Work Force Reductions
During 2002, we reduced our utility work force by approximately 400 employees through a voluntary separation program. We recorded a net charge of approximately $21.7 million in 2002 related to this program. We have replaced and may continue to replace some of these employees. For additional information, see Note 29 of the Notes to Consolidated Financial Statements, “Work Force Reductions.”

Ice Storm
In late January 2002, a severe ice storm swept through our utility service area causing extensive damage and loss of power to numerous customers. Through December 31, 2002, we incurred $19.3 million for restoration costs, a portion of which was capitalized. We have deferred and recorded as a regulatory asset on our December 31, 2002 consolidated balance sheet restoration costs of approximately $15.0 million. We have received an accounting authority order from the KCC that allows us to accumulate and defer for potential future recovery all operating and carrying costs related to storm restoration.

ELECTRIC UTILITY OPERATIONS

General
We supply electric energy at retail to approximately 647,000 customers in Kansas including the communities of Wichita, Topeka, Lawrence, Manhattan, Salina and Hutchinson. We classify our customers as residential, commercial and industrial as defined in our tariffs. We also supply electric energy at wholesale to the electric distribution systems of 62 Kansas cities and four rural electric cooperatives. We have contracts for the sale, purchase or exchange of wholesale electricity with other utilities. In addition, we have power marketing operations that purchase and sell electricity in areas outside our historical service territory.

Our electric sales for the three years ended December 31 were as follows:

(a)Network Integration: Reflects a new network transmission tariff that requires us to pay to the Southwest Power Pool ( SPP) all expenses associated with transporting power from our generating stations. The SPP then pays us for transmitting power to the point of delivery into our retail distribution system. These receipts from the SPP are reflected in revenues under the network integration classification. For further information see “— Network Integration Transmission Service” below.
(b)Other: Includes public street and highway lighting and miscellaneous electric revenues.


 

The following tables show changes in electric sales volumes, as measured by thousands of megawatt hours (MWh) of electricity we generate, for the three years ended December 31. No sales volumes are shown for network integration or power marketing because these activities are not related to electricity we generate.

Generation Capacity
We have 5,929 megawatts (MW) of generating capacity. See “Item 2. Properties” for additional information on our generating units. The capacity by fuel type is summarized below.

Our aggregate 2002 peak system net load of 4,469 MW occurred on July 26, 2002. Our net generating capacity combined with firm capacity purchases and sales provided a capacity margin of approximately 24% above system peak responsibility at the time of the peak. Our all-time peak system net load of 4,528 MW occurred on September 11, 2000. We do not anticipate needing additional generating capacity through 2005.

We have agreed to provide generating capacity to other utilities for certain periods as set forth below:


(a)We provide base capacity to McPherson. McPherson provides peaking capacity to us. During 2002, we provided approximately 75 MW to and received approximately 181 MW from McPherson. The amount of base capacity provided to McPherson is based on a fixed percentage of McPherson’s annual peak system load.



     


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