Great Plains Energy Inc (GXP)

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Great Plains Energy Incorporated (GXP)

Q1 2010 Earnings Call Transcript

May 7, 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 & Strategic Development and CFO

Analysts

Leon Dubov – Catapult

Michael Lapides – Goldman Sachs

Timothy Yee – KeyBanc

John Alley – Decade Capital

Presentation

Operator

Good morning. My name is Therese and I will be your conference operator today. At this time I would like to welcome everyone to the first quarter 2010 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. You may begin.

Michael Cline

Thank you, Therese and good morning. Welcome to Great Plains Energy's first quarter 2010 conference call. Joining me on the call this morning are Mike Chesser, Chairman and CEO, Bill Downey, President and COO and Terry Bassham, Executive Vice President and CFO. John Marshall, Executive Vice President Utility Operations, will be available during the Q&A section of the call.

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 the 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 wanted to remind everyone that we filed our first quarter 2010 10-Q after the market closed yesterday. It is available along with supplemental financial information regarding the quarter and today's webcast slides on the main page of our website at www.GreatPlainsEnergy.com.

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

Mike Chesser

Thanks, Michael and good morning, everyone. Thanks for joining us today. I hope you've had the opportunity to read yesterday afternoon's press release, announcing our first quarter earnings and affirmation of our 2010 earnings guidance range. We also announced yesterday a number of key management changes. They reflect our corporate culture objective to develop future leaders internally where possible while at the same time capitalizing on key opportunities to further enhance the strength of our executive team. I'll discuss these changes more in a few minutes, but I want to first cover the highlights so far in 2010.

Our financial results reflect a very productive first few months of the year. What a difference a year can make. Twelve months ago our service territory was in the throws of the economic recession that gripped the country. Global financial markets were fragile and though we didn't know it at the time, we were heading into the coolest summer in our region in nearly three decades.

In order to imagine – it's hard to imagine a tougher environment in which to pursue our very aggressive 2009 agenda. This included completing the Iatan 1 project, making major headway on the construction of Iatan 2, managing five rate cases and striving for tier one operating performance while raising capital in a manner that enhanced our credit quality. These objectives would have been challenged in the best of conditions.

The head winds we encountered significantly increased that degree of difficulty. But by focusing on execution in our core business and acting firmly and decisively with regard to the level of the dividend, capital expenditures, staffing, expense levels and financing, we effectively positioned our company to weather that storm and with the worst of that storm behind us, we believe we have emerged from the crisis a better and stronger company and we're looking to the balance of 2010 with cautious optimism.

We were pleased to see recent actions by Moody's and Standard & Poor's that signal their agreement with this view. As I've said on this call many times, maintaining our credit quality is our top priority. Steps taken by both agencies to raise our outlook from negative to stable, affirm our decisions and accomplishments in 2009 and indicate that both firms are more positive about our short to medium term prospects.

As Terry will discuss in his comments on customer demand, we're seeing signs of gradually improving economic conditions in our service territory. This comes at an opportune time as we look to complete the comprehensive energy plan or CEP by bringing Iatan 2 online later this year.

In April, we announced a modest increase in the cost of the units and a slight delay in the schedule; however we still project an in-service date in the fourth quarter of 2010. Importantly, our view remains unchanged that when Iatan 2 will be – when completed will be competitive on a cost per KW basis with other similar plants put into service in roughly the same timeframe. Bill is going to provide a few more details on the reforecast in this section.

So as we look beyond the next 12 months, we see a number of uncertainties and changes that are going to impact our industry. Among those are the direction of public policy, natural gas prices, load growth, environmental roles, emerging technologies and of course, the capital markets. We believe the CEP investments we've made over the past five years provide us with a level of flexibility that frankly many of our peers do not have. This provides breathing room, if you will, to wait until we get better clarity around the resolution of some of the uncertainties before we make a number of long-term decisions.

Read the rest of this transcript for free on seekingalpha.com