ML14139A009

Guarantee of Payment of Deferred Premiums, 10 CFR 140.21

ML14139A009
Person / Time
Site:	Wolf Creek
Issue date:	05/08/2014
From:	Stull A F Wolf Creek
To:	Document Control Desk, Office of Nuclear Reactor Regulation
References
CO 14-0003
Download: ML14139A009 (14)

Text

W*LF CREEK'NUCLEAR OPERATING CORPORATION Annette F. Stull Vice President and Chief Administrative Officer May 8, 2014 CO 14-0003 U. S. Nuclear Regulatory Commission ATTN: Document Control Desk Washington, DC 20555

Subject:

Docket No. 50-482: Guarantee of Payment of Deferred Premiums, 10 CFR 140.21 Gentlemen:

Pursuant to the requirements of 10 CFR 140.21, each operating reactor licensee is required to maintain financial protection through guarantees of payment of deferred premiums.

The owners of Wolf Creek Generating Station (WCGS) are providing the enclosed documentation of their ability to pay deferred premiums in the amount of eighteen million nine hundred sixty-three thousand dollars, as determined by 10 CFR 140.11(a)(4).

Kansas Gas and Electric Company (KGE), a wholly-owned subsidiary of Westar Energy, Inc., Kansas City Power & Light Company (KCPL), a wholly-owned subsidiary of Great Plains Energy Incorporated, and Kansas Electric Power Cooperative, Inc. (KEPCo), have each provided audited Consolidated Statements of Cash Flows in order to demonstrate sufficient funds are available to meet their share of the deferred premiums.This letter contains no commitments.

If you have any questions concerning this matter, please contact me at (620) 364-4004, or Mr. Michael J. Westman at (620) 364-4009.Sincerely,~z~6\J )z Annette F. Stull AFS/rlt

Enclosures:

I Kansas Gas and Electric Company Consolidated Statements of Cash Flows II Kansas City Power & Light Company Consolidated Statements of Cash Flows III Kansas Electric Power Cooperative, Inc. Statement of Cash Flows cc: M. L. Dapas (NRC) w/e C. F. Lyon (NRC), w/e N. F. O'Keefe (NRC), w/e Senior Resident Inspector (NRC), w/e P.O. Box 411 / Burlington, KS 66839 / Phone: (620) 364-8831 An Equal Opportunity Employer M/F/HCNETýA IýJ 13 \

Enclosure I to CO 14-0003 Kansas Gas and Electric Company Consolidated Statements of Cash Flows (6 pages)

KGEM May 6, 2014 Mr. Todd N. Laflin Wolf Creek Nuclear Operating Corporation PO Box 411 Burlington, KS 66839

Dear Todd:

Pursuant to the requirements of 10 CFR 140.21, we are providing the attached audited 2013 Consolidated Statements of Cash Flows, with independent auditor's opinion, for Kansas Gas &Electric.

The statement is provided to assess Kansas Gas & Electric's ability to make payment of its share of deferred premiums in an amount of $8,912,610.

Sincerely, Kevin L. Kongs Vice President, Controller Westar Energy, Inc.Ims attachments 818 South Kansas Avenue / P.O. Box 889 / Topeka, Kansas 66601 Office Telephone:

(785) 575-6300 INDEPENDENT AUDITORS' REPORT To the Board of Directors and Stockholder of Kansas Gas and Electric Company Topeka, Kansas We have audited the accompanying consolidated financial statements of Kansas Gas and Electric Company and its subsidiaries (the "Company"), a wholly-owned subsidiary of Westar Energy, Inc., which comprise the consolidated balance sheets as of December 31, 2013 and 2012, and the related consolidated statements of income, changes in equity, and cash flows for the years (lien ended, and the related notes to the consolidated financial statements.

Management's Responsibility for the Consolidated Financial Statements Management is responsible for the preparation and fair presentation of these consolidated financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of consolidated financial statements that are free from material misstatement, whether due to fraud or error.Auditors' Responsibility Our responsibility is to express an opinion on these consolidated financial statements based on our audits. We conducted our audits in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the consolidated financial statements.

The procedures selected depend on the auditor's judgment, including the assessment of the risks of material misstatement of the consolidated financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the Company's preparation and fair presentation of the consolidated financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.Opinion In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Kansas Gas and Electric Company and its subsidiaries as of December 31, 2013 and 2012, and the results of their operations and their cash flows for the years then ended in accordance with accounting principles generally accepted in the United States of America.Deloitte & Touche LLP Kansas City, Missouri February 26, 2014 KANSAS GAS AND ELECTRIC COMPANY CONSOLIDATED BALANCE SHEETS (Dollars in Thousands)

As of As of December 31,2013 December 31, 2012 ASSETS CURRENT ASSETS: Accounts receivable, net of allowance for doubtful accounts of $2,412 and $2,614, respectively......

S 98,716 S 88.164 Fuel inventory and supplies ................................................................................................................

96,860 99,600 Deferred tax assets ..........................................................................................................................

24,143 -Prepaid expenses ......................................................................

..........................................................

5,404 5,997 Regulatory assets .........................................................................

.....................................................

63,996 28,125 O ther ....................................................................................................................................................

3,740 12 ,4 86 Total Current Assets ....................................................................................................................

292,859 234,372 PROPERTY.

PLANT AND EQUIPMENT, NET ............................................

3,627,331 3,263,831 PROPERTY, PLANT AND EQUIPMENT OF VARIABLE INTEREST ENTITY, NET ....................

204,739 211,854 OTHER ASSETS: Regulatory assets .................................................................................................................................

277,352 317,169 Nuclear decommissioning trust .............................................................................................................

175,625 150,754 O ther ........................................................

......................................................

.....................................

6 5,9 18 7 1,138 Total O ther A ssets ........................................................................................................................

518,895 539.06 1 TOTAL ASSETS ...........................................................................................................................................

$ 4.643,824

$ 4,249,118 LIABILITIES AND EQUITY CURRENT LIABILITIES:

Current maturities of long-term debt of variable interest entity .........................

$ 22,332 $ 21,005 A ccounts payable ..................................................................................................................................

95,2 11 96,6 17 Payable to am liate ................................................................................................

..............................

105,968 63,724 A ccrued interest ....................................................................................................................................

38,735 40,039 A ccru ed taxes ...............................................................

• ........................................................................

23,145 2 1,343 R egulatory liabilities

...........................................................................

..................................................

5,562 5,732 Customer deposits .........................................................................................................................

15,511 13,993 Other............................................................................................................

_.... 7,033 7,056 Total Current Liabilities

.............................................................................................................

313,497 269.509 LONG-TERM LIABILITIES:

Long-term debt, net .............................................................................................................................

898,644 998.590 Long-term debt of variable interest entity, net .......................................................

........................

185,791 208,123 Deferred income taxes ............

..............................................

779,010 712,492 Unamortized investment tax credits .....................................................................................................

32,676 34,563 R egulatory liabilities

.............................................................................................................................

205,725 198,336 Asset retirement obligations

.................................................................................................................

152,747 144,418 O th er .....................................................................................................................................................

95 ,6 86 125,2 80 Total Long-Term Liabilities

.............................................................................................

2,350,279 2,421,802 COMMITMENTS AND CONTINGENCIES (See Notes 12 and 14)EQUITY: Kansas Gas and Electric Company Shareholders Equity: Common stock, without par value, authorized, issued and outstanding 1,000 shares .................

1.065,634 1,065,634 Paid-in capital ..............

..............................................

680.457 380,457 Retained earnings .....................

............

...................................

305.839 184,858 Total Kansas Gas and Electric Company Shareholder's Equity ........................

2,051.930 1,630,949 Noncontroling Interest .......................................................................................................................

(71,882) (73,142)Tota l Equity .......................................................

................................................................

1.980,04 8 1.557,807 TOTAL LIABILITIES AND EQUITY ........................................................................................................

$ 4,643,824 S 4,249,118 The accompanying notes are an integral part of these consolidated financial statements.

KANSAS GAS AND ELECTRIC COMPANY CONSOLIDATED STATEMENTS OF INCOME (Dollars in Thousands)

Year Ended December 3 1, 2013 2012 R EV E N U ES .........................................................................................................................

S 1,00 1,538 S 946,34 1 OPERATING EXPENSES.Fuel and purchased power .................................................................................

241.545 216,686 SPP transmission network costs ....................................................................................

89,302 83.274 Operating and maintenance

...........................................................................................

196,756 188,867 Depreciation and amortization

.....................................................................................

2 16,808 119,929 Selling, general and administrative

.........................................

111,008 112,516 Taxes other than income tax ........................................................................................

43,139 42,119 Total Operating Expenses .....................................................................................

798,558 763,391 INCOME FROM OPERATIONS

........................................................................................

202,980 182,950 OTHER INCOME (EXPENSE):

O ther incom e ................................................................................................................

32,209 29.6 11 Other expense ................................................................................................................

(18,098) (19,987)T otal O ther Incom e ..............................................................................................................

14,111 9,624 Interest expense ....................

.............................................

..............................................

60,448 68,675 INCOME BEFORE INCOME TAXES ................................................................................

156.643 123,899 Income tax expense ..........................................

.......................................................

34,402 25,453 NET INCOME.............................................................................................................

122,241 98,446 Less: Net income (loss) attributable to noncontrolling interests

............................................

1.260 (442)NET INCOME ATTRIBUTABLE TO KANSAS GAS AND ELECTRIC COMPANY...-

S 120,981 S 98,888 The accompanying notes are an integral part of these consolidated financial statements.

KANSAS GAS AND ELECTRIC COMPANY CONSOLIDATED STATEMENTS OF CASH FLOWS (Dollars in Thousands)

Year Ended December 31, 2013 2012 CASH FLOWS FROM (USED IN)OPERATING ACTIVI'fILS Net income .....................................................

...S 122,241 S 98.446 Adjustments to reconcile net income to net cash provided by operating activities Depreciation and amortization

....... ...............

...........

116,808 I 19.929 Amortization of nuclear fuel ..........................

.....................

22,690 24.369 Amortization of deferred regulatory gain Irom sale Icaseback

..............................

.(5,495) (5.495)Amortization of corporate-o%%ned lire insurance

... ................................

18J179 20,000 Net deferred income taxes and credits ................................

............................

34,236 25.964 Allowance for equity funds used during construction (11,168) (7.049)Changes in working capital items: A ccounts receivable

..... ........................................................................................

(10.552) (2.110 )Fuel inventory and supplies ....2. ............

.................................................

............

2.765 (6.990)Prepatd expenses and o lher .....................................................................

.....................

(9,472) 19.785 Accounts payable ...... ....... ..........................................

(32.118) 19.728 O ther current liabilities

......................

........................

... ....................

... ..................

(47.86 1) (6 1,826)C hanges in other assets ...........

................................

.............

.............................

.. (13,709 ) (4,755)C hanges in other liabilities

...... ...........................................................

.................................

6.734 (1.737)Cash Flows from Operating A ctivities

..................

... ............................................................

... 193,278 238,259 CASH FLOWS FROM (USED IN) INVESTING AC fIVI'IES.Additions to property, plant and equipment

........................

.........

.....................

... ...... (455.624)

(431.388)Purchase of securities

-trust ........................................

......................

..................................

.(64.602) (19.4 17)S ale o f securities

-trust .............

....... ................................

.........................

6.........

.... .... 6 4.656 18.52 7 Investment in corporate-owncd life insurance

....................................................................

... (17,408) (18.167)Proceeds from investment in corporate-ovwned life insurance

............

...................

85.228 32,718 Other investing activities

........................

.............................

(2,913) 890 Cash Flows used in Investing Activities

...................

................

(390,663)

(416,837)CASH FLOWS FROM (USED IN) FINANCING ACTIVITIES:

Retirem ents of long-term debt ........................................

....... ...........................................

(100,000)

(13,318)Retirements of long-terin debt of variable interest entity ..... ...... .....................

(21.005) (19,186)Borrowings from parent ......................................

.................

42.244 14.425 Investm ent by parent ................................................................................................

300,000 160.457 Borrowings against cash surrender value of corporate-o%%ned life insurance

.............................

59,565 67.791 Repayment or borrowings against cash surrender value of corporate.owned lile insurance (83,419) (31.591)Cash Flows from Financing Activities

.............................................................

197.385 178.578 NET CHANGE IN CASIH AND CASI I EQUIVALEN I'S ...... .....................................................

--CASh) AND CASH EQUIVALENTS:

B eg inn ing o f perio d .................

.............

........ ...............

...........................................

_...............

E nd o l'p e riod ... .....................

....... ..........................................

.......................................

S...... $-SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION-CASH PAID FOR: Interest on financing activities, net of amount capitalized

.....................

S 46646 S 52.942 Inlerest on financing activities of variable interest entity .................

.............

12,346 14.022 NON-CASI I INVESTING TRANSACTIONS.

Property.

plant and equipment additions

........ ...................

...................

... .... 77.140 41,546 The accompanying notes are an integral part of ihese consolidated financial statements KANSAS GAS AND ELECTRIC COMPANY CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY (Dollars In Thousands)

Kansas Gas and Electric Company Common Paid-in Retained Noncontrolling Total stock capital earnings interest equity Balance as of December 31, 2011 ...........

S 1,065,634

$ 220,000 $ 85,970 $ (72,699) S 1,298,905 Net income (loss) ......................................

--98,888 (442) 98.446 Investment by parent company -160,457 --160,457 O ther .........................................................

---(I) (I)Balance as of December 31, 2012 ...........

S 1,065,634 S 380,457 S 184,858 $ (73,142) S 1,557.807 Net income ---. ..........

--120,981 1,260 122,241 Investment by parent company .................

-300.000 --300,000 Balance as of December 31, 2013 ...........

$ 1,065,634

$ 680,457 $ 305,839 S (71.882) S 1,980.048 The accompanying notes are an integral part of these consolidated financial statements.

Enclosure II to CO 14-0003 Kansas City Power & Light Company Consolidated Statements of Cash Flows (2 pages)

May 7, 2014 Wolf Creek Nuclear Operating Corporation PO Box 411 Burlington, KS 66839

Dear Todd:

Pursuant to the requirements of 10 CFR 140.21(e), Kansas City Power & Light Company, is providing the attached audited Consolidated Statements of Cash Flows as evidence of the ability to make payment of its share of deferred premiums in an amount of $8.9 million.The undersigned certifies that the foregoing memorandum with respect to Kansas City Power & Light Company's cash flow for the year 2013 is true and correct to the best of their knowledge and belief.Sincerely, Lorýi Wright Vice President

-Business Planning and Controller attachment KANSAS CITY POWER & LIGHT COMPANY Consolidated Statements of Cash Flows Year Ended December 31 2013 Cash Flows from Operating Activities (millions)

Net income $ 169.0 Adjustments to reconcile income to net cash from operating activities:

Depreciation and amortization 198.3 Amortization of: Nuclear fuel 22.8 Other 34.3 Deferred income taxes, net 92.1 Investment tax credit amortization (1.1)Other operating activities (9.2)Net cash from operating activities 506.2 Cash Flows from Investing Activities Utility capital expenditures (521.9)Allowance for borrowed funds used during construction (10.6)Purchases of nuclear decommissioning trust investments (73.5)Proceeds from nuclear decommissioning trust investments 70.2 Other investing activities (12.4)Net cash from investing activities (548.2)Cash Flows from Financing Activities Issuance of long-term debt 412.5 Issuance fees (5.7)Repayment of long-term debt (2.6)Net change in short-term borrowings (267.8)Net money pool borrowings (3.6)Dividends paid to Great Plains Energy (92.0)Net cash from financing activities 40.8 Net Change in Cash and Cash Equivalents (1.2)Cash and Cash Equivalents at Beginning of Year 5.2 Cash and Cash Equivalents at End of Period $ 4.0 Enclosure III to CO 14-0003 Kansas Electric Power Cooperative, Inc. Statement of Cash Flows (2 pages)

Kansas Electric Power Cooperative, Inc.P.O. Box 4877, Topeka, KS 66604-0877 600 Corporate View, Topeka, KS 66615 Phone (785) 273-7010 Fax (785) 271-4888 www.kepco.org April 17, 2014 Mr. Todd N. Laflin Wolf Creek Nuclear Operating Corporation P.O. Box 411 Burlington, KS 66839

Dear Todd:

Pursuant to the requirements of 10 CFR 140.21(e), Kansas Electric Power Cooperative, Inc. is providing the attached audited Statement of Cash Flows as evidence of the ability to make payment of its share of deferred premiums in an amount of $1.5 million.The undersigned certifies that the foregoing memorandum with respect to Kansas Electric Power Cooperative, Inc.'s. Cash flow for the year 2013 is true and correct to the best of their knowledge and belief.Sincerely yours, Coleen M. Wells VP and CFO Enclosure (1)WVL-KANSAS ELECTRIC POWER COOPERATIVE, INC.CONSOLIDATED STATEMENTS OF CASH FLOWS For the years ending December 31, 2013 2012 Cash Flows From Operating Activities Net margin $ 2.593.780

$11,916,571 Adjustments to reconcile net margin to net cash flows from operating activities Depreciation and amortization 6.540,599 6.417,670 Decommissioning 2,904,092 1,500,024 Amortization of nuclear fuel 2,819.442 3.004.990 Amortization of deferred charges 4,175,257 4,245,720 Amortization or deferred incremental outage costs 5,386.940 7,179.415 Amortization of debt issuance costs 77.813 86,953 Changes in Member accounts receivable 7,609.332 (5,624.402)

Materials and supplies (485,950)

(899.836)Other assets and prepaid expense 106,504 (305.776)Accounts payable 599,854 2,607,180 Payroll and payroll-related liabilities (102,839) 17,531 Accrued property tax (67,149) 180,292 Accrued interest payable 12,556 (34,313)Accrued income taxes 1,092 (847)Other long-term liabilities 1,147,579 (106.340)Prepaid pension cost (1,545,694)

Deferred revenue 1,224.424 Net cash flows from operating activities Cash Flows From Investing Activities Additions to electrical plant Additions to nuclear fuel (Reductions inyadditions to deferred charges Additions to deferred incremental outage costs Investments in decommissioning fund assets Investments In associated organizations Investments in bond reserve assets Proceeds from the sale of property Net cash flows from investing activities Cash Flows From Financing Activities Principal payments on long-term debt Proceeds from issuance of long-term debt Short term notes payable Payments unapplied Net cash flows from financing activities 32,997.632 (17,278,012)

(503.127)95.335 (10.359,443)

(2,942,327) 17.442 (26.164)41.837 (30,954.459)

(20,168,539) 11,594,273 6.500=000 2,388,503 314,237 2,357,410 2,824.134$ 5,181.544 30,184,832 (9,658,692)

(3,709,772)

(280,455)(900,384)(1.966,895) 304,392 (24,930)7.958 (16,228,778)

(18.781,860) 1,048,000 (2,388,504)

(20.122.364)

(6.166,310) 8.990,444 S 2,824.134$10,417,400 Net increase (decrease) in cash and cash equivalents Cash and Cash Equivalents, Beginning of Year Cash and Cash Equivalents, End of Year Supplemental Disclosure of Cash Flow Information Interest paid $ 9,776,900 See Notes to the Consolidated Financial Statements 0