Ratepayers could foot the bill for more than $1 billion in environmental upgrades impacting Kansas City Power & Light and affiliated companies.
Great Plains Energy, the parent company of KCP&L, said it expects to eventually seek rate increases to cover the cost of up to $1.5 billion in new environmental mandates. The company made the disclosure in a regulatory filing along with its first-quarter financial results, which showed $23.4 million in earnings. That’s down 9 percent from the first quarter of 2013.
“It’s pretty safe to say any investment you measure with nine digits in front of the decimal point is a very significant investment,” said Chuck Caisley, vice president of marketing and public affairs with KCP&L. “It’s a significant investment that makes its way into customer rates.”
However, KCP&L does not have a general rate case pending with Missouri regulators and the company would spread the burden of environmental upgrades among separate utilities that operate under the Great Plains umbrella. Mr. Caisley noted that the most significant environmental improvements are being made to a coal-fired plant in La Cygne, Kan., that has no bearing on rates for KCP&L customers in St. Joseph.
Great Plains Energy said in its regulatory filing that it expects the future cost of regulations that are not yet finalized to reach $600 million to $800 million. That’s on top of $700 million in compliance for more recent environmental regulations that have been finalized, such as upgrades to comply with standards for mercury and air toxins.
“The companies expect to seek recovery of the costs associated with environmental requirements through rate increases,” Great Plains disclosed in a 10-Q filing. “However, there can be no assurance that such rate increases would be granted.”
Mr. Caisley said this isn’t the first time Great Plains has made forward-looking statements notifying investors about how environmental regulations affect future rates. “All utilities have to deal with this stuff,” he said. “These are not new things. It’s a laundry list.”
He said KCP&L’s Lake Road generating station in St. Joseph remains an important part of the KCP&L system, especially with the production of steam for local industries, but he said the company is not ready to discuss future plans to retrofit that facility. He also said new regulations limiting greenhouse gas emissions won’t impact existing KCP&L generating facilities as much as future plants that the company might build.
Great Plains’ first-quarter report showed operating revenue climbed to $585.1 million in in the first quarter, an increase of about $40 million from the first quarter last year. It reaffirmed its 2014 earnings per share outlook of $1.60 to $1.75.
“We continue to see a return of customer demand growth in our service territory and believe that we are well-positioned to deliver strong financial performance,” said Terry Bassham, Great Plaines chairman and chief executive, in an earnings statement.