Legal Proceedings

6 Months Ended

Jun. 30, 2012

Legal Proceedings [Abstract]

Legal Proceedings

11.   LEGAL PROCEEDINGS

KCP&L Spent Nuclear Fuel and Radioactive Waste

In January 2004, KCP&L and the other two Wolf Creek owners filed a lawsuit against the United States in the U.S. Court of Federal Claims seeking $14.1 million of damages resulting from the government’s failure to begin accepting spent nuclear fuel for disposal in January 1998, as the government was required to do by the Nuclear Waste Policy Act of 1982.  The Wolf Creek case was tried before a U.S. Court of Federal Claims judge in June 2010 and a decision was issued in November 2010 granting KCP&L and the other two Wolf Creek owners $10.6 million ($5.0 million KCP&L share) in damages.  In January 2011, KCP&L and the other two Wolf Creek owners as well as the United States filed appeals of the decision to the U.S. Court of Appeals for the Federal Circuit.  On July 12, 2012, a three-judge panel of the Court of Appeals issued a decision reversing in part the trial court’s decision and directing that the original award be increased by $2.1 million ($1.0 million KCP&L share).  The parties have until late August 2012 to request a rehearing of that decision.

GMO Western Energy Crisis

In response to complaints of manipulation of the California energy market, The Federal Energy Regulatory Commission (FERC) issued an order in July 2001 requiring net sellers of power in the California markets from October 2, 2000, through June 20, 2001, at prices above a FERC-determined competitive market clearing price, to make refunds to net purchasers of power in the California market during that time period.  Because MPS Merchant was a net purchaser of power during the refund period, it has received approximately $8 million in refunds through settlements with certain sellers of power.  MPS Merchant estimates that it is entitled to approximately $12 million in additional refunds under the standards FERC has used in this case.  FERC has stated that interest will be applied to the refunds but the amount of interest has not yet been determined.

In December 2001, various parties appealed the July 2001 FERC order to the United States Court of Appeals for the Ninth Circuit (Ninth Circuit) seeking review of a number of issues, including expansion of the refund period to include periods prior to October 2, 2000 (the Summer Period).  MPS Merchant was a net seller of power during the Summer Period.  On August 2, 2006, the Ninth Circuit issued an order finding, among other things, that FERC did not provide a sufficient justification for refusing to exercise its remedial authority under the Federal Power Act to determine whether market participants violated FERC-approved tariffs during the Summer Period.  The court remanded the matter to FERC for further consideration.  In May 2011, FERC issued an order which clarified the scope of the hearing regarding spot-market transactions during the Summer Period and ruled on requests for rehearing and motions to dismiss.  An evidentiary hearing before a FERC administrative law judge concluded on July 19, 2012.  An initial decision by the FERC administrative law judge is due February 2013.  If FERC determines that MPS Merchant violated then-existing tariffs or laws during the Summer Period and that such violations affected market clearing prices in California, MPS Merchant could be found to owe refunds.

A separate proceeding was also initiated, generally referred to as the Pacific Northwest refund proceeding, to determine if any refunds were warranted in the Pacific Northwest between December 25, 2000, and June 20, 2001.  Refund claims brought against MPS Merchant were $5.1 million.  FERC initially rejected the refund requests, but its decision was remanded by the Ninth Circuit for FERC to consider whether any specific acts of market manipulation support the imposition of refunds for particular bilateral contracts.  Formal claims against MPS Merchant must be identified by August 17, 2012, and an evidentiary hearing on transactions in the Pacific Northwest has been scheduled to begin April 15, 2013.