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Regulatory Matters
9 Months Ended
Sep. 30, 2012
Regulated Operations [Abstract]  
Regulatory Matters
5. REGULATORY MATTERS
KCP&L Kansas Rate Case Proceedings
On April 20, 2012, KCP&L filed an application with The State Corporation Commission of the State of Kansas (KCC) to request an increase to its retail revenues of $63.6 million, with a return on equity of 10.4% and a rate-making equity ratio of 51.8%. In September 2012, KCP&L revised its requested return on equity to 10.3%. The request includes recovery of costs related to significant upgrades at its generating facilities, including environmental upgrades at the La Cygne Station; investments in additional wind generation; and increased investments in electrical infrastructure.  KCP&L is also requesting that KCC approve a change to depreciation rates to reflect the increase in plant in service as well as a change to the current method of allocating costs between its Kansas and Missouri jurisdictions to better reflect KCP&L's summer peaking business.  Testimony from KCC staff and other parties regarding the case was filed on August 22, 2012. The KCC staff's testimony recommended a return on equity of 9.2% and a revenue increase of approximately $27.5 million.

In October 2012, KCP&L adjusted its requested increase to retail revenues to $56.4 million as the net result of updates to the case, which includes a non-unanimous stipulation and agreement filed in September 2012 by KCP&L and KCC staff to settle a number of issues in the case. The stipulation and agreement is pending KCC approval. The outcome of the KCP&L Kansas rate case will likely be different than either of the positions of KCP&L or KCC staff. The decision of the KCC cannot be predicted.  The increase to retail revenues is anticipated to be effective in January 2013.
KCP&L Missouri Rate Case Proceedings
On February 27, 2012, KCP&L filed an application with the Public Service Commission of the State of Missouri (MPSC) to request an increase to its retail revenues of $105.7 million, with a return on equity of 10.4% and a rate-making equity ratio of 52.5%. In September 2012, KCP&L revised its requested return on equity to 10.3%.  The request includes recovery of costs related to improving and maintaining infrastructure to continue to be able to provide reliable electric service and also includes a lower annual offset to the revenue requirement for the Missouri jurisdictional portion of KCP&L's annual non-firm wholesale electric sales margin (wholesale margin offset). KCP&L currently expects that it will not be able to achieve the $45.9 million wholesale margin offset currently reflected in its retail rates due to transmission congestion, regional demand and low wholesale power prices. Testimony from MPSC staff and other parties regarding the case was filed on August 2, 2012.  The MPSC staff's testimony recommended a return on equity range of 8.0% to 9.0% and a revenue increase range of approximately $16.5 million to $33.7 million.
In November 2012, the MPSC issued an order approving multiple stipulation and agreements to settle a number of the issues in the case. An order on the remaining issues in the case is anticipated to be received to accommodate the increase to retail revenues to be effective in late January 2013. The final outcome of the KCP&L Missouri rate case will likely be different than either of the positions of KCP&L or MPSC staff. The final decision of the MPSC cannot be predicted.
In a March 2011 order, the MPSC required KCP&L and GMO to apply to the Internal Revenue Service (IRS) to reallocate approximately $26.5 million of Iatan No. 2 qualifying advance coal project tax credits from KCP&L to GMO.  KCP&L and GMO did apply to the IRS but in September 2011, the IRS denied KCP&L's and GMO's request. In November 2012, the MPSC issued an order that does not require a reallocation of Iatan No. 2 qualifying advance coal project tax credits from KCP&L to GMO.
GMO Missouri Rate Case Proceedings
On February 27, 2012, GMO filed an application with the MPSC to request an increase to its retail revenues of $58.3 million for its Missouri Public Service division and $25.2 million for its St. Joseph Light & Power (L&P) division, with a return on equity of 10.4% and a rate-making equity ratio of 52.5%. In September 2012, GMO revised its requested return on equity to 10.3% for both its Missouri Public Service and L&P divisions.  The requests include recovery of costs related to improving and maintaining infrastructure to continue to be able to provide reliable electric service, costs related to energy efficiency and demand side management programs, and increased fuel costs.  Testimony from MPSC staff and other parties regarding the case was filed on August 9, 2012. The MPSC staff's testimony recommended a return on equity range of 8.0% to 9.0%, with a revenue increase of $0.4 million to $11.9 million for GMO's Missouri Public Service division and $0.7 million to $4.6 million for its L&P division.
In November 2012, the MPSC issued an order approving multiple stipulation and agreements to settle a number of the issues in the case. An order on the remaining issues in the case is anticipated to be received to accommodate the increase to retail revenues to be effective in late January 2013. The final outcome of the GMO Missouri rate case will likely be different than either of the positions of GMO or MPSC staff. The final decision of the MPSC cannot be predicted.
In December 2011, GMO filed a request with the MPSC seeking to recover costs for new and enhanced energy efficiency and demand side management programs under the Missouri Energy Efficiency Investment Act (MEEIA).  In November 2012, the MPSC issued an order approving a stipulation and agreement to settle all of the issues in the MEEIA request.
GMO Fuel Adjustment Clause (FAC) Prudence Review
GMO's electric retail rates contain an FAC tariff under which 95% of the difference between actual fuel cost, purchased power costs and off-system sales margin and the amount provided in base rates for these costs is passed along to GMO's customers.  The MPSC requires prudence reviews of the FAC no less frequently than at 18-month intervals.  On November 28, 2011, the MPSC staff filed its prudence review report for the 18-month prudence review period covering June 1, 2009 through November 30, 2010.  The MPSC staff recommended to the MPSC to order GMO to refund approximately $19 million, plus interest, (subsequently revised to $14.9 million) to customers through an adjustment to its FAC because the MPSC staff asserted that GMO was imprudent in its use of natural gas hedges to mitigate risk associated with its future purchases in the spot power market. On September 4, 2012, the MPSC issued an order denying the MPSC staff's request for refund and the time frame for appeal of the MPSC order has passed.
SPP and NERC Inquiries
The Southwest Power Pool, Inc. (SPP) conducted a compliance inquiry regarding a transmission system outage that occurred in the St. Joseph, Missouri area in the summer of 2009.  The North American Electric Reliability Corporation (NERC) also investigated the circumstances surrounding this transmission system outage.  GMO was assessed an immaterial penalty in 2012 resolving this matter.