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Notice

Filings Under the Public Utility Holding Company Act of 1935, as Amended (“Act”)

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Start Preamble October 28, 2002.

Notice is hereby given that the following filing(s) has/have been made with the Commission pursuant to provisions of the Act and rules promulgated under the Act. All interested persons are referred to the application(s) and/or declaration(s) for complete statements of the proposed transaction(s) summarized below. The application(s) and/or declaration(s) and any amendment(s) is/are available for public inspection through the Commission's Branch of Public Reference.

Interested persons wishing to comment or request a hearing on the application(s) and/or declaration(s) should submit their views in writing by November 22, 2002, to the Secretary, Securities and Exchange Commission, Washington, DC 20549-0609, and serve a copy on the relevant applicant(s) and/or declarant(s) at the address(es) specified below. Proof of service (by affidavit or, in the case of an attorney at law, by certificate) should be filed with the request. Any request for hearing should identify specifically the issues of facts or law that are disputed. A person who so requests will be notified of any hearing, if ordered, and will receive a copy of any notice or order issued in the matter. After November 22, 2002, the application(s) and/or declaration(s), as filed or as amended, may be granted and/or permitted to become effective.

Great Plains Energy Incorp., et al. (70-10064)

Great Plains Energy Incorporated (“GPE”), a registered holding company; Start Printed Page 66684Kansas City Power & Light Company (“KCPL”), an electric utility company and a wholly-owned subsidiary of GPE; and Great Plains Energy Services Incorporated (“GPES”), a to-be formed service company subsidiary, all located at 1201 Walnut, Kansas City, Missouri 64106; and Wolf Creek Nuclear Operating Corporation (“WCNOC”), 1550 Oxen Lane N.E., Burlington, Kansas 66839, a nonutility subsidiary of KCPL, which provides goods and services to the owners of Wolf Creek Generating Station; (collectively, “Applicants”) have filed an application-declaration under sections 6(a), 7, 9(a), 10, 12(b), and 13(b) under the Act and rules 45, 88, 90 and 91 under the Act.

I. Prior Authorizations

By Commission order dated September 7, 2001 (HCAR No. 27436) (“September Order”) GPE was authorized, among other things, to effectuate a reorganization by GPE forming another Missouri subsidiary and merging KCPL into the Missouri subsidiary that resulted in KCPL becoming a wholly owned subsidiary of GPE. In addition, financing was authorized for the new system. Specifically, related to the intrasystem provision of services, KCPL and GPE were given until April 30, 2002 to file an application-declaration seeking authority to create a service company and implement the final support service structure for the new GPE holding company system (“Service Company Application”). Until the Service Company Application is made effective, KCPL and GPE requested authority under section 13(b) and the rules for an interim period (“Interim Period”) for KCPL and the nonutility subsidiaries to provide support services and to sell goods to each other and to GPE. Existing and future nonutility, intermediate subsidiaries of GPE were also authorized during the Interim Period to provide management, administrative, project development and operating services at fair market prices to certain classes of nonutility subsidiaries.

II. Request to Form the Service Company and Provide Services

A. Summary of Requests

Applicants filed the Service Company Application by April 30, 2002, as directed by the Commission in September Order. The Service Company Application seeks the authorization and approval by the Commission of the provision of intrasystem services and goods following the expiration of the Interim Period, under section 13 of Act and the rules. Applicants request that the Commission: (1) Approve the designation of GPES as a subsidiary service company in accordance with the provisions of rule 88 under the Act and find that GPES is so organized and will conduct its operations so as to meet the requirements of section 13 and the rules under the Act; (2) approve the service agreement (as attached in S.E.C. File No. 70-10064, Exhibit B-1 filed April 19, 2002) (“Service Agreement”); (3) authorize to the extent not exempt under rules 81 and 87, for GPE's subsidiaries to provide certain services and goods to each other and to GPE; and (4) authorize extensions of credit or guarantees under section 12(b) and rule 45 for GPES or KCPL to assume responsibility to counterparties in leases, licenses, or other arrangements for the associates' compliance under those leases, licenses, or other arrangements.

B. Services provided by GPES

GPE requests authorizations with respect to the activities of GPES, which will be incorporated in Missouri as a wholly-owned subsidiary of GPE to serve as the service company for the GPE system. GPES will:

  • Have a minimal equity capitalization of not more than 1,000 shares with total equity capitalization of not more than $10,000.
  • Finance it business through the issuance of debt securities exempted under rule 52(b) to associate companies or unaffiliated parties or as otherwise authorized by the Act, rules, and Commission orders.
  • Provide companies [1] in the GPE system with a variety of administrative, management and support services.
  • Be staffed by a transfer of personnel from KCPL, and in addition, KCPL will transfer personal property from KCPL to GPES.[2]
  • Be assigned certain leases and licenses currently held by KCPL, or in the alternative the leases and licenses may continue to be held by KCPL and a portion of the goods and services may be provided to other system companies. (To the extent that current leases, licenses, and other arrangements respecting goods and services used by KCPL and one or more associate companies cannot be reasonably transferred to GPES, or in situations in which KCPL is the predominant user of such goods and services, or in the event Missouri Public Service Commission approval of the proposed asset transfer is not obtained before the establishment of GPES,[3] KCPL may make available a portion of the associated goods and services to associate companies through leases, licenses or similar arrangements.)
  • Be responsible to counterparties of the underlying leases, licenses, or other arrangements for the associates' compliance with the terms and conditions of those agreements.
  • Comply with the Commission's standards for cost allocation methods and procedures for service companies in registered holding company systems;
  • Use the Commission's “Uniform System of Accounts for Mutual Service Companies and Subsidiary Service Companies” for GPES's billing system.
  • Provide classes of services through departments and more than one class of services. Both corporate services and shared services may be offered. Corporate services are required, but shared services will be a choice subject to the terms and conditions of the service agreement.
  • Provide all services by GPES to affiliated companies on an “at cost” basis as determined by rules 90 and 91 of the Act, except as permitted by the Act or the Commission.

C. Services Provided by the Subsidiaries

1. KCPL

KCPL may provide to associate companies services incidental to its utility business, including but not limited to leases [4] or subleases of office or other space with associate companies, services of personnel with specialized expertise and usage of KCPL's integrated voice and data communications system. In addition, to Start Printed Page 66685the extent that current leases, licenses and other arrangements respecting goods and services used by KCPL and one or more associate companies cannot be reasonably transferred to GPES, or in situations in which KCPL is the predominant user of such goods and services, or in the event Missouri Public Service Commission approval of the proposed asset transfer is not obtained before the establishment of GPES, KCPL may make available a portion of the associated goods and services to associate companies through leases, licenses or similar arrangements. All such goods and services will be provided to associate companies in accordance with rules 87, 90 and 91. To the extent such matters do not fall within the exception provided in rule 87(a)(3), Applicants request authorization for KCPL to engage in such activities.

KCPL may have responsibility for GPES's compliance under assigned leases, licenses, and other arrangements. In situations where KCPL makes available goods and services to associate companies under leases, licenses, or other arrangements between KCPL and third parties, KCPL may have responsibility for those associate companies' compliance with such leases, licenses, or other arrangements. To the extent such responsibility is deemed to be an extension of credit or guaranty by KCPL under section 12(b) of the Act, Applicants request authority for KCPL to incur such responsibility.

2. WCNOC

Applicants request authorization for WCNOC, as a nonutility subsidiary of KCPL, to provide services and goods to the owners of Wolf Creek Generating Station at cost under existing agreements (as attached in S.E.C. File No. 70-10064, Exhibit B-3) (“WCNOC Existing Agreements”). Applicants also request authorization for KCPL to provide goods and services to WCNOC at cost under WCNOC Existing Agreements. WCNOC, KCPL, and Kansas Gas and Electric Company (an owner of Wolf Creek Generating Station) also have entered into a service reciprocity agreement dated June 20, 1986 (as attached in S.E.C. File No. 70-10064, Exhibit B-6) (“Service Reciprocity Agreement”), providing for the recognition of pension service credits earned by employees who transfer to or from WCNOC. To the extent the Service Reciprocity Agreement may be deemed jurisdictional, Applicants request authorization for KCPL and WCNOC to continue with such agreement.

D. Request for an Exemption From At Cost

Applicants request that GPES and all other nonutility subsidiaries of GPE be authorized to enter into agreements to provide construction, goods or services to certain associate companies enumerated below at fair market prices determined without regard to cost, and request an exemption (to the extent that rule 90(d) of the Act does not apply) under section 13(b) from the cost standards of rules 90 and 91:

  • A foreign utility company (“FUCO”) or foreign exempt wholesale generator that derives no part of its income, directly or indirectly, from the generation, transmission or distribution of electric energy for sale within the United States;
  • An exempt wholesale generator (EWG) that sells electricity at market-based rates which have been approved by the Federal Energy Regulatory Commission (“FERC”), provided that the purchaser is not KCPL;
  • A “qualifying facility” (“QF”) within the meaning of the Public Utility Regulatory Policies Act of 1978, as amended (“PURPA”) that sells electricity exclusively (i) at rates negotiated at arms' length to one or more industrial or commercial customers purchasing the electricity for their own use and not for resale, and/or (ii) to an electric utility company at the purchaser's “avoided cost” as determined in accordance with the regulations under PURPA;
  • A domestic EWG or QF that sells electricity at rates based upon its cost of service, as approved by FERC or any state public utility commission having jurisdiction, provided that the purchaser is not KCPL; or
  • A rule 58 subsidiary or any other nonutility subsidiary that (i) is partially-owned, directly or indirectly, by GPE, provided that the ultimate purchaser of such goods or services is not KCPL (or any other entity that GPE may form whose activities and operations are primarily related to the provision of goods and services to KCPL), (ii) is engaged solely in the business of developing, owning, operating and/or providing services or goods to nonutility subsidiaries described in clauses (a) through (e) immediately above, or (iii) does not derive, directly or indirectly, any material part of its income from sources within the United States and is not a public utility company operating within the United States.
Start Signature

For the Commission, by the Division of Investment Management, pursuant to delegated authority.

Margaret H. McFarland,

Deputy Secretary.

End Signature End Preamble

Footnotes

1.  GPE currently has four direct subsidiaries: KCPL; Innovative Energy Consultants, Inc.; KLT, Inc.; and Great Plains Power Incorporated (“GPP”). KCPL is the only public utility company in the GPE system, and provides electricity at retail in portions of Kansas and Missouri and at wholesale.

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2.  The net book value of the property proposed to be transferred to GPES is approximately $4.9 million. Of this amount, approximately $815,000 is related to leasehold improvements in leased office space which will be occupied by GPES. Approximately $2.9 million of this amount is related to general office equipment (such as chairs, desks, furniture, cubicle partitions and other items) which will be used by GPES employees. The remainder is related to the capitalized costs of software which will be used by GPES in providing services to its Clients. GPES will pay to KCPL the net book value of the property, under rule 90. The payment by GPES to KCPL for the transferred property may be in the form of either cash or a promissory note in the principal amount of the purchase price, bearing interest at the effective cost of capital of KCPL. Applicants represent that none of the property proposed to be transferred constitutes “utility assets” as defined by section 2(18) of the Act, and to the extent the property constitutes “goods” of KCPL, the Applicants state the transfer is permitted by rule 87(b)(4).

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3.  Section 393.190, RSMo.

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4.  KCPL leases transmission facilities and railcars, and has entered into lease arrangements for five combustion turbines.

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[FR Doc. 02-27807 Filed 10-31-02; 8:45 am]

BILLING CODE 8010-01-P