Terry Bassham – President and Chief Executive Officer Tony Somma – Executive Vice President and Chief Financial Officer Lori A. Wright – Vice President-Corporate Planning, Investor Relations and Treasurer.

Michael Sullivan – Wolfe Research Julien Dumoulin-Smith – Bank of America Greg Gordon – Evercore ISI Michael Lapides – Goldman Sachs Ali Agha – SunTrust Paul Ridzon – KeyBanc Charles Fishman – Morningstar Research Paul Patterson – Glenrock Associates Shar Pourreza – Guggenheim Partners Ashar Khan – Visium Andrew Levi – ExodusPoint Kevin Fallon – Citadel.

Good day, ladies and gentlemen, and thank you for standing by. Welcome to the Great Plains Evergy, Incorporation Conference Call. (Operator Instructions) As a reminder, this conference call is being recorded. I would now like to introduce your host for today's presentation, Ms. Lori Wright. Ma'am, please begin..

Thank you, Howard. Good morning, everyone, and welcome to Evergy's fourth quarter call. Thank you for joining us this morning. Today's discussion will include forward-looking information, slide 2 and the disclosure in our SEC filings containing list of some of the factors that could cause future results to differ materially from our expectations.

Additional information and non-GAAP financial measures can be found on slide 3. We issued our fourth quarter 2018 earnings release and 2018 10-Q after market closed yesterday. These items are available along with today's webcast slides and supplemental financial information for the quarter on the main page of our website at evergyinc.com.

On the call today, we have Terry Bassham, President and Chief Executive Officer and Tony Somma, Executive Vice President and Chief Financial Officer. Other members of management team are with us and will be available during the question-and-answer portion of the call.

As summarized on slide 4, Terry will recap our 2018 accomplishments provide business updates and give an outlook on 2019 and beyond. Tony will update you on our financial results, then offer details on our 2018 earnings guidance and other financial projections. With that, I'll hand the call to Terry..

Thanks, Lori, and good morning, everybody. I'll start my comments on slide 6. 2018 was a very good year for Evergy.

The merger took many twists and turns as you know over the past few years, but I’m extremely pleased with our team’s ability to thread the needle on successful regulatory proceedings, operational execution and integration of both business and culture.

These accomplishments unlock the value of this combined company and allow for the delivery of solid financial and operational results, which we reported last night. Let me touch on some 2018 highlights. As mentioned, closing the merger allowed us to start capturing the benefits for our shareholders, customers and employees for years to come.

Our company is now better positioned to operate efficiently and approach the future from a position of strength. We executed our target merger savings over the first seven months of our company. We're able to achieve constructive regulatory outcomes and settle in each of our filed rate reviews which reflects tax reform benefits for all customers.

Not an easy task especially following the multi-year merger proceeding. We worked with stakeholders in Missouri to move Senate Bill 564 forward that modernizes the regulatory framework in the state.

We officially implemented the Plant-In-Service Accounting benefits of this bill, which should improve our ability to earn our lab return in Missouri for years to come. We grew our dividend with the announcement of an increase last fall to our current indicated annual rate of $1.90 per share.

We successfully executed our capital allocation plan, including the launch of our share repurchase program. By year-end, we retired over 16 million shares, a good start to tackling our total 60 million share target by mid 2020.

Along with share purchases, we invested approximately $1.1 billion across our service territory, enabling us to continue to provide quality service that customers expect.

We continued our strategy of transforming our fleet in a sustainable manner, retired 1500 megawatts of end-of-life fossil generation, while adding 244 megawatts of wind energy to our portfolio. This contributed to the 36% reduction in carbon level since 2005.

We're expecting this trend to continue and by 2020, we project carbon reductions of more than 40% from the same 2005 base. Lastly, we delivered our customers energy in the safe and reliable manner.

Our customer reliability metrics were in the first or second quartile for industry ranking, marking the second straight year that each of our utilities has been ranked in the top half of the three major reliability metrics. This is a testament to the continued dedication and commitment of our employees.

These highlights help drive total shareholder return to the top quartile of the index. Moving now out to slide 7, I’ll give the latest on our regulatory proceedings. Integrating our workforce and following through our merger commitments continue to be a high priority. We're still on track with our target in merger savings plan.

Actual 2018 savings were ahead of our gross targets. Higher than expected severance costs tied to a voluntary exit program calls net savings to be shy of our target. Including these severance costs we're in line with our 2018 expectations. Going forward, this will better position the company for more efficient operations.

We'll continue to increase our efficiency efforts in 2019 as our saving targets ramp up year-over-year. Much of this increase will come from the annualized benefit of our 2018 savings and second wave of our supply chain sourcing efforts will also continue. In December, we officially announced the closing of two end-of-life fossil plants.

Montrose of 330 megawatt coal plant owned by KCP&L and Sibley, a 400 megawatt coal plant owned by GMO. In addition, the merger savings will also see the benefit of a full year cost reductions related to these two plant retirements.

Related to the closing of our Sibley plant in early January, office of public counsel and Midwest Energy Consumers Group filed the complaint in Missouri, requesting an accounting authority order to the [indiscernible] cost reductions associated with the retirement.

In February, we responded, asking the commission to dismiss the complaint, as it fails to meet the standards of a formal complaint under state law. We also disagreed with the many allegations in the complaint, including the total O&M savings reductions.

The commission has ordered that any party wishing to respond to our motion to dismiss, do so by February 22. Earlier this week, we made a joint filing with the other parties in the docket, proposing a procedural schedule, should the commission choose to proceed hearing the complaint.

Cost savings aren't the only merger commitment we’ve been focused on. In the fourth quarter, we distributed 60 million of upfront bill credits to customers, as well as, met with regulators in both states to provide merger updates.

Along with the updates and stipulating our merger settlement, we opened compliance dockets to track merger related items and commitments like merger savings, service quality metrics, capital plans and the comprehensive study of Kansas rates.

As the Kansas legislature session ramped up earlier this year, we received some attention on our rate study I just mentioned. The staff of the Kansas Corporation Commission also produced their own independent Kansas rate store study. Both yielded similar results, which were presented to the Senate and House Committees last month.

Now moving to slide 8, I’ll update you on our investment outlook before turning things over to Tony. This morning we introduced our 2019 adjusted earnings guidance range of $2.80 to $3 per share. A $2.90 midpoint is the base of our new target EPS compounded growth, annual growth rate of 5% to 7% through 2023.

Commensurate with earnings growth we continued target 60% to 70% dividend payout ratio growing in line with earnings. We believe these targets and our commitments and no rate reviews for the next 4 to 5 years, allowed us to provide an attractive risk adjusted total shareholder return profile.

To summarize, 2018 was a good year for Evergy and we're even more excited about 2019. So with that, I’ll now turn the call over to John..

Thanks, Terry. Good morning everyone. I'll take you through full year results, review our capital allocation plan and then finish up with the details on our 2019 and beyond outlook. Now turning to slide 10, I’ll start with pro forma results, which excludes non-merger related items and compare the results of that Evergy reformed on January 1 of 2017.

Fourth quarter pro forma EPS were $0.08 a share compared to a $0.25 loss for the same period last year. The large increase is due primarily to the revaluation of non-utility deferred income taxes in 2017 as a result of tax reform. This tickup was partially offset by higher O&M and depreciation expense in the quarter.

The increase in O&M was driven by 7 million of severance costs due to a voluntary employee exit program, as well as, 19 million of inventory write-offs associated with plant retirements in Missouri. Additionally, we had about 8 million COLI proceeds in the fourth quarter.

GAAP earnings for the quarter were $0.07 a share, $0.01 lower than pro forma, where the difference, all coming from merger related expenses. For the quarter, pro forma residential sales were up around 4.6% and commercial sales were up 1.2%. Weather was slightly favorable and we estimated up about $0.02 when compared to normal.

Pro forma industrial sales were up about 3.6%. Lower than the same period last year, the decrease was mainly driven by three of our largest industrial customers within a chemical and oil sector, had a multi-week outages within the quarter, some of which were unplanned. Moving on the full year results on slide 11.

Full year 2018 pro forma EPS were $2.67 a share compared to $1.73 last year. The primary driver of the year-over-year increase was due to a decrease in tax expense mainly from the revaluation of non-utilities deferred tax liability that I mentioned.

Other items contributing to tickup include, increased sales due primarily to favorable weather, which helped by $0.37 compared to last year. $0.19 for Westar’s deferred income tax reevaluation, based on the new composite tax rate upon closing the merger and about $0.03 of other.

Providing an offset to these items versus $0.08 of increased depreciation and amortization expense and $0.05 of higher O&M, which includes 23 million of voluntary severance expense and $31 million of plant inventory write-offs.

Full-year GAAP results for $2.50 a share, includes merger related costs that aren’t in pro forma results, reflect lower shares outstanding. Also capital includes KCP&L and GMO results for the period post merger close whereas pro forma included them for the full period.

On a pro forma basis, 2018 residential sales were 10%, while commercial sales were up 3% compared to last year. Sales were driven by the favorable weather, which when compared to normal, we estimate health about $0.31 for full year pro forma results.

Industrial was down about 1.5%, mostly due to some of our largest customers returning to normal levels in 2018, as well as, to the extent of outages that I mentioned in the fourth quarter. Moving to slide 12, I’ll give you an update on a recent financing activities and the progress we’ve made on share repurchase program in the fourth quarter.

In November, we entered another accelerated share purchase and continued with open market purchases. For the year, we purchased more than 16 million total shares or a little over a quarter of our two year 60 million share target. We’ve continued to chip away in 2019 still focusing on the same measured approach, $1 cost averaging over time.

We expect to have repurchased a total around 19 million shares by early March. We’ve projected a little issue around $1.5 billion of holding company debt in 2019, helped with our rebalancing activities. The ultimate amount of debt will vary based on share price timing and total number shares repurchased.

As I mentioned before, the 60 million share by mid 2020 continues to be our target. The cadence on ultimate number of shares of repurchased are subject to market factors in the financial outlook of the company. Now let me give you some details on our guidance on slide 13. As Terry mentioned our 2019 adjusted EPS guidance ranges $2.80 to $3 per share.

This range does not include merger related costs for severance and remaining expenses, which totaled $0.10 a share, as we do not expect these transition expenses to be incurred after this year, certainly not in any meaningful amount.

Additionally embedded within our guidance is the impact of a major ice storm in January, the worst we’ve experienced since 2002, costing us about $30 million of which over half was O&M. Now here's some of the drivers of our earnings guidance. We expect sales anywhere from flat 50 basis points of growth.

Our focus on merger savings will help reduce O&M expense, which we're targeting at $1.2 billion, plus or minus 2%, excluding transition expenses and severance for severance and rebranding. Depreciation and amortization increased $80 million to $90 million compared to our 2018 pro forma amount.

Now as far as interest expense goes, we plan to refinance about $700 million in long-term debt maturities at our utilities, plus we’ll issue approximately $1.5 million of holding company debt. Lastly, we’ll continue to make progress on our share repurchase goal and expect the average annual share count to be about 240 million shares plus or minus 2%.

Now looking beyond this year, we've updated our capital expenditure forecast for 2019 through 2023. The five year plan is relatively consistent with our previous forecast, totaling over $6 billion of infrastructure investment. Should be noticed, our plan includes viable projects and no placeholders.

Should investment opportunity arise outside of our current project list, we would certainly review its merit. We'll continue to evaluate the incremental infrastructure opportunities and provide value to customers like grid modernization and renewables.

This CapEx plan does take advantage of ties in Missouri and will continue evaluate opportunities for additional tie of the qualified spend that would deliver value to our customers. The capital plans of course, are previously disclosed 3% to 4% rate base growth using 2017 as a base year.

However, by moving the base year to 2018, the capital plan will now drive rate based growth in the 2% to 3% range over the next five years. This investment plan reduces lag while we're in a base rate stay out for the next 4 to 5 years.

We are being very intentional with our investments and giving preferences to earnings certainty as we zeroed in on our earnings [indiscernible] returns earning this time. This five year investment cycle balances the interest of shareholders and customers aligning long term sustainability of both stakeholder groups.

We've also updated our five year EPS forecast targeting a 5% to 7% CAGRs through 2023, based off the 290 midpoint of 2019 guidance. The new CAGR answers the questions many of you have posed to us as to what the EPS CAGR would be if we updated to start from a more current period rather than stay on 2016 and take it beyond 2021.

Additionally, this new trajectory is a result of rebasing on a year, which will include many of the advantages of our merger like the near term impact of the cost reductions and share purchases and now fully reflects the imputed savings that were agreed to on our 2018 regulatory settlement.

Having not adjusted the bookends of our guidance range and stayed with the 2016 to 2021 EPS CAGR. We’d still affirm the 6% to 8% CAGR, but would give you – will guide you to the middle or lower end of the range, primarily due to the higher cost of the share repurchase plan.

It should be noted, the new EPS CAGR is not linear and we expect a jump going into 2020 above the 7% CAGR. We remain confident in the opportunity in front of us, and continue to believe in our compelling investment thesis that offers a competitive and risk adjusted shareholders return. With that, I'll turn the call back over to Terry..

All right. Thank you for joining us this morning. We'll take questions..

[Operator Instructions] Our first question or comment comes from a line of Julien Dumoulin-Smith from Bank of America. Your line is open..

Just to follow-up on those last questions as part of the conversation here. When you say it's not linear and the jump going into 2020 above the 7%.

Can you help elaborate a little bit more on 2020 and 2021 and how you’re thinking about that? Obviously, you get the upfront and loaded benefits of the CapEx and the rate saving synergies, as well as, rate cases here.

Can you just give us a little bit more detail in 2020 and 2021 versus the later years where obviously CapEx seems to slow? Then maybe let me just jump to it and ask the second question at the same time, how do you think about backfilling CapEx.

I mean, it's fairly consistent across the sector that we see sort of CapEx trailing off in the later years and that’s subsequently filled in.

How do you think about that right now given the specifics of your rate case timing expectations and the ability to recover or not recover that maybe longer dated CapEx in 2022 and 2023, specifically?.

This is Tony. As far as the EPS goes, given the share buybacks and the ramp of the synergies, which is consistent with what we said all along, then the near terms earnings ramp would be steeper than the out years and this is consistent even though we rebased it off of a current 2019 adjusted EPS CAGR of midpoint up to $2.90 per share.

So, those two items the share repurchases, the ramp up with the synergies will drive the EPS at a steeper rate than when you get to the outyears post 2021.

As far as backfilling the CapEx, the investment thesis from the get go with the merger was that we were going to be rate base growth story that both legacy companies had spent large amounts of capital growing rate base and the value of the merger was and combining these two companies and harvesting the efficiencies for both customers and investors.

We certainly have opportunities being in the Midwest located in the breadbasket of the wind tunnel, if you will, to invest more. But at this time, you know we would have to look at refreshing our RPS and some other things and we’ve laid out there what we see today as viable projects..

Got it.

And let me just clarify what you’ve said, you would still be in the 6% to 8% range, the low-to-mid end of that through the entire period that you had previously?.

Through 2021. Recall, when we announced the deal, a 6% to 8% CAGR of Westar’s 2016 earnings and we took that out to 2021. And as we were on the road, folks could say, that’s little sale, so we're updating upto a more current period..

So, that would be for 2021, somewhere between 325 and 341, if you took the low-to-mid end of that range..

Yeah. I’m not going to argue with your math. If that’s what you come up with then, yeah..

Got it. All right. I'll leave it there. Thank you very much..

You're welcome..

Thank you. Our next question or comment comes from the line of Michael Sullivan from Wolfe Research. Your line is open..

Yeah, hey, guys. Good morning. Just wanted to follow-up on a couple of those questions and then your comments at the end there. So, I guess, just to start on the 2019. Can you just directly quantify one what the O&M hit was worth.

And then the share repurchase costing a little more on an EPS basis and kind of where you would have been otherwise?.

I’m not so sure I understand your question, Michael. As far as the O&M hit, what do you mean by the O&M hit..

The storms..

Yeah, so the guidance includes us being in the storm. The storm is roughly $30 million and we're still telling the O&M piece of it. It’s probably a little more enhanced..

Okay. And then what about the repurchase program costing more than you guys would have otherwise thought.

How much of a drag is that?.

So, obviously, when we announced the deal, and you look in testimony filed, we're probably thinking we were going to issue around 1.1 billion, 1.2 billion holdco debt. Tax reform, put a little bit of a cramp on that, as that hurts cash flows and just the overall values of utilities relative to 10 year [ph] they hung in pretty solid.

And obviously, it makes the share repurchase program more expensive. But you know it's obviously still accretive and the right thing to do to rebalance the capital structure..

Okay. And just to kind of put a point on that. As far as relative to your initial expectations and what you've kind of looked at since the merger closed. These are really the only things that have changed, just these storm costs this year and then the repurchase program costing more than you would have otherwise expected..

Since we announced, no, there was tax reform. I mean, there was lots of pluses and minuses going. But those are the kind of the bigger one..

Okay. And then the last one just on 2019 guidance.

Can you just explain the tax rate assumptions and why that's so low?.

The 12% to 14%. It's a couple of factors, you know the legacy Westar has a COLI plant and so I think embedded within the guidance was about 23 million of COLI proceeds. Additionally, we have large quantities of wind resources, which as you know produced production tax credits which would lower your effective tax rate.

That's our estimate going into the year..

Okay thank you..

You're welcome..

Thank you. Our next question or comment comes from the line of Greg Gordon from Evercore ISI. Your line is open..

So, sorry that I'm going to beat the dead horse a little more here, but a few questions around the guidance revision.

First, just mathematically, if I do use 243 as like the “even if its stale base I get that” but if I use that and I Just do a CAGR to the new guidance range implied by guidance for 2021 that’s about – that's basically 5.5% to 6.5% CAGR off of the 243 number which you know is a $0.05 to $0.25 reduction, a $0.05 to $0.25 reduction in the low end and the high end of the range.

So, it's not a rebase guys its significant reduction in expected earnings outcomes that's why the stocks down 6%. So, I just want to understand from your perspective and I know Tony, you just said there are a lot of moving parts. But what are the key things that took $0.25 off the high end of the range. Was it higher assumed share repurchase price.

You know higher interest expense because of the tax reform at the parent level. One of the big structural drivers that took the $0.25 off the high end..

So, let me first state, you're correct, those are kind of some of the bigger ones, Greg, the tax reform obviously reduced cash flows and when tax reform came out we said this obviously will move us in the range and we never said where we were in the range originally.

We said the regional range was 6% to 8% off the 243 and additionally the valuations in our sector, as well as, interest rates rising its making the share repurchase program more expensive, but it’s still accretive and the right thing to do to rebalance the balance sheet..

Okay. But you still expect as we're thinking about modeling here that a combination of the rate settlements.

And your ability to harvest synergies would allow you to earn at or near your authorized returns across the different regulated business units and should we model accordingly?.

Yes and recall we never said the thesis was overrunning. The thesis was earning in our allowed returns and saying there [ph]. And Greg, we're on track with our synergy expectations and we expect earned – that are allowed returns we’ve said before, we don't really expect to over earn. But we expect to be able to allow earn on allowed returns..

Right. Okay. So, we need to contemplate in our models earning at the authorized returns. And really the leakage here in the growth comes around really the financing costs and the impact of tax reform and all that.

How that sort of flows through your financial outcomes is that a fair summary?.

Yeah. Fair summary, the earnings power of the company is 14.2 billion of rate base that we have to date, right. That's what rates are set at and then harvesting the synergies going forward..

Okay.

Is there anything in the articulated range built in for potentially earning back the rate credits in Kansas or getting or into the sharing? Or if you were to be able to harvest a little bit of higher earned ROE above your authorized through executing and getting into the sharing bands like where would that put you inside this range?.

You’re asking contemplating earning above on the bands in Kansas, which would kick in the sharing mechanism, I’m understanding it, right?.

Yeah, I'm basically saying like if I assume the midpoint is that you're running – is the midpoint that you're earnings at your authorized returns, I mean, because you do have. And I know that you're telling us don't assume we over-earn, assume we just earn in authorized returns.

But you have the ability to harvest more synergies and potentially flow back to customer’s significant incremental benefits.

And then keep something for shareholders, is that at all contemplated in the guidance range?.

Well, it’s certainly is possible, Greg, but there's a lot of pluses and minuses that will go into a forecast, particularly going out five years and the whole one thing constant. We generally avoid that, again, the thesis behind the merger is us earning our allowed returns and staying there.

And if we do earn above those in Kansas and there's a mechanism in place that we could share those and that would obviously help us on the EPS CAGR. Yeah, I mean to your point, I think, if I understand, what you're saying is if we were earnings towards the top end or even into the sharing ranges that would push us up in the range of earnings guide.

Is that kind of what you're suggesting?.

Yes, yes. I'm just asking whether the range, contemplates the ability to do that or whether if you achieved that. It would be about the range, but you're just saying that it would just push you up inside the range..

Yeah, yeah..

Okay. I’m taking up too much time on Q&A guys. I'll go to the back of the queue. Thanks..

Thank you..

Thank you. Our next question or comment comes from a line of Michael Lapides from Goldman Sachs. Your line is open..

Hey guys, thanks for taking my question. Real quick on the docket in Missouri that OPC and the industrials follow.

Can you just talk to us about how that process will work from here?.

Yeah, we’ve filed a motion to dismiss, kind of, based on our prior practice where we've asked for accounting orders on different things that we don't believe these – the request meets the standard. So, the commissions set up online for other folks to comment on that issue.

We’ll either get a ruling yea or nay on a dismissal and if it's not – if it is dismissed, obviously we’re off and running. If it’s not dismissed then we would work with the parties and the commission staff ultimately to establish a timeframe for hearings and briefing and all that kind of stuff.

And that could run, it could run through the summer if those processes don't move extremely quickly..

Or what the complainants basically seeking is to – for customers to get the economic benefit of the O&M savings from the plant retirements.

Was that regionally embedded in as part of the merger agreement? Or is what they're seeking that the retirement benefit is actually greater than what was originally disclosed during the merger process?.

No, no, it’s the former. You know, again we were very transparent about all these business matters. While we were doing our negotiations, so they were well aware this was happening. Their position is even though it occurred after the test year and after the effect of new rates, they want those savings accounted for and look back later.

I will say that even in the context of that request, we don't believe their numbers are right. They just kind of assume every dollar allocated to the plant goes away and some of those employees were reassigned other things. So, the less – the total number they’ve alleged is higher than we believe. But it’s the former, not the latter of your question..

Got it. Okay. And then one question just on the merger of savings and cost savings in general. Do you look at it and think there is upside to the original merger or cost savings that you laid out? And if so, what areas like if I were to go back to Steve Busser’s testimony during the merger process.

What area or what bucket within the various buckets of costs savings, do you think the greatest opportunities except for you guys?.

I don't think we really identified a lot of upside that where we've already outlined and what was in Steve Busser’s testimony. Obviously, every time you make an estimate like that you drive to your goal and hope that you can find others.

But I would say this early in the process, we are implementing the charters and the plans that we put in place to achieve those targets. And then we would hope over time we find more, but I wouldn’t say at this point we've identified any additional opportunities that are material..

I think we are finding some obviously. We’re consolidating the back office [indiscernible]..

Got it. Okay. Last one and I know you've gotten like gazillion questions on kind of the earnings growth.

Is it safe to assume you're above the 5% to 7% percent just in 2020? Or do you think that's a 2020 and 2021 as well that you're above that range, and therefore you’d obviously mathematically have to be at the plant probably closer what your rate base growth would be in like 2022 and 2023?.

So, in the near term obviously, the savings ramp up and the share repurchases Mike, will drive the ramp up, from 2019 to 2020. I haven’t looked at 2020 to 2021. You know we’re not giving 2020 guidance today or 2021 guidance, but we are telling you that the five year EPS CAGR is not linear and it's going to ramp up in the early years..

Got it. Thank you guys. Much appreciated..

You're welcome..

Thank you. Our next question or comment comes from a line of Ali Agha from SunTrust. Your line is open..

Thank you. Good morning..

Good morning. Tony, I just wanted to clarify, a comment you’ve already made, just to make sure I'm understanding it right, first off, coming back to the group rate outlook. So, once the share buyback impacts a fully factored in, which as you say are 2020 and 2021.

Then we should look at the growth rate beyond that really as a function of rate based growth, since you're already earning your authorized returns, presumably, there’s not that much more upside from an earned ROE basis.

So, is rate based growth then a good proxy once the share buyback plan is fully factored in?.

Well, it’s going to depend, right, it’s going to depend on numerous factors. What we're saying today is the ramp up is happening here early because of the share repurchases and the merger fixes [ph] that you outlined. But it won't be the same slope of the line, if you will, probably once you get past 2021..

Yeah and just to be clear on the issue. I mean, we've not tried to place placeholders in later years that will then work to necessarily to drive a greater growth rate.

That doesn't mean that we don't have other opportunities, and as we began to move towards the end of our time period for a freeze and there's a test year involved and we're working towards what is our future generation and need and plans that we won’t have additional CapEx opportunities.

What we haven't done is suggest to you that we’re going work to a blind target in the later years. Just increasing growth rate. We’re trying to be very transparent here..

Okay. And then on the share buyback again, I wanted to clarify Tony your comment. So, you had bought back 16 million shares through the end of the year. And did I hear it right that based on the accelerated and other programs that by early March that 16 million would become 19 million.

So in other words another 3 million would have been bought by early march.

Did I hear that right?.

That's correct..

So, that would imply, I mean, if I just look at the run rate from the last three months of the fourth quarter, which was about 8 million or so, that would be a pretty sizeable slowdown in your buyback between Jan 1 and early March. Any reason for that and as suggested given the pullback in your stock price.

I mean, is there a motivation to potentially accelerate this and maybe do it before mid 2020?.

Well, there’s a potential there, but we'll have to see, we want to keep our options available and we've kind of been pretty transparent that we prefer the dollar cost average over time. If we think evaluation and utilities are cheap and our stock is cheap, then yeah naturally we’d like to step on the gas a little bit more..

Okay, and then lastly also clarifying this point you made about the cost of the buyback is going up and now you're looking at issuing 1.5 billion of debt, previously it was about 1.1 billion, 1.2 billion.

Also for modeling purposes, where should we assume that debt needs to be issued? Is that also happening now earlier than expected in the context of how 2019 numbers maybe shipping up that inflow expense [ph] maybe also higher because the debt needs to be issued a bit earlier as well..

Yeah, so clearly the debt and the associated interest would put pressure on our earning. It depends on the cadence of the share repurchase as to when we would issue that debt. It would be sometime later this year third quarter, so..

So, it would be sort of [indiscernible] for modeling purposes, its third or fourth quarter?.

Yeah..

Okay. Thank you. Appreciate that..

You’re welcome..

Thank you. Our next question or comment comes from the line of Paul Ridzon from KeyBanc. You line is open..

Good morning..

Good morning..

Just a quick question, just if you could review the interplay of the rate freeze and opportunities under Senate Bill 564, kind of, how we should be thinking about that? Are you somehow constrained for opportunities because of the rate freeze?.

You're talking about Missouri 3 piece, right?.

Yes..

The constraint is in the bill itself and remember in Missouri, there's a cap there. Remember, Missouri, we don't have a technical rate freeze on the merger itself, it's related to the bill. So, there's no additional constraint from merger perspective. That was the settlement part of the Kansas deal.

Did that make sense?.

Yes, yes. Thank you for the clarification..

Yeah..

Thank you. Our next question or comment comes from the line of Charles Fishman from Morningstar Research. Your line is open..

Good morning. Just one question, merger savings, slide 20.

That does not include the 200 million of total of merger savings from the closing of Montrose and Sibley, is that correct?.

Good morning. This is Tony, Charles, yes, that's correct..

So that that is – I guess, what keeps that because you controlled it, you’ve already closed those plans.

What keeps that 200 million going from potential to realized?.

I'm not sure, I understand the question..

Yeah, let me say – let me get it out loud and maybe just help answer the question. Remember, that ultimately the closing of the plants that you just mentioned for KCP&L were already announced and they weren't merger savings. So, those aren’t considered merger saving for the purposes of that, merger saving discussion.

It was the closing on the Westar side that spent those closings up and therefore considered merger savings.

Does that make sense?.

Yeah, okay, but I mean, I guess, the 200 million has been baked into your guidance the obviously..

Yeah, it is..

Yeah, the savings is associated with shutting the plants down is all part of our expectation going forward. Absolutely..

Okay. So, I could have done a better job of asking the question. That's all I had. Thank you..

You’re welcome..

Thank you. Our next question or comment comes from the line of Paul Patterson from Glenrock Associates. Your line is open..

Hey, good morning..

Good morning..

So, just back on the complaint case in Missouri. What is the cost savings, I mean, you mentioned that you guys think it's less than what these guys are suggesting.

Could you tell us what you think it is?.

So, I think they and they’re pleading, they said 22 million – 27 million. I’d say, we probably think it's half or a little more that actually could be related to specific cost. Again you take them out, so it'd just be allocated to that and then where actual outcomes work in employees. So, I don't know that we've quantify the exact number –.

Roughly, about half or maybe a little bit more than that number..

Yeah..

Okay. And then, and your, guidance basically assumes that basically that you guys have, as you guys have indicated before, it's your position that basically, this is already announced and therefore, should not be called back or anything like that.

Is that correct?.

And not just that, but in past years we have sought accounting orders for costs such as taxes and other things, pretty straight forward that we ask to be accounted for and it was determined pretty clearly and the parties involved here that are asking for this argued that they were not extraordinary, it should be and this [indiscernible] very similar, if not exact kinds of costs.

So, we think it's pretty clear on where the commission in past cases, that we should not be provided for account one..

Okay. Understood. Then the Kansas legislative study, could you comment a little bit further on that in terms of this issue of competitive rates.

And where you see, if you see anything happening with respect to the legislature or the KCC or whatever regarding this topic, if you follow this?.

Yeah, so we are in lockstep with the commission staff. We've actually justified on one of the bills early on. We and the staff are in agreement. We provided our rate study and the commission staff provided theirs that we agreed to provide and they were very similar.

The bills have been filed now cover a range of things, but the one specifically on the rate study does more than just ask for a study. What it does is an attempt to change the law that would address how you look at those things. And we think that's clearly not the intent of the rate study language. And again the commission staff agrees with us.

So, I think in the end what we expect to come out of the discussion is that we would have an additional rate study around, in particular, larger customers that we would have spend the next year or two, if they don't have, it all comes out. Looking at how we compare to other regional costs.

This is a reminder; 10 years ago we were well below the national average and currently we’re right at about the national average, after about 10 years of both EPA and infrastructure spend. It speaks exactly to while we've done the merger and exactly what we’ve agreed to process over the next 4 or 5 years without waiting [ph]..

Okay. And then, with respect to the rate base growth and it being more modest perhaps than other areas other companies.

I guess, if you could – is there any potential for opportunities with respect to perhaps that you might be exploring that would be in addition to your rate base growth that that could be seen as potentially reducing operating costs or fuel costs or what have you.

Is there any opportunity that you guys are exploring in that? And how much that impacts your rate base growth other than what you guys are providing here..

So, this is Tony. Good morning. We definitely say where the Saudi Arabia went and so there's always opportunities for renewable. In fact, many of our customers like go greener and those would be something that we would look at – we'd be providing more renewable resources to our customers..

Now in the near term, we've got a very specific plan, obviously we talked about that later years we're always looking opportunities as Tony mentioned. Kind of opportunity you talked about you know we haven’t put anything in the forecast that shows a bucket of opportunity dollars, instead we’ll be working and analyze as we go in.

We are updating investors as we become more firm in plans, as we're providing our fees and other things to our commission..

Okay. Great. Thanks a lot..

Yeah..

Thank you. Our next question or comment comes from the line of Shar Pourreza from Guggenheim Partners. Your line is open..

Hey, guys..

Good morning..

Sorry to hop a few minutes late.

On sort of the Sibley complaint, you don't have an outcome or a potential outcome in that case in your outlook, correct?.

Well, that's soon as there's no order granting that – defer all those costs that they remain, as we close the last rate case..

Got it. Okay. And then just obviously, this been hit on way too much, but the growth profile is obviously swing [ph] a little bit, right. So, you've got the front-end loaded, the back-end somewhat tepid, especially as you guys sort of wait to file rate cases.

Can you – I know you've talked about wind and renewables, but clearly there is capital spending that’s sort of been withheld, while you've gone through this entire process. I'm curious you know, as you think about the next wave of rate cases.

Outside of the incremental items around renewables, is there any other sort of capital opportunities you see on the base business. And then, it's likely going to be somewhat of a healthy ask in the various states and obviously, your synergies and efficiencies are helping.

What sort of is the outlook for rates when you sort of go through this next wave of rate cases? And curious, if the profile of that growth can reemerge closer to what people's past expectations were, when you file for a new set of proceedings..

Well, certainly as we get closer to our past year work that will ultimately lead to rate cases. We’ll have a better feel for you know what kind of increases there are. Also be working to streamline and manage our O&M kind of across. Yeah, the idea of been able to spend more on rate base and less so under this is strategy.

But as we get closer to that we’ll certainly and are now looking at opportunities that customers may want from a renewable perspective.

And other than generation, yes, we are a very reliable T&D system and so opportunities from both the transmission and distribution perspective on an ongoing basis, whether it’d be grid modernization or just stability of the system are both opportunities that continue..

And so when you go through that revisit of that capital program and whether it's renewables or your base spending needs. Do you guys feel like you've got enough efficiencies out there, as they're building to mitigate sort of a massive amount of rate inflation..

Yeah, I mean I think if I understand your question, I mean, the notion would be we think our system is in good shape.

We think we have opportunities from both, as we have or recently with coal plants retiring and opportunities with wind that we can continue that transition of being a tier 1 type T&D company, with more and more clean renewable type energy, without having to raise rates dramatically, but continue to give us the ability to invest in our system..

Yep, that's sort of what I was trying to get at. Okay, great thanks guys..

Thank you..

Thank you. Our next question or comment comes from the line of Ashar Khan from Visium..

Most of my questions have been answered. Can I just ask you, can you share with us what the synergy levels are say increased from 2019 to 2020. Is there anything you can provide on guidance on that, how their synergies improved year-over-year from 2019 to 2020 and 2021.

Is there anything you can provide?.

Yeah. Its slide 20, in the deck in 2019, there's a target of about 110 million. In 2020, it ramps up to 145 million and this would exclude, obviously, the power plant savings that we talked about earlier..

And so I can just take the delta in between those and after-taxes, at what tax rate, Tony?.

25% or lower. All in..

Okay. So, I can just take the delta and after-tax 25% and that would be incremental year-over-year earnings, right..

Or they’ve been equal. Obviously, we got other happen and – but that would be the relationship to those costs..

Okay, okay. Thank you so much..

Thank you. Our next question or comment comes from the line of Andrew Levi from ExodusPoint. Your line is open..

Hi, good morning guys..

Good morning, Andy..

How are you?.

Good. Good..

Just two questions. First one, I just want to make sure I heard correctly or maybe I misinterpreted it, just on the stock buyback itself, you're not deviated at all from the amounts dollar wise. So, you're buying back or are you because of what you said about tax reform..

The target is still $60 million. No change in plan..

Okay. Just want to make sure, that didn’t know if I heard correctly. And then just the other thing too so, you know obviously, we've met several times, so – in the last couple of months. So, basically you're saying is in the outer years, so you're saying there's 2%, 3% rate based growth, based on your 2019 studies.

However, if in time, as you kind of get through this stock buyback and you kind of look at opportunities in the future that rate base/CapEx numbers in the outer yours should grow or you're not saying that?.

There’s certainly opportunity there. Obviously, what we’re describing is what's in our guidance. But as we move through that time period, we move towards our upcoming rate cases and we continue to work on issues such as customer growth and integrated resource planning. Yeah, we’d expect there’d be opportunities to evaluate opportunities..

Okay.

And that’s probably is what I’d like to probably see that in like the 2020 timeframe or 2021 or –?.

Yeah, I mean –.

Not the actual dollars that we will get that kind of update..

Yeah, we'll continue to update you along the way as we go with the plan and again we're not going to placeholders to work towards, we're going to put in what we're working on at the time and be transparent about that..

Okay. That's terrific. Thank you. Have a great weekend..

Thank you..

Thank you. Our next question or comments comes from the line of Kevin Fallon from Citadel. Your line is open..

I just wanted to clarify that when you guys are looking at the rate base rolling forward, you’re your assumption is you're earning your authorized on your actual current year rate base, correct?.

Well, there’s a lot of pluses and minuses, but yeah, that's the whole idea that the merger savings will hopefully offset whatever spend there is on the capital side..

Okay. But the base is moving higher..

I understand you want to make a very precise, but there's a lot of plus and minuses that go on with the forecast and a lot of levers that moves..

No, no, that that I can definitely appreciate. I just want to make sure that that as the rebate is moving up 2% to 3% that your opportunity set and your target is to have burn on that that growing rate base..

Yes..

Okay. Exactly. The other thing just in terms of query on the back end, in terms of the CapEx for all these other things like wind and grid mod and whatnot.

What is it that you need to wait for to start to have a like line of sight to be able to update those plans? Like do you have like PPA's rolling off or is there something under the legislation in Missouri? What drives the timing in terms of updating that?.

Well, it's traditional utility planning, on the plan where we’ve just started the merger and the strategy is build our earn on our spend without increasing rates for customers, that’s what we’ve agreed for the near term, not have rate increases.

As we work through our planning for the test year and hopefully those cases will have an update on what's happening with our – different units we’re working with customers on their needs and wants around additional wind and opportunities for wind, which might just simply reduce overall costs, which we've done in the past.

It gives the opportunity at that point to look at whether we want our own those in rate base or whether we want to have PPAs. Remember that in the past, both companies tended to lean on PPAs because from a capital perspective we were spending on environmental and other things and that need additional CapEx, a rate base spend.

The only other kind of limitation might be is piece - as we look at piece on Missouri side. There’s opportunity there, but there’s also limits in the legislation itself and we’ll you know be watching that as well..

Just this follow-up, is there a certain timeframe in terms of when you have these PPA's rolling off. Is it a kind of a front – like when you look at the 2023 in your deck is that the timeframe where you start to have PPA's rolling off or that kind of further out in the in the future..

This is Tony, it’d be further out. I think both legacy companies probably put wind on those 7 or 8 timeframe their own when resources we put on some more, but and those are 20 year PPAs..

Okay. Okay, that's very helpful thank you..

You’re welcome..

Thank you. We have a follow-up question from Ali Agha from Suntrust. Your line is open..

Thanks. Just a very quick one, coming back to the Sibley complaint, I know Terry you mentioned that the commission has asked for comments to your filing for dismissal today. But just given that schedule, when would you expect the commission to rule whether to dismiss this or not..

Yeah like put a deadline for filing comments/for against I guess, with comments around it. They’re relatively a deadline around when the commission would make a decision. Once they get all in, they'll review everybody as said and it will depend on kind of of a follower meeting schedule, which happens every – usually every week.

But until they put it on the docket and press Company, we wouldn't know how could be that would happen..

Understood, within the weeks or months, I mean, just a rough chance..

It’d be probably weeks on the you know move forward, don't report and then if they don't dismiss, case probably months in terms of how to process complaint guys..

Got it. Thank you..

Thank you. We have a follow-up question from Mr. Paul Ridzon, KeyBanc. Your line is open..

Just can you review kind of what the potential blackouts are on the buy back and could you agent be there today taking advantage of this weakness?.

So, as we’ve said before the intent is to have the infrastructure in place to be able to buy back shares through blackout periods..

Then what does guidance contemplate as far as the savings from the plant closings is that, embedded in danger or is that upside..

It is embedded in our guidance..

Okay. Thank you very much..

Thank you. I'm showing no additional questions in the queue at this time, I'd like to turn the conference over to Mr. Terry for any closing remarks..

Okay, thank you, Howard and thank you everybody for joining the call this morning. I know we've got a lot of information we provided today and we appreciate you being on a call and participate speak. Have a good weekend. Thank you..

Ladies and gentleman, thank you for participating in today's conference. This concludes the program. You may now disconnect. Everyone have a wonderful day..