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COMMITMENTS AND CONTINGENCIES | 12 Months Ended
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Dec. 31, 2020
Commitments and Contingencies Disclosure [Abstract] |
COMMITMENTS AND CONTINGENCIES | COMMITMENTS AND CONTINGENCIES Environmental Matters Set forth below are descriptions of contingencies related to environmental matters that may impact the Evergy Companies' operations or their financial results. Management's assessment of these contingencies, which are based on federal and state statutes and regulations, and regulatory agency and judicial interpretations and actions, has evolved over time. These laws, regulations, interpretations and actions can also change, restrict or otherwise impact the Evergy Companies' operations or financial results. The failure to comply with these laws, regulations, interpretations and actions could result in the assessment of administrative, civil and criminal penalties and/or the imposition of remedial requirements. The Evergy Companies believe that all of their operations are in substantial compliance with current federal, state and local environmental standards. There are a variety of final and proposed laws and regulations that could have a material adverse effect on the Evergy Companies' operations and consolidated financial results. Due in part to the complex nature of environmental laws and regulations, the Evergy Companies are unable to assess the impact of potential changes that may develop with respect to the environmental contingencies described below. Cross-State Air Pollution Update Rule In September 2016, the Environmental Protection Agency (EPA) finalized the Cross-State Air Pollution (CSAPR) Update Rule. The final rule addresses interstate transport of nitrogen oxides emissions in 22 states including Kansas, Missouri and Oklahoma during the ozone season and the impact from the formation of ozone on downwind states with respect to the 2008 ozone National Ambient Air Quality Standards (NAAQS). In December 2018, the EPA finalized a determination, known as the CSAPR Close-Out Rule, demonstrating the CSAPR Update Rule fully addressed certain upwind states' 2008 ozone NAAQS interstate transport obligations. Various states and others have challenged both the CSAPR Update Rule and the CSAPR Close-Out Rule in the U.S. Court of Appeals for the D.C. Circuit (D.C. Circuit). In the fourth quarter of 2019, the D.C. Circuit granted these petitions and remanded a portion of the CSAPR Update Rule back to the EPA and vacated the CSAPR Close-Out Rule in its entirety. In response to the remand by the D.C. Circuit, the EPA proposed the Revised Cross-State Air Pollution Rule Update for the 2008 Ozone NAAQS in October 2020. The proposal finds that nine of the states that were subject to the CSAPR Update Rule do not significantly contribute to downwind states' nonattainment and/or maintenance issues during the ozone season, and that these states are therefore currently not subject to this proposed rule. These nine states are Alabama, Arkansas, Iowa, Kansas, Mississippi, Missouri, Oklahoma, Texas and Wisconsin. The Evergy Companies will continue to monitor this proposed rule as any future changes to their NO x ozone season allowance allocations could be material. Greenhouse Gases Burning coal and other fossil fuels releases carbon dioxide (CO 2) and other gases referred to as greenhouse gases (GHG). Various regulations under the federal Clean Air Act Amendments of 1990 (CAA) limit CO 2 and other GHG emissions, and in addition, other measures are being imposed or offered by individual states, municipalities and regional agreements with the goal of reducing GHG emissions. In July 2019, the EPA published the final Affordable Clean Energy (ACE) rule in the Federal Register. This rule contained (1) emission guidelines for GHG emissions from existing electric utility generating units (EGUs) and (2) revisions to emission guideline implementing regulations. This rule defined the "best system of emission reduction" (BSER) for GHG emissions from existing coal-fired EGUs as on-site, heat-rate efficiency improvements. The final rule also provided states with a list of candidate technologies that can be used to establish standards of performance and incorporate these performance standards into state plans. In conjunction with the finalization of the ACE rule, the EPA repealed its previously adopted Clean Power Plan (CPP). In January 2021, the D.C. Circuit vacated and remanded the ACE rule back to the EPA. Absent an approved request for rehearing, the mandate becomes effective on March 12, 2021. In February 2021, the D.C. Circuit granted a motion filed by the EPA for a partial stay of its January 2021 vacatur discussed above. The partial stay leaves the vacatur of the ACE rule in place while staying the mandate that vacates the repeal of the CPP. As a result of the partial stay, neither the ACE rule nor the CPP will be in effect while the EPA forms a new rule to regulate greenhouse gas emissions. Due to uncertainty regarding the future of the CPP or any other GHG regulation, the Evergy Companies cannot determine the impact of the rule on their operations or consolidated financial results, but the cost to comply with the ACE rule, CPP, or other potential GHG rule, could be material. Water The Evergy Companies discharge some of the water used in generation and other operations containing substances deemed to be pollutants. A November 2015 EPA rule establishes effluent limitations guidelines (ELG) and standards for wastewater discharges, including limits on the amount of toxic metals and other pollutants that can be discharged. Implementation timelines for this 2015 rule vary from 2018 to 2023. In April 2019, the U.S. Court of Appeals for the 5th Circuit (5th Circuit) issued a ruling that vacates and remands portions of the original ELG rule. Due to this ruling, future ELG modifications for the best available technology economically achievable for the discharge of legacy wastewater and leachate are likely and could be material. In October 2020, the EPA published the final ELG reconsideration rule. This rule adjusts numeric limits for flue gas desulfurization (FGD) wastewater and adds a 10% volumetric purge limit for bottom ash transport water. The timeline for final FGD wastewater compliance is now as soon as possible on or after one year following publication of the final rule in the Federal Register but no later than December 31, 2025. The Evergy Companies have reviewed the regulation and the costs to comply with these changes are not expected to be material. Regulation of Coal Combustion Residuals In the course of operating their coal generation plants, the Evergy Companies produce coal combustion residuals (CCRs), including fly ash, gypsum and bottom ash. The EPA published a rule to regulate CCRs in April 2015 that requires additional CCR handling, processing and storage equipment and closure of certain ash disposal units. In March 2019, the D.C. Circuit issued a ruling to grant the EPA's request to remand the Phase I, Part I CCR rule in response to a prior court ruling requiring the EPA to address un-lined surface impoundment closure requirements. In August 2020, the EPA published the Part A CCR Rule. This rule reclassified clay-lined surface impoundments from "lined" to "un-lined" and established a deadline of April 11, 2021 to initiate closure. The prior rule included a deadline of October 31, 2020 for un-lined impoundments to initiate closure. In November 2020, the EPA published the final Part B CCR Rule. This rule includes a process to allow un-lined impoundments to continue to operate if a demonstration is made to prove that the un-lined impoundments are not adversely impacting groundwater, human health or the environment. The Evergy Companies currently plan to initiate closure of all un-lined impoundments by the deadline in the Part A CCR rule and therefore the Part B CCR rule is not expected to have a material impact. The Evergy Companies have recorded AROs for their current estimates for the closure of ash disposal ponds, but the revision of these AROs may be required in the future due to changes in existing CCR regulations, the results of groundwater monitoring of CCR units or changes in interpretation of existing CCR regulations or changes in the timing or cost to close ash disposal ponds. If revisions to these AROs are necessary, the impact on the Evergy Companies' operations or consolidated financial results could be material. Storage of Spent Nuclear Fuel Under the Nuclear Waste Policy Act of 1982, the Department of Energy (DOE) is responsible for the permanent disposal of spent nuclear fuel. In 2010, the DOE filed a motion with the Nuclear Regulatory Commission (NRC) to withdraw its application to construct a national repository for the disposal of spent nuclear fuel and high-level radioactive waste at Yucca Mountain, Nevada. The NRC has not yet issued a final decision on the matter. Wolf Creek is constructing a dry cask storage facility to expand its existing on-site spent nuclear fuel storage, which is expected to provide additional capacity by the end of 2021. The Evergy Companies expect that the majority of the costs to construct the dry cask storage facility that would not have otherwise been incurred had the DOE begun accepting spent nuclear fuel will be reimbursed by the DOE. The Evergy Companies cannot predict, when, or if, an off-site storage site or alternative disposal site will be available to receive Wolf Creek's spent nuclear fuel and will continue to monitor this activity. Nuclear Insurance Nuclear liability, property and accidental outage insurance is maintained for Wolf Creek. These policies contain certain industry standard terms, conditions and exclusions, including, but not limited to, ordinary wear and tear and war. An industry aggregate limit of $3.2 billion for nuclear events ($1.8 billion of non-nuclear events) plus any reinsurance, indemnity or any other source recoverable by Nuclear Electric Insurance Limited (NEIL), provider of property and accidental outage insurance, exists for acts of terrorism affecting Wolf Creek or any other NEIL insured plant within 12 months from the date of the first act. In addition, participation is required in industry-wide retrospect assessment programs as discussed below. Nuclear Liability Insurance Pursuant to the Price-Anderson Act, liability insurance includes coverage against public nuclear liability claims resulting from nuclear incidents to the required limit of public liability, which is approximately $13.8 billion. This limit of liability consists of the maximum available commercial insurance of $0.5 billion and the remaining $13.3 billion is provided through mandatory participation in an industry-wide retrospective assessment program. Under this retrospective assessment program, the owners of Wolf Creek are jointly and severally subject to an assessment of up to $137.6 million (Evergy's share is $129.4 million and each of Evergy Kansas Central's and Evergy Metro's is $64.7 million), payable at no more than $20.5 million (Evergy's share is $19.2 million and each of Evergy Kansas Central's and Evergy Metro's is $9.6 million) per incident per year per reactor for any commercial U.S. nuclear reactor qualifying incident. Both the total and yearly assessment is subject to an inflationary adjustment based on the Consumer Price Index and applicable premium taxes. In addition, the U.S. Congress could impose additional revenue-raising measures to pay claims. Nuclear Property and Accidental Outage Insurance The owners of Wolf Creek carry decontamination liability, nuclear property damage and premature nuclear decommissioning liability insurance for Wolf Creek totaling approximately $2.8 billion. Insurance coverage for non-nuclear property damage accidents total approximately $2.3 billion. In the event of an extraordinary nuclear accident, insurance proceeds must first be used for reactor stabilization and site decontamination in accordance with a plan mandated by the NRC. The Evergy Companies' share of any remaining proceeds can be used to pay for property damage or, if certain requirements are met, including decommissioning the plant, toward a shortfall in the nuclear decommissioning trust fund. The owners also carry additional insurance with NEIL to help cover costs of replacement power and other extra expenses incurred during a prolonged outage resulting from accidental property damage at Wolf Creek. If significant losses were incurred at any of the nuclear plants insured under the NEIL policies, the owners of Wolf Creek may be subject to retrospective assessments under the current policies of approximately $33.2 million (Evergy's share is $31.2 million and each of Evergy Kansas Central's and Evergy Metro's is $15.6 million). Nuclear Insurance Considerations Although the Evergy Companies maintain various insurance policies to provide coverage for potential losses and liabilities resulting from an accident or an extended outage, the insurance coverage may not be adequate to cover the costs that could result from a catastrophic accident or extended outage at Wolf Creek. Any substantial losses not covered by insurance, to the extent not recoverable in prices, would have a material effect on the Evergy Companies' consolidated financial results. Contractual Commitments - Fuel, Power and Other The Evergy Companies' contractual commitments at December 31, 2020, excluding pensions, long-term debt and leases, are detailed in the following tables. See Notes 10, 13 and 21 for information regarding pension, long-term debt and lease commitments, respectively.
Evergy |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
|  | 2021 |  |  | 2022 |  |  | 2023 |  |  | 2024 |  |  | 2025 |  | After 2025 | Total
Purchase commitments |  | (millions)
Fuel |  | $ | 311.2 |  |  |  | $ | 118.3 |  |  |  | $ | 134.6 |  |  |  | $ | 97.6 |  |  |  | $ | 88.4 |  |  |  | $ | 94.0 |  |  |  | $ | 844.1 |
Power |  | 62.4 |  |  |  | 62.6 |  |  |  | 63.2 |  |  |  | 57.6 |  |  |  | 58.0 |  |  |  | 349.7 |  |  |  | 653.5 |
Other |  | 135.4 |  |  |  | 25.7 |  |  |  | 19.3 |  |  |  | 23.6 |  |  |  | 21.9 |  |  |  | 86.0 |  |  |  | 311.9 |
Total contractual commitments |  | $ | 509.0 |  |  |  | $ | 206.6 |  |  |  | $ | 217.1 |  |  |  | $ | 178.8 |  |  |  | $ | 168.3 |  |  |  | $ | 529.7 |  |  |  | $ | 1,809.5 |
Evergy Kansas Central |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
|  | 2021 |  |  | 2022 |  |  | 2023 |  |  | 2024 |  |  | 2025 |  | After 2025 | Total
Purchase commitments |  | (millions)
Fuel |  | $ | 149.3 |  |  |  | $ | 74.9 |  |  |  | $ | 85.5 |  |  |  | $ | 66.8 |  |  |  | $ | 62.3 |  |  |  | $ | 56.0 |  |  |  | $ | 494.8 |
Power |  | 1.4 |  |  |  | 0.9 |  |  |  | 0.9 |  |  |  | 0.9 |  |  |  | 0.9 |  |  |  | 4.4 |  |  |  | 9.4 |
Other |  | 66.6 |  |  |  | 9.1 |  |  |  | 8.2 |  |  |  | 4.3 |  |  |  | 2.9 |  |  |  | — |  |  |  | 91.1 |
Total contractual commitments |  | $ | 217.3 |  |  |  | $ | 84.9 |  |  |  | $ | 94.6 |  |  |  | $ | 72.0 |  |  |  | $ | 66.1 |  |  |  | $ | 60.4 |  |  |  | $ | 595.3 |
Evergy Metro |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
|  | 2021 |  |  | 2022 |  |  | 2023 |  |  | 2024 |  |  | 2025 |  | After 2025 | Total
Purchase commitments |  | (millions)
Fuel |  | $ | 142.8 |  |  |  | $ | 38.8 |  |  |  | $ | 46.3 |  |  |  | $ | 27.9 |  |  |  | $ | 23.2 |  |  |  | $ | 38.0 |  |  |  | $ | 317.0 |
Power |  | 34.9 |  |  |  | 35.1 |  |  |  | 35.3 |  |  |  | 29.2 |  |  |  | 29.2 |  |  |  | 196.1 |  |  |  | 359.8 |
Other |  | 55.0 |  |  |  | 15.2 |  |  |  | 10.1 |  |  |  | 18.8 |  |  |  | 18.5 |  |  |  | 81.4 |  |  |  | 199.0 |
Total contractual commitments |  | $ | 232.7 |  |  |  | $ | 89.1 |  |  |  | $ | 91.7 |  |  |  | $ | 75.9 |  |  |  | $ | 70.9 |  |  |  | $ | 315.5 |  |  |  | $ | 875.8 |
Fuel commitments consist of commitments for nuclear fuel, coal and coal transportation. Power commitments consist of certain commitments for renewable energy under power purchase agreements, capacity purchases and firm transmission service. Other represents individual commitments entered into in the ordinary course of business.

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