Great Plains Energy Inc (GXP)

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Great Plains Energy Incorporated (GXP)

Q3 2012 Earnings Call

November 09, 2012 9:00 am ET

Executives

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

Terry Bassham - Chief Executive Officer, President, Chief Operating Officer of KCP&L, Chief Operating Officer, President of KCP&L and Director

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

Analysts

Paul Patterson - Glenrock Associates LLC

James L. Dobson - Wunderlich Securities Inc., Research Division

Paul T. Ridzon - KeyBanc Capital Markets Inc., Research Division

Shahriar Pourreza - Citigroup Inc, Research Division

Brian J. Russo - Ladenburg Thalmann & Co. Inc., Research Division

Charles J. Fishman - Morningstar Inc., Research Division

Michael J. Lapides - Goldman Sachs Group Inc., Research Division

Steven I. Fleishman - BofA Merrill Lynch, Research Division

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 third quarter 2012 earnings call webcast. [Operator Instructions] After the speaker's remarks there will be a question-and-answer session. [Operator Instructions] Thank you. I would now turn the call over to Kevin Bryant. You may begin your conference.

Kevin E. Bryant

Thank you, Therese, and good morning. Welcome to Great Plains Energy's Third Quarter 2012 Earnings Conference Call. Joining me this morning to discuss our third quarter earnings and operating results are Terry Bassham, President and Chief Executive Officer; and Jim Shay, Senior Vice President and Chief Financial Officer. Scott Heidbrink, Executive Vice President and Chief Operating Officer of KCP&L is also joining us and will be available during the question-and-answer portion of today's call.

Before we begin, I must remind you of the inherent uncertainties in 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 also want to remind everyone that we issued our earnings release and third quarter 2012 10-Q after the market closed yesterday. 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 Terry.

Terry Bassham

Thanks, Kevin and good morning, everyone. Thank you for joining us today. Before we discuss our third quarter results, I'd like to express our deep concern for those affected by the devastation that resulted in Hurricane Sandy. It takes a tremendous effort to restore power after a disaster like this, and our industry has a rich history of assisting each other in times of need to serve customers across the country. We have employees in the Northeast assisting those utilities and our customers with the restoration efforts. And we look forward to their safe return to Kansas City.

Yesterday, we announced third quarter 2012 earnings of $145.8 million, $0.95 per share compared with earnings of $126.1 million or $0.91 per share for the same quarter last year. The increase in earnings includes the effects of weather and the record-setting heat our service territory experienced in July.

In addition to the impacts of weather, there were a number of factors that affected our earnings, including a meaningful decline in weather-normalized retail megawatt hour sales. With 3 quarters behind us, we are nearing our 2012 full year earnings guidance range to $1.25 to $1.35 per share from $1.20 to $1.40 per share. Jim will provide you more detail on the quarter and year-to-date results in his comments.

Earlier this week, our Board of Directors approved an increase in our quarterly common stock dividend, raising it from $21.25 per share to $21.75 per share up from $0.85 to $0.87 per share on an annual basis. We believe a competitive, sustainable and increasing dividend is an important driver in our total shareholder returns.

Turning to Slide 4, I will provide an update on our general rate cases. In Kansas, KCP&L initial revenue increased request was $63.6 million, subsequently updated to $56.4 million. Kansas Corporation staff and its direct testimony recommended that the commission authorize a revenue increase of $27.5 million.

A nonunanimous stipulation and agreement to settle a number of the issues in the case was filed by KCP&L, KCC staff and the Citizens Utility Ratepayer Board. Primary issue settled included depreciation rates and the agreement of the parties not to contest KCP&L's request for commission preapproval to file an abbreviated rate case for construction work in process, or CWIP, for the La Cyne environmental upgrade. KCC has not issued an order on the stipulation agreement at this time, but we are confident that commission will approve the stipulation.

An evidentiary hearing on the remaining issues that were not part of the stipulation and agreement, including ROE, was held in early October. Kansas orders expected by December 17, with new rates projected to be in effect on January 1, 2013.

In Missouri, our total initial revenue request for KCP&L and GMO were $105.7 million and $83.5 million, respectively. Since the initial filings, things have progressed according to schedule. The number of agreements that are subject to commission approval have been filed by KCP&L, GMO and the parties to settle some of the issues in both cases. These agreements settle multiple issues in a comprehensive manner without assigning specific value to individual items. Several, but not all of the agreements were approved by the MPSC earlier this week. An agreement entered into just yesterday, the parties settled a number of additional issues to result in a staff revised revenue increase of $53.5 million for KCP&L and $346 million for GMO. These amounts include the staff's recommendation of 9% ROE.

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