Great Plains Energy Inc.GXP

Morningstar Rating

Stock Research and Analysis

by Morningstar Equity Analysts

Great Plains Energy could see solid long-term earnings expansion as it aggressively ramps up investment in its rate base. However, earnings growth will be predicated on regulatory support, stabilization in customer demand growth, and open capital markets. Read more

Bulls Say

As a fully regulated utility, Great Plains Energy generates stable and predictable cash flow.

Internal rate base expansion of some 75% during the next five years should drive above-average earnings growth.

Low-cost coal and nuclear plants allow Great Plains to maintain low prices for its regulated customers and sell excess capacity into the wholesale market at attractive margins.

The acquisition of Aquila's electric assets in Missouri should boost shareholder value through operating synergies and lower financing costs. Read more

Bears Say

There is no guarantee that Great Plains will be able to fully recover the capital costs associated with its massive expansion program.

Although the firm will be seeking to add a fuel adjustment clause to its rate structure, there's no guarantee this provision will be granted--potentially implying continued exposure to fuel price volatility.

Great Plains chopped its dividend in half in early 2009 to preserve much-needed capital.

A crane collapse at Great Plains' Iatan power plant has raised questions about possible construction delays and a credit-rating downgrade. Read more

Strategy

Excluding the Aquila acquisition, Great Plains plans to increase its rate base by $2.8 billion--or about 75%--through 2012. The bulk of this investment will go toward expanding generation capacity by Read more

Management

Chairman and CEO Michael Chesser took the reins at Great Plains Energy in 2003 following a career that spanned various utilities. We think the perspective gained from his varied experience outside the firm is an asset to Great Plains. We do note, however, Read more

Profile

Great Plains Energy is a holding company for a regulated utility and a wholesale energy supply company. Kansas City Power & Light generates, transmits, and distributes Read more

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