GUARANTY

     This Guaranty, dated as of July 26, 2002, is made by Great Plains Energy
Incorporated (herein called "Guarantor"), a Missouri corporation with its
principal place of business located at 1201 Walnut, Kansas City, Missouri 64106,
in favor of PG&E Energy Trading - Power, L.P. (herein called "Creditor") with
its principal place of business located at 7600 Wisconsin Ave., Bethesda, MD
20814

     In order to induce Creditor to enter into, on the date hereof and from time
to time thereafter, agreements or contracts (herein collectively called the
"Agreements") with Strategic Energy, L.L.C. (herein called "Debtor"), a Delaware
limited liability company and a related company of Guarantor (Guarantor has an
indirect ownership interest in Debtor), with its principal place of business
located at Two Gateway Center, Pittsburgh, PA 15222, Guarantor acknowledges
adequate consideration and hereby agrees as follows:

     Section 1.  Guaranty. Guarantor hereby unconditionally guarantees the
punctual and complete payment when due (whether at stated maturity, by
acceleration or otherwise), of any and all indebtedness, liabilities, and
obligations under the Agreements of Debtor to Creditor now or hereafter
existing, whether absolute or contingent, joint and/or several, secured or
unsecured, direct or indirect (all such indebtedness, liabilities and
obligations are being herein collectively called the "Obligations"). This
Guaranty is a guarantee of payment and not of collection. Guarantor acknowledges
that it is jointly and severally liable for payment of the Obligations.

     Section 2.  Demands. If Debtor fails or refuses to pay any Obligations when
due, and Creditor elects to exercise its rights under this Guaranty, Creditor
shall make a demand upon Guarantor (hereinafter referred to as a "Payment
Demand"). A Payment Demand shall be in writing and shall reasonably and briefly
specify in what manner and what amount Debtor has failed to pay and an
explanation of why such payment is due, with a specific statement that Creditor
is calling upon Guarantor to pay under this Guaranty. A Payment Demand
satisfying the foregoing requirements when delivered to Guarantor pursuant to
Section 7 of this Guaranty shall be required with respect to Obligations before
Guarantor is required to pay such Obligations hereunder and shall be deemed
sufficient notice to Guarantor that it must pay the Obligations within ten (10)
business days after its receipt of the Payment Demand. A single written Payment
Demand that complies with the terms of this Section 2 shall be effective as to
any specific failure to pay during the continuance of such failure to pay, until
Debtor or Guarantor has cured such failure to pay, and additional written
demands concerning such failure to pay shall not be required until such failure
to pay is cured.

     Section 3. Waiver. Except as otherwise provided in Sections 2 or 8 hereof,
Guarantor hereby waives:

     (a)  notice of acceptance of this Guaranty, of the creation and/or
existence of any of the Obligations and of any action by Creditor in reliance
hereon or in connection herewith;

     (b)  promptness, diligence, presentment, demand for payment, notice of
dishonor or nonpayment, protest and notice of protest with respect to the
Obligations; and

     (c)  any requirement that suit be brought against, or any other action by
Creditor be taken against, or any notice of default or other notice be given to,
or any demand be made on, the Debtor or any other person, or that any other
action be taken or not taken as a condition to Guarantor's obligations under
this Guaranty or as a condition to enforcement of this Guaranty against
Guarantor.

     Except as to applicable statutes of limitation or repose, no delay of
Creditor in the exercise of, or failure to exercise, any rights hereunder shall
operate as a waiver of such rights, a waiver of any other rights or a release of
Guarantor from any obligations hereunder.

     Guarantor consents to the renewal, compromise, extension, acceleration or
other changes in the time of payment of or other changes in the terms of the
Obligations, or any part thereof or any changes or modifications to the terms of
the Agreements (collectively, "Changes"); however, such consent shall not be
deemed to add to, delete from, or modify any of the terms and conditions of this
Guaranty.

     Section 4. Representations and Warranties. Guarantor hereby represents and
warrants to Creditor as follows:

     (a)  Guarantor is a corporation, duly organized, validly existing and in
good standing under the laws of the state of its organization, and is duly
qualified and in good standing in each jurisdiction where the nature of its
business or the character of the assets and properties owned or held under lease
by it requires such qualification, except where the failure to so qualify could
not reasonably be expected to have a material adverse effect on Guarantor.
Guarantor has all requisite power and authority, organizational or otherwise, to
conduct in all material respects its business and to own, or hold under lease,
its material assets or properties and to execute and deliver, and perform all of
its obligations under this Guaranty;

     (b)  The execution, delivery and performance by Guarantor of this Guaranty
are within the Guarantor's organizational powers, have been duly authorized by
all necessary corporate action and do not contravene the organizing documents of
Guarantor or any law or material contractual restriction binding on or affecting
Guarantor; and

     (c)  This Guaranty is the legal, valid and binding obligation of Guarantor
enforceable against the Guarantor in accordance with its terms except as the
enforceability of this Guaranty may be limited by the effect of any applicable
bankruptcy, insolvency, reorganization, moratorium or similar laws affecting
creditors rights generally and by general principles of equity.

     Section 5. Setoffs and Counterclaims. Without limiting Guarantor's own
defenses and rights hereunder, and except as provided in Section 3, Guarantor
reserves to itself all rights, setoffs, counterclaims and other defenses to
which Debtor or any other affiliate of Guarantor is or may be entitled to,
relating to or arising from or out of the Agreements or otherwise, except for
defenses relating to, arising from or out of the bankruptcy, insolvency,
dissolution or liquidation of Debtor.

     Section 6. Amendments, etc. No amendment or waiver of any provision of this
Guaranty nor consent to any departure by Guarantor therefrom shall in any event
be effective unless the same shall be in writing and signed by Creditor, and
then such waiver or consent shall be effective only in the specific instance and
for the specific purpose for which given.

     Section 7. Addresses for Notices. All notices and other communications
provided for hereunder (collectively called "Notice") shall be in writing and
delivered personally or mailed by certified mail, postage prepaid and return
receipt requested, or by telegram or telecopier, as follows:

To Guarantor:

Great Plains Energy Incorporated

 

1201 Walnut

 

Kansas City, MO 64106

 

Fax No.: (816) 556-2992

 

Attn: Treasurer

   

To Creditor:

PG&E Energy Trading - Power, L.P.

 

7600 Wisconsin Ave.

 

Bethesda, MD 20814

 

301-280-6800

 

301-280-6913

 

Attn: Legal Group

     Notice given by personal delivery or mail shall be effective upon actual
receipt. Notice given by telegram or telecopier shall be effective upon actual
receipt if received during the recipient's normal business hours, or at the
beginning of the recipient's next business day after receipt if not received
during the recipient's normal business hours. All Notices by telegram or
telecopier shall be confirmed promptly after transmission in writing by
certified mail or personal delivery. Any party may change any address to which
Notice is to be given to it by giving notice as provided above of such change of
address.

     Section 8. No Waiver; Remedies. Except as to applicable statutes of
limitation or repose, no failure on the part of Creditor to exercise, and no
delay in exercising, any right hereunder shall operate as a waiver thereof; nor
shall any single or partial exercise thereof or the exercise of any other right.
The remedies herein provided are cumulative and not exclusive of any remedies
provided by law.

     Section 9. Continuing Guaranty; Termination. This Guaranty is an absolute
and continuing guaranty, except as specifically set forth herein. This Guaranty
shall terminate on the first to occur of (a) thirty (30) days after Creditor
receives written notice from Guarantor of such termination and (b) the full
payment of all Obligations and (c) July 26, 2003 (the "Termination Date").
Except as set forth in the next sentence, from and after the Termination Date,
Guarantor shall have no liability whatsoever for any Obligations created or
incurred after the Termination Date. Notwithstanding the preceding sentence,
this Guaranty shall continue to be effective or reinstated, as the case may be,
if at any time payment of the Obligations created or incurred on or before the
Termination Date, or any part thereof, is rescinded or must otherwise be
returned by Creditor upon the insolvency, bankruptcy or reorganization of Debtor
or otherwise, all as though such payment had not been made. Guarantor's
obligations hereunder may not be assigned without Creditor's written consent.
This Guaranty shall be binding upon Guarantor, its successors and assigns, and
shall inure to the benefit of and be enforceable by Creditor and its successors
and assigns.

     Section 10. Governing Law. This Guaranty and the rights and obligations of
the parties hereunder shall be governed by and construed in accordance with the
laws of the State of New York, without reference to conflict of laws principles
of said state.

     Section 11. Limitation on Guarantor's Liability. Notwithstanding anything
herein to the contrary, the liability of Guarantor under this Guaranty shall be
limited to the following:

     (a)  Guarantor's liability hereunder shall be and is specifically limited
to payments expressly required to be made by Debtor under the Agreements, but in
no event shall Guarantor be liable or otherwise subject hereunder to any
indirect, special, incidental, consequential, exemplary, punitive or tort
damages, costs, attorney's fees and expenses or loss of profits; and

     (b)  Guarantor's aggregate liability to Creditor under this Guaranty is
limited to and shall not exceed Thirty Million Dollars ($30,000,000.00).

     Section 12. Entire Agreement. This Guaranty embodies the entire agreement
and understanding between Guarantor and Creditor and supersedes all prior and
contemporaneous agreements and understandings relating to the subject matter
hereof. The headings in this Guaranty are for purposes of reference only, and
shall not affect the meaning hereof.

     IN WITNESS WHEREOF, Guarantor has caused this Guaranty to be duly executed
and delivered by its duly authorized officer as of the date first above written.

 

GREAT PLAINS ENERGY INCORPORATED

       

By:

/s/Andrea F. Bielsker

Name:

Andrea F. Bielsker

Title:

Senior Vice President -

 

Finance, Chief Financial

 

Officer and Treasurer