Regulatory Matters

6 Months Ended

Jun. 30, 2012

Regulatory Matters

Regulatory Matters

Note 3— Regulatory Matters

The Missouri Public Service Commission (MPSC) approved a joint settlement agreement allowing us to defer actual incremental operating and maintenance expenses associated with the repair, restoration and rebuilding activities resulting from the tornado which hit our service territory on May 22, 2011. In addition, depreciation related to the capital expenditures will be deferred and a carrying charge will be accrued. These amounts, which were approximately $2.3 million as of June 30, 2012, have been recorded as a regulatory asset.

As part of a stipulated agreement in our 2009 Kansas rate case, approved by the Kansas Corporation Commission (KCC) on June 25, 2010, we also deferred depreciation and operating and maintenance expense on both Plum Point and Iatan 2 from their respective in-service dates until the effective date for rates from the next Kansas case, which was January 1, 2012. These deferrals are being recovered over a 4 year period.

The following table sets forth the components of our regulatory assets and liabilities on our consolidated balance sheet (in thousands).

Regulatory Assets and Liabilities

	June 30, 2012		December 31, 2011
Regulatory Assets:
Under recovered purchased gas costs — gas segment - current	$	223	$	211
Under recovered electric fuel and purchased power costs — current	1,132		7,513
Regulatory assets, current(1)	1,355		7,724
Pension and other postretirement benefits(2)	115,776		121,058
Income taxes	49,178		49,631
Deferred construction accounting costs(3)	17,067		17,095
Unamortized loss on reacquired debt	12,946		11,610
Unsettled derivative losses — electric segment	9,898		7,839
System reliability — vegetation management	7,579		6,569
Storm costs(4)	4,772		5,303
Asset retirement obligation	4,622		3,571
Customer programs	4,012		3,408
Unamortized loss on interest rate derivative	1,305		1,462
Other	774		1,420
Under recovered purchased gas costs — gas segment	1,050		1,281
Deferred operating and maintenance expenses	1,881		1,444
Under recovered electric fuel and purchased power costs	—		231
Regulatory assets, long-term	230,860		231,922
Total Regulatory Assets	$	232,215	$	239,646

	June 30, 2012		December 31, 2011
Regulatory Liabilities:
Cost of removal	$	78,519	$	73,562
SWPA payment for Ozark Beach lost generation	23,735		25,074
Income taxes	12,197		12,337
Deferred construction accounting costs — fuel(3)	8,228		8,304
Unamortized gain on interest rate derivative	3,626		3,711
Pension and other postretirement benefits(5)	2,411		2,939
Over recovered electric fuel and purchased power costs	8,382		2,513
Regulatory liabilities, long-term	137,098		128,440
Total Regulatory Liabilities	$	137,098	$	128,440

(1)  Reflects over and under recovered costs expected to be returned or recovered, as applicable, within the next 12 months in Missouri, Kansas and Oklahoma rates.

(2) Primarily reflects regulatory assets resulting from the unfunded portion of our pension and OPEB liabilities and regulatory accounting for EDG acquisition costs. Approximately $0.2 million in pension and other postretirement benefit costs have been recognized since January 1, 2012 to reflect the amortization of the regulatory assets that were recorded at the time of the EDG acquisition of the Aquila, Inc. gas properties.

(3)  Reflects the deferral of depreciation, operations and maintenance and carrying costs relating to Iatan 1 and Iatan 2 in accordance with our 2005 regulatory plan, as well as Plum Point construction costs incurred subsequent to February 28, 2010. All of these deferrals ended when recovery in rates began and these costs are now being amortized over the life of the plants. The regulatory plan also required us to continue to defer the fuel and purchased power expense impacts of Iatan 2, which are recorded in Non-Current Regulatory Liabilities.

Balances as of June 30, 2012	Deferred Carrying Charges		Deferred O&M		Depreciation		Total
Iatan 1	$	2,703	$	1,351	$	1,637	$	5,691
Iatan 2	3,856		4,288		2,707		10,851
Plum Point	64		303		158		525
Total							$	17,067

Balances as of December 31, 2011	Deferred Carrying Charges		Deferred O&M		Depreciation		Total
Iatan 1	$	2,728	$	1,363	$	1,652	$	5,743
Iatan 2	3,891		4,271		2,728		10,890
Plum Point	65		239		158		462
Total							$	17,095

(4) Reflects ice storm costs incurred in 2007 and costs incurred as a result of the May 2011 tornado.

(5) Includes the effect of costs incurred that are more or less than those allowed in rates for the Missouri (EDE and EDG) and Kansas (EDE) portion of pension and other postretirement benefit costs. Since January 1, 2012, regulatory liabilities and corresponding expenses have been reduced by less than $0.2 million as a result of ratemaking treatment.