Electric utility provider, Great Plains Energy Incorporated’s (GXP) subsidiary, Kansas City Power & Light Company (“KCP&L”), filed a request with Kansas Corporation Commission for increasing electric service rates in Kansas.
If approved, the rate increase will lead to a hike in a typical residential bill by $11.67 per month. It will also boost the company’s revenues by 12.5% or $67.3 million.
The new rates are expected to come into effect in Oct 2015, as the rate request process in Kansas typically takes eight months for approval.
Why the Request for Rate Increase?
La Cygne Power Plant: KCP&L’s coal-fired plant in La Cygne has been upgraded with environmental equipments mandated by the government to comply with the Environmental Protection Agency’s regulations that will come into effect from Jun 2015. All the infrastructural work began in Sep 2011.
The upgrades include installation of various pollution control equipment such as baghouses and wet scrubbers, chimney and a selective catalytic reduction system. The expenditures incurred are currently within budget and are expected to be completed by Jun 2015. Some of the upgrade-related costs at the La Cygne power plant have already been recouped in previous rate requests.
Other Infrastructural Investment: Additionally, the rate increase was filed to recover investments made to replace aging infrastructure and modernize substations. Other investments include replacement of electric meters in the Kansas service area and upgrades at KPC&L’s Wolf Creek nuclear power plant.
The company also plans to invest in additional transmission lines to deliver electricity across its service areas. The additional lines will help the company to transmit renewable power from urban to rural areas. The renewable sources will help provide electricity to customers at a lesser cost.
These expenditures will also help the company to restore outages more quickly and provide reliable services to its customers.
Previous Rate Request
In Oct 2014, KCP&L had filed a rate increase request with the Missouri Public Service Commission for increasing base rates for rendering electric service to roughly 270,000 of KCP&L’s 565,000 customers in Missouri.
Zacks Rank
Great Plains Energy currently carries a Zacks Rank #3 (Hold). Better-ranked stocks in the same industry are Black Hills Corp. (BKH) and PG&E Corp. (PCG), sporting a Zacks Rank #1 (Strong Buy), and Consolidated Edison, Inc. (ED), holding a Zacks Rank #2 (Buy).
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