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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 12 Months Ended
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Dec. 31, 2020
Accounting Policies [Abstract] |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Organization Evergy is a public utility holding company incorporated in 2017 and headquartered in Kansas City, Missouri. Evergy operates primarily through the following wholly-owned direct subsidiaries listed below. •Evergy Kansas Central, Inc. (Evergy Kansas Central) is an integrated, regulated electric utility that provides electricity to customers in the state of Kansas. Evergy Kansas Central has one active wholly-owned subsidiary with significant operations, Evergy Kansas South, Inc. (Evergy Kansas South). •Evergy Metro, Inc. (Evergy Metro) is an integrated, regulated electric utility that provides electricity to customers in the states of Missouri and Kansas. •Evergy Missouri West, Inc. (Evergy Missouri West) is an integrated, regulated electric utility that provides electricity to customers in the state of Missouri. •Evergy Transmission Company, LLC (Evergy Transmission Company) owns 13.5% of Transource Energy, LLC (Transource) with the remaining 86.5% owned by AEP Transmission Holding Company, LLC, a subsidiary of American Electric Power Company, Inc. (AEP). Transource is focused on the development of competitive electric transmission projects. Evergy Transmission Company accounts for its investment in Transource under the equity method. Evergy Kansas Central also owns a 50% interest in Prairie Wind Transmission, LLC (Prairie Wind), which is a joint venture between Evergy Kansas Central and subsidiaries of AEP and Berkshire Hathaway Energy Company. Prairie Wind owns a 108-mile, 345 kV double-circuit transmission line that provides transmission service in the Southwest Power Pool, Inc. (SPP). Evergy Kansas Central accounts for its investment in Prairie Wind under the equity method. Evergy Kansas Central, Evergy Kansas South, Evergy Metro and Evergy Missouri West conduct business in their respective service territories using the name Evergy. Collectively, the Evergy Companies have approximately 15,400 MWs of owned generating capacity and renewable power purchase agreements and engage in the generation, transmission, distribution and sale of electricity to approximately 1.6 million customers in the states of Kansas and Missouri. Evergy was incorporated in 2017 as Monarch Energy Holding, Inc. (Monarch Energy), a wholly-owned subsidiary of Great Plains Energy Incorporated (Great Plains Energy). Prior to the closing of the merger transactions described below, Monarch Energy changed its name to Evergy and did not conduct any business activities other than those required for its formation and matters contemplated by the Amended and Restated Agreement and Plan of Merger, dated as of July 9, 2017, by and among Great Plains Energy, Evergy Kansas Central, Monarch Energy and King Energy, Inc. (King Energy), a wholly-owned subsidiary of Monarch Energy (Amended Merger Agreement). On June 4, 2018, in accordance with the Amended Merger Agreement, Great Plains Energy merged into Evergy, with Evergy surviving the merger and King Energy merged into Evergy Kansas Central, with Evergy Kansas Central surviving the merger. These merger transactions resulted in Evergy becoming the parent entity of Evergy Kansas Central and the direct subsidiaries of Great Plains Energy, including Evergy Metro and Evergy Missouri West. See Note 2 for additional information regarding the merger. Principles of Consolidation Evergy Kansas Central was determined to be the accounting acquirer in the merger and thus, the predecessor of Evergy. Evergy had separate operations for the period beginning with the quarter ended June 30, 2018, and references to amounts for periods after the closing of the merger relate to Evergy. The results of Great Plains Energy's direct subsidiaries have been included in Evergy's results of operations from the date of the closing of the merger and thereafter. Evergy Metro elected not to apply "push-down accounting" related to the merger, whereby the adjustments of assets and liabilities to fair value and the resulting goodwill would be recorded on the financial statements of the acquired subsidiary. These adjustments for Evergy Metro, as well as those related to the acquired assets and liabilities of Great Plains Energy and its other direct subsidiaries, are only reflected on Evergy's consolidated financial statements. Each of Evergy's, Evergy Kansas Central's and Evergy Metro's consolidated financial statements includes the accounts of their subsidiaries and variable interest entities (VIEs) of which they are the primary beneficiary. Undivided interests in jointly-owned generation facilities are included on a proportionate basis. Intercompany transactions have been eliminated. The Evergy Companies assess financial performance and allocate resources on a consolidated basis (i.e., operate in one segment). Use of Estimates The process of preparing financial statements in conformity with generally accepted accounting principles (GAAP) requires the use of estimates and assumptions that affect the reported amounts of certain types of assets, liabilities, revenues and expenses. Such estimates primarily relate to unsettled transactions and events as of the date of the financial statements. Accordingly, upon settlement, actual results may differ from estimated amounts. Cash and Cash Equivalents Cash equivalents consist of highly liquid investments with original maturities of three months or less at acquisition. Fuel Inventory and Supplies The Evergy Companies record fuel inventory and supplies at average cost. The following table separately states the balances for fuel inventory and supplies.
| December 31
| 2020 |  | 2019
Evergy | (millions)
Fuel inventory | $ | 145.0 |  |  | $ | 146.4 |
Supplies | 359.5 |  |  | 335.2 |
Fuel inventory and supplies | $ | 504.5 |  |  | $ | 481.6 |
Evergy Kansas Central |  |  |
Fuel inventory | $ | 79.3 |  |  | $ | 80.2 |
Supplies | 197.1 |  |  | 186.2 |
Fuel inventory and supplies | $ | 276.4 |  |  | $ | 266.4 |
Evergy Metro |  |  |
Fuel inventory | $ | 44.9 |  |  | $ | 46.1 |
Supplies | 125.5 |  |  | 116.9 |
Fuel inventory and supplies | $ | 170.4 |  |  | $ | 163.0 |
Property, Plant and Equipment The Evergy Companies record the value of property, plant and equipment, including that of VIEs, at cost. For plant, cost includes contracted services, direct labor and materials, indirect charges for engineering and supervision and an allowance for funds used during construction (AFUDC). AFUDC represents the allowed cost of capital used to finance utility construction activity. AFUDC equity funds are included as a non-cash item in other income and AFUDC borrowed funds are a reduction of interest expense. AFUDC is computed by applying a composite rate to qualified construction work in progress. The rates used to compute gross AFUDC are compounded semi-annually. The amounts of the Evergy Companies' AFUDC for borrowed and equity funds are detailed in the following table.
| 2020 |  | 2019 |  | 2018
Evergy | (millions)
AFUDC borrowed funds | $ | 16.5 |  |  | $ | 14.5 |  |  | $ | 10.4 |
AFUDC equity funds | 17.2 |  |  | 2.2 |  |  | 3.1 |
Total | $ | 33.7 |  |  | $ | 16.7 |  |  | $ | 13.5 |
Evergy Kansas Central |  |  |  |  |
AFUDC borrowed funds | $ | 8.5 |  |  | $ | 7.5 |  |  | $ | 6.6 |
AFUDC equity funds | 9.1 |  |  | — |  |  | 2.9 |
Total | $ | 17.6 |  |  | $ | 7.5 |  |  | $ | 9.5 |
Evergy Metro(a) |  |  |  |  |
AFUDC borrowed funds | $ | 6.0 |  |  | $ | 4.3 |  |  | $ | 4.9 |
AFUDC equity funds | 8.0 |  |  | 2.2 |  |  | 1.4 |
Total | $ | 14.0 |  |  | $ | 6.5 |  |  | $ | 6.3 |
(a) Evergy Metro amounts are included in consolidated Evergy from June 4, 2018, the date of the closing of the merger, and thereafter. The average rates used in the calculation of AFUDC are detailed in the following table.
| 2020 |  | 2019 |  | 2018
Evergy Kansas Central | 4.7% |  | 3.0% |  | 3.3%
Evergy Metro | 5.2% |  | 4.6% |  | 3.9%
Evergy Missouri West | 3.5% |  | 3.7% |  | 2.9%
When property units are retired or otherwise disposed, the original cost, net of salvage, is charged to accumulated depreciation. Repair of property and replacement of items not considered to be units of property are expensed as incurred, except for planned refueling and maintenance outages at Wolf Creek Generating Station (Wolf Creek). As authorized by regulators, the incremental maintenance cost incurred for such outages is deferred and amortized to expense ratably over the period between planned outages. Depreciation and Amortization Depreciation and amortization of utility plant other than nuclear fuel is computed using the straight-line method over the estimated lives of depreciable property based on rates approved by state regulatory authorities. Annual depreciation rates average approximately 3%. See Note 8 for more details. Nuclear fuel is amortized to fuel expense based on the quantity of heat produced during the generation of electricity. The depreciable lives of Evergy's, Evergy Kansas Central's and Evergy Metro's property, plant and equipment are detailed in the following table.
|  | Evergy |  |  | Evergy Kansas Central |  |  | Evergy Metro |
|  | (years) |
Generating facilities |  | 8 | to | 87 |  |  |  | 8 | to | 87 |  |  |  | 20 | to | 60 |
Transmission facilities |  | 15 | to | 94 |  |  |  | 36 | to | 94 |  |  |  | 15 | to | 70 |
Distribution facilities |  | 8 | to | 73 |  |  |  | 19 | to | 73 |  |  |  | 8 | to | 55 |
Other |  | 5 | to | 84 |  |  |  | 7 | to | 84 |  |  |  | 5 | to | 50 |
Plant to be Retired, Net When the Evergy Companies retire utility plant, the original cost, net of salvage, is charged to accumulated depreciation. However, when it becomes probable an asset will be retired significantly in advance of its original expected useful life and in the near term, the cost of the asset and related accumulated depreciation is recognized as a separate asset and a probable abandonment. If the asset is still in service, the net amount is classified as plant to be retired, net on the consolidated balance sheets. If the asset is no longer in service, the net amount is classified as a regulatory asset on the consolidated balance sheets. The Evergy Companies must also assess the probability of full recovery of the remaining net book value of the abandonment. The net book value that may be retained as an asset on the balance sheet for the abandonment is dependent upon amounts that may be recovered through regulated rates, including any return. An impairment charge, if any, would equal the difference between the remaining net book value of the asset and the present value of the future revenues expected from the asset. Evergy Missouri West has determined that its November 2018 retirement of Sibley No. 3 Unit meets the criteria to be considered an abandonment. As of December 31, 2020, Evergy has classified the remaining Sibley No. 3 Unit net book value of $128.4 million as retired generation facilities within regulatory assets on its consolidated balance sheet. This regulatory asset is reduced by approximately $9 million of annual amortization expense, which is an amount equal to the annual depreciation expense for the asset reflected in retail rates. In October 2019, the Missouri Public Service Commission (MPSC) granted the request of certain intervenors for an Accounting Authority Order (AAO) that requires Evergy Missouri West to record a regulatory liability for all revenues collected from customers for return on investment, non-fuel operations and maintenance costs, taxes including accumulated deferred income taxes and all other costs associated with Sibley Station following the station's retirement in November 2018 for consideration in Evergy Missouri West's next rate case, which is expected to be completed no later than the end of 2022. See Note 5 for additional information regarding the AAO. Evergy Missouri West expects that the MPSC's decision in its next rate case regarding the AAO could impact the valuation of its regulatory asset for retired generation facilities but as of December 31, 2020, has concluded that no impairment is required based on the relevant facts and circumstances. Nuclear Plant Decommissioning Costs Nuclear plant decommissioning cost estimates are based on either the immediate dismantlement method or the deferred dismantling method as determined by the State Corporation Commission of the State of Kansas (KCC) and MPSC and include the costs of decontamination, dismantlement and site restoration. Based on these cost estimates, Evergy Kansas Central and Evergy Metro each contribute to a tax-qualified trust fund to be used to decommission Wolf Creek. Related liabilities for decommissioning are included on Evergy's, Evergy Kansas Central's and Evergy Metro's consolidated balance sheets in asset retirement obligations (AROs). As a result of the authorized regulatory treatment and related regulatory accounting, differences between the decommissioning trust fund asset and the related ARO are recorded as a regulatory asset or liability. See Note 7 for discussion of AROs including those associated with nuclear plant decommissioning costs. Regulatory Accounting Accounting standards are applied that recognize the economic effects of rate regulation. Accordingly, regulatory assets and liabilities have been recorded when required by a regulatory order or based on regulatory precedent. See Note 5 for additional information concerning regulatory matters. Cash Surrender Value of Life Insurance Amounts related to corporate-owned life insurance (COLI) are recorded on the consolidated balance sheets in other long-terms assets and are detailed in the following table for Evergy. Substantially all of Evergy's COLI-related balances relate to Evergy Kansas Central's COLI activity.
|  | December 31
|  | 2020 |  | 2019
Evergy |  | (millions)
Cash surrender value of policies |  | $ | 1,369.6 |  |  | $ | 1,370.0 |
Borrowings against policies |  | (1,237.6) |  |  | (1,237.1) |
Corporate-owned life insurance, net |  | $ | 132.0 |  |  | $ | 132.9 |
Increases in cash surrender value and death benefits are recorded in other income in the Evergy Companies' consolidated statements of income and comprehensive income. Interest expense incurred on policy loans is offset against the policy income. Income from death benefits is highly variable from period to period. Fair Value of Financial Instruments The following methods and assumptions were used to estimate the fair value of the following financial instruments for which it was practicable to estimate that value. Nuclear decommissioning trust fund - The Evergy Companies' nuclear decommissioning trust fund assets are recorded at fair value based on quoted market prices of the investments held by the fund and/or valuation models. Pension plans - For financial reporting purposes, the market value of plan assets is the fair value based on quoted market prices of the investments held by the fund and/or valuation models. Revenue Recognition The Evergy Companies recognize revenue on the sale of electricity to customers over time as the service is provided in the amount they have the right to invoice. Revenues recorded include electric services provided but not yet billed by the Evergy Companies. Unbilled revenues are recorded for kWh usage in the period following the customers' billing cycle to the end of the month. This estimate is based on net system kWh usage less actual billed kWhs. The Evergy Companies' estimated unbilled kWhs are allocated and priced by regulatory jurisdiction across the rate classes based on actual billing rates. The Evergy Companies' unbilled revenue estimate is affected by factors including fluctuations in energy demand, weather, line losses and changes in the composition of customer classes. See Note 4 for the balance of unbilled receivables for each of Evergy, Evergy Kansas Central and Evergy Metro as of December 31, 2020 and 2019. The Evergy Companies also collect sales taxes and franchise fees from customers concurrent with revenue-producing activities that are levied by state and local governments. These items are excluded from revenue, and thus are not reflected on the consolidated statements of income and comprehensive income for Evergy, Evergy Kansas Central and Evergy Metro. See Note 3 for additional details regarding revenue recognition from sales of electricity by the Evergy Companies. Allowance for Credit Losses Historical loss information generally provides the basis for the Evergy Companies' assessment of expected credit losses. The Evergy Companies use an aging of accounts receivable method to assess historical loss information. When historical experience may not fully reflect the Evergy Companies' expectations about the future, the Evergy Companies will adjust historical loss information, as necessary, to reflect the current conditions and reasonable and supportable forecasts not already reflected in the historical loss information. Receivables are charged off when they are deemed uncollectible, which is based on a number of factors including specific facts surrounding an account and management's judgment. Property Gains and Losses Net gains and losses from the sale of assets and businesses and from asset impairments are recorded in operating expenses. Asset Impairments Long-lived assets and finite-lived intangible assets subject to amortization are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. If the sum of the undiscounted expected future cash flows from an asset to be held and used is less than the carrying value of the asset, an asset impairment must be recognized in the financial statements. The amount of impairment recognized is the excess of the carrying value of the asset over its fair value. Goodwill and indefinite lived intangible assets are tested for impairment annually and when an event occurs indicating the possibility that an impairment exists. The annual test must be performed at the same time each year. The goodwill impairment test consists of comparing the fair value of a reporting unit to its carrying amount, including goodwill, to identify potential impairment. In the event that the carrying amount exceeds the fair value of the reporting unit, an impairment loss is recognized for the difference between the carrying amount of the reporting unit and its fair value. See Note 6 for additional details on goodwill. Income Taxes Income taxes are accounted for using the asset/liability approach. Deferred tax assets and liabilities are determined based on the temporary differences between the financial reporting and tax bases of assets and liabilities, applying enacted statutory tax rates in effect for the year in which the differences are expected to reverse. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion of the deferred tax assets will not be realized. The Evergy Companies recognize tax benefits based on a "more-likely-than-not" recognition threshold. In addition, the Evergy Companies recognize interest accrued related to unrecognized tax benefits in interest expense and penalties in operating expenses. Evergy files a consolidated federal income tax return as well as unitary and combined income tax returns in several state jurisdictions with Kansas and Missouri being the most significant. Income taxes for consolidated or combined subsidiaries are allocated to the subsidiaries based on separate company computations of income or loss. Evergy Kansas Central's and Evergy Metro's income tax provisions include taxes allocated based on their separate company's income or loss. The Evergy Companies have established a net regulatory liability for future refunds to be made to customers for amounts collected from customers in excess of income taxes in current rates. Tax credits are recognized in the year generated except for certain Evergy Kansas Central, Evergy Metro and Evergy Missouri West investment tax credits that have been deferred and amortized over the remaining service lives of the related properties. Other Income (Expense), Net The table below shows the detail of other expense for each of the Evergy Companies.
| 2020 |  | 2019 |  | 2018
Evergy | (millions)
Non-service cost component of net benefit cost | $ | (58.6) |  |  | $ | (55.6) |  |  | $ | (47.8) |
Other | (19.6) |  |  | (21.3) |  |  | (30.9) |
Other expense | $ | (78.2) |  |  | $ | (76.9) |  |  | $ | (78.7) |
Evergy Kansas Central |  |  |  |  |
Non-service cost component of net benefit cost | $ | (21.2) |  |  | $ | (20.1) |  |  | $ | (23.5) |
Other | (17.7) |  |  | (20.0) |  |  | (23.3) |
Other expense | $ | (38.9) |  |  | $ | (40.1) |  |  | $ | (46.8) |
Evergy Metro(a) |  |  |  |  |
Non-service cost component of net benefit cost | $ | (24.2) |  |  | $ | (20.9) |  |  | $ | (25.9) |
Other | (1.3) |  |  | (0.5) |  |  | (5.0) |
Other expense | $ | (25.5) |  |  | $ | (21.4) |  |  | $ | (30.9) |
(a) Evergy Metro amounts are only included in consolidated Evergy from June 4, 2018, the date of the closing of the merger, and thereafter. Earnings Per Share To compute basic earnings per share (EPS), Evergy divides net income attributable to Evergy, Inc. by the weighted average number of common shares outstanding. Diluted EPS includes the effect of issuable common shares resulting from restricted share units (RSUs), performance shares and restricted stock. Evergy computes the dilutive effects of potential issuances of common shares using the treasury stock method. The following table reconciles Evergy's basic and diluted EPS.
| 2020 |  | 2019 |  | 2018
Income | (millions, except per share amounts)
Net income | $ | 630.0 |  |  | $ | 685.6 |  |  | $ | 546.0 |
Less: Net income attributable to noncontrolling interests | 11.7 |  |  | 15.7 |  |  | 10.2 |
Net income attributable to Evergy, Inc. | $ | 618.3 |  |  | $ | 669.9 |  |  | $ | 535.8 |
Common Shares Outstanding |  |  |  |  |
Weighted average number of common shares outstanding - basic | 227.2 |  |  | 239.5 |  |  | 213.9 |
Add: effect of dilutive securities | 0.3 |  |  | 0.4 |  |  | 0.2 |
Diluted average number of common shares outstanding | 227.5 |  |  | 239.9 |  |  | 214.1 |
Basic EPS | $ | 2.72 |  |  | $ | 2.80 |  |  | $ | 2.50 |
Diluted EPS | $ | 2.72 |  |  | $ | 2.79 |  |  | $ | 2.50 |
Anti-dilutive shares excluded from the computation of diluted EPS for 2020 and 2019 were 127,884 RSUs and 785 RSUs, respectively. There were no anti-dilutive securities excluded from the computation of diluted EPS for 2018. Supplemental Cash Flow Information
Year Ended December 31 |  | 2020 |  | 2019 |  | 2018
Evergy |  | (millions)
Cash paid for (received from): |  |  |  |  |  |
Interest, net of amount capitalized |  | $ | 367.6 |  |  | $ | 329.5 |  |  | $ | 255.9 |
Interest of VIEs |  | 0.8 |  |  | 1.6 |  |  | 2.3 |
Income taxes, net of refunds |  | (46.5) |  |  | (5.2) |  |  | (0.9) |
Non-cash investing transactions: |  |  |  |  |  |
Property, plant and equipment additions (reductions) |  | 463.3 |  |  | 186.0 |  |  | (7.8) |
Non-cash financing transactions: |  |  |  |  |  |
Issuance of stock for compensation and reinvested dividends |  | 0.9 |  |  | (0.3) |  |  | 0.5 |
Year Ended December 31 |  | 2020 |  | 2019 |  | 2018
Evergy Kansas Central |  | (millions)
Cash paid for (received from): |  |  |  |  |  |
Interest, net of amount capitalized |  | $ | 157.5 |  |  | $ | 143.0 |  |  | $ | 155.3 |
Interest of VIEs |  | 0.8 |  |  | 1.6 |  |  | 2.3 |
Income taxes, net of refunds |  | 4.7 |  |  | 29.9 |  |  | 37.5 |
Non-cash investing transactions: |  |  |  |  |  |
Property, plant and equipment additions (reductions) |  | 235.4 |  |  | 92.1 |  |  | (32.5) |
Year Ended December 31 |  | 2020 |  | 2019 |  | 2018
Evergy Metro(a) |  | (millions)
Cash paid for (received from): |  |  |  |  |  |
Interest, net of amount capitalized |  | $ | 109.9 |  |  | $ | 118.4 |  |  | $ | 129.4 |
Income taxes, net of refunds |  | 4.8 |  |  | 77.0 |  |  | 31.2 |
Non-cash investing transactions: |  |  |  |  |  |
Property, plant and equipment additions |  | 192.5 |  |  | 80.7 |  |  | 19.2 |
(a) Evergy Metro amounts are included in consolidated Evergy from June 4, 2018, the date of the closing of the merger, and thereafter. Non-cash property, plant and equipment additions in 2020 for Evergy, Evergy Kansas Central and Evergy Metro include a non-cash addition related to the revision in estimate of the Wolf Creek ARO liability in the third quarter of 2020. See Note 7 for more details. See Note 2 for the non-cash information related to the merger transaction in 2018, including the fair value of Great Plains Energy's assets acquired and liabilities assumed and the issuance of Evergy common stock. Dividends Declared In February 2021, Evergy's Board of Directors (Evergy Board) declared a quarterly dividend of $0.535 per share on Evergy's common stock. The common dividend is payable March 22, 2021, to shareholders of record as of March 8, 2021. Recently Adopted Accounting Standards Leases In February 2016, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2016-02, Leases, which requires an entity that is a lessee to record a right-of-use asset and a lease liability for lease payments on the balance sheet for all leases with terms longer than 12 months. Leases will be classified as either finance or operating, with classification affecting the pattern of expense recognition in the income statement. Lessor accounting remains largely unchanged. In January 2018, the FASB issued ASU No. 2018-01, Leases: Land Easement Practical Expedient for Transition to Topic 842, which permits entities to elect an optional transition practical expedient to not evaluate under Topic 842 land easements that exist or expired before the entity's adoption of Topic 842 and that were not previously accounted for as leases under Topic 840. In July 2018, the FASB issued ASU No. 2018-10, Codification Improvements to Topic 842, Leases, which updates narrow aspects of the guidance issued in ASU No. 2016-02. Also in July 2018, the FASB issued ASU No. 2018-11, Leases: Targeted Improvements, which provides an optional transition method that allows entities to initially apply Topic 842 at the adoption date and recognize a cumulative-effect adjustment to the opening balance of retained earnings in the period of adoption without restating prior periods. In December 2018, the FASB issued ASU No. 2018-20, Leases: Narrow-Scope Improvements for Lessors, which is expected to reduce a lessor's implementation and ongoing costs associated with applying ASU No. 2016-02. In March 2019, the FASB issued ASU No. 2019-01, Leases: Codification Improvements, which clarifies certain lessor accounting and interim reporting requirements. ASU No. 2016-02 and the subsequent amendments are effective for interim and annual periods beginning after December 15, 2018, with early adoption permitted, and requires a modified retrospective transition approach with an option to either adjust or not adjust comparative periods. The Evergy Companies adopted the new guidance on January 1, 2019, without adjusting comparative periods for all leases existing as of January 1, 2019, by electing the optional transition method permitted by ASU No. 2018-11. As a result, Evergy, Evergy Kansas Central and Evergy Metro recorded an increase to assets and liabilities of approximately $110 million, $40 million and $80 million, respectively, as of January 1, 2019. Evergy Kansas Central and Evergy Metro have certain lease transactions between them for which the related assets and liabilities are eliminated at consolidated Evergy. The adoption of Topic 842 did not have a material impact on the Evergy Companies consolidated statements of income and comprehensive income and there was no cumulative-effect adjustment recorded to the opening balance of retained earnings. The Evergy Companies also elected a practical expedient to forgo reassessing existing or expired contracts as leases to determine whether each is in scope of Topic 842 and to forgo reassessing lease classification for existing and expired leases.

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