7.043 6 221 6 398 5888 5.205 4506 3449 3 683 Puuhc authortes-Dower t and teleg 86 82 75 69 74 65 60 56 55 49 45 Orner escinc utrhtes 12.631 t2 648 10 638 9 994 8 369 6 186 5315 3 765 2 968 2 ?55 2 123 Total 473.564 463.672 43d 337 363 352 312 208 264 644 232 876 206 427 169 043 154 246 136 744 Othev electoc revenues 2.248 2153 1 845 1732 1 579 1.409 1 421 1 386 1206 1 157 1037 Total $ 475.002 $ 465825 $ 440182 $ 365 084 3 313 787 $ 266053 $ 234 297 $ 207 813 $ 170249 $ 155 403 $ 137 781 Sales in KHowatt Hours (000's) Resdentet 2.378.647 2 345 646 2 689467 2.254 962 2.465 782 2 284.029 2.193.859 2 300 432 2.070 855 2113326 1 956.111 Commercat 3.330.673 3251235 3 338 185 3183710 3182 675 3 080 589 2 889 888 2 846 031 2651817 2 677697 2 493428 i Industnal 1.959,431 2 326 664 2 141 924 2 383204 2 302 619 2.147 363 1 980 230 1768308 1 952 711 1 985 799 1 881 876 Pubhc streel and highway aghhng 66.625 66 308 67.172 66.561 68248 68286 66 814 65260 65276 64158 62 331 Pubbe authontes-power and let:ng 1,657 1 634 1693 1 876 2110 2 702 2 657 2 914 3513 3 599 3 596 Other eiecinc utnes , 325.997 327022 355.154 328 072 336 916 317 5t6 302.842 264 497 235 488 236 309 216 280 ifal 8.072.030 8 318 509 8 593 595 8 218.385 8 358 950 7 900.485 7 436 29J 7247442 6 979 660 7080 888 6 613 622 Cverage Number of Customers Revdential 306.756 304 613 301417 298 413 291 402 288 376 284 296 281 708 278 973 273 532 267.320 Commeroa. 40.065 39 758 38 984 38 372 38 713 38 343 38.024 37709 37.575 37 401 36 670 Industrel 2.476 2.359 2 215 2 142 2 121 2 084 2.065 2043 2 063 2 112 2133 Pubt.c streel and h@*ay hgnhng 120 122 123 123 123 122 125 126 128 128 129 Pubhc autnontes-powef and l@ tea 11 11 11 11 12 11 11 11 12 12 12 Other electnc ut+tes 13 13 14 14 16 16 15 13 13 13 12 TotM 349.441 346 876 342 764 339 075 334 387 328 952 324 536 321 616 318 764 313198 306 276 Residential Sales Average kwh per customer 7.754 7 700 8 923 7 556 8.404 7 920 7.71 7 8 166 7.423 7 726 7 317 Airectoe revenue Der keh-cents 4.742 6 604 6 023 5 373 4 E41 4 087 3 838 3 456 3 009 2 758 2 634 Load Stanst6cs Generated (nett-keh dOOo s) 9,134.264 10 762.030 10 095 801 7 535 591 8 581 224 8 446 189 7687221 7203148 7225.580 7212 592 7225430 Purchased d ah (000 st 11,146 11 051 11 761 79 993 211 991 IM 082 194 250 190198 161 600 141 759 185 822 Interchanged inetskwh t000 s) t 902.501 ) 1 196104 218 421 (182 695) 164 936 463 542 169272 243 921 f 237 235) (539.933) 1 908 379) Tatt 4 atCCO'en 4.003.497 886470 3205041 3 811 688 3 Ci1 SJ6 04*,1576 6 026 4J7 _7 _857.48_6 7 26452 7 566 2 Ti 7 t 74 0 7 w. Maumum iet bouffy demand en kewatts tneter) 1.315,000 1.304 000 1 299 000 1 317000 1 286 000 1 255 000 1.165 000 1.161 000 1.106 300 1 090 900 1 116 800 Maomum ne ebouriv demand a luloeatts tsummer) 2.167.000 2 123 000 2 198 000 1 964 000 2.097.000 1 980 000 1 920 000 1.902 700 1.907 200 1 757 300 1 675 700 Ne4 g.merating capabny m ka>aats (summer 1 2.774.000 2 884 000 2 838 000 2 560.000 2.560.000 2 641.000 2.361 000 2 334 000 2 218 000 2 224 000 1 813 000 Net capaoty e kilowatts isoli purchased isummerl - (200 000) (150 000) - 95,000 (101 000) 118 000 100.000 148 000 (25 000) 163 000 Blu per net kah generateo 11.134 11.119 1i 158 11 633 11 266 .5 ' 8 11 331 11 585 11 364 11 521 11 001 Empl2yee Data Salares and wages 1000's) $ 87.907 $ 80 239 $ 73 602 $ 68 465 $ 54 693 $ 56 380 $ 49 644 $ 45 305 $ 38 614 $ 40 068 $ 33867 Pensens and berets (000 si 14.473 12 759 11 670 9 947 6 861 7 878 7.132 6 487 5 358 5870 4 285
$ 102.300 $ 92 998 _$ 85 272 $ 78 412 $ 61 554 $ 64258 $ 56 776 3 51 792 $ 43 972 $ 45 938 $ 38 152 Numt er of employees. December 31 2.957 2 928 2 856 2 868 2126 2 572 2 522 2 484 2 477 2 556 2473 Employee Data-Adjusted
- I Salares and
- ages t000 s) $ to.1M $ 72627 3 66 469 $ 62 569 $ 49 755 $ 51 716 $ 46 491 3 42 748 $ 36272 $ 39 130 $ 33264 Pensions and benefits t000 s. 13.281 11 610 10 751 9 282 6 28' 7 359 6154 6174 5 087 5 729 4 209
$ 93.475 $ 84 237 5 7722_0 $ 71 851 5 56 042 $ 59 075 $ $3 245 $ 48 922 3 41.359 $ 44 859 $ 37473 Nurnber of emikvees. Decemb 4 31 2.720 2 694 2 628 2.659 2 577 2414 2 382 2.379 2 375 2473 2 429 Tactuces dAi redated to employees arioca'ed to ott'er particcants e pointiv owned u nits ope *ated by KCPL 4
27
1 Board of Directors Company Officers ** Arthur J. Doyle* Willis C. Thels* Arthur J. Doyle,59 Chairman of the Board. Chairman of the Board Cha:rman of the Board. President and Chief Executive Simonds-Shields-Theis President and Chief Executive Officer Grain Company Officer.1973
-grain merchants and Cyrus S. Eaton, Jr. warehousemen Samuel P. Cowley,48 Chairman of the Board Sen:or Vice President-Cyrus Eaton World Trade Robert H. West
- Corporate Affairs, Secretary l l Cleveland. Ohio President and Chief and Chief Legal Officer.1979 l l -mining. investments and Operating Officer I international trade Butler Manufacturing Donald T. McPhee,63 i Company Senior Vice President-System William D. Grant * -manufacturer and marketer Power Operations.1969 l
Chairman of the Board and of pre-engineered buildings Chief Executwe Officer systems,agnculturalequip- J. Robert Miller,58 Business Men's Assurance ment and energy manage. Senior Vice President-Company of America ment systems Transmission and Distribution
-insurance Operations.1971 ,
Robert K. Zimmerman* l Giorge E. Nettels, Jr. Hnnorary Chairman Louis C, Rasmussen,54 President and Chief Executive of the Board Senior Vice President-Finance Officer and Commerce and Chief McNally Pittsburg. Inc. Financial Officer.1974 President Midwest Minera!s. Inc Advisory Director J. Michael Evans,37 Pittsburg. Kansas Robert A. Olson Vice President-System Power
-engrneering. manufac- Retired Chairman Operations.1983 turing. construction of the Board mineral processing and A. Drue Jennings,36 )
quarry operations Vice President and General j Counsel.1980 Louis C. Rasmuseen Sen.or Vice President-Finance Donald M. Landes,51 and Commerce and Chief Vice President-Financial Officer Communications.1975 ! Eugene M. Strauss John A. Mayberry,55 Chief Executive Vice President-Commercial The Strauss Companies Operations.1971 l ! -insurance and related insurance corporations William H. Miller,48 Vice President-Administration. 1980
- Member Executive Committee Ronald G. Wasson,37 l Vice Presidt.nt-Purchasing.
1983 Lee F. Miller,61 Treasurer.1975 J Neil A. Roadman,37 Controller.1980
" Listing includes age. t; tie and year promoted to officer l
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. Audited Financial Statements Kansas Electric Power Cooperative, Inc.
. December 31,'1982 Ernst&Whinney
Audited Financial Statements KANSAS ELECTRIC POWER COOPERATIVE, INC. December 31, 1982 Auditors' Report . . . . . . . . . . . . . . . . . . . . . . . . . . 1 Balance Sheet. . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 Statement of Patronage Capital (Deficit) and other Equities. . . . . 4 Statement of Revenue and Expense . . . . . . . . . . . . . . . . . . 5 Statement of Changes in Financial Position . . . . . . . . . . . . . 6 Notes to Financial Statements. . . . . . . . . . . . . . . . . . . . 7
Ernst&Minney 2000 city center S2 o ,c 1100 Main Street Kansas City, Missouri 64105 816/474-8050 Board of Trustees Kansas Electric Power Cooperative, Inc. Topeka, Kansas We have examined the balance sheet of Kansas Electric Power Cooperative, Inc. as of December 31, 1982 and the related statements of patronage capital (deficit) and other equities, revenue and expense, and changes in financial position for the year then ended. Our examination was made in accordance with generally accepte1 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 financial statements referred to above present fairly the financial position of Kansas Electric Power Cooperative, Inc. at December 31, 1982 and the results of its operations and changes in its financial position for the year then ended, in conformity with generally accepted accounting principles applied on a basis consistent with that of the preceeding year.
+ YY Kansas City, Missouri February 2, 1983 l
BALANCE SHEET KANSAS ELECTRIC POWER COOPERATIVE, INC. I I December 31 1982 ASSETS UTILITY PLANT Electric plant in service $ 125,887 Construction work in progress--Note B 110,794,905 110,920,792 Less allowances for depreciation 47,186 110,873,606 , l INVESTMENTS IN ASSOCIATED ORGANIZATIONS 5,844,180 CURRENT ASSETS l Cash and short-term investments (including amounts l restricted for construction of $138,075) 1,073,264 Accounts receivable from members 2,061,870 i Other 6,083 3,141,217 DEFERRED DEBITS 254,076
$120,113,079 December 31 1982 LIABILITIES AND PATRONAGE CAPITAL PATRONAGE CAPITAL AND OTHER EQUITIES Memberships $ 2,800 -
Patronage Capital (Deficit) (948,266) Other equities 30,433 (915,033) i LONG TERM DEBT--Note C 114,868,281 CURRENT LIABILITIES l Note payable to National Rural Utilities Cooperative Finance Corporation 2,670,000 Accounts payable 2,128,451 Accounts payable to members--Note D 1,082,578 Payroll and payroll related liabilities 21,904 Accrued property taxes 241,220 Accrued interest payable 1,719 Other 13,959 6,159,831 COMMITMEliTS AND LITIGATION--Notes B, C and D
$120,113,079 See notes to financial statements l
1 e STATEMENT OF PATRONAGE CAPITAL (DEFICIT) AND OTHER EQUITIES KANSAS ELECTRIC POWER 000PER' CIVE, INC. Yscr Ended December 31, 1982 Deficit Patronage Accumulated Capital During Member- (Deficit) Development Other ships Unallocated Stage Equities Total Balcnce at D cember 31, 1981 $2,800 $ (3,780) $(3,514,473) $ $(3,515,453) Raclassified to Construction in Progress--Note B --- --- 3,514,473 --- 3,514,473 1982 Net Margin (loss) --- (944,486) 30,433 (914,053) Balance at December 31, 1982 $2,800 $(948,266) $ ---
$30,433 $ (915,033)
Sse notes to financial statements STATEMENT OF REVENUE AND EXPENSE KANSAS ELECTRIC POWER COOPERATIVE, INC. Year Ended December 31, 1982
~ Operating Revenue $18,012,089 Operating Expenses:
Power purchased 17,988,089 Administrative and general 900,485 Depreciation 13,884 Interest 54,117
.$18,956,575 NET LOSS FROM OPERATIONS (944,486)
Interest Income 30,433 NET LOSS $ (914,053) See notes to financial statements 1 f
STATEMENT OF CHANGES IN FINANCIAL POSITION KANSAS ELECTRIC POWER COOPERATIVE, INC. Year Ended December 31, 1982 SOURCES OF WORKING CAPITAL Net loss $ (914,053) Charges to income not affecting working capital: Depreciation 18,496 TOTAL FROM OPERATIONS (895,557) Proceeds from long-term debt 18,311,000 Other 21,727 17,437,170 APPLICATION OF WORKING CAPITAL Increase in investments in associated organizations 2,318,474 Additions to utility plant 25,740,128 Other 86,452 Reduction of long-term debt 13,959 28,159,013 DECREASE IN WORKING CAPITAL $10,721,843 CHANGES IN COMPONENTS OF WORKING CAPITAL Increase (decrease) in current assets: Cash and short-term investments $(6,819,927) Accounts receivable from members 1,780,589 Other 1,761 (5,037,577) Increase (decrease) in current liabilities: Note payable 2,670,000 Accounts payable 1,787,904 Accounts payable to members 1,016,578 Payroll and payroll related liabilities 7,069 Accrued property taxen 237,167 , Accrued interest payable (39,403) ! Other 4,951 l 5,684,266 DECREASE IN WORKING CAPITAL $10,721,843 i See notes to financial statements NOTES TO FINANCIAL STATEMENTS KANSAS ELECTRIC POWER COOPERATIVE, INC. December 31, 1982 NOTE A-
SUMMARY
OF SIGNIFICANT ACCOUNTING POLICIES
. Kansas Electric Power Cooperative, Inc. (KEPCo) maintains its accounting records in accordance with the Federal Energy Regulatory Commission's chart of accounts as adopted by the Rural Electrification Administration.
The more significant accounting policies are described below. Property, Plant and Equipment: Property, plant and equipment is stated at cost. Provision for depreciation is computed on the straight-line method on the basis of the following estimated useful lives: Transportation Equipment 3-4 years Office Furniture & Fixtures 10 years g Leasehold Improvements 3 years Depreciation for 1982 amounted to $18,496, of which $13,884 was charged to depreciation expense with the remaining amount being charged to various deferred debits, member clearing accounts and construction in progress. Short-Term Investments: is approximately equal to Short-term market. investments are stated at cost which Investments in Associated Organizations: Investments in associated organizations consist principally of patronage capital certificates of the i National Rural Utilities Cooperative Finance Corporation. Tax Status: KEPCo has been determined to be exempt from federal income taxes under Section 501(c)12 of the Internal Revenue Code. NOTE B-WOLF CREEK NUCLEAR PLANT
~ On December 31, 198t, KEPCo acquired a six per-cent interest in the Wolf ' Creek Nuclear Plant (Wolf Creek), being constructed near Burlington ,
Kansas, from Kansas City Power and Light Company (KCPL) and Kansas Gas and Electric Company (KCE). The purchase price was approximately $73,922,000. Prior to December 31, 1981, KEPCo had advanced $151,500,000 to KCPL and KGE with the intention of acquiring a 17% interest in Wolf Creek. KEPCo had borrowed such amounts from the National Rural Utilities Cooperative Finance Corporation (NRUCFC) and had incurred interest charges of approxi-mately $57,728,000 through December 31, 1981. On December 31, 1981, the advances were refunded together with interest of $49,531,000. The excess of interest incurred over interest refunded ($8,197,000) has been included in construction in progress as a cost of Wolf Creek. NOTES TO FINANCIAL STATEMENTS-CONT'D NGTE B-WOLF CREEK NUCLEAR PLANT-CONT'D Prior to January 1, 1982, KEPCo was considered to be a " development stage enterprise". In this regard, certain costs were recorded as a deficit accumulated during the development stage ($3,514,473). Additionally,
$19,499,586 of costs related to Wolf Creek were classified as deferred debits at December 31, 1981, consisting principally of capitalized interest including the $8,197,000 referred to in the preceding paragraph.
During 1982, management performed a comprehensive review of all prior years' costs classified as " deferred debits" and " deficit accumulated during development stage", and as a result of this review, management believes that these costs are directly related to KEPCo's participation in Wolf Creek and therefore are properly includable in utility plant. Accordingly, these costs were reclassified to construction in progress during 1982. The expected completion date for Wolf Creek is April,1985, as projected by KGE in its November, 1982 schedule and budget. KEPCo's management estimates KEPCo's total investment at completion, based on the November, 1982 schedule and budget, will be approximately $220,000,000 including interest and administrative costs during construction. At December 31, 1982, KEPCo has an approved Federal Financing Bank (FFB) loan guaranteed by the Rural Electrification Administration (REA) in the amount of
$200,000,000. Management intends to apply to REA for an REA guaranteed FFB deficiency loan of approximately $20,000,000. KEPCo's investment in Wolf Creek at December 31, 1982, was $110,794,905, including approximately
$1,082,000 that management expects to invoice to KCPL and KGE for reimbursable construction costs. Reimbursement will be credited to
- construction in progress when received.
i . NOTE C--LONG TERM DEBT l Long Term debts consists of: l l December 31 1982 Mortgage notes payable to the Federal Financing Bank (FFB) at rates varying from 10.61% to 14.724%. Interest is payable in quarterly installments through 1988. Starting in 1989, quarterly installments of interest and principal will commence and will continue through 2017 $114,311,000 Advances from member and non-member cooperatives 557,281
$114,868,281
NOTES TO FINANCIAL STATEMENTS--CONT'D NOTE C--LONG TERM DEBT--CONT'D KEPCo has the option on FFB promissory note advances to elect short-term maturity dates of not less than two years nor more than seven years after the date of the initial advance (subject to REA approval) or may elect a long term maturity date of 34 years after the end of the calendar year in which the initial advance was made. On the maturity of a short-term i advance, KEPCo may refinance the advance with another short-term advance with a maturity date of not greater than seven years from the date of the l original advance or may elect to refinance with a long term maturity date j of 34 years after the end of the calendar year in which the initial advance was made. At December 31, 1982, KEPCo had $48,000,000 of advances l with maturity dates of December 31, 1983. KEPCo intends to refinance these advances as described above. Accordingly these advances have been classified as long-tena debt for financial statement purposec. KEPCo has a loan commitment of $200,000,000 from FFB which is guaranteed by REA, and intends to apply for a $20,000,000 deficiency loan from FFB to be guaranteed by REA. Advances of funds from member and non-member cooperatives resulted from the transfer of assets and liabilities from the Kansas Electric Cooperative Inc. to KEPCo during 1977. These funds were used to finance economic, engineering, legal and administrative investigations of projects
- that were being contemplated. The agreements with the cooperatives state l that should an investigation result in the construction of a project or projects, amounts of investigation and development costs transfered to project utility plant accounts are to be reimbursable to the systems
! participating in the agreements on a pro rata basis. During 1982, interest incurred totaled approximately $14,183,000, of which
$54,117 was charged to interest expense and the remaining amount was capitalized as part of the cost of capital assets under construction.
NOTE D--CONTINGENCY , At December 31, 1982, KEPCo was a defendant in certain litigation concern-ing disputed power billings from Kansas Gas & Electric Company (KGE) totaling approximately $746,000. The dispute is over the effective date of a rate increase and related issues. Subsequent to December 31, 1982, the litigation was dismissed without prejudice, pending the issuance of an l Order, after a formal hearing by the Federal Energy Regulatory Commission (FERC). In conjunction with the dismissal, KEPCo paid a portion of the disputed amount to KGE totalling $295,328, which is subject to refund with interest upon final resolution of this issue. Through December 31, 1982, KEPCo had retained funds from its members in the amount of $891,180 to be used for payments, if any, as may be required upon resolution of the dispute. The $891,180 is included in accounts payable to members in the accompanying balance sheet.
NOTES TO FINANCIAL STATEMENTS--CONT'D NOTE E--PENSION PLAN KEPCo participates in the National Rural Electric Cooperative Association (NRECA) retirement and security program for its employees. KEPCo makes annual contributions to the plan equal to the amounts accrued for pension costs. KEPCo employees are also required to contribute a percentage of their salary to the plan. In the master multiple-employee plan, which is available to all members of NRECA, the accumulated benefits and plan assets are not determined or allocated by individual employees. KEPCo's pension cost for the plan for the year ended December 31, 1982 was
$33,470.
l i Ernst&Whinney 2000 city ce te, squar. 1100 Main Street Kansas City, Missouri 64105 816/474-8050 Board of Trustees Kansas Electric Power Cooperative Inc. ~ Topeka, Kansas We would like to take this opportunity to express our appreciation to Mr. Charles Ross, Executive Vice President, and the members of his management team, particularly Rick Tyler, for the assistance and co-operation that we received during our audit of the financial statements of Kansas Electric Power Cooperative, Inc. The cooperation and assistance that we received, combined with the overall ( quality of the accounting records, allowed us to complete the audit in an orderly fashion. During our examination, we did not note any weaknesses or deficiencies in the accounting system that would require recommendations for improvement. It is a pleasure to be associated with KEPCo, and we would be pleased to assist the board or management in any way that we can,
&+
Kansas City, Missouri February 2, 1983
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