Evergy Kansas Central Inc.

The stable outlook on EKC incorporates that of parent Evergy, which reflects our base-case scenario that its regulated utility operations will continue to generate sufficient cash flow to maintain financial measures that support adjusted funds from operations (FFO) to debt of 15%-16% through 2023. This results in minimal cushion at the current rating. The outlook also reflects the continued realization of synergies that result in operational improvements and cost savings. We could lower the rating if parent Evergy's financial risk profile weakens such that adjusted FFO to debt is consistently below 15% through 2023. This could occur if, for example, there is a significant and persistent lag in ongoing regulatory recovery of capital spending or operating expenses. This scenario could

...With elevated capital spending, Evergy Inc.'s consolidated credit quality depends upon timely rate recovery and cost savings. Over the next five years, Evergy plans to spend about $9.2 billion on utility investments, including new renewables generation. Capital spending at Evergy Kansas Central Inc. (EKC) reflects about 50% of this. Although the company expects to offset most funding needs with future rate recovery and continued cost savings, Evergy's credit quality ultimately depends upon the timeliness of each of these items, because delays in rate recovery or lower-than-expected realized savings could increase the need for capital market funding. Incremental debt issuances would pressure the company's consolidated financial measures, which reflect limited cushion at the 'A-' rating. House Bill 7032 in Kansas is constructive for credit quality. In late April 2021, the Kansas state legislature enacted legislation permitting the Kansas Corp. Commission to authorize securitization financing...

Full Report