Three Months Ended September 30, Nine Months Ended September 30,
2017 2016 2017 2016
(Dollars In Thousands)
Borrowed funds $ 1,210
$ 2,537
$ 3,958
$ 6,884
Equity funds 321
2,647
1,094
7,894
Total $ 1,531
$ 5,184
$ 5,052
$ 14,778
Average AFUDC Rates 2.2 % 3.6 % 2.0 % 4.2 %

Earnings Per Share

We have participating securities in the form of unvested restricted share units (RSUs) with nonforfeitable rights to dividend equivalents that receive dividends on an equal basis with dividends declared on common shares. As a result, we apply the two-class method of computingTo compute basic ~~and diluted~~ earnings per share (EPS).

~~To compute basic EPS, we divide the earnings allocated~~, Evergy divides net income attributable to ~~common stock~~Evergy, Inc. by the weighted average number of common shares outstanding. Diluted EPS includes the effect of issuable common shares resulting from ~~our RSUs with forfeitable rights to dividend equivalents. We compute~~restricted share units (RSUs), performance shares, restricted stock and a warrant. Evergy computes the dilutive ~~effect~~effects of potential issuances of common shares using the treasury stock ~~method.~~method or the contingently issuable share method, as applicable.

The following table reconciles ~~our~~Evergy's basic and diluted ~~EPS~~EPS.


	Three Months Ended September 30				Year to Date September 30
	2021		2020		2021		2020
Income	(millions, except per share amounts)
Net income	$	452.5	$	367.5	$	835.4	$	576.0
Less: Net income attributable to noncontrolling interests	3.1		3.0		9.1		8.7
Net income attributable to Evergy, Inc.	$	449.4	$	364.5	$	826.3	$	567.3
Common Shares Outstanding
Weighted average number of common shares outstanding - basic	229.7		227.3		228.8		227.2
Add: Effect of dilutive securities	0.5		0.2		0.5		0.3
Weighted average number of common shares outstanding - dilutive	230.2		227.5		229.3		227.5
Basic EPS	$	1.96	$	1.60	$	3.61	$	2.50
Diluted EPS	$	1.95	$	1.60	$	3.60	$	2.49

There were no anti-dilutive shares excluded from ~~net income.~~

Three Months Ended September 30, Nine Months Ended September 30,
2017 2016 2017 2016
(Dollars In Thousands, Except Per Share Amounts)
Net income $ 160,724
$ 158,553
$ 300,245
$ 303,405
Less: Net income attributable to noncontrolling interests 2,418
3,833
10,213
10,760
Net income attributable to Westar Energy, Inc. 158,306
154,720
290,032
292,645
Less: Net income allocated to RSUs 289
325
515
605
Net income allocated to common stock $ 158,017
$ 154,395
$ 289,517
$ 292,040

Weighted average equivalent common shares outstanding – basic 142,472,987
142,090,706
142,458,586
142,039,320
Effect of dilutive securities:
RSUs 43,062
487,239
37,310
373,869
Weighted average equivalent common shares outstanding – diluted (a) 142,516,049
142,577,945
142,495,896
142,413,189

Earnings per common share, basic $ 1.11
$ 1.09
$ 2.03
$ 2.06
Earnings per common share, diluted $ 1.11
$ 1.08
$ 2.03
$ 2.05

~~_______________~~

~~(a) We had no antidilutive securities~~the computation of diluted EPS for the three ~~and nine~~ months ended and year to date September 30, ~~2017~~2021. Anti-dilutive shares excluded from the computation of diluted EPS for the three months ended and ~~2016.~~year to date September 30, 2020, were 124,136 RSUs with performance measures.

Dividends Declared

In November 2021, Evergy's Board of Directors (Evergy Board) declared a quarterly dividend of $0.5725 per share on Evergy's common stock. The common dividend is payable on December 20, 2021, to shareholders of record as of November 19, 2021.

In November 2021, Evergy Kansas Central's Board of Directors declared a cash dividend to Evergy of up to $70.0 million, payable on December 17, 2021.

Supplemental Cash Flow Information


Evergy
Year to Date September 30	2021		2020
Cash paid for (received from):	(millions)
Interest, net of amounts capitalized	$	257.0	$	267.8
Interest of VIEs	0.2		0.8
Income taxes, net of refunds	1.7		(73.8)
Right-of-use assets obtained in exchange for new operating lease liabilities	8.1		4.1
Right-of-use assets obtained in exchange for new finance lease liabilities	0.6		5.0
Non-cash investing transactions:
Property, plant and equipment additions	184.8		371.0

Non-cash financing transactions:
Issuance of stock for compensation and reinvested dividends	0.7		0.9

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Nine Months Ended September 30,
2017 2016
(In Thousands)
CASH PAID FOR (RECEIVED FROM):
Interest on financing activities, net of amount capitalized $ 108,965
$ 100,828
Interest on financing activities of VIEs 3,061
5,846
Income taxes, net of refunds (12,645 ) 13,004
NON-CASH INVESTING TRANSACTIONS:
Property, plant and equipment additions 112,493
94,007
Deconsolidation of property, plant and equipment of VIE (72,901 ) —
NON-CASH FINANCING TRANSACTIONS:
Issuance of stock for compensation and reinvested dividends 4,944
7,315
Deconsolidation of VIE (83,096 ) —
Assets acquired through capital leases 4,611
1,310


Evergy Kansas Central
Year to Date September 30	2021		2020
Cash paid for (received from):	(millions)
Interest, net of amounts capitalized	$	105.8	$	114.1
Interest of VIEs	0.2		0.8
Income taxes, net of refunds	37.2		(6.4)
Right-of-use assets obtained in exchange for new operating lease liabilities	3.6		3.8
Right-of-use assets obtained in exchange for new finance lease liabilities	0.6		3.7
Non-cash investing transactions:
Property, plant and equipment additions	64.6		183.8


Evergy Metro
Year to Date September 30	2021		2020
Cash paid for (received from):	(millions)
Interest, net of amounts capitalized	$	73.3	$	73.3
Income taxes, net of refunds	66.8		(7.3)
Right-of-use assets obtained in exchange for new operating lease liabilities	4.5		0.3
Right-of-use assets obtained in exchange for new finance lease liabilities	—		1.3
Non-cash investing transactions:
Property, plant and equipment additions	75.2		165.6

~~New Accounting Pronouncements~~

We prepare our condensed consolidated financial statements in accordance with GAAP for the United States of America. To address current issues in accounting, the Financial Accounting Standards Board (FASB) issued the following new accounting pronouncements that may affect our accounting and/or disclosure.

~~Compensation - Retirement Benefits~~

In March 2017, the FASB issued Accounting Standard Update (ASU) No. 2017-07, which requires employers to disaggregate the service cost component from other components of net periodic benefit costs and to disclose the amounts of net periodic benefit costs that are included in each income statement line item. The standard requires employers to report the service cost component in the same line item as other compensation costs and to report the other components of net periodic benefit costs (which include interest costs, expected return on plan assets, amortization of prior service cost or credits and actuarial gains and losses) separately and outside a subtotal of operating income. Of the components of net periodic benefit cost, only the service cost component will be eligible for capitalization asNon-cash property, plant and equipment ~~which~~additions year to date September 30, 2020 for Evergy, Evergy Kansas Central and Evergy Metro include non-cash additions of $259.1 million, $140.7 million and $118.4 million, respectively, related to the revision in estimate of the Wolf Creek Generating Station (Wolf Creek) asset retirement obligation (ARO) liability in the third quarter of 2020.

February 2021 Winter Weather Event

In February 2021, much of the central and southern United States, including the service territories of the Evergy Companies, experienced a significant winter weather event that resulted in extremely cold temperatures over a multi-day period (February 2021 winter weather event). The February 2021 winter weather event resulted in an increase in the demand for natural gas used by the Evergy Companies for generating electricity and also contributed to the limited availability of other generation resources, including coal and renewables, within the SPP Integrated Marketplace. The Evergy Companies are members of the SPP and, as a result, principally sell and purchase power for the Evergy Companies' retail electric customers through the SPP Integrated Marketplace. These circumstances resulted in higher than normal market prices for both natural gas and power for the duration of the February 2021 winter weather event. These higher than normal market prices also included make-whole payments calculated by the SPP to compensate natural gas generators within the SPP Integrated Marketplace for costs incurred in excess of revenues. As part of the February 2021 winter weather event and inclusive of the aforementioned items, Evergy incurred natural gas and purchased power costs, net of wholesale revenues, of $349.7 million. This $349.7 million of net fuel and purchased power costs was primarily driven by $293.4 million of costs at Evergy Missouri West and $127.9 million of costs at Evergy Kansas Central, partially offset by $71.6 million of net wholesale revenues at Evergy Metro. The amount of purchased power costs incurred by the Evergy Companies during the February 2021 winter weather event is subject to resettlement activity and further review by the SPP. This review and any subsequent resettlement activity could result in increases or decreases to the final amount of purchased power costs incurred by the Evergy Companies during the February 2021 winter weather event and these changes could be material.

The Evergy Companies have fuel recovery mechanisms in their Kansas and Missouri jurisdictions, as applicable, that allow them to defer substantially all of any increased fuel and purchased power costs, net of wholesale revenues, to a regulatory asset or liability for future recovery from or refund to customers. Further, in February 2021, the State Corporation Commission of the State of Kansas (KCC) issued an emergency Accounting Authority

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Order (AAO) that allowed Evergy Kansas Central and Evergy Metro's Kansas jurisdiction to defer to a regulatory asset any extraordinary costs, including carrying costs, incurred to provide electric service during the February 2021 winter weather event for consideration in future rate proceedings. Additionally, in June 2021, Evergy Metro and Evergy Missouri West filed a joint request for an AAO with the Public Service Commission of the State of Missouri (MPSC) that would allow for the extraordinary costs and revenues to provide service during the February 2021 winter weather event, including carrying costs, to be ~~applied prospectively. The other components of net periodic benefit costs that are no longer eligible for capitalization as property, plant and equipment will be recorded as~~deferred to a regulatory ~~asset.~~ asset or a regulatory liability for consideration in future proceedings. See Note 4 for additional information regarding the AAOs.

As of September 30, 2021, the Evergy Companies have deferred substantially all of the fuel and purchased power costs, net of wholesale revenues, related to the February 2021 winter weather event to a regulatory asset or liability pursuant to the mechanisms discussed above. While the Evergy Companies expect to recover substantially all of any increased fuel and purchased power costs related to the February 2021 winter weather event from customers, the timing of the cost recovery could be delayed or spread over a longer than typical recovery timeframe by the KCC or the MPSC to help moderate monthly customer bill impacts given the extraordinary nature of the February 2021 winter weather event.

The ~~guidance changing~~Evergy Companies also engage in limited non-regulated energy marketing activities in various regional power markets that have historically not had a significant impact on the ~~presentation~~Evergy Companies' results of operations. These energy marketing margins are recorded net in operating revenues on the Evergy Companies' statements of income ~~is to be applied on~~and comprehensive income. As a retrospective basis. The new standard is effective for annual periods beginning after December 15, 2017. We are evaluating the guidance and do not expect it to have a material impact on our condensed consolidated financial statements.

~~Revenue Recognition~~

In May 2014, the FASB issued ASU No. 2014-09, which addresses revenue from contracts with customers. Subsequent ASUs have been released providing modifications and clarifications to ASU No. 2014-09. The objectiveresult of the ~~new guidance is to establish principles to report useful information to users~~elevated market prices experienced in regional power markets across the central and southern United States driven by the February 2021 winter weather event discussed above, Evergy and Evergy Kansas Central recorded $95.0 million of ~~financial statements about the nature, amount, timing and uncertainty of revenue from contracts with customers. Under the new standard, an entity must identify the performance obligations~~energy marketing margins in a contract, determine the transaction price and allocate the price to specific performance obligations to recognize the revenue when the obligation is completed. This guidance is effective for fiscal years beginning after December 15, 2017. Early application of the standard is permitted for fiscal years beginning after December 15, 2016. The standard permits the use of either the retrospective application or modified retrospective method. We will use the modified retrospective method, which requires a cumulative-effect adjustment to be recorded on the balance sheet as of the beginning of 2018, if applicable, as if the standard had always been in effect. We have analyzed and documented the impact of the new revenue standard and related ASU’s for our significant revenue streams including retail, transmission and wholesale, as well as other less significant revenue streams. We also continue to monitor unresolved industry issues, including items2021 related to ~~contributions~~the February 2021 winter weather event, primarily driven by activities in ~~aid~~the Electric Reliability Council of ~~construction, collectability and alternative revenue programs, and will analyze the related impacts to revenue recognition. We are finalizing our analysis~~Texas (ERCOT). The amount of revenue-related controls and development of revenue-related disclosure with an overarching emphasis on effective internal controls over financial reporting. Based upon our completed assessments, we do not expect the impact on our condensed consolidated financial statements to be material.

~~3. PENDING MERGER~~

On May 29, 2016, we entered into an agreement and plan of merger with Great Plains Energy that provided for the acquisition of us by Great Plains Energy. On April 19, 2017, the Kansas Corporation Commission (KCC) denied our and Great Plains Energy’s merger application.

On July 9, 2017, we entered into an amended and restated agreement and plan of merger with Great Plains Energy that provides for a merger of equals between the two companies. Upon closing, each issued and outstanding share of our common stock will be converted into one share of common stock of a new holding company with a final name still to be determined. Upon closing, each issued and outstanding share of Great Plains Energy common stock will be converted into 0.5981 shares of common stock of the new holding company. Following completion of the merger, our shareholders are expected to own approximately 52.5% of the new holding company and Great Plains Energy’s shareholders are expected to own approximately 47.5% of the new holding company.

The closing of the merger is subject to conditions including, among others, approval of our shareholders representing a majority of the outstanding shares of our common stock; approval of Great Plains Energy’s shareholders representing two-thirds of the outstanding shares of Great Plains Energy common stock; clearance under the Hart-Scott-Rodino Antitrust Improvements Act (HSR Act); receipt of all required regulatory approvals from, among others, the Federal Energy Regulatory Commission (FERC), the NRC, the KCC, and the Missouri Public Service Commission (MPSC) (provided that such approvals

do not result in a material adverse effect on Great Plains Energy or us, after giving effect to the merger, measured on the size and scale of Westar Energy and its subsidiaries, taken as a whole); effectiveness of the registration statement for the shares of the new holding company’s common stock to be issued to our shareholders and Great Plains Energy’s shareholders upon consummation of the merger and approval of the listing of such shares on the New York Stock Exchange; the receipt of tax opinions by us and Great Plains Energy that the merger will be treated as a non-taxable event for U.S. federal income tax purposes; there being no shares of Great Plains Energy preference stock outstanding; and Great Plains Energy having not less than $1.25 billion in cash or cash equivalents on its balance sheet. The closing of the merger is also subject to other standard conditions, such as accuracy of representations and warranties, compliance with covenants and the absence of a material adverse effect on either company.

Either party may terminate the amended and restated merger agreement if the merger is not consummated by July 10, 2018, subject to an extension of up to six months. Either party may also terminate the agreement if our shareholders or Great Plains Energy’s shareholders do not approve the merger or an order that prohibits the merger becomes final and non-appealable. There are also termination rights for both parties in certain cases if the other party’s board of directors changes its recommendation to its shareholders regarding approval of the merger, or the other party accepts an alternative, superior offer.

On August 25, 2017, we and Great Plains Energy filed a joint application with the KCC requesting approval of the merger. On August 31, 2017, we and Great Plains Energy applied for approval of the merger from the MPSC. On September 1, 2017, we and Great Plains Energy filed a joint application for approval of the merger with FERC. On September 5, 2017, Wolf Creek filed a request with the NRC to approve an indirect transfer of control of Wolf Creek’s operating license. We and Great Plains Energy each scheduled special meetings for our respective shareholders on November 21, 2017 to vote on the proposed merger.

The amended and restated merger agreement provides that Great Plains Energy may be required to pay us a termination fee of $190.0 million if the agreement is terminated due to (i) failure to receive regulatory approval prior to July 10, 2018, subject to an extension of up to six months, (ii) a non-appealable regulatory order enjoining the merger or (iii) Great Plains Energy’s failure to close after all conditions precedent to closing have been satisfied. In addition, we may be required to pay Great Plains Energy a termination fee of $190.0 million if the agreement is terminated by us under certain circumstances, such as entering into a definitive acquisition agreement with respect to a superior proposal or by Great Plains Energyenergy marketing margins recorded as a result of ~~our board~~the February 2021 winter weather event is subject to resettlement activities and/or legislative action in Texas that could result in increases or decreases to the final amount of ~~directors changing its recommendation~~energy marketing margins earned by Evergy and Evergy Kansas Central and these changes could be material.

2. REVENUE

Evergy's, Evergy Kansas Central's and Evergy Metro's revenues disaggregated by customer class are summarized in the following tables.


Evergy
	Three Months Ended September 30				Year to Date September 30
	2021		2020		2021		2020
Revenues	(millions)
Residential	$	677.4	$	636.4	$	1,533.9	$	1,515.6
Commercial	525.0		499.5		1,293.5		1,272.9
Industrial	166.0		166.8		449.6		446.7
Other retail	9.2		9.5		26.1		29.2
Total electric retail	$	1,377.6	$	1,312.2	$	3,303.1	$	3,264.4
Wholesale	105.0		85.0		662.5		195.8
Transmission	90.3		80.7		266.7		238.5
Industrial steam and other	7.2		5.6		18.3		16.8
Total revenue from contracts with customers	$	1,580.1	$	1,483.5	$	4,250.6	$	3,715.5
Other	36.4		34.1		214.0		103.5
Operating revenues	$	1,616.5	$	1,517.6	$	4,464.6	$	3,819.0

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Evergy Kansas Central
	Three Months Ended September 30				Year to Date September 30
	2021		2020		2021		2020
Revenues	(millions)
Residential	$	282.3	$	262.9	$	657.3	$	627.5
Commercial	218.0		205.2		536.8		511.0
Industrial	105.0		105.7		293.0		284.6
Other retail	4.5		4.4		12.9		13.3
Total electric retail	$	609.8	$	578.2	$	1,500.0	$	1,436.4
Wholesale	76.8		68.7		402.7		168.1
Transmission	81.9		72.9		241.5		215.2
Other	0.6		0.9		1.7		2.1
Total revenue from contracts with customers	$	769.1	$	720.7	$	2,145.9	$	1,821.8
Other	8.7		12.9		131.5		42.7
Operating revenues	$	777.8	$	733.6	$	2,277.4	$	1,864.5


Evergy Metro
	Three Months Ended September 30				Year to Date September 30
	2021		2020		2021		2020
Revenues	(millions)
Residential	$	254.5	$	241.2	$	550.6	$	572.2
Commercial	221.9		213.3		542.5		558.1
Industrial	35.9		36.6		91.9		99.6
Other retail	2.8		2.7		7.7		8.9
Total electric retail	$	515.1	$	493.8	$	1,192.7	$	1,238.8
Wholesale	24.0		9.7		237.3		16.7
Transmission	4.3		3.5		12.8		10.4
Other	1.2		0.8		2.6		2.7
Total revenue from contracts with customers	$	544.6	$	507.8	$	1,445.4	$	1,268.6
Other	27.2		20.7		81.3		59.7
Operating revenues	$	571.8	$	528.5	$	1,526.7	$	1,328.3

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3. RECEIVABLES

The Evergy Companies' receivables are detailed in the merger prior to our shareholder approval having been obtained. Similarly, Great Plains Energy may be required to pay us a termination fee of $190.0 million if the agreement is terminated by Great Plains Energy under certain circumstances, such as entering into a definitive acquisition agreement with respect to a superior proposal or by us as a result of Great Plains Energy’s board of directors changing its recommendation of the merger prior to its shareholder approval having been obtained. Additionally, if the agreement is terminated by either Great Plains Energy or us as a result of Great Plains Energy’s shareholders not approving the agreement, Great Plains Energy may be required to pay us a termination fee of $80.0 million.following table.


	September 30		December 31
	2021		2020
Evergy	(millions)
Customer accounts receivable - billed	$	27.1	$	5.3
Customer accounts receivable - unbilled	143.7		110.0
Other receivables	183.3		177.9
Allowance for credit losses	(19.0)		(19.3)
Total	$	335.1	$	273.9
Evergy Kansas Central
Customer accounts receivable - billed	$	12.8	$	—
Customer accounts receivable - unbilled	38.0		50.7
Other receivables	197.7		175.7
Allowance for credit losses	(7.3)		(7.5)
Total	$	241.2	$	218.9
Evergy Metro
Customer accounts receivable - billed	$	4.9	$	3.3
Customer accounts receivable - unbilled	69.9		27.9
Other receivables	15.5		21.9
Allowance for credit losses	(8.0)		(8.1)
Total	$	82.3	$	45.0

In connection with the merger, we have incurred, and expect to incur additional, merger-related expenses. These expenses are included in our selling, general, and administrative expenses. During 2016, we incurred approximately $10.2 million of merger-related expenses. During the three and nine months endedThe Evergy Companies' other receivables at September 30, ~~2017, we incurred approximately $7.8 million~~2021 and ~~$8.6 million, respectively,~~December 31, 2020, consisted primarily of ~~merger-related expenses. In the event that the merger is consummated, we expect total merger-related expenses will be approximately $45.0 million.~~

~~See also Note 13, “Legal Proceedings,” for more information on litigation~~receivables from partners in jointly-owned electric utility plants, wholesale sales receivables and receivables related to alternative revenue programs. The Evergy Companies' other receivables also included receivables from contracts with customers as summarized in the ~~merger.~~following table.


	September 30		December 31
	2021		2020
	(millions)
Evergy	$	85.3	$	57.5
Evergy Kansas Central	82.7		49.9
Evergy Metro	1.7		6.9

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The change in the Evergy Companies' allowance for credit losses is summarized in the following table.


	2021		2020
Evergy	(millions)
Beginning balance January 1	$	19.3	$	10.5
Credit loss expense	7.6		15.5
Write-offs	(17.1)		(20.8)
Recoveries of prior write-offs	9.2		10.0
Ending balance September 30	$	19.0	$	15.2
Evergy Kansas Central
Beginning balance January 1	$	7.5	$	3.8
Credit loss expense	3.2		6.9
Write-offs	(6.9)		(7.3)
Recoveries of prior write-offs	3.5		2.1
Ending balance September 30	$	7.3	$	5.5
Evergy Metro
Beginning balance January 1	$	8.1	$	4.6
Credit loss expense	2.8		5.5
Write-offs	(6.9)		(8.9)
Recoveries of prior write-offs	4.0		5.3
Ending balance September 30	$	8.0	$	6.5

Sale of Accounts Receivable

Evergy Kansas Central, Evergy Metro and Evergy Missouri West sell an undivided percentage ownership interest in their retail electric accounts receivable to independent outside investors. These sales are accounted for as secured borrowings with accounts receivable pledged as collateral and a corresponding short-term collateralized note payable recognized on the balance sheets. The Evergy Companies' accounts receivable pledged as collateral and the corresponding short-term collateralized note payable are summarized in the following table.


	September 30		December 31
	2021		2020
	(millions)
Evergy	$	395.0	$	360.0
Evergy Kansas Central	200.0		180.0
Evergy Metro	130.0		130.0

Each receivable sale facility expires in 2024. Evergy Kansas Central's facility allows for $185.0 million in aggregate outstanding principal amount of borrowings from mid-October through mid-June and then $200.0 million from mid-June through mid-October. Evergy Metro's facility allows for $130.0 million in aggregate outstanding principal amount of borrowings at any time. Evergy Missouri West's facility allows for $50.0 million in aggregate outstanding principal amount of borrowings from mid-November through mid-June and then $65.0 million from mid-June through mid-November.

4. RATE MATTERS AND REGULATION

KCC Proceedings

Evergy Kansas Central 2021 Transmission Delivery Charge (TDC)

In October 2016, we filed an abbreviated rate review with the KCC to update our prices to include capital costs related to La Cygne Generating Station (La Cygne) environmental upgrades, investment to extend the life of Wolf Creek, costs related to programs to improve grid resiliency and costs associated with investments in other environmental projects during 2015. In May 2017, we entered into a settlement agreement with the major parties to the rate review. In June 2017, the agreement was approved by the KCC. The new prices were effective June 2017 and are expected to increase our annual retail revenues by approximately $16.4 million.

~~In March 2017,~~April 2021, the KCC issued an order ~~allowing us to adjust our~~adjusting Evergy Kansas Central's retail prices to include updated transmission costs as reflected in the Federal Energy Regulatory Commission (FERC) transmission formula rate (TFR). The new prices were effective in April ~~2017~~2021 and are expected to increase ~~our~~Evergy Kansas Central's annual retail revenues by ~~approximately $12.7 million.~~$37.9 million when compared to 2020.

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Evergy Metro 2021 TDC

In ~~December 2016,~~April 2021, the KCC ~~approved~~issued an order allowing us to adjust our prices to include costs incurred for property taxes. The new prices were effective in January 2017 and are expected to decrease our annual retail revenues by approximately $26.8 million.

~~FERC Proceedings~~

Our TFR that includes projected 2018 transmission capital expenditures and operating costs will become effective in January 2018 and is expected to increase our annual transmission revenues by approximately $26.1 million.

Our TFR that includes projected 2017 transmission capital expenditures and operating costs was effective in January 2017 and is expected to increase our annual transmission revenues by approximately $29.6 million. This updated rate provided the basis for our request with the KCC to adjust ouradjusting Evergy Metro's retail prices to include updated transmission costs as reflected in the FERC TFR. The new prices were effective in May 2021 and are expected to decrease Evergy Metro's annual retail revenues by $2.4 million when compared to 2020.

Evergy Kansas Central and Evergy Metro Earnings Review and Sharing Plan (ERSP)

As part of their merger settlement agreement with the KCC, Evergy Kansas Central and Evergy Metro agreed to participate in an ERSP for the years 2019 through 2022. Under the ERSP, Evergy Kansas Central's and Evergy Metro's Kansas jurisdiction are required to refund to customers 50% of annual earnings in excess of their authorized return on equity of 9.3% to the extent the excess earnings exceed the amount of annual bill credits that Evergy Kansas Central and Evergy Metro agreed to provide in connection with the merger that resulted in the formation of Evergy.

Evergy Kansas Central's and Evergy Metro's 2020 calculations of annual earnings did not result in a significant refund obligation. These calculations were filed with the KCC in March 2021. As of September 30, 2021, Evergy Kansas Central and Evergy Metro estimate their 2021 annual earnings will not result in a significant refund obligation. The final refund obligations for 2020 and 2021 will be decided by the KCC and could vary from the current estimates.

Evergy Kansas Central and Evergy Metro February 2021 Winter Weather Event AAO

In February 2021, the KCC issued an emergency AAO directing all Kansas-jurisdictional natural gas and electric utilities, including Evergy Kansas Central and Evergy Metro, to defer to a regulatory asset or regulatory liability any extraordinary costs or revenues, including carrying costs, to provide electric service during the February 2021 winter weather event for consideration in future rate proceedings.

As of September 30, 2021, Evergy Kansas Central had recognized a regulatory asset pursuant to the AAO of $115.0 million related to its costs incurred during the February 2021 winter weather event, primarily consisting of increased fuel and purchased power costs. As of September 30, 2021, Evergy Metro's Kansas jurisdiction had recognized a regulatory liability of $42.4 million related to its increased wholesale revenues during the February 2021 winter weather event.

In July 2021, Evergy Kansas Central and Evergy Metro made a joint filing with the KCC regarding the timing and method of recovery or refund for costs and revenues deferred pursuant to the February 2021 winter weather event AAO. In the filing, Evergy Kansas Central and Evergy Metro requested to recover or refund, as appropriate, their deferred February 2021 winter weather event amounts to customers through their fuel recovery mechanisms over two years and one year, respectively, beginning in April 2022. As part of the filing, Evergy Metro also requested an approximately $6 million decrease to its February 2021 winter weather event refund to Kansas customers, which is not currently reflected in its regulatory liability for the February 2021 winter weather event, for jurisdictional allocation differences in its Kansas and Missouri fuel recovery mechanisms. A decision by the KCC regarding Evergy Kansas Central's and Evergy Metro's request is expected in the first half of 2022.

Lawrence Energy Center (LEC) Unit 4 Securitization

In April 2021, the state of Kansas passed the Utility Financing and Securitization Act (UFSA) which allows certain public utilities, including Evergy Kansas Central and Evergy Metro, to securitize utility assets in order to recover energy transition costs relating to the early retirement of certain generating assets. To recover the energy transition costs through securitization as allowed in the UFSA, a public utility must obtain a predetermination order from the KCC finding that the retirement of the subject generation facility is reasonable. Upon the receipt of a successful predetermination order, the public utility must then file an application with the KCC for a financing order to issue securitized bonds to recover the energy transition costs. The UFSA also allows the pursuit of securitization to help finance qualified extraordinary expenses, such as fuel costs incurred during extreme weather events.

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which are expected to occur between December 2023 and the first half of 2024. An evidentiary hearing in the case is currently scheduled to begin in January 2022 and a decision by the KCC regarding the request is expected in the first or second quarter of 2022.

If the KCC finds that Evergy Kansas Central's planned retirement of LEC Unit 4 and investment in 190 MW of solar generation is prudent as part of the predetermination request, Evergy Kansas Central then plans to file an application with the KCC later in 2022 for a financing order authorizing the issuance of securitized bonds to recover energy transition costs associated with the retirement of LEC Unit 4 and the related coal-handling facilities for LEC Units 4 and 5.

MPSC Proceedings

Evergy Missouri West Other Proceedings

In December 2018, the Office of the Public Counsel (OPC) and the Midwest Energy Consumers Group (MECG) filed a petition with the MPSC requesting an AAO that would require 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.

In October 2019, the MPSC granted OPC's and MECG's request for an AAO and required Evergy Missouri West to record a regulatory liability for the revenues discussed ~~above.~~above for consideration in Evergy Missouri West's next rate case, which is expected to be completed no later than the end of 2022. Depending on the MPSC's decision in this next rate case, Evergy Missouri West could be required to refund to customers all or a portion of amounts collected in revenue for Sibley Station since December 2018 or, alternatively, could be required to make no refunds.

As a result of the MPSC order, Evergy has recorded a regulatory liability of $26.5 million as of September 30, 2021 for the estimated amount of revenues that Evergy Missouri West has collected from customers for Sibley Station since December 2018 that Evergy has determined is probable of refund. Evergy expects that it will continue to defer such amounts as collected from customers until new rates become effective in Evergy Missouri West's next rate case.

The accrual for this estimated amount does not include certain revenues collected related to Sibley Station that Evergy has determined to not be probable of refund in the next rate case based on the relevant facts and circumstances. Although Evergy has determined these additional revenues to not be probable of refund, the ultimate resolution of this matter in the next Evergy Missouri West rate case is uncertain and could result in an estimated loss of up to approximately $12 million per year in excess of the amount accrued until new rates become effective. Evergy's regulatory liability for probable refunds as of September 30, 2021 and estimated loss in excess of the amount accrued represent estimates that could change significantly based on ongoing developments including decisions in other regulatory proceedings that establish precedent applicable to this matter and positions of parties on this issue in a future Evergy Missouri West rate case.

Evergy Metro and Evergy Missouri West February 2021 Winter Weather Event AAO

In June 2021, Evergy Metro and Evergy Missouri West filed a joint request for an AAO with the MPSC that would allow Evergy Metro and Evergy Missouri West to defer to a regulatory asset or regulatory liability any extraordinary costs or revenues, including carrying costs, to provide electric service during the February 2021 winter weather event for consideration in future proceedings.

Evergy Metro and Evergy Missouri West have currently deferred substantially all of their fuel and purchased power costs, net of wholesale revenues, related to the February 2021 winter weather event to a regulatory asset or liability pursuant to their ability to recover or refund these amounts through their fuel recovery mechanisms, which allow for the recovery or refund of 95% of increases in fuel and purchased power costs, net of wholesale revenues, to customers. This AAO request is intended to address the recovery or refund of the February 2021 winter weather event amounts separate from the normal fuel recovery mechanism process given the extraordinary nature of the February 2021 winter weather event and to help moderate customer bill impacts. As of September 30, 2021, Evergy Metro's Missouri jurisdiction had recognized a regulatory liability of $28.0 million related to its increased wholesale

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revenues during the February 2021 winter weather event. As of September 30, 2021, Evergy Missouri West had recognized a regulatory asset of $278.7 million related to its costs incurred during the February 2021 winter weather event, primarily consisting of increased fuel and purchased power costs.

In the AAO filing, Evergy Metro requested to refund its deferred February 2021 winter weather event amounts to customers through its fuel recovery mechanism over one year, beginning in April 2022. In the same AAO filing, Evergy Missouri West requested to exclude its deferred February 2021 winter weather event amounts from recovery through its fuel recovery mechanism and indicated its intent to recover them through issuing securitized bonds pursuant to the securitization legislation signed into law in Missouri in July 2021. As part of the filing, Evergy Metro also requested an approximately $5 million decrease to its February 2021 winter weather refund to Missouri customers, which is not currently reflected in its regulatory liability for the February 2021 winter weather event, for jurisdictional allocation differences in its Kansas and Missouri fuel recovery mechanisms and for the portion of net wholesale revenues not traditionally refundable because of the 5% sharing provision of its fuel recovery mechanism. Evergy Missouri West requested an approximately $15 million increase to its February 2021 winter weather event recovery from Missouri customers, which is not currently reflected in its regulatory asset for the February 2021 winter weather event, for the portion of net fuel and purchased power costs not traditionally recoverable because of the 5% sharing provision of its fuel recovery mechanism. A decision by the MPSC regarding Evergy Metro's and Evergy Missouri West's AAO request is expected by the end of 2021.

FERC Proceedings

In October of each year, Evergy Kansas Central and Evergy Metro post an updated TFR that includes projected transmission capital expenditures and operating costs for the following year. This rate is the most significant component in the retail rate calculation for Evergy Kansas Central's and Evergy Metro's annual request with the KCC to adjust retail prices to include updated transmission costs through the TDC.

Evergy Kansas Central TFR

In the most recent two years, the updated TFR was expected to adjust Evergy Kansas Central's annual transmission revenues by approximately:

•$32.4 million increase effective in January 2021; and

•$6.8 million increase effective in January 2020.

Evergy Metro TFR

In the most recent two years, the updated TFR was expected to adjust Evergy Metro's annual transmission revenues by approximately:

•$3.9 million decrease effective in January 2021; and

•$1.7 million decrease effective in January 2020.

5. ~~FINANCIAL INSTRUMENTS~~GOODWILL

GAAP requires goodwill to be tested for impairment annually and when an event occurs indicating the possibility that an impairment exists. Evergy's impairment test for the $2,336.6 million of goodwill that was recorded as a result of the Great Plains Energy Incorporated (Great Plains Energy) and Evergy Kansas Central merger was conducted as of May 1, 2021. 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. Evergy's consolidated operations are considered 1 reporting unit for assessment of impairment, as management assesses financial performance and allocates resources on a consolidated basis. The determination of fair value of the reporting unit consisted of two valuation techniques: an income approach consisting of a discounted cash flow analysis and a market approach consisting of a determination of reporting unit invested capital using a market multiple derived from the historical earnings before interest, income taxes, depreciation and amortization and market prices of the stock of peer companies. The results of the two techniques were evaluated and weighted to determine a point within the range that management considered

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representative of fair value for the reporting unit. The fair value of the reporting unit exceeded the carrying amount, including goodwill. As a result, there was no impairment of goodwill.

6. PENSION PLANS AND ~~TRADING SECURITIES~~POST-RETIREMENT BENEFITS

Evergy and certain of its subsidiaries maintain, and Evergy Kansas Central and Evergy Metro participate in, qualified non-contributory defined benefit pension plans covering the majority of Evergy Kansas Central's and Evergy Metro's employees as well as certain non-qualified plans covering certain active and retired officers. Evergy is also responsible for its indirect 94% ownership share of Wolf Creek's defined benefit plans, consisting of Evergy Kansas South's and Evergy Metro's respective 47% ownership shares.

For the majority of employees, pension benefits under these plans reflect the employees' compensation, years of service and age at retirement. However, for the plan covering Evergy Kansas Central's employees, the benefits for non-union employees hired between 2002 and the second quarter of 2018 and union employees hired beginning in 2012 are derived from a cash balance account formula. The plan was closed to future non-union employees in 2018. For the plans covering Evergy Metro's employees, the benefits for union employees hired beginning in 2014 are derived from a cash balance account formula and the plans were closed to future non-union employees in 2014.

Evergy and its subsidiaries also provide post-retirement health care and life insurance benefits for certain retirees of Evergy Kansas Central and Evergy Metro and their respective shares of Wolf Creek's post-retirement benefit plans.

The Evergy Companies record pension and post-retirement expense in accordance with rate orders from the KCC and MPSC that allow the difference between pension and post-retirement costs under GAAP and costs for ratemaking to be recognized as a regulatory asset or liability. This difference between financial and regulatory accounting methods is due to timing and will be eliminated over the life of the plans.

For the three months ended and year to date September 30, 2021, Evergy, Evergy Kansas Central and Evergy Metro recorded pension settlement charges of $30.4 million, $22.5 million and $12.5 million, respectively. For the three months ended and year to date September 30, 2020, Evergy and Evergy Metro recorded pension settlement charges of $10.0 million and $12.7 million, respectively. These settlement charges were the result of accelerated distributions as a result of employee retirements and annuity purchases for certain plan participants. Evergy, Evergy Kansas Central and Evergy Metro deferred substantially all of the charges to a regulatory asset and expect to recover these amounts over future periods pursuant to regulatory agreements.

The following tables provide the components of net periodic benefit costs prior to the effects of capitalization and sharing with joint owners of power plants.


	Pension Benefits						Post-Retirement Benefits
Three Months Ended September 30, 2021	Evergy		Evergy Kansas Central		Evergy Metro		Evergy		Evergy Kansas Central		Evergy Metro
Components of net periodic benefit costs	(millions)
Service cost	$	21.0	$	7.4	$	13.6	$	0.8	$	0.4	$	0.4
Interest cost	21.2		10.3		10.7		2.0		1.0		1.0
Expected return on plan assets	(26.5)		(13.6)		(14.2)		(2.3)		(1.6)		(0.7)
Prior service cost	0.5		0.5		—		0.1		0.2		(0.3)
Recognized net actuarial loss	14.7		9.8		11.1		0.4		0.1		—
Settlement and special termination benefits	30.4		22.5		12.5		—		—		—
Net periodic benefit costs before regulatory adjustment and intercompany allocations	61.3		36.9		33.7		1.0		0.1		0.4
Regulatory adjustment	(20.1)		(22.6)		(7.1)		(1.2)		(0.9)		0.1
Intercompany allocations	—		1.0		(6.8)		—		0.1		(0.1)
Net periodic benefit costs (income)	$	41.2	$	15.3	$	19.8	$	(0.2)	$	(0.7)	$	0.4

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	Pension Benefits						Post-Retirement Benefits
Year to Date September 30, 2021	Evergy		Evergy Kansas Central		Evergy Metro		Evergy		Evergy Kansas Central		Evergy Metro
Components of net periodic benefit costs	(millions)
Service cost	$	63.3	$	22.3	$	41.0	$	2.5	$	1.2	$	1.3
Interest cost	63.8		31.0		32.3		5.9		3.0		2.9
Expected return on plan assets	(80.1)		(40.7)		(43.1)		(6.7)		(4.7)		(2.0)
Prior service cost	1.5		1.5		—		0.4		0.4		(0.8)
Recognized net actuarial (gain)/loss	44.2		29.1		33.4		1.0		0.4		(0.1)
Settlement and special termination benefits	30.4		22.5		12.5		—		—		—
Net periodic benefit costs before regulatory adjustment and intercompany allocations	123.1		65.7		76.1		3.1		0.3		1.3
Regulatory adjustment	(6.4)		(23.4)		(2.5)		(3.7)		(2.5)		0.2
Intercompany allocations	—		2.2		(19.0)		—		0.1		(0.3)
Net periodic benefit costs (income)	$	116.7	$	44.5	$	54.6	$	(0.6)	$	(2.1)	$	1.2


	Pension Benefits						Post-Retirement Benefits
Three Months Ended September 30, 2020	Evergy		Evergy Kansas Central		Evergy Metro		Evergy		Evergy Kansas Central		Evergy Metro
Components of net periodic benefit costs	(millions)
Service cost	$	20.1	$	6.8	$	13.3	$	0.7	$	0.3	$	0.4
Interest cost	24.0		11.7		12.1		2.3		1.2		1.1
Expected return on plan assets	(26.3)		(13.3)		(13.5)		(2.4)		(1.7)		(0.7)
Prior service cost	0.4		0.4		0.2		0.1		0.1		—
Recognized net actuarial (gain)/loss	12.1		8.5		11.6		0.1		—		(0.1)
Settlement and special termination benefits	10.0		—		12.7		—		—		—
Net periodic benefit costs before regulatory adjustment and intercompany allocations	40.3		14.1		36.4		0.8		(0.1)		0.7
Regulatory adjustment	(0.4)		0.4		(11.3)		(1.0)		(0.7)		(0.2)
Intercompany allocations	—		1.6		(5.8)		—		0.1		(0.1)
Net periodic benefit costs (income)	$	39.9	$	16.1	$	19.3	$	(0.2)	$	(0.7)	$	0.4


	Pension Benefits						Post-Retirement Benefits
Year to Date September 30, 2020	Evergy		Evergy Kansas Central		Evergy Metro		Evergy		Evergy Kansas Central		Evergy Metro
Components of net periodic benefit costs	(millions)
Service cost	$	59.2	$	20.4	$	38.8	$	2.1	$	0.9	$	1.2
Interest cost	72.9		35.2		37.1		6.9		3.6		3.3
Expected return on plan assets	(79.7)		(39.9)		(41.5)		(7.0)		(5.0)		(2.0)
Prior service cost	1.3		1.2		0.6		0.3		0.3		—
Recognized net actuarial (gain)/loss	34.8		25.4		34.2		0.2		—		(0.4)
Settlement and special termination benefits	10.0		—		12.7		—		—		—
Net periodic benefit costs before regulatory adjustment and intercompany allocations	98.5		42.3		81.9		2.5		(0.2)		2.1
Regulatory adjustment	18.6		1.1		(9.2)		(2.9)		(2.1)		(0.3)
Intercompany allocations	—		(0.1)		(17.0)		—		0.1		(0.1)
Net periodic benefit costs (income)	$	117.1	$	43.3	$	55.7	$	(0.4)	$	(2.2)	$	1.7

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The components of net periodic benefit costs other than the service cost component are included in other expense on the Evergy Companies' consolidated statements of income and comprehensive income.

Year to date September 30, 2021, Evergy, Evergy Kansas Central and Evergy Metro made pension contributions of $41.7 million, $26.2 million and $15.5 million, respectively. Evergy expects to make additional pension contributions of $68.2 million in 2021 to satisfy the Employee Retirement Income Security Act of 1974, as amended (ERISA) funding requirements and KCC and MPSC rate orders, of which $11.1 million is expected to be paid by Evergy Kansas Central and $57.1 million is expected to be paid by Evergy Metro.

Year to date September 30, 2021, Evergy, Evergy Kansas Central and Evergy Metro made post-retirement benefit contributions of $1.2 million, $0.6 million and $0.6 million, respectively. Evergy, Evergy Kansas Central and Evergy Metro expect to make additional contributions in 2021 of $3.7 million, $0.5 million and $3.2 million, respectively, to the post-retirement benefit plans.

7. SHORT-TERM BORROWINGS AND SHORT-TERM BANK LINES OF CREDIT

In August 2021, Evergy amended and restated its $2.5 billion master credit facility and extended the maturity until 2026. Evergy, Evergy Kansas Central, Evergy Metro and Evergy Missouri West have borrowing capacity under the master credit facility with specific sublimits for each borrower. These sublimits can be unilaterally adjusted by Evergy for each borrower provided the sublimits remain within minimum and maximum sublimits as specified in the facility. Evergy adjusted these sublimits in the first quarter of 2021 as further detailed in the table below. The applicable interest rates and commitment fees of the facility are subject to upward or downward adjustments, within certain limitations, if Evergy achieves, or fails to achieve, certain sustainability-linked targets based on two key performance indicator metrics: (i) Non-Emitting Generation Capacity and (ii) Diverse Supplier Spend (as defined in the facility).

A default by any borrower under the facility or one of its significant subsidiaries on other indebtedness totaling more than $100.0 million constitutes a default by that borrower under the facility. Under the terms of this facility, each of Evergy, Evergy Kansas Central, Evergy Metro and Evergy Missouri West is required to maintain a total indebtedness to total capitalization ratio, as defined in the facility, of not greater than 0.65 to 1.00 at all times. As of September 30, 2021, Evergy, Evergy Kansas Central, Evergy Metro and Evergy Missouri West were in compliance with this covenant.

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The following table summarizes the committed credit facilities (excluding receivable sale facilities discussed in Note 3) available to the Evergy Companies as of September 30, 2021 and December 31, 2020.


			Amounts Drawn
	Master Credit Facility		Commercial Paper		Letters of Credit		Cash Borrowings		Available Borrowings		Weighted Average Interest Rate on Short-Term Borrowings
September 30, 2021	(millions)
Evergy, Inc.	$	700.0	$	289.0	$	0.7	$	—	$	410.3	0.21%
Evergy Kansas Central	750.0		236.0		0.1		—		513.9		0.19%
Evergy Metro	350.0		—		—		—		350.0		—%
Evergy Missouri West	700.0		95.5		—		—		604.5		0.17%
Evergy	$	2,500.0	$	620.5	$	0.8	$	—	$	1,878.7

December 31, 2020
Evergy, Inc.	$	450.0	n/a		$	0.7	$	200.0	$	249.3	1.40%
Evergy Kansas Central	1,000.0		50.0		17.0		—		933.0		0.23%
Evergy Metro	600.0		—		—		—		600.0		—%
Evergy Missouri West	450.0		65.0		2.0		—		383.0		0.36%
Evergy	$	2,500.0	$	115.0	$	19.7	$	200.0	$	2,165.3

In May 2021, Evergy, Inc. established a commercial paper program supported by its borrowing capacity under the master credit facility.

8. LONG-TERM DEBT

Senior Notes

In April 2021, Evergy Missouri West issued in a private placement $350.0 million of 2.86% Series A Senior Notes, maturing in 2031, $75.0 million of 3.01% Series B Senior Notes, maturing in 2033, and $75.0 million of 3.21% Series C Senior Notes, maturing in 2036, pursuant to a note purchase agreement. In connection with the issuance, Evergy entered into an agreement to provide an unconditional guaranty of the Series A, B and C Senior Notes, and as required by certain existing note purchase agreements, also agreed to provide unconditional guaranty of the following series of outstanding Evergy Missouri West unsecured senior notes:

•$36.0 million of 3.49% Series A, maturing in 2025;

•$60.0 million of 4.06% Series B, maturing in 2033;

•$150.0 million of 4.74% Series C, maturing in 2043; and

•$100.0 million of 3.74% Series, maturing in 2022.

In April 2021, Evergy redeemed its $350.0 million of 4.85% Senior Notes, which had a maturity date of June 2021.

9. FAIR VALUE MEASUREMENTS

Values of Financial Instruments

GAAP establishes a hierarchical framework for disclosing the transparency of the inputs utilized in measuring assets and liabilities at fair value. ~~Our~~Management's assessment of the significance of a particular input to the fair value measurement requires judgment and may affect the classification of assets and liabilities within the fair value hierarchy levels. In addition, wethe Evergy Companies measure certain investments that do not have a readily determinable fair value at net asset value (NAV), which are not included in the fair value hierarchy. Further explanation of these levels and NAV is summarized below.

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Level 1 -– Quoted prices are available in active markets for identical assets or liabilities. The types of assets and liabilities included in ~~level~~Level 1 are highly liquid and actively traded instruments with quoted prices, such as equities listed on public exchanges.

Level 2 -– Pricing inputs are not quoted prices in active markets but are either directly or indirectly observable. The types of assets and liabilities included in ~~level~~Level 2 are ~~typically liquid investments in funds that have a readily determinable fair value calculated using daily NAVs, other~~certain marketable debt securities, financial instruments ~~that are comparable to actively~~ traded ~~securities or contracts, such as treasury securities with pricing interpolated from recent trades of similar securities,~~in less than active markets or other financial instruments priced with models using highly observable inputs.

Level 3 -– Significant inputs to pricing have little or no transparency. The types of assets and liabilities included in ~~level~~Level 3 are those with inputs requiring significant management judgment or estimation.

~~Net Asset Value~~NAV - Investments that do not have a readily determinable fair value are measured at NAV. These investments do not consider the observability of inputs and, therefore, they are not included within the fair value hierarchy. WeThe Evergy Companies include in this category investments in private equity, real estate and alternative investment funds that do not have a readily determinable fair value. The underlying alternative investments include collateralized debt obligations, mezzanine debt and a variety of other investments.

WeThe Evergy Companies record cash and cash equivalents, accounts receivable and short-term borrowings ~~and variable-rate debt~~ on ~~our condensed~~their consolidated balance sheets at cost, which approximates fair ~~value. We~~value due to the short-term nature of these instruments.

Fair Value of Long-Term Debt

The Evergy Companies measure the fair value of ~~fixed-rate~~long-term debt ~~a level~~using Level 2 measurement, based on quoted market prices for the same or similar issues or on the current rates offered for instruments of the same remaining maturities and redemption provisions. The recorded amount of accounts receivable and other current financial instruments approximates fair value.

~~We measure fair value based on information~~measurements available as of the measurement date. The book value and fair value of the Evergy Companies' long-term debt and long-term debt of variable interest entities is summarized in the following ~~table provides~~table.



	September 30, 2021				December 31, 2020
	Book Value		Fair Value		Book Value		Fair Value
Long-term debt(a)	(millions)
Evergy(b)	$	9,768.7	$	10,967.0	$	9,627.3	$	11,274.2
Evergy Kansas Central	3,933.5		4,552.9		3,931.5		4,801.7
Evergy Metro	2,924.5		3,440.2		2,923.0		3,591.2
Long-term debt of variable interest entities(a)
Evergy	$	—	$	—	$	18.8	$	19.1
Evergy Kansas Central	—		—		18.8		19.1

(a) Includes current maturities.

(b) Book value as of September 30, 2021 and December 31, 2020, includes $100.3 million and $110.4 million, respectively, of fair value adjustments recorded in connection with purchase accounting for the ~~carrying values~~Great Plains Energy and ~~measured fair values~~Evergy Kansas Central merger, which are not part of ~~our fixed-rate debt.~~future principal payments and will amortize over the remaining life of the associated debt instrument.

As of September 30, 2017 As of December 31, 2016
Carrying Value Fair Value Carrying Value Fair Value
(In Thousands)
Fixed-rate debt $ 3,605,000
$ 3,857,763
$ 3,430,000
$ 3,597,441
Fixed-rate debt of VIEs 109,967
110,586
137,962
139,733

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Recurring Fair Value Measurements

The following ~~table provides~~tables include the ~~amounts~~Evergy Companies' balances of financial assets and ~~their corresponding level of hierarchy for our assets that are~~liabilities measured at fair ~~value.~~value on a recurring basis.


Description	September 30, 2021			Level 1		Level 2			Level 3			NAV
Evergy Kansas Central		(millions)
Assets
Nuclear decommissioning trust(a)
Domestic equity funds		$	131.1	$	118.7		$	—		$	—		$	12.4
International equity funds		71.6		71.6			—			—			—
Core bond fund		57.7		57.7			—			—			—
High-yield bond fund		29.3		29.3			—			—			—
Emerging markets bond fund		17.9		17.9			—			—			—

Alternative investments fund		31.5		—			—			—			31.5
Real estate securities fund		14.1		—			—			—			14.1
Cash equivalents		0.6		0.6			—			—			—

Total nuclear decommissioning trust		353.8		295.8			—			—			58.0
Rabbi trust
Fixed income funds		19.7		19.7			—			—			—
Equity funds		9.4		9.4			—			—			—
Combination debt/equity/other fund		2.4		2.4			—			—			—
Cash equivalents		0.1		0.1			—			—			—
Total rabbi trust		31.6		31.6			—			—			—
Total		$	385.4	$	327.4		$	—		$	—		$	58.0
Evergy Metro
Assets
Nuclear decommissioning trust(a)
Equity securities		$	278.0	$	278.0		$	—		$	—		$	—
Debt securities
U.S. Treasury		47.3		47.3			—			—			—
U.S. Agency		0.4		—			0.4			—			—
State and local obligations		4.0		—			4.0			—			—
Corporate bonds		44.5		—			44.5			—			—
Foreign governments		0.1		—			0.1			—			—
Cash equivalents		3.2		3.2			—			—			—
Other		0.7		—			0.7			—			—
Total nuclear decommissioning trust		378.2		328.5			49.7			—			—
Self-insured health plan trust(b)
Equity securities		1.9		1.9			—			—			—
Debt securities		8.9		2.7			6.2			—			—
Cash and cash equivalents		3.1		3.1			—			—			—
Total self-insured health plan trust		13.9		7.7			6.2			—			—
Total		$	392.1	$	336.2		$	55.9		$	—		$	—
Other Evergy
Assets
Rabbi trusts
Core bond fund		$	12.5	$	12.5		$	—		$	—		$	—

Total rabbi trusts		$	12.5	$	12.5		$	—		$	—		$	—



Evergy
Assets
Nuclear decommissioning trust(a)		$	732.0	$	624.3		$	49.7		$	—		$	58.0
Rabbi trusts		44.1		44.1			—			—			—
Self-insured health plan trust(b)		13.9		7.7			6.2			—			—
Total		$	790.0	$	676.1		$	55.9		$	—		$	58.0

Table of Contents


As of September 30, 2017	Level 1		Level 2		Level 3		NAV		Total
	(In Thousands)
Nuclear Decommissioning Trust:
Description											Description	December 31, 2020			Level 1			Level 2			Level 3			NAV
Evergy Kansas Central											Evergy Kansas Central		(millions)
Assets											Assets
Nuclear decommissioning trust(a)											Nuclear decommissioning trust(a)
Domestic equity funds	$	—	$	64,855	$	—	$	5,139	$	69,994	Domestic equity funds		$	102.7		$	95.1		$	—		$	—		$	7.6
International equity funds	—		46,020		—		—		46,020		International equity funds		63.8			63.8			—			—			—
Core bond fund	—		32,914		—		—		32,914		Core bond fund		40.6			40.6			—			—			—
High-yield bond fund	—		17,866		—		—		17,866		High-yield bond fund		25.0			25.0			—			—			—
Emerging markets bond fund	—		17,617		—		—		17,617		Emerging markets bond fund		21.0			21.0			—			—			—
Combination debt/equity/other fund	—		13,688		—		—		13,688		Combination debt/equity/other fund		20.1			20.1			—			—			—
Alternative investments fund	—		—		—		21,063		21,063		Alternative investments fund		23.2			—			—			—			23.2
Real estate securities fund	—		—		—		10,594		10,594		Real estate securities fund		12.9			—			—			—			12.9
Cash equivalents	171		—		—		—		171		Cash equivalents		0.5			0.5			—			—			—
Total Nuclear Decommissioning Trust	171		192,960		—		36,796		229,927
Trading Securities:
Domestic equity funds	—		17,883		—		—		17,883
International equity fund	—		4,491		—		—		4,491
Total nuclear decommissioning trust											Total nuclear decommissioning trust		309.8			266.1			—			—			43.7
Rabbi trust											Rabbi trust
Core bond fund	—		11,789		—		—		11,789		Core bond fund		25.6			—			—			—			25.6
Total Trading Securities	—		34,163		—		—		34,163
Total Assets Measured at Fair Value	$	171	$	227,123	$	—	$	36,796	$	264,090
Combination debt/equity/other fund											Combination debt/equity/other fund		7.1			—			—			—			7.1

As of December 31, 2016	Level 1		Level 2		Level 3		NAV		Total
Total rabbi trust											Total rabbi trust		32.7			—			—			—			32.7
Total											Total		$	342.5		$	266.1		$	—		$	—		$	76.4
Evergy Metro											Evergy Metro
Assets											Assets
Nuclear decommissioning trust(a)											Nuclear decommissioning trust(a)
Equity securities											Equity securities		$	243.1		$	243.1		$	—		$	—		$	—
Debt securities											Debt securities
U.S. Treasury											U.S. Treasury		47.7			47.7			—			—			—
U.S. Agency											U.S. Agency		0.5			—			0.5			—			—
State and local obligations											State and local obligations		4.1			—			4.1			—			—
Corporate bonds											Corporate bonds		43.1			—			43.1			—			—
Foreign governments											Foreign governments		0.1			—			0.1			—			—
Cash equivalents											Cash equivalents		3.2			3.2			—			—			—
Other											Other		0.5			0.5			—			—			—
Total nuclear decommissioning trust											Total nuclear decommissioning trust		342.3			294.5			47.8			—			—
Self-insured health plan trust(b)											Self-insured health plan trust(b)
Equity securities											Equity securities		1.7			1.7			—			—			—
Debt securities											Debt securities		8.0			2.8			5.2			—			—
Cash and cash equivalents											Cash and cash equivalents		3.5			3.5			—			—			—
Total self-insured health plan trust											Total self-insured health plan trust		13.2			8.0			5.2			—			—
Total											Total		$	355.5		$	302.5		$	53.0		$	—		$	—
Other Evergy											Other Evergy
Assets											Assets
Rabbi trusts											Rabbi trusts
Fixed income fund											Fixed income fund		$	13.1		$	—		$	—		$	—		$	13.1
Cash and cash equivalents											Cash and cash equivalents		0.5			0.5			—			—			—
Total rabbi trusts											Total rabbi trusts		$	13.6		$	0.5		$	—		$	—		$	13.1
	(In Thousands)
Nuclear Decommissioning Trust:
Domestic equity funds	$	—	$	56,312	$	—	$	5,056	$	61,368
International equity funds	—		35,944		—		—		35,944
Core bond fund	—		27,423		—		—		27,423
High-yield bond fund	—		18,188		—		—		18,188
Emerging markets bond fund	—		14,738		—		—		14,738
Combination debt/equity/other fund	—		13,484		—		—		13,484
Alternative investments fund	—		—		—		18,958		18,958
Real estate securities fund	—		—		—		9,946		9,946
Cash equivalents	73		—		—		—		73
Total Nuclear Decommissioning Trust	73		166,089		—		33,960		200,122
Trading Securities:
Domestic equity funds	—		18,364		—		—		18,364
International equity fund	—		4,467		—		—		4,467
Core bond fund	—		11,504		—		—		11,504
Cash equivalents	156		—		—		—		156
Total Trading Securities	156		34,335		—		—		34,491
Total Assets Measured at Fair Value	$	229	$	200,424	$	—	$	33,960	$	234,613

Evergy											Evergy
Assets											Assets
Nuclear decommissioning trust(a)											Nuclear decommissioning trust(a)		$	652.1		$	560.6		$	47.8		$	—		$	43.7
Rabbi trust											Rabbi trust		46.3			0.5			—			—			45.8
Self-insured health plan trust(b)											Self-insured health plan trust(b)		13.2			8.0			5.2			—			—
Total											Total		$	711.6		$	569.1		$	53.0		$	—		$	89.5

(a)With the exception of investments measured at NAV, fair value is based on quoted market prices of the investments held by the trust and/or valuation models.

(b)Fair value is based on quoted market prices of the investments held by the trust. Debt securities classified as Level 1 are comprised of U.S. Treasury securities. Debt securities classified as Level 2 are comprised of corporate bonds, U.S. Agency, state and local obligations, and other asset-backed securities.

Table of Contents

~~Some of our~~Certain Evergy and Evergy Kansas Central investments included in the ~~Nuclear Decommissioning Trust (NDT)~~table above are measured at NAV ~~and~~as they do not have readily determinable fair values. ~~These investments are either with investment companies or companies that follow accounting guidance consistent with investment companies.~~ In certain situations, these investments may have redemption restrictions.

The following table provides additional information on these Evergy and Evergy Kansas Central investments.


	September 30, 2021				December 31, 2020				September 30, 2021
	Fair		Unfunded		Fair		Unfunded		Redemption	Length of
	Value		Commitments		Value		Commitments		Frequency	Settlement
Evergy Kansas Central	(millions)
Nuclear decommissioning trust:
Domestic equity funds	$	12.4	$	1.7	$	7.6	$	2.2	(a)	(a)
Alternative investments fund(b)	31.5		—		23.2		—		Quarterly	65 days
Real estate securities fund(b)	14.1		—		12.9		—		Quarterly	65 days
Total	$	58.0	$	1.7	$	43.7	$	2.2
Rabbi trust:
Core bond fund	$	—	$	—	$	25.6	$	—	(c)	(c)
Combination debt/equity/other fund	—		—		7.1		—		(c)	(c)
Total	$	—	$	—	$	32.7	$	—
Other Evergy
Rabbi trust:
Fixed income fund	$	—	$	—	$	13.1	$	—	(c)	(c)
Total Evergy investments at NAV	$	58.0	$	1.7	$	89.5	$	2.2

As of September 30, 2017 As of December 31, 2016 As of September 30, 2017
Fair Value
Unfunded
Commitments
Fair Value
Unfunded
Commitments

Redemption
Frequency

Length of
Settlement
(In Thousands)
Nuclear Decommissioning Trust:
Domestic equity funds $ 5,139

$ 2,929
$ 5,056
$ 3,529
(a) (a)
Alternative investments fund (b) 21,063
—
18,958
—
Quarterly 65 days
Real estate securities fund (b) 10,594

—
9,946
—
Quarterly 65 days
Total $ 36,796
$ 2,929
$ 33,960
$ 3,529

~~_______________~~

~~(a)~~

This investment is in four long-term private equity funds that do not permit early withdrawal. Our investments in these funds cannot be distributed until the underlying investments have been liquidated, which may take years from the date of initial liquidation. Two funds have begun to make distributions. Our initial investment in the third fund occurred in 2013. Our initial investment in the fourth fund occurred in the second quarter of 2016. The term of the third and fourth fund is 15 years, subject to the general partner’s right to extend the term for up to three additional one-year periods.


~~(b)~~	~~There is a holdback on final redemptions.~~

~~Price Risk~~

We use various types of fuel, including coal, natural gas, uranium and diesel to operate our plants and also purchase power to meet customer demand. Our prices and condensed consolidated financial results are exposed to market risks from commodity price changes for electricity and other energy-related products as well as from interest rates. Volatility(a)This investment is in 5 long-term private equity funds that do not permit early withdrawal. Investments in these ~~markets impacts our costs~~funds cannot be distributed until the underlying investments have been liquidated, which may take years from the date of ~~purchased power, costs~~initial liquidation. NaN funds have begun to make distributions. The initial investment in the fourth and fifth funds occurred in 2016 and 2018, respectively. The fourth fund's term is 15 years, subject to the general partner's right to extend the term for up to 3 additional one-year periods. The fifth fund's term is 15 years, subject to additional extensions approved by a fund advisory committee to provide for an orderly liquidation of ~~fuel for our generating plants~~fund investments and ~~our participation in energy markets. We strive~~dissolution of the fund.

(b)There is a holdback on final redemptions.

(c)This investment can be redeemed immediately and is not subject to manage our customers’ and our exposure to market risks through regulatory, operating and financing activities and, when we deem appropriate, we economically hedge a portion of these risks through the use of derivative financial instruments for non-trading purposes.any restrictions on redemptions.

~~Interest Rate Risk~~

We have entered into numerous fixed and variable rate debt obligations. We manage our interest rate risk related to these debt obligations by limiting our exposure to variable interest rate debt, diversifying maturity dates and entering into treasury yield hedge transactions. We may also use other financial derivative instruments such as interest rate swaps.

~~6. FINANCIAL INVESTMENTS~~

We report our investments in equity and debt securities at fair value and use the specific identification method to determine their realized gains and losses. We classify these investments as either trading securities or available-for-sale securities as described below.

~~Trading Securities~~

WeThe Evergy Companies hold equity and debt investments ~~that we classify~~classified as ~~trading~~ securities in ~~a trust used to fund certain retirement benefit obligations. As of~~ ~~September 30, 2017~~, and December 31, 2016, we measured the fair value of trust assets at $34.2 million and $34.5 million, respectively. We include unrealized gains or losses on these securities in investment earnings on our condensed consolidated statements of income. For the three and nine months ended September 30, 2017, we recorded an unrealized gain of $1.0 million and $3.5 million, respectively, on assets still held in the trust. For the three and nine months ended September 30, 2016, we recorded an unrealized gain of $1.0 million and $2.2 million, respectively, on assets still held in the trust.

~~Available-for-Sale Securities~~

~~We hold investments in a trust~~various trusts including for the ~~purpose~~purposes of funding the decommissioning of Wolf ~~Creek. We have classified these investments as available-for-sale~~Creek and ~~have recorded all such investments at their fair market value as of~~ ~~September 30, 2017, and~~ ~~December 31, 2016~~.

~~Using the specific identification method to determine cost, we realized no gains or losses during the three months ended~~ ~~September 30, 2017, and a gain of $0.1 million during the nine months ended~~ ~~September 30, 2017. We realized no gains or losses during the three months ended September 30, 2016, and a loss of $1.5 million~~ for the ~~nine months ended September 30, 2016. We~~benefit of certain retired executive officers of Evergy Kansas Central. The Evergy Companies record net realized and unrealized gains and losses on the nuclear decommissioning trusts in regulatory liabilities on ~~our condensed~~their consolidated balance sheets. This reporting is consistent with the method we use to account for the decommissioning costs we recover in our prices. Gains or losses on assets in the trust fund are recorded as increases or decreases, respectively, to regulatory liabilitiessheets and ~~could result in lower or higher funding requirements for decommissioning costs, which we believe would be reflected in the prices paid by our customers.~~

~~The following table presents the cost, gross~~record net realized and unrealized gains and losses ~~fair value and allocation of investments~~on the Evergy Companies' rabbi trusts in the ~~NDT fund as~~consolidated statements of ~~September 30, 2017~~,income and ~~December 31, 2016~~.comprehensive income.

Table of Contents

Gross Unrealized
Security Type Cost Gain Loss Fair Value Allocation
(Dollars In Thousands)
As of September 30, 2017:
Domestic equity funds $ 55,387
$ 15,227
$ (620 ) $ 69,994
30 %
International equity funds 35,937
10,083
—
46,020
20 %
Core bond fund 32,980
—
(66 ) 32,914
14 %
High-yield bond fund 17,450
416
—
17,866
8 %
Emerging markets bond fund 17,186
431
—
17,617
8 %
Combination debt/equity/other fund 8,068
5,620
—
13,688
6 %
Alternative investments fund 15,000
6,063
—
21,063
9 %
Real estate securities fund 9,500
1,094
—
10,594
5 %
Cash equivalents 171
—
—
171
<1%
Total $ 191,679
$ 38,934
$ (686 ) $ 229,927
100 %

As of December 31, 2016:
Domestic equity funds $ 53,192
$ 8,295
$ (119 ) $ 61,368
31 %
International equity funds 34,502
2,075
(633 ) 35,944
18 %
Core bond fund 27,952
—
(529 ) 27,423
14 %
High-yield bond fund 18,358
—
(170 ) 18,188
9 %
Emerging markets bond fund 16,397
—
(1,659 ) 14,738
7 %
Combination debt/equity/other fund 9,171
4,313
—
13,484
7 %
Alternative investments fund 15,000
3,958
—
18,958
9 %
Real estate securities fund 9,500
446
—
9,946
5 %
Cash equivalents 73
—
—
73
<1%
Total $ 184,145
$ 19,087
$ (3,110 ) $ 200,122
100 %

The following table ~~presents~~summarizes the ~~fair value and the gross~~net unrealized losses of the available-for-sale securities held in the NDT fund aggregated by investment category and the length of time that individual securities have been in a continuous unrealized loss position as of ~~September 30, 2017, and~~ ~~December 31, 2016~~.

Less than 12 Months 12 Months or Greater Total
Fair Value
Gross
Unrealized
Losses
Fair Value
Gross
Unrealized
Losses
Fair Value
Gross
Unrealized
Losses
(In Thousands)
As of September 30, 2017:
Domestic equity funds $ 1,809
$ (337 ) $ 1,904
$ (283 ) $ 3,713
$ (620 )
Core bond fund 32,914
(66 ) —
—
32,914
(66 )
Total $ 34,723
$ (403 ) $ 1,904
$ (283 ) $ 36,627
$ (686 )

As of December 31, 2016:
Domestic equity funds $ 1,788
$ (119 ) $ —
$ —
$ 1,788
$ (119 )
International equity funds —
—
7,489
(633 ) 7,489
(633 )
Core bond fund 27,423
(529 ) —
—
27,423
(529 )
High-yield bond fund —
—
18,188
(170 ) 18,188
(170 )
Emerging markets bond fund —
—
14,738
(1,659 ) 14,738
(1,659 )
Total $ 29,211
$ (648 ) $ 40,415
$ (2,462 ) $ 69,626
$ (3,110 )

~~7. DEBT FINANCING~~

~~In January 2017, Westar Energy retired $125.0 million in principal amount of first mortgage bonds (FMBs) bearing a stated interest at 5.15% maturing January 2017.~~

~~In March 2017, Westar Energy issued $300.0 million in principal amount of FMBs bearing a stated interest at 3.10% and maturing April 2027.~~

~~8. TAXES~~

~~We recorded income tax expense of $55.7 million with an effective income tax rate of 26%~~ f~~or the~~ ~~three months endedSeptember 30, 2017, and income tax expense of~~ ~~$81.2 million~~ ~~with an effective income tax rate of~~ ~~34%~~gains (losses) for the ~~same period of~~ ~~2016. We recorded income tax expense of $112.6 million with an effective income tax rate of 27% for the nine months ended September 30, 2017,~~Evergy Companies' nuclear decommissioning trusts and ~~income tax expense of $160.4 million with an effective income tax rate of~~ ~~35%~~ for the same period of 2016. The decrease in the effective income tax rate for the three and nine months ended September 30, 2017, was due primarily to lower income before income taxes, an increase in tax benefits from production tax credits, largely from placing the Western Plains Wind Farm in service, and a favorable deferred tax true-up related to plant differences.rabbi trusts.


	Three Months Ended September 30				Year to Date September 30
	2021		2020		2021		2020
Evergy	(millions)
Nuclear decommissioning trust - equity securities	$	1.0	$	27.5	$	68.8	$	(8.5)
Nuclear decommissioning trust - debt securities	(0.6)		0.1		(4.0)		5.4
Rabbi trusts - equity securities	(0.1)		0.8		(0.4)		1.6
Total	$	0.3	$	28.4	$	64.4	$	(1.5)
Evergy Kansas Central
Nuclear decommissioning trust - equity securities	$	5.3	$	16.2	$	36.9	$	0.2
Rabbi trust - equity securities	(0.1)		0.6		(0.1)		1.1
Total	$	5.2	$	16.8	$	36.8	$	1.3
Evergy Metro
Nuclear decommissioning trust - equity securities	$	(4.3)	$	11.3	$	31.9	$	(8.7)
Nuclear decommissioning trust - debt securities	(0.6)		0.1		(4.0)		5.4
Total	$	(4.9)	$	11.4	$	27.9	$	(3.3)

As of September 30, 2017, and December 31, 2016, our unrecognized income tax benefits totaled $1.6 million and $2.8 million, respectively. We do not expect significant changes in our unrecognized income tax benefits in the next 12 months.

~~As of~~ ~~September 30, 2017, we had $0.1 million accrued for interest related to our unrecognized income tax benefits compared to no amount as of December 31, 2016. We accrued no penalties at either~~ ~~September 30, 2017, or~~ ~~December 31, 2016~~.

~~As of~~ ~~September 30, 2017, and~~ ~~December 31, 2016, we had recorded $0.2 million and $1.5 million, respectively, for probable assessments of taxes other than income taxes.~~

~~9. PENSION AND POST-RETIREMENT BENEFIT PLANS~~

~~The following tables summarize the net periodic costs for our pension and post-retirement benefit plans prior to the effects of capitalization.~~

Pension Benefits Post-retirement Benefits
Three Months Ended September 30, 2017 2016 2017 2016
(In Thousands)
Components of Net Periodic Cost (Benefit):
Service cost $ 5,218
$ 4,633
$ 271
$ 271
Interest cost 10,621
10,922
1,314
1,392
Expected return on plan assets (10,760 ) (10,664 ) (1,718 ) (1,708 )
Amortization of unrecognized:
Prior service costs 171
174
114
113
Actuarial loss (gain), net 5,489
5,146
(195 ) (279 )
Net periodic cost (benefit) before regulatory adjustment 10,739
10,211
(214 ) (211 )
Regulatory adjustment (a) 3,288
3,306
(478 ) (486 )
Net periodic cost (benefit) $ 14,027
$ 13,517
$ (692 ) $ (697 )

~~_______________~~


~~(a)~~	~~The regulatory adjustment represents the difference between current period pension or post-retirement benefit expense and the amount of such expense recognized in setting our prices.~~

Pension Benefits Post-retirement Benefits
Nine Months Ended September 30, 2017 2016 2017 2016
(In Thousands)
Components of Net Periodic Cost (Benefit):
Service cost $ 15,655
$ 13,930
$ 813
$ 813
Interest cost 31,862
32,802
3,941
4,178
Expected return on plan assets (32,280 ) (31,990 ) (5,154 ) (5,125 )
Amortization of unrecognized:
Prior service costs 512
594
341
341
Actuarial loss (gain), net 16,467
15,680
(585 ) (839 )
Net periodic cost (benefit) before regulatory adjustment 32,216
31,016
(644 ) (632 )
Regulatory adjustment (a) 9,864
9,919
(1,434 ) (1,458 )
Net periodic cost (benefit) $ 42,080
$ 40,935
$ (2,078 ) $ (2,090 )

~~_______________~~


~~(a)~~	~~The regulatory adjustment represents the difference between current period pension or post-retirement benefit expense and the amount of such expense recognized in setting our prices.~~

~~During the nine months ended September 30, 2017 and 2016, we contributed $20.6 million and $15.7 million, respectively, to the Westar Energy pension trust.~~

10. ~~WOLF CREEK PENSION AND POST-RETIREMENT BENEFIT PLANS~~

~~As a co-owner of Wolf Creek, KGE is indirectly responsible for~~ ~~47%~~ ~~of the liabilities and expenses associated with the Wolf Creek pension and post-retirement benefit plans. The following tables summarize the net periodic costs for KGE’s~~ ~~47%~~ ~~share of the Wolf Creek pension and post-retirement benefit plans prior to the effects of capitalization.~~

Pension Benefits Post-retirement Benefits
Three Months Ended September 30, 2017 2016 2017 2016
(In Thousands)
Components of Net Periodic Cost (Benefit):
Service cost $ 1,950
$ 1,687
$ 37
$ 31
Interest cost 2,475
2,413
70
81
Expected return on plan assets (2,643 ) (2,431 ) —
—
Amortization of unrecognized:
Prior service costs 14
14
—
—
Actuarial loss (gain), net 1,245
1,090
(13 ) (3 )
Net periodic cost before regulatory adjustment 3,041
2,773
94
109
Regulatory adjustment (a) 247
483
—
—
Net periodic cost $ 3,288
$ 3,256
$ 94
$ 109

~~_______________~~


~~(a)~~	~~The regulatory adjustment represents the difference between current period pension or post-retirement benefit expense and the amount of such expense recognized in setting our prices.~~

Pension Benefits Post-retirement Benefits
Nine Months Ended September 30, 2017 2016 2017 2016
(In Thousands)
Components of Net Periodic Cost (Benefit):
Service cost $ 5,850
$ 5,061
$ 110
$ 95
Interest cost 7,425
7,241
210
244
Expected return on plan assets (7,928 ) (7,292 ) —
—
Amortization of unrecognized:
Prior service costs 41
42
—
—
Actuarial loss (gain), net 3,734
3,268
(38 ) (11 )
Net periodic cost before regulatory adjustment 9,122
8,320
282
328
Regulatory adjustment (a) 740
1,449
—
—
Net periodic cost $ 9,862
$ 9,769
$ 282
$ 328

~~_______________~~


~~(a)~~	~~The regulatory adjustment represents the difference between current period pension or post-retirement benefit expense and the amount of such expense recognized in setting our prices.~~

~~During the nine months ended September 30, 2017 and 2016, we funded $12.0 million and $14.6 million, respectively, of Wolf Creek’s pension plan contributions.~~

~~11.~~ COMMITMENTS AND CONTINGENCIES

Environmental Matters

Set forth below are descriptions of contingencies related to environmental matters that may impact usthe Evergy Companies' operations or ~~our~~their financial results. ~~Our~~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 the imposition of remedial requirements. The Evergy Companies believe that all 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 ~~our~~the Evergy Companies' operations and ~~condensed~~ consolidated financial results. Due in part to the complex nature of environmental laws and regulations, wethe 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 ~~oxide (NOx)~~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). ~~Starting with~~In December 2018, the ~~2017~~EPA finalized a determination, known as the CSAPR Close-Out Rule, demonstrating the CSAPR Update Rule fully addressed certain upwind states' 2008 ozone ~~season, the final rule will revise the existing ozone season allowance budgets for Missouri and Oklahoma and established an ozone season budget for Kansas.~~NAAQS interstate transport obligations. Various states and others ~~are challenging~~challenged both the ~~rule~~CSAPR Update Rule and the CSAPR Close-Out Rule in the U.S. Court of Appeals for the D.C. ~~Circuit. We~~Circuit (D.C. Circuit). In 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 published the final Revised Cross-State Air Pollution Rule Update for the 2008 Ozone NAAQS in April 2021. The final rule finds that nine of the states that were subject to the CSAPR Update Rule do not ~~believe~~significantly contribute to downwind states' nonattainment or maintenance issues during the ozone season and that there are no further reductions in allowance budgets for these states. These nine states are Alabama, Arkansas, Iowa, Kansas, Mississippi, Missouri, Oklahoma, Texas and Wisconsin. The Evergy

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Companies will continue to monitor this rule ~~will have a material impact on our operations and condensed consolidated financial results.~~as any future changes to their NOx ozone season allowance allocations could be material.

Regional Haze Rule

~~National Ambient Air Quality Standards~~

~~Under the federal Clean Air Act (CAA),~~In 1999, the EPA ~~sets NAAQS for certain emissions known as~~finalized the ~~“criteria pollutants” considered harmful~~Regional Haze Rule which aims to ~~public health~~restore national parks and wilderness areas to pristine conditions. The rule requires states in coordination with the EPA, the National Park Service, the U.S. Fish and Wildlife Service, the U.S. Forest Service, and other interested parties to develop and implement air quality protection plans to reduce the pollution that causes visibility impairment. There are 156 "Class I" areas across the U.S. that must be restored to pristine conditions by the year 2064. There are no Class I areas in Kansas, whereas Missouri has two: the Hercules-Glades Wilderness Area and the ~~environment, including two classes of particulate matter (PM), ozone, NOx (a precursor~~Mingo Wilderness Area. States must submit revisions to ~~ozone), carbon monoxide~~their Regional Haze Rule state implementation plans (SIPs) every ten years and ~~sulfur dioxide (SO~~₂~~), which result from fossil fuel combustion. Areas meeting~~ the ~~NAAQS are designated attainment areas while those that do not meet~~first round was due in 2007. For the ~~NAAQS are considered nonattainment areas. Each state must develop a plan to bring nonattainment areas into compliance with the NAAQS. NAAQS must be reviewed by~~second ten-year implementation period, the EPA ~~at five-year intervals.~~

~~In October 2015, the EPA strengthened the ozone NAAQS~~issued a final rule revision in 2017 that allowed states to submit their SIP revisions by ~~lowering the standards from 75 ppb to 70 ppb. In September 2016,~~July 31, 2021. The Evergy Companies have been in contact with the Kansas Department of Health ~~& Environment~~and Environmental (KDHE) ~~recommended~~and the Missouri Department of Natural Resources (MDNR) as they worked to draft their SIP revisions. The Missouri SIP revision is still being drafted. MDNR has indicated they intend to submit the ~~EPA that they designate eight counties~~Missouri SIP revision in early 2022 which will not require any additional reductions from the Evergy Companies' generating units in the ~~state of~~state. The Kansas asSIP revision was placed on public notice in ~~attainment with~~June 2021 and requested no additional emission reductions by electric utilities based on the ~~standard, and each remaining county in Kansas as attainment/unclassifiable.~~significant reductions that were achieved during the first implementation period. The EPA ~~was~~provided comments on the Kansas SIP revision in June 2021 that each state is statutorily required to ~~make attainment/nonattainment designations~~conduct a "four-factor analysis" on at least two sources within the state to help determine if further emission reductions are necessary. The EPA also stated it would be difficult to approve the Kansas SIP revision if at least two four-factor analyses are not conducted on Kansas emission sources. These sources could be from the electric utility industry or others. KDHE submitted the Kansas SIP revision in July 2021. If a Kansas generating unit of the Evergy Companies is selected for analysis, the ~~revised standards by October 2017, with an option~~possibility exists that the state or EPA, through a federal implementation plan could determine that additional operational or physical modifications are required on the generating unit to ~~extend this deadline by one year. However, the EPA failed to issue these designations by the October 2017 deadline.~~further reduce emissions. If the EPA ~~agrees with~~were to determine the ~~recommended designations for~~emission reduction expenses are cost effective, the ~~state~~modifications could be required. The overall cost of ~~Kansas, we do not believe this will have a~~those modifications could be material ~~impact on our condensed consolidated financial results.~~

Various states and others are challenging the revised 2015 ozone NAAQS in the D.C. Circuit. In April 2017, at the request of the EPA, the court issued an order holding the case in abeyance because the new administration is planning to review the 2015 ozone NAAQS and will determine whether to reconsider all or a portion of the rule. In October 2017, environmental groups sent a notice to the ~~EPA of their intent to sue for failure to make the required area designations by the October 2017 deadline.~~

In December 2012, the EPA strengthened an existing NAAQS for one class of PM. In December 2014, the EPA designated the entire state of Kansas as attainment/unclassifiable with the standard. We do not believe this will have a material impact on our operations or condensed consolidated financial results.

~~In 2010, the EPA revised the NAAQS for SO~~₂~~. In March 2015, a federal court approved a consent decree between the EPA and environmental groups. The decree includes specific SO~~₂ emissions criteria for certain electric generating plants that, if met, required the EPA to promulgate attainment/nonattainment designations for areas surrounding these plants. Tecumseh Energy Center is our only generating station that meets this criteria. In June 2016, the EPA accepted the State of Kansas recommendation to designate the areas surrounding the facility as unclassifiable. In addition, in January 2017, KDHE formally recommended to the EPA a 2,000 ton per year limit for Tecumseh Energy Center Unit 7 in order to satisfy the requirements of the 1-hour SO₂ Data Requirements Rule that governs the next round of the designations. Also in January 2017, KDHE recommended the EPA change the designation of the area surrounding the facility from unclassifiable to attainment/unclassifiable. In August 2017, the EPA indicated they would address this area redesignation request in a separate action. By agreeing to the 2,000 ton per year limitation, no further characterization of the area surrounding the plant is required.

We continue to communicate with our regulatory agencies regarding these standards and evaluate what impact the revised NAAQS could have on our operations and condensed consolidated financial results. If areas surrounding our facilities are designated in the future as nonattainment and/or we are required to install additional equipment to control emissions at our facilities, it could have a material impact on our operations and condensed consolidated financial results.

Evergy Companies.

Greenhouse Gases

Burning coal and other fossil fuels releases carbon dioxide (CO₂) and other gases referred to as ~~GHG.~~greenhouse gases (GHG). Various regulations under the federal ~~CAA~~Clean Air Act Amendments of 1990 (CAA) limit CO₂ 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 ~~October 2015,~~July 2019, the EPA published athe final Affordable Clean Energy (ACE) rule ~~establishing new source performance standards (NSPS) for GHGs that limit CO~~₂ emissions for new, modified and reconstructed coal and natural gas fueled electric generating units to various levels per MWh depending on various characteristics of the units. Legal challenges to the GHG NSPS have been filed in the ~~D.C. Circuit by various states and industry members. Also in October 2015, the EPA published a~~Federal Register. This rule ~~establishing~~contained (1) emission guidelines for ~~states to regulate CO~~₂GHG emissions from existing ~~power plants.~~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 ~~for existing plants are known as~~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). Under the CPP, interim emissions performance rates must be achieved beginning in 2022 and final emissions performance rates must be achieved by 2030. Legal challenges to the CPP were filed by groups of states and industry members, including us, in the D.C. Circuit. In ~~February 2016, after the U.S. Court of Appeals for~~January 2021, the D.C. Circuit ~~denied requests to stay~~vacated and remanded the CPP, the U.S. Supreme Court issued an order granting a stay of the rule pending resolution of the legal challenges. In September 2016, oral arguments were heard before an en banc panel of D.C. Circuit judges and a decision on the legal challenges is pending.

In March 2017, President Trump signed an Executive Order instructing the EPA to immediately review the CPP and GHG NSPS, and “if appropriate . . . as soon as practicable . . . publish for notice and comment proposed rules suspending, revising or rescinding those rules.” On the same day the Executive Order was signed, the EPA filed motions with the D.C. Circuit asking the court to hold the challenges to the CPP and the GHG NSPS in abeyance while the EPA completes its administrative review of the rules and issues any forthcoming rulemakings. In April 2017, the court issued orders to hold the cases in abeyance for 60 days and requested briefing on whether the cases should be remanded to the EPA or continue to be held in abeyance. In May 2017, all parties in the case filed supplemental briefs stating their positions regarding remanding theACE rule back to the ~~EPA or continuing to hold~~EPA. In February 2021, the ~~case in abeyance.~~

~~Also in April 2017,~~D.C. Circuit granted a motion filed by the EPA ~~published in~~for a partial stay of its January 2021 vacatur discussed above. The partial stay leaves the ~~Federal Register a notice of withdrawal~~vacatur of the ~~proposed CPP federal plan, proposed model trading rules and proposed Clean Energy Incentive Program design details,~~ACE rule in ~~light~~place while staying the mandate that vacates the repeal of the ~~Executive Order and~~CPP. As a result of the ~~agency’s~~partial stay, neither the ACE rule nor the CPP will be in effect while the EPA forms a new rule to regulate GHG emissions. In April 2021, 18 states filed a petition for a writ of certiorari to the Supreme Court requesting review of the ~~CPP. Also in April 2017, the EPA published a notice in the Federal Register that it is initiating administrative reviews of the CPP and the GHG NSPS in light of the Executive Order.~~

D.C. Circuit ruling. In October ~~2017,~~2021, the ~~EPA issued a proposed rule~~Supreme Court granted petitions for certiorari to repeal the CPP. The proposed rule indicates the CPP exceeds EPA’s authority and the EPA has not determined whether or not they will issue a replacement rule. The EPA is soliciting comments on the legal interpretations contained in this rulemaking. Comments on the proposed rule are due in December 2017. On the same day the EPA issued its proposal to repeal the CPP, the EPA filed a motion inreview the D.C. Circuit decision to ~~extend~~vacate and remand the ~~abeyance period for~~ACE rule.

Due to uncertainty regarding the ~~rulemaking challenges until the conclusion~~future of the ~~new rulemaking. Certain states and environmental groups have opposed~~ACE rule or other potential GHG regulations, the ~~EPA’s motion and asked the court to issue its ruling on the CPP.~~

~~Due to the future uncertainty of the CPP, we~~Evergy Companies cannot determine the ~~impact~~impacts on ~~our~~their operations or ~~condensed~~ consolidated financial results, but ~~we believe~~ the cost to comply with the ~~CPP, should it be upheld and implemented in its current~~ACE rule or ~~a substantially similar form,~~other potential GHG rules, could be material.

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Water

WeThe Evergy Companies discharge some of the water used in ~~our operations. This water may contain~~generation and other operations containing substances deemed to be pollutants. ~~Revised rules governing such discharges from coal-fired~~A November 2015 EPA rule applicable to steam-electric power generating plants ~~were issued in November 2015. The final rule~~ establishes effluent limitations guidelines ~~(ELGs)~~(ELG) and standards for wastewater discharges, including limits on the amount of toxic metals and other pollutants that can be discharged. Implementation timelines for ~~these requirements~~this 2015 rule vary from 2018 to 2023. In April 2017, the EPA announced it is reconsidering the ELG rule and court challenges have been placed in abeyance pending the EPA’s review. In September 2017, the EPA finalized a rule to postpone the compliance dates for the new, more stringent, effluent limitations and pretreatment standards for bottom ash transport water and flue gas desulfurization wastewater. These compliance dates have been postponed for two years while the EPA completes its administrative reconsideration of the ELG rule. We are evaluating the final rule and related developments and cannot predict the resulting

~~impact on our operations or condensed consolidated financial results, but believe costs to comply could be material if the rule is implemented in its current or substantially similar form.~~

In October 2014, the EPA’s final standards for cooling intake structures at power plants to protect aquatic life took effect. The standards, based on Section 316(b) of the federal Clean Water Act (CWA), require subject facilities to choose among seven best available technology options to reduce fish impingement. In addition, some facilities must conduct studies to assist permitting authorities to determine whether and what site-specific controls, if any, would be required to reduce entrainment of aquatic organisms. Our current analysis indicates this rule will not have a significant impact on our coal plants that employ cooling towers or cooling lakes that can be classified as closed cycle cooling. We do not expect the impact from this rule to be material.

In June 2015, the EPA along with the U.S. Army Corps of Engineers issued a final rule, effective August 2015, defining the Waters of the United States (WOTUS) for purposes of the CWA. This rulemaking has the potential to impact all programs under the CWA. Expansion of regulated waterways is possible under the rule depending on regulating authority interpretation, which could impact several permitting programs. Various states and others have filed lawsuits challenging the WOTUS rule in district courts and courts of appeals across the country. The appellate court challenges have been consolidated in2019, the U.S. Court of Appeals for the ~~Sixth~~5th Circuit (5th Circuit) issued a ruling that vacated and ~~in October 2015, the Sixth Circuit issued an order that temporarily stays implementation~~remanded portions of the ~~WOTUS~~original ELG rule. Due to this ruling, the EPA announced a plan in July 2021 to release a proposed rulemaking in September 2022 to address the vacated limitations for legacy wastewater and landfill leachate. 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 ~~nationwide pending the outcome~~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 as soon as possible on or after one year following publication of the ~~various legal challenges.~~ final rule in the Federal Register but no later than December 31, 2025. In August 2021, the EPA published notice in the Federal Register that it is initiating a supplemental rulemaking to revise the ELG regulations after completing review of the reconsideration rule as a result of an executive order from President Biden. As part of the rulemaking process, the EPA will determine if more stringent limitations and standards are appropriate. The 2020 ELG reconsideration rules will remain in effect while the EPA undertakes this new rulemaking.

The Evergy Companies have reviewed the 2020 ELG reconsideration regulation, and the costs to comply with these changes are not expected to be material. However, the Evergy Companies cannot predict what revisions the EPA may make under its supplemental rulemaking to revise the ELG regulations and compliance costs associated with any revisions could be material.

In July ~~2017,~~2021, the EPA and the ~~U.S.~~Department of the Army ~~Corps~~released a pre-publication version of ~~Engineers published in the Federal Register~~ a ~~proposed rule that would, if implemented, reinstate~~notice announcing their intent to revise the definition of ~~WOTUS that existed prior to the June 2015 expansion~~"Waters of the ~~definition. We are currently evaluating~~United States." After reviewing the ~~WOTUS rule~~Navigable Waters Protection Rule as directed by President Biden's administration, the EPA and ~~related developments. We do not believe~~Department of the ~~rule, if upheld and implemented in its current or substantially similar form,~~Army have determined a need to revise the definition to prevent environmental degradation. The Evergy Companies cannot predict the outcome of any new rulemaking but will ~~have a material~~be monitoring proposals on this topic for any impact ~~on our operations or condensed consolidated financial results.~~ to operations.

Regulation of Coal Combustion Residuals

In the course of operating ~~our~~their coal generation plants, wethe Evergy Companies produce coal combustion residuals (CCRs), including fly ash, gypsum and bottom ash. ~~We recycle some of our ash production, principally by selling to the aggregate industry.~~ The EPA published a rule to regulate CCRs in April 2015 ~~which we believe will require~~that requires additional CCR handling, processing and storage equipment and closure of certain ash disposal ~~ponds. Impacts~~units.

In March 2019, the D.C. Circuit issued a ruling to ~~operations will be dependent on~~grant the ~~development of groundwater monitoring of~~EPA's request to remand the Phase I, Part I CCR ~~units being completed~~rule in ~~2017 and 2018. The Water Infrastructure Improvements for the Nation Act allows states~~response to ~~achieve delegated authority for CCR rules from the EPA. This has the potential to impact compliance options. Electric generation industry participants requested and~~a prior court ruling requiring the EPA ~~has granted~~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 ~~request~~deadline of April 11, 2021 to ~~reconsider portions of~~initiate closure. In November 2020, the EPA published the final Part B CCR ~~regulation. We~~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 initiated 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 ~~an ARO~~AROs for ~~our~~their current ~~estimate~~estimates for the closure of ash disposal ponds, but wethe revision of these AROs may be required ~~to record additional AROs~~ 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 ~~additional~~revisions to these AROs are necessary, ~~we believe~~ the impact on ~~our~~the Evergy Companies' operations or ~~condensed~~ consolidated financial results could be material.

~~SPP Revenue Crediting~~

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11. RELATED PARTY TRANSACTIONS AND RELATIONSHIPS

WeIn the normal course of business, Evergy Kansas Central, Evergy Metro and Evergy Missouri West engage in related party transactions with one another. A summary of these transactions and the amounts associated with them is provided below.

Jointly-Owned Plants and Shared Services

Employees of Evergy Kansas Central and Evergy Metro manage Evergy Missouri West's business and operate its facilities at cost, including Evergy Missouri West's 18% ownership interest in Evergy Metro's Iatan Nos. 1 and 2. Employees of Evergy Kansas Central manage Jeffrey Energy Center (JEC) and operate its facilities at cost, including Evergy Missouri West's 8% ownership interest in JEC. Employees of Evergy Metro manage La Cygne Station and operate its facilities at cost, including Evergy Kansas Central's 50% interest in La Cygne Station. Employees of Evergy Metro and Evergy Kansas Central also provide one another with shared service support, including costs related to human resources, information technology, accounting and legal services.

The operating expenses and capital costs billed for jointly-owned plants and shared services are detailed in the following table.


	Three Months Ended September 30				Year to Date September 30
	2021		2020		2021		2020
	(millions)
Evergy Kansas Central billings to Evergy Missouri West	$	7.3	$	13.1	$	24.1	$	27.4
Evergy Metro billings to Evergy Missouri West	35.4		46.5		103.2		121.8
Evergy Kansas Central billings to Evergy Metro	5.4		5.4		22.4		24.9
Evergy Metro billings to Evergy Kansas Central	36.9		26.9		90.8		94.5

Money Pool

Evergy Kansas Central, Evergy Metro and Evergy Missouri West are authorized to participate in the Evergy, Inc. money pool, which is an internal financing arrangement in which funds may be lent on a ~~member~~short-term basis between Evergy Kansas Central, Evergy Metro, Evergy Missouri West and Evergy, Inc. Evergy, Inc. can lend but not borrow under the money pool. The Evergy, Inc. money pool was amended in July 2021 to include Evergy Kansas Central as a participant.

At September 30, 2021, Evergy Metro had a $238.0 million outstanding receivable from Evergy Missouri West under the money pool. At December 31, 2020, Evergy Metro had a $100.0 million outstanding receivable from Evergy Missouri West under the money pool.

Related Party Net Receivables and Payables

The following table summarizes Evergy Kansas Central's and Evergy Metro's related party net receivables and payables.


	September 30		December 31

	2021		2020
Evergy Kansas Central	(millions)
Net receivable from Evergy	$	4.0	$	0.1
Net payable to Evergy Metro	(15.6)		(21.7)
Net receivable from Evergy Missouri West	8.4		6.6

Evergy Metro
Net receivable from Evergy	$	15.8	$	15.7
Net receivable from Evergy Kansas Central	15.6		21.7
Net receivable from Evergy Missouri West	335.7		188.1

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Tax Allocation Agreement

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. The following table summarizes Evergy Kansas Central's and Evergy Metro's income taxes receivable from Evergy.


	September 30		December 31

	2021		2020
Evergy Kansas Central	(millions)
Income taxes receivable from Evergy	$	14.7	$	25.3

Evergy Metro
Income taxes receivable from Evergy	$	43.0	$	3.2

Leases

Evergy Metro leases certain transmission equipment from Evergy Kansas Central. This lease was entered into prior to the merger in an arms-length transaction and is accounted for as an operating lease. The right-of-use asset related to this lease is recorded within other long-term assets and the current and long-term lease liabilities are recorded within other current liabilities and other long-term liabilities, respectively, on the consolidated balance sheet. The assets and liabilities related to this lease between Evergy Kansas Central and Evergy Metro are eliminated at consolidated Evergy. The following table summarizes Evergy Metro's right-of-use assets and related liabilities on its consolidated balance sheet.


	September 30		December 31

	2021		2020
Evergy Metro	(millions)
Right-of-use asset recorded within other long-term assets	$	28.4	$	28.9
Lease liability recorded in other current liabilities	0.7		0.7
Lease liability recorded in other long-term liabilities	27.7		28.2

12. SHAREHOLDERS' EQUITY

Bluescape Energy Partners, LLC (Bluescape) Securities Purchase Agreement

In February 2021, Evergy entered into a securities purchase agreement with an affiliate of Bluescape. Pursuant to the securities purchase agreement, an affiliate of Bluescape agreed to purchase 2,269,447 shares of Evergy’s common stock for approximately $113.2 million and to receive a warrant to purchase up to 3,950,000 additional shares of Evergy’s common stock. Under the terms of the ~~Southwest Power Pool, Inc. (SPP) RTO,~~warrant, Evergy will have the option to elect a net cash settlement with respect to the exercise of the warrant under certain circumstances, or to net settle in shares of Evergy's common stock. The warrant expires three years from issuance and has an exercise price equal to $64.70 per share. Following the satisfaction of customary closing conditions, Evergy completed the sale of its common stock and warrant to the affiliate of Bluescape in April 2021 for $112.5 million, net of issuance costs of $0.7 million. The Executive Chairman of Bluescape, C. John Wilder, joined the Evergy Board in March 2021.

Evergy Registration Statements

In September 2021, Evergy filed an automatic registration statement providing for the sale of unlimited amounts of securities with the SEC, which ~~coordinates~~expires in September 2024.

In September 2021, Evergy registered shares of its common stock with the ~~operation~~SEC for its Dividend Reinvestment and Direct Stock Purchase Plan. Shares issued under the plan may be either newly issued shares or shares purchased on the open market.

Table of ~~a multi-state interconnected transmission system.~~ Contents

13. TAXES

Components of income tax expense are detailed in the following tables.


Evergy
	Three Months Ended September 30				Year to Date September 30
	2021		2020		2021		2020
Current income taxes	(millions)
Federal	$	(6.5)	$	(16.4)	$	(0.5)	$	(35.0)
State	2.2		(0.4)		1.7		(7.7)
Total	(4.3)		(16.8)		1.2		(42.7)
Deferred income taxes
Federal	61.3		46.6		94.0		83.4
State	1.6		21.5		8.6		57.7
Total	62.9		68.1		102.6		141.1





Investment tax credit
Deferral	—		—		0.4		—
Amortization	(1.4)		(1.3)		(4.4)		(4.6)
Total	(1.4)		(1.3)		(4.0)		(4.6)
Income tax expense	$	57.2	$	50.0	$	99.8	$	93.8


Evergy Kansas Central
	Three Months Ended September 30				Year to Date September 30
	2021		2020		2021		2020
Current income taxes	(millions)
Federal	$	25.6	$	(4.6)	$	45.1	$	7.5
State	1.1		(6.4)		2.6		(13.3)
Total	26.7		(11.0)		47.7		(5.8)
Deferred income taxes
Federal	(3.6)		17.9		(2.6)		(10.7)
State	0.6		16.6		3.5		169.4
Total	(3.0)		34.5		0.9		158.7







Investment tax credit
Deferral	—		—		0.4		—
Amortization	(1.1)		(1.0)		(3.3)		(3.7)
Total	(1.1)		(1.0)		(2.9)		(3.7)
Income tax expense	$	22.6	$	22.5	$	45.7	$	149.2

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Evergy Metro
	Three Months Ended September 30				Year to Date September 30
	2021		2020		2021		2020
Current income taxes	(millions)
Federal	$	(24.2)	$	(8.9)	$	23.9	$	(8.4)
State	2.0		9.5		3.2		10.5
Total	(22.2)		0.6		27.1		2.1
Deferred income taxes
Federal	49.5		22.2		18.5		38.9
State	(0.4)		2.6		(0.8)		(35.1)
Total	49.1		24.8		17.7		3.8


Investment tax credit amortization	(0.4)		(0.3)		(1.1)		(0.8)

Income tax expense	$	26.5	$	25.1	$	43.7	$	5.1

Effective Income Tax Rates

Effective income tax rates reflected in the financial statements and the reasons for their differences from the statutory federal rates are detailed in the following tables.


Evergy
	Three Months Ended September 30				Year to Date September 30
	2021		2020		2021		2020
Federal statutory income tax rate	21.0	%	21.0	%	21.0	%	21.0	%
Effect of:
COLI policies	(1.0)		(1.6)		(1.0)		(1.6)
State income taxes	0.5		3.5		0.8		3.4
Flow through depreciation for plant-related differences	(5.7)		(4.9)		(5.9)		(4.8)
Federal tax credits	(3.1)		(4.6)		(3.1)		(4.6)
Non-controlling interest	(0.3)		(0.3)		(0.3)		(0.3)
AFUDC equity	(0.6)		(0.2)		(0.6)		(0.3)
Amortization of federal investment tax credits	(0.4)		(0.7)		(0.4)		(0.7)

State tax rate change	—		—		—		2.0
Valuation allowance	—		(0.4)		—		(0.2)
Stock compensation	—		—		—		(0.1)
Officer compensation limitation	0.5		0.2		0.5		0.2
Other	0.3		—		(0.3)		—
Effective income tax rate	11.2	%	12.0	%	10.7	%	14.0	%

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Evergy Kansas Central
	Three Months Ended September 30				Year to Date September 30
	2021		2020		2021		2020
Federal statutory income tax rate	21.0	%	21.0	%	21.0	%	21.0	%
Effect of:
COLI policies	(1.7)		(2.9)		(1.7)		(2.9)
State income taxes	0.5		2.3		0.8		2.9
Flow through depreciation for plant-related differences	(3.6)		(0.4)		(3.7)		(0.2)
Federal tax credits	(5.2)		(6.8)		(5.2)		(6.8)
Non-controlling interest	(0.5)		(0.7)		(0.5)		(0.6)
AFUDC equity	(0.5)		0.1		(0.6)		(0.4)
Amortization of federal investment tax credits	(0.5)		(1.1)		(0.5)		(1.0)

State tax rate change	—		—		—		32.0

Stock compensation	—		—		(0.1)		(0.1)
Officer compensation limitation	0.4		—		0.3		—
Other	0.2		—		(0.8)		—
Effective income tax rate	10.1	%	11.5	%	9.0	%	43.9	%


Evergy Metro
	Three Months Ended September 30				Year to Date September 30
	2021		2020		2021		2020
Federal statutory income tax rate	21.0	%	21.0	%	21.0	%	21.0	%
Effect of:
COLI policies	(0.1)		(0.2)		(0.2)		(0.2)
State income taxes	0.6		5.5		0.6		4.5
Flow through depreciation for plant-related differences	(7.8)		(9.1)		(8.0)		(9.1)
Federal tax credits	(0.6)		(2.4)		(0.6)		(2.4)
AFUDC equity	(0.7)		(0.5)		(0.7)		(0.3)
Amortization of federal investment tax credits	(0.4)		(0.4)		(0.4)		(0.4)
State tax rate change	—		—		—		(11.4)

Stock compensation	—		—		—		(0.4)
Officer compensation limitation	0.9		0.5		0.9		0.5
Other	(0.2)		0.1		—		—
Effective income tax rate	12.7	%	14.5	%	12.6	%	1.8	%

Kansas Tax Reform

In ~~2016,~~May 2020, the ~~SPP completed a process~~state of ~~allocating revenue credits under its Open Access Transmission Tariff~~Kansas exempted certain public utilities, including Evergy Kansas Central and Evergy Metro, from Kansas corporate income tax beginning in 2021 and authorized the KCC to sponsors of certain transmission system upgrades. Qualifying upgrades are generation interconnection or transmission service projects that benefit SPP members and that are paid for directly by a sponsor without customer support. The SPP determined sponsors are entitled to revenue credits for previously completed upgrades, and members are obligated to pay for revenue credits attributable to these historical upgrades. As a result,approve changes in ~~November 2016 we paid the SPP $7.6 million~~rates related to ~~revenue credits attributable to historical upgrades from March 2008 to August 2016. In October 2017, the SPP issued revised allocations and we believe we will receive a small refund.~~increases or decreases in federal or state income tax rates.

~~Storage of Spent Nuclear Fuel~~

In 2010, the Department of Energy (DOE) filed a motion with the NRC to withdraw its then pending application to construct a national repository for the disposal of spent nuclear fuel and high-level radioactive waste at Yucca Mountain, Nevada. An NRC board denied the DOE’s motion to withdraw its application and the DOE appealed that decision to the full NRC. In 2011, the NRC issued an evenly split decision on the appeal and also ordered the licensing board to close out its work on the DOE’s application by the end of 2011 due to a lack of funding. These agency actions prompted the states of Washington and South Carolina, and a county in South Carolina, to file a lawsuit in a federal Court of Appeals asking the court to compel the NRC to resume its license review and to issue a decision on the license application. In August 2013, the court ordered the NRC to resume its review of the DOE’s application. The NRC has not yet issued its decision.

Wolf Creek is currently evaluating alternatives for expanding its existing on-site spent nuclear fuel storage to provide additional capacity prior to 2025. Wolf Creek has finalized a settlement agreement through 2019 with the DOE for reimbursement of costs to construct this facility that would not have otherwise been incurred had the DOE began accepting spent nuclear fuel. As a co-owner of Wolf Creek, we received $0.8 million of the settlement representing reimbursement of costs incurred through 2015 for project planning. Wolf Creek submitted a settlement claim to the DOE in August 2017 for costs incurred between January 2016 and June 2017, with our share of the claim being approximately $0.5 million. We 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.

~~12. ASSET RETIREMENT OBLIGATIONS~~

~~In 2017, Wolf Creek filed a nuclear decommissioning cost study with the KCC.~~ As a result of the ~~study, we recorded~~exemption from Kansas corporate income tax, the Evergy Companies revalued their deferred income tax assets and liabilities in May 2020. Evergy decreased its net deferred income tax liabilities by $233.8 million, primarily consisting of a ~~$19.4~~$400.4 million ~~increase~~adjustment for the revaluation of deferred income tax assets and liabilities included in ~~our ARO to reflect revisions to the estimated costs to decommission Wolf Creek. In addition, we revised other AROs by $40.8~~rate base and a $31.7 million ~~relating to asbestos removal, CCR~~tax gross-up adjustment on this amount for ratemaking purposes and ~~windfarms other than Western Plains Wind Farm. We recorded a new ARO liability~~$13.8 million of approximately $13.5 million corresponding to placing Western Plains Wind Farm in service. See Note 11, “Commitments and Contingencies - Regulation of Coal Combustion Residuals,” for additional informationincome tax expense primarily related to the ~~CCR rule.~~

~~The change in the balance~~revaluation of ~~our ARO liability from December 31, 2016, through September 30, 2017, is summarized in the following table.~~

(In Thousands)
Balance as of December 31, 2016 $ 323,951
Increase in ARO liabilities 13,471
Liabilities settled (1,928 )
Accretion expense 12,353
Revision to nuclear decommissioning ARO liability 19,377
Revisions in estimated cash flows 40,829
Balance as of September 30, 2017 408,053
Balance included in other current liabilities (10,548 )
Long-term AROs $ 397,505

~~13. LEGAL PROCEEDINGS~~

~~We and our subsidiaries are involved in various legal, environmental and regulatory proceedings. We believe~~deferred income taxes that ~~adequate provisions have been made and accordingly believe that the ultimate disposition of such matters~~ will not ~~have a material effect on our condensed consolidated financial results. See Note 4, “Rate Matters and Regulation,” and Note 11, “Commitments and Contingencies,” for additional information.~~

~~Pending Merger~~

~~Following the announcement of the original merger agreement~~be recovered from customers in ~~May 2016, two putative class action petitions (which were consolidated and superseded~~future rates; partially offset by a ~~consolidated class action petition) and one putative derivative petition challenging~~decrease to unamortized investment tax credits of $183.6 million due to the ~~original merger were filed in the District Court~~revaluation of Shawnee County, Kansas. In September 2016, the plaintiffs in both actions agreed in principle to dismiss the actions in exchange for our agreement to make supplemental disclosures to shareholders in connection with the original merger agreement and grant waivers of the prohibition on requesting a waiver of the standstill provisions in the confidentiality and standstill agreements executed by the bidders that participated in a sale process that was conducted as part of the original merger agreement. As described below, since the announcement of the revised merger agreement, the plaintiffs in the consolidated putative class action has moved to amend their petition, and the plaintiff in the putative derivative case has refiled his petition.

The consolidated putative class action petition, originally filed July 25, 2016, is captioned In re Westar Energy, Inc. Stockholder Litigation, Case No. 2016-CV-000457. This petition named as defendants Westar Energy, the members of our board of directors and Great Plains Energy.

On September 25, 2017, the lead plaintiff filed a motion for leave to amend her class action petition and attached an amended petition. The proposed petition now includes an additional plaintiff. The petition challenges the revised proposed merger and alleges a claim of breach of fiduciary duty against our board of directorscertain Kansas income tax credits and a ~~claim~~$16.9 million tax gross-up adjustment on this amount for ratemaking purposes.

Table of aiding and abetting that alleged breach against us and Great Plains Energy. The lawsuit seeks injunctive relief declaring the action maintainable as a class action and certifying that the plaintiffs are the class representatives; preliminarily and permanently enjoining the defendants from closing the merger unless we implement a procedure to obtain a merger agreement providing fair and reasonable terms and consideration to the plaintiffs and the class; rescinding the merger agreement or granting the plaintiffs and the class rescissory damages; directing our board of directors to account to the plaintiffs and the class for damages suffered as a result of the alleged breach of fiduciary duty; awarding the plaintiffs reasonable costs and disbursements of the action, including reasonable attorneys’ fees and expert fees; and granting other equitable relief as the court deems proper. The proposed amended petition alleges inadequacies in our joint proxy statement concerning the revised proposed transaction and the degree to which our board of directors solicited or considered offers from prior bidders after the proposed original merger was deniedContents

Evergy Kansas Central decreased its net deferred income tax liabilities by the KCC, and claims that the consideration our stockholders stand to receive in connection with the revised proposed transaction is unfair. Plaintiffs have added two new defendants, Monarch Energy Holding, Inc. and King Energy, Inc., whom they allege aided and abetted our board of directors in breaching their fiduciary duties.

On October 18, 2017, the putative derivative petition, captioned Braunstein v. Chandler et al., Case No. 2017-CV-000692, was re-filed in the District Court of Shawnee County, Kansas. This putative derivative action names as defendants the members of our board of directors, Great Plains Energy, and subsidiaries of Great Plains Energy, with Westar Energy named as a nominal defendant. The petition asserts that the members of our board of directors breached their fiduciary duties to our shareholders in connection with actions taken after the KCC rejected the proposed original merger. It also asserts that Great Plains Energy and subsidiaries of Great Plains Energy aided and abetted such breaches of fiduciary duties. The petition alleges, among other things, that the members of our board of directors failed to obtain the best possible price for our shareholders because$17.6 million, primarily consisting of a flawed process that discouraged third parties from submitting potentially superior proposals, and that members of our board of directors committed waste by not collecting termination fees that may have been payable following the KCC’s rejection of the original merger agreement. The petition seeks, among other remedies, an order enjoining the merger on the terms proposed and directing that the director defendants exercise their fiduciary duties to obtain a transaction which is in the best interests of us and our shareholders, a declaration that the proposed merger was entered into in breach of the fiduciary duties of the defendants and is therefore unlawful and unenforceable, rescission of the merger agreement if consummated, the imposition of a constructive trust in favor of the plaintiff, on behalf of us, upon any benefits improperly received by the named defendants as a result of their wrongful conduct, and an award for costs, including attorneys’ fees and experts’ fees.

~~In addition, on September 21, 2017, a putative class action lawsuit was filed in the United States District Court~~$293.7 million adjustment for the ~~District~~revaluation of Kansas. The federal class action complaint challenges the merger and alleges violations of sections 14(a) and 20(a) of the Securities Exchange Act of 1934, as amended (Exchange Act). The complaint seeks an order declaring that the action is maintainable as a class action and certifying that the plaintiff is the class representative; preliminarily and permanently enjoining defendants from consummating the mergers or, if consummated, setting them aside and awarding rescissory damages; directing the defendants to file a registration statement on Form S-4 that corrects alleged misstatements; directing our board of directors to account to plaintiff and the class for their damages; awarding reasonable costs and disbursements of the action, including reasonable attorneys’ fees and expert fees; and granting other further relief as the court deems proper. The case is captioned David Pill v. Westar Energy, Inc. et al, Civil Action No. 17-4086.

On October 6, 2017, another putative class action lawsuit was filed in the United States District Court for the District of Kansas. This federal class action complaint challenges the proposed merger and alleges violations of sections 14(a) and 20(a) of the Exchange Act. The complaint seeks an order enjoining the board and other parties from proceeding with, consummating, or closing the merger or, if consummated, setting it aside and awarding rescissory damages; directing the board to disseminate a registration statement that corrects alleged misstatements and includes all material facts the plaintiff asserts are missing; declaring that the defendants violated sections 14(a) and 20(a) of the Exchange Act and Rule 14a-9; awarding reasonable costs and disbursements of the action, including reasonable attorneys’ fees and expert fees; and granting other equitable relief as the court deems proper. The case is captioned Robert L. Reese v. Westar Energy, Inc. et al, Civil Action No. 2:17-cv-02584.

~~14. VARIABLE INTEREST ENTITIES~~

In determining the primary beneficiary of a VIE, we assess the entity’s purpose and design, including the nature of the entity’s activities and the risks that the entity was designed to create and pass through to its variable interest holders. A reporting enterprise is deemed to be the primary beneficiary of a VIE if it has (a) the power to direct the activities of the VIE that most significantly impact the VIE’s economic performance and (b) the obligation to absorb losses or right to receive benefits from the VIE that could potentially be significant to the VIE. The primary beneficiary of a VIE is required to consolidate the VIE. The trust holding our 50% interest in La Cygne unit 2 is a VIE. The trust holding our 8% interest in Jeffrey Energy Center (JEC) was a VIE until the expiration of a purchase option in July 2017. We remain the primary beneficiary of the trust holding our 50% interest in La Cygne unit 2.

We assess all entities with which we become involved to determine whether such entities are VIEs and, if so, whether or not we are the primary beneficiary of the entities. We also continuously assess whether we are the primary beneficiary of the VIE with which we are involved. Prospective changes in facts and circumstances may cause us to reconsider our determination as it relates to the identification of the primary beneficiary.

~~8% Interest in Jeffrey Energy Center~~

~~Under an agreement that expires in~~ ~~January 2019, we lease an~~ 8% ~~interest in JEC from a trust. The trust was financed with an equity contribution from an owner participant and debt issued by the trust. The trust was created specifically to purchase the~~ 8% interest in JEC and lease it to a third party, and does not hold any other assets. We met the requirements to be considered the primary beneficiary of the trust until July 2017, when a contractual option to purchase the 8% interest in the plant covered by the lease expired. Accordingly, we deconsolidated the trust in the third quarter of 2017.

In determining the primary beneficiary of the trust, we concluded at the inception of the lease that the activities of the trust that most significantly impacted its economic performance and that we had the power to direct included (1) the operation and maintenance of the 8% interest in JEC, (2) our ability to exercise an option that expired in July 2017 to purchase the plant at the end of the agreement at the lesser of fair value or a fixed amount and (3) our option to require refinancing of the trust’s debt. We had the potential to receive benefits from the trust that could potentially be significant if the fair value of the 8% interest in JEC at the end of the agreement was greater than the fixed amount. The possibility of lower interest rates upon refinancing the debt also created the potential for us to receive significant benefits.

~~50%~~ ~~Interest in La Cygne Unit 2~~

~~Under an agreement that expires in~~ ~~September 2029, KGE entered into a sale-leaseback transaction with a trust under which the trust purchased KGE’s~~ ~~50%~~ interest in La Cygne unit 2 and subsequently leased it back to KGE. The trust was financed with an equity contribution from an owner participant and debt issued by the trust. The trust was created specifically to purchase the ~~50%~~ interest in La Cygne unit 2 and lease it back to KGE, and does not hold any other assets. We meet the requirements to be considered the primary beneficiary of the trust. In determining the primary beneficiary of the trust, we concluded that the activities of the trust that most significantly impact its economic performance and that we have the power to direct include (1) the operation and maintenance of the ~~50%~~ interest in La Cygne unit 2 and (2) our ability to exercise a purchase option at the end of the agreement at the lesser of fair value or a fixed amount. We have the potential to receive benefits from the trust that could potentially be significant if the fair value of the ~~50%~~ ~~interest in La Cygne unit 2 at the end of the agreement is greater than the fixed amount.~~

~~Financial Statement Impact~~

~~We have recorded the following~~deferred income tax assets and liabilities included in rate base and a $17.3 million tax gross-up adjustment on ~~our condensed consolidated balance sheets~~this amount for ratemaking purposes; partially offset by a decrease to unamortized investment tax credits of $183.6 million due to the revaluation of certain Kansas income tax credits and a $16.9 million tax gross-up adjustment on this amount for ratemaking purposes and $109.0 million of income tax expense primarily related to the ~~VIEs described above.~~revaluation of deferred income taxes that will not be recovered from customers in future rates.

Evergy Metro decreased its net deferred income tax liabilities by $152.9 million, primarily consisting of a $106.7 million adjustment for the revaluation of deferred income tax assets and liabilities included in rate base and a $14.4 million tax gross-up adjustment on this amount for ratemaking purposes and $32.2 million of income tax benefit primarily related to the revaluation of deferred income taxes that will not be refunded to customers in future rates.

As of As of
September 30, 2017 December 31, 2016
(In Thousands)
Assets:
Property, plant and equipment of variable interest entities, net $ 178,058
$ 257,904
Regulatory assets (a) —
10,396

Liabilities:
Current maturities of long-term debt of variable interest entities $ 28,534
$ 26,842
Accrued interest (b) —
867
Long-term debt of variable interest entities, net 81,433
111,209

~~_______________~~

~~(a) Included~~The changes to the Evergy Companies' net deferred income tax liabilities included in ~~long-term~~rate base were offset by corresponding changes in regulatory liabilities. The net regulatory liabilities will be refunded to customers in future rates by amortizing the amounts related to plant assets ~~on our condensed consolidated balance sheets.~~

~~(b) Included in accrued interest on our condensed consolidated balance sheets.~~

~~All~~over the remaining useful life of the ~~liabilities noted~~assets, and amortizing the amounts related to other items over a period to be determined in ~~the table above relate~~a future rate case. The changes to the ~~purchase~~Evergy Companies' unamortized investment tax credits were related to the portion of certain Kansas income tax credits that were not expected to be used after December 31, 2020. The amounts of income tax expense (benefit) recognized by the Evergy Companies related to the revaluation of deferred income taxes that will not be recovered from or refunded to customers in future rates primarily pertain to deferred tax adjustments related to the difference between Evergy's consolidated tax rate and the statutory tax rates used for setting rates at Evergy Kansas Central, Evergy Metro and Evergy Missouri West as well as deferred income tax adjustments related to non-regulated operations.

Prior to 2021, Evergy Kansas Central and Evergy Metro recovered the cost of Kansas corporate income taxes in rates from their customers at the prior statutory rate of 7%. In accordance with the provisions of the ~~property, plant~~income tax exemption, Evergy Metro and ~~equipment. The assets~~Evergy Kansas Central filed a joint application with the KCC in July 2020 to reduce their retail rates to reflect their exemption from Kansas corporate income taxes beginning in 2021. In the joint application, Evergy Metro requested to implement its rate reduction in one phase, effective January 1, 2021, and Evergy Kansas Central requested to implement its rate reduction in three phases, effective January 1 in each of 2021, 2022 and 2023. In November 2020, the ~~VIEs can be used only to settle obligations of the VIEs~~KCC approved Evergy Kansas Central's and the VIEs’ debt holders have no recourse to our general credit. We have not provided financial or other support to the VIEs and are not required to provide such support. We did not record any gain or loss upon initial consolidation of the VIEs.Evergy Metro's joint application.

ITEM 2. ~~MANAGEMENT’S~~MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

~~Certain matters discussed in Management’s~~The following combined Management's Discussion and Analysis ~~are “forward-looking statements.” The Private Securities Litigation Reform Act~~ of ~~1995 has established that these~~Financial Condition and Results of Operations (MD&A) should be read in conjunction with the consolidated financial statements ~~qualify for safe harbors from liability. Forward-looking statements may include words like we “believe,” “anticipate,” “target,” “expect,” “estimate,” “intend”~~ and ~~words~~accompanying notes in this combined Quarterly Report on Form 10-Q and the Evergy Companies' combined 2020 Form 10-K. None of ~~similar meaning. Forward-looking statements describe our future plans, objectives, expectations~~the registrants make any representation as to information related solely to Evergy, Evergy Kansas Central or ~~goals.~~Evergy Metro other than itself.

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EVERGY, INC.

~~INTRODUCTION~~EXECUTIVE SUMMARY

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.

~~We are the largest~~•Evergy Kansas Central is an integrated, regulated electric utility ~~in Kansas. We produce, transmit and sell~~that provides electricity ~~at retail~~ to customers in the state of Kansas. Evergy Kansas Central has one active wholly-owned subsidiary with significant operations, Evergy Kansas South.

•Evergy Metro is an integrated, regulated electric utility that provides electricity to customers in the states of Missouri and Kansas.

•Evergy Missouri West is an integrated, regulated electric utility that provides electricity to customers in the state of Missouri.

•Evergy Transmission Company owns 13.5% of Transource with the remaining 86.5% owned by AEP Transmission Holding Company, LLC, a subsidiary of AEP. Transource is focused on the development of competitive electric transmission projects. Evergy Transmission Company accounts for its investment in Transource under the ~~regulation~~equity method.

Evergy Kansas Central also owns a 50% interest in 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 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. The Evergy Companies assess financial performance and allocate resources on a consolidated basis (i.e., operate in one segment).

February 2021 Winter Weather Event

In February 2021, much of the ~~KCC. We~~central and southern United States, including the service territories of the Evergy Companies, experienced a significant winter weather event that resulted in extremely cold temperatures over a multi-day period.The February 2021 winter weather event resulted in an increase in the demand for natural gas used by the Evergy Companies for generating electricity and also ~~supply electric~~contributed to the limited availability of other generation resources, including coal and renewables, within the SPP Integrated Marketplace.As part of the February 2021 winter weather event, Evergy incurred natural gas and purchased power costs, net of wholesale revenues, of $349.7 million. This $349.7 million of net fuel and purchased power costs was primarily driven by $293.4 million of costs at Evergy Missouri West and $127.9 million of costs at Evergy Kansas Central, partially offset by $71.6 million of net wholesale revenues at Evergy Metro. The amount of purchased power costs incurred by the Evergy Companies during the February 2021 winter weather event is subject to resettlement activity and further review by the SPP. This review and any subsequent resettlement activity could result in increases or decreases to the final amount of purchased power costs incurred by the Evergy Companies during the February 2021 winter weather event and these changes could be material.

As of September 30, 2021, the Evergy Companies have deferred substantially all of the fuel and purchased power costs, net of wholesale revenues, related to the February 2021 winter weather event to a regulatory asset or liability pursuant to their fuel recovery mechanisms and an emergency AAO issued by the KCC in February 2021. Further, in June 2021, Evergy Metro and Evergy Missouri West filed a joint request for an AAO with the MPSC regarding the deferral and subsequent recovery or refund of the February 2021 winter weather event amounts. While the Evergy Companies expect to recover substantially all of any increased fuel and purchased power costs related to the February 2021 winter weather event from customers, the timing of the cost recovery could be delayed or spread

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over a longer than typical recovery timeframe by the KCC or the MPSC to help moderate monthly customer bill impacts given the extraordinary nature of the February 2021 winter weather event.

The Evergy Companies also engage in limited non-regulated energy ~~at wholesale~~marketing activities in various regional power markets that have historically not had a significant impact on the Evergy Companies' results of operations. These energy marketing margins are recorded net in operating revenues on the Evergy Companies' statements of income and comprehensive income. As a result of the elevated market prices experienced in regional power markets across the central and southern United States driven by the February 2021 winter weather event discussed above, Evergy and Evergy Kansas Central recorded $95.0 million of energy marketing margins in 2021 related to ~~municipalities~~the February 2021 winter weather event, primarily driven by activities in ERCOT. The amount of energy marketing margins recorded as a result of the February 2021 winter weather event is subject to resettlement activities and/or legislative action in Texas that could result in increases or decreases to the final amount of energy marketing margins earned by Evergy and ~~electric cooperatives~~Evergy Kansas Central and these changes could be material.

See Notes 1 and 4 to the consolidated financial statements for additional information regarding the February 2021 winter weather event and related AAOs.

Transforming Evergy's Generation Fleet

The Evergy Companies are committed to a long-term strategy to reduce CO2 emissions in a cost-effective and reliable manner. In 2020, Evergy achieved a reduction of CO2 emissions of approximately 50% from 2005 levels in connection with its then-stated goal to achieve an 80% reduction from 2005 levels by 2050. In connection with the filing of its triennial integrated resource plan in Missouri in April 2021, Evergy announced a revised goal to achieve net-zero carbon emissions by 2045, which includes an interim goal of a 70% reduction of CO2 emissions from 2005 levels by 2030. The trajectory and timing of reaching Evergy's net-zero carbon emissions goal are dependent on enabling technology developments, the reliability of the power grid, and supportive energy policies and regulations.

LEC Unit 4 Securitization

In April 2021, the state of Kansas ~~under~~passed the ~~regulation~~UFSA which allows certain public utilities, including Evergy Kansas Central and Evergy Metro, to securitize utility assets in order to recover energy transition costs relating to the early retirement of ~~FERC. We have contracts~~certain generating assets. To recover the energy transition costs through securitization as allowed in the UFSA, a public utility must obtain a predetermination order from the KCC finding that the retirement of the subject generation facility is reasonable. Upon the receipt of a successful predetermination order, the public utility must then file an application with the KCC for a financing order to issue securitized bonds to recover the energy transition costs. The UFSA also allows the pursuit of securitization to help finance qualified extraordinary expenses, such as fuel costs incurred during extreme weather events.

In September 2021, Evergy Kansas Central filed a predetermination request with the KCC for the ratemaking principles and treatment related to its planned investment in approximately 190 MW of solar generation and the planned retirement of coal-fired LEC Unit 4 and related coal-handling facilities for LEC Units 4 and 5, both of which are expected to occur between December 2023 and the first half of 2024. An evidentiary hearing in the case is currently scheduled to begin in January 2022 and a decision by the KCC regarding the request is expected in the first or second quarter of 2022.

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Evergy Equity Investment

From time to time, Evergy makes limited equity investments in early-stage energy solution companies that are privately held. These investments have historically not had a significant impact on Evergy's results of operations. In October 2021, an equity investment in which Evergy held a minority stake was acquired through a transaction involving a special purpose acquisition company (SPAC). As a result of its equity investment in the company that was acquired in the SPAC transaction, Evergy received shares of the resulting public company upon the closing of the transaction, which are subject to a restriction on sale orof up to 180 days. Evergy expects to record an unrealized gain in the fourth quarter of 2021 for the conversion of its shares into the newly formed public company along with any changes in the fair value of this investment during the fourth quarter of 2021. The fair value of Evergy's investment will also be affected by its restriction on sale of the shares of the new company. The ultimate amount of this unrealized gain in the fourth quarter of 2021, if any, cannot be estimated at this time as it is largely dependent on the performance of the new public company's stock which is subject to market volatility. However, Evergy currently expects that this gain could have a significant impact on its fourth quarter 2021 earnings when compared with its historical fourth quarter results of operations.

Bluescape Securities Purchase Agreement

See Note 12 to the consolidated financial statements for information regarding Evergy's securities purchase agreement with an affiliate of ~~wholesale electricity with other utilities.~~Bluescape to purchase Evergy's common stock and a warrant that was completed in April 2021.

Impact of COVID-19

~~In Management’s Discussion~~See Part II, Item 7, MD&A - Executive Summary in the Evergy Companies' combined 2020 Form 10-K and ~~Analysis, we discuss our operating results~~Part II, Item 1A, Risk Factors in this combined Quarterly Report on Form 10-Q for information regarding the impact of COVID-19 on the Evergy Companies.

Regulatory Proceedings

See Note 4 to the consolidated financial statements for information regarding regulatory proceedings.

Earnings Overview

The following table summarizes Evergy's net income and diluted EPS.


	Three Months Ended September 30						Year to Date September 30
	2021		Change		2020		2021		Change		2020
	(millions, except per share amounts)
Net income attributable to Evergy, Inc.	$	449.4	$	84.9	$	364.5	$	826.3	$	259.0	$	567.3
Earnings per common share, diluted	1.95		0.35		1.60		3.60		1.11		2.49

Net income attributable to Evergy, Inc. increased for the three ~~and nine~~ months ended September 30, ~~2017~~,2021, compared to the same ~~periods of~~ ~~2016, our general financial condition~~period in 2020, primarily due to higher retail sales driven by warmer weather, lower operating and ~~significant changes that occurred during~~ ~~2017. As you read Management’s Discussion~~maintenance expenses and ~~Analysis, please refer to our condensed consolidated financial statements~~higher investment earnings; partially offset by higher depreciation expense, higher property taxes and ~~the accompanying notes, which contain our operating results.~~higher income tax expense.

~~SUMMARY OF SIGNIFICANT ITEMS~~

~~Proposed Merger with Great Plains Energy~~

In July 2017, we announced that we intend to retire Unit 7 at Tecumseh Energy Center, Units 3 and 4 at Murray Gill Energy Center, and units 1 and 2 at Gordon Evans Energy Center in 2018, subject to the completion of the merger. The decision was based in part on lower demand for energy from the plants. The depreciable lives of the assets have been, and continue to be, based upon us operating as a stand-alone entity. Retiring these units or any other assets identified as part of integration planning could result in the write-down of obsolete inventory or the retirement of assets prior to the end of their estimated useful lives.

~~Earnings Per Share~~

~~Following is a summary of our net income and basic EPS.~~

Three Months Ended September 30, Nine Months Ended September 30,
2017 2016 Change 2017 2016 Change
(Dollars In Thousands, Except Per Share Amounts)
Net income attributable to Westar Energy, Inc. $ 158,306
$ 154,720
$ 3,586
$ 290,032
$ 292,645
$ (2,613 )
Earnings per common share, basic 1.11
1.09
0.02
2.03
2.06
(0.03 )

~~Net income and basic~~Diluted EPS increased for the three months ended September 30, ~~2017,~~2021, compared to the same period in ~~2016,~~2020, primarily due ~~primarily~~ to ~~lower~~the increase in net income ~~tax expense of $25.5 million. Partially offsetting the lower income tax expense were lower retail sales~~ attributable ~~principally~~ to milder weather, recording $10.1 million less in corporate-owned life insurance (COLI) benefits, and recording $9.7 million more in depreciation due in part to placing Western Plains Wind Farm in service.

Evergy, Inc. discussed above.

Net income ~~and basic EPS decreased for the nine months ended~~attributable to Evergy, Inc. increased year to date September 30, ~~2017,~~2021, compared to the same period in ~~2016,~~2020, primarily due ~~primarily~~ to ~~lower retail sales. The lower~~non-regulated energy marketing margins related to the February 2021 winter weather event, higher retail sales driven by favorable weather, lower operating and maintenance expenses, higher equity allowance for funds used during construction (AFUDC), higher investment earnings and lower interest expense; partially offset by higher property taxes, higher depreciation expense and higher income tax expense.

Diluted EPS increased year to date September 30, 2021, compared to the same period in 2020, primarily due to the increase in net income attributable to Evergy, Inc. discussed above.

Table of Contents

For additional information regarding the change in net income, refer to the Evergy Results of Operations section within this MD&A.

Adjusted Earnings (non-GAAP) and Adjusted EPS (non-GAAP)

Evergy's adjusted earnings (non-GAAP) and adjusted EPS (non-GAAP) for the three months ended and year to date September 30, 2021, were ~~attributable principally~~$454.8 million or $1.98 per share and $775.3 million or $3.38 per share, respectively. For the three months ended and year to ~~milder weather. We also recorded $16.7~~date September 30, 2020, Evergy's adjusted earnings (non-GAAP) and adjusted EPS (non-GAAP) were $393.3 million ~~less in corporate-owned life insurance (COLI) benefits~~or $1.73 per share and ~~$24.5~~$641.7 million ~~more in depreciation due in part to placing Western Plains Wind Farm in service. Partially offsetting these decreases~~or $2.82 per share, respectively. In addition to net income attributable to Evergy, Inc. and ~~basic~~diluted EPS, ~~was~~Evergy's management uses adjusted earnings (non-GAAP) and adjusted EPS (non-GAAP) to evaluate earnings and EPS without the income or costs resulting from non-regulated energy marketing margins from the February 2021 winter weather event, as well as costs resulting from executive transition, severance, advisor expenses and the revaluation of deferred tax assets and liabilities from the Kansas corporate income tax rate change.

Adjusted earnings (non-GAAP) and adjusted EPS (non-GAAP) are intended to enhance an investor's overall understanding of results. Management believes that adjusted earnings (non-GAAP) provides a ~~decrease~~meaningful basis for evaluating Evergy's operations across periods because it excludes certain items that management does not believe are indicative of Evergy's ongoing performance. Adjusted earnings (non-GAAP) and adjusted EPS (non-GAAP) are used internally to measure performance against budget and in reports for management and the Evergy Board. Adjusted earnings (non-GAAP) and adjusted EPS (non-GAAP) are financial measures that are not calculated in accordance with GAAP and may not be comparable to other companies' presentations or more useful than the GAAP information provided elsewhere in this report.

The following tables provide a reconciliation between net income attributable to Evergy, Inc. and diluted EPS as determined in accordance with GAAP and adjusted earnings (non-GAAP) and adjusted EPS (non-GAAP).


	Earnings (Loss)		Earnings (Loss) per Diluted Share		Earnings (Loss)		Earnings (Loss) per Diluted Share
Three Months Ended September 30	2021				2020
	(millions, except per share amounts)
Net income attributable to Evergy, Inc.	$	449.4	$	1.95	$	364.5	$	1.60
Non-GAAP reconciling items:

Non-regulated energy marketing costs related to February 2021 winter weather event, pre-tax(b)	1.9		0.01		—		—
Executive transition costs, pre-tax(c)	3.3		0.02		—		—
Severance costs, pre-tax(d)	—		—		28.7		0.13
Advisor expenses, pre-tax(e)	1.2		—		9.7		0.04
Income tax benefit(f)	(1.0)		—		(9.6)		(0.04)

Adjusted earnings (non-GAAP)	$	454.8	$	1.98	$	393.3	$	1.73

Table of Contents


	Earnings (Loss)		Earnings (Loss) per Diluted Share		Earnings (Loss)		Earnings (Loss) per Diluted Share
Year to Date September 30	2021				2020
	(millions, except per share amounts)
Net income attributable to Evergy, Inc.	$	826.3	$	3.60	$	567.3	$	2.49
Non-GAAP reconciling items:
Non-regulated energy marketing margin related to February 2021 winter weather event, pre-tax(a)	(95.0)		(0.42)		—		—
Non-regulated energy marketing costs related to February 2021 winter weather event, pre-tax(b)	5.9		0.03		—		—
Executive transition costs, pre-tax(c)	10.6		0.05		—		—
Severance costs, pre-tax(d)	2.8		0.01		55.3		0.24
Advisor expenses, pre-tax(e)	8.4		0.04		26.1		0.12
Income tax expense (benefit)(f)	16.3		0.07		(20.8)		(0.09)
Kansas corporate income tax change(g)	—		—		13.8		0.06
Adjusted earnings (non-GAAP)	$	775.3	$	3.38	$	641.7	$	2.82

(a)Reflects non-regulated energy marketing margins related to the February 2021 winter weather event and are included in operating revenues on the consolidated statements of comprehensive income.

(b)Reflects non-regulated energy marketing incentive compensation costs related to the February 2021 winter weather event and are included in operating and maintenance expense on the consolidated statements of comprehensive income.

(c)Reflects costs associated with executive transition including inducement bonuses, severance agreements and other transition expenses and are included in operating and maintenance expense on the consolidated statements of comprehensive income.

(d)Reflects severance costs incurred associated with certain voluntary severance programs at the Evergy Companies and are included in operating and maintenance expense on the consolidated statements of comprehensive income.

(e)Reflects advisor expenses incurred associated with strategic planning and are included in operating and maintenance expense on the consolidated statements of comprehensive income.

(f)Reflects an income tax effect calculated at a statutory rate of approximately 22% in 2021 and 26% in 2020, with the exception of certain non-deductible items.

(g)Reflects the revaluation of Evergy Kansas Central's, Evergy Metro's and Evergy Missouri West's deferred income tax assets and liabilities from the Kansas corporate income tax rate change and are included in income tax expense on the consolidated statements of ~~$47.8 million. Refer~~comprehensive income.

Wolf Creek Refueling Outage

Wolf Creek's most recent refueling outage began in March 2021 and the unit returned to service in May 2021. Wolf Creek's next refueling outage is planned to begin in the third quarter of 2022.

ENVIRONMENTAL MATTERS

See Note 810 to the consolidated financial statements for information regarding environmental matters.

RELATED PARTY TRANSACTIONS

See Note 11 to the consolidated financial statements for information regarding related party transactions.

Table of ~~the Notes to Condensed Consolidated Financial Statements, “Taxes,” for additional information on income tax expense.~~Contents

~~Current Trends~~

EVERGY RESULTS OF OPERATIONS

The following ~~is an update to and is to be read in conjunction with “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our 2016 Form 10-K.~~

~~Environmental Regulation~~

We are subject to various federal, state and local environmental laws and regulations. Environmental laws and regulations affecting our operations are overlapping, complex, subject to changes, have generally become more stringent over time and are expensive to implement. There are a variety of final and proposed laws and regulations that could have a material adverse effect on our operations and condensed consolidated financial results. See Note 11 of the Notes to Condensed Consolidated Financial Statements, “Commitments and Contingencies,” for a discussion of environmental costs, laws, regulations and other contingencies.

~~CRITICAL ACCOUNTING ESTIMATES~~

~~Our discussion and analysis of financial condition and~~table summarizes Evergy's comparative results of ~~operations are based on our condensed consolidated~~operations.


	Three Months Ended September 30						Year to Date September 30
	2021		Change		2020		2021		Change		2020
	(millions)
Operating revenues	$	1,616.5	$	98.9	$	1,517.6	$	4,464.6	$	645.6	$	3,819.0
Fuel and purchased power	355.8		39.6		316.2		1,275.0		442.5		832.5
SPP network transmission costs	73.6		7.5		66.1		216.8		19.0		197.8
Operating and maintenance	265.2		(39.4)		304.6		800.6		(64.9)		865.5
Depreciation and amortization	225.0		7.0		218.0		669.5		11.4		658.1
Taxes other than income tax	96.2		5.2		91.0		289.0		14.8		274.2
Income from operations	600.7		79.0		521.7		1,213.7		222.8		990.9
Other income (expense), net	0.6		11.9		(11.3)		(3.2)		33.5		(36.7)
Interest expense	93.6		(1.2)		94.8		281.4		(9.1)		290.5
Income tax expense	57.2		7.2		50.0		99.8		6.0		93.8
Equity in earnings of equity method investees, net of income taxes	2.0		0.1		1.9		6.1		—		6.1
Net income	452.5		85.0		367.5		835.4		259.4		576.0
Less: Net income attributable to noncontrolling interests	3.1		0.1		3.0		9.1		0.4		8.7
Net income attributable to Evergy, Inc.	$	449.4	$	84.9	$	364.5	$	826.3	$	259.0	$	567.3

Evergy Utility Gross Margin and MWh Sales

Utility gross margin is a financial ~~statements, which have been prepared~~measure that is not calculated in ~~conformity~~accordance with GAAP. Utility gross margin, as used by the instructions to Form 10-Q and Article 10 of Regulation S-X. Note 2 of the Notes to Condensed Consolidated Financial Statements, “Summary of Significant Accounting Policies,” contains a summary of our significant accounting policies, many of which require the use of estimates and assumptions by management. The policies highlighted in our ~~2016~~ ~~Form 10-K have an impact on our reported results that may be material due to the levels of judgment and subjectivity necessary to account for uncertain matters or their susceptibility to change.~~

~~From December 31, 2016, through September 30, 2017, we did not experience any significant changes in our critical accounting estimates. For additional information, see our~~ ~~2016~~ ~~Form 10-K.~~

~~OPERATING RESULTS~~

~~We evaluate operating results based on EPS. We have various classifications of revenues,~~Evergy Companies, is defined as ~~follows:~~

~~Retail:~~ Sales of electricity to residential, commercial and industrial customers. Classification of customers as residential, commercial or industrial requires judgment and our classifications may be different from other companies. Assignment of tariffs is not dependent on classification. Other retail sales of electricity include lighting for public streets and highways, net of revenue subject to refund.

~~Wholesale:~~ Sales of electricity to electric cooperatives, municipalities and other electric utilities and RTOs, the prices for which are either based on cost or prevailing market prices as prescribed by FERC authority. Revenues from these sales are either included in the RECA or used in the determinations of base rates at the time of our next general rate review.

~~Transmission:~~ ~~Reflects transmission~~operating revenues ~~including those based on tariffs with the SPP.~~

~~Other:~~ Miscellaneous electric revenues including ancillary service revenues and rent from electric property leased to others. This category also includes transactions unrelated to the production of our generating assets and fees we earn for services that we provide for third parties.

Electric utility revenues are impacted by things such as rate regulation, fuel costs, technology, customer behavior, the economy and competitive forces. Changing weather also affects the amount of electricity our customers use as electricity sales are seasonal. As a summer peaking utility, the third quarter typically accounts for our greatest electricity sales. Hot summer temperatures and cold winter temperatures prompt more demand, especially among residential and commercial customers, and to a lesser extent, industrial customers. Mild weather reduces customer demand. Our wholesale revenues are impacted by, among other factors, demand, cost and availability ofless fuel and purchased power ~~price volatility, available generation capacity,~~costs and amounts billed by the SPP for network transmission ~~availability and weather.~~

~~Three and Nine Months Ended September 30, 2017, Compared to Three and Nine Months Ended September 30, 2016~~

~~Below we discuss our operating results~~costs. Expenses for ~~the three and nine months ended~~ ~~September 30, 2017~~, compared to the results for the three and nine months ended September 30, 2016. Significant changes in results of operations shown in the table immediately below are further explained in the descriptions that follow.

Three Months Ended September 30, Nine Months Ended September 30,
2017 2016 Change % Change 2017 2016 Change % Change
(Dollars In Thousands, Except Per Share Amounts)
REVENUES:
Residential $ 278,138
$ 282,272
$ (4,134 ) (1.5 ) $ 642,449
$ 664,400
$ (21,951 ) (3.3 )
Commercial 219,414
218,377
1,037
0.5
557,232
572,247
(15,015 ) (2.6 )
Industrial 117,721
106,021
11,700
11.0
324,227
314,723
9,504
3.0
Other retail 149
7,883
(7,734 ) (98.1 ) (22,293 ) (23,002 ) 709
3.1
Total Retail Revenues 615,422

614,553
869
0.1
1,501,615
1,528,368
(26,753 ) (1.8 )
Wholesale 102,113
86,421
15,692
18.2
242,524
220,520
22,004
10.0
Transmission 69,504
58,462
11,042
18.9
209,097
188,996
20,101
10.6
Other 7,288
5,218
2,070
39.7
22,986
17,668
5,318
30.1
Total Revenues 794,327
764,654
29,673
3.9
1,976,222
1,955,552
20,670
1.1
OPERATING EXPENSES:
Fuel and purchased power 189,804
155,673
34,131
21.9
415,449
374,361
41,088
11.0
SPP network transmission costs 62,578
57,939
4,639
8.0
185,015
173,925
11,090
6.4
Operating and maintenance 79,856
86,758
(6,902 ) (8.0 ) 248,211
250,135
(1,924 ) (0.8 )
Depreciation and amortization 94,668
84,972
9,696
11.4
277,322
252,838
24,484
9.7
Selling, general and administrative 65,630
60,582
5,048
8.3
182,367
192,762
(10,395 ) (5.4 )
Taxes other than income tax 41,815
48,154
(6,339 ) (13.2 ) 126,421
145,529
(19,108 ) (13.1 )
Total Operating Expenses 534,351
494,078
40,273
8.2
1,434,785
1,389,550
45,235
3.3
INCOME FROM OPERATIONS 259,976
270,576
(10,600 ) (3.9 ) 541,437
566,002
(24,565 ) (4.3 )
OTHER INCOME (EXPENSE):
Investment earnings 2,593
2,619
(26 ) (1.0 ) 8,384
6,916
1,468
21.2
Other income 3,849
13,353
(9,504 ) (71.2 ) 5,672
26,212
(20,540 ) (78.4 )
Other expense (6,493 ) (5,887 ) (606 ) (10.3 ) (14,457 ) (14,338 ) (119 ) (0.8 )
Total Other (Expense) Income (51 ) 10,085
(10,136 ) (100.5 ) (401 ) 18,790
(19,191 ) (102.1 )
Interest expense 43,458
40,897
2,561
6.3
128,232
121,011
7,221
6.0
INCOME BEFORE INCOME TAXES 216,467
239,764
(23,297 ) (9.7 ) 412,804
463,781
(50,977 ) (11.0 )
Income tax expense 55,743
81,211
(25,468 ) (31.4 ) 112,559
160,376
(47,817 ) (29.8 )
NET INCOME 160,724
158,553
2,171
1.4
300,245
303,405
(3,160 ) (1.0 )
Less: Net income attributable to noncontrolling interests 2,418
3,833
(1,415 ) (36.9 ) 10,213
10,760
(547 ) (5.1 )
NET INCOME ATTRIBUTABLE TO WESTAR ENERGY, INC. $ 158,306
$ 154,720
$ 3,586
2.3
$ 290,032
$ 292,645
$ (2,613 ) (0.9 )
BASIC EARNINGS PER AVERAGE COMMON SHARE OUTSTANDING ATTRIBUTABLE TO WESTAR ENERGY, INC. $ 1.11
$ 1.09
$ 0.02
1.8
$ 2.03
$ 2.06
$ (0.03 ) (1.5 )
DILUTED EARNINGS PER AVERAGE COMMON SHARE OUTSTANDING ATTRIBUTABLE TO WESTAR ENERGY, INC. $ 1.11
$ 1.08
$ 0.03
2.8
$ 2.03
$ 2.05
$ (0.02 ) (1.0 )

~~Gross Margin~~

~~Fuel~~fuel and purchased power costs, ~~fluctuate with electricity~~offset by wholesale sales ~~and unit costs. As permitted by regulators, we adjust our retail prices~~margin, are subject to reflect changes in the costs of fuel and purchased power. Fuel and purchased power costs for wholesale customers are recovered at prevailing market prices or based on a predetermined formula with a pricerecovery through cost adjustment ~~approved by FERC.~~mechanisms. As a result, changes in fuel and purchased power costs are offset in operating revenues with minimal impact on net income. In addition, SPP network transmission costs fluctuate primarily due ~~primarily~~ to investments by ~~us and other~~SPP members ~~of the SPP~~ for upgrades to the transmission grid within the SPP RTO. As with fuel and purchased power costs, changes in SPP network transmission costs are mostly reflected in the prices ~~we charge~~charged to customers with minimal impact on net income. ~~For~~

Management believes that utility gross margin provides a meaningful basis for evaluating the Evergy Companies' operations across periods because utility gross margin excludes the revenue effect of fluctuations in these ~~reasons, we believe~~expenses. Utility gross margin is ~~useful~~used internally to measure performance against budget and in reports for ~~understanding~~management and ~~analyzing changes in our operating performance from one period to~~ the ~~next. We calculate~~Evergy Board. Utility gross margin should be viewed as a ~~non-GAAP measure, as total revenues, including transmission revenues, less the sum of fuel~~supplement to, and ~~purchased power costs and amounts billed by the SPP~~not a substitute for, ~~network transmission costs. Accordingly, gross margin reflects transmission revenues and costs on a net basis. The following table summarizes our gross margin for the three and nine months ended~~ ~~September 30, 2017~~ ~~and~~ ~~2016~~.

Three Months Ended September 30, Nine Months Ended September 30,
2017 2016 Change % Change 2017 2016 Change % Change
(Dollars In Thousands)
Revenues $ 794,327
$ 764,654
$ 29,673
3.9
$ 1,976,222
$ 1,955,552
$ 20,670
1.1
Less: Fuel and purchased power expense 189,804
155,673
34,131
21.9
415,449
374,361
41,088
11.0
SPP network transmission costs 62,578
57,939
4,639
8.0
185,015
173,925
11,090
6.4
Gross Margin $ 541,945
$ 551,042
$ (9,097 ) (1.7 ) $ 1,375,758
$ 1,407,266
$ (31,508 ) (2.2 )

~~The following table reflects changes in electricity sales for the three and nine months ended~~ ~~September 30, 2017~~ ~~and~~ ~~2016. No electricity sales are shown for transmission or other as they are not directly related to the amount of electricity we sell.~~

Three Months Ended September 30, Nine Months Ended September 30,
2017 2016 Change % Change 2017 2016 Change % Change
(Thousands of MWh)
ELECTRICITY SALES:
Residential 2,081

2,209
(128 ) (5.8 ) 4,828
5,097
(269 ) (5.3 )
Commercial 2,156

2,230
(74 ) (3.3 ) 5,588
5,763
(175 ) (3.0 )
Industrial 1,563

1,444
119
8.2
4,319
4,137
182
4.4
Other retail 12

19
(7 ) (36.8 ) 56
60
(4 ) (6.7 )
Total Retail 5,812
5,902
(90 ) (1.5 ) 14,791
15,057
(266 ) (1.8 )
Wholesale 3,128
2,389
739
30.9
7,612
5,960
1,652
27.7
Total 8,940
8,291
649
7.8
22,403
21,017
1,386
6.6

Gross margin decreased for the three and nine months ended September 30, 2017, compared to the same periods in 2016, due primarily to lower retail sales. The lower retail sales were attributable principally to more mild weather, which particularly impacts residential and commercial customers. During the three and nine months ended September 30, 2017, compared to the same period in 2016, there were approximately 11% and 12%, respectively, fewer cooling degree days. During the nine months ended September 30, 2017, compared to the same period in 2016, there were approximately 7% fewer heating degree days. Partially offsetting the impact of less favorable weather for both periods was improved sales to industrial customers due partially to a few of our larger, lower margin chemical and oil customers who experienced improved global demand for their products as well as improved sales to the construction segment taking advantage of the more mild weather.

~~Income~~income from operations, which ~~is calculated and presented in accordance with GAAP in our condensed consolidated statements of income,~~ is the most directly comparable financial measure ~~to our presentation~~prepared in accordance with GAAP. The Evergy Companies' definition of ~~gross margin. Our presentation of gross margin should not be considered in isolation or as a substitute for income from operations. Additionally, our presentation of~~utility gross margin may ~~not be comparable to similarly titled measures reported~~differ from similar terms used by other companies.

Table of Contents

The following ~~table reconciles~~tables summarize Evergy's utility gross margin and MWhs sold and provide a reconciliation of utility gross margin to income from ~~operations with~~operations.


	Revenues and Expenses						MWhs Sold
Three Months Ended September 30	2021		Change		2020		2021	Change	2020
Retail revenues	(millions)						(thousands)
Residential	$	677.4	$	41.0	$	636.4	5,135	322	4,813
Commercial	525.0		25.5		499.5		5,146	232	4,914
Industrial	166.0		(0.8)		166.8		2,293	20	2,273
Other retail revenues	9.2		(0.3)		9.5		32	(2)	34
Total electric retail	1,377.6		65.4		1,312.2		12,606	572	12,034
Wholesale revenues	105.0		20.0		85.0		5,883	2,376	3,507
Transmission revenues	90.3		9.6		80.7		N/A	N/A	N/A
Other revenues	43.6		3.9		39.7		N/A	N/A	N/A
Operating revenues	1,616.5		98.9		1,517.6		18,489	2,948	15,541
Fuel and purchased power	(355.8)		(39.6)		(316.2)
SPP network transmission costs	(73.6)		(7.5)		(66.1)
Utility gross margin (a)	1,187.1		51.8		1,135.3
Operating and maintenance	(265.2)		39.4		(304.6)
Depreciation and amortization	(225.0)		(7.0)		(218.0)
Taxes other than income tax	(96.2)		(5.2)		(91.0)
Income from operations	$	600.7	$	79.0	$	521.7
(a) Utility gross margin is a non-GAAP financial measure. See explanation of utility gross margin above.


	Revenues and Expenses						MWhs Sold
Year to Date September 30	2021		Change		2020		2021	Change	2020
Retail revenues	(millions)						(thousands)
Residential	$	1,533.9	$	18.3	$	1,515.6	12,556	442	12,114
Commercial	1,293.5		20.6		1,272.9		13,538	564	12,974
Industrial	449.6		2.9		446.7		6,424	253	6,171
Other retail revenues	26.1		(3.1)		29.2		98	(1)	99
Total electric retail	3,303.1		38.7		3,264.4		32,616	1,258	31,358
Wholesale revenues	662.5		466.7		195.8		13,087	2,845	10,242
Transmission revenues	266.7		28.2		238.5		N/A	N/A	N/A
Other revenues	232.3		112.0		120.3		N/A	N/A	N/A
Operating revenues	4,464.6		645.6		3,819.0		45,703	4,103	41,600
Fuel and purchased power	(1,275.0)		(442.5)		(832.5)
SPP network transmission costs	(216.8)		(19.0)		(197.8)
Utility gross margin (a)	2,972.8		184.1		2,788.7
Operating and maintenance	(800.6)		64.9		(865.5)
Depreciation and amortization	(669.5)		(11.4)		(658.1)
Taxes other than income tax	(289.0)		(14.8)		(274.2)
Income from operations	$	1,213.7	$	222.8	$	990.9
(a) Utility gross margin is a non-GAAP financial measure. See explanation of utility gross margin above.

Table of Contents

Evergy's utility gross margin ~~for the three and nine months ended September 30, 2017 and 2016.~~

Three Months Ended September 30, Nine Months Ended September 30,
2017 2016 Change % Change 2017 2016 Change % Change
(Dollars In Thousands)
Income from operations $ 259,976
$ 270,576
$ (10,600 ) (3.9 ) $ 541,437
$ 566,002
$ (24,565 ) (4.3 )
Plus: Operating and maintenance expense 79,856
86,758
(6,902 ) (8.0 ) 248,211
250,135
(1,924 ) (0.8 )
Depreciation and amortization expense 94,668
84,972
9,696
11.4
277,322
252,838
24,484
9.7
Selling, general and administrative expense 65,630
60,582
5,048
8.3
182,367
192,762
(10,395 ) (5.4 )
Taxes other than income tax 41,815
48,154
(6,339 ) (13.2 ) 126,421
145,529
(19,108 ) (13.1 )
Gross margin $ 541,945
$ 551,042
$ (9,097 ) (1.7 ) $ 1,375,758
$ 1,407,266
$ (31,508 ) (2.2 )

~~Operating Expenses and Other Income and Expense Items~~

Three Months Ended September 30, Nine Months Ended September 30,
2017 2016 Change % Change 2017 2016 Change % Change
(Dollars in Thousands)
Operating and maintenance expense $ 79,856
$ 86,758
$ (6,902 ) (8.0 ) $ 248,211
$ 250,135
$ (1,924 ) (0.8 )

~~Operating and maintenance expense decreased~~increased $51.8 million for the three months ended September 30, ~~2017,~~2021, compared to the same period in ~~2016,~~2020, driven by:

•a $41.3 million increase primarily due to higher retail sales driven by warmer weather (cooling degree days increased by 22%), partially offset by a decrease in weather-normalized residential demand;

•a $10.0 million increase related to TDC riders in 2021, primarily ~~to:~~at Evergy Kansas Central; and

•a $9.6 million increase in transmission revenue due to updated transmission costs reflected in Evergy Kansas Central's FERC TFR effective in January 2021; partially offset by

•a ~~$5.5~~$9.1 million decrease in ~~distribution operations~~revenues at Evergy Kansas Central and ~~maintenance expense~~Evergy Metro due to rate reductions beginning January 1, 2021 in Kansas to reflect their exemption from Kansas corporate income taxes.

Evergy's utility gross margin increased $184.1 million year to date September 30, 2021, compared to the same period in 2020, driven by:

•$95.0 million of non-regulated energy marketing margins recognized at Evergy Kansas Central related to the February 2021 winter weather event;

•a $72.4 million increase primarily due to ~~executing our vegetation management strategy earlier~~higher retail sales driven by favorable weather (heating degree days increased by 5% and cooling degree days increased by 14%);

•a $28.2 million increase in ~~2017;~~transmission revenue primarily due to updated transmission costs reflected in Evergy Kansas Central's FERC TFR effective in January 2021;

•a ~~$1.7~~$10.1 million increase related to TDC riders in 2021, primarily at Evergy Kansas Central; and

•a $1.6 million net increase due to other impacts from the February 2021 winter weather event driven by:

◦a $33.9 million increase at Evergy Kansas Central driven by higher utility gross margin at its non-regulated 8% ownership share of JEC due to higher wholesale sales prices and MWhs sold in February 2021; partially offset by

◦a $20.9 million decrease at Evergy Missouri West driven by $14.7 million of increased fuel and purchased power costs in February 2021 that are not currently recoverable from customers through its fuel recovery mechanism and a $6.2 million decrease related to a special requirements contract with an industrial customer; and

◦an $11.4 million decrease at Evergy Metro primarily driven by jurisdictional allocation differences currently present between its fuel recovery mechanisms in Missouri and Kansas regarding its refund to customers for the net increase in wholesale revenues in February 2021; partially offset by

•a $23.2 million decrease in ~~nuclear operating~~revenues at Evergy Kansas Central and ~~maintenance costs; and~~

~~a $1.5 million decrease in steam generation operating and maintenance costs; however,~~

~~partially offsetting these decreases was a $2.4 million increase~~Evergy Metro due to ~~the start of operation of our Western Plains Wind Farm~~rate reductions beginning January 1, 2021 in ~~March 2017.~~

Kansas to reflect their exemption from Kansas corporate income taxes.

Operating and Maintenance

Evergy's operating and maintenance expense decreased ~~for the nine months ended September 30, 2017, compared to the same period in 2016, due primarily to:~~

~~a $7.7~~$39.4 million ~~decrease in nuclear operating and maintenance costs due primarily to receiving a legal settlement for Wolf Creek; and~~

~~a $1.8 million decrease in distribution operations and maintenance expense; however,~~

~~partially offsetting these decreases was a $6.3 million increase due to the start of operation of our Western Plains Wind Farm in March 2017; and~~

~~a $1.6 million increase in steam generation operating and maintenance costs.~~

Three Months Ended September 30, Nine Months Ended September 30,
2017 2016 Change % Change 2017 2016 Change % Change
(Dollars in Thousands)
Depreciation and amortization expense $ 94,668
$ 84,972
$ 9,696
11.4 $ 277,322
$ 252,838
$ 24,484
9.7

Depreciation and amortization expense increased during the three and nine months ended September 30, 2017, compared to the same periods in 2016, due in part to the start of operation of our Western Plains Wind Farm in March 2017.

Three Months Ended September 30, Nine Months Ended September 30,
2017 2016 Change % Change 2017 2016 Change % Change
(Dollars in Thousands)
Selling, general and administrative expense $ 65,630
$ 60,582
$ 5,048
8.3 $ 182,367
$ 192,762
$ (10,395 ) (5.4 )

~~Selling, general and administrative expense increased during the three months ended September 30, 2017, compared to the same period in 2016, due primarily to:~~

•~~an increase of merger-related expenses of $5.9 million; however,~~

~~partially offsetting this increase was a decrease in outside services of $1.8 million.~~

~~Selling, general and administrative expense decreased during the nine months ended September 30, 2017, compared to the same period in 2016, due primarily to:~~

•~~a decrease in outside services of $5.0 million;~~

•~~a decrease in employee benefit costs of $2.0 million attributable partially to our having fewer employees; and~~

•~~a decrease of merger-related expenses of $1.2 million.~~

Three Months Ended September 30, Nine Months Ended September 30,
2017 2016 Change % Change 2017 2016 Change % Change
(Dollars in Thousands)
Taxes other than income tax $ 41,815
$ 48,154
$ (6,339 ) (13.2 ) $ 126,421
$ 145,529
$ (19,108 ) (13.1 )

Taxes other than income tax decreased for the three and nine months ended September 30, 2017, compared to the same periods in 2016, due primarily to a decrease of $6.3 million and $18.9 million, respectively, in property tax expense amortization. This represents the amortization of the regulatory asset comprised of actual costs incurred for property taxes in the prior year in excess of amounts collected in our prices in the prior year. These decreases are mostly offset in retail revenues.

Three Months Ended September 30, Nine Months Ended September 30,
2017 2016 Change % Change 2017 2016 Change % Change
(Dollars in Thousands)
Other income $ 3,849
$ 13,353
$ (9,504 ) (71.2 ) $ 5,672
$ 26,212
$ (20,540 ) (78.4 )

~~Other income decreased for the three and nine months ended September 30, 2017, compared to the same periods in 2016, due primarily to:~~

•~~our having recorded $10.1 million and $16.7 million, respectively, less in COLI benefits; and~~

•~~a decrease in equity AFUDC of $2.3 million and $6.8 million, respectively, however,~~

~~partially offsetting these decreases was an increase of $3.5 million related to the deconsolidation of the trust holding our 8% interest in JEC.~~

Three Months Ended September 30, Nine Months Ended September 30,
2017 2016 Change % Change 2017 2016 Change % Change
(Dollars in Thousands)
Interest expense $ 43,458
$ 40,897
$ 2,561
6.3 $ 128,232
$ 121,011
$ 7,221
6.0

~~Interest expense increased~~ for the three months ended September 30, ~~2017,~~2021, compared to the same period in ~~2016,~~2020, primarily driven by:

•a $28.7 million decrease in voluntary severance expenses due ~~primarily~~ to a $28.3 million decrease at Evergy Kansas Central, Evergy Metro and Evergy Missouri West related to Evergy voluntary exit programs in 2020 and a $0.4 million decrease in ~~debt AFUDC~~voluntary severance expenses incurred at Evergy Kansas Central and Evergy Metro related to Wolf Creek voluntary exit programs in 2020;

•an $8.5 million decrease in advisor expenses incurred in the third quarter of ~~$1.3 million. Interest~~2021 associated with strategic planning; and

•a $3.0 million decrease in various transmission and distribution operating and maintenance expenses primarily due to lower labor and contractor costs primarily driven by a higher mix of transmission capital projects in the third quarter of 2021; partially offset by

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•$3.3 million of costs associated with executive transition in the third quarter of 2021, including severance agreements and other transition expenses; and

•$1.9 million of costs at Evergy Kansas Central related to non-regulated energy marketing margins recognized related to the February 2021 winter weather event.

Evergy's operating and maintenance expense ~~increased for the nine months ended~~decreased $64.9 million year to date September 30, ~~2017,~~2021, compared to the same period in ~~2016,~~2020, primarily driven by:

•a $52.5 million decrease in voluntary severance expenses due to a $45.5 million decrease at Evergy Kansas Central, Evergy Metro and Evergy Missouri West related to Evergy voluntary exit programs in 2020 and a $7.0 million decrease in voluntary severance expenses incurred at Evergy Kansas Central and Evergy Metro related to Wolf Creek voluntary exit programs in 2020;

•a $17.7 million decrease in advisor expenses incurred in 2021 associated with strategic planning;

•a $10.4 million decrease in various transmission and distribution operating and maintenance expenses primarily due to lower labor and contractor costs primarily driven by a higher mix of transmission capital projects in 2021; and

•a $7.9 million decrease in credit loss expense at Evergy Kansas Central, Evergy Metro and Evergy Missouri West primarily due to increases made to the allowance for credit losses in 2020 related to the economic slowdown resulting from the COVID-19 pandemic and a lower level of write-offs in 2021; partially offset by

•$10.6 million of costs associated with executive transition in 2021, including inducement bonuses, severance agreements and other transition expenses;

•a $6.6 million increase in plant operating and maintenance expense at fossil-fuel generating units primarily due to an $8.0 million increase at Evergy Kansas Central primarily driven by a major maintenance outage at JEC in 2021;

•$5.9 million of costs at Evergy Kansas Central related to non-regulated energy marketing margins recognized during the February 2021 winter weather event; and

•a $2.7 million increase in ~~interest~~property insurance expense ~~on long-term debt~~due to a lower annual refund of ~~$5.1~~nuclear insurance premiums received by Evergy Kansas Central and Evergy Metro in 2021 related to their ownership interests in Wolf Creek.

Depreciation and Amortization

Evergy's depreciation and amortization increased $7.0 million ~~primarily as a result of the issuance of FMBs during March 2017 and a decrease in debt AFUDC of $2.9 million.~~

Three Months Ended September 30, Nine Months Ended September 30,
2017 2016 Change % Change 2017 2016 Change % Change
(Dollars in Thousands)
Income tax expense $ 55,743
$ 81,211
$ (25,468 ) (31.4 ) $ 112,559
$ 160,376
$ (47,817 ) (29.8 )

~~Income tax expense decreased~~ for the three ~~and nine~~ months ended September 30, ~~2017,~~2021 and $11.4 million year to date September 30, 2021, compared to the same periods in ~~2016,~~2020; primarily driven by higher capital additions at Evergy Kansas Central in 2021.

Taxes Other Than Income Tax

Evergy's taxes other than income tax increased $5.2 million for the three months ended September 30, 2021 and $14.8 million year to date September 30, 2021, compared to the same periods in 2020; driven by an increase in property taxes in Missouri and Kansas primarily due to higher assessed property tax values.

Other Income (Expense), Net

Evergy's other expense, net decreased $11.9 million for the three months ended September 30, 2021, compared to the same period in 2020, primarily ~~to:~~driven by:

•a $7.1 million decrease due to higher investment earnings primarily driven by a $5.2 million realized gain from the sale of an equity investment in the third quarter of 2021; and

•$3.0 million of other income recorded in 2021 related to a ~~reduction~~contract termination fee.

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Evergy's other expense, net decreased $33.5 million year to date September 30, 2021, compared to the same period in 2020, primarily driven by:

•a $14.8 million decrease due to higher investment earnings primarily driven by a $5.2 million realized gain from the sale of an equity investment in the third quarter of 2021 and a $10.5 million increase in unrealized gains from equity investments in 2021;

•a $10.9 million decrease due to higher Evergy Kansas Central and Evergy Metro equity AFUDC primarily driven by higher construction work in progress balances at Evergy Kansas Central and Evergy Metro and a lower short-term debt balance at Evergy Metro in 2021;

•$6.1 million of other income recorded in 2021 related to contract termination fees; and

•a $1.6 million decrease due to recording higher Evergy Kansas Central corporate-owned life insurance (COLI) benefits in 2021.

Interest Expense

Evergy's interest expense decreased $9.1 million year to date September 30, 2021, compared to the same period in 2020, primarily driven by:

•an $8.8 million decrease primarily due to lower weighted-average interest rates on short-term borrowings at Evergy Kansas Central and Evergy Metro and lower commercial paper balances at Evergy Metro in 2021;

•an $8.4 million decrease due to the redemption of Evergy's $350.0 million of 4.85% Senior Notes in April 2021; and

•a $2.1 million net decrease due to the redemption of Evergy Kansas Central's $250.0 million of 5.10% FMBs in May 2020, which decreased interest expense by $6.8 million, partially offset by a $4.7 million increase due to the issuance of Evergy Kansas Central's $500.0 million of 3.45% FMBs in April 2020; partially offset by

•a $6.6 million increase due to the issuance in a private placement of Evergy Missouri West's $500.0 million of Series A, B and C Senior Notes in April 2021; and

•a $3.6 million increase due to the issuance of Evergy Metro's $400.0 million of 2.25% Mortgage Bonds in May 2020.

Income Tax Expense

Evergy's income tax expense increased $7.2 million for the three months ended September 30, 2021, compared to the same period in 2020, primarily driven by:

•a $21.8 million increase due to higher Evergy Kansas Central and Evergy Metro pre-tax income in the third quarter of ~~$9.2~~2021;

•a $5.0 million increase due to lower wind and ~~$20.1 million, respectively, from lower~~other income ~~before income taxes;~~

~~an increase of $5.1 million and $16.6 million, respectively, in tax benefits from production~~ tax credits ~~largely~~in the third quarter of 2021; and

•a $1.3 million increase due to higher non-deductible officer compensation in 2021; partially offset by

•a $15.3 million decrease as a result of the state of Kansas exempting certain public utilities, including Evergy Kansas Central and Evergy Metro, from ~~placing the Western Plains Wind Farm~~Kansas corporate income tax beginning in ~~service;~~January 2021; and

~~a favorable~~•an $8.3 million decrease due to flow-through items primarily driven by higher amortization of excess deferred income taxes at Evergy Kansas Central.

Evergy's income tax ~~true-up of $7.6~~expense increased $6.0 million ~~related~~year to ~~plant differences.~~

~~FINANCIAL CONDITION~~

~~A number of factors affected amounts recorded on our balance sheet as of~~date September 30, ~~2017,~~2021, compared to ~~December 31, 2016.~~the same period in 2020, primarily driven by:

•a $69.6 million increase due to higher Evergy Kansas Central and Evergy Metro pre-tax income in 2021;

•a $2.5 million increase due to higher non-deductible officer compensation in 2021; and

•a $2.5 million increase due to lower wind and other income tax credits in 2021; partially offset by

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As of As of
September 30, 2017 December 31, 2016 Change % Change
(Dollars in Thousands)
Property, plant and equipment of variable interest entities, net $ 178,058
$ 257,904
$ (79,846 ) (31.0 )

~~Property, plant and equipment of variable interest entities, net decreased due primarily to deconsolidating the trust holding our 8% interest in JEC. See Note 14~~•a $34.2 million decrease as a result of the ~~Notes to Condensed Consolidated Financial Statements, “Variable Interest Entities” for additional information.~~state of Kansas exempting certain public utilities, including Evergy Kansas Central and Evergy Metro, from Kansas corporate income tax beginning in January 2021;

As of As of
September 30, 2017 December 31, 2016 Change % Change
(Dollars in Thousands)
Regulatory assets $ 843,711
$ 879,862
$ (36,151 ) (4.1 )
Regulatory liabilities 251,133
239,453
11,680
4.9
Net regulatory assets $ 592,578
$ 640,409
$ (47,831 ) (7.5 )

~~Total regulatory assets decreased due primarily to the following items:~~

•a ~~$25.7~~$22.3 million decrease indue to flow-through items primarily driven by higher amortization of excess deferred ~~employee benefit costs;~~

~~a $12.2 million decrease in amounts collected from our customers for the deferred cost of fuel and purchased power;~~

~~a $11.2 million decrease in amounts due from customers for future income taxes; and~~

~~a $10.5 million decrease in amounts deferred for Wolf Creek refueling and maintenance outages; however,~~

~~partially offsetting these decreases was spending $20.9 million more than collected for the cost to remove retired plant assets; and~~

~~a $15.9 million increase in AROs. See Note 12 of the Notes to Condensed Consolidated Financial Statements, “Asset Retirement Obligations,” for additional information.~~

~~Total regulatory liabilities increased due primarily to a $29.8 million increase in the fair value of the NDT. This increase was partially offset by the following items:~~

~~approximately $10.0 million for accreting the Wolf Creek ARO and depreciating the capitalized Wolf Creek asset retirement cost;~~

~~spending $5.7 million more than collected for the cost to remove retired plant assets; and~~

~~amortizing $4.1 million of a deferred regulatory gain from a sale-leaseback of Unit 2 of the La Cygne generating station.~~

As of As of
September 30, 2017 December 31, 2016 Change % Change
(Dollars in Thousands)
Short-term debt $ 189,100
$ 366,700
$ (177,600 ) (48.4 )

Short-term debt decreased due primarily to Westar Energy issuing $300.0 million in principal amount of FMBs, the proceeds for which were used to repay a portion of commercial paper borrowings, and us retiring $125.0 million in principal amount of FMBs. See Note 7 of the Notes to Condensed Consolidated Financial Statements, “Debt Financing” for additional information. Partially offsetting the decrease was issuances of commercial paper primarily used to fund capital expenditures.

As of As of
September 30, 2017 December 31, 2016 Change % Change
(Dollars in Thousands)
Current maturities of long-term debt $ —
$ 125,000
$ (125,000 ) (100.0 )
Long-term debt, net 3,686,852
3,388,670
298,182
8.8
Total long-term debt $ 3,686,852
$ 3,513,670
$ 173,182
4.9

In 2017, Westar Energy issued $300.0 million in principal amount of FMBs and retired $125.0 million in principal amount of FMBs. See Note 7 of the Notes to Condensed Consolidated Financial Statements, “Debt Financing” for additional information.

As of As of
September 30, 2017 December 31, 2016 Change % Change
(Dollars in Thousands)
Current maturities of long-term debt of variable interest entities $ 28,534
$ 26,842
$ 1,692
6.3
Long-term debt of variable interest entities 81,433
111,209
(29,776 ) (26.8 )
Total long-term debt of variable interest entities $ 109,967
$ 138,051
$ (28,084 ) (20.3 )

Total long-term debt of VIEs decreased due primarily to the VIE that holds the La Cygne leasehold interests having made principal payments totaling $26.8 million. See Note 14 of the Notes to Condensed Consolidated Financial Statements, “Variable Interest Entities,” for additional information.

As of As of
September 30, 2017 December 31, 2016 Change % Change
(Dollars in Thousands)
Deferred income taxes $ 1,866,583
$ 1,752,776
$ 113,807
6.5

~~Deferred~~ income taxes ~~increased due primarily to the use of bonus~~at Evergy Kansas Central; and ~~accelerated depreciation methods for income tax purposes.~~

As of As of
September 30, 2017 December 31, 2016 Change % Change
(Dollars in Thousands)
Asset retirement obligations $ 397,505
$ 323,951
$ 73,554
22.7

~~AROs increased due primarily to revisions for asbestos and nuclear decommissioning of $25.2~~•a $13.8 million ~~and $19.4 million, respectively, and a new obligation estimated at $13.5 million~~decrease related to the ~~completion~~revaluation of ~~Western Plains Wind Farm. See Note 12~~deferred income tax assets and liabilities in the second quarter of 2020 due to the ~~Notes to Condensed Consolidated Financial Statements, “Asset Retirement Obligations” for additional information.~~change in the Kansas corporate income tax rate.

LIQUIDITY AND CAPITAL RESOURCES

~~Overview~~

~~Available sources of funds to operate our business include internally generated~~Evergy relies primarily upon cash from operations, short-term borrowings, under Westar Energy’s commercial paper program and revolving credit facilities and access to capital markets. We expect to meet our day-to-day cash requirements including, among other items, fuel and purchased power, dividends, interest payments, income taxes and pension contributions, using primarily internally generated cash and short-term borrowings. To meet the cash requirements for our capital investments, we expect to use internally generated cash, short-term borrowings, and proceeds from the issuance of debt and equity ~~securities in the~~issuances and its existing cash and cash equivalents to fund its capital ~~markets. When such balances are~~requirements. Evergy's capital requirements primarily consist of ~~sufficient size~~capital expenditures, payment of contractual obligations and it makes economic sense to do so, we also use proceeds from the issuance of long-term debt and equity securities to repay short-term borrowings, which are principally related to investments in capital equipmentother commitments, and the ~~redemption~~payment of ~~bonds~~dividends to shareholders. See the Evergy Companies' combined 2020 Form 10-K for more information on Evergy's sources and for working capital and general corporate purposes. Uncertainties affecting our ability to meet cash requirements include, among others, factors affecting revenues described in “—Operating Results” above, economic conditions, regulatory actions, compliance with environmental regulations and conditions in the capital markets.uses of cash.

Short-Term Borrowings

As of September 30, 2021, Evergy had $1.9 billion of available borrowing capacity under its master credit facility. The available borrowing capacity under the master credit facility consisted of $410.3 million for Evergy, Inc., $513.9 million for Evergy Kansas Central, $350.0 million for Evergy Metro and $604.5 million for Evergy Missouri West. The Evergy Companies' borrowing capacity under the master credit facility also supports their issuance of commercial paper. See Note 7 to the consolidated financial statements for more information regarding the master credit facility. Along with cash flows from operations and receivable sales facilities, Evergy generally uses borrowings under its master credit facility and the issuance of commercial paper to meet its day-to-day cash flow requirements. Evergy believes that its existing cash on hand and available borrowing capacity under its master credit facility provide sufficient liquidity for its existing capital requirements.

~~Westar Energy maintains~~In May 2021, Evergy, Inc. established a commercial paper program ~~pursuant to which it may issue commercial paper up to a maximum aggregate amount outstanding at any one time of $1.0 billion. This program is~~ supported by its borrowing capacity under the master credit facility.

Significant Debt Issuances

See Note 8 to the consolidated financial statements for information regarding significant debt issuances.

Equity Issuance

See Note 12 to the consolidated financial statements for information regarding Evergy's securities purchase agreement with an affiliate of Bluescape to purchase Evergy's common stock and ~~cannot exceed~~a warrant that was completed in April 2021.

Shelf Registration Statements and Regulatory Authorizations

Evergy

In September 2021, Evergy filed an automatic shelf registration statement providing for the ~~capacity available under Westar Energy’s revolving credit facilities. Maturities~~sale of ~~commercial paper issuances may~~unlimited amounts of securities with the SEC, which expires in September 2024.

Evergy Kansas Central

In September 2021, Evergy Kansas Central filed an automatic shelf registration statement providing for the sale of unlimited amounts of unsecured debt and first mortgage bonds (FMBs) with the SEC, which expires in September 2024.

Evergy Metro

In September 2021, Evergy Metro filed an automatic shelf registration statement providing for the sale of unlimited amounts of notes and mortgage bonds with the SEC, which expires in September 2024.

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Capital Expenditures

Evergy requires significant capital investments and expects to need cash for utility construction programs designed to improve and expand facilities related to providing electric service, which include, but are not ~~exceed 365 days from~~limited to, expenditures to develop new transmission lines and improvements to power plants, transmission and distribution lines and equipment.

Capital expenditures projected for the ~~date~~next five years, excluding AFUDC and including costs of ~~issuance and proceeds from such issuances will be used to temporarily fund~~removal, are detailed in the following table, which updates the projected capital expenditures table disclosed under "Management's Discussion and Analysis - Liquidity and Capital Resources - Capital Requirements - Capital Expenditures" in Evergy's 2020 Form 10-K. This capital expenditure plan is subject to ~~redeem debt on an interim basis, for working capital and/or for other general corporate purposes. As~~continual review and change.


		2021		2022		2023		2024		2025
	(millions)
Generating facilities - new renewable generation		$	—	$	—	$	253.0	$	450.0	$	750.0
Generating facilities - other		346.0		326.0		285.0		200.0		236.0
Transmission facilities		643.0		650.0		617.0		649.0		601.0
Distribution facilities		667.0		726.0		571.0		528.0		574.0
General facilities		297.0		314.0		267.0		228.0		256.0
Total capital expenditures		$	1,953.0	$	2,016.0	$	1,993.0	$	2,055.0	$	2,417.0

Pensions

Year to date September 30, 2021, Evergy made pension contributions of ~~October 25, 2017, Westar Energy had $167.2~~$41.7 million. Evergy expects to make additional pension contributions of $68.2 million ~~of commercial paper issued~~in 2021 to satisfy ERISA funding requirements and ~~outstanding.~~

~~Westar Energy has two revolving credit facilities in the amounts of $730.0 million~~KCC and ~~$270.0 million. The $730.0 million facility will expire in September 2019, $20.7 million~~MPSC rate orders, of which ~~expired~~$11.1 million is expected to be paid by Evergy Kansas Central and $57.1 million is expected to be paid by Evergy Metro. Also in September 2017. The $270.0 million credit facility will expire in February 2018. As long as there is no default under the facilities, the $730.0 million and $270.0 million facilities may be extended an2021, Evergy expects to make additional ~~year and the aggregate amount~~post-retirement benefit contributions of borrowings under the $730.0 million and $270.0 million facilities may be increased to $1.0 billion and $400.0 million, respectively, subject to lender participation. All borrowings under the facilities are secured by KGE FMBs. Total combined borrowings under the revolving credit facilities and the commercial paper program may not exceed $1.0 billion at any given time. As of October 25, 2017, no amounts were borrowed and $11.8 million in letters of credit had been issued under the $730.0 million facility. No amounts were borrowed and no letters of credit were issued under the $270.0 million facility as of the same date.

~~Long-Term Debt Financing~~

~~In January 2017, Westar Energy retired $125.0 million in principal amount of FMBs bearing a stated interest at 5.15% maturing January 2017.~~

~~In March 2017, Westar Energy issued $300.0 million in principal amount of FMBs bearing a stated interest at 3.10% and maturing April 2027.~~

$3.7 million.

Debt Covenants

~~We were~~As of September 30, 2021, Evergy was in compliance with ~~our~~all debt covenants ~~as of September 30, 2017.~~

~~Impact of Credit Ratings on Debt Financing~~

Moody’s and S&P are independent credit-rating agencies that rate our debt securities. These ratings indicate each agency’s assessment of our ability to pay interest and principal when due on our securities.

In general, more favorable credit ratings increase borrowing opportunities and reduce the cost of borrowing. Under Westar Energy’s revolving credit facilities and commercial paper program, our cost of borrowings is determined in part by credit ratings. However, Westar Energy’s ability to borrow under the master credit ~~facilities~~facility and ~~commercial paper program are not conditioned on maintaining a particular credit rating. We may enter into new credit agreements~~certain debt instruments that contain ~~credit rating conditions, which could affect our liquidity and/or our borrowing costs.~~restrictions that require the maintenance of certain capitalization and leverage ratios. See Note 7 to the consolidated financial statements for more information.

Off-Balance Sheet Arrangements

Factors that impact our credit ratings include a combination of objective and subjective criteria. Objective criteria include typical financial ratios, such as funds from operations to total debt and operating cash flow to debt, among others, future capital expenditures and our access to liquidity including committed lines of credit. Subjective criteria include such items as the quality and credibility of management, the political and regulatory environment we operate in and an assessment of our governance and risk management practices.

~~As of October 25, 2017, our ratings with the agencies are as shown~~Evergy's off-balance sheet arrangements were reported in the ~~table below.~~Evergy Companies' combined 2020 Form 10-K. See Note 8 to the consolidated financial statements for information regarding Evergy's agreement to unconditionally guarantee certain series of Evergy Missouri West long-term debt in April 2021.



	~~Westar~~ ~~Energy~~ ~~First~~ ~~Mortgage~~ ~~Bond~~ ~~Rating~~	~~KGE~~ ~~First~~ ~~Mortgage~~ ~~Bond~~ ~~Rating~~	~~Westar Energy Commercial Paper~~	~~Rating~~ ~~Outlook~~
~~Moody’s~~	A2	A2	~~P-2~~	~~Stable~~
~~S&P (a)~~	A	A	~~A-2~~	~~Positive~~

~~_______________~~


~~(a)~~	In July 2017, following the public announcement of the amended and restated agreement and plan of merger with Great Plains Energy, S&P revised its outlook for Westar Energy and KGE to positive from negative, pending the outcome of the merger.

~~Summary of~~ Cash Flows

The following table presents Evergy's cash flows from operating, investing and financing activities.



Year to Date September 30	2021		2020
	(millions)
Cash Flows from Operating Activities	$	1,036.0	$	1,421.7
Cash Flows used in Investing Activities	(1,349.1)		(1,029.9)
Cash Flows from (used in) Financing Activities	193.5		(53.4)

Nine Months Ended September 30,
2017 2016 Change % Change
(Dollars In Thousands)
Cash flows from (used in):
Operating activities $ 742,322
$ 692,573
$ 49,749
7.2
Investing activities (581,009 ) (815,018 ) 234,009
28.7
Financing activities (160,991 ) 123,151
(284,142 ) (230.7 )
Net change in cash and cash equivalents $ 322
$ 706
$ (384 ) (54.4 )

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Cash Flows from Operating Activities

~~Cash~~Evergy's cash flows from operating activities ~~increased due principally~~decreased $385.7 million year to ~~our having received $39.9 million more for wholesale power sales and transmission services, receiving a $13.0 million refund for income taxes~~date September 30, 2021, compared to ~~paying $13.0 million for~~ the same period in ~~2016,~~2020, primarily driven by:

•$371.8 million of cash payments for net fuel and ~~paying $8.0 million less for coal and natural gas. Partially offsetting these increases was our paying $22.8 million more in~~ purchased power costs during the February 2021 winter weather event;

•a $97.4 million increase in cash payments in 2021 due to the timing of payments made to taxing authorities for property tax payments as well as various suppliers and ~~transmission services.~~other service providers for goods and services purchased in the ordinary course of business; and

•$34.8 million in payments made for a Wolf Creek refueling outage in 2021; partially offset by

•a $124.5 million increase in cash receipts for retail electric sales in 2021 primarily driven by favorable weather; and

•$89.2 million of cash receipts related to non-regulated energy marketing margins earned during the February 2021 winter weather event.

Cash Flows used in Investing Activities

~~Cash~~Evergy's cash flows used in investing activities ~~decreased due~~increased $319.2 million year to date September 30, 2021, compared to the same period in 2020, primarily ~~to our having invested $257.3~~driven by:

•a $336.6 million ~~less~~increase in additions to property, plant and equipment due to increases at Evergy Kansas Central, Evergy Metro and Evergy Missouri West of $111.2 million, $89.5 million and $134.9 million, respectively, primarily due to increased spending for a variety of capital projects including transmission and distribution projects related to grid resiliency and other infrastructure improvements; partially offset by

•an increase of $15.7 million in proceeds from COLI investments at Evergy Kansas Central due to a higher number of policy settlements in 2021.

Cash Flows from (used in) Financing Activities

Evergy's cash flows from financing activities increased $246.9 million year to date September 30, 2021, compared to the same period in 2020, primarily driven by:

•a $663.5 million increase in short-term debt borrowings primarily driven by:

◦a $433.2 million increase at Evergy Kansas Central primarily due to an increase in cash capital expenditures in 2021 of $111.2 million and the repayment of $249.2 million of outstanding commercial paper in 2020; and

◦a $122.9 million increase at Evergy Missouri West primarily due to an increase in cash capital expenditures in 2021 of $134.9 million; and

•$112.5 million of Evergy common stock issued in April 2021 pursuant to a securities purchase agreement with an affiliate of Bluescape; partially offset by

•a $392.0 million decrease in proceeds from long-term debt, net due to Evergy Kansas Central's issuance of $500.0 million of 3.45% FMBs in April 2020 and Evergy Metro's issuance of $400.0 million of 2.25% Mortgage Bonds in May 2020; partially offset by Evergy Missouri West's issuance of $500.0 million of Series A, B and C Senior Notes in April 2021;

•a $100.0 million increase in retirements of long-term debt, net due to Evergy's repayment of $350.0 of 4.85% Senior Notes in April 2021; partially offset by Evergy Kansas Central's repayment of $250.0 million of 5.10% FMBs in May 2020; and

•a $9.6 million increase in the repayment of borrowings against cash surrender value of corporate-owned life insurance primarily due to a higher number of policy settlements in 2021.

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EVERGY KANSAS CENTRAL, INC.

MANAGEMENT'S NARRATIVE ANALYSIS OF RESULTS OF OPERATIONS

The below results of operations and related discussion for Evergy Kansas Central is presented in a reduced disclosure format in accordance with General Instruction (H)(2)(a) to Form 10-Q.

The following table summarizes Evergy Kansas Central's comparative results of operations.


Year to Date September 30	2021		Change		2020

	(millions)
Operating revenues	$	2,277.4	$	412.9	$	1,864.5
Fuel and purchased power	543.7		213.8		329.9
SPP network transmission costs	216.8		19.0		197.8
Operating and maintenance	387.9		11.6		376.3
Depreciation and amortization	349.1		10.1		339.0
Taxes other than income tax	153.2		8.1		145.1
Income from operations	626.7		150.3		476.4
Other expense, net	(2.4)		9.8		(12.2)
Interest expense	120.2		(7.5)		127.7
Income tax expense	45.7		(103.5)		149.2
Equity in earnings of equity method investees, net of income taxes	3.0		(0.4)		3.4
Net income	461.4		270.7		190.7
Less: Net income attributable to noncontrolling interests	9.1		0.4		8.7
Net income attributable to Evergy Kansas Central, Inc.	$	452.3	$	270.3	$	182.0

Evergy Kansas Central Utility Gross Margin and MWh Sales

The following table summarizes Evergy Kansas Central's utility gross margin and MWhs sold and provides a reconciliation of utility gross margin to income from operations.


	Revenues and Expenses						MWhs Sold

Year to Date September 30	2021		Change		2020		2021	Change	2020
Retail revenues	(millions)						(thousands)
Residential	$	657.3	$	29.8	$	627.5	5,259	149	5,110
Commercial	536.8		25.8		511.0		5,467	201	5,266
Industrial	293.0		8.4		284.6		4,106	195	3,911
Other retail revenues	12.9		(0.4)		13.3		30	(1)	31
Total electric retail	1,500.0		63.6		1,436.4		14,862	544	14,318
Wholesale revenues	402.7		234.6		168.1		7,906	2,131	5,775
Transmission revenues	241.5		26.3		215.2		N/A	N/A	N/A
Other revenues	133.2		88.4		44.8		N/A	N/A	N/A
Operating revenues	2,277.4		412.9		1,864.5		22,768	2,675	20,093
Fuel and purchased power	(543.7)		(213.8)		(329.9)
SPP network transmission costs	(216.8)		(19.0)		(197.8)
Utility gross margin (a)	1,516.9		180.1		1,336.8
Operating and maintenance	(387.9)		(11.6)		(376.3)
Depreciation and amortization	(349.1)		(10.1)		(339.0)
Taxes other than income tax	(153.2)		(8.1)		(145.1)
Income from operations	$	626.7	$	150.3	$	476.4

(a)Utility gross margin is a non-GAAP financial measure. See explanation of utility gross margin under Evergy's Results of Operations.

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Evergy Kansas Central's utility gross margin increased $180.1 million year to date September 30, 2021, compared to the same period in 2020, driven by:

•$95.0 million of non-regulated energy marketing margins recognized during the February 2021 winter weather event;

•a $33.9 million increase due to other impacts from the February 2021 winter weather event driven by higher utility gross margin at Evergy Kansas Central's non-regulated 8% ownership share of JEC due to higher wholesale sales prices and MWhs sold in February 2021;

•a $27.1 million increase primarily due to higher retail sales driven by favorable weather (heating degree days increased by 8% and cooling degree days increased by 5%) and an increase in weather-normalized commercial and industrial demand partially offset by a decrease in weather-normalized residential demand;

•a $26.4 million increase in transmission revenue primarily due to updated transmission costs reflected in Evergy Kansas Central's FERC TFR effective in January 2021; and

•a $14.3 million increase related to Evergy Kansas Central's TDC rider in 2021; partially offset by

•a $16.6 million decrease in revenues due to rate reductions beginning January 1, 2021 in Kansas to reflect the exemption of Evergy Kansas Central from Kansas corporate income taxes.

Evergy Kansas Central Operating and Maintenance

Evergy Kansas Central's operating and maintenance expense increased $11.6 million year to date September 30, 2021, compared to the same period in 2020, primarily driven by:

•a $15.7 million increase in various administrative and general operating and maintenance expenses primarily driven by an increase in costs billed for common use assets from Evergy Metro in 2021 primarily related to software assets placed into service in the ~~completion~~third quarter of ~~construction~~2020;

•an $8.0 million increase in plant operating and maintenance expense at fossil-fuel generating units primarily driven by a major maintenance outage at JEC in 2021;

•$7.3 million of ~~Western Plains Wind Farm;~~costs associated with executive transition in 2021, including inducement bonuses, severance agreements and other transition expenses;

•$5.9 million of costs related to non-regulated energy marketing margins recognized during the February 2021 winter weather event; and

•a $1.4 million increase in property insurance expense due to a lower annual refund of nuclear insurance premiums received by Evergy Kansas Central in 2021 related to its ownership interest in Wolf Creek; partially offset by ~~our having~~

•a $25.6 million decrease in voluntary severance expenses due to a $22.1 million decrease related to Evergy voluntary exit programs in 2020 and a $3.5 million decrease in voluntary severance expenses related to Wolf Creek voluntary exit programs in 2020; and

•a $3.7 million decrease in credit loss expense primarily due to increases made to the allowance for credit losses in 2020 related to the economic slowdown resulting from the COVID-19 pandemic and a lower level of write-offs in 2021.

Evergy Kansas Central Depreciation and Amortization

Evergy Kansas Central's depreciation and amortization expense increased $10.1 million year to date September 30, 2021, compared to the same period in 2020, primarily driven by higher capital additions in 2021.

Evergy Kansas Central Other Income (Expense), Net

Evergy Kansas Central's other expense, net decreased $9.8 million year to date September 30, 2021, compared to the same period in 2020, primarily driven by:

•a $5.8 million decrease due to higher equity AFUDC primarily driven by higher construction work in progress balances in 2021;

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•$2.8 million of other income recorded in 2021 related to contract termination fees; and

•a $1.6 million decrease due to recording higher COLI benefits in 2021.

Evergy Kansas Central Interest Expense

Evergy Kansas Cental's interest expense decreased $7.5 million year to date September 30, 2021, compared to the same period in 2020, primarily driven by:

•a $5.3 million decrease primarily due to lower weighted-average interest rates on short-term borrowings in 2021; and

Evergy Kansas Central Income Tax Expense

Evergy Kansas Central's income tax expense decreased $103.5 million year to date September 30, 2021, compared to the same period in 2020, primarily driven by:

•a $109.0 million decrease related to the revaluation of deferred income tax assets and liabilities in the second quarter of 2020 due to the change in the Kansas corporate income tax rate;

•a $19.3 million decrease as a result of the state of Kansas exempting certain public utilities, including Evergy Kansas Central, from Kansas corporate income tax beginning in January 2021;

•a $17.6 million decrease due to flow-through items primarily driven by higher amortization of excess deferred income taxes; and

•a $2.8 million decrease due to higher wind and other income tax credits in 2021; partially offset by

•a $44.4 million increase due to higher pre-tax income in 2021.

EVERGY METRO, INC.

MANAGEMENT'S NARRATIVE ANALYSIS OF RESULTS OF OPERATIONS

The below results of operations and related discussion for Evergy Metro is presented in a reduced disclosure format in accordance with General Instruction (H)(2)(a) to Form 10-Q.

The following table summarizes Evergy Metro's comparative results of operations.



Year to Date September 30	2021		Change		2020
	(millions)
Operating revenues	$	1,526.7	$	198.4	$	1,328.3
Fuel and purchased power	489.3		183.3		306.0
Operating and maintenance	262.1		(43.6)		305.7
Depreciation and amortization	238.3		(5.3)		243.6
Taxes other than income tax	97.2		4.8		92.4
Income from operations	439.8		59.2		380.6
Other expense, net	(9.6)		4.2		(13.8)
Interest expense	83.2		(2.3)		85.5
Income tax expense	43.7		38.6		5.1
Net income	$	303.3	$	27.1	$	276.2

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Evergy Metro Utility Gross Margin and MWh Sales

The following table summarizes Evergy Metro's utility gross margin and MWhs sold and provides a reconciliation of utility gross margin to income from operations.


	Revenues and Expenses						MWhs Sold
Year to Date September 30	2021		Change		2020		2021	Change	2020

Retail revenues	(millions)						(thousands)
Residential	$	550.6	$	(21.6)	$	572.2	4,412	163	4,249
Commercial	542.5		(15.6)		558.1		5,572	212	5,360
Industrial	91.9		(7.7)		99.6		1,249	(30)	1,279
Other retail revenues	7.7		(1.2)		8.9		53	(1)	54
Total electric retail	1,192.7		(46.1)		1,238.8		11,286	344	10,942
Wholesale revenues	237.3		220.6		16.7		4,958	1,268	3,690
Transmission revenues	12.8		2.4		10.4		N/A	N/A	N/A
Other revenues	83.9		21.5		62.4		N/A	N/A	N/A
Operating revenues	1,526.7		198.4		1,328.3		16,244	1,612	14,632
Fuel and purchased power	(489.3)		(183.3)		(306.0)
Utility gross margin (a)	1,037.4		15.1		1,022.3
Operating and maintenance	(262.1)		43.6		(305.7)
Depreciation and amortization	(238.3)		5.3		(243.6)
Taxes other than income tax	(97.2)		(4.8)		(92.4)
Income from operations	$	439.8	$	59.2	$	380.6

(a)Utility gross margin is a non-GAAP financial measure. See explanation of utility gross margin under Evergy's Results of Operations.

Evergy Metro's utility gross margin increased $15.1 million year to date September 30, 2021, compared to the same period in 2020, driven by:

•a $33.1 million increase primarily due to higher retail sales driven by favorable weather (heating degree days increased by 2% and cooling degree days increased by 22%), partially offset by a decrease in weather-normalized residential and industrial demand; partially offset by

•an $11.4 million decrease due to impacts from the February 2021 winter weather event primarily driven by jurisdictional allocation differences currently present between Evergy Metro's fuel recovery mechanisms in Missouri and Kansas regarding its refund to customers for the net increase in wholesale revenues in February 2021; and

•a $6.6 million decrease in revenues due to a rate reduction beginning January 1, 2021 in Kansas to reflect Evergy Metro's exemption from Kansas corporate income taxes.

Evergy Metro Operating and Maintenance

Evergy Metro's operating and maintenance expense decreased $43.6 million year to date September 30, 2021, compared to the same period in 2020, primarily driven by:

•a $19.8 million decrease in voluntary severance expenses due to a $16.3 million decrease related to Evergy voluntary exit programs in 2020 and a $3.5 million decrease in voluntary severance expenses related to Wolf Creek voluntary exit programs in 2020;

•a $15.6 million decrease in various administrative and general operating and maintenance expenses primarily driven by an increase in costs billed for common use assets to Evergy Kansas Central in 2021 primarily related to software assets placed into service in the third quarter of 2020; and

•a $2.7 million decrease in credit loss expense primarily due to increases made to the allowance for credit losses in 2020 related to the economic slowdown resulting from the COVID-19 pandemic and a lower level of write-offs in 2021; partially offset by

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•$2.5 million of costs associated with executive transition in 2021, including inducement bonuses, severance agreements and other transition expenses; and

•a $1.3 million increase in property insurance expense due to a lower annual refund of nuclear insurance premiums received ~~$24.0~~in 2021 by Evergy Metro related to its ownership interest in Wolf Creek.

Evergy Metro Other Expense, Net

Evergy Metro's other expense, net decreased $4.2 million ~~fewer proceeds from our investment~~year to date September 30, 2021, compared to the same period in ~~COLI.~~

~~Cash Flows used~~2020, primarily driven by a $4.6 million increase in ~~Financing Activities~~

~~Cash flows used in financing activities increased~~equity AFUDC primarily due ~~principally~~ to ~~our having issued $162.0 million less in long-term debt of VIEs, issued $110.3 million less in commercial paper, issued $100.3 million less in long-term~~lower short-term debt and ~~redeemed $75.0~~higher construction work in progress balances in 2021.

Evergy Metro Income Tax Expense

Evergy Metro's income tax expense increased $38.6 million ~~more in long-term debt. Partially offsetting these decreases was our having redeemed $163.5 million less in long-term debt of VIEs.~~

~~Pension Contribution~~

~~During the nine months ended~~year to date September 30, ~~2017, we contributed $20.6 million~~2021, compared to the ~~Westar Energy pension trust. We funded $12.0~~same period in 2020, primarily driven by:

•a $32.2 million increase related to the revaluation of ~~Wolf Creek’s pension plan contributions during~~deferred income tax assets and liabilities in the ~~same period.~~second quarter of 2020 due to the change in the Kansas corporate income tax rate;

•a $16.8 million increase due to higher pre-tax income in 2021; and

•a $4.2 million increase due to lower wind and other income tax credits in 2021; partially offset by

~~OFF-BALANCE SHEET ARRANGEMENTS~~

~~From December 31, 2016, through~~ ~~September 30, 2017, our off-balance sheet arrangements did not change materially. For additional information, see our 2016 Form 10-K.~~

~~CONTRACTUAL OBLIGATIONS AND COMMERCIAL COMMITMENTS~~

~~From~~ ~~December 31, 2016, through~~ ~~September 30, 2017, our contractual obligations and commercial commitments did not change materially outside the ordinary course of business. For additional information, see our 2016 Form 10-K.~~

~~OTHER INFORMATION~~

~~Changes in Prices~~

~~See Note 4~~•a $13.7 million decrease as a result of the ~~Notes to Condensed Consolidated Financial Statements, “Rate Matters and Regulation,” for information on our prices.~~ state of Kansas exempting certain public utilities, including Evergy Metro, from Kansas corporate income tax beginning in January 2021.

~~New Accounting Pronouncements~~

~~See Note 2 of the Notes to Condensed Consolidated Financial Statements, “Summary of Significant Accounting Policies,” for information on accounting pronouncements.~~

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

In the ordinary course of business, Evergy faces risks that are either non-financial or non-quantifiable. Such risks principally include business, legal, operational and credit risks and are discussed elsewhere in this report as well as in the Evergy Companies' combined 2020 Form 10-K and therefore are not represented here.

~~We are exposed to~~Evergy's interim period disclosures about market risk ~~including~~included in quarterly reports on Form 10-Q address material changes, if any, from the most recently filed annual report on Form 10-K. Therefore, these interim period disclosures should be read in ~~commodity prices, counterparty credit, interest rates, and debt and equity instrument values. From~~ ~~December 31, 2016, to September 30, 2017, no significant changes occurred in our market risk exposure. See “Item 7A.~~conjunction with Part II, Item 7A, Quantitative and Qualitative Disclosures About Market ~~Risk”~~Risk included in ~~our~~ ~~2016~~the Evergy Companies' combined 2020 Form ~~10-K for additional information.~~10-K.

ITEM 4. CONTROLS AND PROCEDURES

~~We maintain a set~~EVERGY

Disclosure Controls and Procedures

Evergy carried out an evaluation of its disclosure controls and procedures ~~designed to ensure that information required to be disclosed~~(as defined in ~~reports that we file or submit~~Rules 13a-15(e) and 15d-15(e) under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms. In addition, the disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by us in reportsAct). This evaluation was conducted under the ~~Exchange Act is accumulated~~supervision, and ~~communicated to~~with the participation, of Evergy's management, including the chief executive officer and ~~the~~ chief financial officer, ~~allowing timely decisions regarding required disclosure. As~~and Evergy's disclosure committee. Based upon this evaluation, the chief executive officer and chief financial officer of Evergy have concluded as of the end of the period covered by this report ~~based on~~that the disclosure controls and procedures of Evergy were effective at a reasonable assurance level.

Changes in Internal Control Over Financial Reporting

There has been no change in Evergy’s internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) of the Exchange Act) that occurred during the quarterly period ended September 30, 2021, that has materially affected, or is reasonably likely to materially affect, its internal control over financial reporting.

EVERGY KANSAS CENTRAL

Disclosure Controls and Procedures

Evergy Kansas Central carried out an evaluation of its disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act). This evaluation was conducted under the supervision, and with

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the participation, of Evergy Kansas Central's management, including the chief executive officer and chief financial officer, and Evergy Kansas Central's disclosure committee. Based upon this evaluation, the chief executive officer and chief financial officer of Evergy Kansas Central have concluded as of the end of the period covered by this report that the disclosure controls and procedures of Evergy Kansas Central were effective at a reasonable assurance level.

Changes in Internal Control Over Financial Reporting

There has been no change in Evergy Kansas Central’s internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) of the Exchange Act) that occurred during the quarterly period ended September 30, 2021, that has materially affected, or is reasonably likely to materially affect, its internal control over financial reporting.

EVERGY METRO

Disclosure Controls and Procedures

Evergy Metro carried out an evaluation of its disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act). This evaluation was conducted under the supervision, and with the participation, of Evergy Metro's management, including the chief executive officer and ~~the~~ chief financial officer, ~~of the effectiveness of our~~and Evergy Metro's disclosure ~~controls and procedures,~~committee. Based upon this evaluation, the chief executive officer and ~~the~~ chief financial officer of Evergy Metro have concluded as of the end of the period covered by this report that ~~our~~the disclosure controls and procedures of Evergy Metro were ~~effective.~~effective at a reasonable assurance level.

Changes in Internal Control Over Financial Reporting

There ~~were~~has been no ~~changes~~change in ~~our~~Evergy Metro’s internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) of the Exchange Act) that occurred during the ~~three months~~quarterly period ended September 30, ~~2017,~~2021, that has materially affected, or ~~are~~is reasonably likely to materially affect, ~~our~~its internal control over financial reporting.

PART ~~II.~~II - OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

Other Proceedings

~~Information on legal~~The Evergy Companies are parties to various lawsuits and regulatory proceedings ~~is set forth~~ in the ordinary course of their respective businesses. For information regarding material lawsuits and proceedings, see Notes 114 and ~~13 of~~10 to the ~~Notes to Condensed Consolidated Financial Statements, “Commitments and Contingencies” and “Legal Proceedings,” respectively, which are~~consolidated financial statements. Such information is incorporated herein by reference.

ITEM 1A. RISK FACTORS

~~Our 2016 Form 10-K contains descriptions~~Actual results in future periods for the Evergy Companies could differ materially from historical results and the forward-looking statements contained in this report. The business of ~~risk~~the Evergy Companies is influenced by many factors ~~relating~~that are difficult to ~~us, as required by~~predict, involve uncertainties that may materially affect actual results and are often beyond their control. Additional risks and uncertainties not presently known or that management currently believes to be immaterial may also adversely affect the Evergy Companies. Factors that might cause or contribute to such differences include, but are not limited to, those discussed in Part I, Item ~~503(c) of Regulation S-K. The risk factors under the heading “Risks Relating to the Pending Merger”~~1A, Risk Factors included in the ~~2016~~2020 Form 10-K ~~Item 1A. Risk Factors, were replaced with the risk factors contained in Item 1A. Risk Factors in our~~for each of Evergy, Evergy Kansas Central and Evergy Metro, as well as Quarterly ~~Report~~Reports on Form 10-Q ~~for the quarter ended June 30, 2017. Except as indicated below, or as otherwise described in filings we make~~and from time to time in Current Reports on Form 8-K filed by Evergy, Evergy Kansas Central and Evergy Metro. Except as set forth below, there have been no material changes with regards to those risk factors. This information, as well as the other information included in this report and in the other documents filed with the SEC, ~~including our Quarterly Report on Form 10-Q for~~should be carefully considered before making an investment in the ~~quarter ended March 31, 2017, there were no material changes in our~~securities of the Evergy Companies. Risk factors of Evergy Kansas Central and Evergy Metro are also risk factors ~~from December 31, 2016, through September 30, 2017.~~of Evergy.

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~~Pending litigation against us~~Failure to attract and ~~Great Plains Energy~~retain an appropriately qualified workforce or to maintain satisfactory collective bargaining agreements could negatively impact the Evergy Companies' business and operations and adversely impact the Evergy Companies' results of operations, financial position and cash flows.

The Evergy Companies' workforce includes professional, managerial and technical employees. Failure to attract and retain qualified talent, or successfully transition retirements with adequate replacements could impede the Evergy Companies' strategy and/or adversely impact the Evergy Companies' ability to execute on their strategy. For example, certain skills, such as those related to construction, maintenance and repair of transmission and distribution systems are in high demand and have a limited supply. Evergy competes for qualified employees with these skills on a national level.

In addition, federal COVID-19 vaccination and testing mandates could result in ~~an injunction preventing~~employee or contractor labor disruptions, and complying with any mandates and managing any related labor disruptions could have a significant adverse impact on the ~~consummation of the proposed merger or may adversely affect the combined company’s business, financial condition or~~Evergy Companies' results of operations, ~~following the merger.~~financial position and cash flows.

~~Following the announcement~~A significant portion of the ~~original merger~~Evergy Companies' workforce is represented by five local unions of the International Brotherhood of Electrical Workers (IBEW) and one local union of the United Government Security Officers of America (UGSOA). The collective bargaining agreements with the five IBEW locals all expired in 2021 and are currently being renegotiated. The collective bargaining agreement with the UGSOA expires in 2022. A failure to successfully negotiate these collective bargaining agreements could result in labor disruptions and have a ~~putative derivative lawsuit was filed in~~significant adverse impact on the ~~District Court~~Evergy Companies' results of ~~Shawnee County, Kansas against the members of our board of directors, Great Plains Energy~~operations, financial position and cash flows.

The Evergy Companies' strategic plan includes enhanced technology and transmission and distribution investments and a ~~subsidiary~~reduction in reliance on coal-fired generation. The Evergy Companies will need to attract and retain personnel that are qualified to implement the Evergy Companies' strategy and may need to retrain or reskill certain employees to support the Evergy Companies' long-term objectives. A failure to attract and retain qualified employees, retrain or reskill existing employees and maintain satisfactory collective bargaining agreements could have a significant adverse impact on the results of ~~Great Plains Energy, alleging breaches of various fiduciary duties by members of our board of directors in connection with the original proposed transaction~~operations, financial position and alleging that Great Plains Energy and a subsidiary of Great Plains Energy aided and abetted such alleged breaches of fiduciary duties. The putative derivative petition was refiled in October 2017. Also following the announcementcash flows of the original merger agreement, two putative class action lawsuits (which were consolidated and superseded by a consolidated complaint) were filed in the District Court of Shawnee County, Kansas against Westar Energy, the members of our board of directors and Great Plains Energy, alleging breaches of various fiduciary duties by the members of our board of directors in connection with the proposed merger and alleging that we and Great Plains Energy aided and abetted such alleged breaches of fiduciary duties. In September 2017, the lead plaintiffs moved to amend the class action petition with allegations similar to those made regarding the original merger agreement but focusing on the revised merger. Also in September 2017, a putative class action lawsuit was filed in the United States District Court for the District of Kansas challenging the merger and alleged disclosure violations under sections 14(a) and 20(a) of the Exchange Act. In October 2017, another putative class action lawsuit was filed in the United States District Court for the District of Kansas. This federal class action complaint challenges the merger and alleges violations of sections 14(a) and 20(a) of the Exchange Act.Evergy Companies.

Among other remedies, the plaintiffs seek to enjoin the proposed transaction, rescind the merger agreement, remedy alleged disclosure deficiencies, and unspecified damages and reimbursement of costs. The outcome of litigation is inherently uncertain, and we cannot predict how existing litigation will progress, or whether additional claims may result from the amended and restated merger agreement. The defense or settlement of any lawsuit or claim that remains unresolved at the time the merger closes may adversely affect the combined company’s business, financial condition or results of operations. See Note 13 of the Notes to Condensed Consolidated Financial Statements, “Legal Proceedings,” for additional information.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

None.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4. MINE SAFETY DISCLOSURES

Not applicable.

ITEM 5. OTHER INFORMATION

Available Information

The SEC maintains an internet site that contains reports, proxy and information statements and other information regarding issuers that file electronically with the SEC at sec.gov. Additionally, information about the Evergy Companies, including their combined annual reports on Form 10-K, combined quarterly reports on Form 10-Q, current reports on Form 8-K and amendments to those reports filed with the SEC, is also available through the Evergy Companies' website, www.evergy.com. Such reports are accessible at no charge and are made available as soon as reasonably practical after such material is filed with or furnished to the SEC.

Investors should note that wethe Evergy Companies announce material financial information in SEC filings, press releases and public conference calls. In accordance with SEC ~~guidance, we may~~guidelines, the Evergy Companies also use the Investor Relations section of ~~our~~their website, (~~http://www.WestarEnergy.com, under “Investors”)~~www.evergy.com, to communicate with ~~investors about our company.~~investors. It is possible that the

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financial and other information ~~we post~~posted there could be deemed to be material information. The information on ~~our~~the Evergy Companies' website is not part of this document.

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ITEM 6. EXHIBITS

Exhibit

Number

Description of Document

Registrant

10.1

Amended and Restated Credit Agreement dated as of August 31, 2021, by and among Evergy , Inc., Evergy Missouri West , Inc. (formerly KCP&L Greater Missouri Operations Company), Evergy Metro , Inc. (formerly Kansas City Power & Light Company), E vergy Kansas Central , Inc. (formerly Westar Energy, Inc.), as Borrowers, the lenders referred to therein, as Lenders, and Wells Fargo Bank, National Association, as Administrative Agent, Swingline Lender and Issuing Lender, Bank of America, N.A., Citibank, N.A., MUFG Bank, Ltd., TD Bank, N.A. and U.S. Bank National Association as Co-Syndication Ag ents and Issuing Lenders, Wells Fargo Securities, LLC, as Sustainability Struc turing Agent, and Wells Fargo Securities, LLC, Citigroup Global M a rkets Inc., BOFA Securities, Inc., MUFG Bank, L td., TD Securities (USA) LLC and U.S. Bank National Association as Joint Lead Arrangers and Joint Bookrunners. (Exhibit 10.1 to Evergy's Current Report on Form 8-K filed on August 31, 2021).

Evergy
Evergy Kansas Central
Evergy Metro

Amended and Restated Merger Agreement, dated as of July 9, 2017, by and among Westar Energy, Inc., Great Plains Energy Incorporated, Monarch Energy Holding, Inc., King Energy, Inc. and, solely for the purposes set forth therein, GP Star, Inc. (filed as Exhibit 2.1 to the Form 8-K filed on July 10, 2017)

~~31(a)~~

31.1

Rule 13a-14(a)/15d-14(a) Certification of ~~Principal Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 certifying the quarterly report provided for the period ended September 30, 2017~~David A. Campbell.

Evergy

~~31(b)~~

31.2

Rule 13a-14(a)/15d-14(a) Certification of ~~Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 certifying the quarterly report provided for the period ended September 30, 2017~~Kirkland B. Andrews.

Evergy

Certifications pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 certifying the quarterly report provided for the quarter ended September 30, 2017 (furnished and not to be considered filed as part of the Form 10-Q)

~~101.INS~~31.3

Rule 13a-14(a)/15d-14(a) Certification of David A. Campbell.

Evergy Metro

31.4

Rule 13a-14(a)/15d-14(a) Certification of Kirkland B. Andrews.

Evergy Metro

31.5

Rule 13a-14(a)/15d-14(a) Certification of David A. Campbell.

Evergy Kansas Central

31.6

Rule 13a-14(a)/15d-14(a) Certification of Kirkland B. Andrews.

Evergy Kansas Central

32.1

Section 1350 Certifications.

Evergy

32.2

Section 1350 Certifications.

Evergy Metro

32.3

Section 1350 Certifications.

Evergy Kansas Central

101.INS

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XBRL Instance ~~Document~~Document.

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Inline XBRL Taxonomy Extension Schema ~~Document~~Document.

Evergy
Evergy Kansas Central
Evergy Metro

~~101.CAL~~

101.CAL

Inline XBRL Taxonomy Extension Calculation Linkbase ~~Document~~Document.

Evergy
Evergy Kansas Central
Evergy Metro

~~101.DEF~~

101.DEF

Inline XBRL Taxonomy Extension Definition Linkbase ~~Document~~Document.

Evergy
Evergy Kansas Central
Evergy Metro

~~101.LAB~~

101.LAB

Inline XBRL Taxonomy Extension ~~Label~~Labels Linkbase ~~Document~~Document.

Evergy
Evergy Kansas Central
Evergy Metro

~~101.PRE~~

101.PRE

Inline XBRL Taxonomy Extension Presentation Linkbase ~~Document~~Document.

Evergy
Evergy Kansas Central
Evergy Metro

+ The disclosure letters and related schedules to the agreement have been omitted. The registrant agrees to furnish supplementally a copy of any such schedules to the Securities and Exchange Commission upon request.

Table of Contents

~~SIGNATURE~~

104

Cover Page Interactive Data File (embedded within the Inline XBRL document).

Evergy
Evergy Kansas Central
Evergy Metro

* Filed with the SEC as exhibits to prior SEC filings and are incorporated herein by reference and made a part hereof. The SEC filings and the exhibit number of the documents so filed, and incorporated herein by reference, are stated in parenthesis in the description of such exhibit.

** Furnished and shall not be deemed filed for the purpose of Section 18 of the Exchange Act. Such document shall not be incorporated by reference into any registration statement or other document pursuant to the Exchange Act or the Securities Act of 1933, as amended, unless otherwise indicated in such registration statement or other document.

*** The instance document does not appear in the interactive data file because its XBRL tags are embedded within the inline XBRL document.

Copies of any of the exhibits filed with the SEC in connection with this document may be obtained from Evergy, Evergy Kansas Central or Evergy Metro, as applicable, upon written request.

The registrants agree to furnish to the SEC upon request any instrument with respect to long-term debt as to which the total amount of securities authorized does not exceed 10% of total assets of such registrant and its subsidiaries on a consolidated basis.

Table of Contents

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, ~~the registrant has~~Evergy, Inc., Evergy Kansas Central, Inc. and Evergy Metro, Inc. have duly caused this report to be signed on ~~its~~their behalf by the undersigned, thereunto duly authorized.

~~WESTAR ENERGY,~~EVERGY, INC.

~~Date:~~Dated:

November 2, 2021

~~October 31, 2017~~

By:

/s/ ~~Anthony D. Somma~~Kirkland B. Andrews

~~Anthony D. Somma~~(Kirkland B. Andrews)

~~Senior~~(Executive Vice President and Chief Financial ~~Officer and Treasurer~~Officer)


		EVERGY KANSAS CENTRAL, INC.

Dated:	November 2, 2021	By: /s/ Kirkland B. Andrews
		(Kirkland B. Andrews)
		(Executive Vice President and Chief Financial Officer)


		EVERGY METRO, INC.

Dated:	November 2, 2021	By: /s/ Kirkland B. Andrews
		(Kirkland B. Andrews)
		(Executive Vice President and Chief Financial Officer)


TABLE OF CONTENTS
									Page Number
Cautionary Statements Regarding Certain Forward-Looking Information									4
Glossary of Terms									6

~~[X]~~ Part I - Financial Information									~~QUARTERLY REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934~~



~~Kansas~~Item 1.		Financial Statements	~~48-0290150~~
~~(State or other jurisdiction of incorporation or organization)~~	~~(I.R.S. Employer Identification Number)~~


		Evergy, Inc.
~~818 South Kansas Avenue, Topeka, Kansas 66612~~	~~(785) 575-6300~~
~~(Address, including Zip code and telephone number, including area code, of registrant’s principal executive offices)~~


		Unaudited Consolidated Balance Sheets
~~Common Stock, par value $5.00 per share~~	~~142,094,176 shares~~
~~(Class)~~	~~(Outstanding at October 25, 2017)~~




~~PART I. Financial Information~~		~~Page~~
~~Item 1.~~	~~Condensed Consolidated Financial Statements (Unaudited)~~
	~~Condensed Consolidated Balance Sheets~~	6
	~~Condensed~~Unaudited Consolidated Statements of Comprehensive Income	710
			~~Condensed~~Unaudited Consolidated Statements of Cash Flows		92
			~~Condensed~~Unaudited Consolidated Statements of Changes in Equity		103
			Evergy Kansas Central, Inc.
			Unaudited Consolidated Balance Sheets		5
			Unaudited Consolidated Statements of Income		7
			Unaudited Consolidated Statements of Cash Flows		8
			Unaudited Consolidated Statements of Changes in Equity		9
			Evergy Metro, Inc.
			Unaudited Consolidated Balance Sheets		10
			Unaudited Consolidated Statements of Comprehensive Income		12
			Unaudited Consolidated Statements of Cash Flows		13
			Unaudited Consolidated Statements of Changes in Equity		14

			Combined Notes to ~~Condensed~~Unaudited Consolidated Financial Statements for Evergy, Inc., Evergy Kansas Central, Inc. and Evergy Metro, Inc.		1115
			Note 1:	~~1. Description~~Organization and Basis of ~~Business~~Presentation	1115
			Note 2:	~~2. Summary of Significant Accounting Policies~~Revenue	1120
			Note 3:	~~3. Pending Merger~~Receivables	1422
			Note 4:	4. Rate Matters and Regulation	1623
			Note 5:	~~5. Financial Instruments and Trading Securities~~Goodwill	1626

			Note 6:	~~6. Financial Investments~~Pension Plans and Post-Retirement Benefits	1927
			Note 7:	~~7. Debt Financing~~Short-Term Borrowings and Short-Term Bank Lines of Credit	2129
			Note 8:	~~8. Taxes~~Long-Term Debt	2130
			Note 9:	~~9. Pension and Post-Retirement Benefit Plans~~Fair Value Measurements	2230
			Note 10:	~~10. Wolf Creek Pension and Post-Retirement Benefit Plans~~	23
	~~11.~~ Commitments and Contingencies	2435
			Note 11:	~~12. Asset Retirement Obligations~~Related Party Transactions and Relationships	2738
			Note 12:	~~13. Legal Proceedings~~Shareholders' Equity	2739
			Note 13:	~~14. Variable Interest Entities~~Taxes	2940
Item 2.			~~Management’s~~Management's Discussion and Analysis of Financial Condition and Results of Operations		3143
Item 3.			Quantitative and Qualitative Disclosures About Market Risk		4361
Item 4.			Controls and Procedures		4361

~~PART II.~~Part II - Other Information

Item 1.			Legal Proceedings		4362
Item 1A.			Risk Factors		4462
Item 2.			Unregistered Sales of Equity Securities and Use of Proceeds		4463
Item 3.			Defaults Upon Senior Securities		4463
Item 4.			Mine Safety Disclosures		4463
Item 5.			Other Information		4563
Item 6.			Exhibits		4565

~~Signature~~Signatures					4667



~~[ ]~~	~~TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934~~


Abbreviation or Acronym		Definition

AAO		Accounting authority order
ACE		Affordable Clean Energy
AEP		American Electric Power Company, Inc.
AFUDC		Allowance for funds used during construction
AOCI		Accumulated other comprehensive income
AROs		Asset retirement obligations


~~Abbreviation or Acronym~~		~~Definition~~
~~2016 Form 10-K~~Bluescape		~~Annual Report on Form 10-K for the year ended December 31, 2016~~Bluescape Energy Partners, LLC
~~AFUDC~~BSER		~~Allowance for funds used during construction~~Best system of emission reduction
~~ARO~~CAA		~~Asset retirement obligation~~
~~CAA~~	Clean Air Act Amendments of 1990
~~CCR~~CCRs		Coal combustion ~~residual~~residuals
CO₂		Carbon dioxide
COLI		Corporate-owned life insurance
~~CPP~~COVID-19		Coronavirus
CPP		Clean Power Plan
~~CWA~~CSAPR		~~Clean Water Act~~Cross-State Air Pollution
~~DOE~~		~~Department of Energy~~
~~ELG~~
ELG		Effluent limitations guidelines
EPA		Environmental Protection Agency
EPS		Earnings per common share
ERCOT		Electric Reliability Council of Texas
ERISA		Employee Retirement Income Security Act of 1974, as amended
ERSP		Earnings Review and Sharing Plan
Evergy		Evergy, Inc. and its consolidated subsidiaries
Evergy Board		Evergy Board of Directors
Evergy Companies		Evergy, Evergy Kansas Central, and Evergy Metro, collectively, which are individual registrants within the Evergy consolidated group
Evergy Kansas Central		Evergy Kansas Central, Inc., a wholly-owned subsidiary of Evergy, and its consolidated subsidiaries
Evergy Kansas South		Evergy Kansas South, Inc., a wholly-owned subsidiary of Evergy Kansas Central
Evergy Metro		Evergy Metro, Inc., a wholly-owned subsidiary of Evergy, and its consolidated subsidiaries

Evergy Missouri West		Evergy Missouri West, Inc., a wholly-owned subsidiary of Evergy
Evergy Transmission Company		Evergy Transmission Company, LLC
Exchange Act		The Securities Exchange Act of 1934, as amended
~~FERC~~
February 2021 winter weather event		Significant winter weather event in February 2021 that resulted in extremely cold temperatures over a multi-day period across much of the central and southern United States
FERC		Federal Energy Regulatory Commission
~~FMBs~~		~~First mortgage bonds~~
~~GHG~~GAAP		Generally Accepted Accounting Principles
GHG		Greenhouse gas
Great Plains Energy		Great Plains Energy Incorporated
~~HSR Act~~JEC		~~Hart-Scott-Rodino Antitrust Improvements Act~~
~~JEC~~	Jeffrey Energy Center
KCC		~~Kansas~~State Corporation Commission of the State of Kansas


~~KDHE~~Abbreviation or Acronym		Definition
KDHE		Kansas Department of Health & Environment
~~KGE~~kV		~~Kansas Gas and Electric Company~~Kilovolt
~~La Cygne~~kWh		~~La Cygne Generating Station~~Kilowatt hour
~~Merger~~LEC		~~Pending merger of equals between Westar~~Lawrence Energy ~~Inc. and Great Plains Energy Incorporated~~Center
~~MPSC~~
MDNR		Missouri Department of Natural Resources
MECG		Midwest Energy Consumers Group

MPSC		Public Service Commission of the State of Missouri
~~NAAQS~~MW		Megawatt
MWh		Megawatt hour
NAAQS		National Ambient Air Quality Standards
NAV		Net ~~Asset Value~~asset value
~~NDT~~		~~Nuclear Decommissioning Trust~~
~~NOx~~		~~Nitrogen oxides~~
~~NRC~~OCI		~~Nuclear Regulatory Commission~~Other comprehensive income
~~NSPS~~OPC		~~New Source Performance Standard~~Office of the Public Counsel
PM		~~Particulate matter~~
~~RECA~~Prairie Wind		~~Retail energy cost adjustment~~Prairie Wind Transmission, LLC, 50% owned by Evergy Kansas Central
RSU		Restricted share unit
RTO		Regional transmission organization
SO₂ SEC		~~Sulfur dioxide~~Securities and Exchange Commission
~~SPP~~SIP		State implementation plan
SPP		Southwest Power Pool, Inc.
~~TFR~~

TDC		Transmission delivery charge
TFR		Transmission formula rate
~~VIE~~Transource		Transource Energy, LLC and its subsidiaries, 13.5% owned by Evergy Transmission Company
UFSA		Utility Financing and Securitization Act
VIE		Variable interest entity
Wolf Creek		Wolf Creek Generating Station
~~WOTUS~~	~~Waters of the United States~~


-	the pending merger of equals (merger) between Westar Energy, Inc. and Great Plains Energy Incorporated (Great Plains Energy), including the expected timing of closing the merger and costs expected to be incurred in connection with the merger,


-	~~the overall economy of our service area and its impact on our customers’ demand for electricity and their ability to pay for service.~~


-	risks related to operating in a heavily regulated industry that is subject to unpredictable political, legislative, judicial and regulatory developments, which can impact our operations, results of operations, and financial condition,


-	the difficulty of predicting the magnitude and timing of changes in demand for electricity, including with respect to emerging competing services and technologies and conservation and energy efficiency measures,


-	~~the impact of weather conditions, including as it relates to sales of electricity and prices of energy commodities,~~


-	~~economic and capital market conditions, including the impact of inflation or deflation, changes in interest rates, the cost and availability of capital and the market for trading wholesale energy,~~


-	~~the impact of changes in market conditions on employee benefit liability calculations and funding obligations, as well as actual and assumed investment returns on invested plan assets,~~


-	~~amount, type and timing of capital expenditures,~~


-	~~earnings,~~


-	~~cash flow,~~


-	~~liquidity and capital resources,~~


-	~~the impact of changes in estimates regarding our Wolf Creek Generating Station (Wolf Creek) decommissioning obligation,~~


-	~~the existence or introduction of competition into markets in which we operate,~~


-	~~the impact of changing laws and regulations relating to air and greenhouse gas (GHG) emissions, water emissions, waste management and other environmental matters,~~


-	risks associated with execution of our planned capital expenditure program, including timing and receipt of regulatory approvals necessary for planned construction and expansion projects as well as the ability to complete planned construction projects within the terms and time frames anticipated,


-	~~cost, availability and timely provision of equipment, supplies, labor and fuel we need to operate our business,~~


-	~~availability of generating capacity and the performance of our generating plants,~~


-	~~changes in regulation of nuclear generating facilities and nuclear materials and fuel, including possible shutdown or required modification of nuclear generating facilities,~~


-	~~uncertainties with respect to procurement of nuclear fuel and related services, which are dependent on a single supplier,~~


-	additional regulation due to the Nuclear Regulatory Commission (NRC) oversight to ensure the safe operation of Wolf Creek, either related to Wolf Creek’s performance, or potentially relating to events or performance at a nuclear plant anywhere in the world,


-	~~uncertainty regarding the establishment of interim or permanent sites for spent nuclear fuel storage and disposal,~~


-	~~homeland security and information and operating systems security considerations,~~


-	~~changes in accounting requirements and other accounting matters,~~


-	changes in the energy markets in which we participate such as the development and implementation of real time and next day trading markets, and the effect of the retroactive repricing of transactions in such markets following execution because of changes or adjustments in market pricing mechanisms by regional transmission organizations (RTOs) and independent system operators,


-	~~reduced demand for coal-based energy because of actual or perceived climate impacts and the development of alternate energy sources,~~


-	~~current and future litigation, regulatory investigations, proceedings or inquiries,~~


-	~~cost of fuel used in generation and wholesale electricity prices,~~


-	~~certain risks and uncertainties associated with the merger, including, without limitation, those related to:~~


-	~~receipt of approval from our shareholders and shareholders of Great Plains Energy,~~


-	~~the timing of, and the conditions imposed by, regulatory approvals required for the merger,~~


-	~~the occurrence of any event, change or other circumstances that could give rise to the termination of the merger agreement or could otherwise cause the failure of the merger to close,~~