Refund percent on earnings over approved return on equity

[Table of Contents](#i9e3d7fad53bb42b083be8286e4319cd4_10) Evergy Metro 2021 TDCIn April 2021, the KCC issued an order adjusting Evergy Metro's retail prices to include updated transmission costs as reflected in the FERC TFR. The new prices were effective in May 2021 and are expected to decrease Evergy Metro's annual retail revenues by $2.4 million when compared to 2020.Evergy Kansas Central and Evergy Metro Earnings Review and Sharing Plan (ERSP)As part of their merger settlement agreement with the KCC, Evergy Kansas Central and Evergy Metro agreed to participate in an ERSP for the years 2019 through 2022. Under the ERSP, Evergy Kansas Central's and Evergy Metro's Kansas jurisdiction are required to refund to customers 50% of annual earnings in excess of their authorized return on equity of 9.3% to the extent the excess earnings exceed the amount of annual bill credits that Evergy Kansas Central and Evergy Metro agreed to provide in connection with the merger that resulted in the formation of Evergy. Evergy Kansas Central's and Evergy Metro's 2020 calculations of annual earnings did not result in a significant refund obligation. As of December 31, 2021, Evergy Kansas Central estimates its 2021 annual earnings will not result in a refund obligation. As of December 31, 2021, Evergy Metro estimates its 2021 annual earnings will result in a $2.0 million refund obligation. The final refund obligations for 2021 will be decided by the KCC and could vary from the current estimates.Evergy Kansas Central and Evergy Metro February 2021 Winter Weather Event AAO In February 2021, the KCC issued an emergency AAO directing all Kansas-jurisdictional natural gas and electric utilities, including Evergy Kansas Central and Evergy Metro, to defer to a regulatory asset or regulatory liability any extraordinary costs or revenues, including carrying costs, to provide electric service during the February 2021 winter weather event for consideration in future rate proceedings. As of December 31, 2021, Evergy Kansas Central had recognized a regulatory asset pursuant to the AAO of $121.5 million related to its costs incurred during the February 2021 winter weather event, primarily consisting of increased fuel and purchased power costs. As of December 31, 2021, Evergy Metro's Kansas jurisdiction had recognized a regulatory liability of $39.5 million related to its increased wholesale revenues during the February 2021 winter weather event.In July 2021, Evergy Kansas Central and Evergy Metro made a joint filing with the KCC regarding the timing and method of recovery or refund for costs and revenues deferred pursuant to the February 2021 winter weather event AAO. In the filing, Evergy Kansas Central and Evergy Metro requested to recover or refund, as appropriate, their deferred February 2021 winter weather event amounts to customers through their fuel recovery mechanisms over two years and one year, respectively, beginning in April 2022. As part of the filing, Evergy Metro also requested an approximately $6 million decrease to its February 2021 winter weather event refund to Kansas customers, which is not currently reflected in its regulatory liability for the February 2021 winter weather event, for jurisdictional allocation differences in its Kansas and Missouri fuel recovery mechanisms. In January 2022, KCC staff filed their report and recommendation regarding the February 2021 winter weather event and the related costs and revenues deferred by Evergy Kansas Central and Evergy Metro as a result of the AAO granted by the KCC in February 2021. The report concluded that the costs incurred and revenues earned by Evergy Kansas Central and Evergy Metro during the February 2021 winter weather event were prudent. The KCC staff also recommended the following: (1) that Evergy Metro extend the time period of its refund to customers from one year to two years; (2) that the KCC reject the approximately $6 million reduction in refund to customers requested by Evergy Metro due to jurisdictional allocation differences in its Kansas and Missouri fuel recovery mechanisms and (3) that Evergy Metro and the other active parties in the case work to determine the appropriate level of carrying charges that should apply to the amounts deferred related to the February 2021 winter weather event.A decision by the KCC regarding Evergy Kansas Central’s and Evergy Metro’s joint filing is expected in the first half of 2022.101
