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5 Ways To Spring Clean Your Portfolio

Click to enlarge If you have a ritual to turn your house upside down for a thorough spring cleaning, you may want to do the same for your portfolio. If a lot of dust has settled on your investments over the years, it may be time to size things up and evaluate your holdings. Below are five tactics to help you see – and optimize – your portfolio in the new light of spring. 1. Sweep your house into order When was the last time you assessed your portfolio allocations and rebalanced its exposures? Let’s start from the top and assess whether your asset allocation still makes sense. If you want to maintain your original allocation but it is drifting, you can rebalance it by redistributing the weightings among each asset class. While rebalancing does take work, the alternative is a portfolio with out-of-balance allocations that could very well change the portfolio’s overall risk level and performance. Rebalancing the motifs in your account takes only a few mouse clicks. For more, check out the importance of rebalancing a portfolio over time. 2. Is it time to dust off old strategies and look forward? Does your portfolio need a fresh start? While you’re sizing up your portfolio, it could also be a good time take stock of the macro environment and see whether your investment thesis still makes sense. In the current climate where a strong U.S. dollar is putting the brakes on inflation and consumers are pocketing greater purchasing power, you may want to consider plays that take advantage of the appreciating greenback and shed exposure to foreign currencies. After all, of the major central banks, only the Fed has signaled rate hikes this year. In Europe, central bankers are still keeping rates around zero while Bank of Japan has kept rates below zero. So, consider strategies like investing in shares of companies that rake in their earnings from the U.S. domestic market or trim your holdings in foreign bonds. To get some ideas going, check out the All-American motif. 3. Time to part with low performing funds and high cost? Spring cleaning is about letting go – like that old sweater you’ve clung to but have not gotten any wear out of it for a decade. Have your investment returns met your expectations? For instance, if your mutual funds have underperformed, you may want to consider replacing them with ETFs. ETFs track an index, specific asset or basket of assets and can cover sectors, commodities, currencies, bonds, and other asset classes. On the performance front, the latest research from S&P Dow Jones Indices, Does Past Performance Matter , shows that relatively few active managed funds can outperform year after year. Of the 678 U.S. equity funds that made the top quartile as of September 2013, only 4 percent managed to stay in the top quartile after two years. ETFs also tend to be more transparent. While mutual funds are only required to disclose their holdings every quarter, you can usually verify your ETF’s daily positions. On the cost front, ETFs tend to have lower cost because as passive investments that track indices, they do not require high-priced investment professionals to look after them; the passive nature of these vehicles also means fewer trades, which translates to lower commissions. For cost, performance and transparency reasons, it is no wonder that last year ETFs drew a record $2.2 trillion, according to data from Fund Distribution Intelligence and Investment Company Institute. If your mutual funds have underperformed and command high management fees, keep in mind that ETFs are a popular alternative. 4. Pruning your holdings Think about harvesting your gains and cutting your losses. Take a look at the winners and losers in your portfolio. If you have accumulated a few winners over the years and believe their themes have played out, or if the company is fully valued, consider cashing them in and realizing your long-term gains. After all, we have had a strong bull run of the last seven years and taking profits would be a wise move as the climate is now more uncertain. By selling your positions now, you get to reinvest your gains while delaying the payment of your taxes for 12 months. You are also taxed at the long-term capital gains of 15 percent, which is significantly lower than the rate at which short-term gains are taxed (this would be your normal income tax rate). If, on the other hand, you have accumulated some losers and no longer believe in them, ditching them now may be as good a time as any. Your losses can also reduce your capital gains and soften the tax blow. 5. De-cluttering and streamlining your portfolio Do you have multiple retirement accounts? Do you have duplicate holdings in your brokerage accounts? If you are someone who has hopped from one workplace to another, you may have built a nice collection of 401(k) and IRA accounts. If that is the case, you may want to consolidate them because you can probably better manage your retirement accounts and track your assets when your funds are not all spread out among different accounts. Having fewer accounts will help you better size up your net worth, assets and liabilities. So, there you have it. We encourage you to pick one of these spring cleaning tips and get to work. A word of warning: once you dig in, it may be hard to stop because the act of spring cleaning and getting into your portfolio’s nooks and crannies does something to induce satisfaction and put a spring in your step. Happy cleaning!

Great Plains Energy’s (GXP) CEO Terry Bassham on Q4 2015 Results – Earnings Call Transcript

Operator Good day, ladies and gentlemen, and welcome to the Great Plains Energy Incorporated Fourth Quarter 2015 Earnings Conference Call. At this time, all participants are in a listen-only mode. Later we will conduct a question-and-answer session and instructions will follow at that time. [Operator Instructions] As a reminder, this conference call is being recorded. I would like to introduce your host for today’s conference, Ms. Lori Wright, Vice President of Investor Relations and Treasurer. Ma’am, you may begin. Lori Wright Thank you, operator and good morning. Welcome to Great Plains Energy’s Yearend 2015 earnings conference call. On our call today will be Terry Bassham, Chairman, President and Chief Executive Officer and Kevin Bryant, Senior Vice President, Finance and Strategy and Chief Financial Officer. Scott Heidtbrink, Executive Vice President and Chief Operating Officer of KCP&L is also with us this morning as our other members of our management team who will be available during the question-and-answer portion of today’s call. I must remind you of the inherent uncertainties in any forward-looking statements in our discussion this morning. Slide 2 and the disclosure in our SEC filings contain a list of some of the factors that could cause future results to differ materially from our expectations. I also want to remind everyone that we issued our earnings release and 2015 10-K after market closed yesterday. These items are available, along with today’s webcast slides and supplemental financial information regarding the fourth quarter and full year 2015 on the main page of our website at greatplainsenergy.com. Summarized on Slide 3 are the topics that will be covered in today’s presentation. Terry will provide a financial overview and an update of our legislative and regulatory priorities followed by a discussion of our strategic plan. Kevin will discuss our financial results as well as our long-term target. With that, I will now hand the call to Terry. Terry Bassham Thanks Lori, and good morning, everybody. I’ll start on Slide 5. Yesterday we announced fourth quarter and full year 2015 results, earnings for the quarter were up $0.15 per share compared to $0.12 per share in 2014. Full year earnings per share were $1.37 compared to $1.57 a year ago. Our results were within our communicated guidance range of $1.35 to $1.45. Our 2015 results reflect continued disciplined management of our business of solving the regulatory lag typical of our Missouri electric utility prior to new retail rates going into effect. Also weather when compared to normal negatively impacted earnings were approximately $0.09 for the year. During the quarter, we saw the impact of the recently concluded KCP&L Missouri and Kansas rate cases. We also put in place several new riders and trackers including a fuel recovery mechanism in Missouri, and both the transmission delivery charge rider and a CIPS/Cybersecurity tracker in Kansas. Kevin will discuss quarter and yearend-to-date drivers in his remarks Looking forward we’re introducing our 2016 earnings guidance range of $1.65 to $1.80 per share in our long-term expectations and commitment to drive continued dependable shareholder returns through a combination of earnings and dividend growth. As reflected in our press release last night, we’re targeting annualized earnings growth of 4.5% through 2020 of the year’s guidance range. This growth will be consistent with our regulatory frameworks and will be driven by targeted investment in customer and grid operations, continued environmental compliance and disciplined cost management. In addition, continued investment in national transmission and in a growing regional economy support our earnings growth rate. For the decade long investment cycle behind us, increased investment flexibility and improving cash flows, we’re in a stronger position to grow our dividend moving forward. This confidence is reflected in an increased long-term annualized dividend growth target of 5% to 7% through 2020 and a narrowed dividend payout ratio target of 60% to 70%. Turning now to Slide 6, as we reflect on 2015, there is no doubt the outcomes resulting from the traditional elements of our 2015 Missouri and Kansas KCP&L rate proceedings were constructive with virtually no disallowances and allowed returned consistent with regional presence. However, we continue to be disappointed by the inability to gain traction on some of the more responsive and commonly accepted regulatory reforms we’ve pursued in our Missouri case to better respond to the current environment in which we operate. Bottom line, there is also no doubt, the current regulatory construct that has been in place for the last century is in need of a refresh. As a result, we’re working with others to bring about comprehensive, performance-based statewide energy legislation in Missouri that will enable us [supporting] energy infrastructure investments and evolve our regulatory construct the one that meets the needs of all stakeholders. These reforms will provide robust customer protections, support modernization of the grid to address aging infrastructure, improve reliability enhance infrastructure security and facilitate the transition to a cleaner, more diverse mix of energy resources. We believe those common sense reforms will create and help retain thousands of jobs and will completely position Missouri for economic growth. Effectuating this topic of regulatory reform requires hard work, significant stakeholder education and rigorous coalition building. We continue to work with other Missouri utilities, our customers and other stakeholders to advocate for energy and policy advancements in order to bring longer term solutions that benefit customers and shareholders. We’ll keep you posted of these efforts in advance throughout the year. While we’re encouraged by the prospects for real regulatory reform, we continue to also plan to invest consistent with our regulatory frameworks and make active general rate case filings until such changes materialize. To that end, two days ago, we filed a general rate case at our GMO jurisdiction, requesting an increase of $59.3 million on a rate base of approximately $1.9 billion, using a return on equity of 9.9%. The primary drivers of this requested increase includes new infrastructure investments and continued increases in transmission cost and property taxes. New rates are anticipated to be effective early 2017 and summary of the key components of the case can be found in the appendix. We are also in the planning stages for the next round of rate cases at KCP&L. In Kansas we’re required to file an abbreviated rate case by November 2016 to true up our cost for the La Cygne environmental project. In Missouri, we’re evaluating the timing of our next case, which will likely be during the second half of 2016. As a reminder, the rate case process in Missouri is 11 months, while Kansas is approximately eight months. Finally as you know recently the U.S. Supreme Court granted a stay of the clean power plant pending judicial review of the rule. The stay will remain in effect pending Supreme Court review till such review is solved. While we’ve previously worked to improve the emission profile of our generation with nearly 75% of our co-fleet scrubbed, we continue to evaluate the implications of the recent court action. Investments we’ve made over the last several years have afforded us flexibility, response or combination of strategies, including optimization of the operation of our existing generation fleet and investments in new renewable resources and the shutdown of our older less efficient unit. We will continue to monitor these developments and we’ll balance the need to transition to a cleaner energy portfolio with managing the cost impact to our customers. Slide 7 highlights our simple and clear strategy as predicated and closely managing our existing business, promoting economic growth and improving our customer experience. We remain focused on operational excellence and meeting the changing needs of our customers. For the past several years we’ve implemented information technology projects that include an automated leader infrastructure upgrade, leader data management installation and an outage management system replacement. All are part of our broader strategic focus of providing top tier customer satisfaction and operational excellence. We recently initiated a project to replace our customer information system that will further enhance our interactions with our customers. The installation and operation of our Clean Charge Network one of the nation’s first major electric vehicle charging networks has made Kansas City one of the best places to own an electric vehicle and as you’ll hear from Kevin, economic activity in our region continues to improve. With that, I’ll now turn the call over to Kevin. Kevin Bryant Thank you, Terry and good morning, everyone. I’ll begin with an overview of our financial performance on Slide 9. As you can see, earnings for the fourth quarter were $0.15 per share compared with $0.12 a year ago. Full year earnings were $1.37 per share compared to $1.57 per share last year. As detailed on the slide the $0.03 increase for the quarter was driven by new KCP&L retail rates in Kansas and Missouri and an increase in other margins resulting from a change in customer mix, lower fuel and purchase power expenses that do not go through a fuel recovery mechanism and an increase in transmission cost recovered through a transmission recovery mechanism. An increase in weather normalized demand also contributed to the increase. These impacts were partially offset by milder weather, increased O&M, depreciation and amortization expense and lower AFUDC. For the full year, the $0.20 decrease was driven by mild weather, lower AFUDC, higher depreciation and amortization expense and a tax benefit impacting 2014 that did not reoccur in 2015. The decline in wholesale margins due to lower gas prices in KCP&L Missouri were a fuel cost recovery mechanism was implemented late in the year also contributed to the decline. However, we were pleased to implement the fuel recovery mechanism in the quarter as it minimizes margin risk moving forward. These negative impacts were partially offset by new retail rates and increase in weather normalized demand, lower fuel and purchase power cost and higher other margins. We continue our laser focus on managing cost. For the year O&M exclusive of items with direct revenue offset, declined approximately 1%. Over the last five years as a result of our continued commitment to cost management, annualized O&M growth exclusive of those same items increased less than 1% despite increased pressure from emerging regulatory grid security requirements such as CIPS and cyber security. Demand growth also remains a key focus area. 2015 weather normalized demand growth grew 0.4% net of our energy efficiency program, marking our third consecutive year of demand growth. We plan active role in supporting this growth through competitive retail rates, providing customers with Tier one service and by partnering with our communities to offer tools that promote the economic strength of the region. More globally we continue to be encouraged by the broader economic climate in the Kansas City region. Year-to-date December 2015, the unemployment rate in Kansas City was 3.8%, well below the national average of 4.8%. The residential real estate market remained strong. The number of single family residential real estate permit issued in 2015 increased 10% over 2014. Including multifamily permits, the total for 2015 increased 7% over the same year — same prior year period. Turning to Slide 10 as Terry mentioned, we are introducing our 2016 EPS guidance range of $1.65 to $1.08. The primary drivers of this range include a full year of new retail rates in our KCP&L Missouri and Kansas jurisdictions; weather normalized demand growth, consistent with recent trends of flat to 0.5% net of the estimated impact of our energy efficiency programs and continued discipline cost and capital management. While we will likely see a bit of an increase in O&M for the year due to our strong actions and performance in 2015, we continue our laser focus on managing our business in the current environment. And on the weather front, the year is off to a bit of a mild start, but we have the rest of the year ahead of us and are confident in our ability to manage the year. In the capital markets area supported by our strong NOL position, we have no activity planned in 2016 and have no equity needs for the foreseeable future. Turning to Slide 11, we are excited about our long term opportunity to grow our business while meeting the increasing needs of our customers. As we look forward, we’re targeting annualized earnings growth of 4% to 5% through 2020 off of this year’s guidance range of $1.65 to $1.08. This earnings growth will be driven by annualized rate base growth of 2% to 3% resulting from more targeted investment to empower customers and optimize our grid. I won’t belabor the point, but we will remain disciplined in our cost and capital management. As we look at our O&M profile over the next five years, we’ll be working hard to manage our annualized growth rates to be in line with or below the historical rate of inflation. And as evidenced by our modest ate base growth plan, we will be intentionally focusing our investment consistent with our regulatory frameworks for regulatory lag in the material ongoing challenge. In addition we will continue to develop our national transmission business and our regional economy is healthy and supports our earnings growth profile. At a higher level and as you can likely go in from our comments this morning, our focus remains on minimizing regulatory lag. As Terry mentioned, we are actively working with a broad stakeholder group towards regulatory policy change in Missouri and are committed to evolving the regulatory construct. That said, change is not always easy and we are proactively responding to the existing regulatory construct by filing more frequent rate case. Bottom line is that our team is actively working to eliminate the dips in earnings we have historically experienced and believe this is our current best tool along with tightly managing our investment activities to minimize lag. However there are limits to this strategy as Missouri is based on a historical test year and 11 month rate case process. So given our plans for more frequent and sometimes staggered rate cases over the next few years, we do not expect the smooth upward earnings trajectory through 2020 as a material regulatory reform, but we’ll continue to see material revenue steps when new rates in the various jurisdiction become effective, offsetting the lag from jurisdictions for new rate have not gone into effect. Slide 12 contains a list of considerations for 2017 through 2020 much of which we’ve covered in our presentation today. I’d also like to highlight one additional item. The expansion of bonus depreciation while dampening our rate base growth rate did increase future income tax benefits to nearly $1 billion at yearend 2015. As a result we do not anticipate paying significant cash income taxes through approximately 2024 that eliminates the need for additional equity in the foreseeable future. The details of our NOLs and tax credits can be found in the appendix. And again our expectations for demand growth moving forward are consistent with the recent trends and we will continue our focus on operational excellence and tight cost management that separates again and active management of the rate case calendar to minimize lag. As we wrap up on Slide 13 I’d note that with a decade long investment cycle behind us and increasing cash flexibility, we are in a much stronger position for the next decade. Our confidence drives our increased long-term annualized dividend growth target of 5% to 7% with emphasis towards the top side of the range. This strong dividend growth target will lead to a dividend payout ratio of 60% to 70% with the flexibility for potential share repurchases in the later years of the target window. We’re excited to deliver the opportunities in front of us and have a clear commitment to strengthen our utility infrastructure and regulatory frameworks to promote regional growth and in fact — and exceed customer expectations while delivering dependable shareholder returns. Thanks for your time this morning. We’re now happy to answer any questions you might have. Question-and-Answer Session Operator [Operator Instructions] And our first question comes from the line of Charles Fishman of Morningstar. Your line is now open please go ahead. Charles Fishman Thank you. Terry the partnering that you’re talking about doing with other stakeholders in Missouri, is that the [10.28 house 24.95]? Terry Bassham Yeah. That’s what I was talking about. Charles Fishman And then I’m sorry are you getting the feedback like I am on my phone? Terry Bassham I’m not, but you’re a little fuzzy but… Charles Fishman Okay/ I’m on a headset, but let me keep trying. All right, just one other question I guess, we had this bankrupt — there was that aluminum smelter in the Southern part of the state and my impression was they never saw a rate increase or a tracker, they never saw one they liked and they always voted against or at least had their legislative representative vote against it and they were pretty influential. With their bankruptcy, does that — it’s unfortunate certainly for the employees, for the region, but does that give this thing, the new legislation a higher profitability than we’ve seen in the past? Terry Bassham Yes, certainly. You’re talking about Noranda, which happen to be the largest user of electricity in the State of Missouri and is an Ameren customer and certainly that has been one of our challenges in the past and with — I would just say that with the current process, we’re working through, we’re partnering with them as well. They were Ameren obviously, but yeah I would say that they are with us in terms of a final solution that would help solve several issues and that is one of the things that’s different about this session than has been probably in the last four or five sessions. Charles Fishman So my impression is after a — they were very little ensuring if they’re out of the process, that sort of sucks the oxygen out of opposition? Terry Bassham And it more than out of the process, they’re actually in the process in support of what we’re trying to do here. So it is a definite change to what’s been happening in the past. Charles Fishman Okay. Thank you very much. That was it. Terry Bassham Thank you. Operator Thank you. And our next question comes from the line of Brian Russo of Ladenburg Thalmann. Your line is now open. Please go ahead. Brian Russo Hi good morning. Terry Bassham Good morning. Brian Russo Just on slide 11, you noticed rate case, long term growth rate in 2% to 3% but an EPS growth rate of 4% to 5%. How do you try to capture the incremental EPS growth versus the rate base growth? Kevin Bryant Yeah so Brian that comes in a couple of forms. One is continued cost management, but more importantly as you look at us towards the end of an investment cycle, our equity ratios for regulated purposes have dipped a bit. We expect for our cash position to create an opportunity for us to improve our equity ratios as we come out of that side of the build cycle and so that combination with solid management and little growth we think leads to a solid 4% to 5% earnings growth trajectory. Brian Russo Okay. Got it and just the midpoint of your 2016 guidance, it looks like it’s kind of in line below 8% earned ROE, is that accurate? Kevin Bryant Yeah, it’s about a 150 basis points of regulatory lag. Brian Russo Okay. And you mentioned potential share repurchase flexibility in the future, maybe you could just elaborate on that a little bit? Kevin Bryant Yeah that’s something we wanted to just to put out there publicly. As we get to the end of a five-year cycle with an improving cash flow and a moderating CapEx profile consistent with our regulatory construct, we think we’ll have cash flexibility and so amongst other things not only improving our equity ratio, but we think that there may be potential for share repurchases in the latter edge of that timeframe. So it’s something we’re going to make sure we talk to focus about. Obviously several years away, but something that could be utilization of cash. Brian Russo Okay. And then just lastly what’s next kind of on the legislative calendar that we should be looking out for on these senate bills and the house bill line of utility regulations? Terry Bassham Yeah this is Terry the next step would be senate hearings. So that will happen in the coming weeks and it will probably work through that process before the house picks up and does anything, but we would expect senate to have hearings in the coming weeks. Brian Russo Okay. Great, thank you. Terry Bassham Thank you. Operator Thank you. And our next question comes from the line of Gregg Orrill of Barclays. Your line is now open please go ahead. Gregg Orrill Yeah. Thank you. Do you have year-end rate base numbers for KCP&L jurisdictions? Kevin Bryant I don’t think we have that broken out in this presentation. It would still be consistent with what we were talking about in the third and fourth quarter as we finalized our cases last year that totaled to the $6.6 billion of rate base in total. Gregg Orrill Got it. Thank you. Operator Thank you. And our next question comes from the line of Paul Ridzon of Keybanc. Your line is now open please go ahead. Paul Ridzon Thanks. My questions have been answered. So I stood out. Thanks. Terry Bassham Thanks Paul. Operator Thank you. And our next question comes from the line of Chris Turnure of JPMorgan. Your line is now open. Please go ahead. Chris Turnure Okay. Good morning Terry and Kevin. I just wanted to get some color on the later years of your CapEx forecast. There is a lot of environmental spend in there and a couple other drivers that kind of increased it in the later years. How can we think about that plan changing at all in response to success in that legislative arena or failure there pardon me, and kind of the same question on the ability for you guys to do a little bit better or get more constructed outcomes in our current rate cases, rate case now and the one later this year? Terry Bassham Yeah. So this is Terry and I’ll let Kevin jump in here as well. The focus for us on this legislation is first and foremost earning our allowed return on our current investments and being able to fully earn the ROEs the commission awards. Certainly if we had more certainty around a process, we would be able to invest additional dollars on certain things, but that would be based on need and potentially additional other legislation in case issues. The CPP from that perspective remember doesn’t have any specific dollars in our CapEx yet and so we wouldn’t remove anything based on that ruling, but it could be additive if in fact we got a specific ruling. So there’s opportunities there as well. Kevin Bryant Yes and the only other thing I might add is that towards the back end of this CapEx disclosure and we’ve extended it out obviously an additional year, what you see in that environmental line it includes investment to comply with the Clean Water Act. So potentially for equipment associated with some of our river plants. Obviously we think we have a little bit of flexibility that CapEx has shifted out in the ’18, ’19, ’20 timeframe, but that forms the basis of the majority of the environmental CapEx in that timeframe. Chris Turnure Got you. And then on the dividend as we look towards November of this year it could potentially be in two rate cases at that time in Missouri depending on your strategy going forward. How can we think about your comfort level during an increase at the same level that you did last year and kind of keeping up within the payout ratio guidance if you are in fact fully speed to regulatory activity at that time? Kevin Bryant Yeah I think we’ve been clear and in fact have done year after year now for many years we’ve taken the position that a healthy utility with growing dividend is important for our state shareholders and all stakeholders and we’re not bothered by the fact that we might have a dividend increase fall within the time period. We’re also considering a rate case and we’ve had good response. Nobody has suggested that that’s not appropriate. So our guidance here obviously around the dividend recognizes the fact you just mentioned and when time comes, we’ll evaluate that with the Board, but the rate case wouldn’t stop us from doing the right thing. Chris Turnure Okay. Good to hear. Thanks. Kevin Bryant Thank you. Terry Bassham And if I might real quick, I think Gregg from Barclays your question I got my act together and got the answer. It’s about $4.7 billion of rate base at year end for KCP&L and Missouri. Hopefully, that answers the previous question. Operator [Operator Instructions] And our next question comes from the line of Andy Levi of Avon Capital. Your line is now open. Please go ahead. Andy Levi Hey, good morning, gentlemen. Terry Bassham Hey Andy. Kevin Bryant Hey Andy. Andy Levi Hey, just quick questions. There is a big background, look at that. So on the growth rate did you say if I heard correctly, that it’s not liner, that it is choppy or… Kevin Bryant That’s right Andy. We’re trying to remind folks that with historical test years and 11-month process, you’re still going to see dips in regulatory lag, which creates the need for rate cases. What our current plan contemplates is more frequent rate cases to smooth out those grips. But again, it’s not just going to be a smooth 4% to 5% growth from this point through 2020. We’re still going to have to manage that current regulatory process unless we get a change in the regulatory mechanism as Terry discussed. Andy Levi So how should we think about this, oh, I am sorry, were you going to say something Terri? Terry Bassham No. Andy Levi Oh, I am sorry, this background thing is… Terry Bassham Sorry about this. Go ahead. Andy Levi So just trying to understand, so we take your 2016 $1.73 I guess that has been deployed and then we grow that 4% to 5% off the $1.73 through 2020, which gives you another not sure which are accompanied and that’s where you plan to get, but in between that it could be choppy, but it could ultimately by 2020 that’s the number we should focus on that you’re trying to say? Kevin Bryant That’s right. And I wouldn’t say choppy, it just won’t be a straight line because for example now we’ve got our GMO case that we’re getting ready to file. We’ve got four years of lag built up at the GMO jurisdiction. So when those new rates come into effect next year we’ll see those new rates, but remember we will have ongoing lag from KCP&L Missouri primarily due to transmission expense and property tax. In the interim and as Terry mentioned, we’ll file a case likely targeting the second half of this year and then those new rates will come in sometime after that case is filed. So we’re trying to eliminate that choppy thing, but it’s not going to be a smooth straight line through 2020. Andy Levi Got it. Okay. Thank you guys. Kevin Bryant All right Andy. Thank you. Operator Thank you. And I am showing no further questions at this time. I would now like to turn the call over to Terry Bassham for closing remarks. Terry Bassham All right. Well thank you, everybody for joining the call. Thank you for your questions and obviously we’ll keep you updated along the way as things progress. Have a good day. Operator Ladies and gentlemen, thank you for participating in today’s conference. This concludes today’s program. You may all disconnect. Everyone, have a great day. Copyright policy: All transcripts on this site are the copyright of Seeking Alpha. However, we view them as an important resource for bloggers and journalists, and are excited to contribute to the democratization of financial information on the Internet. 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