5. REGULATORY MATTERS

KCP&L Kansas Abbreviated Rate Case Proceedings

In December 2013, KCP&L filed an abbreviated application with KCC to request an increase to its retail revenues of $12.1 million, including the recovery of costs to reflect the completion of certain components of environmental upgrades at the La Cygne Station, construction work in progress for those components of the upgrades still under construction and updates to certain regulatory asset amortizations. The previously approved return on equity and rate-making equity ratio for KCP&L will not be addressed in this case. Testimony from KCC staff and other parties regarding the case is expected in April 2014, with an evidentiary hearing to occur in May 2014. The increase to retail revenues is anticipated to be effective in August 2014.

KCP&L Missouri Rate Case Proceedings

On January 9, 2013, the MPSC issued an order for KCP&L authorizing an increase in annual revenues of $67.4 million effective January 26, 2013. An appeal of the January 9, 2013, MPSC order filed in February 2013 with the Missouri Court of Appeals, Western District (Court of Appeals) by the Missouri Energy Consumers Group (MECG) was dismissed in January 2014. The rates established by the January 9, 2013, MPSC order are effective unless and until modified by the MPSC or stayed by a court.

GMO Missouri Rate Case Proceedings

On January 9, 2013, the MPSC issued an order for GMO authorizing an increase in annual revenues of $26.2 million for its Missouri Public Service division and $21.7 million for its St. Joseph Light & Power division effective January 26, 2013. Appeals of the January 9, 2013, MPSC order were filed in February 2013 with the Court of Appeals by GMO and MECG regarding various issues. The rates established by the January 9, 2013, MPSC order are effective unless and until modified by the MPSC or stayed by a court.

KCP&L Missouri Energy Efficiency Investment Act Proceedings

In January 2014, KCP&L filed a request with the MPSC seeking to recover costs for new and enhanced demand side management programs under the Missouri Energy Efficiency Investment Act (MEEIA). If approved, the costs would be deferred to a regulatory asset and recovered through a rider mechanism beginning in June 2015. Testimony from MPSC staff and other parties regarding the case is expected at the end February 2014, with hearings to occur in March 2014. An order is expected in the second quarter of 2014.

KCP&L and GMO Transmission Cost Accounting Authority Order

In September 2013, KCP&L and GMO filed an application with the MPSC requesting an accounting authority order to defer transmission costs above or below the amount included in current base rates, including carrying costs, as a regulatory asset or liability with the recovery from or refund to Missouri retail customers to be determined in the next general rate case for each company. Hearings were held in January 2014 and a final order is expected in the first half of 2014.

Regulatory Assets and Liabilities

Great Plains Energy and KCP&L have recorded assets and liabilities on their consolidated balance sheets resulting from the effects of the ratemaking process, which would not otherwise be recorded if the Companies were not regulated. Regulatory assets represent incurred costs that are probable of recovery from future revenues. Regulatory liabilities represent future reductions in revenues or refunds to customers.

Management regularly assesses whether regulatory assets and liabilities are probable of future recovery or refund by considering factors such as decisions by the MPSC, KCC or FERC in KCP&L's and GMO's rate case filings; decisions in other regulatory proceedings, including decisions related to other companies that establish precedent on matters applicable to the Companies; and changes in laws and regulations. If recovery or refund of regulatory assets or liabilities is not approved by regulators or is no longer deemed probable, these regulatory assets or liabilities are recognized in the current period results of operations. The Companies' continued ability to meet the criteria for recording regulatory assets and liabilities may be affected in the future by restructuring and deregulation in the electric industry or changes in accounting rules. In the event that the criteria no longer applied to any or all of the Companies' operations, the related regulatory assets and liabilities would be written off unless an appropriate regulatory recovery mechanism were provided. Additionally, these factors could result in an impairment on utility plant assets. Great Plains Energy's and KCP&L's regulatory assets and liabilities are detailed in the following table.



	December 31
	2013								2012
	KCP&L			GMO			Great Plains Energy		KCP&L		GMO		Great Plains Energy
Regulatory Assets	(millions)
Taxes recoverable through future rates	$	111.0		$	25.4		$	136.4	$	114.7	$	23.7	$	138.4
Loss on reacquired debt	7.1		^(a)	1.5		^(a)	8.6		8.1		2.0		10.1
Cost of removal	1.0			—			1.0		2.8		—		2.8
Asset retirement obligations	34.8			16.0			50.8		31.5		14.9		46.4
Pension and post-retirement costs	310.0		^(b)	91.2		^(b)	401.2		541.2		129.7		670.9
Deferred customer programs	50.2		^(c)	21.8		^(d)	72.0		49.8		24.6		74.4
Rate case expenses	3.6		^(e)	0.6		^(f)	4.2		7.5		1.7		9.2
Fuel recovery mechanism	10.8		^(e)	12.8		^(e)	23.6		8.9		16.9		25.8
Acquisition transition costs	12.9		^(g)	11.0		^(g)	23.9		18.7		15.5		34.2
Derivative instruments	—			—			—		—		3.7		3.7
Iatan No. 1 and common facilities depreciation and carrying costs	15.3		^(h)	5.7		^(h)	21.0		15.9		5.9		21.8
Iatan No. 2 construction accounting costs	29.3		⁽ⁱ⁾	16.0		⁽ⁱ⁾	45.3		30.6		16.2		46.8
Kansas property tax surcharge	4.0		^(e)	—			4.0		5.4		—		5.4
Solar rebates	13.0		^(e)	32.3		^(e)	45.3		5.8		10.0		15.8
Voluntary separation program	3.4		^(j)	—			3.4		4.3		—		4.3
Other	7.7		^(e)	1.3		^(e)	9.0		8.0		2.9		10.9
Total	$	614.1		$	235.6		$	849.7	$	853.2	$	267.7	$	1,120.9
Regulatory Liabilities
Emission allowances	$	74.0		$	—		$	74.0	$	78.0	$	0.1	$	78.1
Asset retirement obligations	86.2			—			86.2		63.1		—		63.1
Pension	—			—			—		1.5		44.6		46.1
Cost of removal	—			68.1		^(k)	68.1		—		64.0		64.0
Other	8.1			27.6			35.7		10.4		22.1		32.5
Total	$	168.3		$	95.7		$	264.0	$	153.0	$	130.8	$	283.8

^(a)Amortized over the life of the related new debt issuances or the remaining lives of the old debt issuances if no new debt was issued.

^(b) Represents unrecognized gains and losses, prior service and transition costs that will be recognized in future net periodic pension and post-retirement costs, pension settlements amortized over various periods and financial and regulatory accounting method differences that will be eliminated over the life of the pension plans. Of these amounts, $288.5 million and $57.0 million for KCP&L and GMO, respectively, are not included in rate base and are amortized over various periods.

^(c) $15.4 million not included in rate base and amortized over various periods.

^(d)$2.1 million not included in rate base and amortized over various periods.

^(e)Not included in rate base and amortized over various periods.

^(f)Not included in rate base and amortized through 2014.

^(g)Not included in rate base and amortized through 2016.

^(h)Included in rate base and amortized through 2038.

⁽ⁱ⁾Included in rate base and amortized through 2058.

^(j)Not included in rate base and amortized through 2017.

^(k)Estimated cumulative net provision for future removal costs.