<PAGE>

                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549
                                    FORM 10-Q

(Mark One)

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

For the quarterly period ended SEPTEMBER 30, 1998

                                       OR

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

For the transition period from ________ to ___________

Commission file number: 1-3562


                              UTILICORP UNITED INC.
             (Exact name of registrant as specified in its charter)

Delaware                                                  44-0541877
(State or other jurisdiction of                           (I.R.S. Employer
incorporation or organization)                            Identification No.)


                20 West Ninth Street, Kansas City, Missouri    64105
                  (Address of principal executive offices)    (Zip Code)


Registrant's telephone number, including area code   816-421-6600


         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. Yes X No __
                                                                  ---

         Indicate the number of shares outstanding of each of the 
registrant's classes of common stock, as of the latest practicable date.

CLASS                                          OUTSTANDING AT NOVEMBER 3, 1998

Common Stock, $1 par value                                53,753,800



<PAGE>


                         PART I - FINANCIAL INFORMATION


ITEM 1.  FINANCIAL STATEMENTS

         Information regarding the consolidated condensed financial 
statements is set forth on pages 3 through 14.

ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND 
RESULTS OF OPERATIONS

         Management's discussion and analysis of financial condition and 
results of operations can be found on pages 15 through 26.

                           PART II - OTHER INFORMATION


ITEM 1.  LEGAL PROCEEDINGS

         None.

ITEM 2.  CHANGES IN SECURITIES

         None.

ITEM 3.  DEFAULTS UPON SENIOR SECURITIES

         None.

ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITIES HOLDERS

         None.

ITEM 5.  OTHER INFORMATION

         None.

ITEM 6.  EXHIBITS

         Exhibits and Reports on Form 8-K can be found on page 27.


                                      2

<PAGE>

PART I.  FINANCIAL INFORMATION
ITEM 1.  FINANCIAL STATEMENTS
                              UTILICORP UNITED INC.
             CONSOLIDATED CONDENSED STATEMENTS OF INCOME--UNAUDITED

<TABLE>
<CAPTION>
                                                             Quarter Ended September 30,
DOLLARS IN MILLIONS                                           1998              1997
---------------------------------------------------------------------------------------
<S>                                                          <C>               <C>
Sales                                                        $3,808.6          $2,256.5
Cost of sales                                                 3,560.9           2,019.5
---------------------------------------------------------------------------------------
GROSS PROFIT                                                    247.7             237.0
---------------------------------------------------------------------------------------
Operating, administrative and maintenance expense               149.6             142.6
Depreciation and amortization                                    37.2              32.6
---------------------------------------------------------------------------------------
INCOME FROM OPERATIONS                                           60.9              61.8
---------------------------------------------------------------------------------------
Other income (expense):
Equity in earnings from investments and partnerships             24.1              16.7
Other income                                                      3.9               5.3
Minority interest and other expense                              (3.3)             (5.8)
---------------------------------------------------------------------------------------
Total other income                                               24.7              16.2
---------------------------------------------------------------------------------------
EARNINGS BEFORE INTEREST AND TAXES                               85.6              78.0
---------------------------------------------------------------------------------------
Interest expense:
Interest expense - long-term debt                                27.7              28.2
Interest expense - short-term debt                                6.9               3.9
Minority interest in income of partnership                        2.2               2.2
---------------------------------------------------------------------------------------
Total interest  expense                                          36.8              34.3
---------------------------------------------------------------------------------------
EARNINGS BEFORE INCOME TAXES                                     48.8              43.7
Income taxes                                                     20.3              18.8
---------------------------------------------------------------------------------------
NET INCOME                                                       28.5              24.9
---------------------------------------------------------------------------------------
EARNINGS AVAILABLE FOR COMMON SHARES                         $   28.5          $   24.9
---------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------
</TABLE>
See accompanying notes to consolidated condensed financial statements.



                                      3

<PAGE>

                              UTILICORP UNITED INC.
             CONSOLIDATED CONDENSED STATEMENTS OF INCOME--UNAUDITED
<TABLE>
<CAPTION>
                                                                  Nine Months Ended
                                                                    September 30,
DOLLARS IN MILLIONS                                           1998               1997
--------------------------------------------------------------------------------------
<S>                                                          <C>              <C>
Sales                                                        $9,269.0         $5,866.2
Cost of sales                                                 8,557.6          5,158.3
--------------------------------------------------------------------------------------
GROSS PROFIT                                                    711.4            707.9
--------------------------------------------------------------------------------------
Operating, administrative and maintenance expense               412.4            411.6
Depreciation and amortization                                   110.3             95.7
Provision for asset impairments                                  27.7             26.5
--------------------------------------------------------------------------------------
INCOME FROM OPERATIONS                                          161.0            174.1
--------------------------------------------------------------------------------------
Other income (expense):
Equity in earnings from investments and partnerships            107.3             54.1
Merger termination fee                                            -               53.0
Other income                                                     15.3             12.2
Minority interest and other expense                             (23.0)           (18.4)
--------------------------------------------------------------------------------------
Total other income                                               99.6            100.9
--------------------------------------------------------------------------------------
EARNINGS BEFORE INTEREST AND TAXES                              260.6            275.0
--------------------------------------------------------------------------------------
Interest expense:
Interest expense - long-term debt                                88.9             85.7
Interest expense - short-term debt                               10.8              8.5
Minority interest in income of partnership                        6.7              6.7
--------------------------------------------------------------------------------------
Total interest  expense                                         106.4            100.9
--------------------------------------------------------------------------------------
EARNINGS BEFORE INCOME TAXES                                    154.2            174.1
Income taxes                                                     58.9             71.0
--------------------------------------------------------------------------------------
EARNINGS BEFORE EXTRAORDINARY ITEM                               95.3            103.1
Loss on extinguishment of debt (net of income tax of $4.5)        -                7.2
--------------------------------------------------------------------------------------
NET INCOME                                                       95.3             95.9
Preference dividends                                              -                 .3
--------------------------------------------------------------------------------------
EARNINGS AVAILABLE FOR COMMON SHARES                         $   95.3         $   95.6
--------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------
</TABLE>
See accompanying notes to consolidated condensed financial statements.


                                      4

<PAGE>


                              UTILICORP UNITED INC.
                      CONSOLIDATED CONDENSED BALANCE SHEETS

<TABLE>
<CAPTION>
                                                               September 30,      December 31,
DOLLARS IN MILLIONS                                                 1998              1997
----------------------------------------------------------------------------------------------
<S>                                                             <C>               <C>
ASSETS                                                          (Unaudited)
CURRENT ASSETS:
     Cash and cash equivalents                                     $  166.2         $    89.5
     Funds on deposit                                                  35.0              31.5
     Accounts receivable, net                                       1,031.1           1,165.1
     Inventories and supplies, at average cost                        217.4             134.6
     Price risk management assets                                     109.1             121.5
     Prepayments and other                                             44.5              72.2
----------------------------------------------------------------------------------------------
TOTAL CURRENT ASSETS                                                1,603.3           1,614.4
----------------------------------------------------------------------------------------------
Property, plant and equipment, net                                  2,492.1           2,480.3
Investments in subsidiaries and partnerships                          672.6             691.2
Price risk management assets                                          183.7             161.5
Deferred charges                                                      158.2             166.1
----------------------------------------------------------------------------------------------
TOTAL ASSETS                                                       $5,109.9          $5,113.5
----------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------
LIABILITIES AND SHAREOWNERS' EQUITY
CURRENT LIABILITIES:
     Current maturities of long-term debt                         $    79.3         $   149.6
     Short-term debt                                                  383.8             113.8
     Accounts payable                                               1,248.9           1,356.3
     Accrued liabilities                                               72.4              13.8
     Price risk management liabilities                                125.9             123.7
     Other current liabilities                                         87.2              52.7
----------------------------------------------------------------------------------------------
TOTAL CURRENT LIABILITIES                                           1,997.5           1,809.9
----------------------------------------------------------------------------------------------
LONG-TERM LIABILITIES:
     Long-term debt, net                                            1,231.0           1,358.6
     Deferred income taxes and credits                                380.3             362.7
     Price risk management liabilities                                147.4             170.5
     Minority interest                                                 57.9              59.0
     Other deferred credits                                           101.1              89.2
----------------------------------------------------------------------------------------------
TOTAL LONG-TERM LIABILITIES                                         1,917.7           2,040.0
----------------------------------------------------------------------------------------------
Company-obligated mandatorily redeemable preferred securities
      of partnership                                                  100.0             100.0
Common shareowners' equity                                          1,094.7           1,163.6
Commitments and contingencies
----------------------------------------------------------------------------------------------
TOTAL LIABILITIES AND SHAREOWNERS' EQUITY                          $5,109.9          $5,113.5
----------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------
</TABLE>
See accompanying notes to consolidated condensed financial statements.



                                      5

<PAGE>


                              UTILICORP UNITED INC.
           CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME--UNAUDITED

<TABLE>
<CAPTION>
                                                         Three Months Ended         Nine Months Ended
                                                           September 30,              September 30,
--------------------------------------------------------------------------------------------------------
<S>                                                      <C>          <C>           <C>            <C>
DOLLARS IN MILLIONS                                      1998         1997          1998           1997
--------------------------------------------------------------------------------------------------------

Net Income                                                $28.5        $24.9        $95.3          $95.9

Other comprehensive income (loss)
       Unrealized translation adjustments                 (10.3)        (4.7)       (26.5)         (10.4)
---------------------------------------------------------------------------------------------------------

Comprehensive Income                                      $18.2        $20.2        $68.8          $85.5
----------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------
</TABLE>


         CONSOLIDATED CONDENSED STATEMENTS OF COMMON SHAREOWNERS' EQUITY
<TABLE>
<CAPTION>
                                                                          September 30,     December 31,
DOLLARS IN MILLIONS                                                             1998              1997
--------------------------------------------------------------------------------------------------------
<S>                                                                         <C>              <C>
                                                                            (Unaudited)
  Common Stock: authorized 200,000,000 shares, par value
         $1 per share; 53,753,800 shares issued at September 30,
     1998 and December 31, 1997; authorized 20,000,000 shares of Class A
     common stock, par value $1 per share, none issued
                                                                               $  53.8          $  53.8
Premium on Capital Stock                                                         986.6            999.1
Retained Earnings                                                                175.4            152.8
Treasury Stock, at cost (1,619,251 and 235,075 shares at September 30,
    1998 and December 31, 1997, respectively)                                    (63.3)           (10.8)
Accumulated Other Comprehensive Losses                                           (57.8)           (31.3)
--------------------------------------------------------------------------------------------------------
TOTAL COMMON SHAREOWNERS' EQUITY                                              $1,094.7         $1,163.6
--------------------------------------------------------------------------------------------------------
</TABLE>
See accompanying notes to consolidated condensed financial statements.


                                      6

<PAGE>

                              UTILICORP UNITED INC.
           CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS--UNAUDITED

<TABLE>
<CAPTION>
                                                                                    Nine Months Ended
                                                                                      September 30,
DOLLARS IN MILLIONS                                                                1998            1997
----------------------------------------------------------------------------------------------------------
<S>                                                                                <C>              <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
    Net income                                                                     $95.3            $95.9
    Adjustments to reconcile net income to net cash provided by operating
         activities:
         Depreciation, depletion and amortization                                  110.3             95.7
         Net changes in price risk management assets and liabilities               (30.7)           (12.4)
         Deferred income taxes and credits                                          17.6             30.7
         Equity in earnings from investments and partnerships                      (81.7)           (54.1)
         Dividends from investments and partnerships                                25.3             25.0
         Minority interests                                                          2.0              5.3
         Gain on sale of subsidiary stock                                          (25.5)             -
         Provision for asset impairments                                            27.7             26.5
         Loss on extinguishment of debt                                              -                7.2
         Changes in certain assets and liabilities:
             Accounts receivable, net                                              139.5             33.1
             Accounts receivable, sold                                               -               45.0
             Inventories and supplies                                              (82.8)           (30.4)
             Prepayments and other                                                  27.7            (20.5)
             Deferred charges, net                                                   7.9              8.2
             Accounts payable                                                     (107.4)            91.6
             Accrued liabilities, net                                               58.6              1.7
             Other                                                                  41.1            (59.6)
----------------------------------------------------------------------------------------------------------
CASH PROVIDED BY OPERATING ACTIVITIES                                              224.9            288.9
----------------------------------------------------------------------------------------------------------
CASH FLOWS FROM INVESTING ACTIVITIES:
         Capital additions                                                         (89.4)          (117.0)
         Redemption of investment in debt securities                               100.1              -
         Investments in international businesses                                   (82.6)            (3.6)
         Other                                                                     (43.3)           (28.4)
-----------------------------------------------------------------------------------------------------------
CASH USED FOR INVESTING ACTIVITIES                                                (115.2)          (149.0)
-----------------------------------------------------------------------------------------------------------
</TABLE>


                                      7

<PAGE>

                              UTILICORP UNITED INC.
      CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS--UNAUDITED, CONTINUED

<TABLE>
<CAPTION>
                                                               Nine Months Ended
                                                                 September 30,
DOLLARS IN MILLIONS                                         1998             1997
------------------------------------------------------------------------------------
<S>                                                      <C>                 <C>
CASH FLOWS FROM FINANCING ACTIVITIES:
         Issuance of common stock                        $     -              $13.2
         Treasury stock (acquired)/sold                      (52.5)             2.6
         Issuance of long-term debt                           26.4             20.1
         Retirement of long-term debt                       (179.7)          (106.5)
         Retirement of preference stock                        -              (25.0)
         Short-term borrowings (repayments), net             257.8              (.1)
         Cash dividends paid                                 (72.7)           (71.0)
         Other                                               (12.3)            (1.3)
------------------------------------------------------------------------------------
CASH USED FOR FINANCING ACTIVITIES                           (33.0)          (168.0)
------------------------------------------------------------------------------------
Increase  in cash and cash equivalents                        76.7            (28.1)
Cash and cash equivalents at beginning of period              89.5            137.1
------------------------------------------------------------------------------------
CASH AND CASH EQUIVALENTS AT END OF PERIOD                  $166.2           $109.0
------------------------------------------------------------------------------------
</TABLE>
See accompanying notes to consolidated condensed financial statements.



                                      8

<PAGE>

                              UTILICORP UNITED INC.
                         NOTES TO CONSOLIDATED CONDENSED
                              FINANCIAL STATEMENTS
                                   (UNAUDITED)

1.       SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

         The accompanying unaudited consolidated condensed financial 
statements have been prepared in accordance with the accounting policies 
described in the consolidated financial statements and related notes included 
in UtiliCorp's 1997 Annual Report on Form 10-K. It is suggested that those 
consolidated financial statements be read in conjunction with this report. 
The year end financial statements presented were derived from audited 
financial statements of UtiliCorp United Inc. (the company or UtiliCorp), but 
do not include all disclosures required by generally accepted accounting 
principles. In the opinion of management, the accompanying consolidated 
condensed financial statements reflect all adjustments (which include only 
normal recurring adjustments) necessary for a fair representation of the 
financial position of the company and the results of its operations. Certain 
estimates and assumptions that affect reported amounts of assets and 
liabilities at the date of the financial statements and the reported amounts 
of sales and expenses during the reporting periods shown have been made in 
preparing the consolidated condensed financial statements. Actual results 
could differ from these estimates.

         Certain prior year amounts in the consolidated financial statements 
have been reclassified where necessary to conform to the 1998 presentation.

FINANCIAL INSTRUMENTS

TRADING OPERATIONS

         The company uses a variety of financial instruments in connection 
with price risk management services provided by Aquila Energy Corporation, a 
wholly-owned subsidiary of the company. These financial instruments include 
forward contracts which commit the company to purchase or sell energy in the 
future; swap agreements which require payment to (or receipt of payments 
from) counterparties based on the differential between specific prices for 
the related commodity; futures and options contracts traded on the New York 
Mercentile Exchange and other contractual arrangements. The value of all the 
financial instruments used for price risk management activities are recorded 
at market value with changes in value reflected in the statement of income.


                                      9

<PAGE>

NON-TRADING ACTIVITIES FOR COMMODITY OPERATIONS

         The company utilizes various exchange-traded and over-the-counter 
financial instrument contracts to hedge anticipated purchases and sales of 
natural gas and natural gas liquids. The financial instruments used are 
futures, options, forward contracts and price and basis swaps. Financial 
instruments used for non-trading activities are designated as a hedge at 
inception where there is a direct relationship to the price risk associated 
with the company's future sales and purchases of commodities used in the 
company's operations. Financial instruments used to hedge anticipated 
transactions are accounted for under the deferral method with gains and 
losses on these transactions recognized in sales when the hedged transaction 
occurs.


                                      10

<PAGE>

                              UTILICORP UNITED INC.
                         NOTES TO CONSOLIDATED CONDENSED
                         FINANCIAL STATEMENTS--CONTINUED
                                   (UNAUDITED)


2.       EARNINGS PER SHARE

         The following table shows the amounts used in computing basic and 
dilutive earnings per share and the effect on income and weighted average 
number of shares of dilutive potential common stock for the three months and 
nine months ending September 30, 1998 and 1997.

<TABLE>
<CAPTION>
                                                              Three Months              Nine Months
                                                                Ended                      Ended
IN MILLIONS, EXCEPT PER SHARE AMOUNTS                         September 30,             September 30,
--------------------------------------------------------------------------------------------------------
<S>                                                         <C>          <C>          <C>          <C>
                                                            1998         1997         1998         1997
--------------------------------------------------------------------------------------------------------

Earnings available for common shares                       $28.5       $24.9         $95.3        $95.6
Interest expense on convertible bonds                          -          .1            .2           .2
--------------------------------------------------------------------------------------------------------
Earnings available for common shares after
   assumed conversion of dilutive securities               $28.5       $25.0         $95.5        $95.8
--------------------------------------------------------------------------------------------------------

Earnings per share:
  Basic:
    Earnings before extraordinary item                      $.55        $.46         $1.80        $1.91
    Loss on retirement of debt                                 --          --            --        (.13)
--------------------------------------------------------------------------------------------------------
    Earnings available for common shares                    $.55        $.46         $1.80        $1.78
--------------------------------------------------------------------------------------------------------

  Diluted:
    Earnings before extraordinary item                      $.54        $.46         $1.77        $1.91
    Loss on retirement of debt                                 --          --            --        (.13)
--------------------------------------------------------------------------------------------------------
    Earnings available for common shares                    $.54        $.46         $1.77        $1.78
--------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------

Weighted average number of common shares
   used in basic EPS                                       52.20       53.76         53.06        53.56
 Per Share effect of dilutive securities:
    Stock options                                            .55         .08           .60          .09
    Convertible bonds                                        .23         .25           .23          .27
--------------------------------------------------------------------------------------------------------
Weighted number of common shares and dilutive
   potential common shares used in diluted EPS             52.98       54.09         53.89        53.92
--------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------
</TABLE>


                                      11

<PAGE>

                              UTILICORP UNITED INC.
                         NOTES TO CONSOLIDATED CONDENSED
                         FINANCIAL STATEMENTS--CONTINUED
                                   (UNAUDITED)


3.       REGULATORY MATTER

         In March 1998, the Missouri Public Service Commission ordered the 
company to reduce its annual electric rates in Missouri by $16.9 million and 
increase depreciation expense by $5.8 million beginning in April 1998. The 
impact of this order will reduce EBIT by $16.3 million in 1998 and reduce 
EBIT by $22.7 million in 1999 and beyond.

4.       UNITED KINGDOM GAS SUPPLY CONTRACTS

         In July 1998, United Gas, a wholly-owned subsidiary of UtiliCorp, 
lost a long-standing dispute on a take-or-pay gas supply contract with a gas 
supplier. United Gas and the supplier were disputing whether the supplier 
made proper deliveries pursuant to the supply contract, which would enable 
United Gas to avoid paying the required contract price. United Gas paid the 
supplier the prevailing market prices which were lower than the contract 
price. The difference between the two prices accumulated to approximately $38 
million which had been previously recorded as a liability.

         In a court ruling, a judge ordered United Gas to pay the gas cost 
amount in accordance with the contract. In addition, United Gas is required 
to pay interest to the supplier on the $38 million. This is estimated at 
approximately $6.8 million.

         In June 1998, UtiliCorp paid $25.6 million to a third party to 
cancel two take-or-pay contracts effective April 1, 1998, that required the 
company to take gas at significantly above market prices until 2005. The 
third party also canceled UtiliCorp's obligations under a guarantee related 
to the contracts. Between 1995 and 1997, the company reserved $19.0 million 
against the estimated future losses on these contracts resulting in an 
additional net settlement loss of $6.6 million.

5.       COMPLETION OF AUSTRALIAN INITIAL PUBLIC OFFERING

         In May 1998, UtiliCorp recorded a $.47 per share gain to reflect the 
completed initial public offering of United Energy Limited (UEL). UEL sold 
42% of its common stock, reducing UtiliCorp's ownership share in UEL from 


                                      12

<PAGE>

49.9% to 29%. Concurrent with the offering, UtiliCorp acquired an additional 
5% in UEL from a prior joint venture partner. UtiliCorp's current ownership 
is 34%.

6.       PROVISION FOR ASSET IMPAIRMENTS

Retail Gas Marketing Assets

         As part of a strategic planning process that was concluded in June, 
the company's retail strategy was integrated into the company's networks and 
energy merchant strategies. This strategy change altered the business plan 
for certain retail businesses that were marginal performers. In addition, 
certain retail gas marketers were acquired under a strategic plan that 
assumed that retail markets would be competitive; however, the retail market 
remains regulated. Given this business environment, the cash flows from these 
businesses will not fully recover the price paid for the assets, requiring a 
writedown of $13.2 million. This writedown is comprised of the following 
items.

<TABLE>
         <S>                                                    <C>
         Retail gas marketing assets                            $10.7
         Other                                                    2.5
                                                                -----
         Total                                                  $13.2
                                                                -----
</TABLE>

Independent Power Project (IPP) Investment

         As part of a strategic evaluation, the company determined that its 
IPP assets are not part of its core businesses and it is now in the process 
of considering various alternatives. Through this strategic planning process, 
a project-by-project review was performed and it was determined that the cash 
flow from one of the IPP projects was not sufficient to recover invested 
capital. As a result, a $6.5 million impairment was recorded.

EnergyOne L.L.C. Liquidation

         In April 1998, UtiliCorp and PECO Energy Company (PECO) agreed to 
disband the EnergyOne-SM- L.L.C. joint venture in recognition that a fully 
competitive marketplace did not materialize as originally anticipated. 
EnergyOne L.L.C. offered utilities a branded line of energy products and 
services and other consumer services, all of which could be billed together. 
With the pace of deregulation much slower than was assumed in its strategic 
plan, EnergyOne L.L.C. was unable to sell its concept to other utilities. In 


                                      13

<PAGE>

connection with the disbanding of EnergyOne L.L.C., the company recorded an 
$8.0 million reserve to cover severance costs, contract termination costs, 
and asset write-offs. The company is continuing to use the EnergyOne brand in 
its own utility service territories.

7.    NEW ZEALAND ACQUISITION

         In October 1998, the company acquired an additional 41% interest in 
Power New Zealand Limited's (PNZ) common stock for approximately $206 
million. The company's total ownership in PNZ after the additional investment 
is 78.6%. Concurrent with this acquisition, the company sold its 39.6% 
interest in WEL Energy Group and bought out the minority shareholder in the 
company's New Zealand subsidiary. The acquisition will be recorded as a 
purchase.

8.  REPORTABLE SEGMENT RECONCILIATION

<TABLE>
<CAPTION>
                                 Quarter Ended               Nine Months Ended
                                 September 30,                 September 30,
-----------------------------------------------------------------------------------
<S>                             <C>            <C>            <C>            <C>
DOLLARS IN MILLIONS             1998           1997           1998           1997
-----------------------------------------------------------------------------------
Sales:

Energy Delivery                  $214.5         $203.2         $825.9       $895.7
Generation                        117.0           91.6          285.8        233.8
Aquila Gas Pipeline               202.7          254.3          705.9        736.0
Aquila Energy Marketing         3,197.1        1,650.4        7,172.0      3,785.4
International                      78.8           55.8          280.7        211.8
Corporate/Other                   (1.5)            1.2          (1.3)          3.5
-----------------------------------------------------------------------------------

Total                          $3,808.6       $2,256.5       $9,269.0     $5,866.2
-----------------------------------------------------------------------------------
-----------------------------------------------------------------------------------

EBIT

Energy Delivery                   $34.4          $29.8         $117.4       $121.6
Generation                         30.8           20.0           59.0         56.5
Aquila Gas Pipeline                 2.0           10.5           14.7         33.3
Aquila Energy Marketing            11.5           12.3           11.9          7.2
International                      14.1           14.6           75.9         40.4
Corporate/Other                   (7.2)          (9.2)         (18.3)         16.0
-----------------------------------------------------------------------------------

Total                             $85.6          $78.0         $260.6       $275.0
-----------------------------------------------------------------------------------
-----------------------------------------------------------------------------------
</TABLE>


                                      14

<PAGE>

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND 
RESULTS OF OPERATIONS.

                              UTILICORP UNITED INC.
                MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
                       CONDITION AND RESULTS OF OPERATIONS


         EXCEPT WHERE NOTED, THE FOLLOWING DISCUSSION REFERS TO THE 
CONSOLIDATED ENTITY, UTILICORP UNITED INC. THE BUSINESS SEGMENTS OF THE 
COMPANY INCLUDE THE FOLLOWING BUSINESS GROUPS: UTILICORP ENERGY DELIVERY 
(UED), CONSISTING PRIMARILY OF TRANSMISSION AND DISTRIBUTION UTILITY 
OPERATIONS; AQUILA ENERGY CORPORATION (AQUILA), CONSISTING PRIMARILY OF 
ENERGY MARKETING (BOTH GAS AND ELECTRIC), AND GAS PROCESSING, GATHERING AND 
TRANSMISSION; AND GENERATION, CONSISTING OF DOMESTIC ELECTRIC GENERATION AND 
INDEPENDENT POWER PROJECTS. THE COMPANY ALSO HAS VARIOUS OPERATIONS THAT 
INCLUDE GENERATION, GAS MARKETING, ELECTRIC DISTRIBUTION AND VARIOUS EQUITY 
INVESTMENTS THAT ARE DISCUSSED IN THE INTERNATIONAL SECTION OF THIS REPORT. 
THE LIQUIDITY AND CAPITAL RESOURCES SECTION IS PREPARED ON A CONSOLIDATED 
BASIS.

FORWARD-LOOKING INFORMATION

         This Form 10-Q contains forward-looking information. Although the 
company believes that its expectations are based on reasonable assumptions, 
it can give no assurance that its goals will be achieved. Important factors 
that could cause actual results to differ materially from those in the 
forward looking statements herein include changes in the prices of natural 
gas, natural gas liquids and electricity, future deregulation initiatives and 
their regulatory actions against the company, specifically, the successful 
rollout of future products and services directly or through alliances, 
changes in the future state or federal income tax rates and laws, changes in 
the Canadian, Australian, New Zealand and British currencies relative to the 
U.S. dollar and changes in interest rates.

LIQUIDITY AND CAPITAL RESOURCES

         Management believes that the company's liquidity and capital 
resources are sufficient and provide adequate financial flexibility. The 
company's operations have historically generated strong positive cash flow, 
which, along with the company's credit lines, accounts receivable sales 
programs, common stock offerings and ability to issue public debt, have 
provided adequate liquidity to meet the company's short-term and long-term 
cash requirements, including requirements for acquisitions.


                                      15

<PAGE>

         The company uses its $280 million accounts receivable sales programs 
to efficiently manage its working capital and provide immediate liquidity. 
These programs were fully utilized at September 30, 1998. In addition to the 
accounts receivable sales program, the company can issue up to $150 million 
of commercial paper which is supported by a $250 million revolving credit 
agreement. The company had $120 million of commercial paper borrowings at 
September 30, 1998. The company anticipates that it will pursue loaning funds 
to third parties prospectively to underwrite energy related contracts with 
Aquila Energy.

SIGNIFICANT BALANCE SHEET MOVEMENTS

         Total assets decreased $3.6 million since December 31, 1997. Working 
capital, defined as current assets minus current liabilities excluding 
interest-bearing debt, increased to $68.9 million compared to $67.9 million. 
The company's inventory balance increased $82.8 million primarily due to 
additional gas in storage for the upcoming winter heating season. The 
additional inventory is held by Aquila Energy and will be used for 
non-regulated purposes.

          Cash balances also increased by $76.7 million at September 30, 
1998, compared to December 31, 1997, primarily related to the timing of 
scheduled payments over the reporting date. The increases in current assets 
mentioned above is partially offset by increases in accrued liabilities of 
$58.6 million and other liabilities of $34.5 million. These increases are due 
to changes related to gas costs and timing of tax payments.

         Short and long-term debt increased $72.1 million at September 30, 
1998, compared to December 31, 1997, primarily due to settling gas supply 
contracts, acquiring common stock and acquisition of additional ownership 
interest in Power New Zealand last June.

         Common shareholders equity decreased by $68.9 million at September 
30, 1998, compared to December 31, 1997 due to acquiring treasury shares and 
depreciating foreign currencies. The company acquired its common stock to 
fund its existing stock plans and other corporate purposes.

RESULTS OF OPERATIONS

         The results of operations for the 1998 and 1997 periods have been 
impacted by several items which do not have a continuing effect on the 
company's financial position or results of operations. The consolidated table 
below summarizes the impact of the non-recurring items on earnings before 
interest and taxes (EBIT) and diluted earnings per share (EPS).


                                      16

<PAGE>

<TABLE>
<CAPTION>
                                             Quarters Ended September 30,       Nine Months Ended September 30,
---------------------------------------------------------------------------------------------------------------
DOLLARS IN MILLIONS                             1998             1997              1998               1997
---------------------------------------------------------------------------------------------------------------
                                            EBIT     EPS     EBIT     EPS      EBIT      EPS      EBIT     EPS
----------------------------------------------------------------------------------------------------------------
<S>                                          <C>      <C>    <C>      <C>      <C>       <C>      <C>      <C>
AS REPORTED                                  $85.6    $.54    $78.0    $.46    $260.6    $1.77    $275.0   $1.78

NON-RECURRING ITEMS:
Merger termination fee (a)                       -       -        -       -         -        -    (53.0)   (.61)
Provision for asset impairments (b)              -       -        -       -      27.7      .30      26.5     .30
UK contract settlements (c)                      -       -        -       -      13.4      .15       6.5     .07
Loss on extinguishment of debt (d)               -       -        -       -         -        -         -     .13
Australia Initial Public Offering (e)            -       -        -       -    (45.3)    (.47)         -       -
----------------------------------------------------------------------------------------------------------------
NORMALIZED                                   $85.6    $.54    $78.0    $.46    $256.4    $1.75    $255.0   $1.67
----------------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------------
</TABLE>

a)   In 1997, Kansas City Power & Light (KCPL) paid the company a $53 million
     termination fee which was recorded as other income in the first quarter of
     1997. The payment was required when Western Resources Inc. and KCPL signed
     a definitive agreement to merge.

b)   In 1997, the company recorded a provision for impaired assets of $26.5
     million related to certain technology and royalty assets. In 1998, the
     company recorded a $27.7 million provision for impaired assets relating to
     certain retail gas marketing assets, termination of EnergyOne L.L.C., and
     the write-off of an independent power project.

c)   In 1997, the company recorded a $5.0 million reserve against earnings for
     unfavorable gas supply contracts in the United Kingdom. In 1998, the
     company settled two above-market gas contracts at a net loss of $6.6
     million. In addition, a court ruled against the company on a disputed gas
     supply contract requiring the company to record $6.8 million in interest
     related to the contract.

d)   In 1997, the company retired, at a premium, $69.1 million of 10.5% debt.
     The transaction resulted in an extraordinary loss of $7.2 million, net of
     an income tax benefit of $4.5 million.

e)   In 1998, United Energy Limited (UEL) sold to the public 42% of its common
     stock resulting in a $45.3 million gain for UtiliCorp.

         Normalized earnings or normalized income are terms used by management
to describe the recurring earnings or income of the company. These terms are not
meant to replace net income or other measures under generally accepted
accounting principles.


                                      17

<PAGE>

ENERGY DELIVERY

The table below summarizes the operations of UtiliCorp Energy Delivery for the
following periods:

<TABLE>
<CAPTION>
                                                   Quarter Ended            Nine Months Ended
                                                   September 30,              September 30,
-----------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------
<S>                                             <C>           <C>           <C>           <C>
DOLLARS IN MILLIONS                             1998          1997          1998          1997
-----------------------------------------------------------------------------------------------
Sales:
   Electric                                       $205.9       $173.7        $492.8     $424.5
   Gas                                              65.4         69.7         445.4      524.2
   Other                                            60.2         51.4         173.5      180.8
   Purchases from Generation                      (117.0)       (91.6)       (285.8)    (233.8)
-----------------------------------------------------------------------------------------------
Total net sales                                    214.5        203.2         825.9      895.7
-----------------------------------------------------------------------------------------------
Cost of sales:
   Electric                                          3.5          3.2          10.6       10.5
   Gas                                              28.1         32.4         262.0      329.5
   Other                                            48.5         43.7         144.9      154.3
-----------------------------------------------------------------------------------------------
Total cost of sales                                 80.1         79.3         417.5      494.3
-----------------------------------------------------------------------------------------------
Gross profit                                       134.4        123.9         408.4      401.4
-----------------------------------------------------------------------------------------------
Operating expenses:
    Other operating                                 56.2         56.2         161.6      171.0
    Maintenance                                      9.2          7.7          24.1       20.3
    Taxes, other than income taxes                  14.5         14.7          40.4       41.5
    Depreciation and amortization                   20.4         17.7          63.6       49.6
    Provision for asset impairments                  -            -             2.5        2.5
-----------------------------------------------------------------------------------------------
Total operating expenses                           100.3         96.3         292.2      284.9
-----------------------------------------------------------------------------------------------
Other income                                          .3          2.2           1.2        5.1
-----------------------------------------------------------------------------------------------
EBIT                                                34.4         29.8         117.4      121.6
Non-recurring items:
   Provision for asset impairments                   -            -             2.5        2.5
-----------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------
Normalized EBIT                                    $34.4        $29.8        $114.9     $119.1
-----------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------
</TABLE>

QUARTER-TO-QUARTER

         Normalized EBIT increased $4.6 million or 15%, in the 1998 quarter 
compared to 1997. This increase is primarily due to favorable weather and 
increased usage of $7.5 million, a $3.1 million increase related to customer 
growth and a $2.2 million increase related to a recovery plan to mitigate 
mild winter weather experienced in the first quarter. The recovery plan 
primarily consists of delays of certain expenditures and other discretionary 
actions. Offsetting part of these increases was the Missouri rate reduction 
which reduced EBIT by $8.2 million. The total ordered decrease is $16.9 
million plus $5.8 million in increased depreciation. The annual impact for 
1998 will reduce EBIT by $16.3 million and $22.7 million in 1999 and beyond.

                                      18

<PAGE>

YEAR-TO-DATE

         Normalized EBIT decreased $4.2 million in the 1998 period compared 
to the 1997 period. This decrease is due to milder than normal weather which 
reduced EBIT by $6.9 million in 1998 compared to 1997, reduced electric rates 
in Missouri which decreased EBIT by $10.3 million partially offset by an 
increase to EBIT for customer growth and usage of $15.9 million and the 
impacts of the recovery plan discussed above.

         In the second quarter of 1998, a $2.5 million provision for an asset 
impairment was recorded. See footnote 6 for more information.

GENERATION

The table below summarizes the operations of Generation for the following 
periods:

<TABLE>
<CAPTION>
                                              Quarter Ended              Nine Months Ended
                                              September 30,                September 30,
---------------------------------------------------------------------------------------------
<S>                                        <C>            <C>            <C>            <C>
DOLLARS IN MILLIONS                        1998           1997           1998           1997
---------------------------------------------------------------------------------------------

Sales to affiliate and other                  $117.0          $91.6         $285.8     $233.8
Cost of sales                                   71.9           55.0          175.6      133.7
---------------------------------------------------------------------------------------------
Gross profit                                    45.1           36.6          110.2      100.1
---------------------------------------------------------------------------------------------
Operating expenses:
    Other operating                             14.5           12.2           40.3       35.5
    Maintenance                                  3.0            4.1           10.6       11.6
    Taxes, other than income taxes               1.7            1.7            5.3        5.2
    Depreciation and amortization                6.7            4.1           15.7       12.1
    Provision for asset impairments                -              -            6.5          -
---------------------------------------------------------------------------------------------
Total operating expenses                        25.9           22.1           78.4       64.4
---------------------------------------------------------------------------------------------
Equity  in  earnings  of  investments
  and partnerships                              11.6            5.5           27.2       20.5
Other income (expense)                             -              -              -         .3
---------------------------------------------------------------------------------------------
EBIT                                            30.8           20.0           59.0       56.5
Non-recurring items:
   Provision for asset impairments                 -              -            6.5          -
---------------------------------------------------------------------------------------------
Normalized EBIT                                $30.8          $20.0          $65.5      $56.5
---------------------------------------------------------------------------------------------

EBIT by business subunit:
    Regulated power                            $19.6          $15.0          $39.5      $37.7
    IPP                                         11.2            5.0           26.0       18.8
---------------------------------------------------------------------------------------------
Total                                          $30.8          $20.0          $65.5      $56.5
---------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------
</TABLE>


                                      19

<PAGE>

QUARTER-TO-QUARTER

         Normalized EBIT increased $10.8 million in the 1998 quarter compared 
to the 1997 quarter. Approximately $6.2 million of the increase is from the 
IPP business and the remaining from regulated power. EBIT from the IPP 
business was positively impacted by a $3.6 million gain on the partial sale 
of an IPP project, the impact of a generator failure at a project in 1997 and 
improved project performance at various projects.

         Regulated Power's EBIT increased $4.6 million due to increased 
demand for power from Energy Delivery and for power sold off-system.

YEAR-TO-DATE

         Normalized EBIT increased $9.0 million in the 1998 period compared 
to the 1997 period. This increase is primarily due to the factors outlined in 
the quarter discussion above.

Projected Capacity Requirements

         The company projects that it will need approximately 500 mw's by 
2001 to replace expiring purchased power contracts and to meet the growing 
power demands from regulated customers. The company is evaluating various 
alternatives that include building or contracting for this additional capacity.


                                      20

<PAGE>

AQUILA ENERGY

The table below summarizes the operations of Energy Marketing and Aquila Gas 
Pipeline for the following periods:

<TABLE>
<CAPTION>
                                                     Quarter Ended                  Nine Months Ended
                                                     September 30,                    September 30,
-----------------------------------------------------------------------------------------------------
<S>                                               <C>            <C>            <C>            <C>
DOLLARS IN MILLIONS                               1998           1997           1998           1997
-----------------------------------------------------------------------------------------------------
Sales:
   Energy marketing                                $3,197.1       $1,650.4       $7,172.0    $3,785.4
   Aquila Gas Pipeline                                202.7          254.3          705.9       736.0
-----------------------------------------------------------------------------------------------------
Total sales                                         3,399.8        1,904.7        7,877.9     4,521.4
-----------------------------------------------------------------------------------------------------
Cost of sales:
   Cost of energy marketing                         3,162.5        1,615.1        7,080.7     3,713.9
   Aquila Gas Pipeline                                184.6          226.9          643.5       642.7
-----------------------------------------------------------------------------------------------------
Total cost of sales                                 3,347.1        1,842.0        7,724.2     4,356.6
-----------------------------------------------------------------------------------------------------
Gross profit                                           52.7           62.7          153.7       164.8
-----------------------------------------------------------------------------------------------------
Operating expenses:
    Operating and maintenance                          31.8           30.5           88.4        81.3
    Depreciation, depletion and                         7.4            7.0           22.4        19.9
      amortization
    Provision for asset impairments                       -              -           10.7        15.5
-----------------------------------------------------------------------------------------------------
Total operating expenses                               39.2           37.5          121.5       116.7
-----------------------------------------------------------------------------------------------------
Minority interest expense and other                       -            2.4            5.6         7.6
-----------------------------------------------------------------------------------------------------
EBIT                                                   13.5           22.8           26.6        40.5
Non-recurring items:
   Provision for asset impairments                        -              -           10.7        15.5
-----------------------------------------------------------------------------------------------------
Normalized EBIT                                       $13.5          $22.8          $37.3       $56.0
-----------------------------------------------------------------------------------------------------

EBIT by business subunit:
   Energy marketing                                   $11.5          $12.3          $21.9       $14.6
   Aquila Gas Pipeline                                  2.0           10.5           15.4        41.4
-----------------------------------------------------------------------------------------------------
Total                                                 $13.5          $22.8          $37.3       $56.0
-----------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------
</TABLE>

QUARTER-TO-QUARTER

         Aquila Energy's normalized EBIT for the 1998 quarter decreased by
$9.3 million compared to the 1997 quarter. Approximately $8.5 million of this
decrease is attributable to the Aquila Gas Pipeline (AQP) operation.

         AQP's EBIT was adversely impacted in 1998 by a $.09 per gallon or 
28% decline in natural gas liquid (NGL) prices between the quarters stemming 
from the downward pricing trend that has occurred all year. NGL prices tend 
to move directly with oil prices which have fallen in 1998 compared to 1997. 
In addition to NGL prices, NGL production volumes have decreased by 14,000 
gallons per day or 37%. The NGL production decline is due to several factors. 
The type of wells currently being drilled in the Austin Chalk, AQP's primary 
gathering area, are deeper wells which produce dryer gas and less NGL's. In 
addition, AQP is voluntarily bypassing lower NGL


                                      21

<PAGE>

content gas due to the low NGL prices. NGL prices and production volumes are 
expected to continue to be lower than in 1997 during the fourth quarter.

         Energy Marketing's EBIT in 1998 was slightly below 1997 EBIT. A 
growing proportion of EBIT is now coming from longer term contracts which is 
expected to continue through the fourth quarter. During the quarter, EBIT 
from Power Trading continued to post marked increases over 1997 results. 
Power volumes increased 80% in the 1998 quarter compared to 1997.

         The strong power marketing results in 1998 were offset by lower gas 
marketing compared to 1997. In 1997, gas marketing had strong results and the 
pricing environment provided profitable opportunities. In 1998, the pricing 
environment was less volatile providing less opportunities than in 1997. Gas 
marketing volumes have increased 32% to 9.5 billion cubic feet per day 
compared to 7.2 billion cubic feet per day. The large volume increases in gas 
and power marketing caused sales and cost of sales to increase in 1998 over 
1997. The results from gas marketing and power marketing can vary from 
quarter to quarter. The company manages the risk of earnings fluctuations by 
having multiple portfolios that pertain to products, regions, and 
commodities. Through a diverse total portfolio, earnings volatility is 
believed to be mitigated.

YEAR-TO-DATE

         Aquila Energy's normalized EBIT in the 1998 period decreased by 
$18.7 million compared to the same period in 1997. The decrease is due to a
$26.0 million decrease in AQP's EBIT. AQP's EBIT decreased due to a 26%
decline in NGL prices, a 33% decline in NGL production and a 7% decline in 
throughput volumes. The declines in NGL prices and production are for similar
reasons discussed in the quarter section. The decline in pipeline throughput
volumes was due to less drilling activity in AQP's gathering area resulting from
lower commodity prices. The throughput volumes in the third quarter of 1998 
were 3% better than in 1997.

         Energy Marketing EBIT increased $7.3 million in the 1998 period 
compared to 1997. The increase relates primarily to the strong second quarter 
performance from power marketing partially offset by lower gas marketing 
results. In the second quarter, power prices were very volatile resulting 
from hot temperatures, particularly in June. This pricing volatility 
environment presented a positive opportunity to take profitable positions in 
the market. In addition to strong power marketing results in 1998, the 
portfolio value was enhanced by changes in the credit quality of certain 
counterparties and regulatory changes.


                                      22

<PAGE>

TERMINATED SALE OF AQUILA GAS PIPELINE

         On August 6, 1998, AQP announced that it is no longer considering 
selling the company. In March, AQP retained Merrill Lynch to explore various 
strategic alternatives, including the possible sale of AQP, and has 
determined that more value can be achieved through other means.

INTERNATIONAL
<TABLE>
<CAPTION>
                                            Quarter Ended               Nine Months Ended
                                            September 30,                 September 30,
-------------------------------------------------------------------------------------------
<S>                                      <C>           <C>            <C>            <C>
DOLLARS IN MILLIONS                      1998          1997           1998           1997
-------------------------------------------------------------------------------------------
Sales:
  Electric (Canada)                         $20.7          $20.2          $63.6      $66.4
  Gas Marketing (primarily United
    Kingdom)                                 58.1           35.6          217.1      145.4
-------------------------------------------------------------------------------------------
Total Sales                                  78.8           55.8          280.7      211.8
-------------------------------------------------------------------------------------------
Cost of Sales:
  Cost of fuel and purchased
    power   (Canada)                          7.4            6.2           22.5       20.8
  Cost of gas marketing (United
    Kingdom)                                 54.1           35.4          215.5      148.9
-------------------------------------------------------------------------------------------
Total Cost of sales                          61.5           41.6          238.0      169.7
-------------------------------------------------------------------------------------------
Gross Profit                                 17.3           14.2           42.7       42.1
-------------------------------------------------------------------------------------------
Operating expenses:
  Operating and maintenance                   7.3            7.7           21.5       22.8
  Taxes, other than income taxes              3.0            2.9            9.2        8.6
  Depreciation and amortization               2.7            2.7            8.6        8.3
-------------------------------------------------------------------------------------------
Total Expense                                13.0           13.3           39.3       39.7
-------------------------------------------------------------------------------------------
Equity earnings in subsidiaries
  and partnerships                            8.9           11.5           77.2       34.3
Other income                                   .9            2.2          (4.7)        3.7
-------------------------------------------------------------------------------------------
EBIT                                         14.1           14.6           75.9       40.4
Non-recurring item :
  Gain on sale                                  -              -         (45.3)          -
  UK gas contracts reserve                      -              -           13.4        5.0
-------------------------------------------------------------------------------------------
Normalized EBIT                             $14.1          $14.6          $44.0      $45.4
-------------------------------------------------------------------------------------------

EBIT by business subunit:
   Australia                                 $4.9           $7.0          $19.4      $23.0
   New Zealand                                2.9            2.5            8.1        7.8
   United Kingdom                             1.2          (2.1)             .4       (4.7)
   Canada                                     5.1            7.2           16.1       19.3
-------------------------------------------------------------------------------------------
Normalized EBIT                             $14.1          $14.6          $44.0      $45.4
-------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------
</TABLE>

QUARTER-TO-QUARTER

         Normalized EBIT in the 1998 quarter was $.5 million below the 1997 
quarter. The decrease is due to the lower ownership interest in Australia 
stemming from the initial public offering in May (discussed in more detail 
below) and lower earnings from short-term investments in Canada.


                                      23

<PAGE>

         EBIT was favorably impacted by increased earnings from the United 
Kingdom (UK) related to increased commodity trading margins, increased number 
of customers and the settlement of the Midlands gas contracts.

         The UK operation continues to expand its indirect customers in 1998. 
For the 1998 quarter compared to the 1997 quarter, UK's customers in 1998 
increased 264,000 to 334,000 over the same period last year. In October, the 
UK obtained two new customers that will increase its indirect customers to 
nearly 1 million which reflects the success of the strategy the UK revised 
last fall to provide transportation risk management services to retail gas 
aggregators.

YEAR-TO-DATE

         International's normalized EBIT in 1998 was slightly below 1997. 
This decrease is due to the impact of the initial public offering in 
Australia which reduced the company's ownership interest in United Energy 
Limited from 49.9% to 34%. This ownership change reduces 1998 EBIT from 
Australia when compared to 1997. Prior to the initial public offering, United 
Energy Limited paid off certain loans to UtiliCorp which reduced interest 
expense. In terms of earnings per share, the results of the initial public 
offering and debt paydown should offset and not impact earnings per share 
from Australia. As part of the initial public offering, the company recorded 
a $45.3 million pretax gain in equity earnings. The year-to-date periods were 
also effected by the items discussed above for the quarter.

AUSTRALIAN DEREGULATION

         The electricity industry in Victoria, Australia is being deregulated 
in phases according to annual energy use with the largest customers becoming 
contestable first. As of September 30, 1998, all customers with annual usage 
greater than 160 mwh are able to choose their electricity supplier. On 
January 1, 2001, all remaining customers will become contestable. Concurrent 
with full deregulation, the tariff rates are expected to decrease, lowering
Australia's EBIT contribution to UtiliCorp in 2001 compared to earlier years.

ENERGYONE PARTNERSHIP

         In April 1998, UtiliCorp and PECO Energy Company (PECO) agreed to 
disband the EnergyOne L.L.C. joint venture in recognition that a fully 
competitive marketplace did not materialize as originally anticipated. 
EnergyOne L.L.C. offered utilities a branded line of energy products


                                      24

<PAGE>

and services and other consumer services, all of which could be billed 
together. With the pace of deregulation much slower than was assumed in its 
strategic plan, EnergyOne L.L.C. was unable to sell its concept to other 
utilities. In connection with the disbanding of EnergyOne L.L.C., the company 
recorded an $8.0 million reserve to cover severance costs, contract 
termination costs, and asset write-offs.

         For the quarter ended September 30, 1998, the elimination of 
EnergyOne L.L.C. activities improved the company's EBIT by $3.2 million over 
1997.

YEAR 2000

         At year 2000, a two-digit date of "00" may not be recognized by 
computer systems, software applications, and certain operating controls 
developed in the 1970s and 1980s as the year 2000, causing systems to shut 
down or malfunction. UtiliCorp has established a Year 2000 Project Office to 
coordinate the Year 2000 efforts of teams in the company's operating units to 
ensure that its computer systems and applications will function properly 
beyond 1999.

         Many of the company's information systems and software are Year 2000 
ready. UtiliCorp has undergone a major software system overhaul that consists 
of new financial, customer information and support systems. The customer 
information system is expected to be fully installed by 1999. These projects, 
known internally as "Project BTU" are expected to replace at least 80% of 
potentially affected software. Project BTU began in 1995 and was intended to 
update the company's internal support systems and to position the company to 
better serve its customers. Year 2000 compliance was incorporated into the 
scope of deliverables of Project BTU. Total expenditures for the new systems 
are estimated at approximately $190.6 million of which $130.0 million has 
been spent to date.

         The Year 2000 Project Office is also coordinating the identification 
and testing of remaining software, information technology devices, embedded 
technology systems, and services provided by third parties that may be 
impacted by the year 2000. The Project Team is expected to have the 
identification and testing phases completed by the end of 1998 and begin 
remediation in 1999. At this time, the company does not have a contingency 
plan, but it is expected that the Project Office will have developed a 
contingency plan to address unforeseen issues by first quarter 1999. The 
company is currently preparing budgets and estimates of remediation costs


                                      25

<PAGE>

for this portion of its Year 2000 remediation of mission critical systems. 
The remediation of certain non-mission critical systems is expected to extend 
beyond 1999. The estimated cost of administering the Year 2000 efforts 
through the Project Office is approximately $1.6 million through 2000. 
Approximately $300,000 has been spent to date.

         The company is evaluating the impact of internal and external Year 
2000 issues on its operations to develop a model on which to base contingency 
planning. The Project Team is conducting internal evaluations, discussions 
with other utilities, and participating in industry-wide efforts being 
conducted by the North American Electric Reliability Council and the Gas 
Industry Standards Board to appropriately prepare and ensure the company's 
efforts are in line with the rest of the industry.

NEW ACCOUNTING STANDARD

         In June 1998, the Financial Accounting Standards Board issued 
Statement of Financial Accounting Standards No. 133, "Accounting for 
Derivative Instruments and Hedging Activities" (SFAS 133). SFAS 133 
established accounting and reporting standards for derivative instruments and 
hedging activities requiring that every derivative instrument, including 
certain derivative instruments embedded in other contracts, be recorded in 
the balance sheet as either an asset or liability measured at its fair value. 
The Statement requires that changes in the derivative's fair value be 
recognized currently in earnings unless specific hedge accounting criteria 
are met. Special accounting for qualifying hedges allows a derivative's gains 
and losses to offset related results on the hedged item in the income 
statement, and requires that the company must formally document, designate, 
and assess the effectiveness of transactions that receive hedge accounting. 
SFAS 133 is required to be adopted for fiscal years beginning after June 15, 
1999.

         SFAS 133 will impact the company's hedging activities at Aquila 
Energy and Aquila Gas Pipeline, corporate treasury activities, foreign 
subsidiary trading activities and power contracts. The impact of SFAS 133 has 
not been quantified.

                                      26

<PAGE>

PART II
OTHER INFORMATION


ITEM 6. EXHIBITS

(A)  LIST OF EXHIBITS:

         12     Statements re computation of ratios.

         27     Financial Data Schedule--For the nine months ended 
                September 30, 1998.


(B)  REPORTS ON FORM 8-K:

         The company filed no reports on Form 8-K for the quarter ended
September 30, 1998.


                                      27

<PAGE>

SIGNATURES


         Pursuant to the requirements 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.

UTILICORP UNITED INC.


By:  /s/ Richard C. Green, Jr.
     -------------------------
     Richard C. Green, Jr.
     Chairman of the Board and Chief Executive Officer

Date: November 10, 1998


By:  /s/ James S. Brook
     ------------------
     James S. Brook
     Vice President, Controller and Chief Accounting Officer

Date: November 10, 1998


                                      28