Great Plains Energy Inc (GXP)

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Great Plains Energy Incorporated (GXP)

Q3 2011 Earnings Call

November 04, 2011 9:00 am ET

Executives

M. J. Chesser - Chairman, Chief Executive Officer, Chairman of Executive Committee, Chairman of Kansas City Power & Light, Chairman of GMO, Chief Executive Officer of GMO and Chief Executive Officer of Kansas City Power & Light

Kevin E. Bryant - Vice President of Investor Relations and Treasurer

James C. Shay - Chief Financial Officer and Senior Vice President of Finance & Strategic Development

Terry Bassham - President, Chief Operating officer, Director, President of Kcp&L and Chief Operating officer of Kcp&L

Analysts

Erica Piserchia - Wunderlich Securities Inc., Research Division

Andrew Levi - Caris & Company, Inc., Research Division

Unknown Analyst -

Presentation

Operator

Good morning. My name is Darla and I will be your conference operator today. At this time, I would like to welcome everyone to the third quarter 2011 earnings conference call. [Operator Instructions] After the speakers' remarks, there will be a question-and-answer session. [Operator Instructions] It is my pleasure to turn the call over to Kevin Bryant, Vice President of Investor Relations and Treasurer. Please go ahead, sir

Kevin E. Bryant

Thank you, and good morning. Welcome to Great Plains Energy's Third Quarter 2011 Earnings Conference Call. Joining me this morning to present this quarter's results are Mike Chesser, Chairman and Chief Executive Officer; Terry Bassham, President and Chief Operating Officer; and Jim Shay, Senior Vice President and Chief Financial Officer.

As we get today's call started, I must remind you of the inherent uncertainties of any forward-looking statements in our discussion this morning. Slide 2 and the disclosure on our SEC filings contain a list of some of the factors that could cause future results to differ materially from our expectations.

I want to remind everyone that we issued our earnings release and third quarter 2011 10-Q after the market closed yesterday. I would also mention that we filed an 8-K describing our pursuit of additional wind generation earlier this morning. These items are available along with today's webcast slides and supplemental financial information regarding the quarter on the main page of our website at www.greatplainsenergy.com.

With that, I'll now hand the call to Mike Chesser.

M. J. Chesser

Thanks very much, Kevin, and good morning, everyone. I know there's a great deal of earnings-related activity in the industry this week. So as we approach the annual conference, we appreciate you joining us for our morning call this morning.

During our August Analyst Day presentation, we discussed a number of key drivers for long-term success. As summarized on this slide, our business plan is centered around the ability to deliver safe, reliable, low-cost electricity to our customers, while providing competitive shareholder returns.

Our focus on delivery of improved total shareholder returns will be through earnings growth and a competitive dividend. We're executing the strategy outlined in August and are excited to share with you the progress today.

Now I'd like to start with the 2011 earnings. Jim will provide the details in his comments, but I want to highlight our improved earnings outlook for 2011. As a result of warmer-than-normal weather and favorable commercial sector demand during the quarter, we are increasing and narrowing our 2011 guidance range to $1.22 to $1.32 per share from the previous $1.10 to $1.25. We will continue to monitor local and national economic conditions and plan our business conservatively.

We're also pleased to announce that our Board of Directors approved an increase in our quarterly dividend -- quarterly common stock dividend, raising it from $20.75 to $21.25 per share on a quarterly basis or from $0.83 to $0.85 per share on an annual basis.

The completion of the Comprehensive Energy Plan and solid execution for the first 9 months of 2011 has positioned the company for this dividend action. Some key year-to-date accomplishments include the achievement of fair regulatory returns, strong cash management that allowed us to offset the impacts of the Missouri River flooding and successful financing activities that reinforced a stable credit profile.

We've established a platform for growth that makes this dividend increase possible. And we're excited about this dividend action and continue to view a competitive, sustainable and increasing dividend to be an important driver for shareholder returns.

In our Analyst Day presentation, we also provided an overview of our strategy with respect to renewables including wind generation. We communicated that we had in service or contracted for 280 megawatts of wind. And we also indicated we had an RFP out for another 220 megawatts of wind that could be of service by the end of 2012.

The RFP process yielded very attractive prices for new wind projects, and we are pleased to announce that we have entered into 2 power purchase agreements for a total of 200 megawatts of wind. Up to 100 megawatts of this wind may be converted to company ownership. Jim is going to discuss the potential financial implications of these options in more detail, but we will only pursue wind ownership consistent with the parameters that we outlined during our Analyst Day presentation. We believe the positive conditions for wind development may provide a unique opportunity for rate based growth that is in the best interest of both our customers and our shareholders.

In addition to these new wind opportunities, we've entered into a hydroelectric PPA with Central Nebraska Public Power and Irrigation District. The 10-year agreement commences in 2014 and will provide up to 63 megawatts of power towards our Kansas renewable energy standards. So in total, these additions would increase our portfolio to approximately 600 megawatts of clean, renewable generation, all added in just the last 6 years.

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