10-K 1 gxp-12312014x10k.htm 10-K GXP-12/31/2014-10K
 
 
 
 
 
 
 
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-K

[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 2014

or
  
[  ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934

For the transition period from _______to_______

 
 
Exact name of registrant as specified in its charter,
 
 
Commission
 
state of incorporation, address of principal
 
I.R.S. Employer
File Number
 
executive offices and telephone number
 
Identification Number
 
 
 
 
 
001-32206
 
GREAT PLAINS ENERGY INCORPORATED
 
43-1916803
 
 
(A Missouri Corporation)
 
 
 
 
1200 Main Street
 
 
 
 
Kansas City, Missouri  64105
 
 
 
 
(816) 556-2200
 
 
 
 
 
 
 
000-51873
 
KANSAS CITY POWER & LIGHT COMPANY
 
44-0308720
 
 
(A Missouri Corporation)
 
 
 
 
1200 Main Street
 
 
 
 
Kansas City, Missouri  64105
 
 
 
 
(816) 556-2200
 
 
Each of the following classes or series of securities registered pursuant to Section 12(b) of the Act is registered on the New York Stock Exchange:
 
 
 
 
 
 
 
 
Registrant
 
Title of each class
 
 
 
 
Great Plains Energy Incorporated
 
Cumulative Preferred Stock par value $100 per share
 
3.80%
 
 
 
 
Cumulative Preferred Stock par value $100 per share
 
4.50%
 
 
 
 
Cumulative Preferred Stock par value $100 per share
 
4.35%
 
 
 
 
Common Stock without par value
 
 
 
 
 
 
 
 
 
 
Securities registered pursuant to Section 12(g) of the Act: Kansas City Power & Light Company Common Stock without par value.
 
 
 
 
 
 
 
 
 
 
 
 
 
 




Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.
Great Plains Energy Incorporated
Yes
X
No
_
 
Kansas City Power & Light Company
Yes
_
No
X
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.

Great Plains Energy Incorporated
Yes
_
No
X
 
Kansas City Power & Light Company
Yes
_
No
X
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Great Plains Energy Incorporated
Yes
X
No
_
 
Kansas City Power & Light Company
Yes
X
No
_
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).
Great Plains Energy Incorporated
Yes
X
No
_
 
Kansas City Power & Light Company
Yes
X
No
_
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§229.405 of this chapter) is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to the Form 10-K.
Great Plains Energy Incorporated
X
 
 
 
 
Kansas City Power & Light Company
X
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.
Great Plains Energy Incorporated
 
Large accelerated filer
X
Accelerated filer
_
 
 
 
 
 
 
Non-accelerated filer
_
Smaller reporting company
_
 
 
 
 
Kansas City Power & Light Company
 
Large accelerated filer
_
Accelerated filer
_
 
 
 
 
 
 
Non-accelerated filer
X
Smaller reporting company
_
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
Great Plains Energy Incorporated
Yes
_
No
X
 
Kansas City Power & Light Company
Yes
_
No
X
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
The aggregate market value of the voting and non-voting common equity held by non-affiliates of Great Plains Energy Incorporated (based on the closing price of its common stock on the New York Stock Exchange on June 30, 2014) was approximately $4,136,403,349. All of the common equity of Kansas City Power & Light Company is held by Great Plains Energy Incorporated, an affiliate of Kansas City Power & Light Company.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
On February 24, 2015, Great Plains Energy Incorporated had 154,196,171 shares of common stock outstanding. 
On February 24, 2015, Kansas City Power & Light Company had one share of common stock outstanding and held by Great Plains Energy Incorporated.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Kansas City Power & Light Company meets the conditions set forth in General Instruction (I)(1)(a) and (b) of Form 10-K and is therefore filing this Form 10-K with the reduced disclosure format.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Documents Incorporated by Reference
Portions of the 2015 annual meeting proxy statement of Great Plains Energy Incorporated to be filed with the Securities and Exchange Commission are incorporated by reference in Part III of this report.





TABLE OF CONTENTS
 
 
Page
Number
 
 
 
 
 
 
 
Item 1.
Item 1A.
Item 1B.
Item 2.
Item 3.
Item 4.
Item 5.
Item 6.
Item 7.
Item 7A.
Item 8.
Item 9.
Item 9A.
Item 9B.
Item 10.
Item 11.
Item 12.
Item 13.
Item 14.
Item 15.
 
 
 
 


2


This combined annual report on Form 10-K is being filed by Great Plains Energy Incorporated (Great Plains Energy) and Kansas City Power & Light Company (KCP&L). KCP&L is a wholly owned subsidiary of Great Plains Energy and represents a significant portion of its assets, liabilities, revenues, expenses and operations. Thus, all information contained in this report relates to, and is filed by, Great Plains Energy. Information that is specifically identified in this report as relating solely to Great Plains Energy, such as its financial statements and all information relating to Great Plains Energy's other operations, businesses and subsidiaries, including KCP&L Greater Missouri Operations Company (GMO), does not relate to, and is not filed by, KCP&L. KCP&L makes no representation as to that information. Neither Great Plains Energy nor its other subsidiaries have any obligation in respect of KCP&L's debt securities and holders of such securities should not consider Great Plains Energy's or its other subsidiaries' financial resources or results of operations in making a decision with respect to KCP&L's debt securities. Similarly, KCP&L has no obligation in respect of securities of Great Plains Energy or its other subsidiaries.
CAUTIONARY STATEMENTS REGARDING CERTAIN FORWARD-LOOKING INFORMATION
Statements made in this report that are not based on historical facts are forward-looking, may involve risks and uncertainties, and are intended to be as of the date when made. Forward-looking statements include, but are not limited to, the outcome of regulatory proceedings, cost estimates of capital projects and other matters affecting future operations. In connection with the safe harbor provisions of the Private Securities Litigation Reform Act of 1995, Great Plains Energy and KCP&L are providing a number of important factors that could cause actual results to differ materially from the provided forward-looking information. These important factors include: future economic conditions in regional, national and international markets and their effects on sales, prices and costs; prices and availability of electricity in regional and national wholesale markets; market perception of the energy industry, Great Plains Energy and KCP&L; changes in business strategy, operations or development plans; the outcome of contract negotiations for goods and services; effects of current or proposed state and federal legislative and regulatory actions or developments, including, but not limited to, deregulation, re-regulation and restructuring of the electric utility industry; decisions of regulators regarding rates the Companies can charge for electricity; adverse changes in applicable laws, regulations, rules, principles or practices governing tax, accounting and environmental matters including, but not limited to, air and water quality; financial market conditions and performance including, but not limited to, changes in interest rates and credit spreads and in availability and cost of capital and the effects on nuclear decommissioning trust and pension plan assets and costs; impairments of long-lived assets or goodwill; credit ratings; inflation rates; effectiveness of risk management policies and procedures and the ability of counterparties to satisfy their contractual commitments; impact of terrorist acts, including, but not limited to, cyber terrorism; ability to carry out marketing and sales plans; weather conditions including, but not limited to, weather-related damage and their effects on sales, prices and costs; cost, availability, quality and deliverability of fuel; the inherent uncertainties in estimating the effects of weather, economic conditions and other factors on customer consumption and financial results; ability to achieve generation goals and the occurrence and duration of planned and unplanned generation outages; delays in the anticipated in-service dates and cost increases of generation, transmission, distribution or other projects; Great Plains Energy's ability to successfully manage transmission joint venture; the inherent risks associated with the ownership and operation of a nuclear facility including, but not limited to, environmental, health, safety, regulatory and financial risks; workforce risks, including, but not limited to, increased costs of retirement, health care and other benefits; and other risks and uncertainties.
This list of factors is not all-inclusive because it is not possible to predict all factors. Part I Item 1A Risk Factors included in this report should be carefully read for further understanding of potential risks for each of Great Plains Energy and KCP&L. Other sections of this report and other periodic reports filed by each of Great Plains Energy and KCP&L with the Securities and Exchange Commission (SEC) should also be read for more information regarding risk factors. Each forward-looking statement speaks only as of the date of the particular statement. Great Plains Energy and KCP&L undertake no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events or otherwise.


3


GLOSSARY OF TERMS 
The following is a glossary of frequently used abbreviations or acronyms that are found throughout this report.
Abbreviation or Acronym
 
Definition
 
 
 
AEPTHC
 
AEP Transmission Holding Company, LLC, a wholly owned subsidiary of American Electric Power Company, Inc.
AFUDC
 
Allowance for Funds Used During Construction
ARO
 
Asset Retirement Obligation
ASU
 
Accounting Standard Update
BART
 
Best available retrofit technology
Board
 
Great Plains Energy Board of Directors
CAIR
 
Clean Air Interstate Rule
CAMR
 
Clean Air Mercury Rule
CCRs
 
Coal combustion residuals
Clean Air Act
 
Clean Air Act Amendments of 1990
CO2
 
Carbon dioxide
Company
 
Great Plains Energy Incorporated and its consolidated subsidiaries
Companies
 
Great Plains Energy Incorporated and its consolidated subsidiaries and KCP&L and its consolidated subsidiaries
CSAPR
 
Cross-State Air Pollution Rule
DOE
 
Department of Energy
EBITDA
 
Earnings before interest, income taxes, depreciation and amortization
ECA
 
Energy Cost Adjustment
EIRR
 
Environmental Improvement Revenue Refunding
EPA
 
Environmental Protection Agency
EPS
 
Earnings per common share
ERISA
 
Employee Retirement Income Security Act of 1974, as amended
FAC
 
Fuel Adjustment Clause
FASB
 
Financial Accounting Standards Board
FERC
 
The Federal Energy Regulatory Commission
GAAP
 
Generally Accepted Accounting Principles
GMO
 
KCP&L Greater Missouri Operations Company, a wholly owned subsidiary of Great Plains Energy
GPETHC
 
GPE Transmission Holding Company LLC, a wholly owned subsidiary of Great Plains Energy
Great Plains Energy
 
Great Plains Energy Incorporated and its consolidated subsidiaries
IRS
 
Internal Revenue Service
ISO
 
Independent System Operator
KCC
 
The State Corporation Commission of the State of Kansas
KCP&L
 
Kansas City Power & Light Company, a wholly owned subsidiary of Great Plains Energy, and its consolidated subsidiaries
KCP&L Receivables Company
 
Kansas City Power & Light Receivables Company, a wholly owned subsidiary of KCP&L
KDHE
 
Kansas Department of Health and Environment
kV
 
Kilovolt
KW
 
Kilowatt
kWh
 
Kilowatt hour
MACT
 
Maximum achievable control technology
MATS
 
Mercury and Air Toxics Standards

4


Abbreviation or Acronym
 
Definition
 
 
 
MD&A
 
Management's Discussion and Analysis of Financial Condition and Results of Operations
MDNR
 
Missouri Department of Natural Resources
MEEIA
 
Missouri Energy Efficiency Investment Act
MGP
 
Manufactured gas plant
MPS Merchant
 
MPS Merchant Services, Inc., a wholly owned subsidiary of GMO
MPSC
 
Public Service Commission of the State of Missouri
MW
 
Megawatt
MWh
 
Megawatt hour
NAAQS
 
National Ambient Air Quality Standard
NERC
 
North American Electric Reliability Corporation
NEIL
 
Nuclear Electric Insurance Limited
NOL
 
Net operating loss
NOx
 
Nitrogen oxide
NPNS
 
Normal purchases and normal sales
NRC
 
Nuclear Regulatory Commission
OCI
 
Other Comprehensive Income
PCB
 
Polychlorinated biphenyls
ppm
 
Parts per million
PRB
 
Powder River Basin
QCA
 
Quarterly Cost Adjustment
RTO
 
Regional Transmission Organization
SCR
 
Selective catalytic reduction
SEC
 
Securities and Exchange Commission
SERP
 
Supplemental Executive Retirement Plan
SO2
 
Sulfur dioxide
SPP
 
Southwest Power Pool, Inc.
Syncora
 
Syncora Guarantee, Inc.
TCR
 
Transmission Congestion Right
Transource
 
Transource Energy, LLC and its subsidiaries, 13.5% owned by GPETHC
Transource Missouri
 
Transource Missouri, LLC, a wholly owned subsidiary of Transource
WCNOC
 
Wolf Creek Nuclear Operating Corporation
Westar
 
Westar Energy, Inc., an unrelated Kansas utility company
Wolf Creek
 
Wolf Creek Generating Station


5


PART I
ITEM 1. BUSINESS
General
Great Plains Energy Incorporated and Kansas City Power & Light Company are separate registrants filing this combined annual report on Form 10-K. The terms "Great Plains Energy," "Company," "KCP&L" and "Companies" are used throughout this report. "Great Plains Energy" and the "Company" refer to Great Plains Energy Incorporated and its consolidated subsidiaries, unless otherwise indicated. "KCP&L" refers to Kansas City Power & Light Company and its consolidated subsidiaries. "Companies" refers to Great Plains Energy Incorporated and its consolidated subsidiaries and KCP&L and its consolidated subsidiaries.
Information in other Items of this report as to which reference is made in this Item 1 is hereby incorporated by reference in this Item 1. The use of terms such as "see" or "refer to" shall be deemed to incorporate into this Item 1 the information to which such reference is made.
GREAT PLAINS ENERGY INCORPORATED
Great Plains Energy, a Missouri corporation incorporated in 2001 and headquartered in Kansas City, Missouri, is a public utility holding company and does not own or operate any significant assets other than the stock of its subsidiaries. Great Plains Energy's wholly owned direct subsidiaries with significant operations are as follows:
KCP&L is an integrated, regulated electric utility that provides electricity to customers primarily in the states of Missouri and Kansas. KCP&L has one active wholly owned subsidiary, Kansas City Power & Light Receivables Company (KCP&L Receivables Company).
GMO is an integrated, regulated electric utility that provides electricity to customers in the state of Missouri. GMO also provides regulated steam service to certain customers in the St. Joseph, Missouri area. GMO has two active wholly owned subsidiaries, GMO Receivables Company and MPS Merchant Services, Inc. (MPS Merchant).  MPS Merchant has certain long-term natural gas contracts remaining from its former non-regulated trading operations.
Great Plains Energy also wholly owns GPE Transmission Holding Company, LLC (GPETHC). GPETHC owns 13.5% of Transource Energy, LLC (Transource) with the remaining 86.5% owned by AEP Transmission Holding Company, LLC (AEPTHC), a subsidiary of American Electric Power Company, Inc. GPETHC accounts for its investment in Transource under the equity method. Transource is focused on the development of competitive electric transmission projects.
Great Plains Energy's sole reportable business segment is electric utility. For information regarding the revenues, income and assets attributable to the electric utility business segment, see Note 23 to the consolidated financial statements. Comparative financial information and discussion regarding the electric utility business segment can be found in Item 7 Management's Discussion and Analysis of Financial Condition and Results of Operations (MD&A).
The electric utility segment consists of KCP&L, a regulated utility, GMO's regulated utility operations which include its Missouri Public Service and St. Joseph Light & Power divisions and GMO Receivables Company. Electric utility serves approximately 838,400 customers located in western Missouri and eastern Kansas. Customers include approximately 737,400 residences, 98,400 commercial firms and 2,600 industrials, municipalities and other electric utilities. Electric utility's retail revenues averaged approximately 91% of its total operating revenues over the last three years. Wholesale firm power, bulk power sales and miscellaneous electric revenues accounted for the remainder of electric utility's revenues. Electric utility is significantly impacted by seasonality with approximately one-third of its retail revenues recorded in the third quarter. Electric utility's total electric revenues were 100% of Great Plains Energy's revenues over the last three years. Electric utility's net income accounted for approximately 100%, 103% and 108% of Great Plains Energy's net income in 2014, 2013 and 2012, respectively.

6


Regulation
KCP&L and GMO are regulated by the Public Service Commission of the State of Missouri (MPSC) and KCP&L is also regulated by The State Corporation Commission of the State of Kansas (KCC) with respect to retail rates, certain accounting matters, standards of service and, in certain cases, the issuance of securities, certification of facilities and service territories. KCP&L and GMO are also subject to regulation by The Federal Energy Regulatory Commission (FERC) with respect to transmission, wholesale sales and rates, and other matters, the Southwest Power Pool, Inc. (SPP) and the North American Electric Reliability Corporation (NERC). KCP&L has a 47% ownership interest in Wolf Creek Generating Station (Wolf Creek), which is subject to regulation by the Nuclear Regulatory Commission (NRC) with respect to licensing, operations and safety-related requirements.
The table below summarizes the rate orders in effect for KCP&L's and GMO's retail rate jurisdictions.
 
Regulator
Allowed Return on Equity
Rate-Making Equity Ratio
Rate Base (in billions)
Effective Date
KCP&L Missouri
MPSC
9.7%
          52.3%(a)
$2.1
January 2013
KCP&L Kansas
KCC
9.5%
          51.8%
$1.9
July 2014
GMO
MPSC
9.7%
          52.3%(a)
$1.8
January 2013
(a) The MPSC authorized an equity ratio of 52.6% or approximately 52.3% after including other comprehensive income
Missouri and Kansas jurisdictional retail revenues averaged approximately 71% and 29%, respectively, of electric utility's total retail revenues over the last three years.
See Item 7 MD&A, Critical Accounting Policies section, and Note 5 to the consolidated financial statements for additional information concerning regulatory matters.
Competition
Missouri and Kansas continue on the fully integrated retail utility model. As a result, electric utility does not compete with others to supply and deliver electricity in its franchised service territory, although other sources of energy can provide alternatives to retail electric utility customers. If Missouri or Kansas were to pass and implement legislation authorizing or mandating retail choice, electric utility may no longer be able to apply regulated utility accounting principles to deregulated portions of its operations and may be required to write off certain regulatory assets and liabilities.
Electric utility competes in the wholesale market to sell power in circumstances when the power it generates is not required for customers in its service territory. This competition primarily occurs within the SPP Integrated Marketplace, in which KCP&L and GMO are participants. Similar to other Regional Transmission Organization (RTO) or Independent System Operator (ISO) markets currently operating, this marketplace determines which generating units among market participants should run, within the operating constraints of a unit, at any given time for maximum cost-effectiveness.
In this regard, electric utility competes with owners of other generating stations and other power suppliers, principally other utilities within the SPP Integrated Marketplace, on the basis of availability and price. Electric utility's wholesale revenues averaged approximately 7% of its total revenues over the last three years.
Power Supply
Electric utility has approximately 6,600 MWs of generating capacity. The projected peak summer demand for 2015 is approximately 5,800 MWs. Electric utility expects to meet its projected capacity requirements for the foreseeable future with its generation assets and power and capacity purchases.
KCP&L and GMO are members of the SPP. The SPP is an RTO mandated by FERC to ensure reliable supply of power, adequate transmission infrastructure and competitive wholesale prices of electricity. As members of the SPP, KCP&L and GMO are required to maintain a capacity margin of at least 12% of their projected peak summer demand. This net positive supply of capacity and energy is maintained through their generation assets and capacity,

7


power purchase agreements and peak demand reduction programs. The capacity margin is designed to ensure the reliability of electric energy in the SPP region in the event of operational failure of power generating units utilized by the members of the SPP.
Fuel
The principal fuel sources for electric utility's electric generation are coal and nuclear fuel. It is expected, with normal weather, that approximately 97% of 2015 generation will come from these sources with the remainder provided by wind, natural gas and oil. The actual 2014 and estimated 2015 fuel mix and delivered cost in cents per net kWh generated are outlined in the following table.
 
 
 
 
 
 
 
Fuel cost in cents per
 
Fuel Mix (a)
 
net kWh generated
 
Estimated
 
Actual
 
Estimated
Actual
Fuel
2015
 
2014
 
 
2015
 
2014
Coal
82
%
 
81
%
 
 
2.05

 
2.19

Nuclear
15
 
 
16
 
 
 
0.66

 
0.68

Natural gas and oil
1
 
 
1
 
 
 
7.75

 
10.79

Wind
2
 
 
2
 
 
 

 

   Total Generation
100
%
 
100
%
 
 
1.86

 
1.95

(a) Fuel mix based on percent of net MWhs generated.
GMO's retail rates and KCP&L's retail rates in Kansas contain certain fuel recovery mechanisms. KCP&L's Missouri retail rates do not currently contain a fuel recovery mechanism. To the extent the price of fuel or purchased power increases significantly, or if electric utility's lower cost units do not meet anticipated availability levels, Great Plains Energy's net income may be adversely affected unless and until the increased cost could be reflected in KCP&L's Missouri retail rates. KCP&L has requested a fuel recovery mechanism as part of its Missouri rate case filed in October 2014. If authorized with new rates, the fuel recovery mechanism for KCP&L in Missouri is anticipated to be effective on or around September 30, 2015.
Coal
During 2015, electric utility's generating units, including jointly owned units, are projected to burn approximately 16 million tons of coal. KCP&L and GMO have entered into coal-purchase contracts with various suppliers in Wyoming's Powder River Basin (PRB), the nation's principal supply region of low-sulfur coal, and with local suppliers. The coal to be provided under these contracts is expected to satisfy approximately 95% of the projected coal requirements for 2015, approximately 45% for 2016 and approximately 20% for 2017. The remainder of the coal requirements is expected to be fulfilled through additional contracts or spot market purchases. KCP&L and GMO have entered into coal contracts over time at higher average prices affecting coal costs for 2015 and beyond.
KCP&L and GMO have also entered into rail transportation contracts with various railroads to transport coal from the PRB to their generating units. The transportation services to be provided under these contracts are expected to satisfy almost all of the projected transportation requirements for 2015 through 2019. The contract rates adjust for changes in railroad costs.

8


Nuclear Fuel
KCP&L owns 47% of Wolf Creek Nuclear Operating Corporation (WCNOC), the operating company for Wolf Creek, which is electric utility's only nuclear generating unit. Wolf Creek purchases uranium and has it processed for use as fuel in its reactor. This process involves conversion of uranium concentrates to uranium hexafluoride, enrichment of uranium hexafluoride and fabrication of nuclear fuel assemblies. The owners of Wolf Creek have on hand or under contract all of the uranium and conversion services needed to operate Wolf Creek through September 2016 and approximately 70% after that date through March 2021. The owners also have under contract all of the uranium enrichment and fabrication required to operate Wolf Creek through March 2027 and September 2025, respectively.
See Note 4 to the consolidated financial statements for additional information regarding nuclear plant.
Natural Gas
At December 31, 2014, GMO had hedged approximately 32%, 15% and 9% of its expected on-peak natural gas generation and natural gas equivalent purchased power price exposure for 2015, 2016 and 2017, respectively.
Purchased Power
KCP&L and GMO purchase power to meet their customers' needs, to satisfy firm power commitments or to meet renewable energy standards.  Electric utility's purchased power from others, as a percentage of MWh requirements, averaged approximately 16% over the last three years.
KCP&L has long-term power purchase agreements for approximately 287 MWs of wind and hydroelectric generation which expire in 2023 through 2032. GMO has long-term power purchase agreements for approximately 159 MWs of wind generation which expire in 2032. Additionally, Great Plains Energy, KCP&L and GMO have entered into power purchase agreements for approximately 400 MWs of wind generation to begin in 2016 and expire in 2036.
Management believes electric utility will be able to obtain enough power to meet its future demands due to the coordination of planning and operations in the SPP region; however, price and availability of power purchases may be impacted during periods of high demand.
Environmental Matters
See Note 15 to the consolidated financial statements for information regarding environmental matters.
KANSAS CITY POWER & LIGHT COMPANY
KCP&L, a Missouri corporation incorporated in 1922 and headquartered in Kansas City, Missouri, is an integrated, regulated electric utility that engages in the generation, transmission, distribution and sale of electricity. KCP&L serves approximately 520,700 customers located in western Missouri and eastern Kansas. Customers include approximately 459,000 residences, 59,600 commercial firms, and 2,100 industrials, municipalities and other electric utilities. KCP&L's retail revenues averaged approximately 87% of its total operating revenues over the last three years. Wholesale firm power, bulk power sales and miscellaneous electric revenues accounted for the remainder of KCP&L's revenues. KCP&L is significantly impacted by seasonality with approximately one-third of its retail revenues recorded in the third quarter. Missouri and Kansas jurisdictional retail revenues averaged approximately 55% and 45%, respectively, of total retail revenues over the last three years.
Great Plains Energy and KCP&L Employees
At December 31, 2014, Great Plains Energy and KCP&L had 2,935 employees, including 1,838 represented by three local unions of the International Brotherhood of Electrical Workers (IBEW). KCP&L has labor agreements with Local 1613, representing clerical employees (expires March 31, 2018), with Local 1464, representing transmission and distribution workers (expires January 31, 2016), and with Local 412, representing power plant workers (expires February 28, 2018).

9


Executive Officers
All of the individuals in the following table have been officers or employees in a responsible position with the Company in the positions noted below for the past five years unless otherwise indicated in the footnotes.  The executive officers were reappointed to the indicated positions by the respective boards of directors, effective January 1, 2015, to hold such positions until their resignation, removal or the appointment of their successors. There are no family relationships between any of the executive officers, nor any arrangement or understanding between any executive officer and any other person involved in officer selection.  Each executive officer holds the same position with GMO as he or she does with KCP&L.
Name
Age
Current Position(s)
Year First Assumed an Officer Position
Terry Bassham (a)

54
Chairman of the Board, President and Chief Executive Officer - Great Plains Energy and KCP&L
2005
Scott H. Heidtbrink (b)
53
Executive Vice President and Chief Operating Officer - KCP&L
2008
James C. Shay (c)
51
Senior Vice President - Finance and Chief Financial Officer - Great Plains Energy and KCP&L
2010
Kevin E. Bryant (d)
39
Vice President - Strategic Planning - Great Plains Energy and KCP&L
2006
Steven P. Busser (e)
46
Vice President - Business Planning and Controller - Great Plains Energy and KCP&L
2014
Charles A. Caisley (f)
42
Vice President - Marketing and Public Affairs - Great Plains Energy and KCP&L
2011
Michael L. Deggendorf (g)

53
Senior Vice President - Corporate Services - KCP&L
2005
Ellen E. Fairchild (h) 
53
Vice President, Chief Compliance Officer and Corporate Secretary - Great Plains Energy and KCP&L
2010
Heather A. Humphrey (i) 
44
General Counsel and Senior Vice President - Human Resources - Great Plains Energy and KCP&L
2010
Darrin R. Ives (j)
45
Vice President - Regulatory Affairs - KCP&L
2013
Lori A. Wright (k) 
52
Vice President - Investor Relations and Treasurer - Great Plains Energy and KCP&L
2002
(a) 
Mr. Bassham was appointed Chairman of the Board in May 2013 and has served as Chief Executive Officer of Great Plains Energy, KCP&L and GMO since 2012. He has served as President of each company since 2011. He previously served as President and Chief Operating Officer of Great Plains Energy, KCP&L and GMO (2011-2012) and as Executive Vice President - Utility Operations of KCP&L and GMO (2010-2011).  He was Executive Vice President - Finance and Strategic Development and Chief Financial Officer of Great Plains Energy (2005-2010) and of KCP&L and GMO (2009-2010).  

(b) 
Mr. Heidtbrink was appointed Executive Vice President and Chief Operating Officer of KCP&L and GMO in 2012. He previously served as Senior Vice President - Supply of KCP&L and GMO (2009-2012).  He was Senior Vice President - Corporate Services of KCP&L and GMO (2008), and Vice President - Power Generation & Energy Resources (2006-2008) of GMO.

(c) 
Mr. Shay was appointed Senior Vice President - Finance and Chief Financial Officer of Great Plains Energy, KCP&L and GMO in 2014. Previously, Mr. Shay served as Senior Vice President - Finance and Strategic Development and Chief Financial Officer for Great Plains Energy, KCP&L and GMO (2010-2014) and Treasurer for part of 2014.  He previously served as Chief Financial Officer at Northern Power Systems, Inc. (2009-2010); he served as Managing Director, with responsibilities for business development, transaction execution and advisory work, at Frontier Investment Banc Corporation (2007-2008); he was Chief Financial Officer at Machine Laboratory LLC (2006-2007).

(d) 
Mr. Bryant was appointed Vice President - Strategic Planning of Great Plains Energy, KCP&L and GMO in 2014. He previously served as Vice President - Investor Relations and Strategic Planning and Treasurer of Great Plains Energy, KCP&L and GMO (2013). He served as Vice President - Investor Relations and Treasurer of Great Plains Energy, KCP&L

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and GMO (2011-2013). He was Vice President - Strategy and Risk Management of KCP&L and GMO (2011) and Vice President - Energy Solutions (2006-2011) of KCP&L and GMO.

(e) 
Mr. Busser was appointed Vice President - Business Planning and Controller of Great Plains Energy, KCP&L and GMO in 2014. He previously served as Vice President - Treasurer of El Paso Electric Company (2011-2014). Prior to that, he served as Vice President - Treasurer and Chief Risk Officer (2006-2011) and Vice President - Regulatory Affairs and Treasurer (2004-2006) of El Paso Electric Company.

(f) 
Mr. Caisley was appointed Vice President - Marketing and Public Affairs of Great Plains Energy, KCP&L and GMO in 2011. He was Senior Director of Public Affairs (2008-2011) and Director of Governmental Affairs (2007-2008). Prior to that, he was the president of the Missouri Energy Development Association (2005-2007).

(g) 
Mr. Deggendorf was appointed Senior Vice President - Corporate Services in 2012. He previously served as Senior Vice President - Delivery of KCP&L and GMO (2008-2012).  He was Vice President - Public Affairs of Great Plains Energy (2005-2008).

(h) 
Ms. Fairchild was appointed Vice President, Chief Compliance Officer and Corporate Secretary of Great Plains Energy, KCP&L and GMO in 2010.  She was Senior Director of Investor Relations and Assistant Secretary (2010) and Director of Investor Relations (2008-2010) of Great Plains Energy, KCP&L and GMO.  Prior to that, she was an associate at Hagen and Partners (2005-2007), a public relations firm.

(i) 
Ms. Humphrey was appointed General Counsel in 2010 and Senior Vice President - Human Resources of Great Plains Energy, KCP&L and GMO in 2012.  She previously served as Vice President - Human Resources of Great Plains Energy, KCP&L and GMO (2010-2012). She was Senior Director of Human Resources and Interim General Counsel of Great Plains Energy, KCP&L and GMO (2010) and Managing Attorney of KCP&L (2007-2010).  

(j) 
Mr. Ives was appointed Vice President - Regulatory Affairs of KCP&L and GMO in 2013. He previously served as Senior Director - Regulatory Affairs of KCP&L and GMO (2011-2013). He was Assistant Controller of Great Plains Energy, KCP&L and GMO (2008 - 2011).

(k) 
Ms. Wright was appointed Vice President - Investor Relations and Treasurer in 2014. Prior to this appointment, she served as Vice President - Business Planning and Controller of Great Plains Energy, KCP&L and GMO (2009-2014).  She was Controller of Great Plains Energy and KCP&L (2002-2008) and GMO (2008).

Available Information
Great Plains Energy's website is www.greatplainsenergy.com and KCP&L's website is www.kcpl.com. Information contained on these websites is not incorporated herein. The Companies make available, free of charge, on or through their websites, their annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended, as soon as reasonably practicable after the companies electronically file such material with, or furnish it to, the SEC. In addition, the Companies make available on or through their websites all other reports, notifications and certifications filed electronically with the SEC.
The public may read and copy any materials that the Companies file with the SEC at the SEC's Public Reference Room at 100 F Street, NE, Washington, DC 20549. For information on the operation of the Public Reference Room, please call the SEC at 1-800-SEC-0330. The SEC also maintains an Internet site at http://www.sec.gov that contains reports, proxy statements and other information regarding the Companies.
Investors should note that the Companies announce material financial information in SEC filings, press releases and public conference calls.  Based on guidance from the SEC, the Companies may use the Investor Relations section of Great Plains Energy's website (www.greatplainsenergy.com) to communicate with investors about Great Plains Energy and KCP&L.  It is possible that the financial and other information posted there could be deemed to be material information.  The information on Great Plains Energy's website is not part of this document.

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ITEM 1A. RISK FACTORS
Actual results in future periods for Great Plains Energy and KCP&L could differ materially from historical results and the forward-looking statements contained in this report.  The Companies' business is influenced by many factors that are difficult to predict, involve uncertainties that may materially affect actual results and are often beyond their control.  Additional risks and uncertainties not presently known or that the Companies' management currently believes to be immaterial may also adversely affect the Companies.  This information, as well as the other information included in this report and in the other documents filed with the SEC, should be carefully considered before making an investment in the securities of Great Plains Energy or KCP&L.  Risk factors of KCP&L are also risk factors of Great Plains Energy.
Utility Regulatory Risks:
Complex utility regulation could adversely affect the Companies' results of operations, financial position and cash flows.
The Companies are subject to, or affected by, extensive federal and state utility regulation, including regulation by the MPSC, KCC, FERC, NRC, SPP and NERC.  The Companies must address in their business planning and management of operations the effects of existing and proposed laws and regulations and potential changes in the regulatory framework, including initiatives by federal and state legislatures, RTOs, utility regulators and taxing authorities.  Failure of the Companies to obtain adequate rates or regulatory approvals in a timely manner, new or changed laws, regulations, standards, interpretations or other legal requirements, deterioration of the Companies' relationship with regulators and increased compliance costs and potential non-compliance consequences may materially affect the Companies' results of operations, financial position and cash flows.  Additionally, regulators may impose burdensome restrictions and conditions on the Companies' transactions and ventures, rendering them less attractive from a financial or operational perspective. Certain of these risks are addressed in greater detail below.
The outcome of retail rate proceedings could have a material impact on the business and is largely outside the Companies' control.
The rates that KCP&L and GMO are allowed to charge their customers significantly influence the Companies' results of operations, financial position and cash flows.  These rates are subject to the determination, in large part, of governmental entities outside of the Companies' control, including the MPSC, KCC and FERC.  
The utility rate-setting principle generally applicable to KCP&L and GMO is that rates should provide a reasonable opportunity to recover expenses and investments prudently incurred to provide utility service plus a reasonable return on such investments.  Various expenses incurred by KCP&L and GMO have been excluded from rates by the MPSC and KCC in past rate cases as not being prudently incurred or not providing utility customer benefit, and there is a risk that certain expenses incurred in the future may not be recovered in rates. Third-parties often intervene in the utilities' rate cases and argue that certain costs have not been prudently incurred or are otherwise not recoverable in rates.  The MPSC and KCC also have in the past and may in the future exclude from rates all or a portion of investments in various facilities as not being prudently incurred or not being useful in providing utility service.  
As discussed in the "Environmental Risks" and "Financial Risks" sections below, the Companies' capital expenditures are expected to be substantial over the next several years and there is a risk that a portion of the capital costs could be excluded from rates in future rate cases.
The Companies are also exposed to cost-recovery shortfalls due to the inherent "regulatory lag" in the rate-setting process, especially during periods of significant cost inflation or declining retail usage, as KCP&L's and GMO's utility rates are generally based on historical information and are not subject to adjustment between rate cases, other than principally for fuel, purchased power, transmission and property taxes for KCP&L in Kansas and fuel, purchased power and certain transmission costs for GMO.  These and other factors may result in under-recovery of costs, failure to earn the authorized return on investment, or both.

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There are mandatory renewable energy standards in Missouri and Kansas.  There is also the potential for future federal or state mandatory energy efficiency requirements.
Failure to timely recover the full investment costs of capital projects, the impact of renewable energy and energy efficiency programs, other utility costs and expenses due to regulatory disallowances, regulatory lag or other factors could lead to lowered credit ratings, reduced access to capital markets, increased financing costs, lower flexibility due to constrained financial resources and increased collateral security requirements, or reductions or delays in planned capital expenditures.  In response to competitive, economic, political, legislative, public perception (including, but not limited to, the Companies' environmental reputation) and regulatory pressures, the Companies may be subject to rate moratoriums, rate refunds, limits on rate increases, lower allowed returns on investments or rate reductions, including phase-in plans designed to spread the impact of rate increases over an extended period of time for the benefit of customers.  
Regulatory requirements regarding utility operations may increase costs and may expose the Companies to compliance penalties or adverse rate consequences.
The FERC, NERC and SPP have implemented and enforce an extensive set of transmission system reliability, cyber security and critical infrastructure protection standards that apply to public utilities, including KCP&L and GMO.  The MPSC and KCC have the authority to implement utility operational standards and requirements, such as vegetation management standards, facilities inspection requirements and quality of service standards.  In addition, the Companies are also subject to health, safety and other requirements enacted by the Occupational Safety and Health Administration, the Department of Transportation, the Department of Labor and other federal and state agencies.  As discussed more fully under "Operational Risks," the NRC extensively regulates nuclear power plants, including Wolf Creek. The costs of existing, new or modified regulations, standards and other requirements could have an adverse effect on the Companies' results of operations, financial position and cash flows as a result of increased operations or maintenance and capital expenditures for new facilities or to repair or improve existing facilities.  In addition, failure to meet quality of service, reliability, cyber security, critical infrastructure protection, operational or other standards and requirements could expose the Companies to penalties, additional compliance costs, or adverse rate consequences.
Environmental Risks:
The Companies are subject to current and potential environmental requirements and the incurrence of environmental liabilities, any or all of which may adversely affect their business and financial results.
The Companies are subject to extensive federal, state and local environmental laws, regulations and permit requirements relating to air and water quality, waste management and disposal, natural resources and health and safety.  In addition to imposing continuing compliance obligations and remediation costs for historical and pre-existing conditions, these laws, regulations and permits authorize the imposition of substantial penalties for noncompliance, including fines, injunctive relief and other sanctions.  There is also a risk that new environmental laws and regulations, new judicial interpretations of environmental laws and regulations, or the requirements in new or renewed environmental permits could adversely affect the Companies' operations.  In addition, there is also a risk of lawsuits brought by third parties alleging violations of environmental commitments or requirements, creation of a public nuisance or other matters, and seeking injunctions or monetary damages or other damages. Certain federal courts have held that state and local governments and private parties have standing to bring climate change tort suits seeking company-specific emission reductions and damages.
Environmental permits are subject to periodic renewal, which may result in more stringent permit conditions and limits.  New facilities, or modifications of existing facilities, may require new environmental permits or amendments to existing permits.  Delays in the environmental permitting process, public opposition and challenges, denials of permit applications, limits or conditions imposed in permits and the associated uncertainty may materially adversely affect the cost and timing of projects, and thus materially adversely affect the Companies' results of operations, financial position and cash flows.

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The Companies' current estimate of capital expenditures (exclusive of Allowance for Funds Used During Construction (AFUDC) and property taxes) to comply with current final environmental regulations where the timing is certain is approximately $700 million. This estimate reflects costs to install environmental equipment at KCP&L’s La Cygne Nos. 1 and 2 by June 2015 to comply with the best available retrofit technology (BART) rule and environmental upgrades at other coal-fired generating units through 2016 to comply with the Mercury and Air Toxics Standards (MATS) rule. The Companies estimate that other capital projects at coal-fired generating units for compliance with the Clean Air Act and Clean Water Act (discussed below) based on proposed regulations or final regulations with implementation plans not yet finalized where the timing is uncertain could be approximately $600 to $800 million, which includes approximately $350 million to $450 million for KCP&L. These other projects are not included in the approximately $700 million estimated cost of compliance discussed above.
KCP&L and GMO periodically seek recovery of capital costs and expenses for environmental compliance and remediation through rate increases; however, there can be no assurance that recovery of these costs would be granted.  KCP&L and GMO may be subject to material adverse rate treatment in response to competitive, economic, political, legislative or regulatory pressures and/or public perception of the Companies' environmental reputation.  The costs of compliance or noncompliance with environmental requirements, remediation costs, adverse outcomes of lawsuits, or failure to timely recover environmental costs could have a material adverse effect on the Companies' results of operations, financial position and cash flows.  Certain of these matters are discussed in more detail below.  See Note 15 to the consolidated financial statements for additional information regarding certain significant environmental matters.
Air and Climate Change
Management believes it is possible that additional federal or relevant state or local laws or regulations could be enacted to address global climate change.  At the international level, while the United States is not a current party to the international Kyoto Protocol, it has agreed to undertake certain voluntary actions under the non-binding Copenhagen Accord and pursuant to subsequent international discussions relating to climate change, including the establishment of a goal to reduce greenhouse gas emissions.  International agreements legally binding on the United States may be reached in the future.  Such new laws, regulations or treaties could mandate new or increased requirements to control or reduce the emission of greenhouse gases, such as CO2, which are created in the combustion of fossil fuels.  These requirements could include, among other things, taxes or fees on fossil fuels or emissions, cap and trade programs, emission limits and clean or renewable energy standards.  The Companies' current generation capacity is primarily coal-fired, and is estimated to produce about one ton of CO2 per MWh, or approximately 22 million tons and 17 million tons of CO2 per year for Great Plains Energy and KCP&L, respectively. 
The Environmental Protection Agency (EPA) has enacted various regulations regarding the reporting and permitting of greenhouse gases and has proposed other regulations under the existing Clean Air Act.  The EPA has established thresholds for greenhouse gas emissions, defining when Clean Air Act permits under the New Source Performance Standards, New Source Review and Title V operating permits programs would be required for new or existing industrial facilities and when the installation of best available control technology would be required.  In addition, in June 2014, the EPA proposed its “Clean Power Plan,” which sets emission guidelines for states to follow in developing plans to address greenhouse gas emissions from existing fossil fuel-fired electric generating units. Most of the Companies' generating facilities are affected by these existing rules and would be affected by the proposed rules.  Additional federal and/or state legislation or regulation respecting greenhouse gas emissions may be proposed or enacted in the future.  Requirements to reduce greenhouse gas emissions may cause the Companies to incur significant costs relating to their ongoing operations (such as for additional environmental control equipment, retiring and replacing existing generation, repowering existing plants to utilize alternative fuel or selecting more costly generation alternatives), to procure emission allowance credits, or due to the imposition of taxes, fees or other governmental charges as a result of such emissions.
Rules issued by the EPA regarding emissions of mercury and other hazardous air pollutants, NOX, SO2 and particulates are also in a state of flux. Some of these rules have been overturned by the courts and remanded to the EPA to be revised consistent with the courts' orders while others are pending judicial

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review or are otherwise subject to revision. It is unknown what requirements and standards will be imposed in the future, when the Companies may have to comply or what costs may ultimately be required.
Kansas law currently requires certain utilities, including KCP&L, to have renewable energy generation capacity equal to at least 10% of their three-year average Kansas peak retail demand, increasing to 15% by 2016 and 20% by 2020. Missouri law currently requires at least 5% of the energy provided by certain utilities, including KCP&L and GMO, to come from renewable resources, including wind, solar, biomass and hydropower, increasing to 10% by 2018 and 15% by 2021, with a small portion (estimated to be about 2 MW for each of KCP&L and GMO) required to come from solar resources.  Management believes that national renewable energy standards are also possible. The timing, provisions and impact of such possible future requirements, including the cost to obtain and install new equipment to achieve compliance, cannot be reasonably estimated at this time.  Such requirements could have a significant financial and operational impact on the Companies.
Water
The Clean Water Act and associated regulations enacted by the EPA form a comprehensive program to restore and preserve water quality.  All of the Companies' generating facilities, and certain of their other facilities, are subject to the Clean Water Act.
In May 2014, the EPA finalized regulations regarding protection of aquatic life from being killed or injured by cooling water intake structures. KCP&L’s generation facilities with cooling water intake structures are subject to the best technology available standards based on studies completed to comply with such standards. The rule provides flexibility to work with the states to develop the best technology available to minimize aquatic species impacted by being pinned against intake screens or drawn into cooling water systems. Although the impact on the Companies' operations will not be known until after the studies are completed and reviewed by the Kansas Department of Health and Environment (KDHE) and the Missouri Department of Natural Resources (MDNR), it could have a significant effect on the Companies' results of operations, financial position and cash flows.
KCP&L holds a permit from the MDNR authorizing KCP&L to, among other things, withdraw water from the Missouri River for cooling purposes and return the heated water to the Missouri River at its Hawthorn Station.  KCP&L has applied for a renewal of this permit and the EPA has submitted an interim objection letter regarding the allowable amount of heat that can be contained in the returned water.  Until this matter is resolved, KCP&L continues to operate under its current permit.  KCP&L cannot predict the outcome of this matter; however, while less significant outcomes are possible, this matter may require KCP&L to reduce its generation at Hawthorn Station, install cooling towers or both, any of which could have a significant adverse impact on KCP&L's results of operations, financial position and cash flows.  The outcome could also affect the terms of water permit renewals at KCP&L's Iatan Station and at GMO's Sibley and Lake Road Stations.  
Additionally, in April 2013, the EPA proposed to revise the technology-based effluent limitations guidelines and standards regulation to make the existing controls on discharges from steam electric power plants more stringent. The proposal sets the first federal limits on the levels of toxic metals in wastewater that can be discharged from power plants. The new requirements for existing power plants would be phased-in between 2017 and 2022. The EPA is under a consent decree to take final action on the proposed rule by September 2015.  Until a rule is finalized, the financial and operational impacts cannot be determined.  
Further, the possible effects of climate change, including potentially increased temperatures and reduced precipitation, could make it more difficult and costly to comply with the current and final permit requirements.
Solid Waste
Solid and hazardous waste generation, storage, transportation, treatment and disposal are regulated at the federal and state levels under various laws and regulations.  In December 2014, the EPA finalized

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regulations to regulate coal combustion residuals (CCRs) under the Resource Conservation and Recovery Act (RCRA) Subtitle D to address the risks from the disposal of CCRs generated from the combustion of coal at electric generating facilities. The Companies principally use coal in generating electricity and dispose of CCRs in both on-site facilities and facilities owned by third parties.  Current and future EPA regulations regarding the handling, disposal and remediation of CCRs could have a material adverse effect on the Companies' results of operations, financial position and cash flows.
Remediation
Under current law, the Companies are also generally responsible for any liabilities associated with the environmental condition of their properties and other properties at which the Companies arranged for the disposal or treatment of hazardous substances, including properties that they have previously owned or operated, such as manufactured gas plants (MGP), regardless of whether they were responsible for the contamination or whether the liabilities arose before, during or after the time they owned or operated the properties or arranged for the disposal or treatment of hazardous substances.
Due to all of the above, the Companies' projected capital and other expenditures for environmental compliance are subject to significant uncertainties, including the timing of implementation of any new or modified environmental requirements, the limits imposed by such requirements and the types and costs of the compliance alternatives selected by the Companies.  As a result, costs to comply with environmental requirements cannot be estimated with certainty, and actual costs could be significantly higher than projections.  New environmental laws and regulations affecting the operations of the Companies may be adopted, and new interpretations of existing laws and regulations could be adopted or become applicable to the Companies or their facilities, any of which may materially adversely affect the Companies' business, adversely affect the Companies' ability to continue operating its power plants as currently done and substantially increase environmental expenditures or liabilities in the future.
Financial Risks:
Financial market disruptions and declines in credit ratings may increase financing costs and/or limit access to the credit markets, which may adversely affect liquidity and results.
The Companies' capital requirements are expected to be substantial over the next several years.  The Companies rely on access to short-term money markets, revolving credit facilities provided by financial institutions and long-term capital markets as significant sources of liquidity for capital requirements not satisfied by cash flows from operations.  The Companies also rely on bank-provided credit facilities for credit support, such as letters of credit, to support operations.  The amount of credit support required for operations varies and is impacted by a number of factors.  
Great Plains Energy, KCP&L, GMO and certain of their securities are rated by Moody's Investors Service and Standard & Poor's.  These ratings impact the Companies' cost of funds and Great Plains Energy's ability to provide credit support for its subsidiaries.  The interest rates on borrowings under the Companies' revolving credit agreements and on a portion of Great Plains Energy's debt are subject to increase as their respective credit ratings decrease.  The amount of collateral or other credit support required under power supply and certain other agreements is also dependent on credit ratings.  
Conditions in the United States capital and credit markets may deteriorate in the future for a variety of reasons, including, among others: instability in global markets, political uncertainty in the United States or abroad, fluctuations in the price of oil, geopolitical instability or other unforeseen events both in the United States and around the world. Adverse market conditions or decreases in Great Plains Energy's, KCP&L's or GMO's credit ratings could have material adverse effects on the Companies.  These effects could include, among others: reduced access to capital and increased cost of funds; dilution resulting from equity issuances at reduced prices; changes in the type and/or increases in the amount of collateral or other credit support obligations required to be posted with contractual counterparties; increased nuclear decommissioning trust and pension and other post-retirement benefit plan funding requirements; rate case disallowance of KCP&L's or GMO's costs of capital; reductions in or delays of capital expenditures; or reductions in Great Plains Energy's ability to provide credit support for its subsidiaries.  Any of these results could adversely affect the Companies' results of operations, financial position and cash

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flows.  In addition, market disruption and volatility could have an adverse impact on the Companies' lenders, suppliers and other counterparties or customers, causing them to fail to meet their obligations.
Great Plains Energy has guaranteed some of GMO’s long-term and short-term debt and payments under these guarantees may adversely affect Great Plains Energy's liquidity.
Great Plains Energy has issued guarantees covering $98.8 million of GMO's long-term debt. Great Plains Energy also guarantees GMO's commercial paper program. At December 31, 2014, GMO had no commercial paper outstanding.  The guarantees obligate Great Plains Energy to pay amounts owed by GMO directly to the holders of the guaranteed debt in the event GMO defaults on its payment obligations.  Great Plains Energy may also guarantee debt that GMO may issue in the future.  Any guarantee payments could adversely affect Great Plains Energy's liquidity.
The inability of Great Plains Energy's subsidiaries to provide sufficient dividends to Great Plains Energy, or the inability otherwise of Great Plains Energy to pay dividends to its shareholders and meet its financial obligations would have an adverse effect.
Great Plains Energy is a holding company with no significant operations of its own.  The primary source of funds for payment of dividends to its shareholders and its other financial obligations is dividends paid to it by its subsidiaries, particularly KCP&L and GMO.  The ability of Great Plains Energy's subsidiaries to pay dividends or make other distributions, and accordingly, Great Plains Energy's ability to pay dividends on its common stock and meet its financial obligations principally depends on the actual and projected earnings and cash flow, capital requirements and general financial position of its subsidiaries, as well as regulatory factors, financial covenants, general business conditions and other matters.
In addition, Great Plains Energy, KCP&L and GMO are subject to certain corporate and regulatory restrictions and financial covenants that could affect their ability to pay dividends.  Great Plains Energy's articles of incorporation restrict the payment of common stock dividends in the event common equity is 25% or less of total capitalization. In addition, if preferred stock dividends are not declared and paid when scheduled, Great Plains Energy could not declare or pay common stock dividends or purchase any common shares.  If the unpaid preferred stock dividends equal four or more full quarterly preferred dividends, the preferred shareholders, voting as a single class, could elect the smallest number of directors necessary to constitute a majority of the full Great Plains Energy Board of Directors. Certain conditions in the MPSC and KCC orders authorizing the holding company structure require Great Plains Energy and KCP&L to maintain consolidated common equity of at least 30% and 35%, respectively, of total capitalization (including only the amount of short-term debt in excess of the amount of construction work in progress).  Under the Federal Power Act, KCP&L and GMO generally can pay dividends only out of retained earnings.  The revolving credit agreements of Great Plains Energy, KCP&L and GMO and the note purchase agreement for GMO's Series A, B and C Senior Notes contain a covenant requiring each company to maintain a consolidated indebtedness to consolidated total capitalization ratio of not more than 0.65 to 1.00.  While these corporate and regulatory restrictions and financial covenants are not expected to affect the Companies' ability to pay dividends at the current level in the foreseeable future, there is no assurance that adverse financial results would not trigger such restrictions or covenants and reduce or eliminate the Companies' ability to pay dividends.
Market performance, increased retirements and retirement plan regulations could significantly impact retirement plan funding requirements and associated cash needs and expenses.
Substantially all of the Companies' and WCNOC's employees participate in defined benefit retirement and other post-retirement plans.  Former employees also have accrued benefits in defined benefit retirement and other post-retirement plans.  The costs of these plans depend on a number of factors, including the rates of return on plan assets, the level and nature of the provided benefits, discount rates, the interest rates used to measure required minimum funding levels, changes in benefit design, changes in laws or regulations, and the Companies' required or voluntary contributions to the plans.  The Companies currently have substantial unfunded liabilities under these plans.  Also, if the rate of retirements exceeds planned levels, or if these plans experience adverse market returns on investments, or if interest rates materially fall, the Companies' contributions to the plans could rise substantially over historical levels.  In addition, changes in accounting rules and assumptions related to future costs, returns on investments, interest rates and other actuarial assumptions, including projected retirements, could have a significant impact on the Companies' results of operations, financial position and cash flows.

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The use of derivative contracts in the normal course of business could result in losses that could negatively impact the Companies' results of operations, financial position and cash flows.
The Companies use derivative instruments, such as swaps, options, futures and forwards, to manage commodity and financial risks.  Losses could be recognized as a result of volatility in the market values of these contracts, if a counterparty fails to perform, or if the underlying transactions which the derivative instruments are intended to hedge fail to materialize.  In the absence of actively quoted market prices and pricing information from external sources, the valuation of these financial instruments can involve management's judgment or the use of estimates. As a result, changes in the underlying assumptions or use of alternative valuation methods could affect the reported fair value of these contracts.
As a service provider to GMO, KCP&L may have exposure to GMO's financial performance and operations.
GMO has no employees of its own.  KCP&L employees operate and manage GMO's properties, and KCP&L charges GMO for the cost of these services.  These arrangements may pose risks to KCP&L, including possible claims arising from actions of KCP&L employees in operating GMO's properties and providing other services to GMO.  KCP&L's claims for reimbursement for services provided to GMO are unsecured and rank equally with other unsecured obligations of GMO.  KCP&L's ability to be reimbursed for the costs incurred for the benefit of GMO depends on the financial ability of GMO to make such payments.
Customer and Weather-Related Risks:
The results of operations, financial position and cash flows of the Companies can be materially affected by changes in customer electricity consumption.
Changes in customer electricity consumption due to sustained financial market disruptions, downturns or sluggishness in the economy, technological advances, or other factors may adversely affect the Companies' results of operations, financial position and cash flows.  
Technological advances or other energy conservation measures could reduce customer electricity consumption. KCP&L and GMO generate electricity at central station power plants to achieve economies of scale and produce electricity at a competitive cost. There are distributed generation technologies that produce electricity, including microturbines, wind turbines, fuel cells and solar cells, that could become more cost competitive. If these technologies become cost competitive, the Companies customer electricity consumption could be reduced. Changes in technology could also alter the channels through which the Companies’ customers purchase or use electricity, which could reduce the Companies customer electricity consumption.
Weather is a major driver of the Companies' results of operations, financial position and cash flow.
Weather conditions directly influence the demand for electricity and natural gas and affect the price of energy commodities.  Great Plains Energy and KCP&L are significantly impacted by seasonality, with approximately one-third of their retail electric revenues recorded in the third quarter. Unusually mild winter or summer weather can adversely affect sales.  In addition, severe weather, including but not limited to tornados, snow, rain, flooding and ice storms can be destructive causing outages and property damage that can potentially result in additional expenses, lower revenues and additional capital restoration costs.  KCP&L's and GMO's rates may not always be adjusted timely and adequately to reflect these increased costs. Some of the Companies' generating stations utilize water from the Missouri River for cooling purposes.  Low water and flow levels can increase maintenance costs at these stations and, if these levels were to get low enough, could require modifications to plant operations.  The possible effects of climate change (such as increased temperatures, increased occurrence of severe weather or reduced precipitation, among other possible results) could potentially increase the volatility of demand and prices for energy commodities, increase the frequency and impact of severe weather, increase the frequency of flooding or decrease water and flow levels.

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Operational Risks:
Operational risks may adversely affect the Companies' results of operations, financial position and cash flows.
The operation of the Companies' electric generation, transmission, distribution and information systems involves many risks, including breakdown or failure of equipment, processes and personnel performance; problems that delay or increase the cost of returning facilities to service after outages; limitations that may be imposed by equipment conditions or environmental, safety or other regulatory requirements; fuel supply or fuel transportation reductions or interruptions; labor disputes; difficulties with the implementation or continued operation of information systems; transmission scheduling constraints; and catastrophic events such as fires, floods, droughts, explosions, terrorism, cyber threats, severe weather or other similar occurrences.  An equipment or system outage or constraint can, among other things:
in the case of generation equipment, affect operating costs, increase capital requirements and costs, increase purchased power volumes and costs and reduce wholesale sales opportunities;
in the case of transmission equipment, affect operating costs, increase capital requirements and costs, require changes in the source of generation and affect wholesale sales opportunities and the ability to meet regulatory reliability and security requirements;
in the case of distribution systems, affect revenues and operating costs, increase capital requirements and costs, and affect the ability to meet regulatory service metrics and customer expectations; and
in the case of information systems, affect the control and operations of generation, transmission, distribution, customer information and other business operations and processes, increase operating costs, increase capital requirements and costs, and affect the ability to meet regulatory reliability and security requirements and customer expectations.
With the exception of Hawthorn No. 5, which was substantially rebuilt in 2001, and Iatan No. 2, which was completed in 2010, all of KCP&L's and GMO's coal-fired generating units and its nuclear generating unit were constructed prior to 1986.  The age of these generating units increases the risk of unplanned outages, reduced generation output and higher maintenance expense.  Training, preventive maintenance and other programs have been implemented, but there is no assurance that these programs will prevent or minimize future breakdowns or failures of the Companies' generation facilities or increased maintenance expense.
The Companies currently have general liability and property insurance in place to cover their facilities in amounts that management considers appropriate.  These policies, however, do not cover the Companies' transmission or distribution systems, and the cost of repairing damage to these systems may adversely affect the Companies' results of operations, financial position and cash flows.  Such policies are subject to certain limits and deductibles and do not include business interruption coverage.  Insurance coverage may not be available in the future at reasonable costs or on commercially reasonable terms, and the insurance proceeds received for any loss of, or any damage to, any of the Companies' facilities may not be sufficient to restore the loss or damage.
These and other operating events may reduce the Companies' revenues, increase their costs, or both, and may materially affect their results of operations, financial position and cash flows.
The cost and schedule of capital projects may materially change and expected performance may not be achieved.
Great Plains Energy's and KCP&L's businesses are capital intensive.  The Companies currently have significant capital projects pending and may also have significant capital projects in the future. The risks of any capital project include: that actual costs may exceed estimated costs due to inflation or other factors; risks associated with the incurrence of additional debt or the issuance of additional equity to fund such projects; delays that may occur in obtaining permits and materials; the failure of suppliers and contractors to perform as required under their contracts; inadequate availability or increased cost of equipment, materials or qualified craft labor; delays related to inclement weather; the scope, cost and timing of projects may change due to new or changed environmental requirements,

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health and safety laws or other factors; and other events beyond the Companies' control may occur that may materially affect the schedule, cost and performance of these projects.
These and other risks could materially increase the estimated costs of capital projects, delay the in-service dates of projects, adversely affect the performance of the projects, and/or require the Companies to purchase additional electricity to supply their respective retail customers until the projects are completed.  Thus, these risks may significantly affect the Companies' results of operations, financial position and cash flows.
Failure of one or more generation plant co-owners to pay their share of construction or operations and maintenance costs could increase the Companies' costs and capital requirements.
KCP&L owns 47% of Wolf Creek, 50% of La Cygne Station, 70% of Iatan No. 1 and 55% of Iatan No. 2.  GMO owns 18% of both Iatan units and 8% of Jeffrey Energy Center.  The remaining portions of these facilities are owned by other utilities that are contractually obligated to pay their proportionate share of capital and other costs.
While the ownership agreements provide that a defaulting co-owner's share of the electricity generated can be sold by the non-defaulting co-owners, there is no assurance that the revenues received will recover the increased costs borne by the non-defaulting co-owners.  Occurrence of these or other events could materially increase the Companies' costs and capital requirements.
The Companies are subject to information security risks and risks of unauthorized access to their systems.
In the course of their businesses, the Companies handle a range of system security and sensitive customer information. KCP&L and GMO are subject to laws and rules issued by different agencies concerning safeguarding and maintaining the confidentiality of this information. A security breach of the utilities' information systems such as theft or the inappropriate release of certain types of information, including confidential customer information or system operating information, could have a material adverse impact on the results of operations, financial position and cash flows of the Companies.
KCP&L and GMO operate in a highly regulated industry that requires the continued operation of sophisticated information technology systems and network infrastructures. Despite implementation of security measures, the technology systems are vulnerable to disability, failures, employee error or malfeasance, or unauthorized access. Such failures or breaches of the systems could impact the reliability of generation, transmission and distribution systems, result in legal claims and proceedings, damage the Companies' reputation and also subject the Companies to financial harm. If the technology systems were to fail or be breached and not recovered in a timely way, critical business functions could be impaired and sensitive confidential data could be compromised, which could have a material adverse impact on the Companies' results of operations, financial position and cash flows.
KCP&L is exposed to risks associated with the ownership and operation of a nuclear generating unit, which could result in an adverse effect on the Companies' business and financial results.
KCP&L owns 47% of Wolf Creek.  The NRC has broad authority under federal law to impose licensing and safety-related requirements for the operation of nuclear generation facilities, including Wolf Creek.  In the event of non-compliance, the NRC has the authority to impose fines, shut down the facilities, or both, depending upon its assessment of the severity of the situation, until compliance is achieved. Additionally, the non-compliance of other nuclear facility operators with applicable regulations or the occurrence of a serious nuclear incident anywhere in the world could result in increased regulation of the nuclear industry as a whole.  Any revised safety requirements promulgated by the NRC could result in substantial capital expenditures at Wolf Creek.
Wolf Creek has the lowest fuel cost per MWh of any of KCP&L's generating units.  An extended outage of Wolf Creek, whether resulting from NRC action, an incident at the plant or otherwise, could have a material adverse effect on KCP&L's results of operations, financial position and cash flows in the event KCP&L incurs higher replacement power and other costs that are not recovered through rates or insurance.  If a long-term outage occurred, the state regulatory commissions could reduce rates by excluding the Wolf Creek investment from rate base.  Wolf Creek was constructed prior to 1986 and the age of Wolf Creek increases the risk of unplanned outages and results in higher maintenance costs.

20


Ownership and operation of a nuclear generating unit exposes KCP&L to risks regarding decommissioning costs at the end of the unit's life.  KCP&L contributes annually based on estimated decommissioning costs to a tax-qualified trust fund to be used to decommission Wolf Creek.  The funding level assumes a projected level of return on trust assets.  If the actual return on trust assets is below the projected level or actual decommissioning costs are higher than estimated, KCP&L could be responsible for the balance of funds required and may not be allowed to recover the balance through rates.
KCP&L is also exposed to other risks associated with the ownership and operation of a nuclear generating unit, including, but not limited to, potential liability associated with the potential harmful effects on the environment and human health resulting from the operation of a nuclear generating unit and the storage, handling, disposal and potential release (by accident, through third-party actions or otherwise) of radioactive materials.  Under the structure for insurance among owners of nuclear generating units, KCP&L is also liable for potential retrospective premium assessments (subject to a cap) per incident at any commercial reactor in the country and losses in excess of insurance coverage.
The structure of the regional power market in which the Companies operate could have an adverse effect on the Companies' results of operations, financial position and cash flows.
In March 2014, the SPP launched its Integrated Marketplace. Similar to other RTO or ISO markets, this marketplace will determine which generating units among market participants should run, within the operating constraints of a unit, at any given time for maximum cost-effectiveness. In the event that KCP&L's and GMO's generating units are not among the lowest cost generating units operating within the market, KCP&L and GMO could experience decreased levels of wholesale electricity sales.

A market for Transmission Congestion Rights (TCR) is also included as part of the Integrated Marketplace. TCRs are financial instruments used to hedge transmission congestion charges. Both KCP&L and GMO acquire TCRs for the purpose of hedging against transmission congestion charges. There is a risk that KCP&L and GMO could incorrectly model the amount of TCRs needed, or that the TCRs acquired could be ineffective in hedging against transmission congestion charges which could lead to increased purchased power costs.
The rules governing the various regional power markets may change from time to time and such changes could impact the Companies' costs and revenues. Because the manner in which RTO's or ISO's will evolve is unclear, the Companies are unable to assess fully the impact of these changes.
Commodity Price Risks:
Changes in commodity prices could have an adverse effect on the Companies' results of operations, financial position and cash flows.
The Companies engage in the wholesale and retail marketing of electricity and are exposed to risks associated with the price of electricity.  To the extent that exposure to the price of electricity is not successfully hedged, the Companies could experience losses associated with the changing market price for electricity.
Increases in fuel, fuel transportation and purchased power prices could have an adverse impact on the Companies' costs.
KCP&L's Kansas retail rates and GMO's retail electric and steam rates contain fuel recovery mechanisms. KCP&L's Missouri retail rates currently do not contain a similar provision.  As a result, the Companies are exposed to varying degrees of risk from changes in the market prices of fuel for generation of electricity and purchased power.  Changes in the Companies' fuel mix due to electricity demand, plant availability, transportation issues, fuel prices, fuel availability and other factors can also adversely affect the Companies' fuel and purchased power costs.
The Companies do not hedge their respective entire exposures from fuel and transportation price volatility.  Consequently, the Companies' results of operations, financial position and cash flows may be materially impacted by changes in these prices unless and until increased costs are recovered in KCP&L's Missouri retail rates.

21


Wholesale electricity sales affect revenues, creating earnings volatility.
The levels of the Companies' wholesale sales depend on the wholesale market price, transmission availability and the availability of generation for wholesale sales, among other factors.  A substantial portion of wholesale sales are made in the spot market, and thus the Companies have immediate exposure to wholesale price changes.  Wholesale power prices can be volatile and generally increase in times of high regional demand and high natural gas prices. Conversely, wholesale power prices generally decrease in times of low regional demand and low natural gas prices.  While wholesale sales are reflected in KCP&L's Kansas and GMO's fuel recovery mechanisms, KCP&L's Missouri rates are set on an estimated amount of wholesale sales.  KCP&L will not recover any shortfall in non-firm wholesale electric sales margin from the level included in Missouri rates. Declines in wholesale market price, availability of generation, transmission constraints in the wholesale markets, or low wholesale demand could reduce the Companies' wholesale sales and may materially affect the Companies' results of operations, financial position and cash flows.
Litigation Risks:
The outcome of legal proceedings cannot be predicted.  An adverse finding could have a material adverse effect on the Companies' results of operations, financial position and cash flows.
The Companies are party to various material litigation and regulatory matters arising out of their business operations.  The ultimate outcome of these matters cannot presently be determined, nor, in many cases, can the liability that could potentially result from a negative outcome in each case be reasonably estimated.  The liability that the Companies may ultimately incur with respect to any of these cases in the event of a negative outcome may be in excess of amounts currently reserved and insured against with respect to such matters.
ITEM 1B. UNRESOLVED STAFF COMMENTS
None.

22


ITEM 2. PROPERTIES
Electric Utility Generation Resources
 
 
 
 
Year
 
Estimated 2015
 
Primary
 
Unit
Location
 
Completed
 
MW Capacity
 
Fuel
Base Load
Iatan No. 2
Missouri
 
2010
 
 
482

(a) 
 
Coal
 
Wolf Creek
Kansas
 
1985
 
 
549
(a) 
 
Nuclear
 
Iatan No. 1
Missouri
 
1980
 
 
499
(a) 
 
Coal
 
La Cygne Nos. 1 and 2
Kansas
 
1973, 1977
 
 
696
(a) 
 
Coal
 
Hawthorn No. 5 (b)
Missouri
 
1969
 
 
564
 
 
Coal
 
Montrose Nos. 1, 2 and 3
Missouri
1958, 1960, 1964
 
510
 
 
Coal
Peak Load
West Gardner Nos. 1, 2, 3 and 4
Kansas
 
2003
 
 
311
 
 
Natural Gas
 
Osawatomie
Kansas
 
2003
 
 
77
 
 
Natural Gas
 
Hawthorn Nos. 6 and 9
Missouri
 
2000
 
 
227
 
 
Natural Gas
 
Hawthorn No. 8
Missouri
 
2000
 
 
79
 
 
Natural Gas
 
Hawthorn No. 7
Missouri
 
2000
 
 
78
 
 
Natural Gas
 
Northeast Black Start Unit
Missouri
 
1985
 
 
2
 
 
Oil
 
Northeast Nos. 17 and 18
Missouri
 
1977
 
 
97
 
 
Oil
 
Northeast Nos. 13 and 14
Missouri
 
1976
 
 
91
 
 
Oil
 
Northeast Nos. 15 and 16
Missouri
 
1975
 
 
89
 
 
Oil
 
Northeast Nos. 11 and 12
Missouri
 
1972
 
 
96
 
 
Oil
Wind
Spearville 2 Wind Energy Facility (c)
Kansas
 
2010
 
 
15
 
 
Wind
 
Spearville 1 Wind Energy Facility (d)
Kansas
 
2006
 
 
31
 
 
Wind
Total KCP&L
 
 
 
 
 
4,493

 
 
 
Base Load
Iatan No. 2
Missouri
 
2010
 
 
159
(a) 
 
Coal
 
Iatan No. 1
Missouri
 
1980
 
 
128
(a) 
 
Coal
 
Jeffrey Energy Center Nos. 1, 2 and 3
Kansas
1978, 1980, 1983
 
172
(a) 
 
Coal
 
Sibley Nos. 1, 2 and 3
Missouri
1960, 1962, 1969
 
463
 
 
Coal
 
Lake Road Nos. 2 and 4
Missouri
 
1957, 1967
 
 
115
 
 
Coal and Natural Gas
Peak Load
South Harper Nos. 1, 2 and 3
Missouri
 
2005
 
 
303
 
 
Natural Gas
 
Crossroads Energy Center
Mississippi
 
2002
 
 
307
 
 
Natural Gas
 
Ralph Green No. 3
Missouri
 
1981
 
 
71
 
 
Natural Gas
 
Greenwood Nos. 1, 2, 3 and 4
Missouri
 
1975-1979
 
 
247
 
 
Natural Gas/Oil
 
Lake Road No. 5
Missouri
 
1974
 
 
67
 
 
Natural Gas/Oil
 
Lake Road Nos. 1 and 3
Missouri
 
1951, 1962
 
 
16
 
 
Natural Gas/Oil
 
Lake Road Nos. 6 and 7
Missouri
 
1989, 1990
 
 
42
 
 
Oil
 
Nevada
Missouri
 
1974
 
 
18
 
 
Oil
Total GMO
 
 
 
 
 
2,108

 
 
 
Total Great Plains Energy
 
 
 
 
 
6,601

 
 
 
(a)    Share of a jointly owned unit.
(b) 
In 2001, a new boiler, air quality control equipment and an uprated turbine was placed in service at the Hawthorn Generating Station.
(c) 
The 48 MW Spearville 2 Wind Energy Facility's accredited capacity is 15 MW pursuant to SPP reliability standards.
(d) 
The 100.5 MW Spearville Wind Energy Facility's accredited capacity is 31 MW pursuant to SPP reliability standards.

KCP&L owns 50% of La Cygne Nos. 1 and 2, 70% of Iatan No. 1, 55% of Iatan No. 2 and 47% of Wolf Creek. GMO owns 18% of each of Iatan Nos. 1 and 2 and 8% of Jeffrey Energy Center Nos. 1, 2 and 3.


23


Electric Utility Transmission and Distribution Resources
Electric utility's electric transmission system interconnects with systems of other utilities for reliability and to permit wholesale transactions with other electricity suppliers. Electric utility has approximately 3,600 circuit miles of transmission lines, 15,600 circuit miles of overhead distribution lines and 6,900 circuit miles of underground distribution lines in Missouri and Kansas. Electric utility has all material franchise rights necessary to sell electricity within its retail service territory. Electric utility's transmission and distribution systems are continuously monitored for adequacy to meet customer needs. Management believes the current systems are adequate to serve customers.
Electric Utility General
Electric utility's generating plants are located on property owned (or co-owned) by KCP&L or GMO, except the Spearville Wind Energy Facilities which are located on easements, and the Crossroads Energy Center and the South Harper Facility which are contractually controlled. Electric utility's service centers, electric substations and a portion of its transmission and distribution systems are located on property owned or leased by electric utility. Electric utility's transmission and distribution systems are for the most part located above or underneath highways, streets, other public places or property owned by others. Electric utility believes that it has satisfactory rights to use those places or properties in the form of permits, grants, easements, licenses or franchise rights; however, it has not necessarily undertaken efforts to examine the underlying title to the land upon which the rights rest. Great Plains Energy's and KCP&L's headquarters are located in leased office space.
Substantially all of the fixed property and franchises of KCP&L, which consist principally of electric generating stations, electric transmission and distribution lines and systems, and buildings (subject to exceptions, reservations and releases), are subject to a General Mortgage Indenture and Deed of Trust dated as of December 1, 1986, as supplemented. Mortgage bonds totaling $596.4 million were outstanding at December 31, 2014.

Substantially all of the fixed property and franchises of GMO's St. Joseph Light & Power division is subject to a General Mortgage Indenture and Deed of Trust dated as of April 1, 1946, as supplemented. Mortgage bonds totaling $7.9 million were outstanding at December 31, 2014.
ITEM 3.  LEGAL PROCEEDINGS
Other Proceedings
The Companies are parties to various lawsuits and regulatory proceedings in the ordinary course of their respective businesses.  For information regarding material lawsuits and proceedings, see Notes 5, 15 and 16 to the consolidated financial statements.  Such information is incorporated herein by reference.
ITEM 4.  MINE SAFETY DISCLOSURES
Not applicable.


24


PART II
ITEM 5.  MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES
GREAT PLAINS ENERGY
Great Plains Energy's common stock is listed on the New York Stock Exchange under the symbol "GXP". At February 24, 2015, Great Plains Energy's common stock was held by 16,767 shareholders of record. Information relating to market prices and cash dividends on Great Plains Energy's common stock is set forth in the following table.
 
Common Stock Price Range (a)
 
Common Stock
 
2014
 
2013
 
Dividends Declared
Quarter
High
 
Low
 
High
 
Low
 
2015
 
 
2014
 
2013
First
$
27.04

 
$
23.85

 
$
23.19

 
$
20.41

 
$
0.245

(b) 
 
$
0.23

 
$
0.2175

Second
27.22

 
25.02

 
24.41

 
21.94

 
 
 
 
0.23

 
0.2175

Third
26.80

 
24.17

 
24.60

 
21.49

 
 
 
 
0.23

 
0.2175

Fourth
29.38

 
24.21

 
24.76

 
21.86

 
 
 
 
0.245

 
0.23

(a)    Based on closing stock prices.
(b)    Declared February 10, 2015, and payable March 20, 2015, to shareholders of record as of February 27, 2015.
Dividend Restrictions
For information regarding dividend restrictions, see Note 13 to the consolidated financial statements.
Purchases of Equity Securities
Great Plains Energy had no purchases of its equity securities during the three months ended December 31, 2014.
KCP&L
KCP&L is a wholly owned subsidiary of Great Plains Energy, which holds the one share of issued and outstanding KCP&L common stock.
Dividend Restrictions
For information regarding dividend restrictions, see Note 13 to the consolidated financial statements.

25


ITEM 6. SELECTED FINANCIAL DATA
Year Ended December 31
 
2014
 
2013
 
2012
 
2011
 
2010
Great Plains Energy
 
(dollars in millions except per share amounts)
Operating revenues
 
$
2,568

 
$
2,446

 
$
2,310

 
$
2,318

 
$
2,256

Net income attributable to Great Plains Energy
 
$
243

 
$
250

 
$
200

 
$
174

 
$
212

Basic earnings per common share
 
$
1.57

 
$
1.62

 
$
1.36

 
$
1.27

 
$
1.55

Diluted earnings per common share
 
$
1.57

 
$
1.62

 
$
1.35

 
$
1.25

 
$
1.53

Total assets at year end
 
$
10,476

 
$
9,795

 
$
9,647

 
$
9,118

 
$
8,818

Total redeemable preferred stock, mandatorily
 
 
 
 
 
 
 
 
 
 
redeemable preferred securities and long-
 
 
 
 
 
 
 
 
 
 
term debt (including current maturities)
 
$
3,503

 
$
3,517

 
$
3,020

 
$
3,544

 
$
3,428

Cash dividends per common share
 
$
0.935

 
$
0.8825

 
$
0.855

 
$
0.835

 
$
0.83

SEC ratio of earnings to fixed charges
 
2.72
 
2.75
 
2.31
 
2.03
 
2.28
 
 
 
 
 
 
 
 
 
 
 
KCP&L
 
 
 
 
 
 
 
 
 
 
Operating revenues
 
$
1,731

 
$
1,671

 
$
1,580

 
$
1,558

 
$
1,517

Net income
 
$
162

 
$
169

 
$
142

 
$
136

 
$
163

Total assets at year end
 
$
7,511

 
$
6,839

 
$
6,704

 
$
6,292

 
$
6,026

Total redeemable preferred stock, mandatorily
 
 
 
 
 
 
 
 
 
 
redeemable preferred securities and long-
 
 
 
 
 
 
 
 
 
 
term debt (including current maturities)
 
$
2,313

 
$
2,312

 
$
1,902

 
$
1,915

 
$
1,780

SEC ratio of earnings to fixed charges
 
2.69
 
2.76
 
2.58
 
2.52
 
2.86
ITEM 7.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
GREAT PLAINS ENERGY INCORPORATED
EXECUTIVE SUMMARY
Description of Business
Great Plains Energy is a public utility holding company and does not own or operate any significant assets other than the stock of its subsidiaries.
Great Plains Energy's sole reportable business segment is electric utility. Electric utility consists of KCP&L, a regulated utility, GMO's regulated utility operations, which include its Missouri Public Service and St. Joseph Light & Power divisions, and GMO Receivables Company.  Electric utility has approximately 6,600 MWs of generating capacity and engages in the generation, transmission, distribution and sale of electricity to approximately 838,400 customers in the states of Missouri and Kansas.  Electric utility's retail electricity rates are comparable to the national average of investor-owned utilities.
Great Plains Energy's corporate and other activities not included in the sole reportable business segment includes GMO activity other than its regulated utility operations, GPETHC and unallocated corporate charges.
2014 Earnings Overview
Great Plains Energy's 2014 earnings available for common shareholders decreased to $241.2 million or $1.57 per share from $248.6 million or $1.62 per share in 2013 driven by:
a $23.3 million increase in gross margin driven by new retail rates and energy efficiency programs under the Missouri Energy Efficiency Investment Act (MEEIA) consisting of recovery of program costs, which

26


have a direct offset in utility operating and maintenance expense, and recovery of throughput disincentive, partially offset by unfavorable weather;
a $30.5 million increase in utility operating and maintenance expenses driven by increased Wolf Creek operating and maintenance expenses primarily due to a planned mid-cycle maintenance outage in 2014 and increased amortization from a planned refueling outage in 2013, partially offset by other decreases; increased program costs for energy efficiency programs under MEEIA, which have a direct offset in revenue; and increased transmission and distribution operating and maintenance expenses;
a $16.3 million increase in depreciation and amortization expense driven by capital additions;
a $10.2 million increase in general taxes driven by increased property taxes;
a $9.9 million decrease in interest expense primarily due to lower interest rates from the remarketing of multiple series of KCP&L bonds in April and July of 2013, lower short-term borrowing costs at KCP&L and GMO, an increase in the debt component of AFUDC and interest related to the release of uncertain tax positions in the third quarter of 2014; and
a $13.5 million decrease in income tax expense due to decreased pre-tax income and income tax benefits related to the release of uncertain tax positions in the third quarter of 2014.
Gross margin is a financial measure that is not calculated in accordance with Generally Accepted Accounting Principles (GAAP). See the explanation of gross margin and the reconciliation to GAAP operating revenues under Great Plains Energy's Results of Operations for further information.
For additional information regarding the change in earnings, refer to the Great Plains Energy Results of Operations and the Electric Utility Results of Operations sections within this MD&A.
Regulatory Proceedings
See Note 5 to the consolidated financial statements for information regarding regulatory proceedings.
Impact of Recently Issued Accounting Standard
See Note 1 to the consolidated financial statements for information regarding the impact of ASU No. 2014-09, Revenue from Contracts with Customers, which was issued by the FASB in May 2014.
Wolf Creek Mid-Cycle Maintenance Outage and Refueling Outage
Wolf Creek is scheduled to begin its next refueling outage on February 28, 2015, and the unit is expected to return to service in the second quarter of 2015. Wolf Creek had a mid-cycle maintenance outage that began on March 8, 2014, and the unit returned to service on May 13, 2014. Wolf Creek's previous refueling outage was from February 4, 2013 to April 15, 2013.
ENVIRONMENTAL MATTERS
See Note 15 to the consolidated financial statements for information regarding environmental matters.
RELATED PARTY TRANSACTIONS
See Note 18 to the consolidated financial statements for information regarding related party transactions.
CRITICAL ACCOUNTING POLICIES
The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect reported amounts and related disclosures. Management considers an accounting estimate to be critical if it requires assumptions to be made that were uncertain at the time the estimate was made and changes in the estimate or different estimates that could have been used could have a material impact on Great Plains Energy's results of operations and financial position. Management has identified the following accounting policies as critical to the understanding of Great Plains Energy's results of operations and financial position. Management

27


has discussed the development and selection of these critical accounting policies with the Audit Committee of the Great Plains Energy Board of Directors (Board).
Pensions
Great Plains Energy incurs significant costs in providing non-contributory defined pension benefits. The costs are measured using actuarial valuations that are dependent upon numerous factors derived from actual plan experience and assumptions of future plan experience.
Pension costs are impacted by actual employee demographics (including age, life expectancies, compensation levels and employment periods), earnings on plan assets, the level of contributions made to the plan, and plan amendments. In addition, pension costs are also affected by changes in key actuarial assumptions, including anticipated rates of return on plan assets and the discount rates used in determining the projected benefit obligation and pension costs.
The assumed rate of return on plan assets was developed based on the weighted-average of long-term returns forecast for the expected portfolio mix of investments held by the plan. The assumed discount rate was selected based on the prevailing market rate of fixed income debt instruments with maturities matching the expected timing of the benefit obligation. These assumptions, updated annually at the measurement date, are based on management's best estimates and judgment; however, material changes may occur if these assumptions differ from actual events. See Note 8 to the consolidated financial statements for information regarding the assumptions used to determine benefit obligations and net costs.
The following table reflects the sensitivities associated with a 0.5% increase or a 0.5% decrease in key actuarial assumptions. Each sensitivity reflects the impact of the change based on a change in that assumption only.
 
 
 
Impact on
Impact on
 
 
 
Projected
2014
 
Change in
Benefit
Pension
Actuarial assumption
Assumption
Obligation
Expense
 
 
 
(millions)
Discount rate
0.5
%
increase
 
$
(83.9
)
 
 
$
(6.4
)
 
Rate of return on plan assets
0.5
%
increase
 

 
 
(3.6
)
 
Discount rate
0.5
%
decrease
 
91.3

 
 
6.7

 
Rate of return on plan assets
0.5
%
decrease
 

 
 
3.6

 
Pension expense for KCP&L and GMO is recorded in accordance with rate orders from the MPSC and KCC. The orders allow the difference between pension costs under GAAP and pension costs for ratemaking to be recorded as a regulatory asset or liability with future ratemaking recovery or refunds, as appropriate.
In 2014, Great Plains Energy's pension expense was $96.0 million under GAAP and $84.7 million for ratemaking. The impact on 2014 pension expense in the table above reflects the impact on GAAP pension costs. Under the Companies' rate agreements, any increase or decrease in GAAP pension expense would be deferred in a regulatory asset or liability for future ratemaking treatment. See Note 8 to the consolidated financial statements for additional information regarding the accounting for pensions.
Market conditions and interest rates significantly affect the future assets and liabilities of the plan. It is difficult to predict future pension costs, changes in pension liability and cash funding requirements due to the inherent uncertainty of market conditions.
Regulatory Assets and Liabilities
The Company has recorded assets and liabilities on its consolidated balance sheets resulting from the effects of the ratemaking process, which would not otherwise be recorded under GAAP. Regulatory assets represent incurred

28


costs that are probable of recovery from future revenues. Regulatory liabilities represent future reductions in revenues or refunds to customers.
Management regularly assesses whether regulatory assets and liabilities are probable of future recovery or refund by considering factors such as decisions by the MPSC, KCC or FERC in electric utility's rate case filings; decisions in other regulatory proceedings, including decisions related to other companies that establish precedent on matters applicable to electric utility; and changes in laws and regulations. If recovery or refund of regulatory assets or liabilities is not approved by regulators or is no longer deemed probable, these regulatory assets or liabilities are recognized in the current period results of operations. Electric utility's continued ability to meet the criteria for recording regulatory assets and liabilities may be affected in the future by restructuring and deregulation in the electric industry or changes in accounting rules. In the event that the criteria no longer applied to all or a portion of electric utility's operations, the related regulatory assets and liabilities would be written off unless an appropriate regulatory recovery mechanism were provided. Additionally, these factors could result in an impairment on utility plant assets. See Note 5 to the consolidated financial statements for additional information.
Impairments of Assets, Intangible Assets and Goodwill
Long-lived assets and intangible assets subject to amortization are required to be reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable as prescribed under GAAP.
Accounting rules require goodwill to be tested for impairment annually and when an event occurs indicating the possibility that an impairment exists. The goodwill impairment test is a two step process. The first step compares the fair value of a reporting unit to its carrying amount, including goodwill, to identify potential impairment. If the carrying amount exceeds the fair value of the reporting unit, the second step of the test is performed, consisting of assignment of the reporting unit's fair value to its assets and liabilities to determine an implied fair value of goodwill, which is compared to the carrying amount of goodwill to determine the impairment loss, if any, to be recognized in the financial statements. Great Plains Energy's regulated electric utility operations are considered one reporting unit for assessment of impairment, as they are included within the same operating segment and have similar economic characteristics.
The annual impairment test for the $169.0 million of GMO acquisition goodwill was conducted on September 1, 2014. Fair value of the reporting unit substantially exceeded the carrying amount, including goodwill; therefore, there was no impairment of goodwill.
The determination of fair value of the reporting unit consisted of two valuation techniques: an income approach consisting of a discounted cash flow analysis and a market approach consisting of a determination of reporting unit invested capital using market multiples derived from the historical revenue, EBITDA, net utility asset values and market prices of stock of peer companies. The results of the two techniques were evaluated and weighted to determine a point within the range that management considered representative of fair value for the reporting unit, which involves a significant amount of management judgment.
The discounted cash flow analysis is most significantly impacted by two assumptions: estimated future cash flows and the discount rate applied to those cash flows. Management determined the appropriate discount rate to be based on the reporting unit's weighted average cost of capital (WACC). The WACC takes into account both the return on equity authorized by the MPSC and KCC and after-tax cost of debt. Estimated future cash flows are based on Great Plains Energy's internal business plan, which assumes the occurrence of certain events in the future, such as the outcome of future rate filings, future approved rates of return on equity, anticipated earnings/returns related to future capital investments, continued recovery of cost of service and the renewal of certain contracts. Management also makes assumptions regarding the run rate of operations, maintenance and general and administrative costs based on the expected outcome of the aforementioned events. Should the actual outcome of some or all of these assumptions differ significantly from the current assumptions, revisions to current cash flow assumptions could cause the fair value of Great Plains Energy's reporting unit under the income approach to be significantly different in future periods and could result in a future impairment charge to goodwill.

29


The market approach analysis is most significantly impacted by management's selection of relevant peer companies as well as the determination of an appropriate control premium to be added to the calculated invested capital of the reporting unit, as control premiums associated with a controlling interest are not reflected in the quoted market price of a single share of stock. Management determined an appropriate control premium by using an average of control premiums for recent acquisitions in the industry. Changes in results of peer companies, selection of different peer companies and future acquisitions with significantly different control premiums could result in a significantly different fair value of Great Plains Energy's reporting unit.
Income Taxes
Income taxes are accounted for using the asset/liability approach. Deferred tax assets and liabilities are determined based on the temporary differences between the financial reporting and tax bases of assets and liabilities, applying enacted statutory tax rates in effect for the year in which the differences are expected to reverse. Deferred investment tax credits are amortized ratably over the life of the related property. Deferred tax assets are also recorded for net operating losses, capital losses and tax credit carryforwards. The Company is required to estimate the amount of taxes payable or refundable for the current year and the deferred tax liabilities and assets for future tax consequences of events reflected in the Company's consolidated financial statements or tax returns. Actual results could differ from these estimates for a variety of reasons including changes in income tax laws, enacted tax rates and results of audits by taxing authorities. This process also requires management to make assessments regarding the timing and probability of the ultimate tax impact from which actual results may differ. The Company records valuation allowances on deferred tax assets if it is determined that it is more likely than not that the asset will not be realized. See Note 22 to the consolidated financial statements for additional information.
GREAT PLAINS ENERGY RESULTS OF OPERATIONS 
The following table summarizes Great Plains Energy's comparative results of operations.
 
 
2014
 
2013
 
2012
 
 
(millions)
Operating revenues
 
$
2,568.2

 
$
2,446.3

 
$
2,309.9

 
Fuel
 
(489.2
)
 
(539.5
)
 
(539.5
)
 
Purchased power
 
(253.3
)
 
(125.9
)
 
(94.0
)
 
Transmission
 
(74.7
)
 
(53.2
)
 
(35.4
)
 
Gross margin (a)
 
1,751.0

 
1,727.7

 
1,641.0

 
Other operating expenses
 
(910.5
)
 
(868.8
)
 
(834.1
)
 
Voluntary separation program
 

 

 
4.3

 
Depreciation and amortization
 
(306.0
)
 
(289.7
)
 
(272.3
)
 
Operating income
 
534.5

 
569.2

 
538.9

 
Non-operating income and expenses
 
12.5

 
8.8

 
(13.2
)
 
Interest charges
 
(188.5
)
 
(198.4
)
 
(220.8
)
 
Income tax expense
 
(115.7
)
 
(129.2
)
 
(104.6
)
 
Loss from equity investments
 

 
(0.2
)
 
(0.4
)
 
Net income
 
242.8

 
250.2

 
199.9

 
Preferred dividends
 
(1.6
)
 
(1.6
)
 
(1.6
)
 
Earnings available for common shareholders
 
$
241.2

 
$
248.6

 
$
198.3

 
(a) 
Gross margin is a non-GAAP financial measure. See explanation of gross margin below.
2014 Compared to 2013
Great Plains Energy's 2014 earnings available for common shareholders decreased to $241.2 million or $1.57 per share from $248.6 million or $1.62 per share in 2013.
Electric utility's net income decreased $13.6 million in 2014 compared to 2013 primarily due to:
a $23.3 million increase in gross margin driven by:

30


an estimated $14 million increase from new retail rates in Missouri effective January 26, 2013 and in Kansas effective July 25, 2014;
a $16.0 million increase from energy efficiency programs under MEEIA consisting of $12.4 million for recovery of program costs, which have a direct offset in utility operating and maintenance expense, and $3.6 million for recovery of throughput disincentive; and
an estimated $4 million decrease due to unfavorable weather driven by a 6% decrease in cooling degree days;
a $40.8 million increase in other operating expenses primarily due to:
a $6.0 million increase in Wolf Creek operating and maintenance expenses due to $8.7 million from a planned mid-cycle outage that began in March 2014 and concluded in May 2014, increased amortization of $3.4 million from a planned refueling outage that began in February 2013 and ended in April 2013, where costs are deferred and amortized between refueling outages, partially offset by $6.1 million of other decreases in operating and maintenance expenses;
a $12.4 million increase in program costs for energy efficiency programs under MEEIA, which have a direct offset in revenue;
an $8.3 million increase in transmission and distribution operating and maintenance expenses; and
a $10.4 million increase in general taxes due to increased property taxes;
a $16.3 million increase in depreciation and amortization expense due to capital additions;
a $7.5 million decrease in interest expense primarily due to:
a $1.6 million decrease from the remarketing of KCP&L's Series 1992, 1993A, 2007B Environmental Improvement Revenue Refunding (EIRR) bonds in April 2013 and Series 2008 EIRR bonds in July 2013 at lower interest rates;
a $2.3 million decrease in borrowing costs for short-term debt primarily driven by lower average commercial paper balances and interest rates in 2014 at GMO, as well as lower borrowing fees under KCP&L's and GMO's revolving credit facilities in 2014; and
a $1.2 million increase in the debt component of AFUDC resulting from a higher average construction work in progress balance in 2014 primarily due to environmental upgrades at KCP&L's La Cygne Station; and
a $9.8 million decrease in income tax expense primarily due to decreased pre-tax income.
Great Plains Energy's corporate and other activities loss decreased $6.2 million in 2014 compared to 2013 primarily due to the release of uncertain tax positions related to former GMO non-regulated operations in the third quarter of 2014 which resulted in:
a $2.1 million decrease in after-tax interest expense; and
$6.1 million of income tax benefits.
2013 Compared to 2012
Great Plains Energy's 2013 earnings available for common shareholders increased to $248.6 million or $1.62 per share from $198.3 million or $1.35 per share in 2012.
Electric utility's net income increased $40.5 million in 2013 compared to 2012 driven by:
an $86.7 million increase in gross margin due to:
an estimated $111 million increase primarily from new retail rates in Kansas effective January 1, 2013, and Missouri effective January 26, 2013;
an estimated $42 million increase driven by an increase in weather-normalized retail demand;

31


an estimated $4 million increase from the impact of an unplanned outage at Wolf Creek in the first quarter of 2012;
an estimated $47 million decrease due to unfavorable weather driven by a 27% decrease in cooling degree days partially offset by the impact of favorable weather during the first and fourth quarters of 2013; and
an estimated $23 million decrease primarily due to increased purchased power and transmission expense;
a $2.4 million decrease in Wolf Creek operating and maintenance expenses primarily due to an unplanned outage in the first quarter of 2012, mostly offset by higher operating and maintenance expenses in 2013;
a $22.0 million increase from certain regulatory items included in operating and maintenance expenses including increased pension expense corresponding to the resetting of pension expense trackers with the effective date of new retail rates, costs for energy efficiency and demand side management programs under MEEIA, and solar rebates provided to customers, all of which are included in retail rates;
a $15.3 million increase in general taxes driven by increased property taxes;
a $6.8 million decrease in interest expense primarily due to:
a $13.4 million decrease from the repayment of GMO's $500.0 million 11.875% Senior Notes at maturity in July 2012;
a $6.5 million increase in the debt component of AFUDC resulting from a higher average construction work in progress balance due to environmental upgrades at KCP&L's La Cygne Station;
a $7.5 million increase due to KCP&L's issuance of $300.0 million 3.15% Senior Notes in March 2013;
a $5.4 million increase resulting from GMO's issuance of $350.0 million of senior notes in August 2013; and
a $3.9 million increase relating to intercompany loans from Great Plains Energy to GMO; and
a $13.4 million increase in income tax expense driven primarily by increased pre-tax income.
Great Plains Energy's corporate and other activities loss decreased $9.8 million in 2013 compared to 2012 due to:
an $8.1 million decrease in after-tax interest expense as a result of a lower interest rate on the refinanced long-term debt that was underlying Great Plains Energy's $287.5 million Equity Units and the repayment of Great Plains Energy's $250.0 million 2.75% Senior Notes at maturity in August 2013;
a $2.3 million increase in after-tax intercompany interest income relating to intercompany loans from Great Plains Energy to GMO; and
2012 included:
a $1.8 million after-tax loss on the sale of real estate property; and
$4.5 million of income tax benefits from the release of uncertain tax positions related to former GMO non-regulated operations.
Gross Margin
Gross margin is a financial measure that is not calculated in accordance with GAAP.  Gross margin, as used by Great Plains Energy and KCP&L, is defined as operating revenues less fuel, purchased power and transmission. Expenses for fuel, purchased power and transmission, offset by wholesale sales margin, are subject to recovery through cost adjustment mechanisms, except for KCP&L's Missouri retail operations.  As a result, operating revenues increase or decrease in relation to a significant portion of these expenses.  Management believes that gross margin provides a more meaningful basis for evaluating electric utility's operations across periods than operating revenues because gross margin excludes the revenue effect of fluctuations in these expenses.  Gross margin is used

32


internally to measure performance against budget and in reports for management and the Board.  The Companies' definition of gross margin may differ from similar terms used by other companies.
ELECTRIC UTILITY RESULTS OF OPERATIONS
The following table summarizes the electric utility segment results of operations.
 
 
2014
 
2013
 
2012
 
 
(millions)
Operating revenues
 
$
2,568.2

 
$
2,446.3

 
$
2,309.9

 
Fuel
 
(489.2
)
 
(539.5
)
 
(539.5
)
 
Purchased power
 
(253.3
)
 
(125.9
)
 
(94.0
)
 
Transmission
 
(74.7
)
 
(53.2
)
 
(35.4
)
 
Gross margin (a)
 
1,751.0

 
1,727.7

 
1,641.0

 
Other operating expenses
 
(906.4
)
 
(865.6
)
 
(825.9
)
 
Voluntary separation program
 

 

 
4.3

 
Depreciation and amortization
 
(306.0
)
 
(289.7
)
 
(272.3
)
 
Operating income
 
538.6

 
572.4

 
547.1

 
Non-operating income and expenses
 
13.5

 
10.6

 
(11.2
)
 
Interest charges
 
(183.0
)
 
(190.5
)
 
(197.3
)
 
Income tax expense
 
(125.6
)
 
(135.4
)
 
(122.0
)
 
Net income
 
$
243.5

 
$
257.1

 
$
216.6

 
(a) 
Gross margin is a non-GAAP financial measure. See explanation of gross margin under Great Plains Energy's Results of Operations.
Electric Utility Gross Margin and MWh Sales
The following tables summarize electric utility's gross margin and MWhs sold.
 
 
 
%
 
 
 
%
 
 
 
Gross Margin (a)
2014
 
Change(c)
 
2013
 
Change(c)
 
2012
 
Retail revenues
(millions)
 
Residential
$
999.0

 

 
$
1,000.6

 
4

 
$
965.5

 
Commercial
970.0

 
1

 
963.3

 
6

 
907.6

 
Industrial
217.4

 
3

 
211.7

 
7

 
197.8

 
Other retail revenues
20.1

 
(2
)
 
20.5

 
3

 
19.9

 
Kansas property tax surcharge
2.1

 
N/M

 
(1.3
)
 
N/M

 
4.8

 
Energy efficiency (MEEIA)(b)
28.5

 
N/M

 
12.5

 
N/M

 

 
Provision for rate refund

 

 

 
N/M

 
0.1

 
Fuel recovery mechanism
57.7

 
N/M

 
21.9

 
23

 
17.8

 
Total retail
2,294.8

 
3

 
2,229.2

 
5

 
2,113.5


Wholesale revenues
222.6

 
32

 
168.8

 
10

 
152.9

 
Other revenues
50.8

 
5

 
48.3

 
11

 
43.5

 
Operating revenues
2,568.2

 
5

 
2,446.3

 
6

 
2,309.9


Fuel
(489.2
)
 
(9
)
 
(539.5
)
 

 
(539.5
)
 
Purchased power
(253.3
)
 
101

 
(125.9
)
 
34

 
(94.0
)
 
Transmission
(74.7
)
 
40

 
(53.2
)
 
50

 
(35.4
)
 
Gross margin
$
1,751.0

 
1

 
$
1,727.7

 
5

 
$
1,641.0


(a) 
Gross margin is a non-GAAP financial measure. See explanation of gross margin under Great Plains Energy's Results of Operations.
(b) 
Consists of recovery of program costs of $20.7 million and $8.3 million for 2014 and 2013, respectively, that have a direct offset in utility operating and maintenance expenses and recovery of throughput disincentive of $7.8 million and $4.2 million for 2014 and 2013, respectively.
(c) 
N/M - not meaningful


33


 
 
 
%
 
 
 
%
 
 
 
MWh Sales
2014
 
Change
 
2013
 
Change
 
2012
 
Retail MWh sales
(thousands)
 
Residential
8,971

 

 
8,999

 
1

 
8,930

 
Commercial
10,827

 

 
10,782

 

 
10,767

 
Industrial
3,200

 
2

 
3,132

 
(1
)
 
3,174

 
Other retail MWh sales
117

 
(2
)
 
118

 
(2
)
 
121

 
Total retail
23,115

 

 
23,031

 

 
22,992

 
Wholesale MWh sales
7,587

 
21

 
6,283

 

 
6,283

 
Total MWh sales
30,702

 
5

 
29,314

 

 
29,275

 
Electric utility's residential customers' usage is significantly affected by weather. Bulk power sales, the major component of wholesale sales, vary with system requirements, generating unit, transmission availability, fuel costs, and requirements of other electric systems. Electric utility's revenues contain certain fuel recovery mechanisms as follows:
KCP&L's Kansas retail rates contain an Energy Cost Adjustment (ECA) tariff. The ECA tariff reflects the projected annual amounts of fuel, purchased power, emission allowances, transmission costs and asset-based off-system sales margin. These projected amounts are subject to quarterly re-forecasts. Any difference between the ECA revenue collected and the actual ECA amounts for a given year (which may be positive or negative) is recorded as an increase to or reduction of retail revenues and deferred as a regulatory asset or liability to be recovered from or refunded to Kansas retail customers over twelve months beginning April 1 of the succeeding year.
GMO's electric retail rates contain a Fuel Adjustment Clause (FAC) tariff under which 95% of the difference between actual fuel cost, purchased power costs, certain transmission costs and off-system sales margin and the amount provided in base rates for these costs is passed along to GMO's customers. The FAC cycle consists of an accumulation period of six months beginning in June and December with FAC rate approval requested every six months for a twelve month recovery period. The FAC is recorded as an increase to or reduction of retail revenues and deferred as a regulatory asset or liability to be recovered from or refunded to GMO's electric retail customers.
GMO's steam rates contain a Quarterly Cost Adjustment (QCA) under which 85% of the difference between actual fuel costs and base fuel costs is passed along to GMO's steam customers. The QCA is recorded as an increase to or reduction of other revenues and deferred as a regulatory asset or liability to be recovered from or refunded to GMO's steam customers.
KCP&L's Missouri retail rates do not currently contain a fuel recovery mechanism, meaning that changes in fuel, purchased power and transmission costs will not be reflected in rates until new rates are authorized by the MPSC, creating a regulatory lag between the time costs change and when they are reflected in rates. Regulatory lag can be expected to have an adverse impact, which could be material, on Great Plains Energy's results of operations. KCP&L's retail rates in Missouri reflect a set level of non-firm wholesale electric sales margin. KCP&L does not recover any shortfall in non-firm wholesale electric sales margin from the level included in Missouri retail rates. KCP&L has requested a FAC as part of its Missouri rate case filed in October 2014. If authorized with new rates, the FAC for KCP&L in Missouri is anticipated to be effective on or around September 30, 2015.
Both KCP&L and GMO offer energy efficiency and demand side management programs to their Missouri retail customers under MEEIA and recover both program costs and throughput disincentive in retail rates. KCP&L recovers these items through a rider mechanism, with the difference between the amount collected and the actual program costs and throughput disincentive recorded as an increase to or reduction of retail revenues and is deferred as a regulatory asset or liability to be recovered from or refunded to KCP&L's Missouri retail customers. GMO recovers these items through base rates, with the difference between the amount collected and the actual program costs and throughput disincentive to be included as part of future GMO rate case proceedings.

34


Electric utility's gross margin increased $23.3 million in 2014 compared to 2013 primarily due to:
an estimated $14 million increase from new retail rates in Missouri effective January 26, 2013 and in Kansas effective July 25, 2014;
a $16.0 million increase from energy efficiency programs under MEEIA consisting of $12.4 million for recovery of program costs, which have a direct offset in utility operating and maintenance expense, and $3.6 million for recovery of throughput disincentive; and
an estimated $4 million decrease due to unfavorable weather driven by a 6% decrease in cooling degree days.
Electric utility's gross margin increased $86.7 million in 2013 compared to 2012 due to:
an estimated $111 million increase primarily from new retail rates in Kansas effective January 1, 2013, and Missouri effective January 26, 2013;
an estimated $42 million increase driven by an increase in weather-normalized retail demand;
an estimated $4 million increase from the impact of an unplanned outage at Wolf Creek in the first quarter of 2012;
an estimated $47 million decrease due to unfavorable weather driven by a 27% decrease in cooling degree days partially offset by the impact of favorable weather during the first and fourth quarters of 2013; and
an estimated $23 million decrease primarily due to increased purchased power and transmission expense. Purchased power expense increased primarily due to increased MWh purchases under new wind generation power purchase agreements, which are included in new retail rates. Transmission expense increased primarily due to SPP base plan funding transmission charges, of which a portion is included in new retail rates.
The following table provides cooling degree days (CDD) and heating degree days (HDD) for the last three years at the Kansas City International Airport. CDD and HDD are used to reflect the demand for energy to cool or heat homes and buildings.
 
 
 
%
 
 
 
%
 
 
 
2014
 
Change
 
2013
 
Change
 
2012
 
 
 
 
 
 
 
 
 
 
CDD
1,266
 
(6)
 
1,345
 
(27)
 
1,839
 
 
 
 
 
 
 
 
 
 
HDD
5,666
 
2
 
5,561
 
38
 
4,028
 
 
 
 
 
 
 
 
 
 
Electric Utility Other Operating Expenses (including utility operating and maintenance expenses, general taxes and other)
Electric utility's other operating expenses increased $40.8 million in 2014 compared to 2013 primarily due to:
a $6.0 million increase in Wolf Creek operating and maintenance expenses due to $8.7 million from a planned mid-cycle outage that began in March 2014 and concluded in May 2014, increased amortization of $3.4 million from a planned refueling outage that began in February 2013 and ended in April 2013, where costs are deferred and amortized between refueling outages, partially offset by $6.1 million of other decreases in operating and maintenance expenses;
a $12.4 million increase in program costs for energy efficiency programs under MEEIA, which have a direct offset in revenue;
an $8.3 million increase in transmission and distribution operating and maintenance expenses; and
a $10.4 million increase in general taxes due to increased property taxes.

35


Electric utility's other operating expenses increased $39.7 million in 2013 compared to 2012 primarily due to:
a $7.6 million increase in pension expense corresponding to the resetting of pension expense trackers with the effective date of new retail rates;
$8.3 million relating to costs for energy efficiency and demand side management programs under MEEIA;
a $6.1 million increase relating to solar rebates provided to customers due to the deferral to a regulatory asset for recovery in future rates of $3.0 million in the first quarter of 2012 and $3.1 million of regulatory asset amortization in 2013; and
a $15.3 million increase in general taxes driven by increased property taxes.
These increases were partially offset by a $2.4 million decrease in Wolf Creek operating and maintenance expenses primarily due to an unplanned outage in the first quarter of 2012, mainly offset by higher operating and maintenance expenses in 2013.
Electric Utility Voluntary Separation Program
In 2011, Great Plains Energy executed an organizational realignment and voluntary separation program to assist in the management of overall costs within the level reflected in the Company's retail electric rates and to enhance organizational efficiency.  In 2012, KCP&L deferred $4.3 million of expense related to the voluntary separation program to a regulatory asset for recovery in rates beginning January 1, 2013, pursuant to KCP&L's December 2012 KCC rate order.
Electric Utility Depreciation and Amortization
Electric utility's depreciation and amortization expense increased $16.3 million in 2014 compared to 2013 due to capital additions. Electric utility's depreciation and amortization expense increased $17.4 million in 2013 compared to 2012 driven by higher depreciation rates for KCP&L as well as increased depreciation expense for other capital additions.
Electric Utility Non-Operating Income and Expenses
Electric utility's non-operating income and expenses increased $21.8 million in 2013 compared to 2012 primarily due to a $12.8 million increase in the equity component of AFUDC at KCP&L and $4.2 million of expense recorded in 2012 related to accounting effects of the GMO January 2013 rate order as well as other increased expenses from non-regulated activities.
Electric Utility Interest Charges
Electric utility's interest charges decreased $7.5 million in 2014 compared to 2013 primarily due to:
a $1.6 million decrease from the remarketing of KCP&L's Series 1992, 1993A, 2007B EIRR bonds in April 2013 and Series 2008 EIRR bonds in July 2013 at lower interest rates;
a $2.3 million decrease in borrowing costs for short-term debt primarily driven by lower average commercial paper balances and interest rates in 2014 at GMO, as well as lower borrowing fees under KCP&L's and GMO's revolving credit facilities in 2014; and
a $1.2 million increase in the debt component of AFUDC resulting from a higher average construction work in progress balance in 2014 primarily due to environmental upgrades at KCP&L's La Cygne Station.
Electric utility's interest charges decreased $6.8 million in 2013 compared to 2012 primarily due to a $13.4 million decrease from the repayment of GMO's $500.0 million 11.875% Senior Notes at maturity in July 2012 and a $6.5 million increase in the debt component of AFUDC resulting from a higher average construction work in progress balance due to environmental upgrades at KCP&L's La Cygne Station.

36


These decreases were partially offset by:
$7.5 million increase due to KCP&L's issuance of $300.0 million 3.15% Senior Notes in March 2013;
a $5.4 million increase resulting from GMO's issuance of $350.0 million of senior notes in August 2013; and
a $3.9 million increase relating to intercompany loans from Great Plains Energy to GMO.
Electric Utility Income Tax Expense
Electric utility's income tax expense decreased $9.8 million in 2014 compared to 2013 primarily due to decreased pre-tax income. Electric utility's income tax expense increased $13.4 million in 2013 compared to 2012 primarily due to increased pre-tax income.
GREAT PLAINS ENERGY SIGNIFICANT BALANCE SHEET CHANGES
(December 31, 2014 compared to December 31, 2013)
Assets held for sale decreased $36.2 million to reflect the sale of KCP&L's and GMO's SPP-approved regional transmission projects to Transource Missouri, LLC in January 2014.
Great Plains Energy's construction work in progress increased $163.3 million primarily due to environmental upgrades at KCP&L's La Cygne Station.
Great Plains Energy's regulatory assets increased $184.9 million primarily due to an increase in pension and post-retirement benefit obligations driven by an actuarial loss due to longer mortality assumptions and a decrease in the discount rate assumption, and solar rebates paid to customers.
Great Plains Energy's commercial paper increased $250.1 million primarily due to borrowings at KCP&L for capital expenditures and pension funding contributions.
Great Plains Energy's deferred income taxes - deferred credits and other liabilities increased $124.9 million primarily due to an increase in temporary differences and changes in the projected utilization of net operating loss carryforwards, primarily driven by bonus depreciation.
Great Plains Energy's asset retirement obligations increased $37.1 million primarily due to an increase in the asset retirement obligation related to the decommissioning of Wolf Creek as a result of the updated Wolf Creek decommissioning cost study. See Note 7 to the consolidated financial statements for additional information.
Great Plains Energy's pension and post-retirement liability - deferred credits and other liabilities increased $148.1 million primarily due to an increase in benefit obligations driven by an actuarial loss due to longer mortality assumptions and a decrease in the discount rate assumption.
CAPITAL REQUIREMENTS AND LIQUIDITY 
Great Plains Energy operates through its subsidiaries and has no material assets other than the stock of its subsidiaries.  Great Plains Energy's ability to make payments on its debt securities and its ability to pay dividends are dependent on its receipt of dividends or other distributions from its subsidiaries, proceeds from the issuance of its securities and borrowing under its revolving credit facility.
Great Plains Energy's capital requirements are principally comprised of debt maturities and electric utility's construction and other capital expenditures.  These items as well as additional cash and capital requirements are discussed below.
Great Plains Energy's liquid resources at December 31, 2014, consisted of $13.0 million of cash and cash equivalents on hand and $881.8 million of unused bank lines of credit.  The unused lines consisted of $196.0 million from Great Plains Energy's revolving credit facility, $239.0 million from KCP&L's credit facilities and $446.8 million from GMO's credit facilities.  See Note 10 to the consolidated financial statements for more information regarding the revolving credit facilities. Generally, Great Plains Energy uses these liquid resources to

37


meet its day-to-day cash flow requirements, and from time to time issues equity and/or long-term debt to repay short-term debt or increase cash balances.
Great Plains Energy intends to meet day-to-day cash flow requirements including interest payments, retirement of maturing debt, construction requirements, dividends and pension benefit plan funding requirements with a combination of internally generated funds and proceeds from short-term debt. From time to time, Great Plains Energy issues equity and/or long-term debt to repay short-term debt or increase cash balances. Great Plains Energy's intention to meet a portion of these requirements with internally generated funds may be impacted by the effect of inflation on operating expenses, the level of MWh sales, regulatory actions, compliance with environmental regulations and the availability of generating units.  In addition, Great Plains Energy may issue equity, equity-linked securities and/or debt to finance growth. 
Cash Flows from Operating Activities
Great Plains Energy generated positive cash flows from operating activities for the periods presented. The $78.6 million decrease in cash flows from operating activities for Great Plains Energy in 2014 compared to 2013 was primarily due to a $32.4 million decrease driven by changes in coal inventory levels, a $27.2 million decrease driven by the under recovery of costs subject to fuel recovery mechanisms where deferrals have exceeded recoveries and a $10.7 million decrease driven by an increase in solar rebates paid to customers.
Other changes in working capital are detailed in Note 2 to the consolidated financial statements.  The individual components of working capital vary with normal business cycles and operations.
The $113.0 million increase in cash flows from operating activities for Great Plains Energy in 2013 compared to 2012 is primarily due to a $50.3 million increase in net income along with other changes in working capital that are detailed in Note 2 to the consolidated financial statements. 
Cash Flows from Investing Activities
Great Plains Energy's cash used for investing activities varies with the timing of utility capital expenditures and purchases of investments and nonutility property.  Investing activities are offset by proceeds from the sale of properties and insurance recoveries.
Great Plains Energy's utility capital expenditures increased $104.7 million in 2014 compared to 2013 primarily due to an increase in cash utility capital expenditures related to infrastructure and system improvements at KCP&L offset by a decrease in expenditures related to environmental upgrades at KCP&L's La Cygne Station.
In January 2014, KCP&L and GMO completed the sale of two SPP-approved regional transmission projects to Transource Missouri for cash proceeds of $37.7 million. See Note 12 to the consolidated financial statements for additional information regarding the sale.
Great Plains Energy's utility capital expenditures increased $58.8 million in 2013 compared to 2012 primarily due to an increase in cash utility capital expenditures at the Wolf Creek nuclear unit for a back-up diesel generator and pipe replacement for the essential service water system and construction of the SPP-approved regional transmission line from the Iatan generating station to KCP&L's Nashua substation.
Cash Flows from Financing Activities
Great Plains Energy's cash flows from financing activities in 2014 reflect increased short-term borrowings at KCP&L primarily driven by capital expenditures and pension funding contributions.
Great Plains Energy's cash flows from financing activities in 2013 reflect KCP&L's issuance, at a discount, of $300.0 million of 3.15% Senior Notes that mature in 2023 and the remarketing of $112.8 million of EIRR bonds previously held by KCP&L, with the proceeds used to repay short-term borrowings. In August 2013, GMO issued$350.0 million of senior notes and used the proceeds to repay a $248.7 million intercompany loan from Great Plains Energy and repay short-term borrowings. Great Plains Energy used the proceeds from GMO to repay its $250.0 million 2.75% Senior Notes that matured in August 2013.

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In June 2012, Great Plains Energy settled the obligations under the purchase contracts underlying its 5.7 million outstanding Equity Units by issuing approximately 17.1 million shares of its common stock in exchange for $287.4 million in cash proceeds which Great Plains Energy used to make an intercompany loan to GMO.  GMO used the proceeds from the intercompany loan along with increased short-term borrowings to repay its $500 million 11.875% Senior Notes at maturity in July 2012. Great Plains Energy's cash flows from financing activities in 2012 also reflect repayment of KCP&L's $12.4 million of 4.00% EIRR bonds at maturity in January 2012.
Impact of Credit Ratings on Liquidity
The ratings of Great Plains Energy's, KCP&L's and GMO's securities by the credit rating agencies impact their liquidity, including the cost of borrowings under their revolving credit agreements and in the capital markets. The Companies view maintenance of strong credit ratings as extremely important to their access to and cost of debt financing and to that end maintain an active and ongoing dialogue with the agencies with respect to results of operations, financial position and future prospects. While a decrease in these credit ratings would not cause any acceleration of Great Plains Energy's, KCP&L's or GMO's debt, it could increase interest charges under Great Plains Energy's 6.875% Senior Notes due 2017 or Great Plains Energy's, KCP&L's and GMO's revolving credit agreements. A decrease in credit ratings could also have, among other things, an adverse impact, which could be material, on Great Plains Energy's, KCP&L's and GMO's access to capital, the cost of funds, the ability to recover actual interest costs in state regulatory proceedings, the type and amounts of collateral required under supply agreements and Great Plains Energy's ability to provide credit support for its subsidiaries.
As of February 25, 2015, the major credit rating agencies rated Great Plains Energy's, KCP&L's and GMO's securities as detailed in the following table.
 
Moody's
 
Standard
 
Investors Service
 
& Poor's
Great Plains Energy
 
 
 
 
 
 
 
Outlook
 
Stable
 
 
 
Stable
 
Corporate Credit Rating
 
-
 
 
 
BBB+
 
Preferred Stock
 
Ba1
 
 
 
BBB-
 
Senior Unsecured Debt
 
Baa2
 
 
 
BBB
 
 
 
 
 
 
 
 
 
KCP&L
 
 
 
 
 
 
 
Outlook
 
Stable
 
 
 
Stable
 
Senior Secured Debt
 
A2
 
 
 
A
 
Senior Unsecured Debt
 
Baa1
 
 
 
BBB+
 
Commercial Paper
 
P-2
 
 
 
A-2
 
 
 
 
 
 
 
 
 
GMO
 
 
 
 
 
 
 
Outlook
 
Stable
 
 
 
Stable
 
Senior Unsecured Debt
 
Baa2
 
 
 
BBB+
 
Commercial Paper
 
P-2
 
 
 
A-2
 
A securities rating is not a recommendation to buy, sell or hold securities and may be subject to revision or withdrawal at any time by the assigning rating agency.
Financing Authorization
Under stipulations with the MPSC and KCC, Great Plains Energy and KCP&L maintain common equity at not less than 30% and 35%, respectively, of total capitalization (including only the amount of short-term debt in excess of the amount of construction work in progress).  KCP&L's long-term financing activities are subject to the authorization of the MPSC.  In July 2014, the MPSC authorized KCP&L to issue up to $350.0 million of long-term debt and enter into interest rate hedging instruments in connection with such debt through June 30, 2016. KCP&L has not utilized any of this authorization.

39


In November 2014, FERC authorized KCP&L to have outstanding at any one time up to a total of $1.0 billion in short-term debt instruments through December 2016, conditioned on KCP&L's borrowing costs not exceeding the greater of: (i) 2.25% over LIBOR; (ii) 1.75% over the prime rate or federal funds rate; or (iii) 2.25% over the A2/P-2 nonfinancial commercial paper rate most recently published by the Federal Reserve at the time of the borrowing. The authorization is subject to four restrictions: (i) proceeds of debt backed by utility assets must be used for utility purposes; (ii) if any utility assets that secure authorized debt are divested or spun off, the debt must follow the assets and also be divested or spun off; (iii) if any proceeds of the authorized debt are used for non-utility purposes, the debt must follow the non-utility assets (specifically, if the non-utility assets are divested or spun off, then a proportionate share of the debt must follow the divested or spun off non-utility assets); and (iv) if utility assets financed by the authorized short-term debt are divested or spun off to another entity, a proportionate share of the debt must also be divested or spun off. At December 31, 2014, there was $641.7 million available under this authorization.
In January 2014, FERC authorized GMO to have outstanding at any one time up to a total of $750.0 million in short-term debt instruments through March 2016, conditioned on GMO's borrowing costs not exceeding the greater of 2.25% over LIBOR or 1.75% over the prime rate or federal funds rate, as applicable, and subject to the same four restrictions as the KCP&L FERC short-term authorization discussed in the preceding paragraph.  At December 31, 2014, there was $750.0 million available under this authorization.
KCP&L and GMO are also authorized by FERC to participate in the Great Plains Energy money pool, an internal financing arrangement in which funds may be lent on a short-term basis to KCP&L and GMO.  At December 31, 2014, KCP&L had an outstanding payable to GMO and GMO had an outstanding payable to Great Plains Energy under the money pool of $12.6 million and $3.3 million, respectively.  
Significant Financing Activities
Great Plains Energy
Great Plains Energy has an effective shelf registration statement for the sale of unspecified amounts of securities with the SEC that became effective in March 2012. A new shelf registration statement is expected to be filed in the first quarter of 2015.
In August 2013, GMO entered into a note purchase agreement and issued the following series of unsecured senior notes:   
$125.0 million 3.49% Senior Notes, Series A, maturing in 2025;
$75.0 million 4.06% Senior Notes, Series B, maturing in 2033; and
$150.0 million 4.74% Senior Notes, Series C, maturing in 2043.
In June 2012, Great Plains Energy settled the obligations under the purchase contracts underlying its 5.7 million outstanding Equity Units by issuing approximately 17.1 million shares of its common stock in exchange for $287.4 million. The $287.4 million had been raised through the remarketing of subordinated notes that were originally issued as components of the Equity Units as senior notes at a new interest rate.
KCP&L
KCP&L has an effective shelf registration statement providing for the sale of unspecified amounts of investment grade notes and general mortgage bonds with the SEC that became effective in March 2012. A new shelf registration statement is expected to be filed in the first quarter of 2015.
In March 2013, KCP&L issued, at a discount, $300.0 million of 3.15% unsecured Senior Notes, maturing in 2023.
In April 2013, KCP&L remarketed the following series of EIRR bonds that were previously held by KCP&L:
secured Series 1993B EIRR bonds totaling $39.5 million at a fixed rate of 2.95% through maturity; and

40


unsecured Series 2007A-1 and 2007A-2 EIRR bonds totaling $10.0 million and $63.3 million, respectively, maturing in 2035 into one series: Series 2007A totaling $73.3 million at a variable rate that will be determined weekly.
Debt Agreements
See Note 10 to the consolidated financial statements for information regarding revolving credit facilities.
Projected Utility Capital Expenditures
Great Plains Energy's cash utility capital expenditures, excluding AFUDC to finance construction, were $773.7 million, $669.0 million and $610.2 million in 2014, 2013 and 2012, respectively. Utility capital expenditures represent a significant portion of Great Plains Energy's capital requirements. Utility capital expenditures projected for the next five years include improvements to generating, distribution and transmission facilities, software upgrades and expenditures for environmental projects at coal-fired power plants. Environmental in the table below includes costs at KCP&L's La Cygne Station to comply with the Best Available Retrofit Technology (BART) rule, costs at other coal-fired generating units to comply with the Mercury and Air Toxics Standards (MATS) rule and costs for compliance with the Clean Air Act and Clean Water Act based on proposed regulations or final regulations with implementation plans not yet finalized where the timing is uncertain. Great Plains Energy intends to meet these capital requirements with a combination of internally generated funds and proceeds from short-term and long-term debt.
Utility capital expenditures projected for the next five years, excluding AFUDC, are detailed in the following table. This utility capital expenditure plan is subject to continual review and change.
 
 
2015
 
2016
 
2017
 
2018
 
2019
 
 
(millions)
Generating facilities
 
$
245.2

 
$
222.5

 
$
204.8

 
$
205.1

 
$
203.2

 
Distribution and transmission facilities
 
260.1

 
229.6

 
201.0

 
203.0

 
222.9

 
General facilities
 
148.2

 
84.2

 
71.8

 
28.6

 
15.9

 
Nuclear fuel
 
20.0

 
21.0

 
44.4

 
21.2

 
23.5

 
Environmental
 
117.4

 
41.8

 
129.3

 
102.1

 
113.5

 
Total utility capital expenditures
 
$
790.9

 
$
599.1

 
$
651.3

 
$
560.0

 
$
579.0

 
Pensions
The Company incurs significant costs in providing defined benefit plans for substantially all active and inactive employees of KCP&L and GMO and its 47% ownership share of WCNOC's defined benefit plans. Funding of the plans follows legal and regulatory requirements with funding equaling or exceeding the minimum requirements of the Employee Retirement Income Security Act of 1974, as amended (ERISA).
In 2014 and 2013, the Company contributed $66.2 million and $57.4 million to the pension plans, respectively, and in 2015 the Company expects to contribute $78.9 million to the plans to satisfy the minimum ERISA funding requirements and the MPSC and KCC rate orders, the majority of which is expected to be paid by KCP&L. Additional contributions to the plans are expected beyond 2015 in amounts at least sufficient to meet the greater of ERISA or regulatory funding requirements; however, these amounts have not yet been determined.
Additionally, the Company provides post-retirement health and life insurance benefits for certain retired employees and expects to make benefit contributions of $10.2 million under the provisions of these plans in 2015, the majority of which is expected to be paid by KCP&L.
Management believes the Company has adequate access to capital resources through cash flows from operations or through existing lines of credit to support these funding requirements.

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Supplemental Capital Requirements and Liquidity Information
The information in the following table is provided to summarize Great Plains Energy's cash obligations and commercial commitments.
Payment due by period
2015
 
2016
 
2017
 
2018
 
2019
After 2019
Total
Long-term debt
(millions)
Principal
$
15.1

 
$
1.1

 
$
382.1

 
$
351.1

 
$
401.1

 
$
2,352.1

 
$
3,502.6

Interest
180.1

 
179.7

 
172.2

 
146.5

 
120.9

 
1,133.2

 
1,932.6

Lease commitments
 
 
 
 
 
 
 
 
 
 
 
 
 
Operating leases
14.2

 
10.0

 
9.7

 
9.7

 
9.0

 
129.5

 
182.1

Capital leases
0.4

 
0.4

 
0.4

 
0.4

 
0.4

 
4.0

 
6.0

Pension and other post-retirement plans (a)
89.1

 
89.1

 
89.1

 
89.1

 
89.1

 
(a)

 
445.5

Purchase commitments
 
 
 
 
 
 
 
 
 
 
 
 
 
Fuel
374.6

 
184.9

 
163.0

 
112.2

 
138.2

 
70.9

 
1,043.8

Power
47.3

 
47.3

 
47.3

 
47.3

 
47.3

 
556.8

 
793.3

Capacity
3.0

 
1.2

 

 

 

 

 
4.2

La Cygne environmental project
16.6

 

 

 

 

 

 
16.6

Non-regulated natural gas transportation
3.5

 
3.5

 
1.0

 

 

 

 
8.0

Other
44.8

 
31.1

 
10.0

 
12.8

 
12.0

 
44.2

 
154.9

Total contractual commitments (a)
$
788.7

 
$
548.3

 
$
874.8

 
$
769.1

 
$
818.0

 
$
4,290.7

 
$
8,089.6

(a) 
The Company expects to make contributions to the pension and other post-retirement plans beyond 2019 but the amounts are not yet determined. Amounts for years after 2015 are estimates based on information available in determining the amount for 2015. Actual amounts for years after 2015 could be significantly different than the estimated amounts in the table above.
Long-term debt includes current maturities. Long-term debt principal excludes $0.5 million of net premiums on senior notes. Variable rate interest obligations are based on rates as of December 31, 2014.
Lease commitments end in 2048. Operating lease commitments include railcars to serve jointly-owned generating units where KCP&L is the managing partner. Of the amounts included in the table above, KCP&L will be reimbursed by the other owners for approximately $1.9 million in 2015 and approximately $0.4 million per year from 2016 to 2025, for a total of $6.1 million.
The Company expects to contribute $89.1 million to the pension and other post-retirement plans in 2015, of which the majority is expected to be paid by KCP&L. Additional contributions to the plans are expected beyond 2019 in amounts at least sufficient to meet the greater of ERISA or regulatory funding requirements; however, these amounts have not yet been determined. Amounts for years after 2015 are estimates based on information available in determining the amount for 2015. Actual amounts for years after 2015 could be significantly different than the estimated amounts in the table above.
Fuel commitments consist of commitments for nuclear fuel, coal and coal transportation costs. Power commitments consist of commitments for renewable energy under power purchase agreements. KCP&L and GMO purchase capacity from other utilities and nonutility suppliers. Purchasing capacity provides the option to purchase energy if needed or when market prices are favorable. KCP&L has capacity sales agreements not included above that total $5.5 million per year from 2015 to 2016, $1.3 million per year from 2017 to 2018 and $0.9 million for 2019<