KCPL is taking Sierra Club to court over Iatan

Washington (Platts)--2Mar2007

In the latest round of the dispute between Kansas City Power & Light and the
Sierra Club over the utility's Iatan 2 coal-fired project, KCPL filed a
lawsuit in US District Court on Thursday seeking a declaratory judgment that
the operation of the existing Iatan 1 plant has not violated the Clean Air
Act.

The Sierra Club is not only seeking to get the 850-MW Iatan 2 project subject
to enhanced environmental controls but also is challenging KCPL's adherence to
New Source Review requirements at the existing 725-MW Iatan 1 unit in Platte
County, Missouri. The second unit will take Powder River Basin coal like its
sibling unit.

"For the past year, the Sierra Club alleged Clean Air Act violations at Iatan
1 as part of its appeal of the Iatan 2 air permit," KCPL said in a Thursday
statement. "After many months of discovery and shortly before an
administrative hearing to consider the allegations was to commence, the Sierra
Club announced that it would abandon these allegations in the air permit
appeal and instead file a lawsuit in federal court containing the same
allegations -- effectively starting the process all over again."

The Missouri Department of Natural Resources reviewed Iatan's operation before
issuing air permits and investigated again after issuing the permit. It found
that KCPL made no impermissible modifications to Iatan 1, KCPL CEO Bill Downey
said in the statement.

Bruce Nilles, director of the Sierra Club's Midwest Clean Energy Campaign,
told Platts, "We think [the KCPL-filed lawsuit is] without merit and an act of
desperation."

On February 27 the Missouri Court of Appeals said KCPL couldn't pass on to
ratepayers the $1.4 billion cost of its Comprehensive Energy Plan, which
includes construction of Iatan 2, Nilles said.

But, "there's been no ruling to that effect," KCPL spokesman Matt Tidwell told
Platts.

In its statement, the utility noted that the state appeals court for the
western district issued a ruling that the Missouri Public Service Commission
did not follow proper procedure in approving the CEP. "The ruling did not
question the merits or components of the plan," KCPL said.

"The plan itself was not touched; all that was touched was the procedure on
the part of the MPSC," Tidwell said.

The utility "believes that this lawsuit [against the Sierra Club] is the
quickest and best way to finally resolve the issue" of Iatan's operation.

Sierra Club to file federal lawsuit next week
Nilles speculated that KCPL wanted to beat the Sierra Club to the federal
court clerk's office because the club told KCPL that it was moving some
administrative matters being heard in Missouri regarding the alleged clean-air
violations at Iatan 1 to federal court. The club expects to file its lawsuit
next week, he said.

"In the administrative proceeding, we uncovered [the alleged] violations of
the Clean Air Act," Nilles said.

The Sierra Club also has an appeal pending before the Kansas Corporation
Commission regarding approval of the Iatan 2 project. Iatan serves customers
in both Kansas and Missouri and thus is subject to regulatory jurisdiction in
both states.

KCPL said construction is under way of environmental upgrades at Iatan 1 and
the Iatan 2 plant. Currently, Iatan 2 is scheduled for commercial operation in
the summer of 2010.

--Steve Hooks, steve_hooks@platts.com