A New Energy Vision: Our Role in a Smarter, Cleaner Energy Future Michael J. Chesser Chairman and CEO, Great Plains Energy and KCP&L Chairman, Electric Power Research Institute (EPRI)

The evolutionary steps to a smarter grid Key Takeaway: Rising cost of coal will push the retail price of electricity higher as these costs will be passed on to the customer Detail: • Dip in 2009 is a result of softening commodity prices – 1) utilities are building coal inventories following the May 2005 joint line derailment that when completed will reduce marginal demand, 2) KCP&L uses a laddering strategy when purchasing coal (dollar averaging), some of the coal under contract is priced at a level that is above current market prices – some of these contracts expire after 2007. • The continued decline in 2010 is due to including Iatan 2 tonnage, which is forecasted to be the lowest cost delivered coal, in the weighted cost of fuel calculation – increasing the relative weight of the lowest cost coal into the mix reduces system cost • Coal transportation contracts with BNSF Railroads expire in 2010 – new rail rates, assuming current market pricing indications, increases the projected cost of delivered coal by 39% in 2011 and beyond

Achievement of CO2 reductions Energy Efficiency is first in a portfolio of options

A vision of a smarter grid (EPRI)