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Latest revision as of 18:16, 27 February 2020
| ML19309E654 | |
| Person / Time | |
|---|---|
| Site: | Wolf Creek  |
| Issue date: | 03/03/1980 |
| From: | KANSAS GAS & ELECTRIC CO. |
| To: | |
| Shared Package | |
| ML19309E638 | List: |
| References | |
| NUDOCS 8004220747 | |
| Download: ML19309E654 (36) | |
Text
{{#Wiki_filter:- - - - - . __ O Kansas City Power & Light Company Annual Report 1979 1979 At A Glance + New load forecast predicts lower peak growth: delays need for next unit till 1989 or possibly later. Construction expenditures peak in 1979, will drop significantly in 1980 and taper off rapidly through 1982.
- Earnings decline reflects more moderate weather, higher maintenance and inter-change costs, impact of inflation, and inadequate rates.
- Electric rates increase 12.4 percent in Slissouri: 7.5 percent in Kansas.
Fuel adjustment clause terminated in blissouri: to undergo review in Kansas. Coal contract restructuring. effective in 1980 improves operation, lowers future cost. latan I scheduled for commercial operation in Slay 1980. Operating Highlights Percent increase 1979 1978 t Decrease) Electric Utility Data Electric Revenues (000s) 5 365,084 $ 313.787 16.3% Gross Additions to Plant (000s) $ 234,758 $ 188.65') ')4.4% Total Plant (000s) $ 1,036,161 $ 993.381 4.3% Construction Work in Progress (000s) 5 516,845 $ 330.860 56.2% Total Company Data Earnings for Common Stock (000s) $ 33,180 $ 34.205 (3.0%) Average Shares Outstanding 11,009,407 9.644.321 14.2% Eamings Per Share 5 3.01 $ 3.55 t 15.2%) 1 Dividends Per Share 5 2.635 $ 2.56 2.9% Book Value Per Share (year end) 5 31.95 $ 32.85 12.7%) Return on Average Common Equity 9.5% 11.2% (15.2%) l Selected Statistics Kilowatt Hour Sales (000s) 8,218,385 8.358.950 (1.7%) Peak Load (Kw) Summer 1,964,000 2.097.000 (6.3%) Winter 1,317,000 1.286.000 2.4% Fuel Slix (%) Coal 88.8% 88.1% .6% Fuel Oil 3.7% 5.7% (35.1%) Natural Gas 7.5% 6.2% 21.0%
> Average Coal Cost Iper million Blu) 95.5c 74.3e 28.5%
Centents l Letter to Shareholders. .2,3 l Special Report: Facing Up to the New Challenges of Change. .4,5 l The Year 1979. .6 13 Financial Statements. .14 26 Supplementary Financial Data Adjusted for Changing Prices. .27,28 31anagement's Discussion and Analysis of Operating Results. .28,29 Eleven Year Summaries. .30,31 8004220 S(f@
To the Shareholders: pletion prior to 1989. This pause will be a welcome relief and by 1984 we anticipate achieving our capitalization goals of 48 percent Prior to 1970, the. electric utility industry debt,12 perce:t preferred and 40 percent com-experienced nearly eight decades of consistently mon equity. high rates ofload growth and steadily declining ~ included in the following text is a chart electric service rates to customers. That was a Ilustrating the magnitude of year-end amounts period of technological advance and only mod- of actual and estimated impacts of the Com-erate inflation. By 1970, production of electric pany's construction work in progress for the energy required some 22 percent of the total 21-year period 1970-1990. It should be of primary energy consumed in this Country. particular interest in comparing our current The decade of the 70's was one of upsets, construction burden with our anticipated reversals, frustrations and transitions for our in- respite in the mid-1980's. dustry. It was faced, among other things, with- Comparisons of KCPL operating results in
-governmental indecision on energy and 1979 with the prior year may be misleading fuels policy, because 1978 had been a year oflarge inter-
-inordinantly high inflation severely change sales, due to cold weather and the coal impacting on the costs of construction miners' strike in the first quarter, and of and capital funds, reduced operations and deferred maintenance
-rapidly changing market conditions for during a 4-1/2-month strike of our own collec-2 primary fuels, tive bargaining unit employees during the last
-pervasive bureaucratic regulation and half of that year which included some unusually vacillation with respect to all phases of hot weather.
utility operations, and KCPI 's operating results for 1979 reflect, in
-electric rates being targets for political part, reduced kilowatt hour sales on account opportumsm. of energy conservation through mandated in 1979 the industry, nevertheless, managed to thermostat settings and more moderate weather provide adequate electric service using 32 per- as compared to 1978. Rate relief as authorized cent of our Country's total energy supr*y. by our regulatory commissions in the spring of For KCPL 1979 was a difficult year-one 1979 was only 68 percent of the increases which failed to live up to our modest expectations. sought by the Company. Revenues in 1979, As projected in last year's report, our 1979 therefore, failed to meet our expectations.
construction expenditures reached a record Throughout 1979 our operating expenses peak of over $200 million and our construction were burdened by overlapping outages of major work in progress at year-end was at an all time generating units for maintenance resulting in high of nearly $520 million. With our new latan high interchange purchases and significantly coal fired unit now being tested for commercial increased production maintenance costs. operation in May, and our Wolf Creek nuclear With an additional 1.4 million average unit now more than 50 percent complete.1980 shares outstanding, KCPL earnings for 1979 cash construction outlays will dmp to about were $3.01 a share, as compared to $3.55 per
$130 million and will taper off rapidly during share for the prior year. The 1979 earnings the next three years. included $2.68 per share attributable to the For our Company, the year 1979 ended allowance for funds used during construction nearly a decade of financing the concurrent (AFDC) and 65 cents per share related to the l construction of multiple generating units. cumulative effect to January 1,1979, of a With reduced system load growth forecasted change in the method of revenue recognition through 1990, when our industry will require to accrue revenues for unbilled sales.
nearly 40 percent of the total energy consumed On May 1,1979, the Board of Directors in this Country, we are not now planning any increased the quarterly dividend on the Com-other Company generating additions for com- pany's common stock to 66b cents a share, an
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l l equivalent of $2.66 annually, the 20th dividend After the Nuclear Regulatory Commission increase in the last 21 years. concluded in July,1979, that concrete installed i During recent months the Company's earn- for our Wolf Creek reactor base mat does, in ! ings have deteriorated ranidly and will continue fact, meet design specifications, construction i to do so until rate relief is obtained. We was expedited on those buildings which were presently have pending before the 31issouri behind schedule to permit completion in 1983. and Kansas Commissions requests for both A recent update now estimates cash construction emergency interim rate relief at this time and cost of this unit at $930 million. We estimate permanent rate relief to become effective Ler the installed cost for the Company's agreed this year after start of commercial operation 41.5 percent share of the 1,150-megawatt unit of our latan Unit No.1. Consequently, on will be $ 1.100 per kilowatt, including AFDC , January 7,1980, the Company implemented and capitalized taxes. an austerity program to reduce cash expen- The Board of Directors has designated a l ditures without impairing the adequacy and management state of nine nominees for elec-reliability of service to customers, tion at the 1980 annual meeting of stockholders, We are pleased with the outcome of several which slate includes three new nominees to fill significant events in recent months: vacancies on the Ibard. The officers of the l In December, we completed the restructuring Company are most gratified by the selection of our contract arrangements with two major of the new nominees: blessrs. George E. Nettels, coal suppliers involving about one-half of the Jr., Eugene 31. Strauss and Robert 11. West. Cornpany's coal supply for its existing units. For further information see the Company's 3 The new arrangements enabled our suppliers Starch,1980. Proxy Statement to take advantage of economies and will save the Company an estimated $10 million over the next five years. . ? k' N ' j The Company, Kansas Gas and Electric Company and Westinghouse Electric Cor- # poration have now settled our long-standing litigation involving uranium supply for our ' .64
- Wolf Creek nuclear unit. The terms of the settlement have a present value to KCPL and #j
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KG&E of $94.1 million, which covers the full amount of the damages we claimed. Kansas .
- Electric Power Cooperative, Inc., will receive i a 17 percent interest in this settlement upon y j purchase by it of an equivalent portion of the j ownership interest in Wolf Creek. '
Our fatan generating unit has been com- ) ' pleted for testing on schedule and within its . - installed cost estimate of $530 per kilowatt, Mgh 5-- ' < w including AFDC and capitalized property taxes. Starch 3,1980 The Company is the operator and owns 70 For the Board of Directors, percent of the 650-mega..att coal-fired unit. , Some appreciation for the impact of inflation on our major construction can be gained from I comparing this fatan unit with the cost of la Cygne 2 a similar unit completed three years earlier at an installed cost of about $340 Chairman of the bard per kilowatt. and President __. __- _ _ _ _ - _ _ - - _ _ _ - . _ = - _ = = . _ - . - - _ _ - - -
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l , x a A ( l Joint Ownership Cats Costs. for each 3 ear, principally in the lower 20 per-l The Company's continuing effort to cut costs cent level. $: was strengthened during the decade of the . Mr Construction To Taper Off Rapidly *;i 1970's by combining capacity needs with other latan 1 is now being tested for commercial power suppliers and building larger, jointly- operation in May,1980.The Wolf Creek unit - owried generating units. We operate and own is about 50 percent complete. With no goerat- , M halfof the La Cygne Units 1 and 2 and 70 per- " ing additions now planned forcompletion totil
- l cent of latan 1. When the sale of 17 percent of 1989 or later, annual construction expenditures our one-half ownership in Wolf Creek nuclear will be down significantly in 1980 and taper i unit is completed, the Company will have a 41.5 off rapidly thmugh 1983, after which there will percent share of the ownership and output of be a Iull of several years before major expendi-the unit. That unit will be operated by Kansas tures will be required for the Companyi next .
Gas and Electric Company and is planned for generating unit. . !i completion la 1983. The beneficial:" 'the anticipated relief ' Coal Supply Restructured, - fmm major construction is graphically depicted 510 Million Saved on the chart below which shows the cumulative . While the cost trends for the fuels we burn have actual and projected build up of construction been sharply upward in recent years, we were work in progress (CWIP) for major projects by , able to reduce our estimated coal costs by year fmm 1970 to 1990. Note especially the
$ 10 million over the nexi iive years as a result drop in year-em! CWIP balances in 1973,1977, of December,1979, agreements with two coal 1980 and 1983 with completion of major proj-suppliers. The new arrangements have restruc- ects. The amounts for each year-end represent tured about half of the coal supply contracted total construction expenditures then carried for existing units, will improve the quality of by the Company on which it cannot earn a re-coal for the older Montrose Station units, will turn until the project is completed and a sub-accommodate changing system coal needs and sequent decision by the regulatory commissions ,
help assure compliance with environmental includes the project investment in the rate l regulations. The agreements also resolved base. At the end of 1979, CWIP represented 5 , pendingputes among the parties. about $517 million, or one-third of the Com- . l Imovative Flaancing pany's total investment in properties. After Techalques Adopted completion of latan 1 in 1980, tne CWIP will al We have also taken advantage of innovative drop to about $380 million and will rise to an ways to minimize capital costs. We pioneered estimated all-time high of $575 miilion in a warehousing technique for use of bankers' 1982. After completion of holf Creek in 1983, acceptances to finance utility coal and oil it will drop to about three percent of the inventories at more favorable costs. We also Company's total plant investment until entered the Eum-dollar market through a line expenditures related to the next generating of credit with international banks to take advan- addition begin to build up. tage of lower capital costs. a New Forecasts Predict Lower Peak Grswth and Increased Lead Factor To evaluate changing patterns of customer usage, the Company has utilized econometric i 1, modeling in forecasting system energy sales ' and peak load demands. Based upon this analy- l l ' sis, our load and capacity planning scenario- 1 J now pmjected through 1990-predicts our l l gj peak kilowatt demand will gmw at an annual - rate of 3.6 percent, down from the previously l -l estimated 4 to 5 percent level. Kilowatt hour l sales for the Il year period are expected to !- . grow at an annual average rate of 4 percent. I 3 reflecting an anticipated improvement in sys ' l 1l tem h)ad factor from the pre-19791evel of below l 4 49 percent to approximately 53 percent in - 1990. More importantly, the reduced peak de-I, ' mand growth will enable the Company to delay ~
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ELR T Rit RH E%t E% 400 350 MM M 250 E F ' iOO 50 0 1969 '70 '71 72 '73 '74 '75 '76 '77 '7 s '79 2 7 3 ""tS Pe"ni"i"" Bt" comp red The Year 1979 with 87.8 cents m 1978. commo"'t"ck from the 979 "et income were $33.2 million, down $1 million Financial and Capital Costs and Net Income from 1978. Per share earnings in 1979 were $3.01, based on 11 million average Corporate Review Stost of the financing required to sup. shares outstanding, and $3.na m 1978 port the Company's constmetion program Revenues and Expenses is obtained from investors who must be on 9.6 million shares. paid interest or dividends for the use of On blay 1,1979, the Board of Direc-Total revenues in 1979 of $370.9 mil. tors mcreased quarterly common stock lion were up 16.4 percent from 1978. their funds. By law in both 31issouri and Kansas, construction work in progress disidends b) .. cents to 66b cents per Of this gain some $33.2 million was is excluded from electric service rates, share, or $2.66 on an annual basis. attributable to rate increases granted which are based only on completed Approximately 89 percent of available carly in the year and $22 million repre. plants. As a result, the Company is not eamings was declared m disidends to sented recoverv of fuel cost increases. able to earn a wtum on construction common stockholders. Kilowatt hour sales for the year were work until the new facilities are placed For further comments on operating down about 1.7 percent from'1978' reflecting customer conservation. in service and rates are increased to results,see .}1anagement's Discussion redect the additional investment. and Analysis on pages 28 and 29. mandatory and voluntary thermostat settings at higher summer and lower 1979 was a record year for construc- Construction Budgeted at winter levels, and milder weather as tion and substantial cash expenditures $134.2 million for 1980 compared to 1978. By customer cbssifi. were required for funds used to finance For 1980. the Company has budgeted 6 cations, residential kilowatt hour sales that construction. Interest on debt cash expenditures of $134.2 million. dropped about 8.5 percent, commercial totaled $46.a million in 1979, up $12 ncluding $94.7 million for Wolf Creek. sales experienced a slight increase and million, preferred and preference dn.i- ' dends of $10.6 million were $ 1.9 milh;on $4 million for the nuclear fuel assembiv. industrial sales were up 3.5 percent. 59 million for completion oflatan 1, and l Operating expenses were up 24 percent higher, and common dividends were
$19.3 million for transmission and l to $326.8 million in 1979. Three factors $29.5 million. an increase of $a million.
l distribution facilities. Unless otherwise accounted for most of this increase. The allowance for funds used during noted, figures for construction expen-i 51aintenance work on power plants construction (AFDC)is a non-cash item ditures include cash construction costs accrued during construction. It is m-totaled $42.2 million for the year, com. and capitalized property taxes but pared with $21.7 million in 1978. tended to recognize the cost of money exclude AFDC. This increase continued the upward trend required for construction projects until Projected annual construction expen-of recent years to meet growing mainte. facilities become commercially operable. ditures will drop from the $134.2 million nance requin ments of our older coal-fired it is added to the cash construction in 1980 to about $65 million in 1983 equipment with added environmental costs and the Company is allowed to and will total $498.1 million for the five protection systems and our new major depreciate and earn a return on the net
. cars 1980-84, based on 41.5 percent base-load units. These maintenance costs dunng the usefullife of the prop- ownership by the Company in the Elf requirements are burdened because of erty. To that extent. AFDC is somewhat Creek nuclear generating unit.
the low grade, high ash content coal like an IOU to be paid to the Company which makes up about half of the coal by its customers over the years of service Construction Expenditures bumed. Net interchange purchases were of the facility. AFDC credits in 1979. Total $205.3 Million
$27.2 million during the year, compared before income taxes, amounted to $38.7 Construction expenditures in 1979 were with sales of $2.6 million in 1978. million, an increase of $15.4 milh' the highest in the Company's history and These purchases provided replacement from 1978. totaled $205.3 million, excluding the energy during maintenance downtime Net income for 1979 of $43.8 mil- allowance for funds used during con-of major units and partially after tennina, li n, including some $29.5 million of. struction. Of this. $39.7 million went tion on June 1 of the energy associated AFDC net of related taxes, was up about for the nearty<ompleted fatan unit no.1, with the 95 megawatts of hydroelectric $800.000 from the presious year. It $116.9 million for the Elf Cn'ek nuclear capacity previously available from the also included about $7.2 million unit, $6.4 million for nuclear fuel. and Southwestern Power Administration. resulting from a change ,m account.ing $31 million for transmission and distri-Although generation was down by procedures related to the accrual of bution facilities.
12.2 percent, fuel expense was up 13.3 unbilled electric revenues. Construction funds were provided by percent to $102.7 million in 1979, pri. Earnings and Dividends $29.3 million of short-term borrowings, marily related to increased coal costs. After payment of preferred and prefer- $45 million in advances related to the The average cost of fuel burned was ence dividends, earnings available for anticipated sale of 17 percent of the
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TOTAL COST OF FLEL EL~ENED s , ,, . . . . ; - - ie e 1969 '7e *T I '73 '73 74 75 *76 *77 *78 *79 Company's ownership in the Wolf Creek scheduled for commercial operation in Missouri Fuel Clause plant to the Kansas Electric Power Slay.1980. Eliminated: Kansas Clause Cooperatives. Inc.. $42.4 million from On January 28.1980 the Company To Undergo Review the issuance of additional common applied to the Stissoun Public Service . ssoun Supreme stock and first mortgage bonds, and t(nourt ruled that Shssoun31:. June.1979, the , Commission (31PSC) and the Kansas Statutes do t increases of $36 million in intermediate Corperation Commission (KCC) for term indebtedness, not permit the >1PSC to authorize var'- i authority to place into effect emergency ble fuel adjustment clauses. The ruling The sale in afay of 1.6 million common interim rate schedules which seek in did not require refunds of revenues shares provided net proceeds of $39.5 advance about 50 percent of the perma-million. The shares were sold to under- nent requests. The emergency increases, billed under approved fuel adjustment, clauses, but did order a retund of $2.4 a writers at $24.71 a share and were offered if authorized, would be subject to refund mMon of cedain fuel cost surcharges for public sale at $25.50 per share. pending actions by the commissions on billed in 1976 and 19,,4. These refunds. Issuance of common stock through the permanent rate schedules. which are averaging $3.31 per customer net of Dividend Reinvestment and Stock Pur- not expected untii mid-year by the taxes, were begun in November,1979. chase Plan provided the Company with 31PSC and later by the KCC. As a result of the Court ruling, effec-an additional $2.9 million. Rate Increases in 1979 tive in October.1979, the 31PSC elimi-In December. $50 million of First nated our 31:ssoun fuel adjustment 31ortgage Bonds.12% Series. due 2009 The 31PSC authorized a 12.4 percent clause and approved new rates which were sold at competitive bidding. The increase in retail electric rates effective issue was awarded to a group of under- Slarch 16.1979. Based on a test year .nwrporated a substantial portien of ended June 30.1978, these rates were f uel cost increases into base rates, sub-wnters at 99.537 percent of the pnncipal 7 designed to increase revenues from ject to refund. Based on a subsequent amount. providing net pn>ceeds to the 31issouri customers by $26.3 million audit, the Company adjusted its base Company of $49.8 million. The bonds annually, or about 63 percent of the rates for such includable fuel cost sold to the public at 100 percent to yield 12 percent at an effective interest request 61ed in April.1978. The increase increases and commenced refunding, cost to the Company of 12.06 percent authorized a rate of return of 9.47 per, about $2.a mdlion to customers m mid-cent. and a 13.4 percent return on February.1980. At year end we had borrowed $27 common equity. In the same order, the The Kansas Energy Cost Adjustment million against our $50-million li wf. 31PSC also granted an increase of 5.65 Clause permits recovery of substantially credit with a group ofinternational percent in steam rates designed to pro- all fuel cost increases applicable to banks and $30 million against a fuel duce $182.000 in additional revenues. Kansas retail electric sales. Charges 6nancing agreement with Citibank. N.A. Effective April 20. the KCC approved under the clause are based on estimates The international arrangement provides of fuel costs. the energy component af for the use of unsecured funds at fluctua. an additional increase in rates of some
$5 million annually based on a test year purchased power costs and energy sales.
ting interest rates based on the lendon ended June 30.1978, the final action and are adjusted monthly to reflect Inter-Bank Offered Rate. Through in a two-step decision which included actual costs and sales. Citibank. the Company may secure up an interim increase of $9.9 million As required by the Public Utdities to $40 million through bankers' accep-effective in November.1977. The com. Regulatory Policies Act adopted by Con-tances using coal and fuel oil inventories bined actions represent an increase of gress in 1978, the KCC is pl nning to as collateral. 22.3 percent-about 79 percent of the review the design and operation of al! Kansas energy cost adjustment clauses. Rate Increases Proposed amount requested in November,1976 i In Missouri and Kansas -and authorized a rate of return of 8.61 percent and a return on common Method of Revenue On August 3. we 6 fed for 25.5 percent increases in rates appliiable to retai equity of 14 percent. Recognition Changed In December, the Company and its Beginning in 1979. the Company electric customers in both 31issouri and Kansas. If granted. the new rates would wholesale customers agreed upon a changed its method of accounting to produce about $76.4 r illion in addi. revenue increase of $391.750 annually, record revenue from kilowatt hours tional revenues annually from 31issour subject to Federal Energy Regulatory delivered to customers, but unbilled at Commission (FERC) approval. These the end of a period. The change was customers and $27.8 million from Kansas customers. A signi6 cant portion rates apply to the utilities, cooperatives implemented to maten more closely of the amounts requested relates to and municipalities who buy tirm power r venues with expenses. The cumu-recovery of fixed charges and operating from the Company for resale. In.ve erfect of this change for unbilled costs of the latan generating plant. ( -- - - _ . .__ ___ _ .____ _____ .-_ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _
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1969 '70 '71 '73 73 74 75 '76 77 78 79 1%9 7e 71 72 73 74 '75 76 '77 '75 '79 revenues prior to 1979 increased earn- Bylaw Amendments Robert E. Zimmerman, ings available for common stock for the Require 3 Committees Chairman, Retires year 1979 by $7.2 million after taxes, After nearly 30 years with the Company, On February 5,1980, the Board of Di-or $.65 per share. rectors amended the Bylaws of the Robert K.Zimmerman retired as chair-Monthly Billing Extended Company to mandate the use of three man of the Ibard on December 14. standing committees of the Ibard com- Str. Zimmerman began his utility career To All Customers prised exclusively of nonemployee with Public Service Electric & Gas Com-In October, the Company established directors. In the past, such committees pany in Newark, New Jersey, after grad-monthly billing procedures for all . had functioned successfully on an ad uating from Rutgers Univ.rsity in 1936. customers. The change applied to resi- hoc basis. The three standing committees, lie came to KCPL in 1450 as super-dential and small commercial customers whose specific powers and responsibilities visor of employee educatmn and held tormerly billed every two months. W,e w 11 be fixed, from time to time, by several executive positions before expect the shorter billing schedule will Ibard resolution, are:(1) Audit Com- becoming president in 1971. Since provide these customers with a better mittee which recommends and advises 1973, Str. Zimmerman served in the method of evaluating energy usage. The the Ibard with respect to the selection additional capacities of chairman of l change should alsa facihtate compliance of independent auditors, reviews the the Ibard and chief executive officer. with the Public Utility Regulatory scope and results of the audit of the He earned a record of distinguished Policies Act of 1978, which requires Company's financial records and advises community involvement, having served investigation of various alternative rate the Ibard concerning the Company's fi- on the boards and as president of designs and conservation procedures. nancial affairs and accounting controls; numerous civic organizations in (2) Nominating Committee which advises Kansas City. Dividend Reinvestment Plan nd m kes recommend tions to the air. Zimmerman was succeeded by Available to Shareholders Ibard concerning the election or ap- Arthur J. Doyle, president, who was Our Dividend Reinvestment and Stock pointment of the Chairman of the Ibard. named chief executive officer in August. Purchase Plan offers all KCPL share- the President and the Chief Executive 1979, and chairman of the Ibard upon holders the opportunity to increase Officer and members of the Ibard of bir. Zimmerman's retirement. holdings of common stock without pay- Directors, and (3) Compensation Com- Str. Doyle joined the Company in ment of brokerage fees or commissions. mittee which makes recommendations Starch,1973, after having represented By enrolling in the plan, shareholders to the Ibard with respect to compen- KCPL as independent legal counsel for may have dividends remvested m new sation for Company officers, other senior 24 years. lie served as vice president common shares purchased at 9a percent executives and members of the Board and general counsel frora 1973 to 1977 of market value, invest up to $1,000 of Directors. and as executive vice president begin-quarterly in shares at market value,or ning in blay,1977. lie was named to the Annual Meeting Set for i elect both options. Ibard in November,1976, and became Proceeds fmm issuance of stock under April 22 in Kansas City president in 1978. the plan are used primarily for the con- All shareholders are invited to attend struction program. Since it was first the 1980 Annual 31ceting scheduled for New Vice President, offered in 1978, shareholders have Tuesday, April 22,1980, at the Company's General Counsel Named invested over $3.8 million in purchase headquarters at 1330 Baltimore Avenue, Effective October 1,1979. Samuel P. of 156,593 shares. Approximately 3,700 Kansas City, blissouri at 10:00 a.m. Cowley became vice president of cor-shareholders, er about 8 percent of all Proxy materials will be mailed to share- porate affairs and chief legal officer and KCPL shareholders, now participate. holders in mid-Starch,1980. was succeeded by A. Drue Jennings as Shareholders may obtain more The 1979 Annual bleeting was held general counsel. information about the plan by writing Tuesday, April 24 in the Company's Str. Cowleyjoined the Company in to: Stanufacturers !!anover Trust downtown Kansas City offices. Repre- 1974 as assistant general counsel and Company Dividend Reinvestment sented either in person or by proxy were had been general counsel since 1977. Department, P.O. Box 24850, Church 8,030,302 shares, or 80 6 percent of all lie came to KCPL from Nevada Ibwer Street Station New York, NY,10242, outstanding. shares of common stock Company where he served in the posi-or Sliss Clare Den llacrynck, Secretary, eligible to vote. tions of vice president, general counsel Kansas City Ibwer & Light Company, At the meeting, shareholders reelected and secretary. 1330 Baltimore Avenue, Kansas City, nine directors and appmved the appoint-blissouri 64141. ment of Arthur Andersen & Co. as l independent public accountants for 1979.
um SOURCE OF Ft(EL Et'EMED EE ~ ___d._._ l d_ _ _ ._ . ._._L__ (__;L_a ways 5 m + -
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isas 7e 7: vs 7s 74 7s 7s n. 7e vs Str. Jennmgs came to the Company The quantity of fuel oil bumed Under construction since 1975 at a l in 1971 as a staff attorney from pnvate decreased to 576.000 barrels in 1979 site on the 31issouri River ahiut 36 law practice. lie was appointed mistant in>m 9ti7.No in 1978. or about 40 per- miles northwest of Kansas City. the unit i general counsel in 1978. cent. I ess oil was burned because of is designed to burn low-sulfur coal. It reduced peaking requirements and we is essentially a companion umt to la in Memoriam were often able to purchase available Cygne 2. and is equipped with an electro-The Company was deeply saddened bv energy at a cost lower than we could static precipitator for removal of 99.1 percent of particulate emissions. the death on July 23 of button A. generate on our system with oil. The cost of oil burned was $2.97 per million latan's initial coal requirements are Bn okfield. who had served on the Board Btu m 1979, an increase of 12 percent. covered under a contract with Amax for 15 vears. 31r. Bnioktield. who was president of Unitog Company in Kansas The Company burned 7.1 million mcf Coal Company. The latan contract City. Slissouri died from con 7lications of natural gas. up 10 percent from includes options :or coal through and miuries affered in a tire. lie con- 1978. C,as prices rose about 30 percent October,1982. at costs comparable to tnbuted signaicantly to the progress of to $1.53 per million Btu in 1979. other system coal costs. Three umt trains the Company and was widely recognized will transport the coal from the mine in for his business and cnic leadership. latan Operation Set for May the Powder River Basin in Wyoming. a Testing of latan 1 began in I)ecember distance of 770 miles. and the unit is scheduled for commercial Through its wholly-owned subsidiary. operation in Stay,1980. The Company WY310 fuels Inc.. the Company holds a ti40-acre State Coal lxase comaining Operations and owns 70 percent of the 650-megawatt
,J
. umt; 18 percent is owned by St Joseph about 44 million tons of recoverable pOnStruct10n 1. ght & Power Company an'd 12 percent low-selfur coal in Wyoming's Powder
. by The Empire 1)istnct Electric Com- River Basin. We expect a State Permit Generatm. g System Coal Fired pany. The installed cost of our share to 31ine to be issued in mid-1980.
()ne of the Company's mam operating is estimated to be $235 miPion, or WY310 also owns 4.3 tid acres of adioin-strengths is that all of its base load $317 a kilowatt. mg lands of which 3.2 to acres contain capacity is coal fired. Ahiut 40 percent of that capacity also has gas-tired cara- .. bihtv. For peakmg purposes. the _. ;- *13. Company maintains about 400 mega- ~ ~ b ed ~ watts ut oil-fired combustion turbine - %. Z
'~
capacity and 80 megawatts of small steam g units a hich are Jual gas and oil-tired. - r g l
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.1 a 7.N The Company i3 not faced with any coal conversions of generating units to coal- . . , . -
fired operations. l 1.ong-term coal Wly contracts from ma.ior producers will protide about 90 '_.. ~ ~ percent of coal requirements for eyist-mg umts through 193ti. and 70 percent *.
- u- T' thereafter through 199ti. ,,,, .
Fuel Burn Drops in 1979 ' IIllr Il generating units burned 4.2 y [ milhon tons of coal in 1979. Compared ~k,Q , O.p -
^
to 1 ti million tons in 1978 The average ; , d gv ,r , cost of coal mcreased about 29 percent. -
,p , p*N to 93.3 cents per million Blu in 1979.
from 71.3 cents in 1978. The increase 4
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largely resulted from inflation addi-flonal reclamation charges and Cost d *0 " 'D C " (*,
- esialations beCau8C of govCrnment in ated m the m rt futvr \' llcts a about li miles northurst of Kansas Cutti. the latan I generalma
- - umt is undergomq tinal testing m preparation for commert talutvration in .' fait hvo electmstatic l
impositions ce n.ering mine pL, y13n3 preapitat vs. u hich bnJqc the 65tkmeyairatt plant anJ uts 7tutout stas k. ttsilremver uuvr 94 safety. and increased freight rates. cercent oivartmutarc cmns,ons.
!,, .lf u E m _ c.
1 l l l l l l b-l l about 200 million tons of low-sulf ur balance in 1954 Wolf Creek Construction l coal. Siaior port.ons of these tracts are However. because of the position of About 50 Percent Complete nommated for Federalleasing Based the Department of Justice with respect Construction of the Wolf Creek nucitar l on current Department of interior plan- to captive coal mmts by electnc util~ plant was about 30 percent complete at I nmg. we are hopeful that a Federal Coal ities. the Company ha3 not yet fmahzed vor end .-Uter the NHC concluded m Lease on half of the tracts will be avail- plans for WY310s future operations or able for bidding in 19h2 and the .luh that the ba3e mat concrete Joes. m for a long-term coal suppiv for latan 1 tact. meet strength design specifications. we expedited c< instruction to recuser j 4;- . -- time lost on scheduled cor)struction riir j
- + w commercial operation m 19M l
,. . ./ . . _- - -
Based on a recent update or con-T struct nin ciist3. w e ne m estimate < >ur
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\ taital cash outlas for Wolf Creek at 5395 milhon
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Electric Company each ow n 50 portt nt i
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oftht 1.13il-megawatt unit and tii- l
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, s; gether will sell a 1 , percent ownership 1
~
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and regulators approsals KEPCo has N
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f: M aJsanced 545 nulhon to each ownei toward the sale. expected to take plact
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7% rotarts Ju mtvr at latan s an empts 1Iiku> ton > ot s oal trom a ilo s av umt train m les> thar tour hours 4 rotart, a vupler tumma t% s ar~ cnablo otwrators to unload onalautomarts alty u ithout sethiratmgj rat!carr '*' Q l
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latan plant ..tvrafors perfomt preorvrationalintmq m the contnd nnom of the neu plant fu c
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f s omr~uters monnor mors tha': 5 f NNr kcy twmt> throusphout lhc lJality - " ' ' -
t i l l l I I I w ; ~ p ]. y y ~ p T g g g.7 __,g Business Expansions E' " Kansas City's growing national reputa-( Ng G.cii O "D^ h'%-
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O.g 4:::.1lfff!!! ijj i - 4r } a X. M'* '[ed7( C;%;U '
- 4 with comple-tion as a convention center will be enhanced in June,1980,
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]gi:g! Nllll-l!4 ~j$ Jp a.[ H . n Mipd .d
/ tion of a 750-room flyatt Regency hotel.
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. , ' 6 %. One of the city's three world class' hotels,
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CW S f f ,K 4 the Regency is located in Crown Center,
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(? a 25-square-block-City within a City" M.[ ., ( ; dewtopment near downtown Kansas City m y- ..
.a, e by flallmark Cards, Incorporated. The
.A; privately-fmanced urban renewal project t . -
f7.JU.' g- '. k 3 already includes a 730-rmm luxury hotel. 85 retail shops, eight restaurants.
' *a
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t. (/ ,, 1.2 million square feet of office space, M a y:.! a meeting and audio visual center and i ~.=h
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- j. yy. l.jf ~ 74 245 apartment and condominium units.
Ad. y %. Expansion of the office and residential
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1 .: pleted in 1990, investment in the N- #.
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M development will total $500 million.
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k= p-4 - _; y--a a%%( N1@Y h.3 W W g7.; 7.> s gg Taking advantage of freeway conidors, trees, and rolling hills, of6ce park devel-11 The M-ton lettom nng of the steelhner is hited into place atop the Wolf Creek nuclear reactor opment has mushroomed in Johnson building. This event uus followed two uveks later i y the lift of the dome cap. shown to the left. County, Nansas, in reCent years. huthor-Iwassembly of the steel structure saved approximately three months of construction time.
;,;e, e,,;,,,e gome g99,999,qu,7e (cet of of6ce space was completed in 1979, Settlement Reached in receives in its current litigation with boosting total of6ce space in the County Westinghouse Litigation an alleged uranium cartel. to more than five million square feet.
The settlement was approved by the Additional developments already under-The Company and Kansas Gas and court and the litigation has now been way and those planned are expected to Electric Company reached a settlement termmated. hansas Electnc Power push of6ce space development in Johnson in their long-standing litigation with ; Looperatives, Inc., wdl acquire a 1,t County within the next six years to the Westinghouse Electric Corporation. i percent interest in the settlement pomt where it may rival the 11 million The dispute involved Westinghouse's up n closing of the Wolf Creek square feet of office space m Jackson default on deliveries of some 3 million sale transaction. County,31issouri. t pounds of uranium for the Wolf Creek Lnd r th settlement. Westinghouse dk *k~ $4' N N[ ' ' kNhY
%g[
will make payments of cash and deliv-eries of uranium, goods, services and
> hw " i ' . N f * ~~3> . k . 1 4
rights having a potential value of about
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$94 million on a present worth basis.
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- k k -- g*Or A$ f #- h Under the settlement agreement, the companies will receive $38 million in cash in 31 arch,1980. The companies
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]J will purchase from Westinghouse 1., w ..- .- -
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million pounds of uranium, equipment. T.v . N h rY.' % Q:y.b"MQ3 4g # x,'W;i- G # h [% % u fuel fabrication and engineering and - other services at substantial discounts " (-y 2 l from market prices, presently valued at "" . j . f g .{k "J f\ f N[.M
$43.6 million. In addition, the com-i
. - Kansas Cityk sprawling 85%icre Crown Center compla features the Crown Center Hotel apartments 1
; pantes will recen..e up to $11 million, and condominiums shown in the forearound a multi leerloffice compla on the right she .slutual
; ftom any proceeds Westinghouse Bernefit Ufe oft]ce high-nse in the center and to its right the new Hyatt Regency hotel. set for f completion in Jane.
).
Several major projects are ready for
~ ground breaking or are in the final plan-mg stages. Site gradmg is set for Arni for a 230-acre industnal park de clop-ment in Clav Countv. .\1lssoun. within Kansas Oty's Foreign Trade Zone. a jomt f roject of Great .\lidwest Corporation
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and Hurhngton Northern Inc. A fourth luxun hotel for hansas City Is sched-uled for construction commencmg this q.; y . , 2 j., - " ?* ' ,' ,3 4~ },;' . summer. the tiou-room hotel will be
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y , t.' ,;, bfj ,- uf.f. g g' 1* operated by Hilton Intemational Co..
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nf y . g~ ag . . . will tie together the city's Jowntown
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N conwnt on facilities and will be com-j1 c*,4 k '
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,- pleted m 1982 The federal government
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- has announced plans to builJ aJiacent l ' ' ~
f' = y .. to the histonc l' mon Station. a 5120 e u.[
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- # milhon Internal Revenue .\1idwest 7q<4 . . g7 . ,
Semce tenter to be completed in 1955.
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- which will emplov ti.400 and serve l
( .e 4%1 ~j Slissouri. Iowa. Ilhnois and Wisconsm. j -[4M* [-
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~ :s ' -i,.y. the development plan provides for jm -
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- revitahzation of the ti5-vear-old railway 7;f , y , A ' f ., *:
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- station landmark as a shopping and of-
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tice center an j permanent home fiir the
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- W" hansas Cit) NelenCe .\ludeum-all largel)
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t' . with pr.vate funds-and also accom- i a v
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- . - ln.4 modates continuation of rail semcc. l i Company Evaluates Energy d k*aN i N M., .kG
.ej gw.,, . g%. y. g.,.- Management Techniques
, Q, .D.W't , .ry8 '
i -,t Several innovative projects designed to
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. +o<>- collect data relating to peak k>ad control
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- ' A are in vanous stages of development by the Lompany's commercial operations
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M t% D plans to implement a research program i 7
. A ". g- M (_q .9 39 _ . % / ' g *M 1 E .Vd of radio-controlled mterruption of air conditioning involvmg selected
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, A M, 1 customers to determine its effect on I peak load.
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Two projects begun in 1979 will test the effectiveness of retrofittmg older x -
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i homes with energy conserving features 9s , .A
# and use of passive solar designs in
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, , . g-new homes.
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5 Thousands of area residents and nsitors hnsuse V.l W - , _- p,9 f
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J cerf) 9. g_ the avrks oflocalartists a' the l'ta:a Art Fan 3re Art Fair ts one of many annualcommumty
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- earnts u hoch hatt helped earn hansas City the
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s~ - e 4 '3s . reputation of one ofAmenca.k mostluvable cities
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1 1 e . t~ sing two homes donated by the Cits houses were built in the Quail Valley Kansas stone. The thermal mass will o; Kansas City and H.l1D.. the Com- subdivision in Overland Park. Kansas. be tested to determine its capability to pany has mstalled Jifferent levels of Passive solar applications require provide heat requirements dunng 'he weatherization Through the testing. little or no moving parts and take ad- wmter months. we hope to compile data useful to vantage of seasonal heat gain through Mter the two-year study. the homes lower-income famihes who do not qual- design matenals and proper siting. will be sold to recover construction ifv for government assisted programs. The only "attive" solar feature is a costs. The project's operation is being The project focuses on effective, yet black-glass solar collector panel for financed wi h funds available for k> cal t inexpensive consersation methods. water heating mounted on the roof. research from the Company's total The control home was built to KCC contnbution to the Electnc Power Quail Valley Proj.ect Tests mmimum standards for energy use and Research Institute. the research arm Passive Solar Application is a typical conventional design. to the utihty industry. A study to determine the economic A key element of a passive solar benefits of passise solar aophcations home is the use of heat-storing ma-in residential construction began in tenals for " thermal mass" which absorb t Au't. enemccr comr3 ~ut ecatur.s on a nodcl 19M The Compans has completed two heat from the sun. The thermal mass "' th< *"'l l "#<v Pos" '"i"' P" t'<" dPI"Wd houses-a solar home and a consen- is formed by an interior floor of con- i'""y"["g',["'l]*,[.*ll,'ll2"'C'$sy, tional ~ control home -with the same crete and iron alloy brown bnck. di der sc,,g., % o,,,parmy cycryy u,aqc . ore 73ar ,7 square tootage and floor plan. The wall and fireplace made of native .m iscnricai non-s"/ar resiscnce 1 I3 g <
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M.ND hdk @ M-1979 December 31 1978
~" 1. '.
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..- CapitaBaatles (See statements) .' - J-
, Common stock-authorized 16,000,000 ,
e *W
#, .: shares without par value-- , 7,2 11,682,349 and 9,%1,794 shares outstanding-stated value S 224,442 $ 182,047 j$
3 Retained earningi(Notes 6 and 7) 145,700 142,069
- Capital surplus . . 3,082 3,144 7
..,. . ' . . Total commo. n, equity . . .
.. 373,224~u. , . r. 327,260 . n~,M M v .
.*.x.. .. - .,
." i s .; Cumulative preferred)tock (Note 3) ,
112,000,_ .s 112,000iizq
- - > <;. A MM6 v - ' ' ":Cumulative. prefdrredstock(redeemableJ 3~
- . ' (Note 4) ..
3,996 4,156 m. " ' . .M 2
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=
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~
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+. ,
long-term debt (Note 5) 576.904 . 503,044".Z. 8.[ s
.t.- 3- Total capitalization . 1,091,124_ 971,460 l,[l&
- ~
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Carrent Liabilities Notes payable to banks (Note 2) 18,300 - Commercial paper (Note 2) 21,000 10,000 73 Current maturities oflong-term debt .
~
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. w. [ . expected to be refunded . 11,972 -- -
, Accounts payable. 37,930 32,459 - Y
. . , .. _ , ._ M, . ' Dividendsdeclared , 2,643' 2.617 . _.15d ,c w
r ' Accrued taxes ~ 4,028 6,558 W
.... a
' Accrued deferred income taxes 4,347 .- - g 7,483 Accrued interest 7,959 a Actrued payroll and vacations 6,570 6,491 J
' Accrued fuel costs 11,982 6,469 "S Other 41624 5,263 M 4
. Totalcurrentliabilities 133,355 77,340 ;y
,.s Deferred Credits -
Deferred income taxes (Note 1) 74,527 72,079 ,j Deferred investment tax credits (Note 1) 43,729 44,186 fj Advance payment on sale of property (Note 9) 46,839 - Other 1,464 1,695 {4 q
, Total deferred credits 166,559 117,960 .j:
Commitments and Contingencies (Note 8) i a Totalliabilities 31,391 03_8 t $1,166,760 ~,M y
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revenue 36,551
, $~recognition 42,924
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- 9,749 - (8,I86) u '
f
~
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. Total funds provided from outside financing. 314,383' 111,263 >.
w Other Funds Provided (Used) (Increase) in' accrued unbilled revenues -(11,454) . " -- Mu (Increase) decrease .- .. ervables, c . ,. .
.m
.. . less reserve. s y m ..
, m rec,a. . _ ' , . . . .-.. ,-.. (315), .-
9,266 a c1C ' "_ 2 L ' T(Increase)dedreakin fuitinvestories N %~ (19,039)' "C.E ~ 199~~
'V * * ' ' i : Incicas in accruedand' current deferred taxes' *^ 3,817: '
T 2,768 - @3 ^ 5,471 Increaseinaccountspayable . - 361
' (Increase)in materials andfsiipplies" ,
(3,376) (3,173) % y~ . . . . (3,765) , .(1,683)
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- (Increase) in other investments ."g?w' . l c%d M
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_ _ - _. , , . . . .,, ,m . . D Statements of Cumtdative Preferred. and..,,Of . s i D
' 'n, A 'L u c:
l W3;c
^
Preference Stock and Long;-Term Debt' . i y .
., d
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. . ,. . . . . .?a (son W N3)?M;uP:%e(W c". .. ';r;Is79 : mai - le7s J 1 ' QA$ l.
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,$ m s.-' 7,000 . ~ i 7,000 ~7D . . . .4
?.% 3100 Par Valee-Authorized# 520,000
^
-%haies.--outstanding' .- 4.50%,--100,000_ shires. %" .7,-.,w .u % . >
n ; sl E.,,.m N
.10,000 e ' 10,000 1
n.g
' 9 dl ;
,', 4.20%- 70,000 shares X . l 99 y ,/-
'"# NR000 $[j-%w[W'M;. c'[ C'$ ' 12,000y 12,000 ;aM -
5 7.72%-130,000 shares? M 7 jy a c*~n :13,000 13,000 9 I N) No Par-Authorized 4,000,000 , t . 20,000 l [ 20,000
<WS .$10.70-200,000 $ .2.33-800,000 shares % shares
. j@&A ' o .. E n _ 20,000 g 20,000 ~ c4 1 W l Ashares-outstanding s f I z W3. , 4. W. ,
ma@ga.e.is.~2,.ae.
.w.s,
.800,000WA;4@W,w?m.3x 30.000 , p 2e,000
* %% TeemI Cusselanve Prefer, red 5 ect 4 .w4 9'W ay d. ,. yW W e- ^ 28112,000, -.
$112,000'+.. i
.a.am W @ u N~h ef. c s. c r %.c4~.s. .e<c t y.. l
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X- ~ $ ' 3,906 $ 4,156 :, 1 a 9 shares-outsta.
%, v. 7 . _ nding^m%,:s- .. _ 4% g. .-39,957 j and .341,557. . 7 sha,resno m; . ., - e . , -
' Camalative Preference Stock (Redeemable)(Note 4f -
N a u I i No Par-Authorized 4,000,000 J
-a shares-outstanding
$ 8.00 250,00.0 share.s.
s 25,000 $ 25,000, - .ql 1
)
(
~
Long-Term Debt (Note 5) s - Mr.J 2 ~
=
First Mortgage Beads f . Regularissues"f ~ ..
~
9
~ ' 2%%seriesdue 1980 ' ' $ 11,972 S 11,972 ..d 8h% series due 1981 25,000 25,000 u
< 3M% series due 1983 ' 9,506 9.506 3. .
3M% series due 1985 16,000 16,000 mi 5% series due 1990 ' 20,000 20,000 .f 4X% series due 1995 15,000 15,000 M r J ~ : SM% series due 1997 D .d.th .u 30.000 ~ . 30.000 ' Md 6%% series dve 1996F m e '*: ; -- ' - 25,000 25,000 M 7%% series due 1999.T . . .
, 26,000 35,000 26.000 35,000 W4 9%% series due 2000 w.a w 27,000 27,000 q
7M%'se.rie a m , . .n
.4 4 7h% .. sseries due .n2001. .
due 2002 I *a ",i 30,000 30,000-r 8%% series due 2006 40,000 40,000 - -7m 84%seriesdue 2006 ' - J,' 30,000 30,000 84% seriesduc 2007"w .- -... -~ 30,000 30,000 fg 3
. 9M% series duc 2006. C ..n.M.w. . . ., - ;' . . ' ,.
25,000. ... 25,000 .,S,
,' D. , serkes d.ue M.,' - ' . . 50,000 .wu -
- 1 , m, W
~
Pledgedin support of pollutio. n ,.ncontrolbonds -
. M v'?
r :5. A% seriesdue'2007. C,.W M , ' ~ y 41,940' ' '4I,940 . 5, l
. 6M% series.duc 2006 . "- ; .e-o..+".;' . .. . e.
- 2 ,- 31,000 , .:31,000, .
'Aj Guaranty of Pelletlen Centre!Bo' ads" 5%% series dud 2003 +
Loan Agreemest
~
J Due 1962j ' # % P%,i' 7M 'd
. .,V.1 '
15,000 27,000'
- 15,000~ ~
21,000 i; Bankers' Acceptances" ~ Due'1962 - , J sc 4. #r",A t m l ~
-- ^ 30,000 -
V l Unamortized premium and discou.nt (net) (1,542) (1,374)
. G.
508,876
.. .a .. _ . . . 7: C_
11,972 . 503,044 9, less current maturities oflong-term debt - - Total Leag-Term Debt ,-
~ w* . . ._ . . . r4. , ,;.,_ :a j (1 -
* - SS76,904 - $503,044 y
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- 1.674
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. . j whv.;d,n.
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,.s *
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- D % 'dlSen. menues -
M ~~ sM "e' 'S _5,485 - 3+ x T#EMDebt F --MAFDCW^ N *' Y
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4,838 M, .%'a _ J % M M d 43t A f [ N hlj M M $ % ' W + fRAles (234) 15,347) - h%.e.po;Wiedsgg, n - we,GM2.:w. - ..;;-yState(astb.a.W
.w. %. h canpiorweed 1.350 u L614w 1,112
% .m _
Mkkd ppff k ihar.% w d d 6i. M. %s pshpfge taxcredit3gtwisima?,q dd g ja,M did gn~;'@mmy,-- 17.900 b EErar m u g 11,126 12.990
#4@ilik #M;% mm . u (1,463) (1,333)
' '%'F .
iP . - *' 7btalinvestment tax credit (1.463) 9,793 e.Mi~,' %' h -Ag - p"i
. ~
'.~,'",'.TTita11ns.. une tax expense 18,517 27,154 3$ a $gx $ gip'wjf"g: less- Defened inmme tax on cumulative ATN$kipihd MhdMJm&M&pi$s#B.syMi% A
, ,eSectWanuary1,1979,ofchange n3he.. i method.of. revenue.recosmtun;wdeg,A.g_8,881 -
g* g. gg g_r Mt_mW
- g. w yg w:.~..s..~.,Irme a .
tasexoensededucted.
-.n- - - - - - im,s.aWherinc.ome Ac a 357 1.017.-
TWA - =5MXs@CZQ"d"f.FeEPensepgWs* %eper=Ma8 iricane]((,5g9 ' '26,137 t , 18,382 k$'h r n T Cees secespisnMMM.x ; N. eigyg c8,371 wyW.b>EhWjmdpijstateg$g@gM 30,135 17,620 _ . . J' dMS Othe f ~' ~ - 3,308 2,509 Y. . . p9dM,rbtalgederal'taifeidense . + , - z U.F N.7 m m __ _ ,,m 8L 41,914 38,511 W
, wwwpy v -
Jn . 2" wMBA54*#4 r.4M me qw~m&VLi@?$.%= WMo56wngncaykgw%m>)N.sbw.ty Mnyn a%c tfA $lh . - 64,648 5 a m r
.u "yeWg,ggg g grtgagg w. . yyyggg*h n*mmt.,
n M> w~g*%e. y;ggyggw _6_ 51.488
- ~y$g .g_n R , a ME! *** M I
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. c. %mmeae Md long-termdebto RansasC47tiser&UditCompany(aPlissourimrporation)asofh-7 r W19 and.1978/'a(edWidated statements ofincome, tames, capital stock, capital surplu k%7 ' ~ .
addibons for,the years then ended. Our:t t - "naioniiisess" ' terspaspmperty,6;tednuatiriasesiidaidina,'acco wahWie=Armix=
- g. .3, -
wmg 4'- f j@j . _ g{g) 7
.gg:sioenes nie. eness,= g n .-
% eecast ' he " wa~ocnse nvenues for sales unbitted at the la a linaincial nexgp+s y %m ~'have . n. - w been apphed. .w an N #
.. M M St. % -
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~
- l. s k. 3 k k h h NT ww b, .[Nhb sv Notes to Financial Statements ' @s PC - ~6 ,
MW% T' December 31,1979 and 1978
. - p @W5
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1.Summaary ofi System of Accomats: The accou'nting records of the Company ~are maintained in accordance with , c4 Significant _u O Accountingf ' thegenerally and uniform system accepted of accounts accounting principles.prescribed The Company .by alsothe Federal subject to regulationEnergy by theiRegulatory Felicies M A; 'o(issouri Nansas(KCC). Public Service W g 'Commission MWNW c (MPSC) andW:W M,
~
the State~
;- Co Wg pora Utstley Plant: Utility plant is sta'ted at nistobicai cosis o(construction. These costs include payroll 'd related costs such as taxes, pensions and other fringe be.nefits, and an allowance for funds used- m during construction. , u? .
'A A5ewance For Funds Used Darlag Constructies (AFDC): AFDC includes the' net cost of N borrowed funds used for construction purposes and a reasonable rate upon other funds when so 'R y used.The allowance for borrowed funds represents an allocation ofinterest costs to construction,i yQ
, i
, while
~ work in the allowance
' progress during thefor equity period fundsWtien o(construction. is aa non-cash construction project item ~ofincome.
is placed in ' AFDC service, the related AFDC becomes a part of the original cost of the completed plant which is used' ~Q to establish rates for utility charges under established regulatory rate practices. The rates used to .ij compute AFDC, compounded semi-annually, were 9.7% for 1979 and 9.02% for 1978 (see
- Income Taxes
- below).
]g Depreciation and Malatemance: Provisions for depreciation are computed on a straight-line %
basis pursuant to rates ordered by the MPSC. Approximate annual composite rates were as followsi ,q Year Ended December 31 M 1979 1978 Electnc. 3.62% 3.62% Steam Heat. 3.70% 336% j Depreciation for i:'come tax purposes is computed on different bases and methods as explained
- in this note under income taxes. 21' The Company charges to maintenance expense the repairs of property and replacement and renewals !
ofitems determined to be less than units of propert), except for such costs which are charged to clearing accounts and redistributed to various operating, construction and other accounts. The cost
'}
of renewals and betterments of units of property are charged to the utility plant accounts. Property . units retired or otherwise disposed of in the normal course of business are charged to the reserves for depreciation, along with removal costs, net of salvage. , 1 The amounts of maintenance and depreciation expense other than those set forth in the Statements i of Income are not significant. Rents and lease payments for computer equipment. buildings i and similar items are also not significant. . J Retirement Flaas: The Company has group annuity plans for its employees, including officers, H providing for benefits upon retirement, normally at age 65. Under the requirements of the Employees y Retirement income Security Act of 1974 (ERISA), the Company is obligated to fund the benefits a of the plans. The Company's policy is to fund pension costs accrued. Liability for past service costs is j not significant. Annual costs of the plans were $6.5 million and $4.7 million for the years 1979 and 1 1978, respectively. The costs in 1978 were abnormally low due to a lengthy strike, during which 9 contributions were not made to the plan for collective bargaining unit employees. Other factors , j causing the increase were inc'.ased contributions because of salary and age changes and to meet ERISA requirements. , ,, yAg,, , j,
. , _ f..
~ '# 3 Revenne and Expeinse Re' cognition: Ths Cointiahy utilizes cycle billing and in years prio'r to " 1 1979 recorded revenues billed to its customers when meters were read. Costs of service renddred, d induding fuel consumed, are recognized as incurred. Due to increases in sales, rate levels and costs, ' ]!
the effect on operating results from the difference in timing between the current recognition of 3 1- costs and the delayed reporting of revenues under such method of accounting increased. In order . M
~d to more closely match revenues and expenses and because the Company expected to change and ;_
~ did change in October,1979, from bi-monthly meter reading for residential and~small commercial ~
customers to monthly meter reading for all customc4 the Company changed its method of ' M accounting effective as of January 1,1979, to accrue the amount of revenue for sales unbilled at the - q] ) end of each reporting period. The effect of the change after considering the effect of the change from bi-monthly to monthly billing, net ofincome taxes, was to increase 1979 reported net income 3g 1 4 a .,h a.: .. .+ , sg;3.mgg.3y _ ,~ 9 p
..m.- U.& L -. .~ w. . E., & a _m_aw. ..
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;Q .
V ,,7
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. p: %
- p. .a. N:t:0 to Fl rcial St-tam: cts (c ctlaced)"
s t i ' by $8.4 million ($0.76 pershare)ofwhich a net increase of $ 12 million ($0.11 per shareI was reflected
. in operations and $7.2 million ($0.65 per share) represents the cumulative effect of the change as of
- p. '
. ' January 1,1979. De effect on operating results for any year prior to 1979, assuming this change
. were to be applied retroactively, is not significant except in 1976 when earnings available for com mon I
p, ' . f '_'_ ' [ stock would have increased fmm $24.5 mi!Iion ($3.40 per share) to $26.6 million ($3.68 per share). i .,L
-'~.
p' 7~F [ Prior to 1979, fuel and purchased power costs in excess of those reflected in base rates were recov;.sd s , subsequent to the period in which such excess costs were incurred through fuel adjudment clauses. .." F I
- :F i ,
'J :
j 0rders from the MPSC and the KCC provided for revisions in the Companys fuel adjustment E ~ ,' schedules and new fuel adjustment revenue recognition procedures were implemented in the first e L quarter of 1979 to record currently the revenue to be collected under such clauses. Because of a ruling of the Missouri Supreme Court (see Note 7), the Company terminated its fuel adjustment
, clause for Missouri reta. il customers effective October 1.1979.
Income Taxes: The Company generally normalizes the effects of the use of accelerated tax ) !; l
', 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 Depreciation Range i system which permits shorter lives and current deduction of removal cost and repair allowance. (- .
. . Thxes deferred on property additions for certain prior years are now being restored to income as the l .. .C' y ' QQtiming differencesivverse. . .
. The tax effect of the interest component of AFDC is being normalized in accordance with rate orders l
l [j "
~ issued by the regulatory commissions of the States of Missouri and Kansas. Under such orders.
the related accumulated deferred income taxes are credited to construction work in progress rather ! i. I than being shown as deferred income taxes on the balance sheet.
~
Prior to March 31.1979, the tax effects of currently deducting certain costs which were capitalized i on the books, including pension costs anc' taxes, were not normalized. Effective April 1,1979 the n" O- , Company was authorized by the MPSC, to normalize the tax effect of pension costs, payroll taxes
. and property taxes which are capitalized on the books but deducted currently for income tax f.-
; ~ purposes and to flow through the effect of the current deduction of removal costs for income taxes.
L22 - %ese changes in income tax accounting procedures resulted from rate proceedings which also y'
- ... m adjusted revenues accordingly. The procedures in Kansas remain unchanged.
The Company's effective income tax rates were computed by dividing total income tax expense before the cumulative effect of the change in the method of revenue recognition by the sum of such h *- _ ' tax expense and the reiated income. nc following table reconciles the effective tax rates to the 9 Cstatutory Federalincome tax rate.
- 7. v.f s arm.
u . e:w w 1' w. . ' , , br Ended December 31 '
.c -y g .. 4 a c ; a .
g,. . ; .; y 7a wgs % . .- . y,,, y,7, w, ,. . t, E &... . Qm ...~ w AT E&ctive income tax ratebefore the cumulahme e/ ~
,...J t
- 7 et W u .E., - ;
N eNect of change in the method of revenue recognition. I. .'2 4. . . .C. Tm.7N ! r5 9a ~1 [.g17[EM Zh ~Bowance for equity funds used duringconstructen, .... 19.3 0% 'SS i .- ' W
/.%'W C: S '"i. Differences betwen book and tax depreciation.
' ~,d.,;12 t 4
.19) -
- 2. . . .i.. . . . . e . 3.1 > s: . 1.9 -
N5 > 4.. ES% Taxes and pension costs capitalised... .e c;;..f U t.Qa.7. O ...c.. s ,.' E3.e A Amortization of investment tax crent. . . .. . . . . . .u . . 4.. .
- 1A 4 hN%)Mp,$pate inmme usa.qq.g Ops . . . ., N... . . . . . . .[.. . (.9) v i
p%g - ggg@y' (1.9) - < c.W. ? ll$ l .1 W
;; ;Olber~ . . . . . .-. . * . . . . . . . . '. v m. .. . ~ . . . ~.
l .c +L :Mit : . ww - Statutory Federal mcome tax rate.,+. l1. . .. . . .. 48.0% 4a0% w.
'J X. .. , . . . .C 3.# At December 31,1979, the Company had incurred a net tax operating loss carryforward, expiring in c' '
~
6 1986, of approximately $11.7 million with an etimtui tax benefit of $5.8 million. The effect of the g $, J . Mi tax benefit has been used to reduce the 1979 provision. for deferred income W ,
*'J! cW-TJ. ; . , . y Mn :$W deferred income inn wBI beiestored as the net tax operating loss is uhly=1 g .
.. 'MM J ; MMMhNstmEnt tixNdEMein deidred whEuttudand are being amortized to income over
- %ggy.fthe service lives of the related properties. At December 31,1979, the' Company also had unused
{M; y -u 7JMM9 letvestment tax credits o(approximately $30 miBion.' which will be available to reduce Federal mcome taxes payable throudi 1986. Such amounts have not been recorded in the accompanying ~ , , y,,. q.g EW, ~ 7 n'gq;f.gi{?{;*w , y qq
,.S e - tinancialm statemenen.A.y
- y. : ...g Mu3J A w gym 7r . . . ;#m .
-~..
~
k 'e: W b W p; S S trC 8 wit ~OM M a WYMO uisition and development ~cf crialproperties. De Company has accounted for the investment " Wi i ^ Fuelsinc., under the egiiijy. method and has not prepared consolidated financial y@MMQ@mWXt[f%ubsidiary: g.pM
!M d M W MMMM M M. m%m%n%;mw.m esMMMM statemenisk a'usep edsf WconsolalMn hpon the aiscompanying financial statements would i ne
&e$ %n d na maw ^w& m% k mgx w m bNbhMM.@w$% M+w!" @ M;wbisk N h Y _ ShhPkk$ $$k$jdNN
< c -1 s .. g m t. w ,n m.
, ,'!f..g , ..~dy' , . . *;
.? .,; ; a - f , f '_ Q'd
., l ,
3.v 4% 2.Short Termi The Company honous Ainds pnmanly for construction tom banks underlinedcaNt f . W Borrowings aseements and throudi the sale o(commercialpaper. . bonowings are normaBy arranged on" a 30 to 90 day basis at the prime rate then in effect. In connection with the ' bank14
. the Company has informally aseed to snaintain an operating account or a minimum average 17k]
with the banks. Such amounts are expressed as percentages of the line-of<redit available '
.a
' \g N, and the amount of outstanding loans. '!here age no legal restrictions placed on the withdrawal of .
these funds. As of December 31,1979 and 1978, unused lines-of<redit of $23.1 million and _ . .
, .../j
.. . .g
.-e $11 mimoe, suspectively, support comanercial geper outstanding
~ sets out informarlha related to these honowing during the periods. -
~
.= as of those 9 . . . . ,~ . ..,~. _ y - . . _ . ._ . ~ 1 .y. L . , -
. .An%% . ! 4 . U._ R Y EU... '.
}Dh j. . m' Y.'. ".*k. E.^^. 2.
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w :p..q
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T ---- 3ggg
.+,%m ag n3.g"Q.p. m .n g 3 % m . ym le7s . ' u g. .e Q ' " ~ ShorHenn bonainen * -N'N ' r
- 7 + - '
k Maximum amount at any month end..'.Z g.s , . ; . . . . . 857,500,000, Monthly average. . . . . . . . . . . . . . . . . . .<.7. .t. . , . . . . . . . 34,35s,000 _.
$45,000,000 24,167,000 - '* * }z ja 9 IJnused lines-ofcredit, end of _' y '
penod . ....... ............./ M ;..... ... . 38,700,000 56,500,000 g$
. o Maimumaveragedeposit . . ' -
,. i
- 4/M repurementsr.:.b. .-;r.QWdc - e ' <l M K ! r.5; W .:e. f J7,175,000 6,850,000 3 WT.
.. . : laterestrat-s i 5 ' ~ ' A t M.Nh - A + +b'~.W
~ Weighted daily' average. . . . . . . . . . : .f. 2. C ... . . . .W. . . . . '- c 8.1% k. r .,d
- a. 11.7%
- . _End o(permd n~ . , ',,, _ - f .m. .
23
+ - - Commercial paper. . . . . . . ; c. . ; . a .% . c. tn , . . . . . 13.9% - - 10.4% a_m.q'
.' Bank loans. . . . f. l. . . . . . . . . ~. . . . .u ch . . .?. >. . ; . . . 14.05
- H . - 5 Fc d if x
- 3. Preferred Stock Preferred stock may be redeemed at stated prices, ec:ept that certain series may not be redeemed - .
at the option of the Company prior to the date specified through a refunding, directly or indirectly, . ,la 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 the stated minimums: Stated Mielmsma 3} l Redemption Prices Restricted Interest er : Series Decessber31,1979 , Redemption Date Dividend Cest {1 3.80%. . . . ... $103.70 - - 23 2a; 4.50%. . .. . . . . 101.00 - - 4.20%. . . . 102.00 - - j' 4.35%. ... ... . . 101.00 - -
^'
7.72%. 105.79 May 31,1981 7.83% i
$ 2.33. 29.80 December 1,1981 836% !
$ 2.20. . 29.70 August 1.1982 8.26%
$ 10.70. I10J0 June 1.1985 10.84%
1
- 4. Redeessable The Company is obligated under t!,e terms of the Purchase Fund Agreement to proside funds i Preferred and sufficient to purchase 1,600 shares of the 4% Cumulative Preferred Stock annually. The redemption 9 Preference Stock price of this preferred stock at December,31,1979, was $102.25. , , . , _ _.. q The Cumulative Preference Stock is nc . .i. able through December 1,1961, but may be - ei i redeemed thereafter in whole or in part ratably from each of the holders of the outstanding shares at $ 104 per share through December 1,1982, and at $100 per share thereafter. Annual sinking .)
fund purchases of 41,667 shares on December I of the years 1983 through 1988 are mandatory. l No shares of Cumulative Preference Stock have been repurchased. - - p _.: - ' Scheduled redemption and' sinking fund requirements for redeemable preferred stock for the next five years are as follows: 1980 through 1982, $160,000 each; and 1983 and 1984, $4,326,000 each. i
.J Q
A
- 5. Long-Term Debt The amount of First Mortgage Bonds authonzed by the Indenture of Mortgage and Deed of Trust Qi dated as of December I,1946, as supplemented, is unNmited. 'Ihe amount of additional bonds e$:,WQ which may be issued is subject to certain restrictive provisions of the Indenture., Substantially,all of i,. -s the Company's utility plant is pledged under the tenas of the Indenture." g , rq;y ]Tf; M
^
Annual sinking fund requirements of $160,000 may be met by pledging property additio'ns t-dien/ c at 60% of met.. orfair value to th.e Compan, y, whichever .is- ..less.. x .._.-i;S~n == CH.7pdis gg9a
.e . . .. ., _ , . _ . . .
The Company has a $":0 million line4 credit with a group of international banks. 'Ihis agreement, m
'which does not require compensating halanees, provides for the use of unsecured intermediate.7
- term funds at Auctuating interest rates (15.375% at December 31,1979) based on the recent ' ~ T ' " N three-month tendon Inter-Bank Offered Rate plus a commitment fee of 1/4% per annum on any unused portion of the line.of-credit. The unused line-of-credit at December 31,1979 was,$23 ' j$
million. The agreement expires June 30,1982.J -- _. X:
, - 2 a~c:- ,
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-;,. N= ,N, y., n. $ ;.,,.l' .ia A '..z..sM~ wl.a M 4, ;.E rM4A64, s.6M,;ist;g.%.;b.;c.:. h ;.Ja. t . .Wl
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'the Company has a sneen% senewed Gnancing arrangement whh Citibank, NA, expiring January 16,1982, whsch enables the rh=pany to borrow up to $40 million thmugh banisers* acceptances by milatenimist its coal and fuel oil inventones at discount rates (14.42% at December 31.1979) 3 upon the current bankers'W= discount rate phas 'an' acceptance charge of 0.6% per j num on the ties amount of the acceptances. in addition, these is a 0.25% per annum fee on the unused poetson of the comediment when less than $32 milhon afloans are outstanding as well as A a warehouse charge of 0.25 per annum'en the average aggregate face amount of outstanding bankers * =- 9==, plus.wasehousemani Geld costs. At Dar*=iwr 31,1979, the unused ~
_d. m==itment underthisa.nangemae.nt,was
.. y .- . ..
$10 miBson. 29. 7sp:._@ ._ h e Schekluled snaturities;andfsinking fund requirements for k 4 " . debt are as follows: . . . _ .
Qg 9 - o ,ypnge
- v. Meqxt wiMmp nm.,y.n r.n- e . -
c n;. o-
~ .~' ~
.pqr :; 99pMQC%p .pne s --.u : " . ,,. ' Slaking Fuad . .. I.eam Agreements v.n n. W .c:
- CBeeds ' " 'i# ' ' * ~ " Pand Basisers' 6 ~ [g'O Weer s'OM.M,y4MEsess9mg M Soesirements , QMsIIWe4 ' hw E
iss0. m - '
= ;:3.:.qsuarases.feAsense0..sasemase0a N0,000 ' " 380,000. .W gs a-au -
N S 4 000 - 1981;. 1982.L.2 .S. h.g!.D71'$D,000*. F 200400 : M360,000 DF 57,000,000 1983. M.v.J.4,.%.d + 9 $06,000 . h 100,000 (160,000 ~ W - { ,, a- . <** h < le&. Q$4& v.Q,.X $n *$l?.OdjlA4 M < i , At h II.1979, .
.had.8118.5.saEion of unbautd peepestudditions aveEnhis.r~
F 6. Dividend ~ Retained earnings at O 31,' 1979, included $16.3 mmion ishich wainot ammilable for cash ~ Restrictions dividends on comunen stock under the provisions of the Indentuse cf Marsige. i . _
- 7. Rate Matters On March 16,1979, theiCoinpariy placed into enect new rates appiioved by the MPSC designed to .
increase its Missouri retail electnc revenues by approximately $26.3 million (12.4%). Certain parties in the rate proceeding have appealed the MPSC onier; however, la the opinion af Counsel for '
~
the Company, under Missouri law the new rates reneb in effect,istthout refund ithgation, " pendi w h yr ' ~m 'x' t rm'~ - W- =-= mm m- aw = er =e m- :-= war-~ =~~':- y . . . On Mardi 13,1979, the EX: entered an ceder authorising an inesease in ts Kanes retail electric . service revenues by
~< w. =' s.^ .L $5
, miBion -m..annuab, eSectm y , for~
~ 3.% sales.ce an,d adher
. u. AprG , . .20,1979.
On August 3,1979, the Cosspany fBed with the MPSC and NCC revised rate schedules designed to increase its annual Missouri and Kansas retail electric service revenue by apprmimately $76.4
- . million and $27.8 ailElen, respectiveh,(25.5%) based on the Costpany's *=ti==Wof anndal sales
- and sevenues ist the suelse moeshs ended December 31,1979, agusted for known and uneasurable
- -- - < changisemeu6 Ai42,SN.Osanameyasilget,sheCodpaySed seemsstsebbene388Cne(
L T ~ 'cand the nOcier aightentdene lat(ceba emessenq heatleAge ~ es7m ~ r ln m
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S. r==d--ses ' , ; 1btal construction cosamitments'at December 3; M9, appenaanant $302 miBion. At Decemberi. +" . My
' M4
~
and C: ^" %"= 31,1979, constructen commitments of 8276 miBosiandactualexpenditures of $286.9 miDion,i including nuclear fuel and AFDC, related to Wolf Chek Unit *l, which is jointly owned with
~ ". $
^ '
KansasGasand ElectricCompany(KC&E)', Weg, : b
~
An application has been made before the Nuclear Regulatory Commissiori (NRC) for an operating ~d
~
- license for Wolf Creek Unit *I. The NRC has indcated that it will undertake generic rule. making M procedures with respect to nuclear waste disposal and reprocessing and that licenses will continue _ y s ' to be issued, but on a conditional basis soldect to $nal court review. Tir Company assumes a risk ; 1 6
.ofloss in proceeding with the construction . .-
of.W. .olfCreek
~ . . . . .
Unit *1J
~
SA
, ~
9 ^ v'and M1he Report certainof the Presideatt (hnmission on the Accident at Tliree Mile Island was issued in malees recommendations concerning the nuclear power industry and its regulationc The Company is unable to predict what,if any, impact such Report and the implementation ofits ' fx recommendations may have on the construction and/or o. peration of Wolf Creek Unit *l. . On January 14,1980, the Company, KG&E and Westinghouse Electric Corporation entered into an agreement in principle to settle their long-standing uranium supply litigation. Under the tentative ]T agreement, the Company and KC&E wiB receive $38 million in cash following execution of .. a ,.
- m. m,., - definitive settlement cscts, approvals by the respective boards of directors and dismissal of _
< , R.J the litigation. Also, the utilities win purchase froen Westindouse 1.7 million pounds of uranium, f
.& ~
~-
equipment, fuel fabncation and engmeering and other services at substantial discounts from l ~ market pnces having a present value of $486 miBion. In addition, the utilities will receive as much 7
'3 , r . 7. as $ 11 million from proceeds Westinghouse receives in its current litigation with an alleged Q
- - W; . uranium cartel NEPCo will receive a 17% interest in th'e Westinghouse settlement upon closing ~ .
W
~
~ of the sale by the utilities to KEPCo ofa 17% ownership ~ interest in Wolf Creek Unit *l. .
a 9.Jeestly Owned Underjoint ownership agreements with other utilities the Company has an undivided interest at Z
' ~ Electric UtBqy ~ ' December 31,1979, in three electric generating stations, either in service or under construction, as Flasts i
' shown below. Expenditures to December 31,1979, which include AFDC, were: pj LaCygne WolfCreek Iataa .4 Staties Staties (al Staties i (thousands) j Utility plant in service. . .... ... . . . $222.411 $ - $ 9,748 l, Utility plant under construction. . ........... ......... 3,069 286,869 214,060 25 # '
. . Accumulated depreciation (Production plant only). . . .. . . . ... . . 39,932 . -
265 _ _ .j
- Unit capacity-MW. . .. a....... 1.450 1,150 650~ q
,_ . Companyk share. percent. . . . . . . .. . . . . . .. . . . . . . . . . . . . . . . . . 50.0% 50.0% 70.0% -J1 The dollar amounts shown above represent the Company's share in each hintly-owned station.
Each participant must provide its own financing for its share of the unit. The Company's share of - direct expenses of the jointly-owned units were included in the corresponding operating expenses on 4 the Statements ofIncome. ~A (a) The Company and KG&E each presently own 50% of the unit under construction; however, they _4., have agreed to sell to Kansas Electnc Power Cooperatives, Inc. (KEPCo), a 17% ownership
~ ~ interest in the unit,in equal proportions. At December 31,1979, KEPCo has made advance %j payments of $45 million to each company which, together with credits for interest accrued, will
be applied against the purchase price obligation of KEPCo. The sale is subject to regulatory 9 1 approvals and KEPCo's permanent financing. The Company could be required to repay the '; advances and accrued interest if the sale is not completed by June 30,1980. At this time, the . Company has no reason to believe that the sale will not be completed by June 30,1980, but there i can be no assurance that all conditions to the sale will be satisfied by that date. The Company d has classified the advanced payments and accrued interest thereon as a deferred credit on its balance sheet, pending consummation of the sale. j
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- p ., ..a
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o
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..y.4 r jF hpWdaNe Earningsparastest!&h,ya.m a.h, . . . < F o .r, ~. . ..1 ;m M M ' -$ ~ ~% 0.58 PWm.ECl,?.?f.w p.
T. 'w/ . f-.S.$1
- ===a= . . doseM. w imt.muMO s$ 7 .I9 1 L7,8.
m .w:- < .04 .?$ g
<. > - o n. 4 g% 4.7ycV M M M o. g',gtn ' :< .*n -...,L '
O M,*G.# %3%gw. ,p%WfdP4D weRangsg:%st ' ; 'mm,e.mp;.'E..R. n ,. .^ .. . . , x 984574 ' R,7046534 .11416 j 443. - 1 ab . m._...
~.-.
. ,, . _ %_;. .o g C M ' F F _D ., ,. y .
a,;,r..w.~,_.,. wym a.#.m _ 1.5 _.7 &. . . ..,N M_i@ W M3rd m And au
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v wo % g. %. e. _ -. m .. w s Yb hD Q d[*N& mn ..
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,s.w, %, . v+.sw n M, ,..s & h.,:.n_, _ ..,(thousands) . ,
a~ww-A c.- <. .m. y-. m rs .e < Ope.%. . rati. ,
.$ . : 68,973 c Operatm.ng g income .~ ,reiennes,q ,,.g sa.;_.. ~.g 74,97ge a13,897 C,12,713 ' ' ,-
... w ...m y
% a m. s ,.s. .. < .; -
18,341 y.4 2. #. o..,n y,-
.4 .
_ _.m 11,.578 1 15,459 #
.r>.7 %M 8 is j n'
** M Ss8El .'W".,?L i8- ?.7,N'i. 2
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a sp~ por
~
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3
, Kansas City Power 0 L.ight Company. .. + . ,
O. - >
. ., s - . ..
t c c . . . m lSuppleme'ntary Finandal Data'A4asted
. . . m .~
for'Changh g Prices. , i # 1 a Statement ofIncome from Continalng Operations (snaudited) w .. N
.,a s
. . . Year Emded December.31,1979 .
3 .
~ ,' . .o. .
.g o1.e%... J _"
'A:
j _ _ _ (thousands) p
;.yn k
~' .
a . ..,
- r. :r n .,
V Conventional Constant Ibflar ' Current Cost ' - 9.4 a + . n, . .f.a. ;.n. Hi.storical . . Average. Average ,. . ., .. d, , 4
.da:a A. ., . + ,..i,u . c. s . . . .
gp e e ., -m.... . ;
;p,;c.gw . y ;,..o 1. . o - - . .
m., . .y ,.g g y 4, ,.;W - Cost s 1979 Dolta'rs' 1979 Dollars _us. 'd 4
% e/ #, a", J~ i - y/A_.s.s $370,875 -
.. . ,3 , % , .
l g' Operating revenues 7N y. ?
~
$370,875 $370,875 ~. ' + -Q
. ., ,e iN3 'VM,a M(,, ~^ * 'y 1 N
^'
E Operatingexpenses'[ ' *'*9[ ' Operation and maintenance" ~
. Z- - ' - M w 240,449 / 240,449 240,449 2 1 dl
' J /..
Depreciation ' , c.i
~N '
s34,868, 68,097 80,660 Income taxesg . y d$fy gl.c , c.7 . p, . , 9,569 4 9.569. g yl:.Q . w , . Cencral .- +. taxesT.,..cs , aNM. 4w w/.R.y.F hm w n m .:. @..,41,914 4.M, gh.'gi ..s.o . .. . ' .,, ,,9,569 41,914 n ' y e . 41,914 t a U.M'
' fc';Totaloperatingexpense$lgl.
; Operatingincome nL -
- ik Ay hp -yQ f,.JQMyyj ' - ' r ; ' 32E800 44,075
- W" ,[(360,029f 10,846 ~ ,
'~(1,717) 4 -372,592 7 d,i g J. < Other income and. ddd,uctions m Y" ^ #w-.~@m.u ^ ' n.,. 'mb Ma 4 e+ i ,'.19,771 6 - 19,771-.
19,771 O, 4 ee i -(27,295) . '
~ (27,295) , ...yA e;i.,I.nterest charge.s.1 { nut $.
6
. 'M h@o a - ~@- . (27,295)' .9. . -..a Income (loss) . r -
from continuing operationsM~ ~ N"+ ~a9'& a S 'F,T + ' '" m.,Sr, ..
- .!, ~
, v
' r~' G
. n. -
before cumulative effect of change ~n in ' % ^ ^ h M. , . .,1 . WA
<.s.
, . , , ~ ~
.+. .~ , . . v:a
.g W the method of rewnue recognition and 2 %' > , e ,. ,m Jag . .p.- .
- . , e t .
excluding reduction to net recoverabIc~ . s[^ ' '
M ,
cost
' ~
$ 3.6,551- $. 3,322' $ (9,241) ;Q ,
income (loss) from continuing operations. .,. 1 - , . 'k per common share (after preferred and
='perty. plant and equipment held j
dunng the year ** $ 188.355 j Reduction to net recoverable cost $(117,426) (11.694) d Effect of increase in general price level - (281,525) I Excess of increase in general price level . .. .
]
- o. . gi over mcrease in specific prices .a afte_r ,. ._ .
. . . . .3-. %,. . _~ .,4 ~- #.:,n. . ..
m.. ., . . . , ,,, .. , j reduction to net recoverable cxpt m , (104,864)._ , , Gain (n>m decline in pun-hasing power or ' y~ ~ e .. , , ' % %,w.._,"4 "^ n . '.
~
a
*dN
~.
net amounts owed .i; k D' 7~ 99,780 99,780 Net
'~
[ ",. L f'MD l M l 7 o S $(17,646) $j5,084)
;. m,m . .
+m. . w. . yn,qw, ~%. .g :a . z. .
, . ~ ,a,n ..e..r a .. .
= . - ,. ,m.)
Net assets at year.cnd at net recoverable cost . *f ?.;W";O n. $.e.@.
. <;, ,@:1Q.p' e,. t$351118
==. m 1 . $351,118'.*~y
.w r.
ak
- Including the reduction to net rec. ove,rable cost,, t.he. in. .com. e(los..s) fro.m. 'c. d.,ntin_uing o. .per.at. ion. s on. .a. . consta .=,
3
. wW.W have been ($114,104) for 1979.'. _' :_ >. .- @ _.
m: Wn . . . a.a. M, h.,nph.?rWNny.mh.
. . -3 m% V. ..W.
- .. - 4 A e. .~a,.. .
M...
**At December 31,1979, current cost of utility pbat net of accumuhteddep%reciation was $2,235,000, while histancal cost,
..', or net cost recoverable through depreciationMaisi,252,000',sM..
m m c M,,; K F.
. ~,. m, . . . - 1 ,-g w.c__h 2 .u s -. %%,m( o . . w, .,.,. ..
t% m.. e. m g m_r,. a n c t al Data (tinamlitedr wem. %m'.s m ..t e %4s...
. Selected Five-Year Su.....pp .le.sasestary FIm.m.%
s T %* M
- (in average 1979 .
m
.m mc nm # y.*.>
d..% a., oRars}:r a nmw~w%w ww pir w > ,r,e.,u.s,..a,
, e > paa
&,m.un.O i
w q %;
,i. 4 3 f p.
M&.$g*pWWM;r.g,W:m8mM w Aewsegwe
,rra ge..,i ~ded w.tg. ga D~ecem5er 3,1.:x. .w xm
~p~ ~s QQ13$w~:!@,
-:m
,w
. . m .x n k"w% w,.4 g. ,
e -4 .w %, y.n<.-. % . g g .'1975.'xv "1974 An. ,,1977., _ 1978. '1979- , W M ,N
, y- e; Operatmg Revenues (thousNds).,~~. " J -.
..13233A03">$30 .
.iS354,867 . S378,875_e .
atH rW
.-.N. mh,w$M3A5 M, Cash dividends declared per~ common share-~"c
.a. - .
SW,m,0,680 . .. 199 M. a: s
~
5 4 33676.1o.. . $.e 25.87 < .$~30.83 4$324,496.nMark . g . . .. c. Average consumer ; r :m. price index13#rriJ w psme A J MSM.sMD+.$.MI.5' w n t.i.11%.47 mnhe 5. 217.s. (esL)' m q,p,..
+w . ,.;p(w.+a
.. ann~. .w:n;n,*
s.s UfM.re a:w.ra,% * ' m N.M,b y".my@e,y h4 4p,d:,, M%S %ew+=c4m +a.n. ..hei . g ,,f <+,.n v wa
" " r . N n..y
. .4 u pp4 M dr? w. w6%g DwANgA
@Ap;a'+q y;.. . 4 WW <- 6%.e.;r.m
+ *. c:p g..g. t0 C6
%4w.s,m p A f,pm F.A m,.,y
~A" "y%:A.swbwah.Lw.anit:wwL y yLm ,e4QW. n.e
. g .: a m s.
w> . c A.n6 m . m s.4 p . ;
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~.
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aem~ ,g.~- . s . h
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m m,
-4)g - . g A s*W , , .3 ,
. w g .T1y* e %. w.w.a.w '
er. ' J e. 'd '-
'~...r..~
+
& ' N' ote Wr~ ~A4s_s ste8f m
. ~ .
or_Suppleme%'.L.Jntary th.to. e Effec.ts~f
~.
o Changing Prices Financial Data
~ m + --..... - . . - ~~ m - -
WEh.regmag,,ch p %esupplementaryinformataanpresentedaboveissuppliedin
'-withtherequirements
(/ gt.e lr;M.Jff "'Qfq 7,55gf
.9 =S$hd'Mi@.~ 2e rtam information about the effects ofchanging pnces. It should be viewed as an estimate31of the gm.ergy;;,WN"Edse&AS8 ym approximate effect ofinflation, ha===*
, ~ ,
rather than as NoJ33/Tinancial
..~
a precise measure..-
~i ' Reporting t@- ' and L~a:g.n. e,w w.g;chJh-cM.W
*- P 7
.DM.~ ~ 'FKEF9M$'poder, as measured by the Consumer Price index for all Urban Consumer amounts refied the chages in specific pnoes of plant from the date the plant was acquired to the (US
%q 7 . SpfMMQ-.
7 , , y- ! present, and differ from constant dollar amounts to the extent that specific prices 4
- n=5 have inc E ' ' more orless rapidly than prices in general. The current cost of plant was determined by indexing '~W '
p Wx . N' ' the surviving plant by the Handy-Whitman Index of Public Utility Construction Costs. Since utility %
'd Q 2, 3 c . w. 1.E . plant is not espar*M to be replaced precisely in kind, current cost does not necessarily represent Lc- d4M . .d~ 'l@~ the replacement cost of the Cornpanyt productive capacity.The current yeart provt F' '
% t,"; -7. N l. by applying the Company's composite depreciation rate to the average, depreciable plant amount 2%
- - . 4-P calculated on a constant dollar and current cost basis. 'M G_.n
%E%GaTM'M@t ' eSince regulation limits a recovery of fuel costs in base rate schedulek to actual costs, fuel Q 7:G .6 7 W 3 f 8 7 N W 2J aventories are e".JM y monetary assets and have, therefore, not been restated from their histo. icaf p,u . ma w w .w.f cost in nominal dollars. Also, preferred stock has been treated as a monetary item since it is treated y .
- ~ .the same as debt for rate making purposes.
p' ' "" " ~~ Since only historical costs are deductible for income tax purnoses, income tax expense has
.not been adjusted.
n y L, . .. . , - , . Under the ratemaking prescribed by the regulatory commissions to which the Company is
%c_.s s W_bc EMb Essubsect, only the histoncal cost of plant is recoverable in revenues as deprec L. ,
-. a.
w histoncal cost of plant is not presently recoverable in rates as depreciation, and is reflected as a '
%mW.c
' Q3.uj 3 DMMyyJT Wureduction toStatement net recoverable costs.To property reflect the economics of rate regulations in the ofIncome from Continuing Operations, the reduction of net plant to net recoverable _
- NA:.
Q57Nh $;pgtCcost has been offset by the gain from the dedine in purchasing power of net amounts owed.
~- y , .Q. , :/, ,34 gQ; t.
< , . ' s a ) a, p , , . . , . , , , _g _ ,
A **A M'*-
~ ' " 4 * .
,n.-,M.n., Idd ,-[.0 lop _e&athagD6 , ~ .- - salts MM.., y g..@_MMn - - -
v,...
-~P ;_p. + , . t
,g. _ .; . . 3. _ .,, .; q_
e - [M '* .::
~
' * ' .$. y ec v - -.- M. .S. M $. M$$
~
duets @ h in 1979 thaQ anatomerata ~ Mi> '
S & _ & L u n ; ' ' E30CFEIEE?'5.55W5$0W1OWML O Y - ' - T 3**
mr .,e ,. - sI , t ' Md , gesWag and ==ama===e= egemens im 1979 any set be disectly--
. y- ' . . - c m sa a; w sy.a ;, n .w
. 9 tothosein 1938.m
. ~ - . ._.
\ - - w- w:n ,
E_ k ..i My pd eqpensesco s s4 E b sans!Athou6Mg
% ei Tes1 prices 1=====A JMX
_ _ _ _ _. swemynce w y.; om- M t/9 j E t Qq G;l;" M.q@ h,6,9% j lrdilovember,197sa ~N MMR_
'~ ' < n .- . ," w~.n. - -4,1b.e inaeasei,n operating , expenses. '
gY 1 [ I N' '
..2'._ - M_;, ' gjg.gf{gg g *
- @, .us w -
~~~
M'.6 locassegn- during r inspection'of the units MM' .g%- #%dW%;% g?
& ', C ' ~' ' < 0 -
4 po.1;x ., w,,.em n w w p,g[.$. p -
.a ,
.m . c., u
&. mwnpig z . i, m wc ::m y 8t'vi tp%vy.Mij av W M *M4 C "
'-',, 4ghm ;Q @r:n y.m y y W- .
-- a ,-
4 DjM. V@m.n .w w .%p a . 4, m.payjy , ,IQ ( _
m 45
- M An increase in gross receipts tax, which paralleled the Companyt increase in revenues bdled, 4 I Tames:
accounted for most of the increase in general taxes. Income taxes decreased because of a reduction . j M) in the amount of taxable income. i< Allowance for Continued construction expenditures at !atan Unit 'I and Wolf Creek Unit #1 resulted in ' Funds Used Durlag increased AFDC. '
~
~
~
'#8 4
Construction: ;,M Interest Expenses L Interest on long-term debt increased because of the issuance of first mortgage bonds in December,fC h:f.y , y .,a 7 _ m Also contributing to the increase was the interest expense resulting .. - fromn. loa
! T .1978 and early 1979 under the Eurodollar taan Agreement and through bankers acceptancesOfMW-Interest on short-term notes increased due to anincrease in average short-term indebtedness andW t 7 d'l higher interest rates. Miscellaneous interest charges '
,'reflected accrued "^expense onG4 an advanc Kansas Electric Power Cooperatives,Inc. ' % 'i i ,
~
Other: The cumulative effect at January 1,1979, of change in the Companyt method of revenuei . . _ M.m recognition (net of income taxes) is a'one-time entry recorded in January,1979, and resulted in . .. A a (See NoteN l e E,J . an increase to net income'and' earnings available for common stock of $7.2 million. gm 14,*W n ~ .. m. .: W.. %,. the Financial .mSt.at.e.mentF. RF ey WW X lc ME.y ,.m c, g me u m ,,.e.M. g&..p% qq.NT m ,w,_ s : %
~
; ' ?~ ' ~ Preferred and prefe're'nce dividerif requirements increased because of th'e issuance of preference 79%
stock iri December,1978. The increase in average number of common shares ~ outstanding resulted N 9 d a from sales'of additional shares in March,19786 and Jum1979, and hem sales ~under.the CampgMk Dmdend 2 Reinvestment andvStock
- n. Purchase
~q?wWW,2s Plansu.xw #n Wsup W.d G ep@w n anniug hhM a -
., . , 7 7,
, 3- .j :
,~.w~ a.+n m. _ .a.
- .- .-, ,,-s.. , m ,_ -
. - . - . - ..... w ~ . - n.=
1978 Compa. red, to,1977M,.e M;M @** **MN,m@
~
-~
a- . n 7 n Operating Revenees: Of the $48 million increase in operating revenues in 1978, about $31 mi!! ion was due to rate 4* ' increases of 6.9% in Missouri and 14.8% in Kansas, each effective in November,1977. Approximately
$17 million of the increase was attributable to a 5.8% increase in kilowatt hour sales resulting in part i from the severe winter of 1977-78 and increased air cooling loads during the warmer than usual 3 summer of 1978. 29.;.;
.m Operating Expenses: Increased operating expenses in 1978 largely offset increases in operating revenues. La Cygne' . .
7 ';M M
'~
Unit *2 was placed in~ operation in May,1977 which resulted in an increase in operation, maintenance and depreciation expense. A 138-day strike during the summer and earty fa!! of 1978 TF M caused variations in the Company's operating condition and, as a result, operation and maintenance ~~ ' ~d expenses in 1978 may not be directly comparable to these in 1977. '$ Operation expenses increased in 1978 largely because of increased fuel costs. Approximately 89% of the increase in the cost of fuel was due to increased prices of fuel and the balance was due to - 1,]3 increased generation. Increased kilowatt hour sales, the purchase of economy energy and a major Q unit outage because of the installation of improved air quality control equipment, resulted in increased purchases of interchange energy. Consequently, net interchange sales decreased iri 1978
~
-y].
and contributed to the increased operating expenses. 'g Maintenance expenses increased only slight!y in 1978,largely as a result of the postponement of ll non-critical maintenance work during the strike in the latter part of 1978. j Depreciation expenses increased because'of additional plant placed in service during the year. Taxes: General taxes increased in 1978 because ofincreased gross receipts taxes and increased 1 propera taxes. j Income 2xes increased as a result of greater taxadle income and the normalization of the tax .
]M
~ ^
effect of 6e debt component of a greater amount of AFDC. Allowance for AFDC increased in 1978 because of further custruction expenditures at latan Unit *1'and Wolf N Funds Used During Creek Unit #1. d Construction: . Interest Expense: Interest on long-term debt increased from 1977 to 1978 because of the issuance of additional m long-term debt in October and November,1977, and June and July,1978. 1 Interest on short-term notes increased in 1978 because of an increase in average .hort-term I indebtedness and higher interest rates. Other: Preferred and preference dividend requirements increased in 1978 because of the issuance of additional preferred stock in August,1977, and the issuance of preference stock in December,1978. See Sumnury of Earnmgs for the years 1975-1979 on page 30. qq q , D D D 3 n
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Kan5a5 City Power & Light Compasy y,NM $ygn usw n~ , d, " &. . 4. ' f. ~ ah Eleven-Year Summaries,.L ,. . .. m a .;. ['y K,l-
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%Q Samammary of Earnings ~1 . "asse H CNes Uterrill' 'sinf61k ; 1975 ' W4 '
"1973' 1972 19 71 1970 le 2 Operating Beweses Om) _, p , . , ;; . O . j p.x ,y _ . . . , ' , . . .c .. .,
h Eldru , ,,S n 33,gge 3 31173f 5 M $ 234,2971 207A13 $ 170.249 8 151403 5 137,7815 128.774 5 I!9.M99 5 108.9:
-- Other n 5. W -.,,",- -3,333-?*gNG L' W -'2,NT^ 2,35 "1.799 1,75 1A29 IJ00 1A07 1.7
' 8 ' 3TG,8pS J 38tAES./- SpeA63 337.864 - 314 318 - 872,048 157,139 139.610 ly' G .)
Tidal uperatmg revenues - 130.474 121,70h Ilow 7 Operstlag Espensee IOUOst u~.
.m
. < ? r. " -
~, .. .
'z- ..
f a. -} Operaum
. . C'.~ T 333,333 y gN Age " 33gste W g g'e5 Y $56 R - SRA37 '55.950 'd um 41622 40.326 352' mmtenance f 34,333 3e33 1 meg 6 T32A75 '1%I94 ' 14.550 13.890 10.659 11.451 10.835 8.41 7 d permten '
33,333 314-( 235 34 2 , SIA67 30.648 14560 14.301 11489 12,957 Iljt
- Income 9,5W '3E137 R&455 19,841 1654 95 15.204 10,633 9,349 9.952 9A54 1227
(-] General 41,984 35.5]I 35.519 31A22 28.537 21207 22,959 21.375 20 h05 18,462 lh R Tidal operatmg cipemes ass,see 361631 , 224.336 191.512 169.648 134.446 121,992 10622 99.119 92.434 84JL r O- Operating Income Om) - 44,833 s M M Y 4338 "46Ast - 4e470 I 37, set ; 35.147 31388 31.335 29.272 25.94 other laceae and Dedactaene toimt ;e- . -4 , M, g .. a. - - Ahance for equity funds used ~ dunng constructmn 39,4sf 12,563 - 7.583 3,953 - 2.119 511 IAo6 1.893 1.0?9 337 97 Maritanmus inct) .. .. Ses 1874) - - IN) 185 1.715 642 214 498 503 402 51 Total rwher manne and deductsms ' 39,771 " I W '? 725 4,1N " 3A34 1.153 l 1.230 2.391 1.532 739 1.48
, . . . ~ . . - .
Incese before teames , . '. 1. Charges tomu '
- 33,343 " E701 ' "$1879 ' 49.520 44,504 3E755 ' 36,367 3E779 32A87 30.011 ' ' 27.43 laterest Charges nuou . g .. ., -. .n- r - , -
Interest on iong tenn dcht 44,813 3I217 36.e86 33,553 19.988 17a84 17.473 15,978 13.638 II.0hD 9.13 Interest on shint.ttnn nines 3,4e8 1.909 1A06 - 412 ' l.085 1.592 343 650 672 1.183 7e Abance kw tuerneed funds . used dunns constructon-credit (19,311) 114,750) . (1984)- 44AES) (3,356) (1.062) (1.554) (3.102) t1.6M6) (912)- (l.13 j Mrscellanenu _3,438 1b41 '35 356 MB 128 ~ 147 87- 82 64 5 1 Tidal enterest charges 37,805 23.777 22.386 30,198 _ l7.900 18542 16,409 13.613 12,706 11.395 8K
~
* ~ "
Income before Canaletin Emus of '"[.~~'.E"....^*'".."... . . ' ' - . . ' ' ' ' . .~ ' " . ' ~ . g Change le Beweee Rww-ana- 10nou , en mas - .-42,seg' 31133 .. 3pA32 136A04 . 38,213 ~ 19,958 32.106 < 30.181 18416 18.60 Cemetanin Effect of Change la
~
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Nt Incese Hmst 43,753 42.924 31393 29.622 36,604 30,213 19.958 22,166 20.181 18.616 18.4 ' Preferred DMdeed l Regwneests Hwsl 19,573 8,719 7.545 5,124 4.019 2A42 2.848 2AS4 1401 IA63 ; IA7 te,I& cable to Commee Steck1000u 8 33,180 $ 34.205 8 24.048 5 24.498 8 22,585 5 17.371 8 17.110 S19,312 5 17,780 5 16,753 5 - 16.73
' '~ *'
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Earmands ree Awruge ' ~"T^ 2
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ws . , . S.as n. s u. c . .. ~: . - - . . ~ .: Itrkee chanar m revenur recogneten : 3,5 5 . 198 $ - 140 $ s s 3.37 s 136 s - les s 10 Earnings per shme - 6 .~ 5,88 4 6 i ^ 3,40 81 1 3de6M S . 35 $ c 32 6 + J SN 8336 5 : 3AS $ Basie of Earmames to Flued Charges {[.32 8My Mf f , f3AS M[ 187 y M 3.N,[. f10 4.0 Capitansation Data lc%. -.q - - J[,ES%@%?
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Commee Stock Egmity t000u q.m , , . 9 3FS,338 $ 1 NAN S' N3,438 8 30W S . 39 Ell! 5 .38L336 S 381984 8 I?W $ .157.709 s 151.530 $ .145.73 Awrage shares outstandmg ,, %' m SL83,4N SNG,35 4308138- 7,3 ALEE G872 8,947m 1947M.1727N E447AR2 5,447AIE 5A47.09 Cash dmdends per share .y - '.9 - W S ~ 12.5 8 M $ .; Sm $ 25 $ ' 1N $ 1.9 K. & T Q ? % & N p"1(g ?' y 8,a M S?. WYNWP ?i& W d' v *?. . Alt 5'WO-'+! Pretemd seech tocou - ;* e 335,038 $ IOLIN 9_196306 8 f 9L438 $ } M435 $ 5,1796 $ 56,356 5 $7.116 3 57.276 $ 44.436 8 44.54 Devmirnd regwrements (000u ^'S 5,134 S 4,019 $ 2.842 8 2,848 $ 2AS4 8 2.401 5 1.863 5 IA7 l Average dmdend rate 7, ' 1 7 T. m' S,SF3 W $ l' S TMT v57214 7.546 $[669BE ' Smn 5.005 ' 5.esh '100% 4.63% 4.195 4.19
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- 334,541 S. 3OL797 8 3EA73 $ SeN $ 231A06 L 19E69 (W $[4E33 s$ptits s ~ 341730 $ i,,128 6 - 172 $ j ISM $ . !!A
( _ Interest en debt (OOOW
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, short-Term femens(000W 4g& g S Sy 4; ?,W 4.g.. A;; p 6i1839$233 2 8(12,N0$ 11.500 8 - 11.500 6 30.00 Average efktrue rear ab m .pwy.
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(1) Restated to svr eSect to the refund of fuel =enga %fs; y
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JQ p s.y3c QJp y;g.sf,+ a-. Electric Sales Statistics love I9Ps - ~ Istr N Esse b'Er5'" 51574 - IG73 -
- 1977 1971 1970 19h9
^
geweses vom ' W N N V'* &W9M S F ^ ' ~ 51.533 s 4A912 5 45.571 s 40.425 Resadential 9 138.199'8 mIll.Sf3 (3gy5 "pR3B C g$~0W 8(g y ;,R384 g333 $ s ' 58,38 ges3 5 44217 omime,cw w ,g Mnm . ;y 333,m g " $W ' 2998'WW 'E3485O 3&WT P 2F,530 ' 24.530 g '.1 54.830 51.112 21487 43.067 20372 1A223 Pubhc street and hqghway hghtmg LIES Y 4 M 7 W T I W O W [.,,.1900 3.683 1424 3301 1169
.- - :.T 4 V' V, 7,848 ' ~ d L-M.iOO R dW;.L W'.~:'.A.F.O<
WW c auqhontws-puwer O y p#Ky!4 W " CW [ 'd" 2.123
.y1; WQ .. < ' ~6 45 44 45 4I i g ('yigj ' " W74g7;g*E33'
,,g ggei,g uther h utsties d~ > ' SMS ' LW. ' 1A68 1.679 f.463
' - 7 8 a' yyg,g nem nas 3112W 264.644 2 3,876 M 12843 7.w346 136.744 127347 119.035 10A13M i ither eirctru revenues 1,75 1,579 1.400 1,41 W IJOS 1,157 i.037 927 M64 774 Tbtal 8 308,084 S 313.787 5 266,053 $ 2S&29F S 20t.al3 5 170,340 S 155,403 5 137.781 $_12&774 $__Il_9fw s 10H 912
%eies la EEewett Beers 1000W .,'4 .. 4 4 M58 dental . 3.354.985 2.465,782 2.284.029 2,19859 130&432 '2JmL855 2,111326 1.956.111 1540.228 1.735.017 1.544.619 Gauneraal ggW - t'bWa;[p 3,3m,3pglgm gg ;g;2,8etmi'1851.Bl7
~ 3,188.739 3,132,875 3,seL5m 2M m ; l,gg,7tl} 2.677Af7 ),9E799 1.881.876 2.491428 2.312.259 2.238.07b 2.124.161 1,752.072 1.649.M57 1.582389 Indatnal yQg,m pp. 33 gg ,g,j g2fG48&l5B 62.331 59.249 51733 54.403 NMis PuNr senstandindeglidtimCgggh authurtiedpower y '..n.. ; f gY9 .egy-.p p.w g ,. . q g ,,.., f ., ,
mi heting . W Q .P r;; C,. ;* .S.858 12739 T~ 1W RSR : MB4 ;;l ~ 3,5131 ' 1559 3.596 1M5 1774 1479 uther electric ut&tirs U 2;W . MSES 35plS' 317,548 3E 843 V 235,488 23SJe9 216.2Mo 195369 182J10 170m7
.- : . . . . 9.,%, % ,4h . ., ,.[yJ Q f.
Total e.
. g.ac s
; 7,, Sq g e). y gjp.v ._
,,g, q .7,gegag -7 ,
7,3er,4e2 gyrg,gge 7ASSM8 6.613.622 6.161242-5.861167 1-479 - - 143
%,, , Q y 1A .V +e ,- .,~e 4-
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m , . ' Hm.irntul 398,413 293.402 29&J76 _ . 284.296 ,. 281.708 278.973 273h32 267320 2hleh5 25h 452 252354 uimmemal as,373 3&713 38.343 38.034 37,709 . 37.575 . 37,401 36.670 31897 35 624 31Alo Industrial ( 3.143 2,121 2.004 2.005 2 )tB - 2,063 . U12 2,133 1.843 1.4v 75M Nets street and ludway hghung 133 123 122 125 126 128 128 129 131 132 133 Nhhc authnnhes-pswrr mihghung Il 12 11 11 !! 12 12 12 12 12 12 Wr dertrw utihnrs le 16 16 15 13 13 13 12 12 11 18 Ntal 339,075 U4.387 32M.952 324.536 321 616 318.764 313.19R 3nh276 2* ] .'91703 2w no ReeMe:tial Sales 7,920 7,717 8,166 7,423 7,726 73r27 6Jh5 h.121
'g u rage kwh per customer 7,556 8.404 7.317 u rde nwnue per kwhwents 5,373 4.541 4.087 3.838 , 1 456 1009 2 758 2 634 2 65A 2 627 2 617 Lead Statistics Gncrataf fnethkwh tom 7.585,301 &5R1.224 8.446189 7.667.221 7.2M748 7.221540 7.212.592 7.225.430 707&M3 6354710 5.911202 Nn hawd-kwh onuN 79,998 211.991 188.0R2 194250 190.198 161.600 141.759 181822 1;h347 1712 0 163 'm I vm hangnj inct >-. kwh 6M NN I,396,194 218.421 (182.695) 164.936 463.542 169.272 243 921 (237235) M3 Dun *l w l'o il<i%
1,tal-kwh HuuN _8 _831 _,688 9011.06 8.451.576 _A.026.407 _7A57_.488. _7.5_56.452_ 7.598_.272 _7.17 8_017 _6 h41_310 _h 32_t i_l_?. __5 w_a li_'9
%umum net hourty demam! m Wh watts twmter) 1,317,000 12M6,000 1251000 1.165.000 I.161.000 1.106J00 I,090.900 1.116A0 1.o lh.D o 'm4.D o m7im hmum net hourfy Jemand m blowatts pummer) 3.964,000 2.097.000 I.9MO.000 1.920.000 1.902.700 I.907.200 1,757.300 1.675.710 1.571?u o 1.4+ 9'io 1.4M.m o %t generaung capabahty m kw isammert - 2,500,000 2.560.00n 2.641.000 2J61.000 2.334.006' 2.21&one 2.224.000 1.A139w) 1.684.ou0 t hx6.imo 1.6949 n Nrt purttuned capauty m kw tsummer) - 95u00 (101.000) 11&000 . 100.0W0 144006 (2550uw thlou0 172.ono 41ono aloupen Pau per net h=h dencratal 11.433 11.266 11,518 11.331 11.585 11.364 11.521 11.001 11.037 11065 11215 Utility Plant Gnes ad i tuns tuuo's) 3 334,818 $ 18&721 $ 1682s5 8 126014 S _ 8&A18 $ 61179 $ 31.M s 70.170 5 56.213 5 42.65h 5 3hm?
Employee Data , , . w mbrr ut emphmecs. Dn embi r 31 3,8e8 2,726 2.572 2,522 2.484 2.477 2,556 2.473 2.444 2.393 2.314
%nes and wagrs 04NN 5 68,445 5 54.693 5 56,3R0 $ 49.644 $ 41305 3 38,614 8 40.068 5 33.M67 5 31+65 5 29 332 5 2h.255 Pcnsens anJ hrnents uknN 9,947 6A61 7E75 7,133 _ 6.48f 5,358 5A79 42M5 1 430 117M 2390 8 78,453 S 51J64 L etMB S 5&M S < 51,1W 9 - 41972 S eit3A 5 3A.152 5 353N5 5 32.510 5 _ 29 045
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Officere and Execstivea Board of Directors
" ' N .h
~ '
[ ' [ Arthur J. Doyle* ( - Chairman of the Ik>ard l.
~,: 2 .
and President
; . e%ngp1E; g-.
- - - 3 Cyrus S. Eaton, Jr.
.l 3-- sp,..7...., .. .
.4 Chairman
.~ ' - ,.
,, . .e,. .
n'uts. Tower International Cleveland. Ohio
' . . 7. D - ..
Arther J. Doyle n , I . . -1. . . '
-mining. investments and Eemaeth G. Revland Demand T. McPhee international trade chairTriati iif the Heard Senue VKe President Vur IMadent-5vstem hwer
.no Pn-s,dm operations William D. Grant *
, ., ,, Chairman of the Board and Chief Executive Offico
.4.':*-
- 1 Business Men's Assurance
- g. 4 Compaay of Amenca
-insurance l
1
-X,
' :.- ig 4 Eenneth C. Hovland Senior Vice President c, .. . g. Robert A. Olson*
f. i . . :: . . . -
.y t l 7 , , Retired Chairman of the Board Stanley G. Jamenem Jehe A. Mayberry J. Robert Miller
\a( Pf r uJ r Y T rmm w. o Vu e IMedent 4 nmmernal Vu Pn-sadent-4dministrattor BIFon T* Shutz'
,,anner+ow s e operatx,n.s Honorary Chairman of the Board "r=""'"
_ The Byron Shut 2 Company
,. '- ?.
y-
-realtors and mortgage
+
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! ;~ ' Willis C. Theis' l E .; . = .
- Chairman of the Board
' i. - '
4 Simonds-Shields-Theis Grain
. :. .4.
Company
.;, .. -grain merchants y3 ,y .
and warehousemen to.i. c.B u . ae. D..and M. i.e.de. s r.co-sey Robert E. Zimmerman*
'" "'#""*"""*** P $En7$$1["" 1En""d'"'
Honorary Chairman of the Board 1
- ' Member of Executive l Committee Advisory Directors Joseph F. Porter, Jr.
F Herbert H. Wilson Richard W. Fisher Lee F. Mmer Clare Dee Baeryoch contn dle r Treasurer Secretary
' '~
(. EaJ WIHime H. M Wer A. Bene Jemadags , Directiv of Human Resources Generai n====s8 j y/
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rj Kansas 54 Kansas Electric Power Cooperative. Inc. I t l '. ! Topeka, Kansas l
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r s I 1 EXAMINATION REPORT For The Period January 1, 1979 To December 31, 1979 t I
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K;nnao 54 Kansas Electric Power Cooperative, Inc. Topeka , Kansas INDEX Page Trustees, Alternates and Executive Committee............................. 1 A c c o un t a n t s ' Re po r t . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 Exhibit A Balance Sheet as of December 31, 1979...................... 3 Exhibit A-1 Comparative Balance Sheet December 21, 1978 and December 31, 1970.................... 4 Exhibit A-2 Statement of Changes in Financial Position................. 5 1 1 Statement of Changes in Working Capital.................... 5
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l Exhibit B Utility Pla-t.............................................. 6 History and Organization................................................. 7 Balance Sheet Comments................................................... 7 General Comments........................................................, 14 i s e e
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1 Krnsta 54 Kansas Electric Power Cooperative, Inc. Topeka, Kansas BOARD OF TRUSTEES Cooperative Trustee Alternate Altamont, Kansas- L. G. Dulavey Dora Boore Belleville, Kansas Everett L. Ledbetter Raymond Trecek Burlington, Kansas Dean Martin Alfred Meyer Cedar Vale, Kansas Walter David Robert L. Brown Cheney, Kansas Jack Hutchinson Gene Porter Clay Center, Kansas Charles W. Ellis Raymond James Council Grove, Kansas Gerald F. Ridenour Wilmer Tischhauser Dodge City, Kansas R. J. Sprenkle Ralph V. Sherer El Dorado, Kansas Wilbur C. Reed Ed Helmer Ellsworth, Kansas A. D. Paul.: Larry D. Filian Emporia, Kansas R. D. Speece, Sr. Larry N. Scott Fredonia, Kansas Howard Sell Marvin Freidline Girard, Kansas Ray Taylor Marvin Lewis Great Bend, Kansas Jack D. Goodman LaVern Backer Horton, Kansa s Dale Bodenhausen Alva Amon Hutchinson, Kansas Wesley Nunemaker Delbert Tyler Iola, Kansas Wesley R. Clendenen Elmer Nichols Lindsborg, Kansas Verner E. Lundquist Gilbert Bengtson Mankato, Kansas Clarence Beck Jim Gouldie McLouth, Kansas W. A. Ousdahl Fred L. Johnson Meade, Kansas Otes Allison H. L. Murp?my Norton, Kansas Phillip A. Lesh Lynn Morford Pratt, Kansas Robert Ahrens Frederic Moore Solomon, Kansas James F. Schmidt Nadine Griffin Wamego, Kansas Kenneth Erickson Lester Marten Wellington, Kansas Max Kolarik Garland Price EXECUTIVE COMMITTEE
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Charles W. Ellis President James Schmidt Vice-President
. Phillip A. Lesh Secretary Allen Paull Treasurer Max Kolarik Otes Allison l Wilbur Reed MANAGEMENT l Charles Ross ' Executive Vice-President
2 S CH MI D T & COM PANY - CERTIFIED PUBLtd ACCOUNTANTS 2837 MalN STREET KANSAS CITY, MISSOURI 641045 meneras or tat a=caican eastnute Ts6Ep=ome OF Cravirito pueuC account.Nvs (816) 421 4624 February 4, 1980 Board of Trustees Kansas Electric Power Coopefative, Inc. Topeka, Kansas Gentlemen: We have examined the bale:nce sheets of the Kansas Electric Power Cooperative, Inc. , Tope ka , Kansas as of December 31, 1979 and 1978 and the related statements
,- of changes in financial position for the years then ended. Our examinations were made in accordance with generally accepted auditing standards, and accordingly
. included such tests of the cccoun*ing 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 the Kansas Electric Power Cooperative, Inc., Topeka, Kansas, at December 31, 1979 and 1978, in conformity with generally accepted accounting principles applied on a consistent basis, SCHMIITI' Sc COMPANY D W. G. Schmidt, Pa rtner
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3 Exhibit A Kansas 54 , l Kansas Electric Power Cooperative, Inc. 1 l Topeka, Kansas i BALANCE SHEET December 31, 1979 l ASSETS AND OTHER DEBITS Plant General plant $ 36,720.24 Less: Accumulated depreciation 12,043.91 Depreciated Value $ 24,676.33 Investments Equities in other organizations 17,034.00 Current Assets Cash 8,022.43 Accounts receivable 33,141.80 Prepaid expenses 1,586.09 Total Current Assets 42,750.32 Deferred Debits Organization expense 1,067.50 Research and developinent 2,766,598.05 Construction advance 90,000,000.00 Interest on construction advance 5,263,270.66 Total Deferred Debits 98,030,936.21 TOTAL ASSETS AND OTHER DEBITS $98,115,396.86 MEMBERS' EQUITY AND LIABILITIES Capital Equities Memberships $ 2,700.00 Current Liabilities Notes payable (CFC) $97,532,270.66
, Accounts payable 21,797.62 Accrued taxes 1,338.60 Employee savings 9.38 Total Current Liabilities 97,555,416.26 Deferred Credits Advances for research and development 557,280.60 TOTAL MEMBERS' EQUITY AND LIABILITIES $98,115,396.86 l
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4 Exhibit A-1 Kansas 54 , Kansas Electric power Cooperative, Inc. Topeka, Kansas COMPARATIVE BALANCE SHEET December 31 December 31 Increase 1979 1978 (Isacrease) ASSETS Plant General plant $ 36,720.24 $ 24,112.72 $ 12,607.52 Less: Accumulated depreciation 12,043.91 11,269.37 774.54 Depreciated Value 24,676.33 12,843.35 11,832.98 Investments Equities in other organizations 17,034.00 9,880.50 7,153.50 Current Assets Cash 8,022.43 7,755.67 266.76 Accouats receivable 33,141.80 17,439.29 15,702.51
. Prepayments 1,586.09 1,440.17 145.92 Total 42,750.32 26,635.13 16,115.19
. Deferred Debits 98,030,936.21 1,874,895.11 96,156,041.10
'IOTAL ASSETS $98,115,396.86 $1,924,254.09 $96,191,142.77 MESTERS' EQUITY AND LIABILITIES Capital Equities Memberships $ 2,700.00 $ 2,700.00 $ Current Liabilities Notes payable 97,532,270.66 1,352,000.00 96,180,270.66 Accounts payable 21,807.00 10,624.50 11,182.50 Accrued taxes _
1,338.60 1,648.99 (310.39) Total 97,555,416.26 1,364,273.49 96,191,142.77 Deferred Credits 557,280.60 557,280.60 'IOTAL MEhEERS' EQUITY AND LIABILITIES $98,115,396.86 $1,924,254.09 $96,191,142.77 l l l 1 sese.or a comeA=v, canticiso FwSUC ACCOUNTANYS
5 Exhibit A-2 Kansas 54 , Kansas Electric Power Cooperative, Inc. Topeka, Kansas STATEMENT OF CHANGES IN FINANCIAL POSITION For The Year 1979 FUNDS RECEIVED Loans from CFC $96,180,270.66 Salvage of transportation equipment 1,433.90 TOTAL FUNDS RECEIVED $96,181,704.56 FUNDS APPLIED Transportation equipment $ 12,135.80 Office furniture & equipment 4,911.08 Increase in working capital 5,243.08 Research & development $892,770.44 Add:
. Member advances applied Capital credits applied 7,153.50 899,923.94 s Deduct:
Depreciation included 3,780.00 Funds devoted to research 896,143.94 Deposit toward Wolf Creek project 90,000,000.00 Allowance for funds used in construction 5,263,270.66 TOTAL FUNDS APPLIED $96,181,704.56 STATEMENT OF CHANGES IN WORKING CAPITAL INCREASE y WORKING CAPITAL Increase in cash $ 266.76
. Increase in accounts receivable 15,702.51 Increase in prepaid expenses 145.92 Decrease in accrued taxes 310.39 Total 16,425,58 DECREASE E WORKING CAPITAL Increase in accounts payable 11,182.50 NET INCREASE IN WORKING CAPITAL $ 5,243.08 SCsenet & Ccespeev. CEsteFife Webst ACCoves, mats
6 Exhibit B Kansas 54 e Kansas Electric Power Cooperative, Inc. Topeka, Kansas UTILITY PIANT Balance Balance
, 1-1-79 Additions Retirements 12-31-79 General Plant Transportation equipment $14,538.92 $12,135,80 $4,439.36 $22,235.36 Office furniture & fixtures 9,573.80 4,911.08 14,484.88 Total 24,112.72 17,046.88 4,439.36 36,720.24 Depreciation Transportation equipment (1) 7,617.15 2,722.51 3,005.46 7,334,20 Office furniture & fixtures (2) 3,652.22 1,057.49 4,709.71 Total 11,269.37 3,780.00 3,005.46 12,043.91 . Depreciated Value $24,676.33 (1) Cost less estimated salvage over three years, (2) 107..
SCsemDT G Conspassv, CtefsFifD PWOUC ACCOues? Ass?S
7 History and Organization Articles of Incorporation adopted by six electric distribution cooperatives of Kansas were filed with the Secretary of State, February 13, 1975 for the Incorporation of Kansas Electric Power Cooperative, Inc., pursuant to the Electric Cooperative Act, K. S. A. 17-4601 and other applicable laws It is a nonprofit cooperative with perpetual existence. Bylaws of the corporation do not restrict membership to electric cooperatives. Each active member has a representative on the Beard of Trustees. The membership fee is $100 and at audit date the corporation had twenty-six active members. Balance Sheet Comments Plant Exhibit B, page 6, of this report presents General plant $36,720.24 a detailed statement of general plant Less: Depreciation 12,043.91 facilities and changes in the plant accounts Depreciated Value $24,676.33 during 1979. Activity included the purchase of two vehicles involving the trade of one vehicle, the purchase of two desks, two chairs, an IBM typewriter, and office dividers. l Investments Equities in other organizations ! Equities in other organizations $17,034.00 include the following: National Rural Utilities Cooperative Finance Corporation Washington, D. C. Membership $ 1,000.00 Capital credits 15,794.00 $16,794.00 Federated Rural Electric Insurance Corporation Madison, Wisconsin Preferred stock 220.00 Kansas Electric Cooperatives, Inc. Topeka , Kansas Membership 10.00 National Rural Electric Cooperative Association Washington, D. C, Membership 10.00
. Total $17,034.00 Cash We counted the cash on hand at January 31, 1980 and l Working fund $ 100.00 af ter considering the receipts and deposits since the audit date, ascertained the working funds were o a1 $8[02 3
( on hand at -December 31, 1979. Cash expenditures l were properly supported by receipts.
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8 -' The general fund of the cooperative is in the custody of the Fairlawn Plaza State Bank, Topeka , Kansas. We examined all checks honored by the bank during 1979 and traced the checks to detailed computer listings. Special attention was directed to authorized signatures and to classification of the expenditures. We reconciled the bank statements with the cooperative's books and compared our reconciliation with one prepared by the cooperative. Particular attention was directed to the outstanding checks at the beginning and end of the year. Written confirmation of the bank balance was obtained from the bank, a member of the Federal Deposit 6 . Insurance Corporation. Accounts Receivable $33,141.80 We reviewed the subsidiary ledger of accounts receivable and determined it was in balance with the ledger control account. Accounts receivable consist primarily of expenses incurred by KEPCo assisting its members in wholesale rate cases. The age of the accounts receivable is as follows: Less than thirty days old $32,499.36 Thirty to ninety days old 622.24 Over ninety days old 20.20 Total $33,141.80 Negative confirmation requests were mailed to the extent deemed necessary. I l Prepaid Expenses Insurance policies were examined and Prepaid insurance $ 411.67 the unexpired insurance premiums Prepaid employee benefits 224.42 C mputed. We listed the policies, Travel advances 950.00 Total $1,586.09 observed they were made payable to the cooperative and ascertained all were in effect at audit date. Insurance coverage is provided by Federated Rural Electric Insurance Corporation, Madison, Wisconsin. SCoenOf 8 Compaat, CretFige sweLeC aCCowestaasts
9 The type of insurance and the amount in effect at audit date were as follows: Type of Insurance Amount General public liability Bodily injury $500,000/1,000,000 Property damage 200,000/200,000 Workmen's compensation Statutory Fidelity insurance (blanket crime) 50,000
. Automobile Bodily injury 500,000/1,000,000 Property damage 200,000 Collision - $100 deductibio .
A.C.V. Fire and extended coverage (80% coinsurance) Contents of rented office 7,500 Travel advances were as follows: Joe Mulholland $150.00 Jerry Haahr 150.00 Joe Hamman 150.00 Wesley Taylor 150.00 Bob Bowser 150.00 Rick Tyler 50.00 Hoburg Lee 150.00 Total $950.00 Deferred Debits Kansas Electric power l Organization expense $ 1,067.50 Cooperative, Inc., was Research and development 2,766,598.05 Construction advance 90,000,000.00 rganized to provide Interest on construction advance 5,263,270.66 additional power for its Total $98,030,936.21 members. The cooperative selected Southern Engineering Company to provide engineerint services arid the firm of Kassebaum and Johnson to provide legal services. It is hoped that this effort will result in acquisition of generation capacity and transmission capabilities in cooperation with other utilities in the state. Costs have been incurred with a number of projects and four projects are involved at audit date. Financink of these projects is provided by member
, assessments and by short-term loans from National Rural Utilities Cooperative Finance Corporation (CFC), Washington, D. C.
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10 Until is is determined whether actual construction results from the,ef fort, costs are being deferred and consist of the following as of December 31, 1979:
- Research Projects ~
KCPkL KPkL KGE Hydro CTU Labor $ 584.68 $ 472,951.31 $ 3,710.10 $ 45,859.57 Payroll taxes 10.84 37,592.17 253.61 4,788.21 Employee benefits 83.54 53,041.56 439.90 5,917.23 Travel 454.20 70,025.75 1,058.85 9,440,19
. Public relations 347.71 839.84 57.46 Rent 44.01 18,914.22 211.40 2,149.67 Building costs 36.18 17,302.29 152.04 2,002.60 Leasing-maintenance 15.63 15,466.50 133.26 2,127.94 Depreciation 31.30 24,674.57 160.92 5,960.90 Insurance 7.27 3,688.12 42.62 478.67 Property tax 8.13 4,893.65 96.77 740.36 Meetings 23.65 125,318.70 .54 4.618.38 Engineering 35,499.01 510,240.64 14,722.56 Corputer 35,658.90 Supplies 43.56 24,584 91 127.13 2,632.46 Postage 25,25 14,858.24 170.81 1,560,59 ,
Telephone 46.71 29,775.56 274.99 3,390.93 l Legal 515.00 627,296.78 5,134.60 Contingency 5,633.77 98 Subscriptions 87.07 6,039 83 5.01 234.36 ! Interest 200.35 371,343.54 3,162.83 1,370.85 l Auditing 2,100.00 1 Personnel costs 5.35 86,167.67 42.16 11,743.26 Consultants 234.82 27,326.02 7,584.54 Totals ($2,766,598.05) $38,304.26 $2,585,734 54 $17,685.92 $124,873.33 On April 19, 1979, the cooperative entered into an agreement with Kansas Gas and Electric Company, Wichita, Kansas and Kahsas City Power and Light Company, Kansas City, Missouri, whereby KEPCo agreed to purchase a 17% undivided ownership interest in the Wolf Creek Nuclear Power Plant. In compliance with the terms of the agreement, KEPCo has advanced $45,000,000.00 to KGLE and $45,000,000.00 to KCP&L. For other terms concerning this acquisition, see our comments on contingent liabilities, page 12. We received direct confirmation from KGkE and KCP&L to support the above mentioned advances, Interest on construction advances is chargeable to construction. Capital Equities Membership certificates have been issued to twenty-Memberships $2,700.00 seven cooperatives in Kansas. One member dropped its membership, but the fee was not refunded.
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11 Current Liabilities We examined invoices paid Notes payable $97,532,270.66 subsequent to the audit date, Accounts payable 21,797.62 made inquiries concerning Accrued property taxes 370.66 Accrued withholding taxes 563.60 possible unrecorded liabilities Accrued FUTA taxes 157.91 Accrued SUTA taxes and contacted the cooperative's 246.43 Employee savings 9.38 attorneys regarding contingent
- Total $97,555,416.26 Notes payable consist of the following:
Short-term line-of-credit $ 2,269,000.00 Short-term note 12,000,000.00 Intermediate term note 83,263,270.66 Total $97,532,270.66 The cooperative has a line of credit with the National Rural Utilities Cooperative Finance Corporation (CFC), Washington, D. C., in the amount of $2,500,000.00 and at audit date had borrowed $2,265,000.00. Interest on the short-term loan varies
, monthly with market and at December 31, 1979 was 15.50%. The line of credit is arranged on a yearly basis and both the line of credit and any amounts advanced s become due March 22, 1080 Members of KEPCo have guaranteed payment to CFC for any amounts advanced to KEPCo plus interest. We obtained written confirmation of the note payable to CFC at audit date. Interest is paid quarterly. l l
To fund the construction deposits to KG&E and KCP&L, the cooperative obtained a short-term loan in the amount of $12,000,000.00 and an intermediate term loan in the amount of $113,000,000.00 from CFC. Interest rates vary monthly with the market and at December 31, 1979, the rates were 15.50% and 15.75% respectively. Notes were executed April 12, 1979 anC mature in one year. At audit date the cooperative had borrowed $12,000,000.00 on tl.a short-term note and $83,263,270.66 on the intermediate term note. We obtained written confirmation of the notes payable to CFC at audit date. Interest accrues quarterly and is added to the principal of the intermediate note. Accounts payable were as follows: Kansas Electric Cooperatives, Inc. $ 4,784.71 Southern Engineering' Company 3,971.15 William Wise 744.57 R. W. Beck & Associates 12,297.19 Tot &l $21,797.62 Scsese0? e Coes*4esv. Ctefipite puhst aCCoweetasifs (-
12 Igasmuch as KEPCo is operated under common management with KEC, overhead costs incair:( by KEC applicable to KEPCo are billed'at the end of cach month. The i amount ut. old at December 31, 1979 amounted to $4,784.71. Property taxes payable l represent one-half of the 1979 taxes assessed per statements on file in the ! cooperative 's of fice. Withholding tax was withheld from employees during the last quarter of 1979 and is payable to the State of Kansas. Accrued unemployment taxes were verified by examination of appropriate records and a review of disbursements subsequent to the audit date. Employee savings represent authorized withholdings from employee's wages for the purchase of U. S. savings bonds. Contingent Liabilities and Commitments As mentioned in our comments regarding deferred debits, the cooperative has entered into an agreement to purchase 17% of the Wolf Creek facilities from KGLE and KCP&L. Advances totaling $90,000,000.00 have been made toward this agreement and according to the terns of the agreement, KEPCo is to close the sale on March 30, 1980. Exact figures will 70t be available until the closing date; however, a loan estimate has
, been submitted to the Rural Electrification Administration (REA) in the amount of
$318,000,000.00. This estimato is subject to revision. According to the terms of
, the agreement, if a loan comuitment is not obtained by 3-31-80, KEPCo may pay to KGLE and KCPkL $5,000,000.00 each and extend the closing date to 6-30-80. If KEPCo is unable to obtain long-term financing prior to 6-30-80, KGkE and KCPkL will repay to KEPCo, on or prior to 6-30-80, all amounts previously received by KCaE and KCP&L, respectively, as advance payments from KEPCo on account of the purchase, together with interest from the date of the draw. If the agreement is closed, KEPCo is to pay its pro rata share of all additional construction costs. Upon completion of the project, KEPCo is to own IT% of the site, common facilities, and Wolf Creek i Generating Unit #1.
Upon closing, KG&E and KCPkL will transfer to KEPCo 1"% of the then outstanding stock of Utility Fuel Company--included in the purchase price. KEPCo agrees that e after closing it will purchase from Utility Fuel Company 17% of all additional shares of capital stack issued for the purpose of funding the company.
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13 Defarrsd Crsdits Capital for KEPCo, formerly Advance rfor research & development $55/,280.60 KEC's power and energy department, was provided by member assessments and by short-term loans from CFC. One agreement provided for five assessments of $600.00 per member, plus $0.15 per KWH sold by the member in 1972. Sunflower Electric Cooperative and its mar 5ers are to pay 75% of this amount. The other agreement provided for assessments of $0.25 per KW. The first agreement was to provide funds to operate the department, while the second was to fund engineering, legal, etc. costs involved in negotiations with other utilities. In 1976, the Board of Directors of KEPCo charged $96,649.40 of deferred research and development costs against capital derived under the first agreement and in 1978 KEPCo charged another $95,605.25 against advances provided by members. At audit date the advances appeared as follows: KEC administrative funds (seven assessments) $140,143.50 Less: Board action 1976 $96,649.40 Assessment not paid 646.00 i Board action 1978 42,848.10 140,143.50
$ Engineering, legal, etc. (seven assessments) $610,037.75 Less: Board action 1978 52,757.15 Balance December 31, 1979 $557,280.60 O
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14 Gensrsl Commsnts
- We have read REA Bulletin 185.1, Audit of REA Borrowers' Accounting Records, dated January, 1972, and our examination included the auditing procedures required by the bulletin. The cooperative employs the Uniform System of Accounts, prescribed by the Federal Energy Regulatory Commission and supplement accounts provided by the Rural Electrification Administration.
e The primary purpose of our examination was to formulate an opinion on the basic financial statements, taken as a whole. Any additional information presented in the preceding pages was prepared on the basis of audit procedures applied in our examination of the basic financial statements. This information, while not considered necessary for fair presentation of the financial position and results of operations, is, in our opinion, fairly stated in all material respects when considered in relation to the basic financial statements taken as a whole. Before we completed the examination, all audit entries had been entered on the books of the cooperative. Our examination disclosed the cooperative's accounting records have been maintained in a current and generally accurate condition. s The cooperative has a contributory pension plan covering substantially all of its, employees. The plan is administered by the National Rural Electric Cooperative Association. Pension expense for 1979 and 1978 amounted to $7,247.58 and $8,914.42, respectively. .I 1 4
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