Evergy Metro Inc.

The stable outlook on Evergy Metro Inc. reflects our base-case scenario, which assumes the utility will generate sufficient cash flow to maintain adjusted funds from operations (FFO) to debt of 20%-22% through 2023, which is at the upper end of our expected range for the significant financial risk profile category. The outlook also reflects our expectation that the company will continue to realize merger-related synergies that provide it with operational improvements and cost savings. We could lower our rating on Evergy Metro over the next 24 months if we lower our rating on Evergy or if the utility's stand-alone financial measures weaken such that its FFO to debt remains consistently below 20%. We could raise our rating on Metro over

...We expect Evergy Metro Inc. to return its wholesale revenue related to the February 2021 winter storm to its customers. The company realized about $77 million of net wholesale revenue during the winter storm event. We expect it to defer this revenue as a regulatory liability and ultimately return it to its customers. Given its elevated capital spending, Evergy Metro's credit quality is dependent upon the receipt of timely rate increases and its continued access to funding. Through 2025, we expect the company to spend roughly $2.8 billion, $1.6 billion of which it will spend in Missouri and the remaining $1.2 billion in Kansas. While we believe Evergy Metro's regulatory construct provides it with multiple avenues for cost recovery--including those implemented through Missouri Senate Bill 564--its credit quality ultimately depends upon the receipt of timely rate recovery and its continued access to funding, including capital contributions from its parent Evergy Inc. We view Kansas House Bill...

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