FAIR VALUE MEASUREMENTS

12 Months Ended

Dec. 31, 2020

Values of Financial Instruments

GAAP establishes a hierarchical framework for disclosing the transparency of the inputs utilized in measuring assets and liabilities at fair value. Management's assessment of the significance of a particular input to the fair value measurement requires judgment and may affect the classification of assets and liabilities within the fair value hierarchy levels. In addition, the Evergy Companies measure certain investments that do not have a readily determinable fair value at NAV, which are not included in the fair value hierarchy. Further explanation of these levels and NAV is summarized below.

Level 1 – Quoted prices are available in active markets for identical assets or liabilities. The types of assets and liabilities included in Level 1 are highly liquid and actively traded instruments with quoted prices, such as equities listed on public exchanges.

Level 2 – Pricing inputs are not quoted prices in active markets but are either directly or indirectly observable. The types of assets and liabilities included in Level 2 are certain marketable debt securities, financial instruments traded in less than active markets or other financial instruments priced with models using highly observable inputs.

Level 3 – Significant inputs to pricing have little or no transparency. The types of assets and liabilities included in Level 3 are those with inputs requiring significant management judgment or estimation.

NAV - Investments that do not have a readily determinable fair value are measured at NAV. These investments do not consider the observability of inputs and, therefore, they are not included within the fair value hierarchy. The Evergy Companies include in this category investments in private equity, real estate and alternative investment funds that do not have a readily determinable fair value. The underlying alternative investments include collateralized debt obligations, mezzanine debt and a variety of other investments.

The Evergy Companies record cash and cash equivalents, accounts receivable and short-term borrowings on their consolidated balance sheets at cost, which approximates fair value due to the short-term nature of these instruments.

Interest Rate Derivatives

The Evergy Companies are exposed to market risks arising from changes in interest rates and may use derivative instruments to manage these risks. From time to time, risk management activities may include entering into interest rate swap agreements to protect against unfavorable interest rate changes relating to forecasted debt transactions. These interest rate swap agreements can be designated as cash flow hedges, in which case gains and losses on the interest rate swaps are deferred in other comprehensive income to be recognized as an adjustment to interest expense over the same period that the hedged interest payments affect earnings. The Evergy Companies classify all cash inflows and outflows for interest rate swap agreements accounted for as cash flow hedges of forecasted debt transactions as financing activities on their consolidated statements of cash flows.

In September 2019, Evergy issued $800.0 million of 2.90% Senior Notes maturing in 2029 and paid $69.8 million to settle an interest rate swap agreement with a notional amount of $500.0 million that was designated as a cash

flow hedge of interest payments on the debt issuance. The $69.8 million pre-tax loss was recorded in accumulated other comprehensive loss on Evergy's consolidated balance sheet and is being reclassified to interest expense over the ten-year term of the debt. For 2020, $7.0 million and $(4.0) million were reclassified from accumulated other comprehensive loss to interest expense and income tax expense, respectively, on Evergy's consolidated statements of comprehensive income. For 2019, $2.0 million and $(0.5) million were reclassified from accumulated other comprehensive loss to interest expense and income tax expense, respectively, on Evergy's consolidated statements of comprehensive income. As of December 31, 2020, Evergy expects to amortize $5.4 million to earnings from accumulated other comprehensive loss over the next twelve months.

Fair Value of Long-Term Debt

The Evergy Companies measure the fair value of long-term debt using Level 2 measurements available as of the measurement date. The book value and fair value of the Evergy Companies' long-term debt and long-term debt of variable interest entities is summarized in the following table.


	December 31
	2020				2019
	Book Value		Fair Value		Book Value		Fair Value
Long-term debt(a)	(millions)
Evergy(b)	$	9,627.3	$	11,274.2	$	8,997.8	$	9,750.2
Evergy Kansas Central	3,931.5		4,801.7		3,686.1		4,078.8
Evergy Metro	2,923.0		3,591.2		2,525.0		2,932.2
Long-term debt of variable interest entities(a)
Evergy	$	18.8	$	19.1	$	51.1	$	51.5
Evergy Kansas Central	18.8		19.1		51.1		51.5

(a) Includes current maturities.

(b) Book value as of December 31, 2020 and 2019, includes $110.4 million and $125.5 million, respectively, of fair value adjustments recorded in connection with purchase accounting for the Great Plains Energy and Evergy Kansas Central merger, which are not part of future principal payments and will amortize over the remaining life of the associated debt instrument.

Recurring Fair Value Measurements

The following tables include the Evergy Companies' balances of financial assets and liabilities measured at fair value on a recurring basis.


Description	December 31, 2020			Level 1		Level 2			Level 3			NAV
Evergy Kansas Central		(millions)
Assets
Nuclear decommissioning trust(a)
Domestic equity funds		$	102.7	$	95.1		$	—		$	—		$	7.6
International equity funds		63.8		63.8			—			—			—
Core bond fund		40.6		40.6			—			—			—
High-yield bond fund		25.0		25.0			—			—			—
Emerging markets bond fund		21.0		21.0			—			—			—
Combination debt/equity/other fund		20.1		20.1			—			—			—
Alternative investments fund		23.2		—			—			—			23.2
Real estate securities fund		12.9		—			—			—			12.9
Cash equivalents		0.5		0.5			—			—			—
Total nuclear decommissioning trust		309.8		266.1			—			—			43.7
Rabbi trust
Core bond fund		25.6		—			—			—			25.6
Combination debt/equity/other fund		7.1		—			—			—			7.1

Total rabbi trust		32.7		—			—			—			32.7
Total		$	342.5	$	266.1		$	—		$	—		$	76.4
Evergy Metro
Assets
Nuclear decommissioning trust(a)
Equity securities		$	243.1	$	243.1		$	—		$	—		$	—
Debt securities
U.S. Treasury		47.7		47.7			—			—			—
U.S. Agency		0.5		—			0.5			—			—
State and local obligations		4.1		—			4.1			—			—
Corporate bonds		43.1		—			43.1			—			—
Foreign governments		0.1		—			0.1			—			—
Cash equivalents		3.2		3.2			—			—			—
Other		0.5		0.5			—			—			—
Total nuclear decommissioning trust		342.3		294.5			47.8			—			—
Self-insured health plan trust(b)
Equity securities		1.7		1.7			—			—			—
Debt securities		8.0		2.8			5.2			—			—
Cash and cash equivalents		3.5		3.5			—			—			—
Total self-insured health plan trust		13.2		8.0			5.2			—			—
Total		$	355.5	$	302.5		$	53.0		$	—		$	—
Other Evergy
Assets
Rabbi trusts
Fixed income fund		$	13.1	$	—		$	—		$	—		$	13.1
Cash and cash equivalents		0.5		0.5			—			—			—
Total rabbi trusts		$	13.6	$	0.5		$	—		$	—		$	13.1



Evergy
Assets
Nuclear decommissioning trust(a)		$	652.1	$	560.6		$	47.8		$	—		$	43.7
Rabbi trusts		46.3		0.5			—			—			45.8
Self-insured health plan trust(b)		13.2		8.0			5.2			—			—
Total		$	711.6	$	569.1		$	53.0		$	—		$	89.5


Description	December 31, 2019			Level 1			Level 2			Level 3			NAV
Evergy Kansas Central		(millions)
Assets
Nuclear decommissioning trust(a)
Domestic equity funds		$	86.1		$	78.6		$	—		$	—		$	7.5
International equity funds		52.0			52.0			—			—			—
Core bond fund		39.3			39.3			—			—			—
High-yield bond fund		22.3			22.3			—			—			—
Emerging markets bond fund		19.4			19.4			—			—			—
Combination debt/equity/other fund		16.4			16.4			—			—			—
Alternative investments fund		23.9			—			—			—			23.9
Real estate securities fund		12.6			—			—			—			12.6
Cash equivalents		0.5			0.5			—			—			—
Total nuclear decommissioning trust		272.5			228.5			—			—			44.0
Rabbi trust
Core bond fund		25.3			—			—			—			25.3
Combination debt/equity/other fund		6.3			—			—			—			6.3
Cash equivalents		0.1			0.1			—			—			—
Total rabbi trust		31.7			0.1			—			—			31.6
Total		$	304.2		$	228.6		$	—		$	—		$	75.6
Evergy Metro
Assets
Nuclear decommissioning trust(a)
Equity securities		$	211.1		$	211.1		$	—		$	—		$	—
Debt securities
U.S. Treasury		50.3			50.3			—			—			—
U.S. Agency		0.4			—			0.4			—			—
State and local obligations		2.2			—			2.2			—			—
Corporate bonds		33.2			—			33.2			—			—
Foreign governments		0.1			—			0.1			—			—
Cash equivalents		3.1			3.1			—			—			—
Other		0.3			—			0.3			—			—
Total nuclear decommissioning trust		300.7			264.5			36.2			—			—
Self-insured health plan trust(b)
Equity securities		0.5			0.5			—			—			—
Debt securities		6.7			1.4			5.3			—			—
Cash and cash equivalents		2.7			2.7			—			—			—
Total self-insured health plan trust		9.9			4.6			5.3			—			—
Total		$	310.6		$	269.1		$	41.5		$	—		$	—
Other Evergy
Assets
Rabbi trusts
Fixed income fund		$	13.3		$	—		$	—		$	—		$	13.3
Cash and cash equivalents		0.5			0.5			—			—			—
Total rabbi trusts		$	13.8		$	0.5		$	—		$	—		$	13.3



Evergy
Assets
Nuclear decommissioning trust(a)		$	573.2		$	493.0		$	36.2		$	—		$	44.0
Rabbi trust		45.5			0.6			—			—			44.9
Self-insured health plan trust(b)		9.9			4.6			5.3			—			—
Total		$	628.6		$	498.2		$	41.5		$	—		$	88.9

(a)Fair value is based on quoted market prices of the investments held by the trust and/or valuation models.

(b)Fair value is based on quoted market prices of the investments held by the trust. Debt securities classified as Level 1 are comprised of U.S. Treasury securities. Debt securities classified as Level 2 are comprised of corporate bonds, U.S. Agency, state and local obligations, and other asset-backed securities.

Certain Evergy and Evergy Kansas Central investments included in the table above are measured at NAV as they do not have readily determinable fair values. In certain situations, these investments may have redemption restrictions.

The following table provides additional information on these Evergy and Evergy Kansas Central investments.


	December 31, 2020				December 31, 2019				December 31, 2020
	Fair		Unfunded		Fair		Unfunded		Redemption	Length of
	Value		Commitments		Value		Commitments		Frequency	Settlement
Evergy Kansas Central
Nuclear decommissioning trust:	(millions)
Domestic equity funds	$	7.6	$	2.2	$	7.5	$	3.3	(a)	(a)
Alternative investments fund(b)	23.2		—		23.9		—		Quarterly	65 days
Real estate securities fund(b)	12.9		—		12.6		—		Quarterly	65 days
Total	$	43.7	$	2.2	$	44.0	$	3.3
Rabbi trust:
Core bond fund	$	25.6	$	—	$	25.3	$	—	(c)	(c)
Combination debt/equity/other fund	7.1		—		6.3		—		(c)	(c)
Total	$	32.7	$	—	$	31.6	$	—
Other Evergy
Rabbi trust:
Fixed income fund	$	13.1	$	—	$	13.3	$	—	(c)	(c)
Total Evergy investments at NAV	$	89.5	$	2.2	$	88.9	$	3.3

(a)This investment is in five long-term private equity funds that do not permit early withdrawal. Investments in these funds cannot be distributed until the underlying investments have been liquidated, which may take years from the date of initial liquidation. Three funds have begun to make distributions. The initial investment in the fourth and fifth funds occurred in 2016 and 2018, respectively. The fourth fund's term is 15 years, subject to the general partner's right to extend the term for up to three additional one-year periods. The fifth fund's term is 15 years, subject to additional extensions approved by a fund advisory committee to provide for an orderly liquidation of fund investments and dissolution of the fund.

(b)There is a holdback on final redemptions.

(c)This investment can be redeemed immediately and is not subject to any restrictions on redemptions.

The Evergy Companies hold equity and debt investments classified as securities in various trusts including for the purposes of funding the decommissioning of Wolf Creek and for the benefit of certain retired executive officers of Evergy Kansas Central. The Evergy Companies record net realized and unrealized gains and losses on the nuclear decommissioning trusts in regulatory liabilities on their consolidated balance sheets and record net realized and unrealized gains and losses on the Evergy Companies' rabbi trusts in the consolidated statements of income and comprehensive income.

The following table summarizes the net unrealized gains (losses) for the Evergy Companies' nuclear decommissioning trusts and rabbi trusts.



	2020		2019		2018
Evergy	(millions)
Nuclear decommissioning trust - equity securities	$	45.5	$	74.0	(54.1)
Nuclear decommissioning trust - debt securities	5.3		5.1		(0.5)
Rabbi trusts - equity securities	(5.6)		3.1		1.0
Total	$	45.2	$	82.2	$	(53.6)
Evergy Kansas Central
Nuclear decommissioning trust - equity securities	$	21.9	$	33.3	(31.8)
Rabbi trust - equity securities	(6.1)		3.2		1.0
Total	$	15.8	$	36.5	$	(30.8)
Evergy Metro(a)
Nuclear decommissioning trust - equity securities	$	23.6	$	40.7	(20.7)
Nuclear decommissioning trust - debt securities	5.3		5.1		(2.5)
Total	$	28.9	$	45.8	$	(23.2)

(a) Evergy Metro amounts are included in consolidated Evergy from June 4, 2018, the date of the closing of the merger, and thereafter.

- Definition

The entire disclosure for the fair value of financial instruments (as defined), including financial assets and financial liabilities (collectively, as defined), and the measurements of those instruments as well as disclosures related to the fair value of non-financial assets and liabilities. Such disclosures about the financial instruments, assets, and liabilities would include: (1) the fair value of the required items together with their carrying amounts (as appropriate); (2) for items for which it is not practicable to estimate fair value, disclosure would include: (a) information pertinent to estimating fair value (including, carrying amount, effective interest rate, and maturity, and (b) the reasons why it is not practicable to estimate fair value; (3) significant concentrations of credit risk including: (a) information about the activity, region, or economic characteristics identifying a concentration, (b) the maximum amount of loss the entity is exposed to based on the gross fair value of the related item, (c) policy for requiring collateral or other security and information as to accessing such collateral or security, and (d) the nature and brief description of such collateral or security; (4) quantitative information about market risks and how such risks are managed; (5) for items measured on both a recurring and nonrecurring basis information regarding the inputs used to develop the fair value measurement; and (6) for items presented in the financial statement for which fair value measurement is elected: (a) information necessary to understand the reasons for the election, (b) discussion of the effect of fair value changes on earnings, (c) a description of [similar groups] items for which the election is made and the relation thereof to the balance sheet, the aggregate carrying value of items included in the balance sheet that are not eligible for the election; (7) all other required (as defined) and desired information.

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