Great Plains Energy Inc (GXP)

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Great Plains Energy Incorporated (GXP)

Q4 2009 Earnings Call Transcript

February 26, 2010 9:00 am ET

Executives

Michael Cline – VP, IR and Treasurer

Mike Chesser – Chairman and CEO

Bill Downey – President and COO

Terry Bassham – EVP, Finance and CFO

Analysts

Paul Ridzon – KeyBanc

Michael Lapides – Goldman Sachs

Presentation

Operator

Good morning. My name is Jennifer and I'll be cure on conference operator today. At this time, I'd like to welcome everyone to the Fourth Quarter 2009 Earnings Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers’ remarks, there will be a question-and-answer session. (Operator Instructions)

I would now like to turn the call over to Mr. Michael Cline, Vice President of Investor Relations and Treasurer. Please go ahead.

Michael Cline

Thank you Jennifer and good morning. Welcome to Great Plains Energy’s 2009 fourth quarter and year-end conference call. Joining me on the call this morning are Mike Chesser, Chairman and CEO, Bill Downey, President and COO and Terry Bassham. Also joining us on the call today is John Marshall, Executive Vice President, Utility Operations, will be available for questions.

Since some of our remarks will be forward looking, I must remind you of the uncertainties inherent in such comments. The second slide included in this webcast and disclosure in our SEC filings contain a list of some of the factors that could cause future results to differ materially from our expectations.

Before I hand the call to Mike, I have three items to highlight this morning. First, we filed our 2009 10-K after the market closed yesterday. It’s available along with supplemental financial information regarding the quarter and full year and today's webcast slides on the main page of our website at www.greatplainsenergy.com. Second, I want to remind everyone that we closed the acquisition of Aquila, which we now refer to as GMO, on July 14, 2008.

In comparing 2009 results to 2008, it's therefore important to know that GMO is not reflected in the 2008 numbers until the acquisition date. And third, as a reminder, Great Plains Energy provides the financial information in its earnings release in accordance with GAAP. For a number of years prior to 2009 the company also provided core earnings, a non-GAAP measure that excluded the effects of discontinued operations, certainly unusual items and mark-to-market gains and losses on energy contracts.

Following the sale of Strategic Energy in 2008, the company determined that providing core earnings was no longer necessary in order to provide comparable results among periods. Accordingly, effective in the first quarter 2009, the company no longer provides core earnings.

With that, it's now my pleasure to introduce Mike Chesser.

Mike Chesser

Thanks, Michael and good morning, everyone. Thanks for joining us today. Yesterday, we announced our full year 2009 earnings of $1.14 per share, which is right in the middle of the revised range we disclosed in October. We also announced our 2010 earnings guidance range of $1.20 to $1.40 per share. Terry's going to provide the details around these in his comments, but I'd like to spend a couple of minutes reflecting on the year and my thoughts as we look forward to 2010.

The combination of challenges that we faced in 2009 was unprecedented in recent history. Our service territory like the rest of country was impacted by deep recession and significantly reduced energy consumption and reduced wholesale market prices resulted.

In a seasonal business in which we typically generate about 60% of our earnings in the third quarter, we were hit by the cool summer in the Kansas City region in 30 years. In volatile and difficult financial markets, especially in the first half of the year presented a tough environment in which to raise capital and preserve liquidity.

In the face of these headwinds, we had a very aggressive business agenda as we came off of a transformational year in 2008 and entered 2009. In addition to our ongoing objectives of excellence in our day-to-day operations, which were newly expanded as a result of GMO acquisition, we were focused on finishing the environmental project and unit overhaul at Iatan 1, continuing to work towards 2010 in-service dates for Iatan 2 and successfully completing five rate cases we had filed in the fall of 2008.

We knew that our success would depend upon our ability to execute, with our strong utility operation as a foundation. We call this strength at the core. As evidenced in 2009, business conditions will ebb and flow but we believe a fundamental emphasis on excellence in our core operations serves our shareholders and customers well regardless of the business environment.

Across our organization, we strive for industry leading operational performance at emphasizes productivity, efficiency and discipline cost control while at the same time preserving a reliability of our networks and the effective operation of our generation fleet. The strength of our core utility business is reflected in key utility performance metrics that we used to measure ourselves. These include reliability, safety, plant performance and customer satisfaction. Bill is going to share some additional details on these in a minute, but I'd like to take a second to highlight customer service.

In the most recent JD Power survey, KCP&L was ranked number one in customer satisfaction for business electric service among large utilities in the Midwest. And this was on top our Tier 1 ranking in last year JD Power Residential study as we discussed during the first quarter 2009 earnings call. So it's truly gratifying to get this sort of recognition from both our business and residential customers. And all of our employees deserve the credit to that accomplishment.

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