Fitch Affirms Kansas City, KS BPU's Ref Rev Bonds 'A+'.

Business Editors

NEW YORK--(BUSINESS WIRE)--Nov. 21, 2003

Fitch Ratings affirms the 'A+' rating of Kansas City (KS) Board of Public Utilities' (KCBPU) $253 million in outstanding combined utility revenue bonds. The Rating Outlook is Stable.

The rating reflects the solid financial performance of the utility's electric and water operations, low-cost power generation facilities, an experienced management team, and improving service territory demographics. Debt service coverage for 2002 was 2.1 times (x) (indenture coverage was 2.2x maximum annual debt service), and is projected to be comparable for 2003. Equity is a healthy 56% of capitalization for 2002, and the utility's liquidity is ample with over 100 days cash on hand for 2002. BPU meets the bulk of its load requirements with power from its low-cost coal fired facilities, and has consistently kept rates at or below the regional average. Several new tourist attractions in the western part of BPU's service territory, including a NASCAR speedway and two large new retail outlets, have recently reinvigorated the historically sluggish local economy and brought new jobs to the region.

Management is currently exploring options for meeting additional generation needs in upcoming years. For 2004, peak demand (inclusive of 12% reserve requirements) is expected to be 587 megawatts, roughly in line with expected available generating capacity. BPU is presently negotiating with various power providers to shore up its future load requirements, including some intermediate and peaking capacity needs for the 2004-2005 summer months. In 2006, BPU expects to bring a 75 megawatt combustion turbine on line, and for longer term needs is considering options to add more coal-fired capacity to its power mix. While BPU's fuel mix is already heavily weighted toward coal, the diversity of resources and limited near-term environmental risk are considered offsetting factors.

Credit concerns include BPU's high level of contributions to the Unified Government of Wyandotte County/Kansas City, KS (Unified Government) general fund, some industrial concentration, and below average wealth indicators for the service territory. Transfers to the Unified Government totaled 11% of total gross revenues in 2002 and include a payment-in-lieu-of-taxes (7.7% of revenues) as well as free services provided to the city. As of August 2003, BPU's top ten electric customers represented 25% of total annual revenues--an above average degree of customer concentration for the rating category. However, BPU's competitive rates and longer term commitments from several of these customers are viewed positively.

The Kansas City Board of Public Utilities (BPU) operates a combined utility serving 66,000 electric accounts and 52,000 water accounts in the Kansas City, Kansas, and surrounding Wyandotte county. Revenues for 2002 totaled $191 million and consisted of electric (83%) and water (17%). Electric revenues consist of residential (29%), commercial (34%), industrial (24%) and other (13%).