Pension Plans and Other Employee Benefits

12 Months Ended

Dec. 31, 2011

Pension Plans and Other Employee Benefits [Abstract]

Pension Plans and Other Employee Benefits

8.   PENSION PLANS, OTHER EMPLOYEE BENEFITS AND VOLUNTARY SEPARATION PROGRAM

Great Plains Energy maintains defined benefit pension plans for substantially all active and inactive employees, including officers, of KCP&L, GMO and Wolf Creek Nuclear Operating Corporation (WCNOC) and incurs significant costs in providing the plans.  Pension benefits under these plans reflect the employees’ compensation, years of service and age at retirement.  In addition to providing pension benefits, Great Plains Energy provides certain post-retirement health care and life insurance benefits for substantially all retired employees of KCP&L, GMO and WCNOC.

KCP&L and GMO record pension and post-retirement expense in accordance with rate orders from the MPSC and KCC that allow the difference between pension and post-retirement costs under GAAP and costs for ratemaking to be recognized as a regulatory asset or liability.  This difference between financial and regulatory accounting methods is due to timing and will be eliminated over the life of the plans.

During 2011, Great Plains Energy recorded settlement charges of $10.1 million from the voluntary separation program as a result of accelerated pension distributions.  The Companies deferred substantially all of the charges as a regulatory asset and expect to recover it over future periods pursuant to regulatory agreements.  See below for information regarding the voluntary separation program.

The following pension benefits tables provide information relating to the funded status of all defined benefit pension plans on an aggregate basis as well as the components of net periodic benefit costs.  For financial reporting purposes, the market value of plan assets is the fair value.  KCP&L uses a five-year smoothing of assets to determine fair value for regulatory reporting purposes.  Net periodic benefit costs reflect total plan benefit costs prior to the effects of capitalization and sharing with joint owners of power plants.

	Pension Benefits						Other Benefits
	2011			2010			2011			2010
Change in projected benefit obligation (PBO)	(millions)
PBO at beginning of year	$	911.4		$	836.3		$	143.6		$	148.9
Service cost		31.1			30.3			3.1			3.8
Interest cost		49.6			49.3			7.8			8.8
Contribution by participants		-			-			6.6			5.6
Amendments		-			0.5			-			-
Actuarial (gain) loss		83.2			55.1			7.4			(12.5	)
Benefits paid		(54.7	)		(60.1	)		(14.3	)		(11.0	)
Settlements		(40.0	)		-			-			-
PBO at end of plan year	$	980.6		$	911.4		$	154.2		$	143.6
Change in plan assets
Fair value of plan assets at beginning of year	$	557.6		$	488.2		$	65.8		$	52.0
Actual return on plan assets		(3.7	)		62.7			2.5			0.5
Contributions by employer and participants		128.8			64.5			23.0			23.9
Benefits paid		(91.6	)		(57.8	)		(13.9	)		(10.6	)
Fair value of plan assets at end of plan year	$	591.1		$	557.6		$	77.4		$	65.8
Funded status at end of year	$	(389.5	)	$	(353.8	)	$	(76.8	)	$	(77.8	)
Amounts recognized in the consolidated balance sheets
Current pension and other post-retirement liability	$	(3.5	)	$	(3.1	)	$	(0.9	)	$	(1.0	)
Noncurrent pension liability and other post-retirement liability		(386.0	)		(350.7	)		(75.9	)		(76.8	)
Net amount recognized before regulatory treatment		(389.5	)		(353.8	)		(76.8	)		(77.8	)
Accumulated OCI or regulatory asset/liability		491.8			403.2			52.5			54.8
Net amount recognized at December 31	$	102.3		$	49.4		$	(24.3	)	$	(23.0	)
Amounts in accumulated OCI or regulatory asset/liability
not yet recognized as a component of net periodic benefit cost:
Actuarial loss	$	295.6		$	219.5		$	15.7		$	8.5
Prior service cost		10.7			15.3			36.9			44.1
Transition obligation		-			-			1.7			3.0
Other		185.5			168.4			(1.8	)		(0.8	)
Net amount recognized at December 31	$	491.8		$	403.2		$	52.5		$	54.8

	Pension Benefits									Other Benefits
	2011			2010			2009			2011			2010			2009
Components of net periodic benefit costs	(millions)
Service cost	$	31.1		$	30.3		$	29.1		$	3.1		$	3.8		$	4.1
Interest cost		49.6			49.3			47.3			7.8			8.8			8.3
Expected return on plan assets		(38.0	)		(36.6	)		(32.4	)		(1.8	)		(2.1	)		(1.6	)
Prior service cost		4.6			4.6			4.2			7.2			7.2			6.9
Recognized net actuarial (gain) loss		38.7			37.4			36.3			(0.5	)		(0.1	)		(0.4	)
Transition obligation		-			0.1			0.1			1.3			1.3			1.3
Settlement charges		10.1			-			0.1			-			-			-
Net periodic benefit costs before
regulatory adjustment		96.1			85.1			84.7			17.1			18.9			18.6
Regulatory adjustment		(27.9	)		(32.3	)		(28.4	)		1.1			-			(0.3	)
Net periodic benefit costs		68.2			52.8			56.3			18.2			18.9			18.3
Other changes in plan assets and benefit
obligations recognized in OCI or
regulatory assets/liabilities
Current year net (gain) loss		114.8			29.1			(9.2	)		6.7			(10.9	)		(0.2	)
Amortization of gain (loss)		(38.7	)		(37.4	)		(36.3	)		0.5			0.1			0.4
Prior service cost		-			0.5			5.7			-			-			24.8
Amortization of prior service cost		(4.6	)		(4.6	)		(4.2	)		(7.2	)		(7.2	)		(6.9	)
Transition obligation		-			-			-			-			-			1.2
Amortization of transition obligation		-			(0.1	)		(0.1	)		(1.3	)		(1.3	)		(1.3	)
Other regulatory activity		17.1			29.5			10.1			(1.0	)		0.1			(3.1	)
Total recognized in OCI or regulatory asset/liability		88.6			17.0			(34.0	)		(2.3	)		(19.2	)		14.9
Total recognized in net periodic benefit costs
and OCI or regulatory asset/liability	$	156.8		$	69.8		$	22.3		$	15.9		$	(0.3	)	$	33.2

For financial reporting purposes, the estimated prior service cost and net loss for the defined benefit plans that will be amortized from accumulated OCI or a regulatory asset into net periodic benefit cost in 2012 are $4.5 million and $44.5 million, respectively.  For financial reporting purposes, net actuarial gains and losses are recognized on a rolling five-year average basis.  For regulatory reporting purposes, net actuarial gains and losses are amortized over ten years.  The estimated prior service cost, net gain and transition costs for the other post-retirement benefit plans that will be amortized from accumulated OCI or a regulatory asset into net periodic benefit cost in 2012 are $7.2 million, $(0.1) million and $1.0 million, respectively.

The accumulated benefit obligation (ABO) for all defined benefit pension plans was $852.6 million and $808.8 million at December 31, 2011 and 2010, respectively.  The PBO, ABO and fair value of plan assets at plan year-end are aggregated by funded and underfunded plans in the following table.

	2011		2010
Pension plans with the ABO in excess of plan assets	(millions)
Projected benefit obligation	$	980.6	$	911.4
Accumulated benefit obligation		852.6		808.8
Fair value of plan assets		591.1		557.6
Pension plans with plan assets in excess of the ABO
Projected benefit obligation	$	-	$	-
Accumulated benefit obligation		-		-
Fair value of plan assets		-		-

The GMO SERP is reflected as an unfunded ABO of $20.6 million.  Great Plains Energy has segregated approximately $20.1 million of assets for this plan as of December 31, 2011, and expects to fund future benefit payments from these assets.

The expected long-term rate of return on plan assets represents Great Plains Energy’s estimate of the long-term return on plan assets and is based on historical and projected rates of return for current and planned asset classes in the plans’ investment portfolios.  Assumed projected rates of return for each asset class were selected after analyzing historical experience and future expectations of the returns of various asset classes.  Based on the target asset allocation for each asset class, the overall expected rate of return for the portfolios was developed and adjusted for the effect of projected benefits paid from plan assets and future plan contributions.  The following tables provide the weighted-average assumptions used to determine benefit obligations and net costs.

Weighted-average assumptions used to determine	Pension Benefits						Other Benefits
the benefit obligation at plan year-end	2011			2010			2011			2010
Discount rate		5.01	%		5.54	%		5.03	%		5.50	%
Rate of compensation increase		4.08	%		4.08	%		4.07	%		4.06	%
Weighted-average assumptions used to determine	Pension Benefits						Other Benefits
net costs for years ended December 31	2011			2010			2011			2010
Discount rate		5.54	%		5.92	%		5.50	%		5.87	%
Expected long-term return on plan assets		7.29	%		8.00	%		2.83	% *		4.25	% *
Rate of compensation increase		4.08	%		4.26	%		4.06	%		4.25	%
* after tax

For pension benefits, Great Plains Energy's 2012 projected weighted-average long-term rate of return on plan assets is 7.3%, unchanged from 2011.

Great Plains Energy expects to contribute $94.5 million to the pension plans in 2012 to meet Employee Retirement Income Security Act of 1974 (ERISA) funding requirements and regulatory orders, the majority of which is expected to be paid by KCP&L.  Great Plains Energy’s funding policy is to contribute amounts sufficient to meet the ERISA funding requirements and MPSC and KCC rate orders plus additional amounts as considered appropriate; therefore, actual contributions may differ from expected contributions.  Great Plains Energy also expects to contribute $16.7 million to other post-retirement benefit plans in 2012, the majority of which is expected to be paid by KCP&L.

The following benefit payments, which reflect expected future service, as appropriate, are expected to be paid through 2021.

	Pension		Other
	Benefits		Benefits
	(millions)
2012	$	76.6	$	8.6
2013		65.5		8.1
2014		67.3		8.3
2015		66.5		8.2
2016		70.1		8.4
2017-2021		381.0		46.3

Pension plan assets are managed in accordance with prudent investor guidelines contained in the ERISA requirements.  The investment strategy supports the objective of the fund, which is to earn the highest possible return on plan assets within a reasonable and prudent level of risk.  The portfolios are invested, and periodically rebalanced, to achieve targeted allocations of approximately 27% U.S. large cap and small cap equity securities, 20% international equity securities, 36% fixed income securities, 7% real estate, 6% commodities and 4% hedge funds.  Fixed income securities include domestic and foreign corporate bonds, collateralized mortgage obligations and asset-backed securities, U.S. government agency, state and local obligations, U.S. treasury notes and money market funds.

The fair values of Great Plains Energy’s pension plan assets at December 31, 2011 and 2010, by asset category are in the following tables.

			Fair Value Measurements Using
Description	December 31 2011		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
	(millions)
Pension Plans
Equity securities
U.S.(a)	$	156.3	$	94.6	$	61.7	$	-
International(b)		117.0		40.9		76.1		-
Real estate(c)		34.7		-		-		34.7
Commodities(d)		34.6		-		34.6		-
Fixed income securities
Fixed income funds(e)		166.5		34.2		132.3		-
U.S. Treasury		4.9		4.9		-		-
U.S. Agency, state and local obligations		17.7		-		17.7		-
U.S. corporate bonds(f)		26.6		-		26.6		-
Foreign corporate bonds		2.6		-		2.6		-
Hedge funds(g)		21.7		-		-		21.7
Total	$	582.6	$	174.6	$	351.6	$	56.4
Cash equivalents - money market funds		8.5
Total Pension Plans	$	591.1

				Fair Value Measurements Using
Description		December 31 2010		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
		(millions)
Pension Plans
	Equity securities
	U.S.(a)	$	158.5	$	90.5	$	68.0	$	-
	International(b)		122.4		39.4		83.0		-
	Limited partnerships		0.1		-		-		0.1
	Real estate(c)		30.3		-		-		30.3
	Commodities(d)		37.0		-		37.0		-
	Fixed income securities
	Fixed income funds(e)		148.7		23.0		125.7		-
	U.S. Treasury		1.8		1.8		-		-
	U.S. Agency, state and local obligations		14.8		-		14.8		-
	U.S. corporate bonds(f)		24.2				24.2		-
	Foreign corporate bonds		1.5		-		1.5		-
	Hedge funds(g)		8.4		-		-		8.4
	Total	$	547.7	$	154.7	$	354.2	$	38.8
	Cash equivalents - money market funds		9.9
	Total Pension Plans	$	557.6
(a)	At December 31, 2011 and 2010, this category is comprised of $94.6 million and $90.5 million, respectively, of traded mutual funds valued at daily listed prices and $61.7 million and $68.0 million, respectively,
	of institutional common/collective trust funds valued at daily Net Asset Values (NAV) per share.
(b)	At December 31, 2011 and 2010, this category is comprised of $40.9 million and $39.4 million, respectively, of traded mutual funds valued at daily listed prices and $76.1 million and $83.0 million, respectively,
	of institutional common/collective trust funds valued at daily NAV per share.
(c)	This category is comprised of institutional common/collective trust funds and a limited partnership valued at NAV on a quarterly basis.
(d)	This category is comprised of institutional common/collective trust funds valued at daily NAV per share.
(e)	At December 31, 2011 and 2010, this category is comprised of $34.2 million and $23.0 million, respectively, of traded mutual funds valued at daily listed prices and $132.3 million and $125.7 million, respectively, of institutional common/collective trust funds valued at daily NAV per share.
(f)	At December 31, 2011 and 2010, this category is comprised of $18.1 million and $13.9 million, respectively, of corporate bonds, $6.1 million and $8.0 million, respectively, of collateralized mortgage obligations
	and $2.4 million and $2.3 million, respectively, of other asset-backed securities.
(g)	This category is comprised of closely-held limited partnerships valued at NAV on a quarterly basis.

The following tables reconcile the beginning and ending balances for all level 3 pension plan assets measured at fair value on a recurring basis for 2011 and 2010.

Fair Value Measurements Using Significant Unobservable Inputs (Level 3)
	Real		Hedge			Limited
Description	Estate		Funds			Partnerships			Total
	(millions)
Balance January 1, 2011	$	30.3	$	8.4		$	0.1		$	38.8
Actual return on plan assets
Relating to assets still held		3.9		(1.3	)		(0.1	)		2.5
Relating to assets sold		-		-			-			-
Purchase, sales, and settlements		0.5		14.6			-			15.1
Transfers in and/or out of Level 3		-		-			-			-
Balance December 31, 2011	$	34.7	$	21.7		$	-		$	56.4

Fair Value Measurements Using Significant Unobservable Inputs (Level 3)
	Real		Hedge			Limited
Description	Estate		Funds			Partnerships		Total
	(millions)
Balance January 1, 2010	$	26.8	$	2.4		$	0.1	$	29.3
Actual return on plan assets
Relating to assets still held		2.5		(0.2	)		-		2.3
Relating to assets sold		-		(0.7	)		-		(0.7	)
Purchase, sales, and settlements		1.0		6.9			-		7.9
Transfers in and/or out of Level 3		-		-			-		-
Balance December 31, 2010	$	30.3	$	8.4		$	0.1	$	38.8

Other post-retirement plan assets are also managed in accordance with prudent investor guidelines contained in the ERISA requirements.  The investment strategy supports the objective of the funds, which is to preserve capital, maintain sufficient liquidity and earn a consistent rate of return.  Other post-retirement plan assets are invested primarily in fixed income securities, which may include domestic and foreign corporate bonds, collateralized mortgage obligations and asset-backed securities, U.S. government agency, state and local obligations, U.S. Treasury notes and money market funds, as well as domestic and international equity funds.

The fair values of Great Plains Energy’s other post-retirement plan assets at December 31, 2011 and 2010, by asset category are in the following tables.

				Fair Value Measurements Using
Description		December 31 2011		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
		(millions)
Other Post-Retirement Benefit Plans
	Equity securities	$	1.4	$	1.4	$	-	$	-
	Fixed income
	U.S. Treasury		14.3		14.3		-		-
	U.S. Agency, state and local obligations		27.2		-		27.2		-
	U.S. corporate bonds (a)		14.8		-		14.8		-
	Foreign corporate bonds		1.5		-		1.5		-
	Mutual funds		0.2		0.2		-		-
	Total	$	59.4	$	15.9	$	43.5	$	-
	Cash and cash equivalents - money market funds		18.0
	Total Other Post-Retirement Benefit Plans	$	77.4
(a)	This category is comprised of $12.7 million of corporate bonds, $0.6 million of collateralized mortgage obligations and $1.5 million
	of other asset-backed securities.

				Fair Value Measurements Using
Description		December 31 2010		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
		(millions)
Other Post-Retirement Benefit Plans
	Fixed income
	U.S. Treasury	$	12.1	$	12.1	$	-	$	-
	U.S. Agency, state and local obligations		22.2		-		22.2		-
	U.S. corporate bonds (a)		11.4		-		11.4		-
	Foreign corporate bonds		1.0				1.0
	Mutual funds		0.1		0.1		-		-
	Total	$	46.8	$	12.2	$	34.6	$	-
	Cash and cash equivalents - money market funds		19.0
	Total Other Post-Retirement Benefit Plans	$	65.8
(a)	This category is comprised of $9.2 million of corporate bonds, $0.9 million of collateralized mortgage obligations and $1.3 million
	of other asset-backed securities.

Assumed health care cost trend rates have a significant effect on the amounts reported for the health care plans.  The cost trend assumed for 2011 and 2012 was 8.0%, with the rate declining through 2018 to the ultimate cost trend rate of 5%.  The health care plan requires retirees to make monthly contributions on behalf of themselves and their dependents in an amount determined by Great Plains Energy.

The effects of a one-percentage point change in the assumed health care cost trend rates, holding all other assumptions constant, at December 31, 2011, are detailed in the following table.  The results reflect the increase in the Medicare Part D employer subsidy which is assumed to increase with the medical trend and employer caps on post-65 plans.

	Increase		Decrease
	(millions)
Effect on total service and interest component	$	0.5	$	(0.4	)
Effect on post-retirement benefit obligation		4.0		(3.5	)

Employee Savings Plans

Great Plains Energy has defined contribution savings plans (401(k)) that cover substantially all employees.  Great Plains Energy matches employee contributions, subject to limits.  The annual cost of the plans was approximately $9.2 million, $8.9 million and $8.8 million in 2011, 2010 and 2009, respectively.  KCP&L’s annual cost of the plans was approximately $6.7 million, $6.5 million and $6.5 million in 2011, 2010 and 2009, respectively.

Voluntary Separation Program

In March 2011, Great Plains Energy and KCP&L announced an organizational realignment and voluntary separation program to assist in the management of overall costs within the level reflected in the Companies’ retail electric rates and to enhance organizational efficiency.  Savings from the realignment process and voluntary separation program, including approximately $15 million in labor costs on an annual basis, are expected to partially offset projected cost increases.  Under the voluntary separation program, any non-union employee could voluntarily elect to separate and receive a severance payment equal to two weeks of salary for every year of employment, with a minimum severance payment equal to fourteen weeks of salary.  There were 140 employees that made such elections and the majority separated on April 30, 2011.  Great Plains Energy recorded $12.7 million in 2011 related to this voluntary separation program reflecting severance and related payroll taxes to employees who elected to voluntarily separate.  KCP&L recorded $9.2 million in 2011 related to this voluntary separation program.