UNITED STATES  SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K/AAmendment No. 1

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

For
the fiscal year ended December 31, 2003

or

[ ] TRANSITION REPORT
PURSUANT SECTION 13 OR 15(d) OF THE SECURITIES   EXCHANGE ACT OF 1934 For the transition
period from _______to_______

|Commission |  | Registrant, State of Incorporation, |  | I.R.S. Employer                  
|---------- |  | ----------------------------------- |  | ---------------------------------
|
|
|0-33207    |  |                                     |  | GREAT PLAINS ENERGY INCORPORATED 
|           |  |                                     |  | (A Missouri Corporation)         
|           |  |                                     |  | 1201 Walnut Street               
|           |  |                                     |  | Kansas City, Missouri 64106      
|           |  |                                     |  | (816) 556-2200                   
|           |  |                                     |  | www.greatplainsenergy.com        
|
|1-707      |  |                                     |  | KANSAS CITY POWER & LIGHT COMPANY
|           |  |                                     |  | (A Missouri Corporation)         
|           |  |                                     |  | 1201 Walnut Street               
|           |  |                                     |  | Kansas City, Missouri 64106      
|           |  |                                     |  | (816) 556-2200                   
|           |  |                                     |  | www.kcpl.com                     

Each of the following classes or
series of securities registered pursuant to Section 12(b) of the Act is registered on the
New York Stock Exchange:

|Registrant                       |  | Title of each class |  |                                                    
|-------------------------------- |  | ------------------- |  | ---------------------------------------------------
|Great Plains Energy Incorporated |  |                     |  | Cumulative Preferred Stock par value $100 per share
|                                 |  |                     |  | Cumulative Preferred Stock par value $100 per share
|                                 |  |                     |  | Cumulative Preferred Stock par value $100 per share
|                                 |  |                     |  | Common Stock without par value                     

Securities registered
pursuant to Section 12(g) of the Act.  None.

---

Indicate by check mark whether the
registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period
that the registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. YesX No ___

Indicate by check mark if disclosure
of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and
will not be contained, to the best of registrants knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form 10-K or any
amendment to the Form 10-K. X

Indicate by check mark whether the
registrant is an accelerated filer (as defined in Rule 12b-2 of the Act.)
Great Plains Energy Incorporated YesX No ___     Kansas City Power &
Light Company Yes___  No X

The aggregate market value of the
voting and non-voting common equity held by non-affiliates of Great Plains Energy
Incorporated (based on the closing price of its common stock on the New York Stock
Exchange on June 30, 2003, was approximately $1,998,389,779. All of the common equity of
Kansas City Power & Light Company is held by Great Plains Energy Incorporated, an
affiliate of Kansas City Power & Light Company.

On March 5, 2004, Great Plains
Energy Incorporated had 69,258,755 shares of common stock outstanding. The aggregate
market value of the common stock held by nonaffiliates of Great Plains Energy Incorporated
(based upon the closing price of its common stock on the New York Stock Exchange on March
5, 2004) was approximately $2,444,141,464. On March 5, 2004, Kansas City
Power & Light Company had one share of common stock outstanding and held by Great
Plains Energy Incorporated.

Documents Incorporated by Reference

Portions of the 2004 Proxy Statement
of Great Plains Energy Incorporated to be filed with the Securities and Exchange
Commission are incorporated by reference in Part III of this report.

---

Great Plains Energy Incorporated
(Great Plains Energy) and Kansas City Power & Light Company (KCP&L) separately
file this Amendment No. 1 on Form 10-K/A to the combined Annual Report on Form 10-K for
the year ended December 31, 2003. Information contained herein relating to an individual
registrant and its subsidiaries is filed by such registrant on its own behalf. Each
registrant makes representations only as to information relating to itself and its
subsidiaries.

# Explanatory Note

Great Plains Energy and KCP&L
separately filed on March 10, 2004, their combined Annual Report on Form 10-K for the year
ended December 31, 2003 (2003 10-K). Subsequent to the filing, a typographical error was
discovered in the date paragraph of the PricewaterhouseCoopers LLP Reports of Independent
Auditors contained in Item 8 of the 2003 10-K. The date paragraph reference to Note 9
should have been Note 4. The same typographical error was discovered in the Reports of
Independent Auditors on Financial Statement Schedule contained in Item 15 of the 2003
10-K.

Amendment No. 1 sets forth Items 8
and 15 of the 2003 10-K in their entirety, as amended to include the corrected Reports of
Independent Auditors of PricewaterhouseCoopers LLP. There are no other changes to Item 8.
Item 15 is also amended to reflect the page numbers of the financial schedules in this
Amendment No. 1 and to reflect the incorporation by reference of certain exhibits filed
with the 2003 10-K. There are no other changes to Item 15.

The chief executive officer and the
chief financial officer of each of Great Plains Energy and KCP&L have determined that
the filing of this Amendment No. 1 on Form 10-K/A and the amended Reports of Independent
Auditors of PricewaterhouseCoopers LLP contained herein have not altered their conclusions
with regard to the disclosure controls and procedures of the respective companies as set
forth in Item 9A of the 2003 10-K.

2

GLOSSARY OF TERMS

The following is a
glossary of frequently used abbreviations or acronyms that are found throughout this
report:

|Abbreviation or Acronym | Definition
|----------------------- | ----------
|
|35 Act                  |           
|ABO                     |           
|AFDC                    |           
|APB                     |           
|ARB                     |           
|ARO                     |           
|Bracknell               |           
|CenturyTel              |           
|Clean Air Act           |           
|CO2                     |           
|COLI                    |           
|Compact                 |           
|Consolidated KCP&L      |           
|Custom Energy Holdings  |           
|Digital Teleport        |           
|DOE                     |           
|DTI                     |           
|                        |           
|EBITDA                  |           
|EIRR                    |           
|ELC                     |           
|EPA                     |           
|EPS                     |           
|ERISA                   |           
|FASB                    |           
|FERC                    |           
|FIN                     |           
|GAAP                    |           
|GPES                    |           
|GPP                     |           
|                        |           
|Great Plains Energy     |           
|Holdings                |           
|HSS                     |           
|IBEW                    |           
|IEC                     |           
|                        |           
|IRS                     |           
|ISO                     |           
|KCC                     |           
|KCP&L                   |           
|                        |           
|KLT Energy Services     |           
|KLT Gas                 |           
|KLT Gas portfolio       |           

3

|Abbreviation or Acronym | Definition
|----------------------- | ----------
|
|KLT Inc.                |           
|KLT Investments         |           
|KLT Telecom             |           
|KW                      |           
|kWh                     |           
|MAC                     |           
|MACT                    |           
|Medicare Act            |           
|MISO                    |           
|MODOR                   |           
|MPSC                    |           
|MW                      |           
|MWh                     |           
|NAAQS                   |           
|NEIL                    |           
|NERC                    |           
|NOx                     |           
|NRC                     |           
|OCI                     |           
|Receivables Company     |           
|                        |           
|RSAE                    |           
|RTO                     |           
|SEC                     |           
|Securities Trust        |           
|SE Holdings             |           
|Services                |           
|SFAS                    |           
|SIP                     |           
|SOP                     |           
|SPP                     |           
|Strategic Energy        |           
|WCNOC                   |           
|Wolf Creek              |           
|Worry Free              |           
|XLCA                    |           

4

# ITEM 8. CONSOLIDATED
FINANCIAL STATEMENTS

# GREAT PLAINS ENERGY
                  Consolidated Statements of Income

|Year Ended December 31                                         | 2003
|-------------------------------------------------------------- | ----
|
|(thousands, except per share amounts)                         
|Operating Revenues                                             |     
|Electric revenues - KCP&L                                      |     
|Electric revenues - Strategic Energy                           |     
|Other revenues                                                 |     
|                                                               |     
|Total                                                          |     
|
|Operating Expenses                                             |     
|Fuel                                                           |     
|Purchased power - KCP&L                                        |     
|Purchased power - Strategic Energy                             |     
|Other                                                          |     
|Maintenance                                                    |     
|Depreciation and depletion                                     |     
|General taxes                                                  |     
|(Gain) Loss on property                                        |     
|                                                               |     
|Total                                                          |     
|
|Operating income                                               |     
|Income (loss) from equity investments                          |     
|Minority interest in subsidiaries                              |     
|Non-operating income                                           |     
|Non-operating expenses                                         |     
|Interest charges                                               |     
|
|Income (loss) from continuing operations before income taxes   |     
|and cumulative effect of a change in accounting principle      |     
|Income taxes                                                   |     
|
|Income (loss) from continuing operations before cumulative     |     
|effect of a change in accounting principle                     |     
|Loss from discontinued operations, net of income               |     
|taxes (Note 8)                                                 |     
|Cumulative effect of a change in accounting principle (Note 6) |     
|
|Net income (loss)                                              |     
|Preferred stock dividend requirements                          |     
|
|Earnings (loss) available for common stock                     |     
|
|                                                               |     
|Average number of common shares outstanding                    |     
|                                                               |     
|Basic and diluted earnings (loss) per common share             |     
|Continuing operations                                          |     
|Discontinued operations                                        |     
|Cumulative effect                                              |     
|
|Basic and diluted earnings (loss) per common share             |     
|
|                                                               |     
|Cash dividends per common share                                |     
|

The accompanying Notes
to Consolidated Financial Statements are an integral part of these statements.

5

# GREAT PLAINS ENERGY
                                         Consolidated Balance Sheets

|                                                           | December 31
|---------------------------------------------------------- | -----------
|2002                                                      
|
|(thousands)                                               
|ASSETS                                                     |            
|Current Assets                                             |            
|Cash and cash equivalents                                  |            
|Restricted cash                                            |            
|Receivables                                                |            
|Fuel inventories, at average cost                          |            
|Materials and supplies, at average cost                    |            
|Deferred income taxes                                      |            
|Assets of discontinued operations                          |            
|Other                                                      |            
|                                                           |            
|Total                                                      |            
|
|Nonutility Property and Investments                        |            
|Affordable housing limited partnerships                    |            
|Gas property and investments                               |            
|Nuclear decommissioning trust fund                         |            
|Other                                                      |            
|                                                           |            
|Total                                                      |            
|
|Utility Plant, at Original Cost                            |            
|Electric                                                   |            
|Less-accumulated depreciation                              |            
|                                                           |            
|Net utility plant in service                               |            
|Construction work in progress                              |            
|Nuclear fuel, net of amortization of $113,472 and $121,951 |            
|                                                           |            
|Total                                                      |            
|
|Deferred Charges                                           |            
|Regulatory assets                                          |            
|Prepaid pension costs                                      |            
|Goodwill                                                   |            
|Other deferred charges                                     |            
|                                                           |            
|Total                                                      |            
|
|Total                                                      |            
|

The accompanying Notes
to Consolidated Financial Statements are an integral part of these statements.

6

# GREAT PLAINS ENERGY
                                         Consolidated Balance Sheets

|                                                              | December 31
|------------------------------------------------------------- | -----------
|2002                                                         
|
|(thousands)                                                  
|LIABILITIES AND CAPITALIZATION                                |            
|Current Liabilities                                           |            
|Notes payable                                                 |            
|Current maturities of long-term debt                          |            
|EIRR bonds classified as current                              |            
|Accounts payable                                              |            
|Accrued taxes                                                 |            
|Accrued interest                                              |            
|Accrued payroll and vacations                                 |            
|Accrued refueling outage costs                                |            
|Supplier collateral                                           |            
|Liabilities of discontinued operations                        |            
|Other                                                         |            
|                                                              |            
|Total                                                         |            
|
|Deferred Credits and Other Liabilities                        |            
|Deferred income taxes                                         |            
|Deferred investment tax credits                               |            
|Asset retirement obligations                                  |            
|Accrued nuclear decommissioning costs                         |            
|Pension liability                                             |            
|Other                                                         |            
|                                                              |            
|Total                                                         |            
|
|Capitalization                                                |            
|Common stock equity                                           |            
|Common stock-150,000,000 shares authorized without par value  |            
|69,259,203 and 69,196,322 shares issued, stated value         |            
|Unearned compensation                                         |            
|Capital stock premium and expense                             |            
|Retained earnings                                             |            
|Treasury stock-3,265 and 152 shares, at cost                  |            
|Accumulated other comprehensive loss                          |            
|                                                              |            
|Total                                                         |            
|Cumulative preferred stock $100 par value                     |            
|3.80% - 100,000 shares issued                                 |            
|4.50% - 100,000 shares issued                                 |            
|4.20% - 70,000 shares issued                                  |            
|4.35% - 120,000 shares issued                                 |            
|                                                              |            
|Total                                                         |            
|Company-obligated Mandatorily Redeemable Preferred Securities |            
|of a trust holding solely KCP&L Subordinated Debentures       |            
|Long-term debt (Note 18)                                      |            
|                                                              |            
|Total                                                         |            
|
|Commitments and Contingencies (Note 13)                       |            
|
|Total                                                         |            
|

The accompanying Notes
to Consolidated Financial Statements are an integral part of these statements.

7

# GREAT PLAINS ENERGY
                                   Consolidated Statements of Cash Flows

|Year Ended December 31                                       | 2003
|------------------------------------------------------------ | ----
|
|(thousands)                                                 
|Cash Flows from Operating Activities                         |     
|Net income (loss)                                            |     
|Less: Loss from discontinued operations, net of income taxes |     
|                                                             |     
|Income (loss) from continuing operations                     |     
|Adjustments to reconcile income (loss) to net cash           |     
|from operating activities:                                   |     
|Cumulative effect of a change in accounting principles       |     
|Depreciation and depletion                                   |     
|Amortization of:                                             |     
|Nuclear fuel                                                 |     
|Other                                                        |     
|Deferred income taxes (net)                                  |     
|Investment tax credit amortization                           |     
|(Income) Loss from equity investments                        |     
|(Gain) Loss on property                                      |     
|Deferred storm costs                                         |     
|Minority interest                                            |     
|Other operating activities (Note 2)                          |     
|                                                             |     
|Net cash from operating activities                           |     
|
|Cash Flows from Investing Activities                         |     
|Utility capital expenditures                                 |     
|Allowance for borrowed funds used during construction        |     
|Purchases of investments                                     |     
|Purchases of nonutility property                             |     
|Proceeds from disposition of property                        |     
|Hawthorn No. 5 partial insurance recovery                    |     
|Hawthorn No. 5 partial litigation settlements                |     
|Loan to DTI prior to majority ownership                      |     
|Other investing activities                                   |     
|                                                             |     
|Net cash from investing activities                           |     
|
|Cash Flows from Financing Activities                         |     
|Issuance of common stock                                     |     
|Issuance of long-term debt                                   |     
|Repayment of long-term debt                                  |     
|Net change in short-term borrowings                          |     
|Dividends paid                                               |     
|Other financing activities                                   |     
|                                                             |     
|Net cash from financing activities                           |     
|
|Net Change in Cash and Cash Equivalents                      |     
|Cash and Cash Equivalents from Continuing                    |     
|Operations at Beginning of Year                              |     
|                                                             |     
|Cash and Cash Equivalents from Continuing                    |     
|Operations at End of Year                                    |     
|
|
|Net Change in Cash and Cash Equivalents from                 |     
|Discontinued Operations                                      |     
|Cash and Cash Equivalents from Discontinued                  |     
|Operations at Beginning of Year                              |     
|                                                             |     
|Cash and Cash Equivalents from Discontinued                  |     
|Operations at End of Year                                    |     
|

The accompanying Notes
to Consolidated Financial Statements are an integral part of these statements.

8

# GREAT PLAINS ENERGY
          Consolidated Statements of Common Stock Equity

|                                              | 2003 | 2002 | 2001
|--------------------------------------------- | ---- | ---- | ----
|
|
|(thousands, except share data)               
|Common Stock                                  |      |      |     
|Beginning balance                             |      |      |     
|Issuance of common stock                      |      |      |     
|Issuance of restricted common stock           |      |      |     
|
|Total common stock                            |      |      |     
|
|
|Unearned Compensation                         |      |     
|Issuance of restricted common stock           |      |      |     
|Compensation expense recognized               |      |      |     
|
|Total unearned compensation                   |      |      |     
|
|
|Capital Stock Premium and Expense             |      |     
|Beginning balance                             |      |      |     
|Issuance of common stock                      |      |      |     
|Other                                         |      |      |     
|
|Total capital stock premium and expense       |      |      |     
|
|
|Retained Earnings                             |      |     
|Beginning balance                             |      |      |     
|Net income (loss)                             |      |      |     
|Dividends:                                    |      |     
|Common stock                                  |      |      |     
|Preferred stock - at required rates           |      |      |     
|Options                                       |      |      |     
|
|Total retained earnings                       |      |      |     
|
|
|Treasury Stock                                |      |     
|Beginning balance                             |      |      |     
|Treasury shares acquired                      |      |      |     
|Treasury shares reissued                      |      |      |     
|
|Total treasury stock                          |      |      |     
|
|
|Accumulated Other Comprehensive               |      |     
|Income (Loss), net of tax                     |      |     
|Beginning balance                             |      |      |     
|Gain (loss) on derivative hedging instruments |      |      |     
|Minimum pension obligation                    |      |      |     
|Reclassifications to revenues and expenses    |      |      |     
|Cumulative effect of a change in              |      |     
|accounting principles                         |      |      |     
|
|Ending balance                                |      |      |     
|
|
|
|Total Common Stock Equity                     |      |      |     
|

The accompanying Notes
to Consolidated Financial Statements are an integral part of these statements.

9

# GREAT PLAINS ENERGY
         Consolidated Statements of Comprehensive Income

|Year Ended December 31                                  | 2003
|------------------------------------------------------- | ----
|
|(thousands)                                            
|Net Income (Loss)                                       |     
|
|Other comprehensive loss:                               |     
|Gain (loss) on derivative hedging instruments           |     
|Income tax (expense) benefit                            |     
|                                                        |     
|Net gain (loss) on derivative hedging instruments       |     
|                                                        |     
|
|Change in minimum pension obligation                    |     
|Income tax benefit                                      |     
|                                                        |     
|Net change in minimum pension obligation                |     
|                                                        |     
|Reclassification to revenues and expenses, net of tax   |     
|
|Comprehensive income (loss) before cumulative effect of |     
|a change in accounting principles, net of income taxes  |     
|Cumulative effect of a change in accounting principles, |     
|net of income taxes                                     |     
|
|Comprehensive Income (Loss)                             |     
|

The accompanying Notes
to Consolidated Financial Statements are an integral part of these statements.

10

# KANSAS CITY POWER & LIGHT
COMPANY                    Consolidated Statements of Income

|Year Ended December 31                                         | 2003
|-------------------------------------------------------------- | ----
|
|(thousands)                                                   
|Operating Revenues                                             |     
|Electric revenues                                              |     
|Other revenues                                                 |     
|                                                               |     
|Total                                                          |     
|
|Operating Expenses                                             |     
|Fuel                                                           |     
|Purchased power                                                |     
|Other                                                          |     
|Maintenance                                                    |     
|Depreciation and depletion                                     |     
|General taxes                                                  |     
|Gain on property                                               |     
|                                                               |     
|Total                                                          |     
|
|Operating income                                               |     
|Income from equity investments                                 |     
|Minority interest in subsidiaries                              |     
|Non-operating income                                           |     
|Non-operating expenses                                         |     
|Interest charges                                               |     
|
|Income from continuing operations before income taxes          |     
|and cumulative effect of a change in accounting principle      |     
|Income taxes                                                   |     
|
|Income from continuing operations before cumulative            |     
|effect of a change in accounting principle                     |     
|Loss from discontinued operations, net of                      |     
|income taxes (Note 8)                                          |     
|Cumulative effect of a change in accounting principle (Note 6) |     
|
|Net income                                                     |     
|Preferred stock dividend requirements                          |     
|                                                               |     
|Earnings available for common stock                            |     
|

The disclosures
regarding KCP&L included in the accompanying Notes to Consolidated Financial Statements
are an integral part of these statements.

11

# KANSAS CITY POWER & LIGHT
COMPANY                        Consolidated Balance Sheets

|                                                           | December 31
|---------------------------------------------------------- | -----------
|2002                                                      
|
|(thousands)                                               
|ASSETS                                                     |            
|Current Assets                                             |            
|Cash and cash equivalents                                  |            
|Receivables                                                |            
|Fuel inventories, at average cost                          |            
|Materials and supplies, at average cost                    |            
|Deferred income taxes                                      |            
|Assets of discontinued operations                          |            
|Other                                                      |            
|                                                           |            
|Total                                                      |            
|
|Nonutility Property and Investments                        |            
|Nuclear decommissioning trust fund                         |            
|Other                                                      |            
|                                                           |            
|Total                                                      |            
|
|Utility Plant, at Original Cost                            |            
|Electric                                                   |            
|Less-accumulated depreciation                              |            
|                                                           |            
|Net utility plant in service                               |            
|Construction work in progress                              |            
|Nuclear fuel, net of amortization of $113,472 and $121,951 |            
|                                                           |            
|Total                                                      |            
|
|Deferred Charges                                           |            
|Regulatory assets                                          |            
|Prepaid pension costs                                      |            
|Other deferred charges                                     |            
|                                                           |            
|Total                                                      |            
|
|Total                                                      |            
|

The disclosures
regarding KCP&L included in the accompanying Notes to Consolidated Financial Statements
are an integral part of these statements.

12

# KANSAS CITY POWER & LIGHT
COMPANY                        Consolidated Balance Sheets

|                                                              | December 31
|------------------------------------------------------------- | -----------
|2002                                                         
|
|(thousands)                                                  
|LIABILITIES AND CAPITALIZATION                                |            
|Current Liabilities                                           |            
|Notes payable to Great Plains Energy                          |            
|Current maturities of long-term debt                          |            
|EIRR bonds classified as current                              |            
|Accounts payable                                              |            
|Accrued taxes                                                 |            
|Accrued interest                                              |            
|Accrued payroll and vacations                                 |            
|Accrued refueling outage costs                                |            
|Liabilities of discontinued operations                        |            
|Other                                                         |            
|                                                              |            
|Total                                                         |            
|
|Deferred Credits and Other Liabilities                        |            
|Deferred income taxes                                         |            
|Deferred investment tax credits                               |            
|Asset retirement obligations                                  |            
|Accrued nuclear decommissioning costs                         |            
|Pension liability                                             |            
|Other                                                         |            
|                                                              |            
|Total                                                         |            
|
|Capitalization                                                |            
|Common stock equity                                           |            
|Common stock-1,000 shares authorized without par value        |            
|1 share issued, stated value                                  |            
|Retained earnings                                             |            
|Accumulated other comprehensive loss                          |            
|                                                              |            
|Total                                                         |            
|Company-obligated Mandatorily Redeemable Preferred Securities |            
|of a trust holding solely KCP&L Subordinated Debentures       |            
|Long-term debt (Note 18)                                      |            
|                                                              |            
|Total                                                         |            
|
|Commitments and Contingencies (Note 13)                       |            
|
|Total                                                         |            
|

The disclosures
regarding KCP&L included in the accompanying Notes to Consolidated Financial Statements
are an integral part of these statements.

13

# KANSAS CITY POWER & LIGHT
COMPANY             Consolidated Statements of Cash Flows

|Year Ended December 31                                        | 2003
|------------------------------------------------------------- | ----
|
|(thousands)                                                  
|Cash Flows from Operating Activities                          |     
|Net income                                                    |     
|Less:  Loss from discontinued operations, net of income taxes |     
|                                                              |     
|Income from continuing operations                             |     
|Adjustments to reconcile income to net cash                   |     
|from operating activities:                                    |     
|Cumulative effect of a change in accounting principles        |     
|Depreciation and depletion                                    |     
|Amortization of:                                              |     
|Nuclear fuel                                                  |     
|Other                                                         |     
|Deferred income taxes (net)                                   |     
|Investment tax credit amortization                            |     
|Income from equity investments                                |     
|Gain on property                                              |     
|Deferred storm costs                                          |     
|Minority interest                                             |     
|Other operating activities (Note 2)                           |     
|                                                              |     
|Net cash from operating activities                            |     
|
|Cash Flows from Investing Activities                          |     
|Utility capital expenditures                                  |     
|Allowance for borrowed funds used during construction         |     
|Purchases of investments                                      |     
|Purchases of nonutility property                              |     
|Proceeds from disposition of property                         |     
|Hawthorn No. 5 partial insurance recovery                     |     
|Hawthorn No. 5 partial litigation settlements                 |     
|Loan to DTI prior to majority ownership                       |     
|Other investing activities                                    |     
|                                                              |     
|Net cash from investing activities                            |     
|
|Cash Flows from Financing Activities                          |     
|Issuance of long-term debt                                    |     
|Repayment of long-term debt                                   |     
|Net change in short-term borrowings                           |     
|Dividends paid                                                |     
|Dividends paid to Great Plains Energy                         |     
|Cash of KLT Inc. and GPP dividended to                        |     
|Great Plains Energy                                           |     
|Equity contribution from Great Plains Energy                  |     
|Other financing activities                                    |     
|                                                              |     
|Net cash from financing activities                            |     
|
|Net Change in Cash and Cash Equivalents                       |     
|Cash and Cash Equivalents from Continuing                     |     
|Operations at Beginning of Year                               |     
|                                                              |     
|Cash and Cash Equivalents from Continuing                     |     
|Operations at End of Year                                     |     
|
|
|Net Change in Cash and Cash Equivalents from                  |     
|Discontinued Operations                                       |     
|Cash and Cash Equivalents from Discontinued                   |     
|Operations at Beginning of Year                               |     
|                                                              |     
|Cash and Cash Equivalents from Discontinued                   |     
|Operations at End of Year                                     |     
|

The disclosures
regarding KCP&L included in the accompanying Notes to Consolidated Financial Statements
are an integral part of these statements.

14

# KANSAS CITY POWER & LIGHT
COMPANY            Consolidated Statements of Common Stock Equity

|                                                   | 2003 | 2002 | 2001
|-------------------------------------------------- | ---- | ---- | ----
|
|
|(thousands, except share data)                    
|Common Stock                                       |      |      |     
|Beginning balance                                  |      |      |     
|Exchange of KCP&L common stock to                  |      |     
|Great Plains Energy common stock                   |      |      |     
|Exchange of preferred stock and the associated     |      |     
|stock discount to Great Plains Energy              |      |      |     
|Issuance of new KCP&L common stock                 |      |      |     
|Equity contribution from Great Plains Energy       |      |      |     
|
|Total common stock                                 |      |      |     
|
|
|Capital Stock Premium and Expense                  |      |     
|Beginning balance                                  |      |      |     
|Transfer of capital stock premium and expense      |      |     
|to Great Plains Energy                             |      |      |     
|
|Total capital stock premium and expense            |      |      |     
|
|
|Retained Earnings                                  |      |     
|Beginning balance                                  |      |      |     
|Net income (loss)                                  |      |      |     
|Dividends:                                         |      |     
|Common stock                                       |      |      |     
|Common stock held by Great Plains Energy           |      |      |     
|Preferred stock - at required rates                |      |      |     
|Equity dividend of KLT Inc. to Great Plains Energy |      |      |     
|
|Total retained earnings                            |      |      |     
|
|
|Accumulated Other Comprehensive                    |      |     
|Income (Loss), net of tax                          |      |     
|Beginning balance                                  |      |      |     
|Gain (loss) on derivative hedging instruments      |      |      |     
|Minimum pension obligation                         |      |      |     
|Reclassifications to revenues and expenses         |      |      |     
|Equity dividend of KLT Inc. to Great Plains Energy |      |      |     
|Cumulative effect of a change in                   |      |     
|accounting principles                              |      |      |     
|
|Ending balance                                     |      |      |     
|
|
|
|Total Common Stock Equity                          |      |      |     
|

The disclosures
regarding KCP&L included in the accompanying Notes to Consolidated Financial Statements
are an integral part of these statements.

15

# KANSAS CITY POWER & LIGHT
COMPANY          Consolidated Statements of Comprehensive Income

|Year Ended December 31                                  | 2003
|------------------------------------------------------- | ----
|
|(thousands)                                            
|Net income                                              |     
|
|Other comprehensive loss:                               |     
|Gain (loss) on derivative hedging instruments           |     
|Income tax (expense) benefit                            |     
|                                                        |     
|Net gain (loss) on derivative hedging instruments       |     
|                                                        |     
|
|Change in minimum pension obligation                    |     
|Income tax benefit                                      |     
|                                                        |     
|Net change in minimum pension obligation                |     
|                                                        |     
|Reclassification to revenues and expenses, net of tax   |     
|
|Comprehensive income before cumulative effect of a      |     
|change in accounting principles, net of income taxes    |     
|Cumulative effect of a change in accounting principles, |     
|net of income taxes                                     |     
|
|Comprehensive Income                                    |     
|

The disclosures
regarding KCP&L included in the accompanying Notes to Consolidated Financial Statements
are an integral part of these statements.

16

# GREAT PLAINS ENERGY
INCORPORATED KANSAS CITY POWER &
LIGHT COMPANY Notes to Consolidated
Financial Statements

The notes to consolidated financial
statements that follow are a combined presentation for Great Plains Energy Incorporated
and Kansas City Power & Light Company, both registrants under this filing. The terms
Great Plains Energy, Company, KCP&L and
consolidated KCP&L are used throughout this report. Great Plains
Energy and the Company refer to Great Plains Energy Incorporated and its
consolidated subsidiaries, unless otherwise indicated. KCP&L refers to
Kansas City Power & Light Company, and consolidated KCP&L refers to
KCP&L and its consolidated subsidiaries.

# 1. SUMMARY OF
SIGNIFICANT ACCOUNTING POLICIES

OrganizationGreat Plains Energy, a Missouri
corporation incorporated in 2001, is a public utility holding company registered with and
subject to the regulation of the Securities and Exchange Commission (SEC) under the Public
Utility Holding Company Act of 1935 (35 Act). Through a corporate restructuring, which was
consummated on October 1, 2001, Great Plains Energy became the parent company and sole
owner of the common stock of KCP&L. Each outstanding share of KCP&L stock was
exchanged for a share of Great Plains Energy stock. As a result, Great Plains Energy
replaced KCP&L as the listed entity on the New York Stock Exchange with the trading
symbol GXP. In connection with the reorganization, KCP&L transferred to Great Plains
Energy its interest in two wholly-owned subsidiaries, KLT Inc. and Great Plains Power
Incorporated (GPP). Great Plains Energy does not own or operate any significant assets
other than the stock of its subsidiaries.

Great Plains Energy has five direct
subsidiaries:

| |  |  
| |  | -
| |  | o
| |  |  
| |  |  
| |  |  
| |  |  
| |  |  
| | 
| |  | o
| |  |  
| |  |  
| |  |  
| |  |  
| |  |  
| | 
| |  | o
| |  |  
| |  |  
| |  |  
| | 
| |  | o
| |  |  

17

| |  | o |  | Great Plains Energy Services Incorporated (Services) was formed in 2003 as a service company under the 35 Act to provide | 
| |  | - |  | ------------------------------------------------------------------------------------------------------------------------ | 
| |  |   |  | support and administrative services to Great Plains Energy and certain of its subsidiaries.                              | 

The operations of Great Plains Energy
and its subsidiaries are divided into three reportable segments: KCP&L, Strategic
Energy and KLT Gas. Great Plains Energys legal structure differs from the functional
management and financial reporting of its reportable segments. Other activities not
considered a reportable segment include the operations of HSS, GPP, Services, all KLT Inc.
operations other than Strategic Energy and KLT Gas and holding company operations.

Cash and Cash EquivalentsCash and cash equivalents consist of
highly liquid investments with original maturities of three months or less. For Great
Plains Energy this includes Strategic Energys cash held in trust of $16.1 million
and $11.4 million at December 31, 2003 and 2002, respectively.

Strategic Energy has entered into
collateral arrangements with selected electricity power suppliers that require selected
customers to remit payment to lockboxes that are held in trust and managed by a Trustee.
As part of the trust administration, the Trustee remits payment to the supplier for
electricity purchased by Strategic Energy. On a monthly basis, any remittances into the
lockboxes in excess of disbursements to the supplier are remitted back to Strategic
Energy.

Restricted CashStrategic Energy has entered into
Master Power Purchase and Sale Agreements with its power suppliers. Certain of these
agreements contain provisions whereby, to the extent Strategic Energy has a net exposure
to the purchased power supplier, collateral requirements are to be maintained. Collateral
posted in the form of cash to Strategic Energy is restricted by agreement, but would
become unrestricted in the event of a default by the purchased power supplier. Restricted
cash collateral at December 31, 2003, was $20.9 million. There were no such cash
collateral deposits at December 31, 2002.

Fair Value of Financial
InstrumentsThe following methods and assumptions
were used to estimate the fair value of each class of financial instruments for which it
is practicable to estimate that value:

Nonutility Property and
Investments Consolidated KCP&Ls investments and nonutility property
includes the nuclear decommissioning trust fund recorded at fair value. Fair value is
based on quoted market prices of the investments held by the fund. In addition to
consolidated KCP&Ls investments, Great Plains Energys investments and
nonutility property include KLT Investments affordable housing limited partnerships.
The fair value of KLT Investments affordable housing limited partnership total
portfolio, based on the discounted cash flows generated by tax credits, tax deductions and
sale of properties, approximates book value. The fair values of other various investments
are not readily determinable and the investments are therefore stated at cost.

Long-term DebtThe
incremental borrowing rate for similar debt was used to determine fair value if quoted
market prices were not available. Great Plains Energys and consolidated
KCP&Ls book value of long-term debt was 5% below fair value at December 31,
2003.

Investments in
Affordable Housing Limited PartnershipsAt December 31, 2003, KLT Investments
had $52.6 million in affordable housing limited partnerships. Approximately 65% of these
investments were recorded at cost; the equity method was used for the remainder. Tax
expense is reduced in the year tax credits are generated. The investments generate future
cash flows from tax credits and tax losses of the partnerships. The investments also
generate

18

cash flows from the sales of the properties. For most investments, tax credits
are received over ten years. KLT Investments projects tax credits to run through 2009. A
change in accounting principle relating to investments made after May 19, 1995, requires
the use of the equity method when a company owns more than 5% in a limited partnership
investment. Of the investments recorded at cost, $33.1 million exceed this 5% level but
were made before May 19, 1995. Management does not anticipate making additional
investments in affordable housing limited partnerships at this time.

On a quarterly basis, KLT Investments
compares the cost of those properties accounted for by the cost method to the total of
projected residual value of the properties and remaining tax credits to be received.
Estimated residual values are based on studies performed by an independent firm. Based on
the latest comparison, KLT Investments reduced its investments in affordable housing
limited partnerships by $11.0 million, $9.0 million, and $13.5 million in 2003, 2002 and
2001, respectively. These amounts are included in Non-operating expenses on the
consolidated statements of income. Pretax reductions in affordable housing investments are
estimated to be $7 million, $10 million and $3 million for the years 2004 through 2006,
respectively. These projections are based on the latest information available but the
ultimate amount and timing of actual reductions could be significantly different from the
above estimates. The properties underlying the partnership investment are subject to
certain risks inherent in real estate ownership and management. Even after these estimated
reductions, earnings from the investments in affordable housing are expected to be
positive for the years 2004 through 2006.

Natural Gas PropertiesThe Company does not have significant
oil and gas producing activities based on the results of the significance tests preformed
as prescribed in Statement of Financial Accounting Standards (SFAS) No. 69,
Disclosures About Oil and Gas Producing Activities. KLT Gas follows the full
cost method of accounting for its natural gas properties, substantially all of which were
undeveloped at December 31, 2003. The full cost method requires that all costs associated
with property acquisition, exploration and development activities be capitalized. Any
excess of book value over the present value (10% discount rate) of estimated future net
revenues (at year-end prices) from the natural gas reserves is expensed. All natural gas
property interests owned by KLT Gas are located in the United States.

Natural gas property and equipment
included in gas property and investments on Great Plains Energys consolidated
balance sheets totaled $9.8 million, net of $63.8 million of accumulated depreciation and
impairments, in 2003 and $45.0 million, net of $8.5 million of accumulated depreciation,
in 2002. See Note 7 for information regarding the impairment of KLT Gas assets.

In June 2001, the Financial
Accounting Standards Board (FASB) issued SFAS No. 141, Business Combinations,
which requires the purchase method of accounting for business combinations initiated after
June 30, 2001. In July 2001, the FASB also issued SFAS No. 142, Goodwill and Other
Intangible Assets, which discontinues the practice of amortizing goodwill and
indefinite lived intangible assets and initiates an annual review for impairment.
Intangible assets with a determinable useful life will continue to be amortized over that
period. The amortization provisions apply to goodwill and intangible assets acquired after
June 30, 2001. SFAS No. 141 and 142 clarify that more assets should be distinguished and
classified between tangible and intangible. KLT Gas did not change or reclassify
contractual mineral rights included in gas property and investments on Great Plains
Energys consolidated balance sheet upon adoption of these standards. KLT Gas
management believes its classification of such mineral rights under the full cost method
of accounting for natural gas properties, which is consistent with industry practice, is
appropriate. However, the accounting profession and others are engaged in industry-wide
deliberations regarding whether SFAS No. 141 and 142 require contractual mineral rights to
be classified as intangible assets. Based on the results of the deliberations, if
management determines reclassification is necessary, KLT Gas gas property and
investments would be reduced and intangible assets would increase by a like amount at
December 31,

19

2003 and 2002, respectively, representing cost incurred from the effective
date of June 30, 2001. The amounts are not significant to Great Plains Energys
consolidated balance sheets. The provisions of SFAS No. 141 and 142 impact only the
balance sheet and associated footnote disclosure, and any required reclassification would
not impact Great Plains Energys cash flows or results of operations.

Other Nonutility PropertyGreat Plains Energys and
consolidated KCP&Ls other nonutility property includes land, buildings,
vehicles, general office equipment and software and is recorded at historical cost, net of
accumulated depreciation, and has a range of depreciable lives of 3 to 50 years.

Utility PlantKCP&Ls utility plant is
stated at historical costs of construction. These costs include taxes, an allowance for
the cost of borrowed and equity funds used to finance construction and payroll-related
costs, including pensions and other fringe benefits. Replacements, improvements and
additions to units of property are capitalized. Repairs of property and replacements of
items not considered to be units of property are expensed as incurred (except as discussed
under Wolf Creek Refueling Outage Costs). When property units are retired or otherwise
disposed, the original cost, net of salvage, is charged to accumulated depreciation.
Substantially all utility plant is pledged as collateral for KCP&Ls mortgage
bonds under the General Mortgage Indenture and Deed of Trust dated December 1, 1986, as
supplemented.

The balances of utility plant in
service with a range of depreciable lives are listed in the table below:

|                            
|----------------------------
|December 31                 
|Utility Plant In Service    
|
|(millions)                  
|Production (23 - 42 years)  
|Transmission (27 - 76 years)
|Distribution (8 - 75 years) 
|General (5 - 50 years)      
|
|Total                       
|

Through December 31, 2003, KCP&L
has received $164 million in insurance recoveries related to property destroyed in the
February 17, 1999, explosion at Hawthorn No. 5. Additionally, KCP&L filed suit against
multiple defendants who are alleged to have responsibility for the explosion. In 2003,
various defendants settled with KCP&L in this litigation resulting in KCP&L
recording $17.3 million in recoveries of property destroyed. Recoveries received have been
recorded as an increase in accumulated depreciation.

As prescribed by the Federal Energy
Regulatory Commission (FERC), Allowance for Funds used During Construction (AFDC) is
charged to the cost of the plant. AFDC is included in the rates charged to customers by
KCP&L over the service life of the property. AFDC equity funds are included as a
non-cash item in non-operating income and AFDC borrowed funds are a reduction of interest
charges. The rates used to compute gross AFDC are compounded semi-annually and averaged
8.2% in 2003, 4.4% in 2002 and 6.8% in 2001.

In 2001, the American Institute of
Certified Public Accountants issued an exposure draft on a proposed Statement of Position
(SOP) Accounting for Certain Costs and Activities Related to Property, Plant, and
Equipment. The SOP is expected to be issued in 2004 and is effective for fiscal
years beginning after December 15, 2004. If issued in its present format, the SOP would
prohibit KCP&L from accruing in advance for its Wolf Creek refueling outage, which
occurs on an 18 month cycle. The next refueling outage is scheduled for the second quarter
2005. The SOP would also prohibit the capitalization of

20

almost all administrative and
general costs. The Company is currently analyzing the effect of the SOP on the
Companys results of operations.

Depreciation, Depletion
and AmortizationDepreciation of KCP&Ls
utility plant other than nuclear fuel is computed using the straight-line method over the
estimated lives of depreciable property based on rates approved by state regulatory
authorities. Annual depreciation rates average about 3%. Depreciation of nonutility
property is computed using the straight-line method. Excluding DTI and RSAE, annual
depreciation rates for 2003, 2002 and 2001 were 13.6%, 11.9% and 14.6%, respectively.

KCP&L amortizes nuclear
fuel-to-fuel expense based on the quantity of heat produced during the generation of
electricity. Regulatory assets and liabilities are amortized consistent with the recovery
period.

Prior to adoption of SFAS No. 142 on
January 1, 2002, Great Plains Energy and consolidated KCP&L amortized goodwill using
the straight-line method over a 15 and 40-year life, respectively. See Note 6 for
additional information concerning the adoption of SFAS No. 142.

Depletion, depreciation and
amortization of natural gas properties are calculated using the units of production
method. The depletion per mmBtu was $2.78 in 2003, $4.61 in 2002 and $1.35 in 2001. The
depletion per mmBtu in 2002 reflected downward revisions in reserve estimates. Unproved
gas properties are not amortized but are assessed for impairment either individually or on
an aggregated basis.

Nuclear FuelUnder the Nuclear Waste Policy Act of
1982, the Department of Energy (DOE) is responsible for the permanent disposal of spent
nuclear fuel. KCP&L pays the DOE a quarterly fee of one-tenth of a cent for each
kilowatt-hour of net nuclear generation delivered and sold for the future disposal of
spent nuclear fuel. These disposal costs are charged to fuel expense. In 2002, the U.S.
Senate approved Yucca Mountain, Nevada as a long-term geologic repository. The DOE is
currently in the process of preparing an application to obtain the NRC license to proceed
with construction of the repository. Management cannot predict when this site may be
available. Under current DOE policy, once a permanent site is available, the DOE will
accept spent nuclear fuel first from the owners with the oldest spent fuel. Wolf Creek
Generating Station (Wolf Creek) has completed an on-site storage facility that is designed
to hold all spent fuel generated at the plant through the end of its 40-year licensed life
in 2025.

Wolf Creek Refueling
Outage CostsKCP&L accrues forecasted
incremental costs to be incurred during scheduled Wolf Creek refueling outages monthly
over the units operating cycle, normally about 18 months. Estimated incremental
costs, which include operating, maintenance and replacement power expenses, are based on
budgeted outage costs and the estimated outage duration. Changes to or variances from
those estimates are recorded when known or are probable.

Nuclear Plant
Decommissioning CostsThe Missouri Public Service
Commission (MPSC) and The State Corporation Commission of the State of Kansas (KCC)
require KCP&L and the other owners of Wolf Creek to submit an updated decommissioning
cost study every three years. The most recent study was submitted to the MPSC and the KCC
on August 30, 2002, and is the basis for the decommissioning cost estimates in the
following table. Both the MPSC and the KCC have accepted the 2002 cost estimate as filed
and have approved funding schedules for this cost estimate. The MPSC-approved schedule
assumes funding through the expiration of Wolf Creeks current Nuclear Regulatory
Commission (NRC) operating license (2025).

21

The KCC-approved schedule assumes that Wolf
Creek will be granted a 20-year license extension and, thus, assumes funding through 2045.
At this time, the owners of Wolf Creek have neither sought nor received a license
extension from the NRC. The escalation rates and earnings assumptions shown in the table
below are those that were last explicitly approved by the MPSC and the KCC. The
decommissioning cost estimates are based on the immediate dismantlement method and include
the costs of decontamination, dismantlement and site restoration. KCP&L does not
expect plant decommissioning to start before 2025.

|                                                  
|--------------------------------------------------
|KCC                                               
|
|(millions)                                        
|Current cost of decommissioning (in 2002 dollars):
|Total Station                                     
|47% share                                         
|Future cost of decommissioning (in 2025 dollars): 
|Total Station                                     
|47% share                                         
|Future cost of decommissioning (in 2045 dollars): 
|Total Station                                     
|47% share                                         
|                                                  
|Annual escalation factor                          
|Annual return on trust assets (a)                 
|

|    | 
|--- | 
|(a) | 
|    | 
|    | 

KCP&L currently contributes about
$3.5 million annually to a tax-qualified trust fund to be used to decommission Wolf Creek.
These costs are charged to other operating expenses and recovered in billings to
customers. These funding levels assume a certain return on trust assets. If the actual
return on trust assets is below the anticipated level, KCP&L believes a rate increase
would be allowed ensuring full recovery of decommissioning costs over the remaining life
of the station.

The trust fund balance, including
reinvested earnings, was $75.0 million and $63.3 million at December 31, 2003 and 2002,
respectively. The related liabilities for decommissioning are included in Asset Retirement
Obligations at December 31, 2003, and Accrued Nuclear Decommissioning Costs at December
31, 2002.

The Company adopted SFAS No. 143,
Accounting for Asset Retirement Obligations on January 1, 2003. See Note 15
for discussion of Asset Retirement Obligations (ARO) including those associated with
nuclear plant decommissioning costs.

Regulatory MattersKCP&L is subject to the
provisions of SFAS No. 71, Accounting for the Effects of Certain Types of
Regulation. Pursuant to SFAS No. 71, KCP&L defers items on the balance sheet
resulting from the effects of the ratemaking process, which would not be recorded under
Generally Accepted Accounting Principles (GAAP) if KCP&L were not regulated. See Note
5 for additional information concerning regulatory matters.

Revenue RecognitionKCP&L and Strategic Energy
recognize revenues on sales of electricity when the service is provided. KLT Gas records
natural gas sales revenues based on the amount of gas sold to purchasers on its behalf.
Receivables recorded at December 31, 2003 and 2002, include $28.4 million and $27.2
million,

22

respectively, for electric services provided but not yet billed by KCP&L, and
$81.2 million and $57.3 million, respectively, for electric services provided, but not yet
billed by Strategic Energy. See Note 3 for additional information on receivables.

To supply its retail contracts,
Strategic Energy primarily purchases long-term blocks of electricity under forward
contracts in fixed quantities at fixed prices from power suppliers based on projected
usage. Strategic Energy sells any excess retail supply of electricity back into the
wholesale market. The proceeds from the sale of excess supply of electricity are recorded
as a reduction of purchased power. The amount of excess retail supply sales that reduced
purchased power was $160.4 million, $126.4 million and $95.6 million in 2003, 2002 and
2001, respectively.

Property Gains and LossesNet gains and losses from the sales
of assets, businesses, and net asset impairments are recorded in operating expenses. See
Note 9 for additional information regarding the net impairment of DTI assets.

Asset ImpairmentsLong-lived assets and intangible
assets subject to amortization are periodically reviewed for impairment whenever events or
changes in circumstances indicate that the carrying amount of an asset may not be
recoverable as prescribed under SFAS No. 144 Accounting for the Impairment or
Disposal of Long-lived Assets. SFAS No. 144 requires that if the sum of the
undiscounted expected future cash flows from an asset to be held and used is less than the
carrying value of the asset, an asset impairment must be recognized in the financial
statements. The amount of impairment recognized is the excess of the carrying value of the
asset over its fair value. See Note 7 for information regarding the impairments of KLT Gas
assets.

Goodwill is tested for impairment at
least annually and more frequently when indicators of impairment exist as prescribed under
SFAS No. 142. SFAS No. 142 requires that if the fair value of a reporting unit is less
than its carrying value including goodwill, an impairment charge for goodwill must be
recognized in the financial statements. To measure the amount of the impairment loss to
recognize, the implied fair value of the reporting unit goodwill would be compared with
its carrying value. See Note 6 for information regarding the impact of adopting SFAS No.
142 on goodwill and goodwill amortization.

Income TaxesIn accordance with SFAS No. 109,
Accounting for Income Taxes, Great Plains Energy has provided deferred taxes
for all temporary book-tax differences using the liability method. The liability method
requires that deferred tax balances be adjusted to reflect enacted tax rates that are
anticipated to be in effect when the temporary differences reverse.

Great Plains Energy and its
subsidiaries file consolidated federal and combined and separate state income tax returns.
Income taxes for consolidated or combined subsidiaries are allocated to the subsidiaries
based on separate company computations of taxable income or loss. In accordance with 35
Act requirements, the holding company allocates its own net income tax benefits to its
direct subsidiaries based on the positive taxable income of each company in the
consolidated federal or combined state returns. KCP&L uses the separate return method
to compute its income tax provision. For the years ended December 31, 2003 and 2002, there
were no differences between the separate return method used to compute KCP&Ls
tax provision and the amount it owed to Great Plains Energy.

KCP&L has established a
regulatory asset for the additional future revenues to be collected from customers for
deferred income taxes. KCP&L records operating income tax expense based on ratemaking
principles.

23

Tax credits are recognized in the
year generated except for certain KCP&L investment tax credits that have been deferred
and amortized over the remaining service lives of the related properties.

Environmental MattersEnvironmental costs are accrued when
it is probable a liability has been incurred and the amount of the liability can be
reasonably estimated.

Stock OptionsThe Company has one equity
compensation plan, which is described more fully in Note 10. The Company adopted the fair
value recognition provisions of SFAS No. 123, Accounting for Stock-Based
Compensation, for its stock options as of January 1, 2003. The Company has elected
to use the modified prospective method of adoption as prescribed under SFAS No. 148,
Accounting for Stock-Based Compensation-Transition and Disclosure. Under the
modified prospective method of adoption, stock option compensation cost recognized
beginning January 1, 2003, is the same as if the fair value recognition provisions of SFAS
No. 123 had been applied to all stock options granted after October 1, 1995.

The following table illustrates the
effect on net income and earnings per share (EPS) for Great Plains Energy as if the fair
value method had been applied in preparing 2002 and 2001 financial statements.

|                                                
|------------------------------------------------
|2002                                            
|
|(thousands except per share amounts)            
|Net income (loss), as reported                  
|Add: Stock-based employee compensation          
|expense included in net income as reported,     
|net of income taxes                             
|Less: Total stock-based employee compensation   
|expense determined under fair value             
|based method for all awards, net of income taxes
|                                                
|Pro forma net income (loss) as if fair          
|value method were applied                       
|                                                
|Basic and diluted earnings (loss)               
|per common share, as reported                   
|Basic and diluted earnings (loss)               
|per common share, pro forma                     
|

Basic and Diluted
Earnings (Loss) per Common Share CalculationThere was no significant dilutive
effect on Great Plains Energys earnings per share from other securities in 2003,
2002 or 2001. To determine earnings (loss) per common share, preferred stock dividend
requirements are deducted from income from continuing operations before cumulative effect
of changes in accounting principles and net income before dividing by average number of
common shares outstanding. The loss per share impact of discontinued operations, net of
income taxes, is determined by dividing the loss from discontinued operations, net of
income taxes, by the average number of common shares outstanding. The earnings (loss) per
share impact of the cumulative effect of changes in accounting principles is determined by
dividing the cumulative effect of changes in accounting principles by the average number
of common shares outstanding.

24

The following tables reconcile Great
Plains Energys basic and diluted earnings (loss) per common share calculation:

|                                                          
|----------------------------------------------------------
|
|                                                          
|(thousands except per share amounts)                      
|Income from continuing operations before cumulative effect
|Less: Preferred stock dividend requirement                
|                                                          
|Basic EPS                                                 
|Income available to common stockholders                   
|Add: effect of dilutive securities                        
|                                                          
|Diluted EPS                                               
|

|                                                          
|----------------------------------------------------------
|
|                                                          
|(thousands except per share amounts)                      
|Income from continuing operations before cumulative effect
|Less: Preferred stock dividend requirement                
|                                                          
|Basic EPS                                                 
|Income available to common stockholders                   
|Add: effect of dilutive securities                        
|                                                          
|Diluted EPS                                               
|

|                                                        
|--------------------------------------------------------
|
|                                                        
|(thousands except per share amounts)                    
|Loss from continuing operations before cumulative effect
|Less: Preferred stock dividend requirement              
|                                                        
|Basic EPS                                               
|Income available to common stockholders                 
|Add: effect of dilutive securities                      
|                                                        
|Diluted EPS                                             
|

As of December 31, 2003, there were
no anti-dilutive shares. Options to purchase 394,723 shares of common stock as of December
31, 2002 were excluded from the computation of diluted earnings per share because the
option exercise prices were greater than the average market price of the common shares at
the end of the period. Options to purchase 277,902 shares of common stock as of December
31, 2001, were excluded from the diluted earnings calculation because the Company had a
net loss from operations; therefore no potential common shares are included in the
calculation because the effect is always anti-dilutive.

25

# 2. SUPPLEMENTAL CASH
FLOW INFORMATION

|Great Plains Energy Other Operating Activities           
|---------------------------------------------------------
|
|2003                                                     
|
|Cash flows affected by changes in:                       
|Receivables                                              
|Fuel inventories                                         
|Materials and supplies                                   
|Accounts payable                                         
|Accrued taxes                                            
|Accrued interest                                         
|Wolf Creek refueling outage accrual                      
|Pension and postretirement benefit assets and obligations
|Allowance for equity funds used during construction      
|Other                                                    
|
|Total other operating activities                         
|
|Cash paid during the period:                             
|Interest                                                 
|Income taxes                                             
|

|Consolidated KCP&L Other Operating Activities            
|---------------------------------------------------------
|
|2003                                                     
|
|Cash flows affected by changes in:                       
|Receivables                                              
|Fuel inventories                                         
|Materials and supplies                                   
|Accounts payable                                         
|Accrued taxes                                            
|Accrued interest                                         
|Wolf Creek refueling outage accrual                      
|Pension and postretirement benefit assets and obligations
|Allowance for equity funds used during construction      
|Other                                                    
|
|Total other operating activities                         
|
|Cash paid during the period:                             
|Interest                                                 
|Income taxes                                             
|

KCP&L adopted SFAS No. 143 on
January 1, 2003, and recorded a liability for ARO of $99.2 million and increased property
and equipment, net of accumulated depreciation, by $18.3 million. KCP&L is a regulated
utility subject to the provisions of SFAS No. 71, and management believes it is probable
that any differences between expenses recognized under SFAS No. 143 and expenses recovered
currently in rates will be recoverable in future rates. As a result, the $16.3 million net
cumulative effect of the adoption of SFAS No. 143 was recorded as a regulatory asset and
therefore, had no impact on net income. KLT Gas also adopted SFAS No. 143 and recorded a
liability for ARO of $1.2 million, increased gas property and investments by $1.0 million
and increased operating expense by $0.2 million for the immaterial cumulative effect of
the accounting change. The adoption of SFAS No. 143 had no effect on Great Plains
Energys and consolidated KCP&Ls cash flows.

KCP&Ls Lease Trust was
consolidated in the fourth quarter of 2003, as required by FASB Interpretation (FIN) No.
46, Consolidation of Variable Interest Entities. As a result, Great Plains
Energys and consolidated KCP&Ls long-term debt increased $143.8 million.
The consolidation of the

26

Lease Trust had no effect on Great Plains Energys and
consolidated KCP&Ls cash flows. See Note 13 for additional information
concerning the consolidation of the Lease Trust.

KCP&L de-consolidated KCPL
Financing I (Securities Trust) in the fourth quarter of 2003, as required by FIN No. 46.
Great Plains Energys and consolidated KCP&Ls long-term debt increased
$154.6 million representing the 8.3% Junior Subordinated Deferrable Interest Debentures
issued by KCP&L and held by the Securities Trust. The de-consolidation of the
Securities Trust had no effect on Great Plains Energys and consolidated
KCP&Ls cash flows. See Note 19 for additional information concerning the
de-consolidation of the Securities Trust.

On June 13, 2003, HSS board of
directors approved a plan to dispose of its interest in residential services provider
RSAE. On June 30, 2003, HSS completed the disposition of its interest in RSAE. See Note 8
for additional information concerning the disposition of RSAE. The following table
summarizes Great Plains Energys and consolidated KCP&Ls loss from
discontinued operations as a result of this transaction.

|                                                
|------------------------------------------------
|Year to Date                                    
|June 30                                         
|2003                                            
|
|(thousands)                                     
|Cash repayment of supported bank line           
|Write-off of intercompany balance and investment
|Accrued transaction costs                       
|Income tax benefit                              
|                                                
|Loss on disposition                             
|Pre-disposition operating losses                
|                                                
|Discontinued operations                         
|

KLT Telecom received $19.2 million in
2003 related to the confirmation of the DTI bankruptcy. Pending final resolution of the
Missouri Department of Revenue (MODOR) Claim and the put option of a minority shareholder,
the effect of the DTI bankruptcy on the Company has been resolved. See Note 9 for
additional information concerning the DTI bankruptcy.

|                                          
|------------------------------------------
|2003                                      
|
|(thousands)                               
|Cash proceeds from bankruptcy estates     
|Cash proceeds from sale of office building
|Receivables                               
|                                          
|Total proceeds                            
|Book basis of office building sold        
|DIP financing accrual reversal            
|Accounts payable                          
|Income tax                                
|Reversal of tax valuation allowance       
|
|Gain on sale of assets                    
|

During November 2002, Great Plains
Energy indirectly acquired an additional 6% ownership in Strategic Energy through its
subsidiary IEC. The $15.1 million consideration paid for the 6% ownership consisted of
$8.0 million in Great Plains Energy common stock and promissory notes of $4.7 million
(issued by Great Plains Energy) and $2.4 million (issued by IEC). The promissory notes
were paid in January 2003. This transaction had no effect on Great Plains Energys
cash flows for the year ended December 31, 2002. See Note 12 for additional information
regarding this transaction.

27

On February 8, 2001, KLT Telecom
increased its equity ownership in DTI to a majority ownership. On December 31, 2001, DTI
filed voluntary petitions in Bankruptcy Court. As a result, DTI was consolidated and its
operations were included in KLT Telecoms results of operations from February 8,
2001, through December 31, 2001, prior to the bankruptcy filings at which time DTI was
de-consolidated. See Note 9 for additional information concerning the DTI bankruptcy.

The following table reflects a
reconciliation of DTIs effect on Great Plains Energys cash flows for the year
ended December 31, 2001, to the cash invested in DTI during 2001.

|                                            
|--------------------------------------------
|2001                                        
|
|Cash Flows from Operating Activities        
|Amounts included in net income (loss)       
|                                            
|                                            
|Depreciation                                
|Goodwill amortization                       
|Loss on property (net impairment)           
|Other operating activities                  
|Accretion of Senior Discount Notes          
|and amortization of the discount            
|Other                                       
|                                            
|DTI adjustment to operating activities      
|                                            
|Net cash from operating activities          
|Cash Flows from Investing Activities        
|Purchase of additional ownership in DTI     
|Purchase of nonutility property             
|Loans to DTI prior to consolidation         
|Other investing activities                  
|                                            
|DTI effect on cash from investing activities
|Cash Flows from Financing Activities        
|DTI effect on cash from financing activities
|                                            
|Cash flows from DTI investment              
|
|                                            
|
|Cash invested in DTI                        
|Loan to DTI Holdings                        
|Operating loans to Digital Teleport, Inc.   
|Purchase of additional ownership in DTI     
|                                            
|Cash used for DTI investment                
|

28

As described in Note 1, KCP&L
distributed, as a dividend, its ownership in KLT Inc. and GPP to Great Plains Energy on
October 1, 2001. The effect of this transaction on consolidated KCP&Ls cash
flows for the year ended December 31, 2001, is summarized in the table that follows.

|                                                          
|----------------------------------------------------------
|Effect of dividend to Great Plains Energy:                
|
|Assets                                                    
|Cash                                                      
|Equity securities                                         
|Receivables                                               
|Nonutility property and investment                        
|Goodwill                                                  
|Other assets                                              
|
|Total assets                                              
|Liabilities and Accumulated Other Comprehensive Income    
|Notes payable                                             
|Accounts payable                                          
|Accrued taxes                                             
|Accrued interest                                          
|Deferred income taxes                                     
|Deferred telecommunications revenue                       
|Other liabilities and deferred credits                    
|Long-term debt                                            
|Accumulated other comprehensive income                    
|
|Total liabilities and accumulated other                   
|comprehensive income                                      
|
|Equity dividend of KLT Inc. and GPP to Great Plains Energy
|

During the first quarter of 2001, KLT
Telecom increased its equity ownership in DTI to a majority ownership and HSS increased
its equity ownership in RSAE to a majority ownership. The effect of these transactions is
summarized in the table that follows. The initial consolidation of DTI (February 8, 2001)
and RSAE (January 1, 2001) are excluded from both Great Plains Energys and
consolidated KCP&Ls cash flows for the year December 31, 2001. See Note 9 for
information concerning the DTI bankruptcy and Note 8 for information concerning the June
2003 disposition of RSAE.

29

|                                              
|----------------------------------------------
|DTI                                           
|
|(thousands)                                   
|Cash paid to obtain majority ownership        
|Subsidiary cash                               
|                                              
|Purchase of DTI and RSAE, net of cash received
|
|Initial consolidation of subsidiaries:        
|Assets                                        
|Cash                                          
|Receivables                                   
|Other nonutility property and investments     
|Goodwill                                      
|Other assets                                  
|Eliminate equity investment                   
|                                              
|Total assets                                  
|                                              
|Liabilities                                   
|Notes payable                                 
|Accounts payable                              
|Accrued taxes                                 
|Deferred income taxes                         
|Other liabilities and deferred credits        
|Loan from KLT Telecom (a)                     
|Long-term debt                                
|                                              
|Total liabilities                             
|

|    | 
|--- | 
|(a) | 
|    | 
|    | 

# 3. RECEIVABLES

The Companys receivables are
comprised of the following:

|                                     
|-------------------------------------
|December 31                          
|2003                                 
|
|(thousands)                          
|Customer accounts receivable sold to 
|Receivables Company                  
|Consolidated KCP&L other receivables 
|                                     
|Consolidated KCP&L receivables       
|Great Plains Energy other receivables
|
|Great Plains Energy receivables      
|

KCP&L has entered into a
revolving agreement, which expires in October 2004, to sell all of its right, title and
interest in the majority of its customer accounts receivable to Kansas City Power &
Light Receivables Company (Receivables Company), which in turn sells most of the
receivables to outside investors. KCP&L expects the agreement to be renewed annually.
Accounts receivable sold under this revolving agreement totaled $87.9 million and $89.2
million at December 31, 2003 and 2002, respectively. These sales included unbilled
receivables of $28.4 million and $27.2 million at December 31, 2003 and 2002,
respectively. As a result of the sales to outside investors, Receivables Company received
$70 million in cash, which was forwarded to KCP&L as consideration for its sale. The
agreement is structured as a true sale under which the creditors of Receivables Company
are entitled to be satisfied out of the assets of Receivables Company prior to any value
being returned to KCP&L or its creditors.

30

KCP&L sells its receivables at a
fixed price based upon the expected cost of funds and charge-offs. These costs comprise
KCP&Ls loss on the sale of accounts receivable. KCP&L services the
receivables and receives an annual servicing fee of 0.25% of the outstanding principal
amount of the receivables sold and retains any late fees charged to customers.

Information regarding
KCP&Ls sale of accounts receivable is reflected in the following table.

|                                   
|-----------------------------------
|For the years ended December 31    
|
|(thousands)                        
|Gross proceeds on sale of          
|accounts receivable                
|Collections                        
|Loss on sale of accounts receivable
|Late fees                          
|

Consolidated KCP&Ls other
receivables at December 31, 2003 and 2002, consist primarily of receivables from partners
in jointly-owned electric utility plants, wholesale sales receivables, insurance
recoveries and accounts receivable held by Worry Free. Great Plains Energys other
receivables at December 31, 2003 and 2002, are primarily the accounts receivable held by
Strategic Energy including unbilled receivables held by Strategic Energy of $81.2 million
and $57.3 million at December 31, 2003 and 2002, respectively.

# 4. EQUITY METHOD
INVESTMENTS

After the acquisition of majority
ownership in RSAE (see Note 2 and Note 8 for additional information) and the equity method
investments activity discussed below, the Company has no remaining equity method
investments other than affordable housing limited partnerships held by KLT Investments.

Sale of KLT Investments
II s Ownership of Downtown Hotel GroupOn May 31, 2001, KLT Investments II
sold its 25% ownership of Kansas City Downtown Hotel Group, L.L.C. for total proceeds of
$3.8 million resulting in a $1.4 million after tax gain.

Sale of KLT Gas
PropertiesOn June 28, 2001, KLT Gas sold its
50% ownership in Patrick KLT Gas, LLC for total proceeds of $42.3 million resulting in a
$12.0 million after tax gain.

KLT Telecom Investment
in DTIIn 2001, KLT Telecom recorded a gain
on early extinguishment of debt resulting from DTIs completion of a successful
tender offer for 50.4 percent of its outstanding Senior Discount Notes prior to KLT
Telecom acquiring a majority ownership in DTI. Previously, under SFAS No. 4,
Reporting Gains and Losses from Extinguishment of Debtan amendment of APB
Opinion No. 30, all gains and losses from extinguishment of debt were required to be
aggregated and, if material, classified as an extraordinary item, net of related income
tax effect. Effective January 1, 2003, the Company adopted SFAS No. 145, Rescission
of FASB Statements No. 4, 44, and 64, Amendment of FASB Statement No. 13, and Technical
Corrections. SFAS No. 145 eliminates SFAS No. 4 and as a result, the 2001 gain on
early extinguishment of debt was restated to reflect the $25.0 million gain on early
extinguishment of debt, which is net of the losses previously recorded by DTI, but not
reflected by KLT Telecom, as income from equity method investments. KLT Telecom also
recorded $9.1 million of income tax related to the gain. See Note 9 for additional
information regarding 2001 activity in KLT Telecoms investment in DTI.

31

# 5. REGULATORY MATTERS

Regulatory Assets and
LiabilitiesAs discussed in Note 1, KCP&L is
subject to the provisions of SFAS No. 71. Accordingly, KCP&L has recorded assets and
liabilities on its balance sheet resulting from the effects of the ratemaking process,
which would not be recorded under GAAP for non-regulated entities. Regulatory assets
represent incurred costs that have been deferred because they are probable of future
recovery in customer rates. Regulatory liabilities generally represent probable future
reductions in revenue or refunds to customers. KCP&Ls continued ability to meet
the criteria for application of SFAS No. 71 may be affected in the future by competitive
forces and restructuring in the electric industry. In the event that SFAS No. 71 no longer
applied to all, or a separable portion, of KCP&Ls operations, the related
regulatory assets and liabilities would be written off unless an appropriate regulatory
recovery mechanism is provided.

|                                                 
|-------------------------------------------------
|Amortization                                     
|ending                                           
|period                                           
|
|(millions)                                       
|Taxes recoverable through future rates           
|Coal contract termination costs                  
|Decommission and decontaminate federal           
|uranium enrichment facilities                    
|Loss on reacquired debt                          
|January 2002 incremental ice storm costs         
|Change in depreciable life of Wolf Creek (Kansas)
|Cost of removal                                  
|Asset retirement obligations                     
|Other (a)                                        
|
|Total Regulatory Assets                          
|
|Regulatory Liabilities                           
|Emission allowances (b)                          
|
|Total Regulatory Liabilities                     
|

|    | 
|--- | 
|(a) | 
|    | 
|(b) | 

The Company adopted SFAS No. 143 on
January 1, 2003, and recorded liabilities for legal obligations to retire assets. In
conjunction with the adoption of SFAS No. 143, non-legal costs of removal were
reclassified for all periods presented from accumulated depreciation to a regulatory
asset. See Note 15 for discussion of asset retirement obligations. The change in the
depreciable life of Wolf Creek in 2003 was the result of the KCC stipulation and agreement
discussed below. See Note 1 for additional information.

Retail Rate MattersAt the end of January 2002, a severe
ice storm occurred throughout large portions of the Midwest, including the greater Kansas
City metropolitan area. In 2002, the KCC approved a stipulation and agreement regarding
the treatment of the $16.5 million Kansas jurisdictional portion of the ice storm costs.
Pursuant to the stipulation and agreement, KCP&L implemented a retail rate reduction
January 1, 2003, and began calculating depreciation expense on Wolf Creek using a 60-year
life instead of a 40-year life. As a result of the stipulation and agreement,
KCP&Ls retail revenues decreased approximately $12.5 million and depreciation
expense decreased approximately $7.7 million in 2003. The reduction in depreciation
expense has been recorded as a regulatory asset, as discussed above. KCP&L also agreed
to file a rate case by May 15, 2006.

32

In 2002, the MPSC approved
KCP&Ls application for an accounting authority order related to the Missouri
jurisdictional portion of the storm costs. The order allows KCP&L to defer and
amortize $20.1 million, representing the Missouri portion of the storm costs, through
January 2007. The amortization, which began in September 2002, is approximately $4.6
million annually for the remainder of the amortization period. In 2003 and 2002, the
amortization totaled $4.6 million and $1.5 million, respectively.

# 6. GOODWILL AND
INTANGIBLE PROPERTY

The Company adopted SFAS No. 142 on
January 1, 2002. Under the new standard, goodwill is no longer amortized, but rather is
tested for impairment upon adoption and at least annually thereafter. The annual test may
be performed anytime during the year, but must be performed at the same time each year.

Strategic Energys annual
impairment tests, conducted September 1, have been completed and there were no impairments
of the Strategic Energy goodwill in 2003 or 2002. Goodwill reported on Great Plains
Energys consolidated balance sheets associated with the Companys ownership in
Strategic Energy was $26.1 million at December 31, 2003 and 2002, respectively.

As a result of the transition
impairment test of RSAE goodwill in 2002, the Company recorded a $3.0 million write-down
of goodwill as a cumulative effect of a change in accounting principle. Goodwill reported
in assets of discontinued operations on Great Plains Energys and consolidated
KCP&Ls balance sheets associated with HSS ownership interest in RSAE was
$20.0 million at December 31, 2002. See Note 8 for additional information concerning the
June 2003 disposition of RSAE.

The following table adjusts the
reported 2001 Great Plains Energys and consolidated KCP&Ls income
statement information to add back goodwill amortization as if the non-amortization
provisions of SFAS No. 142 had been applied during all periods presented.

|                                                                   
|-------------------------------------------------------------------
|Great Plains                                                       
|Energy                                                             
|
|(thousands, except per share amounts)                              
|Income (loss) from continuing operations, as reported              
|Add back: Goodwill amortization                                    
|                                                                   
|Income (loss) from continuing operations, as adjusted              
|                                                                   
|Loss from discontinued operations, net of income taxes, as reported
|Add back: Goodwill amortization                                    
|                                                                   
|Loss from discontinued operations, net of income taxes, as adjusted
|                                                                   
|                                                                   
|Net income (loss), as adjusted                                     
|Preferred stock dividend requirements                              
|                                                                   
|Earnings (loss) available for common stock, as adjusted            
|
|                                                                   
|Basic and diluted loss per common share                            
|Continuing operations, as reported                                 
|Add back:  Goodwill amortization                                   
|                                                                   
|Continuing operations, as adjusted                                 
|                                                                   
|Discontinued operations, as reported                               
|Add back:  Goodwill amortization                                   
|                                                                   
|Discontinued operations, as adjusted                               
|                                                                   
|Basic and diluted loss per common share, as adjusted               
|

33

Other Intangible AssetsKCP&Ls electric utility
plant on the consolidated balance sheets included intangible computer software of $33.6
million, net of accumulated amortization of $52.5 million, in 2003 and $41.6 million, net
of accumulated amortization of $42.4 million, in 2002.

Other intangible assets on the
consolidated KCP&Ls balance sheets include intangible computer software and the
Worry Free service mark, which were fully amortized by the end of 2003 and totaled $0.5
million, net of accumulated amortization of $0.3 million, in 2002. Assets of discontinued
operations include an RSAE trademark, logo and non-compete agreement totaling $4.2 million
in 2002, net of $0.1 million of accumulated amortization.

KLT Gas gas property and
investments on the consolidated balance sheets included gross intangible drilling costs,
before impairments, of $32.0 million in 2003 and $20.8 million in 2002. The KLT Gas
assets, including intangible drilling costs, were significantly written down at the end of
2003 in aggregate at the property level. See Note 7 for additional information.

Other intangible assets on Great
Plains Energys consolidated balance sheets include other intangible computer
software of $2.7 million, net of accumulated amortization of $1.8 million, in 2003 and
$1.8 million, net of accumulated amortization of $0.6 million, in 2002.

# 7. KLT GAS PROPERTY
IMPAIRMENTS

Unproven gas properties are reviewed
for impairment under SFAS No. 144 whenever events or changes in circumstances indicate
that carrying amounts may not be recoverable. During 2003, impairments totaling $54.5
million, as described below, were recorded. These impairments were reported as losses in
(Gain) Loss on property in Great Plains Energys consolidated statement of income.
Net of the related tax effects totaling $21.0 million, these impairments reduced earnings
by $33.5 million.

During 2003, KLT Gas management
determined that two gas properties were impaired as development activities
indicated a decline in the estimates of future gas production. As a result of the lower
estimated production, the carrying amount of each property exceeded its estimated fair
value based upon discounted estimated future cash flows, which resulted in impairments on
the two properties. The impairments totaled $15.2 million, which net of the related tax
effects totaling $5.9 million, reduced earnings by $9.3 million.

Additionally, in the second half of
2003, Great Plains Energy management performed a strategic review of the KLT Gas natural
gas properties (KLT Gas portfolio) and operations. At the direction of the Board of
Directors, management engaged a third party specialist to help evaluate the KLT Gas
business and provide recommendations regarding business strategy, management, staffing and
optimization of the KLT Gas portfolio. The objective of the strategic review was to
develop a course of action regarding KLT Gas operations for the Board of Directors
consideration at its February 2004 meeting. After completion of the KLT Gas strategic
review, management determined it would recommend a sale of the KLT Gas portfolio and a
plan to exit the gas business at the February 2004 Board of Directors meeting.

As a result of its decision to
recommend a sale of the KLT Gas portfolio and exit the gas business, Great Plains Energy
management engaged a second third party specialist to complete a market reference
valuation analyses of the KLT Gas portfolio. As a result of the KLT Gas strategic review
and market reference valuation analysis having been conducted, an impairment test of the
entire KLT Gas portfolio was performed at December 31, 2003, in accordance with SFAS No.
144, using a probability weighting of the likelihood of potential outcomes at the February
2004 meeting. The impairment test considered 1) the scenario of sale of the entire KLT Gas
portfolio with fair value determined by a third party valuation specialist based on
estimated market prices and 2) the scenario of hold and use with

34

fair value determined by
risk adjusted discounted cash flows. The impairment test indicated that the carrying
amount of the KLT Gas portfolio exceeded the probability-weighted fair value, which
resulted in an impairment of $39.3 million. Net of the related tax effect of $15.1
million, the impairment reduced earnings by $24.2 million.

At its February 2004 meeting, the
Board of Directors approved managements recommendation to sell the KLT Gas portfolio
and exit the gas business. Consequently, in the first quarter of 2004, the KLT Gas
portfolio will be reported as assets held for sale and KLT Gas historical activities
will be reported as discontinued operations, in accordance with SFAS No. 144. In the first
quarter of 2004, Great Plains Energy also will write down the KLT Gas portfolio to its
estimated realizable value. Management expects this write down to total approximately $3
million, which net of the related tax effect of approximately $1 million, will reduce
earnings by approximately $2 million. The impact on earnings will be recorded as a loss
from discontinued operations in Great Plains Energys first quarter 2004 consolidated
statement of income. To the extent the actual proceeds from the sale of the KLT Gas
portfolio differ from the estimated realizable value used to determine the write down, any
difference will be reflected by Great Plains Energy on its consolidated statement of
income at the conclusion of the sale process.

8.
          DISPOSITION OF OWNERSHIP INTEREST IN R.S. ANDREWS ENTERPRISES, INC.

On June 13, 2003, HSS board of
directors approved a plan to dispose of its interest in residential services provider
RSAE. On June 30, 2003, HSS completed the disposition of its interest in RSAE. Under terms
of the agreement, HSS repaid $22 million of RSAEs outstanding debt under its bank
line of credit and forgave $4 million of inter-company debt. The financial statements
reflect RSAE as discontinued operations for all periods presented as prescribed under SFAS
No. 144. The following table summarizes the discontinued operations.

|                                                         
|---------------------------------------------------------
|2003                                                     
|
|(millions)                                               
|Revenues                                                 
|
|                                                         
|Loss from operations before income taxes                 
|Loss on disposal before income taxes                     
|                                                         
|Total loss on discontinued operations before income taxes
|Income tax benefit (a)                                   
|                                                         
|                                                         
|Loss on discontinued operations, net of income taxes     
|

|    | 
|--- | 
|(a) | 
|    | 
|    | 
|    | 

35

Assets and liabilities of the
discontinued operations were as follows:

|                                            
|--------------------------------------------
|December 31                                 
|2002                                        
|
|(millions)                                  
|Current assets                              
|Other nonutility property and investments   
|Goodwill                                    
|Other deferred charges                      
|                                            
|Total assets of discontinued operations     
|
|                                            
|Current liabilities                         
|Deferred taxes                              
|Other deferred credits and liabilities      
|Long-term debt                              
|                                            
|Total liabilities of discontinued operations
|

# 9. DTI BANKRUPTCY

On December 31, 2001, a subsidiary of
KLT Telecom, Holdings and its subsidiaries, Digital Teleport and Digital Teleport of
Virginia, Inc., filed separate voluntary petitions in the Bankruptcy Court for the Eastern
District of Missouri for reorganization under Chapter 11 of the U.S. Bankruptcy Code,
which cases have been procedurally consolidated. Holdings and its two subsidiaries are
collectively called DTI.

In December 2002, Digital Teleport
entered into an agreement to sell substantially all of its assets (Asset Sale) to
CenturyTel Fiber Company II, LLC (CenturyTel), a nominee of CenturyTel, Inc. The Asset
Sale was approved by the Bankruptcy Court in 2003 and closed in 2003.

KLT Telecom received $19.2 million in
2003 related to the confirmation of the DTI bankruptcy. Pending final resolution of the
MODOR Claim and the put option of a minority shareholder (which are described below), the
effect of the DTI bankruptcy on the Company has been resolved. During 2003, the Company
recorded a $22.1 million gain on property and a $6.0 million tax benefit resulting in a
net gain of $28.1 million or $0.41 per share in 2003. The impact on net income was
primarily due to the net effect of the confirmation of the DTI bankruptcy and the
resulting distribution, the reversal of a $15.8 million tax valuation allowance and the
reversal of a $5 million debtor in possession financing commitment previously reserved.

In early 2004, KLT Telecom paid $2.5
million to certain executives of Digital Teleport for entering into employment agreements
required as a condition precedent to the Asset Sale. The amount was recorded as a
liability in 2003.

The Bankruptcy Court conducted an
evidentiary hearing regarding three priority proofs of claim by the MODOR in the aggregate
amount of $2.8 million (collectively, the MODOR Claim), and ruled substantially in favor
of Digital Teleport. MODOR appealed this ruling. KLT Telecom may receive an additional
distribution from the bankruptcy estate; however, the amount and timing of any additional
distribution is dependent upon the outcome of the MODOR appeal.

KLT Telecom originally acquired a 47%
interest in DTI in 1997. On February 8, 2001, KLT Telecom acquired control of DTI by
purchasing shares from another Holdings shareholder, Richard D. Weinstein (Weinstein),
increasing its ownership to 83.6%. In connection with this purchase, KLT Telecom granted
Weinstein a put option. The put option provided for the sale by Weinstein of his remaining
shares in Holdings to KLT Telecom during a period beginning September 1, 2003, and ending
August 31, 2005.

36

The put option provides for an aggregate exercise price for these
remaining shares equal to their fair market value with an aggregate floor amount of $15
million. The floor amount of the put option was fully reserved during the fourth quarter
of 2001. On September 2, 2003, Weinstein delivered to KLT Telecom notice of the exercise
of his put option. KLT Telecom declined to pay Weinstein any amount under the put option
because, among other things, the stock of Holdings has been cancelled and extinguished.
Weinstein has sued KLT Telecom for allegedly breaching the put option.

Because DTI filed for bankruptcy
protection under the U.S. Bankruptcy Code, KLT Telecom no longer had control over nor
could it exert significant influence over DTI. As a consequence, as of December 31, 2001,
DTI was de-consolidated and was presented on the cost basis. Because of this
de-consolidation, KLT Telecom did not include in its financial results the ongoing results
of operations, earnings or losses incurred by DTI since December 31, 2001.

During the fourth quarter of 2001,
the following were recognized in the financial statements of the Company related to the
activities of DTI:

| |  |  
| |  | -
| |  | o
| |  | o
| |  | o
| |  |  
| |  |  
| |  |  
| |  |  
| |  |  

The net of the above items resulted
in Great Plains Energy recording in 2001 a $195.8 million loss on property and $55.8
million of related income tax benefits. The $55.8 million income tax benefits applicable
to this net write-off is net of a $15.8 million tax valuation allowance due to the
uncertainty of recognizing future tax deductions while in the bankruptcy process. The
$55.8 million income tax benefit reflects the impact of DTIs 2001 abandonment of
$104 million of its long-haul assets in addition to other expected tax deductions.
DTIs tax losses have continued to be included in Great Plains Energys
consolidated tax return. In accordance with the tax allocation agreement with DTI, cash
tax savings were shared with DTI only to the extent DTI generated taxable income to
utilize such losses.

37

The following are condensed DTI
consolidated financial statements for the year ended December 31, 2001:

|                                                 
|-------------------------------------------------
|
|
|(millions)                                       
|Telecommunications service revenues              
|Operating expenses                               
|Provision for impairment of long-lived assets (a)
|Gain on early extinguishment of debt             
|Other                                            
|Interest expense net of interest income          
|                                                 
|Loss before income tax benefit                   
|Income tax benefit                               
|
|Net loss                                         
|

|    | 
|--- | 
|(a) | 
|    | 
|    | 
|    | 
|    | 
|    | 
|    | 
|    | 

|                                         
|-----------------------------------------
|
|
|(millions)                               
|Net cash used in operating activities    
|Net cash used in investing activities    
|Cash provided by financing activities    
|
|Net decrease in cash and cash equivalents
|

|                                                              
|--------------------------------------------------------------
|
|
|
|(millions)                                                    
|Loss before income tax benefit                                
|                                                              
|Income before consolidation on February 8, 2001               
|Goodwill write-off                                            
|Reduction to KLT Telecom's negative investment in DTI         
|                                                              
|Total                                                         
|                                                              
|Net DTI write-off                                             
|DTI operational loss, excluding net write-off                 
|                                                              
|Total equal to the above                                      
|Income from equity method investment - gain on                
|early extinguishment of debt                                  
|Other                                                         
|                                                              
|Total included in loss before income taxes                    
|Income tax benefits recorded by KLT Telecom                   
|
|DTI loss included in Great Plains Energy consolidated net loss
|

38

# 10. PENSION PLANS AND
OTHER EMPLOYEE BENEFITS

Pension Plans and Other
Employee BenefitsThe Company maintains defined benefit
pension plans for substantially all employees of KCP&L, Great Plains Energy Services
and Wolf Creek Nuclear Operating Corporation (WCNOC), including officers. Benefits under
these plans reflect the employees compensation, years of service and age at
retirement. The funding policy for the pension plans is to contribute amounts sufficient
to meet the minimum funding requirements under ERISA plus additional amounts as considered
appropriate.

For defined benefit pension plans
sponsored by Great Plains Energy, pension costs and contributions to KCP&L, GPES and
Worry Free are allocated based on labor costs of plan participants. Any additional minimum
pension liability is allocated based on each plans funded status.

In addition to providing pension
benefits, the Company provides certain postretirement health care and life insurance
benefits for substantially all retired employees. The cost of postretirement health care
and life insurance benefits are accrued during an employees years of service and
recovered through rates. The Company funds the portion of net periodic postretirement
benefit costs that are tax deductible. For post retirement health care plans sponsored by
Great Plains Energy, contributions and expense are allocated to KCP&L, GPES and Worry
Free based on the number of plan participants.

On December 8, 2003, the Medicare
Prescription Drug, Improvement and Modernization Act of 2003 (Medicare Act) was signed
into law. The Medicare Act, among other things, provides a federal subsidy beginning in
2006 to sponsors of retiree health care benefit plans. At this time, detailed regulations
necessary to implement the Medicare Act and specific accounting guidance from the FASB
have not been issued. Therefore, in accordance with FASB Staff Position No. FAS 106-1,
Accounting and Disclosure Requirements Related to the Medicare Prescription Drug,
Improvement and Modernization Act of 2003, the Company elected to defer accounting
for the effects of the Medicare Act until authoritative guidance on accounting is
available. Such guidance could require revision of prior financial statements to include
the effects of the Medicare Act. Until detailed regulations necessary to implement the
Medicare Act and specific accounting guidance are issued, the Company cannot determine the
benefit, if any, associated with the new law. The Company will continue to monitor the new
regulations and may amend the plan in order to benefit from the new legislation.

39

The pension benefits tables below
provide information relating to the funded status of all defined benefit pension plans on
an aggregate basis. The plan measurement date for the majority of plans is September 30.
In 2003, contributions were made after the measurement date to the pension and
postretirement benefit plans of $32.0 million and $4.8 million, respectively. Net periodic
benefit costs reflect total plan benefit costs prior to the effects of capitalization and
sharing with joint-owners of power plants.

|                                                     
|-----------------------------------------------------
|Pension Benefits                                     
|2003                                                 
|
|(thousands)                                          
|PBO at beginning of year                             
|Service cost                                         
|Interest cost                                        
|Contribution by participants                         
|Amendments                                           
|Actuarial loss                                       
|Benefits paid                                        
|Benefits paid by KCP&L                               
|Settlements                                          
|
|PBO at end of plan year                              
|
|Change in plan assets                                
|Fair value of plan assets at beginning of year       
|Actual return on plan assets                         
|Contributions by employer and participants           
|Benefits paid                                        
|
|Fair value of plan assets at end of plan year        
|
|Prepaid (accrued) benefit cost                       
|Funded status                                        
|Unrecognized actuarial loss                          
|Unrecognized prior service cost                      
|Unrecognized transition obligation                   
|
|Net prepaid (accrued) benefit cost                   
|
|Amounts recognized in the consolidated balance sheets
|Prepaid benefit cost                                 
|Accrued benefit cost                                 
|Minimum pension liability adjustment                 
|Intangible asset                                     
|Accumulated other comprehensive income               
|
|Net amount recognized in balance sheets              
|Contributions and changes after                      
|measurement date                                     
|
|Net amount recognized at December 31                 
|

40

|                                    
|------------------------------------
|Pension Benefits                    
|2003                                
|
|(thousands)                         
|Service cost                        
|Interest cost                       
|Expected return on plan assets      
|Amortization of prior service cost  
|Recognized net actuarial loss (gain)
|Transition obligation               
|Amendment                           
|Net settlements                     
|
|Net periodic benefit cost           
|

The accumulated benefit obligation
(ABO) for all defined benefit pension plans was $429.9 million and $375.8 million at plan
year-end for 2003 and 2002, respectively. The projected benefit obligation, accumulated
benefit obligation and the fair value of plan assets are aggregated in the table below.

|                                                   
|---------------------------------------------------
|December 31                                        
|2003                                               
|
|(thousands)                                        
|Projected benefit obligation                       
|Accumulated benefit obligation                     
|Fair value of plan assets at plan year-end         
|
|Pension plans with plan assets in excess of the ABO
|Projected benefit obligation                       
|Accumulated benefit obligation                     
|Fair value of plan assets at plan year-end         
|

Pension plan assets are managed in
accordance with prudent investor guidelines contained in the ERISA
requirements. The investment strategy supports the objective of the fund, which is to earn
the highest possible return on plan assets within a reasonable and prudent level of risk.
Investments are diversified across classes and within each class to minimize risks. The
fair value of plan assets at plan year-end 2003 was $341.0 million, not including a $32.0
million contribution made in 2003 after the plan year-end, and $324.2 million at plan
year-end 2002. The asset allocation for the Companys pension plans at the end of
2003 and 2002, and the target allocation for 2004 are reported below. The portfolio is
rebalanced when the targets are exceeded.

|                 
|-----------------
|Plan Assets at   
|Target           
|Asset Category   
|
|Equity securities
|Debt securities  
|Real estate      
|Other            
|
|Total            
|

The expected long-term rate of return
on plan assets is based on historical and projected rates of return for current and
planned asset classes in the plans investment portfolio. Assumed projected rates of
return for each asset class were selected after analyzing historical experience and future
expectations of the returns of various asset classes. Based on the target asset allocation
for each asset class, the

41

overall expected rate of return for the portfolio was developed
and adjusted for the effect of projected benefits paid from plan assets and future plan
contributions.

The following tables provide the
weighted-average assumptions used to determine benefit obligations and net costs.

|                                              
|----------------------------------------------
|Weighted average assumptions used to determine
|the benefit obligation at plan year-end       
|
|Discount rate                                 
|Rate of compensation increase                 
|

|                                              
|----------------------------------------------
|Weighted average assumptions used to determine
|net costs for years ended at December 31      
|
|Discount rate                                 
|Expected long-term return on plan assets      
|Rate of compensation increase                 
|

Primarily as a result of lower
discount rates and the prior years losses in the market value of plan assets; at
December 31, 2003, the Company had a minimum pension liability adjustment of $78.4 million
offset by an intangible asset of $17.4 million and OCI of $61.0 million ($37.2 million net
of tax). At December 31, 2002, the Companys minimum pension liability adjustment was
$63.1 million offset by an intangible asset of $19.2 million and OCI of $43.9 million
($26.8 million net of tax). Because these adjustments were non-cash, their effect has been
excluded from the Consolidated Statements of Cash Flows.

Assumed health care cost trend rates
have a significant effect on the amounts reported for the health care plans. The health
care plan requires retirees to share in the cost when premiums exceed specified amounts.
The following table provides information on the assumed health care rate trends.

|                                                  
|--------------------------------------------------
|Assumed Health Care Cost Trends at December 31    
|
|Health care cost trend rate assumed for next year 
|Rate to which the cost trend rate is assumed to   
|decline (the ultimate trend rate)                 
|Year that the rate reaches the ultimate trend rate
|

A one-percentage point change in the
medical cost trend rates, holding all other assumptions constant, would have the following
effects as of December 31, 2003:

|                                              
|----------------------------------------------
|Increase                                      
|
|(thousands)                                   
|Effect on total service and interest component
|Effect on postretirement benefit obligation   
|

Employee Savings PlansGreat Plains Energy has defined
contribution savings plans that cover substantially all employees. The Company matches
employee contributions, subject to limits. The annual cost of the plans was $4.1 million
in 2003 and 2002 and $2.9 million in 2001.

Strategic Energy Phantom
Stock PlanStrategic Energy has a phantom stock
plan that provides incentive in the form of deferred compensation based upon the award of
performance units, the value of which is related to the increase

42

in profitability of
Strategic Energy. Strategic Energys annual cost for the plan was $4.6 million in
2003, $5.9 million in 2002 and $3.4 million in 2001.

Stock OptionsThe Company has one equity
compensation plan, which has been approved by its shareholders. The equity compensation
plan is a long-term incentive plan that permits the grant of restricted stock, stock
options, limited stock appreciation rights and performance shares to officers and other
employees of the Company and its subsidiaries. The maximum number of shares of Great
Plains Energy common stock that may be issued under the plan is 3.0 million with 2.2
million shares remaining available for future issuance.

Stock Options Granted
1992  1996The exercise price of stock options
granted equaled the market price of the Companys common stock on the grant date.
One-half of all options granted vested one year after the grant date, the other half
vested two years after the grant date. An amount equal to the quarterly dividends paid on
Great Plains Energy common stock shares (dividend equivalents) accrues on the options for
the benefit of option holders. The option holders are entitled to stock for their
accumulated dividend equivalents only if the options are exercised when the market price
is above the exercise price. At December 31, 2003, the market price of Great Plains Energy
common stock was $31.82, which exceeded the grant price for all such options still
outstanding. Unexercised options expire ten years after the grant date.

Prior to the adoption of SFAS No. 123
on January 1, 2003, Great Plains Energy followed Accounting Principles Board (APB) Opinion
25, Accounting for Stock Issued to Employees and related interpretations in
accounting for these options. Great Plains Energy recognized annual compensation expense
equal to accumulated and reinvested dividends plus the impact of the change in stock price
since the grant date. Great Plains Energy recognized compensation expense of $0.1 million
in 2002 and $(0.3) million in 2001. These options were fully vested prior to the adoption
of SFAS No.123; therefore, no compensation expense was recognized in 2003.

For options outstanding at December
31, 2003, grant prices range from $20.6250 to $23.0625 and the weighted-average remaining
contractual life is 0.8 years.

Stock Options Granted
2001  2003Stock options were granted under the
plan at the fair market value of the shares on the grant date. The options vest three
years after the grant date and expire in ten years if not exercised. Exercise prices range
from $24.90 to $27.73 and the weighted-average remaining contractual life is 7.9 years.

In accordance with the provisions of
SFAS No. 123, the Company recognized an immaterial amount of compensation expense in 2003.
Under the provisions of APB Opinion 25, no compensation expense was recognized in 2002 and
2001 because the option exercise price was equal to the market price of the underlying
stock on the date of grant.

The fair value for the stock options
granted in 20012003 was estimated at the date of grant using the
Black-Scholes option-pricing model. The weighted-average assumptions used are in the
following table:

|                               
|-------------------------------
|2003                           
|
|Risk-free interest rate        
|Dividend yield                 
|Stock volatility               
|Expected option life (in years)
|

43

The option valuation model requires
the input of highly subjective assumptions, primarily stock price volatility, changes in
which can materially affect the fair value estimate.

All stock option activity for the
last three years is summarized below:

|                             
|-----------------------------
|2003                         
|Shares                       
|
|Outstanding at January 1     
|Granted                      
|Exercised                    
|Forfeited                    
|
|Outstanding at December 31   
|
|Exercisable as of December 31
|
|* weighted-average price     

Performance SharesPerformance shares granted in 2003
totaled 20,744. The issuance of performance shares is contingent upon achievement, over a
three-year period, of company performance goals as compared to a peer group of utilities.
Performance shares have a value equal to the fair market value of the shares on the grant
date with accruing dividends. In accordance with the provisions of SFAS No. 123,
compensation expense is recognized over the vesting period. The Company recognized
compensation expense of $0.4 million in 2003.

During 2003, all 144,500 performance
shares granted in 2001 were canceled. No compensation expense had been recorded related to
these performance shares.

Restricted StockRestricted shares have a value equal
to the fair market value of the shares on the grant date. Restricted stock shares granted
in 2003 totaled 120,196. There is a restriction as to transfer until December 31, 2004, on
54,436 of the restricted shares. In accordance with the provisions of SFAS No. 123,
restricted stock shares totaling 57,315 are considered 100% vested. Restricted stock
shares totaling 62,881 vest on a graded schedule over a three-year period with accruing
reinvested dividends. The Company recognized compensation expense of $1.8 million in 2003.

44

# 11. INCOME TAXES

Components of income tax expense
(benefit) were as follows:

|                                     
|-------------------------------------
|2003                                 
|
|Current income taxes:                
|Federal                              
|State                                
|                                     
|Total                                
|
|Deferred income taxes:               
|Federal                              
|State                                
|                                     
|Total                                
|
|Investment tax credit amortization   
|
|Total income tax expense             
|Less taxes on loss from discontinued 
|operations (Note 8):                 
|Current tax (benefit) expense        
|Deferred tax expense                 
|
|Income taxes on continuing operations
|

|                                     
|-------------------------------------
|2003                                 
|
|Current income taxes:                
|Federal                              
|State                                
|                                     
|Total                                
|
|Deferred income taxes:               
|Federal                              
|State                                
|                                     
|Total                                
|
|Investment tax credit amortization   
|
|Total income tax expense             
|Less taxes on loss from discontinued 
|operations (Note 8):                 
|Current tax (benefit) expense        
|Deferred tax expense                 
|
|Income taxes on continuing operations
|

45

The effective income tax rates
reflected in the financial statements and the reasons for their differences from the
statutory federal rates were as follows:

|                                      
|--------------------------------------
|2003                                  
|
|
|Federal statutory income tax rate     
|Differences between book and tax      
|depreciation not normalized           
|Amortization of investment tax credits
|Federal income tax credits            
|State income taxes                    
|Valuation allowance                   
|RSAE (b)                              
|Other                                 
|
|Effective income tax rate             
|

|                                      
|--------------------------------------
|2003                                  
|
|
|Federal statutory income tax rate     
|Differences between book and tax      
|depreciation not normalized           
|Amortization of investment tax credits
|Federal income tax credits (a)        
|State income taxes                    
|RSAE (b)                              
|Other                                 
|
|Effective income tax rate             
|

|    | 
|--- | 
|(a) | 
|    | 
|(b) | 
|    | 
|    | 

The tax effects of major temporary
differences resulting in deferred tax assets and liabilities in the balance sheets are as
follows:

|                                         
|-----------------------------------------
|Great Plains Energy                      
|December 31                              
|
|(thousands)                              
|Plant related                            
|Future income taxes                      
|Pension and postretirement benefits      
|Tax credit carryforwards                 
|Gas properties related                   
|Nuclear fuel outage                      
|AMT credit                               
|Other                                    
|
|Net deferred tax liability before        
|valuation allowance                      
|Valuation allowance (Note 9)             
|Less:  Deferred tax asset in discontinued
|operations (Note 8)                      
|
|Net deferred tax liability               
|

46

The net deferred income tax liability
consisted of the following:

|                                     
|-------------------------------------
|Great Plains Energy                  
|December 31                          
|
|(thousands)                          
|Gross deferred income tax assets     
|Gross deferred income tax liabilities
|
|Net deferred income tax liability    
|

# 12. RELATED PARTY
TRANSACTIONS AND RELATIONSHIPS

Custom Energy Holdings, L.L.C.
(Custom Energy Holdings) holds 100% of the direct ownership interests in Strategic Energy.
Great Plains Energy holds an 89% indirect ownership position in Strategic Energy. SE
Holdings, L.L.C. (SE Holdings) owns the remaining 11% indirect ownership position in
Strategic Energy. Richard Zomnir, President and Chief Executive Officer of Strategic
Energy, and certain other employees of Strategic Energy hold direct or indirect interests
in SE Holdings. SE Holdings has a put option to sell all or part of its 11% interest in
Strategic Energy (Put Interest) to Custom Energy Holdings at any time within the 90 days
following January 31, 2004, at fair market value. On February 9, 2004, a letter agreement
was entered into between SE Holdings and IEC on behalf of certain of its affiliates,
including Great Plains Energy, agreeing to a procedure for determining the fair market
value of the Put Interest (Letter Agreement). The Letter Agreement provides for SE
Holdings to exercise its put option with respect to all but one unit (0.00001% of issued
and outstanding units) of each of its respective series of ownership interest in Custom
Energy Holdings. Upon closing of such a transaction, which is anticipated for mid-April
2004, subject to obtaining all necessary regulatory approval, SE Holdings would continue
to be a member of Custom Energy Holdings and be represented on the Management Committee of
Custom Energy Holdings and Strategic Energy.

Custom Energy Holdings business
and affairs are controlled and managed by a three member Management Committee composed of
one representative designated by KLT Energy Services Inc. (KLT Energy Services), one
representative designated by IEC, and one representative designated by SE Holdings.
Certain actions (including amendment of Custom Energy Holdings operating agreement,
approval of actions in contravention of the operating agreement, approval of a dissolution
of Custom Energy Holdings, additional capital contributions and assumption of recourse
indebtedness) require the unanimous consent of all the members of Custom Energy Holdings.

Strategic Energys business and
affairs are controlled and managed by a four member Management Committee composed of two
representatives designated by KLT Energy Services, one representative designated by IEC
and one representative designated by SE Holdings. Certain actions (including amendment of
Strategic Energys operating agreement, approval of actions in contravention of the
operating agreement, approval of transactions between Strategic Energy and affiliates of
its members, approval of a dissolution of Strategic Energy, and assumption of recourse
indebtedness) require the unanimous consent of all the Management Committee members.

In November 2002, the Board of
Directors of the Company approved a merger of Environmental Lighting Concepts, Inc. (ELC)
into IEC to acquire ELCs 6% indirect interest in Strategic Energy. The merger
resulted in Great Plains Energy holding an 89% indirect interest in Strategic Energy.
Gregory J. Orman, the former Executive Vice President  Corporate Development and
Strategic Planning of the Company, was the majority shareholder of ELC and received $10.1
million in Company common stock and a note, which was paid in January 2003.

47

# 13. COMMITMENTS AND
CONTINGENCIES

# Nuclear Liability and
Insurance

Liability InsuranceThe Price-Anderson Act currently
limits the combined public liability of nuclear reactor owners to $10.9 billion for claims
that could arise from a single nuclear incident. The owners of Wolf Creek, a nuclear
generating station, (Owners) carry the maximum available commercial insurance of $0.3
billion. Secondary Financial Protection, an assessment plan mandated by the NRC, provides
insurance for the $10.6 billion balance.

Under Secondary Financial Protection,
if there were a catastrophic nuclear incident involving any of the nations licensed
reactors, the Owners would be subject to a maximum retrospective assessment per incident
of up to $95.8 million plus up to an additional 5% surcharge for a total of $100.6 million
($47.3 million, KCP&Ls 47% share). The Owners are jointly and severally liable
for these charges, payable at a rate not to exceed $10 million ($5 million,
KCP&Ls 47% share) per incident per year, excluding applicable premium taxes. The
assessment, most recently revised in 2003, is subject to an inflation adjustment based on
the Consumer Price Index and renewal of the Price-Anderson Act by Congress.

Property,
Decontamination, Premature Decommissioning and Extra Expense Insurance
The Owners also carry $2.8 billion
($1.3 billion, KCP&Ls 47% share) of property damage, decontamination and
premature decommissioning insurance for loss resulting from damage to the Wolf Creek
facilities. Nuclear Electric Insurance Limited (NEIL) provides this insurance.

In the event of an accident,
insurance proceeds must first be used for reactor stabilization and NRC mandated site
decontamination. KCP&Ls share of any remaining proceeds can be used for further
decontamination, property damage restoration and premature decommissioning costs.
Premature decommissioning coverage applies only if an accident at Wolf Creek exceeds $500
million in property damage and decontamination expenses, and only after trust funds have
been exhausted.

The Owners also carry additional
insurance from NEIL to cover costs of replacement power and other extra expenses incurred
in the event of a prolonged outage resulting from accidental property damage at Wolf
Creek.

Under all NEIL policies, KCP&L is
subject to retrospective assessments if NEIL losses, for each policy year, exceed the
accumulated funds available to the insurer under that policy. The estimated maximum amount
of retrospective assessments to KCP&L under the current policies could total about
$24.5 million.

In the event of a catastrophic loss
at Wolf Creek, the insurance coverage may not be adequate to cover property damage and
extra expenses incurred. Uninsured losses, to the extent not recovered through rates,
would be assumed by KCP&L and could have a material, adverse effect on its financial
condition, results of operations and cash flows.

Low-Level WasteThe Low-Level Radioactive Waste
Policy Amendments Act of 1985 mandated that the various states, individually or through
interstate compacts, develop alternative low-level radioactive waste disposal facilities.
The states of Kansas, Nebraska, Arkansas, Louisiana and Oklahoma formed the Central
Interstate Low-Level Radioactive Waste Compact (Compact) and selected a site in northern
Nebraska to locate a disposal facility. Wolf Creek Nuclear Operating Corporation (WCNOC)
and the owners of the other five nuclear units in the Compact provided most of the
pre-construction financing for this project. KCP&Ls net investment in the
Compact was $7.4 million at December 31, 2003 and 2002.

48

Significant opposition to the project
has been raised by Nebraska officials and residents in the area of the proposed facility
and attempts have been made through litigation and proposed legislation in Nebraska to
slow down or stop development of the facility. On December 18, 1998, the application for a
license to construct this project was denied. After the license denial, WCNOC and others
filed a lawsuit in federal court contending Nebraska officials acted in bad faith while
handling the license application. In September 2002, the U.S. District Court Judge
presiding over the Central Interstate Compact Commissions federal bad
faith lawsuit against the State of Nebraska issued his decision in the case finding
clear evidence that the State of Nebraska acted in bad faith in processing the license
application for a low-level radioactive waste disposal site in Nebraska and rendered a
judgment on behalf of the Compact in the amount of $151.4 million against the state. The
state appealed this decision to the U.S. Court of Appeals for the Eighth Circuit. On
February 18, 2004, a three-judge panel of the appellate court unanimously affirmed the
trial courts decision in its entirety. On March 2, 2004, Nebraska filed a Petition
for Rehearing En Banc with the U.S. Court of Appeals for the Eighth Circuit. Based on the
favorable outcome of the trial and appeal, in KCP&Ls opinion, there is a greater
possibility of reversing the states license denial once the decision in this case is
final.

In May 1999, the Nebraska legislature
passed a bill withdrawing Nebraska from the Compact. In August 1999, the Nebraska Governor
gave official notice of the withdrawal to the other member states effective in August
2004. In June 2003, the Compact revoked Nebraskas membership in the Compact
effective July 17, 2004. As a result, Nebraskas legal rights under the Compact will
be extinguished on the effective date of either the Compacts revocation of
Nebraskas membership or Nebraskas withdrawal from the Compact. If membership
is severed by virtue of revocation by the Compact, any legal obligations Nebraska incurred
prior to revocation shall not cease until Nebraska fulfills them. The Compact has taken
the position that Nebraskas legal obligations include the obligation to be the host
state for a disposal site. Nebraskas legal obligations, under the Compacts
position, are more extensive than would exist if Nebraskas withdrawal preceded the
revocation of its membership. On August 22, 2003, Nebraska filed a new lawsuit in U.S.
District Court in Nebraska seeking to have the Compacts action deemed void; it does
not seek damages. A procedural schedule has been set in this case to be ready for trial by
June 2004.

Environmental MattersThe Company is subject to regulation
by federal, state and local authorities with regard to air and other environmental matters
primarily through KCP&Ls operations. The generation and transmission of
electricity produces and requires disposal of certain hazardous products that are subject
to these laws and regulations. In addition to imposing continuing compliance obligations,
these laws and regulations authorize the imposition of substantial penalties for
noncompliance, including fines, injunctive relief and other sanctions. Failure to comply
with these laws and regulations could have a material adverse effect on consolidated
KCP&L and Great Plains Energy.

KCP&L operates in an
environmentally responsible manner and seeks to use current technology to avoid and treat
contamination. KCP&L regularly conducts environmental audits designed to ensure
compliance with governmental regulations and to detect contamination. Governmental bodies,
however, may impose additional or more restrictive environmental regulations that could
require substantial changes to operations or facilities at a significant cost. At December
31, 2003 and 2002, KCP&L had $1.8 million and $1.9 million, respectively, accrued for
environmental remediation expenses covering water monitoring at one site and unasserted
claims for remediation at a second site. The amounts accrued were established on an
undiscounted basis and KCP&L does not currently have an estimated time frame over
which the accrued amounts may be paid out. Expenditures to comply with environmental laws
and regulations have not been material in amount during the periods presented and are not
expected to be material in the upcoming years with the exception of the issues discussed
below.

49

Certain Air Toxic
SubstancesIn July 2000, the National Research
Council published its findings of a study under the Clean Air Act Amendments of 1990
(Clean Air Act), which stated that power plants that burn fossil fuels, particularly coal,
generate the greatest amount of mercury emissions. As a result, in December 2000, the
Environmental Protection Agency (EPA) announced it would propose Maximum Achievable
Control Technology (MACT) requirements by December 2003 to reduce mercury emissions and
issue final rules by December 2004. In December 2003, the EPA issued proposed regulations
that contained two options. Based upon preliminary testing, it does not appear that
KCP&L would incur additional expense under the MACT option. Under the cap and
trade option, KCP&L would incur additional expenses in the 2015-2016 timeframe.
However, until the EPA decides which option it will pursue and the proposed rules are
finalized, KCP&L cannot predict the likelihood or compliance costs of such
regulations. Comments on the proposed regulations are due by March 30, 2004. KCP&L
plans to submit comments supporting the MACT option.

Air Particulate MatterIn July 1997, the EPA revised ozone
and particulate matter air quality standards creating a new eight-hour ozone standard and
establishing a new standard for particulate matter less than 2.5 microns (PM-2.5) in
diameter. These standards were challenged in the U.S. Court of Appeals for the District of
Columbia (Appeals Court) that decided against the EPA. Upon further appeal, the U.S.
Supreme Court reviewed the standards and remanded the case back to the Appeals Court for
further review, including a review of whether the standards were arbitrary and capricious.
On March 26, 2002, the Appeals Court issued its decision on challenges to the 8-hour ozone
and PM-2.5 National Ambient Air Quality Standards (NAAQS). This decision denied all state,
industry and environmental groups petitions for review and thus upheld as valid the
EPAs new 8-hour ozone and PM-2.5 NAAQS. In so doing, the court held that the EPA
acted consistently with the Clean Air Act in setting the standards at the levels it chose
and the EPAs actions were reasonable and not arbitrary and capricious, and cited the
deference given the EPAs decision-making authority. The court stated that the
extensive records established for each rule supported the EPAs actions in both
rulemakings.

This decision by the Appeals Court
removed the last major hurdle to the EPAs implementation of stricter ambient air
quality standards for ozone and fine particles. The EPA has not yet issued regulations
incorporating the new standards. Until new regulations are issued, KCP&L is unable to
estimate the impact of the new standards. However, the impact on KCP&L and all other
utilities that use fossil fuels could be substantial. In addition, the EPA is conducting a
three-year study of fine particulate ambient air levels. Until this testing and review
period has been completed, KCP&L cannot determine additional compliance costs, if any,
associated with the new particulate regulations.

Nitrogen Oxide and Sulfur
DioxideThe EPA announced in 1998 regulations
implementing reductions in Nitrogen Oxide (NOx) emissions. These regulations
initially called for 22 states, including Missouri, to submit plans for controlling
NOx emissions. The regulations would have required a significant reduction in
NOx emissions from 1990 levels at KCP&Ls Missouri coal-fired plants
by the year 2003.

In December 1998, KCP&L and
several other western Missouri utilities filed suit against the EPA over the inclusion of
western Missouri in the NOx reduction program based on the 1-hour
NOx standard. On March 3, 2000, a three-judge panel of the District of Columbia
Circuit of the U.S. Court of Appeals sent the NOx rules related to Missouri
back to the EPA, stating the EPA failed to prove that fossil plants in the western part of
Missouri significantly contribute to ozone formation in downwind states. On March 5, 2001,
the U.S. Supreme Court denied certiorari, making the decision of the Court of Appeals
final.

50

In February 2002, the EPA issued
proposed Phase II NOx State Implementation Plan (SIP) Call regulations, which
specifically exclude the fossil plants in the western part of Missouri from the
NOx SIP Call. To date, the EPA has not issued its final Phase II NOxSIP Call regulation.

If fossil plants in western Missouri
are required to implement NOx reductions, KCP&L would need to incur
significant capital costs, purchase power or purchase NOx emission allowances.
Preliminary analysis of the regulations indicates that selective catalytic reduction
technology, as well as other changes, may be required for some of the KCP&L units.
Currently, KCP&L estimates that additional capital expenditures to comply with these
regulations could range from $40 million to $60 million. Operations and maintenance
expenses could also increase by more than $2.5 million per year. KCP&L continues to
refine these preliminary estimates and explore alternatives. The ultimate cost of these
regulations, if any, could be significantly different from the amounts estimated above.

In addition to the pending Phase II
NOx SIP Call regulation, in December 2003, the EPA issued proposed regulations
titled Interstate Air Quality Regulations that also would control
NOx emissions as well as sulfur dioxide emissions from coal fired power plants
and would apply to fossil plants in western Missouri. This proposed regulation will be
supplemented with another proposed regulation, which is scheduled for release in May 2004.
Compliance costs associated with these regulations, as currently proposed, would be
material, however, KCP&L cannot predict the likelihood of such regulations being
adopted.

Carbon DioxideAt a December 1997 meeting in Kyoto,
Japan, delegates from 167 nations, including the United States, agreed to a treaty (Kyoto
Protocol) that would require a seven percent reduction in United States carbon dioxide
(CO2) emissions below 1990 levels. Although the United States agreed to the
Kyoto Protocol, the treaty has not been sent to Congress for ratification. The financial
impact on KCP&L of future requirements in the reduction of CO2 emissions
cannot be determined until specific regulations are adopted.

EPA New Source ReviewThe EPA is conducting an enforcement
initiative to determine whether modifications at coal-fired plants across the United
States are subject to New Source Performance Standards (NSPS) or New Source Review (NSR)
requirements under Section 114(a) of the Clean Air Act. This initiative reviews all
expenditures at the plants to determine if they were for routine maintenance or whether
the expenditures were for substantial modifications or resulted in improved operations. If
a plant, subject to a Section 114 letter, is determined to be subject to NSPS or NSR the
plant could be required to install best available control technology (BACT) or lowest
achievable emission rate (LAER) technology. KCP&L has not received a Section 114
letter to date.

Clean Air LegislationCongress has debated numerous bills
that would make significant changes to the current federal Clean Air Act including
potential establishment of nationwide limits on power plant emissions for several specific
pollutants. These bills have the potential for a significant financial impact on KCP&L
through the installation of new pollution control equipment to achieve compliance with the
new nationwide limits. The financial consequences to KCP&L cannot be determined until
the final legislation is passed. KCP&L will continue to monitor the progress of these
bills.

Proposed Water Use
RegulationsIn February 2002, the EPA issued
proposed rules related to certain existing power producing facilities that employ cooling
water intake structures that withdraw 50 million gallons or more per day and use 25% or
more of that water for cooling purposes. The proposed rules establish national minimum
performance requirements designed to minimize adverse environmental impact. The EPA
approved

51

the proposed rules on February 16, 2004. Pursuant to the EPAs action,
KCP&L has three and one-half years to conduct demonstration studies on each of its
coal plants. The cost of each of these studies is estimated at $0.3 million to $0.5
million. The outcome of those studies will determine whether the plants are in compliance
with the new rules.

Nuclear Fuel CommitmentsAs of December 31, 2003,
KCP&Ls 47% share of Wolf Creek nuclear fuel commitments included $15.3 million
for enrichment through 2006, $55.9 million for fabrication through 2025 and $20.4 million
for uranium and conversion through 2007.

Coal ContractsKCP&Ls share of coal
purchased under existing contracts was $53.6 million in 2003, $49.5 million in 2002 and
$44.6 million in 2001. Under these coal contracts, KCP&Ls remaining share of
purchase commitments totals $131.5 million. Obligations for the years 2004 through 2006
total approximately $55.7 million, $57.0 million, and $18.8 million, respectively. The
remainder of KCP&Ls coal requirements will be fulfilled through additional
contracts or spot market purchases.

Purchased Capacity
CommitmentsKCP&L purchases capacity from
other utilities and nonutility suppliers. Purchasing capacity provides the option to
purchase energy if needed or when market prices are favorable. This can be a
cost-effective alternative to new construction. KCP&Ls capacity purchases
totaled $18.9 million, $18.5 million and $17.7 million in 2003, 2002 and 2001,
respectively. As of December 31, 2003, contracts to purchase capacity totaled $71.7
million through 2016. These commitments are approximately $19 million in 2004, $10 million
in 2005 and $4 million in each of 2006, 2007 and 2008. Capacity sales contracts to supply
other utilities and municipalities in the years 2004 through 2008 average $12 million per
year. For the next five years, net capacity contracts average less than 1% of
KCP&Ls estimated 2004 total available generating capacity.

Strategic Energy
Purchased Power Energy CommitmentsStrategic Energy has entered into
agreements to purchase electricity at various fixed prices to meet estimated supply
requirements. Commitments at December 31, 2003, under these agreements total $1,403.7
million through 2010. Commitments for the years 2004 through 2008 total $757.4 million,
$457.9 million, $132.0 million, $44.9 million, and $4.1 million, respectively. Energy
sales contracts for 2004 and 2005 total $111.9 million and $37.8 million, respectively.
See Note 17 for further discussion.

Great Plains Energy
LeasesGreat Plains Energys lease
expense was $24.1 million during 2003 and $27.4 million during 2002.
Great Plains Energys lease expense,
excluding DTI, was $30.6 million during 2001. The remaining rental commitments under
leases total $189.4 million ending in 2028. Obligations for the years 2004 through 2008
are $44.8 million, $14.0 million, $13.4 million, $11.4 million and $9.3 million,
respectively.

Consolidated KCP&L
LeasesConsolidated KCP&Ls lease
expense was $23.1 million during 2003 and $25.7 million during 2002. Consolidated
KCP&Ls lease expense, excluding DTI, was $29.6 million during 2001. The
remaining rental commitments under leases total $186.5 million ending in 2028. Obligations
for the years 2004 through 2008 are $43.9 million, $13.4 million, $12.9 million, $10.9
million and $8.9 million, respectively.

KCP&L has a transmission line
lease with another utility through September 2025 whereby, with the FERCs approval,
the rental payments can be increased by the lessor. If this occurs and KCP&L is able
to secure an alternative transmission path, KCP&L can cancel the lease. Commitments
under this lease total $1.9 million per year and $41.1 million over the
remaining life of the lease, assuming it is not canceled.

52

KCP&Ls expense for other
leases, including railcars, computer equipment, buildings, transmission line and other
items, approximated $23.6 million annually for the last three years. The remaining
rental commitments under these leases total$145.4 million through
2028. In early 2004, the operating lease for vehicles and heavy equipment was terminated
and the vehicles and equipment purchased for $29.0 million, which is included in the 2004
obligation. These amounts exclude possible termination payments under the synthetic lease
arrangement discussed below. Capital leases are not material and are included in these
amounts.

As the managing partner of three
jointly owned generating units, KCP&L has entered into leases for railcars to serve
those units. Consolidated KCP&L has reflected the entire lease commitment in the above
amounts, although about $2.0 million per year ($24.0 million total) will be
reimbursed by the other owners.

In 2001, KCP&L entered into a
synthetic lease arrangement with a Lease Trust (Lessor) to finance the purchase,
installation, assembly and construction of five combustion turbines and related property
and equipment that added 385 MWs of peaking capacity (Project). The Lease Trust is a
special-purpose entity and has an aggregate financing commitment from third-party equity
and debt participants of $176 million. In the second quarter of 2003, construction and
installation of KCP&Ls five combustion turbines was completed and the units were
placed in service. At December 31, 2003, cumulative project costs were approximately
$152.0 million. Rental payments under the lease will begin in 2004. Upon a default during
the lease period, KCP&Ls maximum obligation to the Lessor equals 100% of project
costs. KCP&Ls rental obligation, which reflects interest payments only, is
expected to be approximately $15.5 million ending in October 2006. KCP&Ls rental
obligation for the years 2004 through 2006 are approximately $3.1 million, $6.2 million
and $6.2 million, respectively. At the end of the lease term (October 2006), KCP&L may
choose to sell the project for the Lessor, guaranteeing that the Lessor receives a
residual value for the Project in an amount, which may be up to 83.21% of the project
cost. Alternatively, KCP&L may purchase the facility at an amount equal to the project
cost.

The Lease Trust, a special purpose
entity, acting as Lessor in the synthetic lease arrangement discussed above, is considered
a Variable Interest Entity under FIN No. 46. Because KCP&L has variable interests in
the Lease Trust, including among other things, a residual value guarantee provided to the
Lessor, KCP&L is the primary beneficiary of the Lease Trust. The Lease Trust was
consolidated in the fourth quarter of 2003, as required by FIN No. 46. Great Plains
Energys and consolidated KCP&Ls utility plant increased $149.3 million,
long-term debt increased $143.8 million and minority interest included in other deferred
credits and other liabilities increased $5.5 million. Additionally, in Great Plains
Energys and consolidated KCP&Ls statements of income, depreciation expense
increased and minority interest decreased $1.3 million in 2003 as a result of the
consolidation of the Lease Trust.

Other Great Plains Energy
LeasesGreat Plains Energys other
subsidiaries have entered operating leases for buildings, compressors, communications
equipment and other items. Lease expense was $1.0 million in 2003, $1.7 million in 2002
and about $1 million in 2001. Obligations average about $0.6 million per year for the
years 2004 through 2008.

Internal Revenue Service
Settlement  Corporate-Owned Life InsuranceIn November 2002, KCP&L accepted
a settlement offer related to the proposed disallowance of interest deductions on
corporate-owned life insurance (COLI) loans. The offer allowed 20% of the interest
originally deducted and taxed only 20% of the gain on surrender of the COLI policies.
KCP&L surrendered the policies in February 2003. KCP&L made cash payments of $1.3
million to the Internal Revenue Service (IRS) in 2003 to satisfy the liability associated
with the surrender. The remaining $9.9 million related to the disallowed interest will be
paid upon completion of the 1995  1999 IRS audit.

53

KCP&L paid $1.5 million to the
IRS in 2001 related to the disallowance of the 1994 COLI deduction and related interest.
KCP&L accrued for these disallowances and payments in 2000.

# 14. GUARANTEES

In the normal course of business,
Great Plains Energy and certain of its subsidiaries enter into various agreements
providing financial or performance assurance to third parties on behalf of certain
subsidiaries. Such agreements include, for example, guarantees and indemnification of
letters of credit and surety bonds. These agreements are entered into primarily to support
or enhance the creditworthiness otherwise attributed to a subsidiary on a stand-alone
basis, thereby facilitating the extension of sufficient credit to accomplish the
subsidiaries intended business purposes.

As prescribed in FIN No. 45,
Guarantors Accounting and Disclosure Requirements for Guarantees, Including
Guarantees of Indebtedness of Others, the Company began recording a liability for
the fair value of the obligation it has undertaken for guarantees issued after December
31, 2002. The liability recognition requirements of FIN No. 45 are applied on a
prospective basis to guarantees issued or modified after December 31, 2002, while the
disclosure requirements are applied to all guarantees. The interpretation does not
encompass guarantees of the Companys own future performance, such as credit support
provided to its subsidiaries. As of December 31, 2003, KCP&L had an immaterial amount
recorded for the fair value of guarantees issued for the residual value of vehicles and
heavy equipment under an operating lease, which will be reversed in 2004 following the
buyout of the lease.

The following table reflects Great
Plains Energys and consolidated KCP&Ls maximum potential amount of future
payments that could be required under guarantees and describes those guarantees:

|                        
|------------------------
|Maximum                 
|Guarantor               
|
|(millions)              
|KCP&L                   
|                        
|                        
|                        
|                        
|KCP&L                   
|                        
|
|Total consolidated KCP&L
|and Great Plains Energy 
|

# 15. ASSET RETIREMENT
OBLIGATIONS

Effective January 1, 2003, the
Company adopted SFAS No. 143. SFAS No. 143 provides accounting requirements for the
recognition and measurement of liabilities associated with the retirement of tangible
long-lived assets. Under the standard, these liabilities are recognized at fair value as
incurred and capitalized as part of the cost of the related long-lived asset. Accretion of
the liabilities due to the passage of time is recorded as an operating expense. Retirement
obligations associated with long-lived assets included within the scope of SFAS No. 143
are those for which a legal obligation exists under enacted laws, statutes and written or
oral contracts, including obligations arising under the doctrine of promissory estoppel.

The adoption of SFAS No. 143 changed
the accounting for and the method used to report KCP&Ls obligation to
decommission its 47% share of Wolf Creek. The legal obligation to decommission Wolf Creek
was incurred when the plant was placed in service in 1985. The estimated liability,
recognized

54

on KCP&Ls balance sheet at January 1, 2003, is based on a third party
nuclear decommissioning study conducted in 2002. KCP&L used a credit-adjusted risk
free discount rate of 6.42% to calculate the retirement obligation. This estimated rate
was based on the rate KCP&L could issue 30-year bonds, adjusted downward to reflect
the portion of the anticipated costs in current year dollars that had been funded at date
of adoption through a tax-qualified trust fund. The cumulative impact of prior
decommissioning accruals recorded consistent with rate orders issued by the MPSC and KCC
has been reversed with an offsetting reduction of the regulatory asset established upon
adoption of SFAS No. 143, as described below. Amounts collected through these rate orders
have been deposited in a legally restricted external trust fund. The fair market value of
the trust fund was $75.0 million and $63.3 million at December 31, 2003 and 2002,
respectively.

KCP&L also must recognize, where
possible to estimate, the future costs to settle other legal liabilities including the
removal of water intake structures on rivers, capping/filling of piping at levees
following steam power plant closures and capping/closure of ash landfills. Estimates for
these liabilities are based on internal engineering estimates of third party costs to
remove the assets in satisfaction of legal obligations and have been discounted using
credit adjusted risk free rates ranging from 5.25% to 7.50% depending on the anticipated
settlement date.

KLT Gas has estimated liabilities for
gas well plugging and abandonment, facility removal and surface restoration. These
estimates are based upon internal estimates of third party costs to satisfy the legal
obligations and have been discounted using credit adjusted risk free rates ranging from
6.00% to 7.25%, depending upon the anticipated settlement date.

Revisions to the estimated
liabilities of KCP&L and KLT Gas could occur due to changes in the decommissioning or
other cost estimates, extension of the nuclear operating license or changes in federal or
state regulatory requirements.

On January 1, 2003, KCP&L
recorded an ARO of $99.2 million, reversed the decommissioning liability of $64.6 million
previously accrued and increased property and equipment, net of accumulated depreciation,
by $18.3 million. KCP&L is a regulated utility subject to the provisions of SFAS No.
71 and management believes it is probable that any differences between expenses under SFAS
No. 143 and expenses recovered currently in rates will be recoverable in future rates. As
a result, the $16.3 million net cumulative effect ($80.9 million gross cumulative effect
net of $64.6 million decommissioning liability previously accrued) of the adoption of SFAS
No. 143 was recorded as a regulatory asset and therefore, had no impact on net income.

In addition, KCP&L recognizes
removal costs for utility assets that do not have an associated legal retirement
obligation. Historically, these removal costs have been reflected as a component of
depreciation in accordance with regulatory treatment. In conjunction with the adoption of
SFAS No. 143, non-legal costs of removal were reclassified for all periods presented from
accumulated depreciation to a regulatory asset.

As a result of its adoption of SFAS
No. 143, KLT Gas recorded an ARO of $1.2 million, increased property and equipment by $1.0
million and increased operating expense by $0.2 million for the immaterial cumulative
effect of the accounting change.

KCP&L has legal ARO for certain
other assets where it is not possible to estimate the time period when the obligations
will be settled. Consequently, the retirement obligations cannot be measured at this time.
For transmission easements obtained by condemnation, KCP&L must remove its
transmission lines if the line is de-energized. It is extremely difficult to obtain siting
for new transmission lines. Consequently, KCP&L does not anticipate de-energizing any
of its existing lines. KCP&L also operates, under state permits, ash landfills at
several of its power plants. While the life of the ash

55

landfill at one plant can be
estimated and is included in the estimated liabilities above, the future life of ash
landfills at other permitted landfills cannot be estimated. KCP&L can continue to
maintain permits for these landfills after the adjacent plant is closed.

It is anticipated the Companys
February 2004 decision to exit the gas business will be accomplished by the sale of KLT
Gas assets. Management expects the ARO related to the KLT Gas portfolio to be
transferred to the new owners at the time of the sale.

The following table illustrates the
effect on ARO if the provisions of SFAS No. 143 had been applied beginning January 1,
2001. Pro forma amounts for the periods prior to the January 1, 2003, adoption were
measured using assumptions consistent with the period of adoption.

|                                               
|-----------------------------------------------
|2003                                           
|
|(millions)                                     
|Asset retirement obligation beginning of period
|Additions                                      
|Accretion                                      
|                                               
|Asset retirement obligation end of period      
|
|Great Plains Energy                            
|Asset retirement obligation beginning of period
|Additions                                      
|Accretion                                      
|                                               
|Asset retirement obligation end of period      
|

# 16. SEGMENT AND RELATED
INFORMATION

Great Plains EnergyGreat Plains Energy has three
reportable segments based on its method of internal reporting, which generally segregates
the reportable segments based on products and services, management responsibility and
regulation. The three reportable business segments are: (1) KCP&L, an integrated,
regulated electric utility, which generates, transmits and distributes electricity; (2)
Strategic Energy, which provides power supply coordination services by entering into
long-term contracts with its customers to supply electricity Strategic Energy purchases
under long-term contracts, operating in several electricity markets offering retail
choice; and (3) KLT Gas, which explores for, develops, and produces unconventional natural
gas resources, including coal bed methane properties. Other includes the
operations of HSS, GPP, Services, all KLT Inc. operations other than Strategic Energy and
KLT Gas, unallocated corporate charges and intercompany eliminations. The summary of
significant accounting policies applies to all of the reportable segments. Segment
performance is evaluated based on net income.

The following tables reflect
summarized financial information concerning Great Plains Energys reportable
segments.

|                                 
|---------------------------------
|Strategic                        
|KCP&L                            
|
|(millions)                       
|Operating revenues               
|Depreciation and depletion       
|Loss from equity investments     
|Interest charges                 
|Income taxes                     
|Loss from discontinued operations
|Net income (loss)                
|

56

|                                 
|---------------------------------
|Strategic                        
|KCP&L                            
|
|(millions)                       
|Operating revenues               
|Depreciation and depletion       
|Loss from equity investments     
|Interest charges                 
|Income taxes                     
|Loss from discontinued operations
|Cumulative effect of a change    
|in accounting principle          
|Net income (loss)                
|

|                                 
|---------------------------------
|Strategic                        
|KCP&L                            
|
|(millions)                       
|Operating revenues               
|Depreciation and depletion       
|Income from equity investments   
|Interest charges                 
|Income taxes                     
|Loss from discontinued operations
|Net income (loss)                
|

|                                      
|--------------------------------------
|Strategic                             
|KCP&L                                 
|
|(millions)                            
|Assets                                
|Capital and investment expenditures(a)
|
|2002                                  
|Assets                                
|Capital and investment expenditures(a)
|
|2001                                  
|Assets(b)                             
|Capital and investment expenditures(a)
|

|    | 
|--- | 
|(a) | 
|(b) | 
|    | 
|    | 

Consolidated KCP&LOn October 1, 2001, consolidated
KCP&L distributed, as a dividend, its ownership interest in KLT Inc. and GPP to Great
Plains Energy. As a result, those companies are direct subsidiaries of Great Plains Energy
and have not been included in consolidated KCP&Ls results of operations and
financial position since October 1, 2001.

57

The following tables reflect
summarized financial information concerning consolidated KCP&Ls reportable
segment. Other includes the operations of HSS and intercompany eliminations, which are
immaterial.

|                                 
|---------------------------------
|Consolidated                     
|KCP&L                            
|
|(millions)                       
|Operating revenues               
|Depreciation and depletion       
|Interest charges                 
|Income taxes                     
|Loss from discontinued operations
|Net income (loss)                
|

|                                 
|---------------------------------
|Consolidated                     
|KCP&L                            
|
|(millions)                       
|Operating revenues               
|Depreciation and depletion       
|Interest charges                 
|Income taxes                     
|Loss from discontinued operations
|Cumulative effect of a change    
|in accounting principle          
|Net income (loss)                
|

|                                     
|-------------------------------------
|Subsidiaries                         
|transferred to                       
|KCP&L                                
|
|(millions)                           
|Operating revenues                   
|Depreciation and depletion           
|Income (loss) from equity investments
|Interest charges                     
|Income taxes                         
|Loss from discontinued operations    
|Net income (loss)                    
|

|                                       
|---------------------------------------
|Subsidiaries                           
|transferred to                         
|KCP&L                                  
|
|(millions)                             
|Assets                                 
|Capital and investment expenditures (a)
|
|2002                                   
|Assets                                 
|Capital and investment expenditures (a)
|
|2001                                   
|Assets                                 
|Capital and investment expenditures (a)
|

|    | 
|--- | 
|(a) | 

58

# 17. SHORT-TERM
BORROWINGS AND SHORT-TERM BANK LINES OF CREDIT

Great Plains Energy syndicated a $225
million, revolving credit facility with a group of banks in the first quarter of 2003.
This facility replaced a $205 million syndicated facility and a $20 million credit
facility with a bank. The line has a 364-day term but may be extended for an additional
year at the Companys option. Available liquidity under this facility is not impacted
by a decline in credit ratings unless the downgrade occurs in the context of a merger,
consolidation or sale. A default by Great Plains Energy or any of its significant
subsidiaries of material other indebtedness totaling more than $25.0 million is a default
under this bank line. Under the terms of this agreement, Great Plains Energy is required
to maintain a consolidated indebtedness to consolidated capitalization ratio not greater
than 0.65 to 1.0 at all times and an interest coverage ratio greater than 2.25 to 1.0, as
those ratios are defined in the agreement. At December 31, 2003, the Company was in
compliance with these covenants. At December 31, 2003, Great Plains Energy had $87.0
million of outstanding borrowings under this facility with a weighted-average interest
rate of 2.12%. Great Plains Energy also issued a letter of credit for $15.8 million as
credit support for Strategic Energy. At December 31, 2002, Great Plains Energy had $14.0
million of outstanding borrowings under its $20 million credit facility, with a
weighted-average interest rate of 2.27%.

Strategic Energy maintains a secured
revolving credit facility for up to $95 million with a group of banks. This facility is
partially guaranteed by Great Plains Energy. The facility enhances Strategic Energys
liquidity including its ability to provide credit support through letters of credit for
purchased power and regulatory requirements. The maximum amount available for loans and
letters of credit under the facility is the lesser of $95 million or the borrowing base,
as defined in the agreement. The borrowing base generally is the sum of certain Strategic
Energy accounts receivable and the amount of the Great Plains Energy guarantee which was
$40.0 million at December 31, 2003. At December 31, 2003, Strategic Energy had a minimum
fixed charge ratio, as defined in the agreement, of at least 1.05 to 1.0; however, if the
ratio drops below 1.05 to 1.0, Great Plains Energys guarantee amount is required to
be increased based on quarterly calculations. At December 31, 2003, $58.5 million in
letters of credit had been issued under the agreement, leaving $27.3 million of capacity
available for loans and additional letters of credit. The line has a 364-day term that may
be extended for an additional year by Strategic Energy with mutual agreement of the
parties. A default by Strategic Energy of other indebtedness, as defined in the facility,
totaling more than $5.0 million is a default under the facility. Under the terms of this
agreement, Strategic Energy is required to maintain a minimum net worth of $30 million and
a maximum debt to EBITDA ratio of 2.0 to 1.0, as those are defined in the agreement. At
December 31, 2003, Strategic Energy was in compliance with these covenants.

Strategic Energy had a $30 million
short-term bank credit agreement that expired in March 2003. At December 31, 2002,
Strategic Energy had no short-term borrowings outstanding.

KCP&Ls short-term
borrowings consist of funds borrowed from banks or through the sale of commercial paper as
needed. As of December 31, 2003, and 2002, there was no commercial paper outstanding. A
default by KCP&L on other indebtedness is a default under these bank line agreements.
Under the terms of certain bank line agreements, KCP&L is required to maintain a
consolidated indebtedness to consolidated capitalization ratio, as defined in the
agreements, not greater than 0.65 to 1.0 at all times. At December 31, 2003, KCP&L was
in compliance with this covenant. KCP&Ls short-term bank lines of credit totaled
$150.0 million as of December 31, 2003, and $126.0 million as of December 31, 2002.

On June 30, 2003, HSS completed the
disposition of its interest in RSAE. RSAEs line of credit totaling $27 million was
cancelled. With proceeds from a note to Great Plains Energy, HSS repaid $22.1 million on
the supported bank line. At December 31, 2003, HSS notes payable to Great Plains
Energy totaled $22.0 million. See Note 8 for additional information concerning the
disposition of RSAE.

59

# 18. LONG-TERM DEBT AND
EIRR BONDS CLASSIFIED AS CURRENT LIABILITIES

|                                                                   
|-------------------------------------------------------------------
|December 31                                                        
|Year Due                                                           
|
|(thousands)                                                        
|KCP&L                                                              
|General Mortgage Bonds                                             
|7.55%* and 7.28%** Medium-Term Notes                               
|2.36%* and 2.48%** EIRR bonds                                      
|Senior Notes                                                       
|7.125%                                                             
|6.500%                                                             
|6.000%                                                             
|Unamortized discount                                               
|EIRR bonds                                                         
|2.16%* and 2.41%** Series A & B                                    
|2.25%* and 4.50%** Series C                                        
|2.16%* and 2.41%** Series D                                        
|                                                                   
|8.30% Junior Subordinated Deferred Interest Bonds                  
|                                                                   
|Other Consolidated KCP&L                                           
|1.25%* Combustion Turbine Synthetic Lease                          
|                                                                   
|Current liabilities                                                
|EIRR bonds classified as current                                   
|Current Maturities                                                 
|                                                                   
|Total consolidated KCP&L excluding current liabilities             
|                                                                   
|Other Great Plains Energy                                          
|7.84%* and 8.16%** Affordable Housing Notes                        
|Current maturities                                                 
|
|Total consolidated Great Plains Energy excluding current maturities
|

|   | 
|-- | 
|*  | 
|** | 

KCP&L General
Mortgage BondsKCP&L has issued mortgage bonds
under the General Mortgage Indenture and Deed of Trust dated December 1, 1986, as
supplemented. The Indenture creates a mortgage lien on substantially all utility plant.
Mortgage bonds secure $213.8 million and $337.8 million of medium-term notes and EIRR
bonds (see discussion below) at December 31, 2003 and 2002, respectively.

In 2003, KCP&L redeemed $124.0
million of its medium term notes, including $104.0 million called prior to maturity. The
medium term notes were paid off primarily with proceeds from a $100.0 million equity
contribution received from Great Plains Energy during the first quarter of 2003. The
average interest rate on the $104.0 million of notes called early was 7.28% and the
original maturity dates were 2005 through 2008.

In December 2002, KCP&L secured
bond insurance policies as a credit enhancement to its Series 1993A and 1993B EIRR bonds,
which aggregate $79.5 million. The insurance agreement between KCP&L and XL Capital
Assurance Inc. (XLCA), the issuer of the bond insurance policies, provides for
reimbursement by KCP&L for any amounts that XLCA pays under the bond insurance
policies. The

60

insurance policies are in effect for the term of the bonds. The insurance
agreement contains a covenant that the indebtedness to total capitalization ratio of
KCP&L and its consolidated subsidiaries will not be greater than 0.68 to 1.0.
KCP&L is also restricted from issuing additional bonds under its General Mortgage
Indenture if, after giving effect to such additional bonds, the proportion of secured debt
to total indebtedness would be more than 75%, or more than 50% if the long term rating for
such bonds by Standard & Poors or Moodys Investors Service would be at or
below A- or A3, respectively. In the event of a default under the insurance agreement,
XLCA may take any available legal or equitable action against KCP&L, including seeking
specific performance of the covenants.

The EIRR bonds are subject to
mandatory redemption within 120 to 180 days of a final determination by the IRS or a court
that, as a result of KCP&L failing to perform any of its agreements relating to the
bonds, interest paid or payable on the bonds is or was includable in the bondholders
gross income for Federal tax purposes.

KCP&L EIRR Bonds
Classified as Current LiabilitiesIn the third quarter of 2003,
KCP&L remarketed its 1998 Series C unsecured EIRR bonds totaling $50.0 million at a
fixed rate of 2.25% ending August 31, 2004. The previous 4.50% interest rate expired on
August 31, 2003. If the bonds could not be remarketed, KCP&L would be obligated to
either purchase or retire the bonds.

The 3.9% interest rate on
KCP&Ls $48.3 million secured 1993 and 1994 series EIRR bonds expires in August
2004. If the bonds could not be remarketed KCP&L would be obligated to either purchase
or retire the bonds.

A $31.0 million variable-rate,
secured EIRR bond with a final maturity in 2017 is remarketed on a weekly basis, with full
liquidity support provided by a 364-day credit facility with one bank. KCP&Ls
available liquidity under this credit line is not impacted by a decline in credit ratings
unless the downgrade occurs in the context of a merger, consolidation, or sale.

The $50.0 million Series C unsecured
EIRR bonds, the $48.3 million secured 1993 and 1994 Series EIRR bonds and the $31.0
million discussed above totaled $129.3 million and were classified as current liabilities
at December 31, 2003. The $50.0 million Series C unsecured EIRR bonds and the $31.0
million discussed previously totaled $81.0 million and were classified as current
liabilities at December 31, 2002.

KCP&L Unsecured NotesAt December 31, 2003, KCP&L had a
total of $199.8 million of unsecured EIRR bonds outstanding. The Series C EIRR bonds,
$50.0 million due 2017, have a fixed rate of 2.25% through August 31, 2004, and are
classified as current liabilities at December 31, 2003. In 2002, KCP&L remarketed its
1998 Series A, B and D EIRR bonds totaling $146.5 million to a five-year fixed interest
rate of 4.75% ending October 1, 2007. The final maturity for Series A and B bonds is 2015
and the final maturity for Series D is 2017. At the end of the fixed interest rate period,
the bonds will be subject to mandatory redemption or purchase and KCP&L anticipates
remarketing the bonds at which time a new interest rate period and mode will be
determined. KCP&L has classified the 1998 Series A, B and D EIRR bonds as long-term
debt consistent with the remaining term under the remarketing.

Simultaneously with the remarketing,
KCP&L entered into an interest rate swap for the $146.5 million based on LIBOR to
effectively create a floating interest rate obligation. The transaction is a fair value
hedge with the assumption of no ineffectiveness under SFAS No. 133, Accounting for
Derivative Instruments and Hedging Activities, as amended. The fair value of the
swap is recorded on KCP&Ls balance sheet as an asset with an offset to the
respective debt balances and has no impact on earnings. Future changes in the fair market
value of the swap will be similarly recorded on the balance

61

sheet with no impact on
earnings. The fair value of the swap was a $3.3 million and $4.3 million asset at December
31, 2003 and 2002, respectively. See Note 20 for additional discussion of the interest
rate swap.

KCP&L had a total of $625.0
million of outstanding unsecured senior notes at December 31, 2003 and 2002.

In accordance with FIN No. 46, the
Company has determined that KCP&L is not the primary beneficiary of the Securities
Trust and thus, KCP&L de-consolidated the Securities Trust in the fourth quarter of
2003. De-consolidation required the consolidated financial statements of Great Plains
Energy and consolidated KCP&L to present the $4.6 million investment in the common
securities of the Securities Trust and the $154.6 million 8.3% Junior Subordinated
Deferrable Interest Debentures issued by KCP&L and held by the Securities Trust while
no longer presenting the $150.0 million of 8.3% preferred securities issued by the
Securities Trust.

The Lease Trust, a special purpose
entity, acting as Lessor in the synthetic lease arrangement discussed in Note 13, is
considered a Variable Interest Entity under FIN No. 46. The Lease Trust was consolidated
in the fourth quarter of 2003, as required by FIN No. 46. Accordingly, Great Plains
Energys and consolidated KCP&Ls long-term debt increased $143.8 million.

Other Great Plains
Energy Long-Term DebtKLT Investments affordable
housing notes are collateralized by the affordable housing investments. Most of the notes
also require the greater of 15% of the outstanding note balances or the next annual
installment to be held as cash, cash equivalents or marketable securities. The equity
securities held as collateral for these notes, included in other investments and
nonutility property on the consolidated balance sheets, were $1.5 million and $9.3 million
at December 31, 2003 and 2002, respectively.

Scheduled MaturitiesGreat Plains Energys long-term
debt maturities for the years 2004 through 2008 are $59.3 million, $253.2 million, $145.5
million, $226.1 million and $0.3 million, respectively. These amounts include consolidated
KCP&Ls long-term debt maturities for the years 2004 through 2007 of $54.5
million, $250.0 million, $143.8 million, and $225.5 million, respectively.

19.
          COMMON STOCK EQUITY, PREFERRED STOCK, REDEEMABLE PREFERRED STOCK AND MANDATORILY
          REDEEMABLE PREFERRED SECURITIES

Common Stock EquityIn 2002, Great Plains Energy filed a
registration statement for the issuance of an aggregate amount up to $300 million of any
combination of senior debt securities, subordinated debt securities, trust preferred
securities, convertible securities or common stock. During November 2002, Great Plains
Energy issued 6.9 million shares of common stock at $22 per share under this registration
with $151.8 million in gross proceeds to be used for repayment of debt at Great Plains
Energy and KCP&L and for general corporate purposes. Issuance costs of $6.1 million
are reflected in Great Plains Energys capital stock premium and expense line in the
consolidated balance sheets at December 31, 2003 and 2002.

Also during November 2002, Great
Plains Energy issued 0.4 million shares of common stock valued at $8.0 million in
conjunction with the purchase of an additional indirect ownership interest in Strategic
Energy. See Note 12 for additional information concerning this transaction.

Treasury shares are held for future
distribution upon exercise of options issued in conjunction with the Companys equity
compensation plan. Shares held by consolidated KCP&L prior to the October 1,

62

2001,
distribution of a dividend to Great Plains Energy were included in other investments and
nonutility property on consolidated KCP&Ls balance sheets.

Great Plains Energy has 3.0 million
shares of common stock registered with the SEC for a Dividend Reinvestment and Direct
Stock Purchase Plan (Plan). The Plan allows for the purchase of common shares by
reinvesting dividends or making optional cash payments. Great Plains Energy currently
purchases shares for the Plan on the open market.

Great Plains Energy has 8.3 million
shares of common stock registered with the SEC for a defined contribution savings plan.
The Company matches employee contributions, subject to limits.

Under the 35 Act, Great Plains Energy
and KCP&L can pay dividends only out of retained or current earnings, unless
authorized to do otherwise by the SEC. Under stipulations with the MPSC and KCC, Great
Plains Energy and KCP&L have committed to maintain consolidated common equity of not
less than 30% and 35%, respectively. Pursuant to SEC order, Great Plains Energys and
KCP&Ls authorization to issue securities is conditioned on maintaining a
consolidated common equity capitalization of at least 30%.

Great Plains Energys Articles
of Incorporation contain a restriction related to the payment of dividends in the event
common equity falls to 25% of total capitalization. If preferred stock dividends are not
declared and paid when scheduled, Great Plains Energy could not declare or pay common
stock dividends or purchase any common shares. If the unpaid preferred stock dividends
equal four or more full quarterly dividends, the preferred shareholders, voting as a
single class, could elect the smallest number of Directors necessary to constitute a
majority of the full Board of Directors.

Under the indenture relating to
KCP&Ls 8.3% Junior Subordinated Deferrable Interest Debentures, due 2037
(Debentures), which are held by KCPL Financing I, KCP&L may not declare or pay any
dividends on any shares of its capital stock if at the time (i) there is an event of
default (as defined in the indenture), (ii) KCP&L is in default with respect to its
payment of any obligations under its guarantee of preferred securities issued by KCPL
Financing I, or (iii) KCP&L has elected to defer payments of interest on the
Debentures.

Great Plains Energy made capital
contributions to KCP&L of $100 million and $36 million in 2003 and 2002, respectively.
These contributions were used to pay down long-term debt. At December 31, 2003,
KCP&Ls capital contributions from Great Plains Energy totaled $175.0 million
which is reflected in common stock in the consolidated KCP&L balance sheet.

Preferred StockAs of December 31, 2003, 1.6 million
shares of Cumulative No Par Preferred Stock and 11 million shares of no par Preference
Stock were authorized under Great Plains Energys Articles of Incorporation. Great
Plains Energy has the option to redeem the $39.0 million of issued Cumulative Preferred
Stock at prices approximating par or stated value.

Mandatorily Redeemable
Preferred SecuritiesIn 1997, the Securities Trust issued
$150.0 million of 8.3% preferred securities. The sole asset of the Securities Trust is the
$154.6 million principal amount of 8.3% Junior Subordinated Deferrable Interest
Debentures, due 2037, issued by KCP&L. The terms and interest payments on these
debentures correspond to the terms and dividend payments on the preferred securities.
KCP&L deducts these payments for tax purposes. KCP&L may elect to defer interest
payments on the debentures for a period up to 20 consecutive quarters, causing dividend
payments on the preferred securities to be deferred as well. In case of a deferral,
interest and dividends will continue to accrue, along with quarterly compounding interest
on the deferred amounts. KCP&L may redeem all or a portion of the

63

debentures at par at
anytime but has not elected to redeem any up to this point. If KCP&L redeems all or a
portion of the debentures, the Securities Trust must redeem an equal amount of preferred
securities at face value plus accrued and unpaid distributions. The back-up undertakings
in the aggregate provide a full and unconditional guarantee of amounts due on the
preferred securities.

KCP&L de-consolidated the
Securities Trust in the fourth quarter of 2003, as required by FIN No. 46. Great Plains
Energys and consolidated KCP&Ls other nonutility property and investments
increased $4.6 million representing the investment in the common securities of the
Securities Trust, and long-term debt increased $154.6 million representing the 8.3% Junior
Subordinated Deferrable Interest Debentures issued by KCP&L and held by the Securities
Trust. Great Plains Energys and consolidated KCP&L will no longer present the
$150.0 million of 8.3% preferred securities issued by the Securities Trust on their
respective balance sheets.

# 20. DERIVATIVE FINANCIAL
INSTRUMENTS

The Companys activities expose
it to a variety of market risks including interest rates and commodity prices. Management
has established risk management policies and strategies to reduce the potentially adverse
effects that the volatility of the markets may have on its operating results. The
Companys risk management activities, including the use of derivatives, are subject
to the management, direction and control of internal risk management committees. The
Companys interest rate risk management strategy uses derivative instruments to
adjust the Companys liability portfolio to optimize the mix of fixed and floating
rate debt within an established range. The Company maintains commodity-price risk
management strategies that use derivative instruments to minimize significant,
unanticipated earnings fluctuations caused by commodity price volatility. Derivative
instruments measured at fair value are recorded on the balance sheet as an asset or
liability. Changes in fair value are recognized currently in earnings unless specific
hedge accounting criteria are met.

Interest Rate Risk
ManagementIn 2002, KCP&L remarketed its
1998 Series A, B, and D Environmental Improvement Revenue Refunding (EIRR) bonds totaling
$146.5 million to a 5-year fixed interest rate of 4.75% ending October 1, 2007.
Simultaneously with the remarketing, KCP&L entered into an interest rate swap for the
$146.5 million based on LIBOR to effectively create a floating interest rate obligation.
The transaction is a fair value hedge with no ineffectiveness. Changes in the fair market
value of the swap are recorded on the balance sheet as an asset with an offset to the
respective debt balances with no impact on earnings. The fair value of the swap was an
asset of $3.3 million and $4.3 million at December 31, 2003, and 2002, respectively.

At December 31, 2002, KCP&L had
two interest rate swap agreements in place to effectively fix the interest rate on $30
million of floating-rate long-term debt. The swap agreements expired in June 2003.

Commodity Risk ManagementKCP&Ls risk management
policy is to use derivative hedge instruments to mitigate its exposure to market price
fluctuations on a portion of its projected gas purchases to meet generation requirements
for retail and firm wholesale sales. These hedging instruments are designated as cash flow
hedges. The fair market values of these instruments are recorded as current assets or
current liabilities. When the gas is purchased and to the extent the hedge is effective at
mitigating the impact of a change in the purchase price of gas, the amounts in other
comprehensive income (OCI) are reclassified to the consolidated income statement. To the
extent that the hedges are not effective, the ineffective portion of the changes in fair
market value is recorded currently in fuel expense.

Strategic Energy maintains a
commodity-price risk management strategy that uses forward physical energy purchases and
derivative instruments to minimize significant, unanticipated earnings fluctuations caused
by commodity-price volatility. Supplying electricity to retail customers requires

64

Strategic Energy to match customers projected demand with fixed price purchases. In
certain markets where Strategic Energy operates, entering into forward fixed price
contracts is cost prohibitive. Derivative instruments, primarily swaps, are used to limit
the unfavorable effect that price increases will have on electricity purchases,
effectively fixing the future purchase price of electricity for the applicable forecasted
usage and protecting Strategic Energy from significant price volatility. Certain forward
fixed price purchases and swap agreements are designated as cash flow hedges resulting in
changes in the hedge value being recorded as OCI. To the extent that the hedges are not
effective, the ineffective portion of the changes in fair market value is recorded
currently in purchased power. Strategic Energy also enters into economic hedges that do
not qualify as accounting hedges. The changes in the fair value of these derivative
instruments are recorded into earnings as a component of purchased power.

An option that was designated as a
cash flow hedge expired on December 31, 2001. The option allowed Strategic Energy to
purchase up to 270 MWs of power at a fixed rate of $21 per MWh. The fair market value of
this option and swap agreements designated as cash flow hedges at January 1, 2001, was
recorded as a current asset and a cumulative effect of a change in accounting principle in
comprehensive income.

In March 2003, Strategic Energy
terminated an agreement with a swap counterparty due to credit and performance concerns.
Strategic Energy received a $4.8 million fair value settlement. The swap was designated as
a cash flow hedge of a forecasted transaction and Strategic Energy management believed the
forecasted transaction would occur. Accordingly, the $4.8 million settlement was
reclassified to earnings over the remaining term of the underlying transaction, which was
completed in the fourth quarter of 2003.

KLT Gas risk management policy
is to use firm sales agreements or financial hedge instruments to mitigate its exposure to
market price fluctuations on up to 85% of its daily natural gas production. KLT Gas had no
significant production during the reported periods; therefore, no hedges were in place.

SFAS No. 149, Amendment of
Statement 133 on Derivative Instruments and Hedging Activities was generally
effective for contracts entered into or modified after June 30, 2003. The adoption of SFAS
No. 149 did not have a material effect on the results of operations of Great Plains Energy
or consolidated KCP&L for the period ended December 31, 2003, or their financial
positions as of that date.

The amounts recorded in OCI related
to the cash flow hedges are summarized in the following tables:

|Great Plains Energy activity for 2003
|-------------------------------------
|
|Increase                             
|December 31                          
|2002                                 
|
|(millions)                           
|Current assets                       
|Other deferred charges               
|Other current liabilities            
|Deferred income taxes                
|Other deferred credits               
|
|OCI                                  
|

65

|Consolidated KCP&L activity for 2003
|------------------------------------
|
|Increase                            
|December 31                         
|2002                                
|
|(millions)                          
|Other current assets                
|Deferred income taxes               
|
|OCI                                 
|

|Great Plains Energy activity for 2002
|-------------------------------------
|
|Increase                             
|December 31                          
|2001                                 
|
|(millions)                           
|Other current assets                 
|Other current liabilities            
|Deferred income taxes                
|Other deferred credits               
|
|OCI                                  
|

|Consolidated KCP&L activity for 2002
|------------------------------------
|
|Increase                            
|December 31                         
|2001                                
|
|(millions)                          
|Other current assets                
|Other current liabilities           
|Deferred income taxes               
|
|OCI                                 
|

|Great Plains Energy activity for 2001
|-------------------------------------
|
|Cumulative                           
|Effect to                            
|January 1                            
|2001                                 
|
|(millions)                           
|Other current assets                 
|Other current liabilities            
|Deferred income taxes                
|Other deferred credits               
|
|OCI                                  
|

66

|Consolidated KCP&L activity for 2001
|------------------------------------
|
|Cumulative                          
|Effect to                           
|January 1                           
|2001                                
|
|(millions)                          
|                                    
|Other current assets                
|Other current liabilities           
|Deferred income taxes               
|Other deferred credits              
|
|OCI                                 
|

|Reclassified to earnings
|------------------------
|
|Great Plains Energy     
|2003                    
|
|(millions)              
|Gas revenues            
|Fuel expense            
|Purchased power expense 
|Minority interest       
|Income taxes            
|
|OCI                     
|

# 21. JOINTLY-OWNED
ELECTRIC UTILITY PLANTS

KCP&Ls share of
jointly-owned electric utility plants as of December 31, 2003, is as follows:

|                                
|--------------------------------
|Wolf Creek                      
|Unit                            
|
|(millions except MW amounts)    
|KCP&L's share                   
|                                
|Utility plant in service        
|Accumulated depreciation        
|Nuclear fuel, net               
|KCP&Ls accredited capacity--MWs
|

Each owner must fund its own portion
of the plants operating expenses and capital expenditures. KCP&Ls share of
direct expenses is included in the appropriate operating expense classifications in the
Great Plains Energy and consolidated KCP&L Statements of Income.

67

# 22. QUARTERLY OPERATING
RESULTS (UNAUDITED)

|Great Plains Energy                              
|-------------------------------------------------
|
|Quarter                                          
|1st                                              
|
|(millions except earnings per share amounts)     
|Operating revenue                                
|Operating income (loss)                          
|Income (loss) from continuing operations         
|Net income (loss)                                
|Basic and diluted earning (loss) per common      
|share from continuing operations                 
|Basic and diluted earning (loss) per common share
|
|2002                                             
|Operating revenue                                
|Operating income                                 
|Income (loss) from continuing operations         
|before cumulative effect                         
|Net income (loss)                                
|Basic and diluted earning (loss) per common      
|share from continuing operations before          
|cumulative effect                                
|Basic and diluted earning (loss) per common share
|

|Consolidated KCP&L                      
|----------------------------------------
|
|Quarter                                 
|1st                                     
|
|(millions)                              
|Operating revenue                       
|Operating income                        
|Income (loss) from continuing operations
|Net income                              
|
|2002                                    
|Operating revenue                       
|Operating income                        
|Income (loss) from continuing operations
|before cumulative effect                
|Net income (loss)                       
|

Great Plains Energys fourth
quarter 2003 results reflects impairments of KLT Gas properties totaling $45.5 million
which reduced earnings by $28.0 million, or $0.40 per share. See Note 7 for additional
information.

First quarter 2002 income statement
information as reported in the March 31, 2002, Form 10-Q has been restated to reflect the
cumulative effect to January 1, 2002, of a change in accounting principle for the $3.0
million RSAE goodwill write-down. All quarters presented prior to the second quarter of
2003 have also been recast to reflect RSAE as discontinued operations. See Note 8 for
additional information concerning the June 2003 disposition of RSAE. The quarterly data is
subject to seasonal fluctuations with peak periods occurring during the summer months.

68

# INDEPENDENT
AUDITORS REPORT

To the Board of Directors
and Shareholders of  Great Plains Energy Incorporated

We have audited the accompanying
consolidated balance sheets of Great Plains Energy Incorporated and subsidiaries (the
Company) as of December 31, 2003 and 2002, and the related consolidated
statements of income, comprehensive income, common stock equity and cash flows for the
years then ended. Our audits also included the 2003 and 2002 financial statement schedules
listed in the Index at Item 15. These financial statements and financial statement
schedules are the responsibility of the Companys management. Our responsibility is
to express an opinion on these financial statements and financial statement schedules
based on our audits.

We conducted our audits in accordance
with auditing standards generally accepted in the United States of America. Those
standards require that we plan and perform the audit to obtain reasonable assurance about
whether the financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in the
financial statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis for our
opinion.

In our opinion, such financial
statements present fairly, in all material respects, the consolidated financial position
of Great Plains Energy Incorporated and subsidiaries as of December 31, 2003 and 2002, and
the results of their operations and their cash flows for the years then ended in
conformity with accounting principles generally accepted in the United States of America.
Also, in our opinion, such financial statement schedules, when considered in relation to
the 2003 and 2002 basic consolidated financial statements taken as a whole, present
fairly, in all material respects, the information set forth therein.

As discussed in Note 6 to the
consolidated financial statements, effective January 1, 2002, the Company changed its
method of accounting for intangible assets to adopt Statement of Financial Accounting
Standards (SFAS) No. 142, Goodwill and Other Intangible Assets. As
discussed in Notes 1 and 15, respectively, to the consolidated financial statements,
effective January 1, 2003, the Company changed its method of accounting for stock-based
compensation to adopt SFAS No. 123, Accounting for Stock-Based Compensation
and changed its method of accounting for asset retirement obligations to adopt SFAS No.
143, Accounting for Asset Retirement Obligations.

/s/DELOITTE & TOUCHE
LLP

Kansas City, Missouri  March
9, 2004

69

# INDEPENDENT
AUDITORS REPORT

To the Board of Directors
of  Kansas City Power & Light Company

We have audited the accompanying
consolidated balance sheets of Kansas City Power & Light Company and subsidiaries (the
Company) as of December 31, 2003 and 2002, and the related consolidated
statements of income, comprehensive income, common stock equity and cash flows for the
years then ended. Our audit also included the 2003 and 2002 financial statement schedules
listed in the Index at Item 15. These financial statements and financial statement
schedules are the responsibility of the Companys management. Our responsibility is
to express an opinion on these financial statements and financial statement schedules
based on our audits.

We conducted our audits in accordance
with auditing standards generally accepted in the United States of America. Those
standards require that we plan and perform the audit to obtain reasonable assurance about
whether the financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in the
financial statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis for our
opinion.

In our opinion, such financial
statements present fairly, in all material respects, the consolidated financial position
of Kansas City Power & Light Company and subsidiaries as of December 31, 2003 and
2002, and the results of their operations and their cash flows for the years then ended in
conformity with accounting principles generally accepted in the United States of America.
Also, in our opinion, such financial statement schedules, when considered in relation to
the 2003 and 2002 basic consolidated financial statements taken as a whole, present
fairly, in all material respects, the information set forth therein.

As discussed in Note 6 to the
consolidated financial statements, effective January 1, 2002, the Company changed its
method of accounting for intangible assets to adopt Statement of Financial Accounting
Standards (SFAS) No. 142, Goodwill and Other Intangible Assets. As
discussed in Note 15 to the consolidated financial statements, effective January 1, 2003,
the Company changed its method of accounting for asset retirement obligations to adopt
SFAS No. 143, Accounting for Asset Retirement Obligations.

/s/DELOITTE & TOUCHE
LLP

Kansas City, Missouri  March
9, 2004

70

# Report of Independent
Auditors

To the Board of Directors and
Shareholders of  Great Plains Energy Incorporated:

We have audited the accompanying
consolidated statements of income, of cash flows, of common stock equity, and of
comprehensive income of Great Plains Energy Incorporated and Subsidiaries for the year
ended December 31, 2001. These financial statements are the responsibility of the
Companys management. Our responsibility is to express an opinion on these financial
statements based on our audit. We did not audit the consolidated financial statements of
DTI Holdings, Inc. and Subsidiaries (Debtors-in-Possession) (an 83.6 percent owned
entity), for the year ended December 31, 2001, which statements reflect total revenues of
$17.4 million and a net loss of $306.1 million for the year ended December 31, 2001. Those
statements were audited by other auditors whose report thereon has been furnished to us,
and our opinion expressed herein, insofar as it relates to the amounts included for DTI
Holdings, Inc. and Subsidiaries, is based solely on the report of the other auditors.

We conducted our audit in accordance
with auditing standards generally accepted in the United States of America. Those
standards require that we plan and perform the audit to obtain reasonable assurance about
whether the financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in the
financial statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audit and the report of other auditors provide
a reasonable basis for our opinion.

In our opinion, based on our audit
and the report of other auditors, the consolidated financial statements referred to above
present fairly, in all material respects, the results of operations and cash flows of
Great Plains Energy Incorporated and Subsidiaries for the year ended December 31, 2001 in
conformity with accounting principles generally accepted in the United States of America.

As discussed in Note 20 to the
consolidated financial statements, the Company adopted SFAS No. 133 Accounting for
Derivative Instruments and Hedging Activities, as amended on January 1, 2001.

/s/PricewaterhouseCoopers
LLPPricewaterhouseCoopers
LLP

Kansas City, Missouri 
February 5, 2002, except with respect
to the reclassification of the 2001 information in Note 16 as to which the date is May 22,
2002; the 2001 transitional disclosures relating to the adoption of Statement of Financial
Accounting Standards No. 142 as described in Note 6 as to which the date is February 21,
2003; and the reclassification described in the last paragraph of Note 4 relating to the
adoption of Statement of Financial Accounting Standards No. 145, the reclassification to
the 2001 financial statements relating to the discontinued operations as described in Note
8, and the 2001 transitional disclosures relating to the adoption of Statement of
Financial Accounting Standards No. 143 as described in Note 15 as to which the date is
August 13, 2003

71

# Report of Independent
Auditors

To the Board of Directors and
Shareholder of  Kansas City Power & Light Company:

We have audited the accompanying
consolidated statements of income, of cash flows, of common stock equity, and of
comprehensive income of Kansas City Power & Light Company (a wholly-owned subsidiary
of Great Plains Energy Incorporated) and Subsidiaries for the year ended December 31,
2001. These financial statements are the responsibility of the Companys management.
Our responsibility is to express an opinion on these financial statements based on our
audit. We did not audit the consolidated financial statements of DTI Holdings, Inc. and
Subsidiaries (Debtors-in-Possession) (an 83.6 percent owned entity), for the year ended
December 31, 2001, which statements reflect total revenues of $17.4 million and a net loss
of $306.1 million for the year ended December 31, 2001. Those statements were audited by
other auditors whose report thereon has been furnished to us, and our opinion expressed
herein, insofar as it relates to the amounts included for DTI Holdings, Inc. and
Subsidiaries, is based solely on the report of the other auditors.

We conducted our audit in accordance
with auditing standards generally accepted in the United States of America. Those
standards require that we plan and perform the audit to obtain reasonable assurance about
whether the financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in the
financial statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audit and the report of other auditors provide
a reasonable basis for our opinion.

In our opinion, based on our audit
and the report of other auditors, the consolidated financial statements referred to above
present fairly, in all material respects, the results of operations and cash flows of
Kansas City Power & Light Company and Subsidiaries for the year ended December 31,
2001 in conformity with accounting principles generally accepted in the United States of
America.

As discussed in Note 20 to the
consolidated financial statements, the Company adopted SFAS No. 133 Accounting for
Derivative Instruments and Hedging Activities, as amended on January 1, 2001.

As discussed in Note 1 to the consolidated financial statements, on October 1, 2001 the
Company completed its corporate reorganization creating a holding company structure.

/s/PricewaterhouseCoopers
LLPPricewaterhouseCoopers LLP

Kansas City, Missouri 
February 5, 2002, except with respect
to the reclassification of the 2001 information in Note 16 as to which the date is May 22,
2002; the 2001 transitional disclosures relating to the adoption of Statement of Financial
Accounting Standards No. 142 as described in Note 6 as to which the date is February 21,
2003; and the reclassification described in the last paragraph of Note 4 relating to the
adoption of Statement of Financial Accounting Standards No. 145, the reclassification to
the 2001 financial statements relating to the discontinued operations as described in Note
8, and the 2001 transitional disclosures relating to the adoption of Statement of
Financial Accounting Standards No. 143 as described in Note 15 as to which the date is
August 13, 2003

72

# INDEPENDENT
AUDITORS REPORT

To the Board of Directors and
Stockholders of DTI Holdings, Inc.

We have audited the statements of
operations and stockholders equity (deficit) and cash flows of DTI Holdings, Inc.
and subsidiaries (Debtors-in-Possession) (the Company) for the year ended
December 31, 2001. These financial statements (which are not included herein) are the
responsibility of the Companys management. Our responsibility is to express an
opinion on these financial statements based on our audit.

We conducted our audit in accordance
with auditing standards generally accepted in the United States of America. Those
standards require that we plan and perform the audit to obtain reasonable assurance about
whether the financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in the
financial statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audit provides a reasonable basis for our
opinion.

In our opinion, such financial
statements present fairly, in all material respects, the results of operations and cash
flows of DTI Holdings, Inc. and subsidiaries for the year ended December 31, 2001, in
conformity with accounting principles generally accepted in the United States of America.

As discussed in Note 1 to those
financial statements, the Company has filed for reorganization under Chapter 11 of the
Federal Bankruptcy Code. The financial statements do not purport to reflect or provide for
the consequences of the bankruptcy proceedings. In particular, such financial statements
do not purport to show (a) as to assets, their realizable value on a liquidation basis or
their availability to satisfy liabilities; (b) as to prepetition liabilities, the amounts
that may be allowed for claims or contingencies, or the status and priority thereof; (c)
as to stockholder accounts, the effect of any changes that may be made in the
capitalization of the Company; or (d) as to operations, the effect of any changes that may
be made in its business.

The financial statements have been
prepared assuming that the Company will continue as a going concern. As discussed in Note
1 to those financial statements, the Companys recurring losses from operations,
negative working capital, and stockholders capital deficiency raise substantial
doubt about its ability to continue as a going concern. Managements plans concerning
these matters are also discussed in Note 1 to those financial statements. The financial
statements do not include adjustments that might result from the outcome of this
uncertainty.

As discussed in Note 3 to those
financial statements, the Company determined that the carrying value of its long-lived
assets had been impaired during the year. In accordance with Financial Accounting
Standards No. 121, Accounting for the Impairment of Long-Lived Assets and for Long-lived
Assets to be Disposed of, the Company recorded an impairment charge of approximately $342
million at December 31, 2001.

/s/DELOITTE & TOUCHE
LLP

St. Louis, MissouriJanuary 30, 2002

73

# PART IV

# ITEM 15. EXHIBITS,
FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K

# Financial Statements

|   |  | Page                                                                                           
|-- |  | -----------------------------------------------------------------------------------------------
|
|
|
|a. |  | Consolidated Statements of Income for the years ended December 31, 2003, 2002 and 2001         
|   | 
|b. |  | Consolidated Balance Sheets - December 31, 2003 and 2002                                       
|   | 
|c. |  | Consolidated Statements of Cash Flows - December 31, 2003, 2002 and 2001                       
|   | 
|d. |  | Consolidated Statements of Common Stock Equity for the years ended December 31, 2003,          
|   |  | 2002 and 2001                                                                                  
|   | 
|e. |  | Consolidated Statements of Comprehensive Income for the years ended December 31, 2003,         
|   |  | 2002 and 2001                                                                                  
|   | 
|f. |  | Notes to Consolidated Financial Statements                                                     
|   | 
|g. |  | Independent Auditors' Report - Deloitte & Touche LLP to the Board of Directors and Shareholders
|   |  | of Great Plains Energy                                                                         
|   | 
|h. |  | Report of Independent Auditors - PricewaterhouseCoopers LLP to the Board of Directors and      
|   |  | shareholders of Great Plains Energy Incorporated                                               
|   | 
|i. |  | Independent Auditors' Report - Deloitte & Touche LLP to the Board of Directors and Stockholders
|   |  | of DTI Holdings, Inc.                                                                          

|   | KCP&L |                                                                                        
|-- | ----- | ---------------------------------------------------------------------------------------
|
|j. |       | Consolidated Statements of Income for the years ended December 31, 2003, 2002 and 2001 
|   |      
|k. |       | Consolidated Balance Sheets - December 31, 2003 and 2002                               
|   |      
|l. |       | Consolidated Statements of Cash Flows - December 31, 2003, 2002 and 2001               
|   |      
|m. |       | Consolidated Statements of Common Stock Equity for the years ended December 31, 2003,  
|   |       | 2002 and 2001                                                                          
|   |      
|n. |       | Consolidated Statements of Comprehensive Income for the years ended December 31, 2003, 
|   |       | 2002 and 2001                                                                          
|   |      
|o. |       | Notes to Consolidated Financial Statements                                             
|   |      
|p. |       | Independent Auditors' Report - Deloitte & Touche LLP to the Board of Directors of KCP&L

74

|q. |  | Report of Independent Auditors - PricewaterhouseCoopers LLP to the Board of Directors and       |  | 72 | 
|-- |  | ----------------------------------------------------------------------------------------------- |  | -- | 
|   |  | Shareholder of Kansas City Power & Light Company                                                | 
|   | 
|r. |  | Independent Auditors' Report - Deloitte & Touche LLP to the Board of Directors and Stockholders |  | 73 | 
|   |  | of DTI Holdings, Inc.                                                                           | 

Financial Statement
Schedules

|   | Great Plains Energy |                                                                                               
|-- | ------------------- | ----------------------------------------------------------------------------------------------
|
|a. |                     | Schedule II - Valuation and Qualifying Accounts and Reserves                                  
|   |                    
|b. |                     | Report of Independent Auditors on Financial Statement Schedule - PricewaterhouseCoopers LLP to
|   |                     | the Board of Directors of Great Plains Energy Incorporated                                    

|   | KCP&L |                                                                                               
|-- | ----- | ----------------------------------------------------------------------------------------------
|
|c. |       | Schedule II - Valuation and Qualifying Accounts and Reserves                                  
|   |      
|d. |       | Report of Independent Auditors on Financial Statement Schedule - PricewaterhouseCoopers LLP to
|   |       | the Board of Directors of Kansas City Power & Light Company                                   

Exhibits

|Great Plains Energy Documents
|-----------------------------
|Exhibit                      
|Number                       
|
|2.1                          
|                             
|                             
|                             
|3.1.a                        
|                             
|                             
|3.1.b                        
|                             
|                             
|4.1.a                        
|                             
|                             
|4.1.b                        
|                             
|                             
|4.1.c                        
|                             
|                             
|4.1.d                        
|                             

75

|       |  |   
|------ |  | --
|10.1.a |  | *+
|       |  |   
|       | 
|10.1.b |  | *+
|       |  |   
|       | 
|10.1.c |  | *+
|       |  |   
|       | 
|10.1.d |  | *+
|       |  |   
|       | 
|10.1.e |  | *+
|       |  |   
|       | 
|10.1.f |  | *+
|       |  |   
|       | 
|10.1.g |  | *+
|       |  |   
|       | 
|10.1.h |  | *+
|       |  |   

|       |  |   
|------ |  | --
|10.1.i |  | *+
|       |  |   
|       | 
|10.1.j |  | *+
|       |  |   
|       | 
|10.1.k |  | *+
|       |  |   
|       | 
|10.1.l |  | * 
|       |  |   
|       |  |   
|       |  |   
|       |  |   
|       | 
|10.1.m |  | * 
|       |  |   
|       |  |   

76

|       |  |  
|------ |  | -
|10.1.n |  | *
|       |  |  
|       |  |  
|       |  |  
|       | 
|10.1.o |  | *
|       |  |  
|       |  |  
|       | 
|10.1.p |  | *
|       |  |  
|       |  |  
|       |  |  
|       |  |  
|       | 
|10.1.q |  | *
|       |  |  
|       |  |  
|       | 
|10.1.r |  | *
|       |  |  
|       |  |  
|       |  |  
|       |  |  

|       |  |  
|------ |  | -
|10.1.s |  | *
|       |  |  
|       |  |  
|       | 
|10.1.t |  | *
|       |  |  
|       |  |  
|       | 
|10.1.u |  | *
|       |  |  
|       |  |  
|       | 
|10.1.v |  | *
|       |  |  
|       | 
|10.1.w |  | *
|       |  |  
|       | 

77

|        |  |  
|------- |  | -
|10.1.x  |  | *
|        |  |  
|        |  |  
|        |  |  
|        | 
|10.1.y  |  | *
|        |  |  
|        | 
|10.1.z  |  | *
|        |  |  
|        | 
|10.1.aa |  | *
|        |  |  
|        |  |  
|        | 
|10.1.bb |  | *
|        |  |  
|        | 
|10.1.cc |  | *
|        |  |  
|        |  |  
|        | 
|10.1.dd |  | *
|        |  |  
|        | 
|12.1    |  | *

|       |  |  
|------ |  | -
|16.1   |  | *
|       | 
|21.1   |  | *
|       | 
|23.1.a |  | *
|       | 
|23.1.b |  |  
|       | 
|23.1.c |  |  
|       | 
|23.1.d |  |  
|       | 
|24.1   |  |  
|       | 
|31.1.a |  |  
|       | 

78

|       |  | 
|------ |  | 
|31.1.b |  | 
|       | 
|32.1   |  | 

* Filed with the SEC as exhibits
to prior registration statements (except as otherwise noted) and are incorporated herein
by reference and made a part hereof. The exhibit number and file number of the documents
so filed, and incorporated herein by reference, are stated in parenthesis in the
description of such exhibit.

+ Indicates management
contract or compensatory plan or arrangement.

Copies of any of the exhibits
filed with the SEC in connection with this document may be obtained from Great Plains
Energy upon written request.

Great Plains Energy agrees 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 Great
Plains Energy and its subsidiaries on a consolidated basis.

|KCP&L Documents
|---------------
|Exhibit        
|Number         
|
|2.2            
|               
|               
|               
|3.2.a          
|               
|               
|3.2.b          
|               

|      |  |  
|----- |  | -
|4.2.a |  | *
|      |  |  
|      |  |  
|      | 
|4.2.b |  | *
|      |  |  
|      | 
|4.2.c |  | *
|      |  |  
|      | 
|4.2.d |  | *
|      |  |  
|      | 
|4.2.e |  | *
|      |  |  
|      | 

79

|      |  |  
|----- |  | -
|4.2.f |  | *
|      |  |  
|      | 
|4.2.g |  | *
|      |  |  
|      | 
|4.2.h |  | *
|      |  |  
|      | 
|4.2.i |  | *
|      |  |  
|      | 
|4.2.j |  | *
|      |  |  
|      | 
|4.2.k |  | *
|      |  |  
|      | 
|4.2.l |  | *
|      |  |  
|      |  |  
|      | 
|4.2.m |  | *
|      |  |  

|       |  |  
|------ |  | -
|4.2.n  |  | *
|       |  |  
|       |  |  
|       |  |  
|       | 
|4.2.o  |  | *
|       |  |  
|       |  |  
|       | 
|10.2.a |  | *
|       |  |  
|       | 
|10.2.b |  | *
|       |  |  
|       | 
|10.2.c |  | *
|       |  |  
|       | 

80

|       |  |  
|------ |  | -
|10.2.d |  | *
|       |  |  
|       |  |  
|       | 
|10.2.e |  | *
|       |  |  
|       | 
|10.2.f |  | *
|       |  |  
|       |  |  
|       | 
|12.2   |  | *
|       | 
|16.2   |  | *
|       | 
|23.2.a |  | *
|       | 
|23.2.b |  |  
|       | 
|23.2.c |  |  
|       | 
|23.2.d |  |  
|       | 
|24.2   |  |  
|       | 
|31.2.a |  |  

|       |  | 
|------ |  | 
|31.2.b |  | 
|       | 
|32.2   |  | 

* Filed with the SEC as exhibits
to prior registration statements (except as otherwise noted) and are incorporated herein
by reference and made a part hereof. The exhibit number and file number of the documents
so filed, and incorporated herein by reference, are stated in parenthesis in the
description of such exhibit.

Copies of any of the exhibits
filed with the SEC in connection with this document may be obtained from KCP&L upon
written request.

KCP&L agrees 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 KCP&L and its
subsidiaries on a consolidated basis.

81

# Reports on Form 8-K

Great Plains EnergyGreat Plains Energy furnished on
October 23, 2003, a report on Form 8-K dated October 22, 2003, furnishing a press release
regarding third quarter 2003 earnings information.

Great Plains Energy filed on November
13, 2003, a report on Form 8-K dated November 12, 2003, regarding the statement by
Moodys Investors Service announcing the downgrade of its ratings of KCP&L
securities.

Great Plains Energy filed on December
5, 2003, a report on Form 8-K dated December 5, 2003, regarding the provision of a notice
to its directors and officers pursuant to Rule 104(b)(2) of Regulation BTR with respect to
the transition and blackout periods under the Great Plains Energy Incorporated Employee
Savings Plus (ESP) Plan and the Capital Accumulation Plan.

Great Plains Energy furnished on
February 5, 2004, a report on Form 8-K dated February 4, 2004, furnishing a press release
regarding fourth quarter 2003 and full year 2003 earnings.

Great Plains Energy filed on February
11, 2004, a report on Form 8-K dated February 9, 2004, regarding a letter agreement
between SE Holdings, L.L.C. (SE Holdings), and Innovative Energy Consultants Inc. on
behalf of certain of its affiliates agreeing to a procedure for determining the fair
market value of its ownership interest in Custom Energy Holdings, L.L.C. (Custom Energy)
subject to a put option, providing for SE Holdings to exercise its put option with respect
to all but one unit of each of its respective series of ownership interest in Custom
Energy, and further providing that Richard M. Zomnir, President and Chief Executive
Officer of Strategic Energy, L.L.C, will resign such positions upon consummation of the
transaction.

KCP&LKCP&L furnished on October 23,
2003, a report on Form 8-K dated October 22, 2003, furnishing a press release regarding
third quarter 2003 earnings information.

KCP&L furnished on February 5,
2004, a report on Form 8-K dated February 4, 2004, furnishing a press release regarding
fourth quarter 2003 and full year 2003 earnings.

82

# Schedule II 
Valuation and Qualifying Accounts and Reserves

# Great Plains Energy
       Valuation and Qualifying Accounts          Years Ended December 31, 2003, 2002 and
2001

|                                    
|------------------------------------
|                                    
|                                    
|                                    
|                                    
|                                    
|Description                         
|
|                                    
|Year Ended December 31, 2003:       
|Allowance for uncollectible accounts
|Legal reserves                      
|Environmental reserves              
|Tax valuation allowance (e)         
|Discontinued operations             
|
|Year Ended December 31, 2002:       
|Allowance for uncollectible accounts
|Legal reserves                      
|Environmental reserves              
|Tax valuation allowance             
|Discontinued operations (g)         
|
|Year Ended December 31, 2001:       
|Allowance for uncollectible accounts
|Legal reserves                      
|Environmental reserves              
|Tax valuation allowance (e)         
|Discontinued operations (j)         
|

Note 1: On June 13, 2003, HSS
board of directors approved a plan to dispose of its interest in residential services
provider RSAE. On June 30, 2003, HSS completed the disposition of its interest in RSAE.
Great Plains Energys Valuation and Qualifying Accounts have been recast to reflect
RSAE as discontinued operations for the years ended December 31, 2002 and 2001.

|    | 
|--- | 
|(a) | 
|    | 
|(b) | 
|    | 
|(c) | 
|(d) | 
|(e) | 
|    | 
|    | 
|    | 
|(f) | 
|    | 
|(g) | 
|    | 
|(h) | 
|(i) | 
|    | 
|(j) | 
|    | 
|(k) | 
|    | 

83

# Kansas City Power & Light
Company       Valuation and Qualifying Accounts        Years Ended December 31, 2003,
2002 and 2001

|                                    
|------------------------------------
|                                    
|                                    
|                                    
|                                    
|                                    
|Description                         
|
|                                    
|Year Ended December 31, 2003:       
|Allowance for uncollectible accounts
|Legal reserves                      
|Environmental reserves              
|Discontinued operations             
|
|Year Ended December 31, 2002:       
|Allowance for uncollectible accounts
|Legal reserves                      
|Environmental reserves              
|Discontinued operations (f)         
|
|Year Ended December 31, 2001:       
|Allowance for uncollectible accounts
|Legal reserves                      
|Environmental reserves              
|Discontinued operations (i)         
|

Note 1: On June 13, 2003, HSS
board of directors approved a plan to dispose of its interest in residential services
provider RSAE. On June 30, 2003, HSS completed the disposition of its interest in RSAE.
KCP&Ls Valuation and Qualifying Accounts have been recast to reflect RSAE as
discontinued operations for the years ended December 31, 2002 and 2001.

|    | 
|--- | 
|(a) | 
|(b) | 
|    | 
|    | 
|(c) | 
|(d) | 
|(e) | 
|    | 
|(f) | 
|    | 
|(g) | 
|(h) | 
|    | 
|(i) | 
|    | 
|(j) | 
|    | 

84

# Report of Independent
Auditors on Financial Statement Schedule

To the Board of Directors
of  Great Plains Energy Incorporated:

Our audits of the consolidated
financial statements of Great Plains Energy Incorporated referred to in our report dated
February 5, 2002, except with respect to the reclassification of the 2001 information in
Note 16 as to which the date is May 22, 2002; the 2001 transitional disclosures relating
to the adoption of Statement of Financial Accounting Standards No. 142 as described in
Note 6 as to which the date is February 21, 2003; and the reclassification described in
the last paragraph of Note 4 relating to the adoption of Statement of Financial Accounting
Standards No. 145, the reclassification to the 2001 financial statements relating to the
discontinued operations as described in Note 8, and the 2001 transitional disclosures
relating to the adoption of Statement of Financial Accounting Standards No. 143 as
described in Note 15 as to which the date is August 13, 2003, appearing in this Form 10-K/A
also included an audit of the 2001 information included in the financial statement
schedule in this Form 10-K/A. In our opinion, the 2001 information included in this
financial statement schedule presents fairly, in all material respects, the information
set forth therein when read in conjunction with the related consolidated financial
statements.

/s/PricewaterhouseCoopers
LLPPricewaterhouseCoopers
LLP

Kansas City, Missouri February 5,
2002, except with respect to the reclassification to the 2001 financial statement schedule
information relating to the discontinued operations as described in Note 1 as to which the
date is August 13, 2003

85

# Report of Independent
Auditors on Financial Statement Schedule

To the Board of Directors
ofKansas City Power & Light Company:

Our audits of the consolidated
financial statements of Kansas City Power & Light Company referred to in our report
(which has an explanatory paragraph regarding the corporate reorganization which occurred
on October 1, 2001) dated February 5, 2002, except with respect to the reclassification of
the 2001 information in Note 16 as to which the date is May 22, 2002; the 2001
transitional disclosures relating to the adoption of Statement of Financial Accounting
Standards No. 142 as described in Note 6 as to which the date is February 21, 2003; and
the reclassification described in the last paragraph of Note 4 relating to the adoption of
Statement of Financial Accounting Standards No. 145, the reclassification to the 2001
financial statements relating to the discontinued operations as described in Note 8, and
the 2001 transitional disclosures relating to the adoption of Statement of Financial
Accounting Standards No. 143 as described in Note 15 as to which the date is August 13,
2003, appearing in this Form 10-K/A also included an audit of the 2001 information included
in the financial statement schedule in this Form 10-K/A. In our opinion, the 2001
information included in this financial statement schedule presents fairly, in all material
respects, the information set forth therein when read in conjunction with the related
consolidated financial statements.

/s/PricewaterhouseCoopers
LLPPricewaterhouseCoopers
LLP

Kansas City, Missouri February 5,
2002, except with respect to the reclassification to the 2001 financial statement schedule
information relating to the discontinued operations as described in Note 1 as to which the
date is August 13, 2003

86

# SIGNATURES

Pursuant to the requirements of
Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused
this report to be signed on its behalf by the undersigned, thereunto duly authorized.

|                     | 
|-------------------- | 
|                     | 
|                     | 
|Date: April 14, 2004 | 
|                     | 
|                     | 
|                     | 

Pursuant to the requirements of the
Securities Act of 1934, this report has been signed below by the following persons on
behalf of the registrant and in the capacities and on the dates indicated.

|Signature                 | Title |  | Date                                     
|------------------------- | ----- |  | -----------------------------------------
|                          |       |  | Chairman of the Board and Chief Executive
|/s/Michael J. Chesser     |       |  | Officer                                  
|Michael J. Chesser        |       |  | (Principal Executive Officer)            
|                          |       |  |                                          
|                          |       |  | Senior Vice President - Finance,         
|/s/Andrea F. Bielsker     |       |  | Chief Financial Officer and              
|Andrea F. Bielsker        |       |  | Treasurer                                
|                          |       |  | (Principal Financial Officer)            
|                          |       |  |                                          
|/s/Lori A. Wright         |       |  | Controller                               
|Lori A. Wright            |       |  | (Principal Accounting Officer)           
|                          |       |  |                                          
|David L. Bodde*           |       |  | Director                                 
|                          |       |  |                                          
|/s/William H. Downey      |       |  | Director                                 
|William H. Downey         |       |  |                                          
|                          |       |  |                                          
|Mark A. Ernst*            |       |  | Director                                 
|                          |       |  |                                          
|Randall C. Ferguson, Jr.* |       |  | Director                                 
|                          |       |  |                                          
|William K. Hall*          |       |  | Director                                 
|                          |       |  |                                          
|Luis A. Jimenez*          |       |  | Director                                 
|                          |       |  |                                          
|James A. Mitchell*        |       |  | Director                                 
|                          |       |  |                                          
|William C. Nelson*        |       |  | Director                                 
|                          |       |  |                                          
|Linda H. Talbott*         |       |  | Director                                 
|                          |       |  |                                          
|Robert H. West*           |       |  | Director                                 

|    | 
|--- | 
|*By | 
|    | 
|    | 

87

# SIGNATURES

Pursuant to the requirements of
Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused
this report to be signed on its behalf by the undersigned, thereunto duly authorized.

|                     | 
|-------------------- | 
|                     | 
|                     | 
|Date: April 14, 2004 | 
|                     | 
|                     | 

Pursuant to the requirements of the
Securities Act of 1934, this report has been signed below by the following persons on
behalf of the registrant and in the capacities and on the dates indicated.

|Signature                 | Title |  | Date                                     
|------------------------- | ----- |  | -----------------------------------------
|                          |       |  | President and Chief Executive Officer and
|/s/ William H. Downey     |       |  | Director                                 
|William H. Downey         |       |  | (Principal Executive Officer)            
|                          |       |  |                                          
|                          |       |  | Senior Vice President - Finance,         
|/s/Andrea F. Bielsker     |       |  | Chief Financial Officer and              
|Andrea F. Bielsker        |       |  | Treasurer                                
|                          |       |  | (Principal Financial Officer)            
|                          |       |  |                                          
|/s/Lori A. Wright         |       |  | Controller                               
|Lori A. Wright            |       |  | (Principal Accounting Officer)           
|                          |       |  |                                          
|David L. Bodde*           |       |  | Director                                 
|                          |       |  |                                          
|/s/Michael J. Chesser     |       |  | Chairman of the Board                    
|Michael J. Chesser        |       |  |                                          
|                          |       |  |                                          
|Mark A. Ernst*            |       |  | Director                                 
|                          |       |  |                                          
|Randall C. Ferguson, Jr.* |       |  | Director                                 
|                          |       |  |                                          
|William K. Hall*          |       |  | Director                                 
|                          |       |  |                                          
|Luis A. Jimenez*          |       |  | Director                                 
|                          |       |  |                                          
|James A. Mitchell*        |       |  | Director                                 
|                          |       |  |                                          
|William C. Nelson*        |       |  | Director                                 
|                          |       |  |                                          
|Linda H. Talbott*         |       |  | Director                                 
|                          |       |  |                                          
|Robert H. West*           |       |  | Director                                 

|    | 
|--- | 
|*By | 
|    | 
|    | 

88

Supplemental Information to be
Furnished With Reports Filed Pursuant to Section 15(d) of the Act by Registrants Which
Have Not Registered Securities Pursuant to Section 12 of the Act.KCP&L did not
send any annual report to security holders covering its last fiscal year, and did not send
any proxy statement, form of proxy or other proxy soliciting material to its security
holders with respect to any annual or other meeting of security holders.

89