ORGANIZATION AND BASIS OF PRESENTATION

3 Months Ended

Mar. 31, 2020

Accounting Policies [Abstract]

ORGANIZATION AND BASIS OF PRESENTATION

ORGANIZATION AND BASIS OF PRESENTATION

Organization

Evergy is a public utility holding company incorporated in 2017 and headquartered in Kansas City, Missouri. Evergy operates primarily through the following wholly-owned direct subsidiaries listed below.

• Evergy Kansas Central, Inc. (Evergy Kansas Central) is an integrated, regulated electric utility that provides electricity to customers in the state of Kansas. Evergy Kansas Central has one active wholly-owned subsidiary with significant operations, Evergy Kansas South, Inc. (Evergy Kansas South).

• Evergy Metro, Inc. (Evergy Metro) is an integrated, regulated electric utility that provides electricity to customers in the states of Missouri and Kansas.

• Evergy Missouri West, Inc. (Evergy Missouri West) is an integrated, regulated electric utility that provides electricity to customers in the state of Missouri.

• Evergy Transmission Company, LLC (Evergy Transmission Company) owns 13.5% of Transource Energy, LLC (Transource) with the remaining 86.5% owned by AEP Transmission Holding Company, LLC, a subsidiary of American Electric Power Company, Inc. (AEP). Transource is focused on the development of competitive electric transmission projects. Evergy Transmission Company accounts for its investment in Transource under the equity method.

Evergy Kansas Central also owns a 50% interest in Prairie Wind Transmission, LLC (Prairie Wind), which is a joint venture between Evergy Kansas Central and subsidiaries of AEP and Berkshire Hathaway Energy Company. Prairie Wind owns a 108-mile, 345 kV double-circuit transmission line that provides transmission service in the Southwest Power Pool, Inc. (SPP). Evergy Kansas Central accounts for its investment in Prairie Wind under the equity method.

Evergy Kansas Central, Evergy Kansas South, Evergy Metro and Evergy Missouri West conduct business in their respective service territories using the name Evergy. Collectively, the Evergy Companies have approximately 14,700 MWs of owned generating capacity and renewable purchased power agreements and engage in the generation, transmission, distribution and sale of electricity to approximately 1.6 million customers in the states of Kansas and Missouri.

Basis of Presentation

These unaudited consolidated financial statements have been prepared in accordance with generally accepted accounting principles (GAAP) for interim financial information and with the instructions to Form 10-Q and Regulation S-X. Accordingly, these unaudited consolidated financial statements do not include all of the information and notes required by GAAP for annual financial statements and should be read in conjunction with the consolidated financial statements in the Evergy Companies' combined 2019 Form 10-K.

These unaudited consolidated financial statements, in the opinion of management, reflect all normal recurring adjustments necessary to fairly present the unaudited consolidated financial statements for each of the Evergy Companies for these interim periods. In preparing financial statements that conform to GAAP, management must make estimates and assumptions that affect the reported amounts of assets and liabilities, the reported amounts of revenues and expenses, and the disclosure of contingent assets and liabilities at the date of the financial statements. Actual results could differ from those estimates.

Principles of Consolidation

Each of Evergy's, Evergy Kansas Central's and Evergy Metro's unaudited consolidated financial statements includes the accounts of their subsidiaries and variable interest entities (VIEs) of which they are the primary beneficiary. Undivided interests in jointly-owned generation facilities are included on a proportionate basis.  Intercompany transactions have been eliminated. The Evergy Companies assess financial performance and allocate resources on a consolidated basis (i.e., operate in one segment).

Fuel Inventory and Supplies

The Evergy Companies record fuel inventory and supplies at average cost. The following table separately states the balances for fuel inventory and supplies.

	March 31 2020		December 31 2019
Evergy	(millions)
Fuel inventory	$	166.4	$	146.4
Supplies	332.5		335.2
Fuel inventory and supplies	$	498.9	$	481.6
Evergy Kansas Central
Fuel inventory	$	87.6	$	80.2
Supplies	183.3		186.2
Fuel inventory and supplies	$	270.9	$	266.4
Evergy Metro
Fuel inventory	$	57.9	$	46.1
Supplies	117.2		116.9
Fuel inventory and supplies	$	175.1	$	163.0

Property, Plant and Equipment

The following tables summarize the property, plant and equipment of Evergy, Evergy Kansas Central and Evergy Metro.

March 31, 2020	Evergy				Evergy Kansas Central				Evergy Metro
		(millions)
Electric plant in service		$	27,995.1			$	13,634.9			$	10,865.3
Electric plant acquisition adjustment		740.6				740.6				—
Accumulated depreciation		(10,460.3		)		(5,034.6		)		(4,340.8		)
Plant in service, net		18,275.4				9,340.9				6,524.5
Construction work in progress		831.0				452.6				281.2
Nuclear fuel, net		115.9				57.6				58.3
Plant to be retired, net(a)		0.9				0.9				—
Property, plant and equipment, net		$	19,223.2			$	9,852.0			$	6,864.0
December 31, 2019	Evergy				Evergy Kansas Central				Evergy Metro
		(millions)
Electric plant in service		$	27,768.8			$	13,538.1			$	10,776.5
Electric plant acquisition adjustment		740.6				740.6				—
Accumulated depreciation		(10,293.7		)		(4,951.5		)		(4,272.0		)
Plant in service, net		18,215.7				9,327.2				6,504.5
Construction work in progress		839.2				472.8				269.9
Nuclear fuel, net		128.5				63.9				64.6
Plant to be retired, net(a)		1.0				1.0				—
Property, plant and equipment, net		$	19,184.4			$	9,864.9			$	6,839.0

^(a) As of March 31, 2020, and December 31, 2019, represents the planned retirement of Evergy Kansas Central analog meters prior to the end of their remaining useful lives.

Other Income (Expense), Net

The table below shows the detail of other expense for each of the Evergy Companies.

Three Months Ended March 31	2020			2019
Evergy	(millions)
Non-service cost component of net benefit cost	$	(16.2	)	$	(13.1	)
Other	(6.5		)	(6.3		)
Other expense	$	(22.7	)	$	(19.4	)
Evergy Kansas Central
Non-service cost component of net benefit cost	$	(5.6	)	$	(4.4	)
Other	(5.9		)	(6.2		)
Other expense	$	(11.5	)	$	(10.6	)
Evergy Metro
Non-service cost component of net benefit cost	$	(6.9	)	$	(5.1	)
Other	(0.5		)	0.1
Other expense	$	(7.4	)	$	(5.0	)

Earnings Per Share

To compute basic earnings per share (EPS), Evergy divides net income attributable to Evergy, Inc. by the weighted average number of common shares outstanding. Diluted EPS includes the effect of issuable common shares resulting from restricted share units (RSUs), performance shares and restricted stock. Evergy computes the dilutive effects of potential issuances of common shares using the treasury stock method.

The following table reconciles Evergy's basic and diluted EPS.

Three Months Ended March 31	2020		2019
Income	(millions, except per share amounts)
Net income	$	72.2	$	103.4
Less: Net income attributable to noncontrolling interests	2.8		3.9
Net income attributable to Evergy, Inc.	$	69.4	$	99.5
Common Shares Outstanding
Weighted average number of common shares outstanding - basic	227.1		252.8
Add: Effect of dilutive securities	0.4		0.2
Weighted average number of common shares outstanding - dilutive	227.5		253.0
Basic and Diluted EPS	$	0.31	$	0.39

Anti-dilutive shares excluded from the computation of diluted EPS for the three months ended March 31, 2020 were 175,991 RSUs with performance measures and 58,714 RSUs with only service requirements. There were no anti-dilutive securities excluded from the computation of diluted EPS for the three months ended March 31, 2019.

Dividends Declared

In May 2020, Evergy's Board of Directors (Evergy Board) declared a quarterly dividend of $0.505 per share on Evergy's common stock. The common dividend is payable June 19, 2020, to shareholders of record as of May 20, 2020.

In May 2020, Evergy Kansas Central's Board of Directors declared a cash dividend payable to Evergy of $60.0 million, payable on June 18, 2020.

In May 2020, Evergy Metro's Board of Directors declared a cash dividend payable to Evergy of $20.0 million, payable on June 18, 2020.

Supplemental Cash Flow Information

Evergy
Three Months Ended March 31	2020		2019
Cash paid for (received from):	(millions)
Interest, net of amounts capitalized	$	86.5	$	59.3
Interest of VIEs	0.6		1.0
Income taxes, net of refunds	0.2		(0.1		)
Right-of-use assets obtained in exchange for new operating lease liabilities	2.6		2.2
Non-cash investing transactions:
Property, plant and equipment additions	75.7		47.1
Non-cash financing transactions:
Issuance of stock for compensation and reinvested dividends	0.9		0.5
Right-of-use assets obtained in exchange for new finance lease liabilities	3.1		2.3

Evergy Kansas Central
Three Months Ended March 31	2020		2019
Cash paid for (received from):	(millions)
Interest, net of amounts capitalized	$	37.4	$	32.6
Interest of VIEs	0.6		1.0
Income taxes, net of refunds	0.2		—
Right-of-use assets obtained in exchange for new operating lease liabilities	2.6		—
Non-cash investing transactions:
Property, plant and equipment additions	52.5		27.1
Non-cash financing transactions:
Right-of-use assets obtained in exchange for new finance lease liabilities	1.9		2.3

Evergy Metro
Three Months Ended March 31	2020		2019
Cash paid for (received from):	(millions)
Interest, net of amounts capitalized	$	18.7	$	19.6
Right-of-use assets obtained in exchange for new operating lease liabilities	—		2.2
Non-cash investing transactions:
Property, plant and equipment additions	17.8		15.9
Non-cash financing transactions:
Right-of-use assets obtained in exchange for new finance lease liabilities	1.2		—