Company officials, in hearings this week before the Missouri Public Service Commission, said the revised figure for the Iatan 2 plant near Weston was unveiled privately last Friday for officials of KCP&L and its parent company, Great Plains Energy Inc.
The new figures, which also included a revised cost for an upgrade to an existing plant, are to be released publicly Thursday — two days after Great Plains’ annual shareholders meeting. The company said the estimates, which have been in the works since last October, still need to be reviewed by a consultant and will be presented to Great Plains’ board on Tuesday and subsequently to the power plant’s minority partners, which include Aquila Inc. and Empire District Electric Co.
The most recent estimate, which is more than a year old, was for the 850-megawatt plant to cost $1.7 billion. Similar plants are now estimated to cost more than $2.5 billion, in part because of higher material and labor costs.
KCP&L officials, without giving specifics, in the past have said that factors such as having the price locked in on some of the plant’s components would help soften any cost increases. On the other hand, there was testimony at the hearings indicating that the construction has had significant cost and scheduling problems.
In addition, the latest estimate may not be the last word on the power plant’s cost. Company officials testified that they will work on another “reforecast” at the end of the year, which will reflect any further changes in such things as labor or material costs. The plant, currently 70 percent engineered, is expected to be 90 percent engineered by the end of the year, which also could cause some changes in the cost.
“There are a number of risks associated with completing the project,” Stephen Easley, a senior vice president for KCP&L, said at the hearings, which are being held to help regulators decide whether Great Plains’ purchase of Aquila should be approved.
Those hearings just ended, but they may have to be restarted if a lawsuit filed Thursday by several large industrial users of electricity is successful.
The Public Service Commission over the last few months has received anonymous letters purportedly from KCP&L employees about mismanagement of the power-plant construction and efforts to hide the actual cost. The commission’s staff investigated and was going to present the results during the hearings, but the commission said it wasn’t going to consider the information obtained by the investigation. The commission also denied a request from the industrial users that would have kept the investigation’s findings as part of the case’s record.
So a suit was filed Thursday in the Missouri Court of Appeals that could force regulators to reopen the hearings and hear testimony about the staff’s investigation.
The cost of the plant has become a big issue in the current case asking Missouri regulators to approve Great Plains’ purchase of Aquila. The commission’s staff, the Missouri Office of the Public Counsel and the industrial customers have questioned whether Great Plains has the wherewithal to build the plant and buy Aquila at the same time, especially as costs for the plant increase.
Compounding the problem, they say, is that Great Plains paid too much for Aquila. A document giving the commission staff’s position said the “fundamental problem with the proposed transaction” was that Great Plains was overpaying at a time when KCP&L and Aquila would need the financing for infrastructure investments.
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