##### Table of Contents

---

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549



---



FORM 10-Q



---



|x | QUARTERLY REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|- | ---------------------------------------------------------------------------------------



For the quarterly period ended March 31, 2005



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 1-7324



---



KANSAS GAS AND ELECTRIC COMPANY

(Exact name of registrant as specified in its charter)



---



|                                                               |  |  |  |                                     
|-------------------------------------------------------------- |  |  |  | ------------------------------------
|Kansas                                                         |  |  |  | 48-1093840                          
|(State or other jurisdiction of incorporation or organization) |  |  |  | (I.R.S. Employer Identification No.)



P.O. BOX 208

Wichita, Kansas 67201

(316) 261-6611

---

(Address, including Zip Code and telephone number,
including area code, of registrants principal executive offices)



---



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 by check mark
whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act).    Yes ̈No  x



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



|                           |  |  |  |                              
|-------------------------- |  |  |  | -----------------------------
|Common Stock, No Par Value |  |  |  | 1,000 Shares                 
|(Class)                    |  |  |  | (Outstanding at May 10, 2005)



Registrant meets the
conditions of General Instruction H(1)(a) and (b) to Form 10-Q for certain wholly-owned subsidiaries and is therefore filing this Form with a reduced disclosure format.



---



---

##### Table of Contents

TABLE OF CONTENTS



|                              |  |         |  |                                                                                       |  |     
|----------------------------- |  | ------- |  | ------------------------------------------------------------------------------------- |  | ----
|                              |  |         |  |                                                                                       |  | Page
|PART I. Financial Information |  |        
|                              |  |         | 
|                              |  | Item 1. |  | Condensed Financial Statements (Unaudited)                                            |  |     
|                              |  |         | 
|                              |  |         |  | Consolidated Balance Sheets                                                           |  | 4   
|                              |  |         | 
|                              |  |         |  | Consolidated Statements of Income                                                     |  | 5   
|                              |  |         | 
|                              |  |         |  | Consolidated Statements of Cash Flows                                                 |  | 6   
|                              |  |         | 
|                              |  |         |  | Notes to Consolidated Financial Statements                                            |  | 7   
|                              |  |         | 
|                              |  | Item 2. |  | Managements Discussion and Analysis of Financial Condition and Results of Operations |  | 13  
|                              |  |         | 
|                              |  | Item 3. |  | Quantitative and Qualitative Disclosures About Market Risk                            |  | 18  
|                              |  |         | 
|                              |  | Item 4. |  | Controls and Procedures                                                               |  | 18  
|                              | 
|PART II. Other Information    |  |        
|                              |  |         | 
|                              |  | Item 1. |  | Legal Proceedings                                                                     |  | 19  
|                              |  |         | 
|                              |  | Item 2. |  | Unregistered Sales of Equity Securities and Use of Proceeds                           |  | 19  
|                              |  |         | 
|                              |  | Item 3. |  | Defaults Upon Senior Securities                                                       |  | 19  
|                              |  |         | 
|                              |  | Item 4. |  | Submission of Matters to a Vote of Security Holders                                   |  | 19  
|                              |  |         | 
|                              |  | Item 5. |  | Other Information                                                                     |  | 19  
|                              |  |         | 
|                              |  | Item 6. |  | Exhibits                                                                              |  | 19  
|                              | 
|Signature                     |  | 20     



2



---

##### Table of Contents

FORWARD-LOOKING STATEMENTS



Certain matters discussed in this Form 10-Q are forward-looking statements. The Private Securities Litigation
Reform Act of 1995 has established that these statements qualify for safe harbors from liability. Forward-looking statements may include words like we believe, anticipate, target, expect, pro
forma, estimate, intend and words of similar meaning. Forward-looking statements describe our future plans, objectives, expectations or goals. Such statements address future events and conditions concerning:



| |  |  | capital expenditures,
| | - |  | ---------------------



| |  |  | earnings,
| | - |  | ---------



| |  |  | liquidity and capital resources,
| | - |  | --------------------------------



| |  |  | litigation,
| | - |  | -----------



| |  |  | accounting matters,
| | - |  | -------------------



| |  |  | possible corporate restructurings, acquisitions and dispositions,
| | - |  | -----------------------------------------------------------------



| |  |  | compliance with debt and other restrictive covenants,
| | - |  | -----------------------------------------------------



| |  |  | interest rates,
| | - |  | ---------------



| |  |  | environmental matters,
| | - |  | ----------------------



| |  |  | nuclear operations, and
| | - |  | -----------------------



| |  |  | the overall economy of our service area.
| | - |  | ----------------------------------------



What happens in each case could vary materially from what we expect because of such things as:



| |  |  | electric utility deregulation or re-regulation,
| | - |  | -----------------------------------------------



| |  |  | regulated and competitive markets,
| | - |  | ----------------------------------



| |  |  | ongoing municipal, state and federal activities,
| | - |  | ------------------------------------------------



| |  |  | economic and capital market conditions,
| | - |  | ---------------------------------------



| |  |  | changes in accounting requirements and other accounting matters,
| | - |  | ----------------------------------------------------------------



| |  |  | changing weather,
| | - |  | -----------------



| |  |  | the outcome of the pending rate review filed with the Kansas Corporation Commission on May 2, 2005,
| | - |  | ---------------------------------------------------------------------------------------------------



| |  |  | rates, cost recoveries and other regulatory matters,
| | - |  | ----------------------------------------------------



| |  |  | the impact of changes and downturns in the energy industry and the market for trading wholesale electricity,
| | - |  | ------------------------------------------------------------------------------------------------------------



| |  |  | the outcome of the notice of violation received by Westar Energy, Inc. on January 22, 2004 from the Environmental Protection Agency and other environmental matters,
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | political, legislative, judicial and regulatory developments,
| | - |  | -------------------------------------------------------------



| |  |  | the impact of changes in interest rates,
| | - |  | ----------------------------------------



| |  |  | changes in, and the discount rate assumptions used for, Wolf Creek Nuclear Operating Corporations pension and other post-retirement benefit liability calculations, as well as
actual and assumed investment returns on pension plan assets,
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | the impact of changing interest rates and other assumptions on our decommissioning liability for Wolf Creek Generating Station,
| | - |  | -------------------------------------------------------------------------------------------------------------------------------



| |  |  | regulatory requirements for utility service reliability,
| | - |  | --------------------------------------------------------



| |  |  | homeland security considerations,
| | - |  | ---------------------------------



| |  |  | coal, natural gas, oil and wholesale electricity prices,
| | - |  | --------------------------------------------------------



| |  |  | availability and timely provision of rail transportation for our coal supply, and
| | - |  | ---------------------------------------------------------------------------------



| |  |  | other circumstances affecting anticipated operations, sales and costs.
| | - |  | ----------------------------------------------------------------------



These lists are not all-inclusive because it is not possible to predict all factors. This report should be read in its
entirety and in conjunction with our Annual Report on Form 10-K for the year ended December 31, 2004. No one section of this report deals with all aspects of the subject matter and additional information on some matters that could impact our
operations and financial results may be included in our Annual Report on Form 10-K for the year ended December 31, 2004. Any forward-looking statement speaks only as of the date such statement was made, and we do not undertake any obligation to
update any forward-looking statement to reflect events or circumstances after the date on which such statement was made except as required by applicable laws or regulations.



3



---

##### Table of Contents

PART I. Financial Information

ITEM 1. CONDENSED FINANCIAL STATEMENTS



KANSAS GAS AND ELECTRIC COMPANY



CONSOLIDATED BALANCE SHEETS

(Dollars in Thousands)

(Unaudited)



|                                                               |  |                |           |                   |   |          
|-------------------------------------------------------------- |  | -------------- | --------- | ----------------- | - | ---------
|                                                               |  | March 31, 2005 |           | December 31, 2004
|ASSETS                                                         |  |                |           |                   |   |          
|                                                               |  |               
|CURRENT ASSETS:                                                |  |                |           |                   |   |          
|Cash and cash equivalents                                      |  | $              | 2,594     |                   | $ | 812      
|Accounts receivable, net                                       |  |                | 50,648    |                   |   | 92,284   
|Inventories and supplies                                       |  |                | 64,874    |                   |   | 64,397   
|Energy marketing contracts                                     |  |                | 3,798     |                   |   | 4,020    
|Deferred tax assets                                            |  |                | 3,192     |                   |   | 544      
|Prepaid expenses                                               |  |                | 13,573    |                   |   | 24,070   
|Other                                                          |  |                | 1,845     |                   |   | 2,633    
|                                                               |  |                |           |                   |   |          
|Total Current Assets                                           |  |                | 140,524   |                   |   | 188,760  
|                                                               |  |                |           |                   |   |          
|PROPERTY, PLANT AND EQUIPMENT, NET                             |  |                | 2,343,316 |                   |   | 2,349,673
|                                                               |  |                |           |                   |   |          
|OTHER ASSETS:                                                  |  |                |           |                   |   |          
|Regulatory assets                                              |  |                | 353,517   |                   |   | 321,359  
|Nuclear decommissioning trust                                  |  |                | 90,312    |                   |   | 91,095   
|Other                                                          |  |                | 41,922    |                   |   | 40,303   
|                                                               |  |                |           |                   |   |          
|Total Other Assets                                             |  |                | 485,751   |                   |   | 452,757  
|                                                               |  |                |           |                   |   |          
|TOTAL ASSETS                                                   |  | $              | 2,969,591 |                   | $ | 2,991,190
|                                                               |  |                |           |                   |   |          
|LIABILITIES AND SHAREHOLDERS EQUITY                           |  |                |           |                   |   |          
|                                                               |  |               
|CURRENT LIABILITIES:                                           |  |                |           |                   |   |          
|Current maturities of long-term debt                           |  | $              | 165,000   |                   | $ | 65,000   
|Accounts payable                                               |  |                | 35,518    |                   |   | 39,772   
|Payable to affiliates                                          |  |                | 63,182    |                   |   | 91,504   
|Accrued interest                                               |  |                | 6,714     |                   |   | 7,308    
|Accrued taxes                                                  |  |                | 36,285    |                   |   | 29,420   
|Energy marketing contracts                                     |  |                | 5,217     |                   |   | 2,497    
|Other                                                          |  |                | 23,702    |                   |   | 30,079   
|                                                               |  |                |           |                   |   |          
|Total Current Liabilities                                      |  |                | 335,618   |                   |   | 265,580  
|                                                               |  |                |           |                   |   |          
|LONG-TERM LIABILITIES:                                         |  |                |           |                   |   |          
|Long-term debt, net                                            |  |                | 387,421   |                   |   | 487,419  
|Deferred income taxes                                          |  |                | 681,878   |                   |   | 656,838  
|Unamortized investment tax credits                             |  |                | 45,425    |                   |   | 46,073   
|Deferred gain from sale-leaseback                              |  |                | 136,024   |                   |   | 138,981  
|Asset retirement obligation                                    |  |                | 88,852    |                   |   | 87,118   
|Nuclear decommissioning                                        |  |                | 90,312    |                   |   | 91,095   
|Other                                                          |  |                | 126,643   |                   |   | 126,280  
|                                                               |  |                |           |                   |   |          
|Total Long-Term Liabilities                                    |  |                | 1,556,555 |                   |   | 1,633,804
|                                                               |  |                |           |                   |   |          
|COMMITMENTS AND CONTINGENCIES (See Note 6)                     |  |                |           |                   |   |          
|SHAREHOLDERS EQUITY:                                          |  |                |           |                   |   |          
|Common stock, no par value; authorized and issued 1,000 shares |  |                | 1,065,634 |                   |   | 1,065,634
|Retained earnings                                              |  |                | 11,784    |                   |   | 26,172   
|                                                               |  |                |           |                   |   |          
|Total Shareholders Equity                                     |  |                | 1,077,418 |                   |   | 1,091,806
|                                                               |  |                |           |                   |   |          
|TOTAL LIABILITIES AND SHAREHOLDERS EQUITY                     |  | $              | 2,969,591 |                   | $ | 2,991,190
|                                                               |  |                |           |                   |   |          



The accompanying notes
are an integral part of these condensed consolidated financial statements.



4



---

##### Table of Contents

KANSAS GAS AND ELECTRIC COMPANY



CONSOLIDATED STATEMENTS OF INCOME

(Dollars in Thousands)

(Unaudited)



|                                    |  |                              |         |   |      |   |         |  
|----------------------------------- |  | ---------------------------- | ------- | - | ---- | - | ------- | -
|                                    |  | Three Months Ended March 31, |        
|                                    |  | 2005                         |         |   | 2004 |  
|SALES                               |  | $                            | 165,770 |   |      | $ | 162,091 |  
|                                    |  |                              |         |   |      |   |         |  
|OPERATING EXPENSES:                 |  |                              |         |   |      |   |         |  
|Fuel and purchased power            |  |                              | 49,168  |   |      |   | 55,041  |  
|Operating and maintenance           |  |                              | 60,000  |   |      |   | 54,963  |  
|Depreciation and amortization       |  |                              | 22,986  |   |      |   | 22,753  |  
|Selling, general and administrative |  |                              | 20,900  |   |      |   | 17,743  |  
|                                    |  |                              |         |   |      |   |         |  
|Total Operating Expenses            |  |                              | 153,054 |   |      |   | 150,500 |  
|                                    |  |                              |         |   |      |   |         |  
|INCOME FROM OPERATIONS              |  |                              | 12,716  |   |      |   | 11,591  |  
|                                    |  |                              |         |   |      |   |         |  
|OTHER INCOME (EXPENSE):             |  |                              |         |   |      |   |         |  
|Other income                        |  |                              | 6,189   |   |      |   | 5,990   |  
|Other expense                       |  |                              | (4,807  | ) |      |   | (4,253  | )
|                                    |  |                              |         |   |      |   |         |  
|Total Other Income                  |  |                              | 1,382   |   |      |   | 1,737   |  
|                                    |  |                              |         |   |      |   |         |  
|Interest expense                    |  |                              | 6,873   |   |      |   | 9,406   |  
|                                    |  |                              |         |   |      |   |         |  
|INCOME BEFORE INCOME TAXES          |  |                              | 7,225   |   |      |   | 3,922   |  
|Income tax expense                  |  |                              | 1,612   |   |      |   | 977     |  
|                                    |  |                              |         |   |      |   |         |  
|NET INCOME                          |  | $                            | 5,613   |   |      | $ | 2,945   |  
|                                    |  |                              |         |   |      |   |         |  



The accompanying notes
are an integral part of these condensed consolidated financial statements.



5



---

##### Table of Contents

KANSAS GAS AND ELECTRIC COMPANY



CONSOLIDATED STATEMENTS OF CASH FLOWS

(Dollars in Thousands)

(Unaudited)



|                                                                                  |  |                              |         |   |      |   |         |  
|--------------------------------------------------------------------------------- |  | ---------------------------- | ------- | - | ---- | - | ------- | -
|                                                                                  |  | Three Months Ended March 31, |        
|                                                                                  |  | 2005                         |         |   | 2004 |  
|CASH FLOWS FROM (USED IN) OPERATING ACTIVITIES:                                   |  |                              |         |   |      |   |         |  
|Net income                                                                        |  | $                            | 5,613   |   |      | $ | 2,945   |  
|Adjustments to reconcile net income to net cash provided by operating activities: |  |                              |         |   |      |   |         |  
|Depreciation and amortization                                                     |  |                              | 22,986  |   |      |   | 22,753  |  
|Amortization of nuclear fuel                                                      |  |                              | 3,292   |   |      |   | 3,493   |  
|Amortization of deferred gain from sale-leaseback                                 |  |                              | (2,957  | ) |      |   | (2,957  | )
|Amortization of prepaid corporate-owned life insurance                            |  |                              | 4,107   |   |      |   | 3,786   |  
|Net deferred taxes and credits                                                    |  |                              | 15,648  |   |      |   | (1,571  | )
|Net changes in energy marketing assets and liabilities                            |  |                              | 3,109   |   |      |   | 1,916   |  
|Changes in working capital items:                                                 |  |                              |         |   |      |   |         |  
|Accounts receivable, net                                                          |  |                              | 41,636  |   |      |   | 16,543  |  
|Inventories and supplies                                                          |  |                              | (477    | ) |      |   | 9,652   |  
|Prepaid expenses and other                                                        |  |                              | (210    | ) |      |   | (1,316  | )
|Accounts payable                                                                  |  |                              | (4,377  | ) |      |   | (5,437  | )
|Payable to affiliates                                                             |  |                              | (28,322 | ) |      |   | (17,138 | )
|Other current liabilities                                                         |  |                              | 6,850   |   |      |   | 10,553  |  
|Changes in other, assets                                                          |  |                              | (23,487 | ) |      |   | 2,065   |  
|Changes in other, liabilities                                                     |  |                              | (2,358  | ) |      |   | (3,952  | )
|                                                                                  |  |                              |         |   |      |   |         |  
|Cash flows from operating activities                                              |  |                              | 41,053  |   |      |   | 41,335  |  
|                                                                                  |  |                              |         |   |      |   |         |  
|CASH FLOWS FROM (USED IN) INVESTING ACTIVITIES:                                   |  |                              |         |   |      |   |         |  
|Additions to property, plant and equipment                                        |  |                              | (17,978 | ) |      |   | (17,104 | )
|Removal, dismantlement and salvage of property, plant and equipment               |  |                              | (2,166  | ) |      |   | (1,187  | )
|                                                                                  |  |                              |         |   |      |   |         |  
|Cash flows used in investing activities                                           |  |                              | (20,144 | ) |      |   | (18,291 | )
|                                                                                  |  |                              |         |   |      |   |         |  
|CASH FLOWS FROM (USED IN) FINANCING ACTIVITIES:                                   |  |                              |         |   |      |   |         |  
|Borrowings against cash surrender value of corporate-owned life insurance         |  |                              | 873     |   |      |   | 939     |  
|Dividends to parent company                                                       |  |                              | (20,000 | ) |      |   | (25,000 | )
|                                                                                  |  |                              |         |   |      |   |         |  
|Cash flows used in financing activities                                           |  |                              | (19,127 | ) |      |   | (24,061 | )
|                                                                                  |  |                              |         |   |      |   |         |  
|NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS                              |  |                              | 1,782   |   |      |   | (1,017  | )
|CASH AND CASH EQUIVALENTS:                                                        |  |                              |         |   |      |   |         |  
|Beginning of period                                                               |  |                              | 812     |   |      |   | 6,321   |  
|                                                                                  |  |                              |         |   |      |   |         |  
|End of period                                                                     |  | $                            | 2,594   |   |      | $ | 5,304   |  
|                                                                                  |  |                              |         |   |      |   |         |  
|SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:                                |  |                              |         |   |      |   |         |  
|CASH PAID FOR:                                                                    |  |                              |         |   |      |   |         |  
|Interest on financing activities, net of amount capitalized                       |  | $                            | 6,597   |   |      | $ | 5,879   |  



The accompanying notes
are an integral part of these condensed consolidated financial statements.



6



---

##### Table of Contents

KANSAS GAS AND ELECTRIC COMPANY



CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)



1. DESCRIPTION OF BUSINESS



Kansas Gas and Electric Company is a regulated electric utility incorporated
in 1990 in Kansas. Unless the context otherwise indicates, all references in this quarterly report on Form 10-Q to the company, KGE, we, us, our and similar words are to Kansas Gas and
Electric Company. We are a wholly owned subsidiary of Westar Energy, Inc. and we provide rate-regulated electric service, together with the electric utility operations of Westar Energy, using the name Westar Energy. We provide electric generation,
transmission and distribution services to approximately 303,000 customers in south-central and southeastern Kansas, including the city of Wichita.



We own a 47% interest in the Wolf Creek Generating Station (Wolf Creek), a nuclear power plant located near Burlington, Kansas, and a 47% interest in Wolf
Creek Nuclear Operating Corporation (WCNOC), the operating company for Wolf Creek.



2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES



Principles
of Consolidation



We prepare our condensed consolidated
financial statements in accordance with generally accepted accounting principles (GAAP) for the United States of America for interim financial information and in accordance with the instructions to Form 10-Q and Article 10 of Regulation S-X.
Accordingly, certain information and footnote disclosures normally included in financial statements presented in accordance with GAAP have been condensed or omitted. The accompanying condensed consolidated financial statements and notes should be
read in conjunction with the consolidated financial statements and notes included in our Annual Report on Form 10-K for the year ended December 31, 2004 (2004 Form 10-K).



Use of Managements Estimates



When we prepare our consolidated financial statements, we are required to make estimates and assumptions that affect the reported amounts of assets,
liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities at the date of our consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. We evaluate our
estimates on an on-going basis, including those related to bad debts, inventories, valuation of commodity contracts, depreciation, unbilled revenue, valuation of our energy marketing portfolio, intangible assets, income taxes, our portion of
WCNOCs pension and other post-retirement benefits, our asset retirement obligations including decommissioning of Wolf Creek, environmental issues, contingencies and litigation. Actual results may differ from those estimates under different
assumptions or conditions. The results of operations for the three months ended March 31, 2005 are not necessarily indicative of the results to be expected for the full year.



7



---

##### Table of Contents

New Accounting Pronouncement



In March 2005, the Financial Accounting Standards Board (FASB) issued Interpretation No. (FIN) 47, Accounting for
Conditional Asset Retirement Obligations. FIN 47 clarifies that the term conditional asset retirement obligation as used in Statement of Financial Accounting Standards (SFAS) No. 143, Accounting for Asset Retirement
Obligations, refers to a legal obligation to perform an asset retirement activity in which the timing or method of settlement are conditional on a future event. An entity is required to recognize a liability for the fair value of a conditional
asset retirement obligation if the fair value of the liability can be reasonably estimated. Uncertainty about the timing or method of settlement of a conditional asset retirement obligation should be factored into the measurement of the liability
when sufficient information exists. FIN 47 also clarifies when an entity would have sufficient information to reasonably estimate the fair value of an asset retirement obligation. FIN 47 is effective for the year ended December 31, 2005. We are
currently evaluating what impact FIN 47 will likely have on our consolidated results of operations.



Reclassifications



We
have reclassified certain prior year amounts to conform with classifications used in the current-year presentation as necessary for a fair presentation of the financial statements.



3. RATE MATTERS AND REGULATION



Retail Rate Review



In accordance with a Kansas Corporation Commission (KCC) order, we filed an application with the KCC on May 2, 2005, to propose a $36.3 million increase
in our retail electric rates. We anticipate that our rates will change in January 2006. Key components of the filing are as follows:



| |  |  | Implementation of a fuel and purchased power adjustment clause
| | - |  | --------------------------------------------------------------



| |  |  | Sharing of market-based wholesale margins with customers
| | - |  | --------------------------------------------------------



| |  |  | Recovering transmission costs through a separate Federal Energy Regulatory Commission (FERC) transmission delivery charge
| | - |  | -------------------------------------------------------------------------------------------------------------------------



| |  |  | Adoption of a tariff to provide more timely recovery of investments and expenditures associated with adding and operating pollution control equipment at our power plants
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Recovery of approximately $35.0 million of deferred maintenance costs associated with restoring the service to our customers stemming from damage to our lines and equipment in the
ice storms that occurred in 2002 and 2005
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Increasing depreciation expense by approximately $13.7 million
| | - |  | --------------------------------------------------------------



| |  |  | A proposal that would establish customer service targets and the potential for rebates to customers based on our financial and customer service performance
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------



We can provide no assurance that the KCC will approve our application as
filed.



FERC Proceedings



On May 2, 2005, we filed an application with FERC to change our transmission
rates. The application proposes a formula transmission rate that provides for annual adjustments to reflect changes in Westar Energys and our transmission costs. This is consistent with our proposal submitted to the KCC on May 2, 2005 to
separately charge retail customers for transmission service. We expect the transmission rate to become effective no later than December 2005. We can provide no assurance that FERC will approve our application as filed.



8



---

##### Table of Contents

On March 23, 2005, FERC instituted a proceeding concerning the reasonableness of Westar Energys and
our market-based rates in our electrical control area and the Midwest Energy, Inc. and West Plains Energy electrical control areas. On April 21, 2005, Westar Energy and we provided FERC with certain information it requested to complete its analysis.
A FERC decision, expected by mid-2005, could affect how we price future wholesale power sales to wholesale customers in our control area and to Midwest Energy and West Plains Energy. We do not expect the outcome of this matter to significantly
impact our consolidated results of operations.



Service
Reliability Standards



On February 10, 2004, the North
American Electric Reliability Council (NERC) issued reliability improvement initiatives stemming from an investigation of the August 14, 2003 blackout in portions of the northeastern United States. In February 2005, NERC approved reliability
standards, which went into effect on April 1, 2005. We have not had to make any significant expenditures to be in compliance with these standards.



4. ACCOUNTS RECEIVABLE SALES PROGRAM



WR Receivables Corporation, a wholly owned subsidiary of Westar Energy, has an agreement with a financial institution whereby WR Receivables can sell an
interest of up to $125.0 million in a designated pool of our qualified accounts receivable. The agreement expires in July 2005 and, subject to the mutual agreement of the parties, is renewable on an annual basis. We expect to renew the agreement on
substantially similar terms.



The receivables sold by WR
Receivables to the financial institution are not reflected in the accounts receivable balance in the accompanying consolidated balance sheets. The amounts sold to the financial institution were $95.0 million at March 31, 2005 and $80.0 million at
December 31, 2004. We record this activity on the consolidated statements of cash flows in the accounts receivable, net line of cash flows from operating activities.



We service, administer and collect the receivables on behalf of the financial institution. Administrative expenses, which
represent the loss on the sale, paid to the financial institution associated with the sale of these receivables were $0.7 million for the three months ended March 31, 2005 and $0.5 million for the same period of 2004. We include these expenses in
other expense on our consolidated statements of income.



We
record receivables transferred to WR Receivables at book value, net of allowance for bad debts. This approximates fair value due to the short-term nature of the receivable. We include the transferred accounts receivable in accounts receivable, net,
on our consolidated balance sheets. The interests that we hold are presented in the table below.



|                                                             |  |                |        |                   |   |       
|------------------------------------------------------------ |  | -------------- | ------ | ----------------- | - | ------
|                                                             |  | March 31, 2005 |        | December 31, 2004
|                                                             |  | (In Thousands)
|Accounts receivable retained by WR Receivables, net          |  | $              | 47,522 |                   | $ | 81,842
|Accounts receivables reserved for financial institution, net |  |                | 2,837  |                   |   | 10,023
|                                                             |  |                |        |                   |   |       
|Transferred receivables, net                                 |  | $              | 50,359 |                   | $ | 91,865
|                                                             |  |                |        |                   |   |       



5. INCOME TAXES AND TAXES OTHER
THAN INCOME TAXES



We recorded income tax expense of
approximately $1.6 million for the three months ended March 31, 2005 as compared to $1.0 million for the same period of 2004.



We are a member of Westar Energys consolidated tax group. We file consolidated tax returns with Westar Energy. Westar Energy allocates to us our pro
rata portion of consolidated income taxes based on our contribution to consolidated taxable income.



9



---

##### Table of Contents

As of March 31, 2005 and December 31, 2004, we had recorded reserves for uncertain tax positions of $3.0
million and $2.9 million, respectively. Tax reserves are established for tax deductions or income positions taken in prior income tax returns that we believe were treated properly on the tax returns but may be challenged if such tax returns are
audited. The tax returns containing these tax reporting positions are currently under audit or will likely be audited. The timing of the resolution of these audits is uncertain. If the positions taken on the tax returns are ultimately sustained, we
will reverse these tax provisions to income. If the positions taken on the tax returns are not ultimately sustained, we may be required to make cash payments for taxes and interest. The reserves are determined based on our best estimate of probable
assessments by the Internal Revenue Service or other taxing authorities and are adjusted, from time to time, based on changing facts and circumstances.



As of March 31, 2005 and December 31, 2004, we also had a tax reserve of $1.0 million and $0.9 million, respectively, or $0.6 million and $0.5 million
after-tax, for probable assessments of taxes other than income taxes.



6.
COMMITMENTS AND CONTINGENCIES



Environmental Matters



Our activities are subject to environmental regulation by federal, state,
and local governmental authorities. These regulations generally involve the use of water, discharges of effluents into the water, emissions into the air, the handling, storage and use of hazardous substances and waste handling, remediation and
disposal, among others. Congress or the state of Kansas may enact legislation and the Environmental Protection Agency (EPA) or the state of Kansas may propose new regulations or change existing regulations that could require us to reduce emissions.
Such action could require us to install costly equipment, increase our operating expense and reduce production from our plants.



Uncertain legislative and regulatory outcomes result in a wide range of potential expenditures. Currently, we have identified the potential for up to $345
million of expenditures for environmental projects over approximately ten years. In addition to the capital investment, were we to install such equipment, we anticipate that we would incur a significant annual expense to operate and maintain the
equipment and the operation of the equipment would reduce net production from our plants.



The degree to which we will need to reduce emissions and the timing of when such emissions control equipment may be required is uncertain. Both the timing and the nature of required investments depend on specific
outcomes that result from interpretation of regulations, new regulations, legislation, and the resolution of the New Source Review described below. Although we expect to recover such costs through our rates, we can provide no assurance that we would
be able to fully and timely recover all or any increased costs relating to environmental compliance. If we were unable to recover these associated costs, we could have a material and adverse effect on our consolidated financial condition or results
of operations.



EPA New Source Review



The EPA is conducting investigations nationwide to determine whether
modifications at coal-fired power plants are subject to New Source Review requirements or New Source Performance Standards under Section 114(a) of the Clean Air Act (Section 114). These investigations focus on whether projects at coal-fired plants
were routine maintenance or whether the projects were substantial modifications that could have reasonably been expected to result in a significant net increase in emissions. The Clean Air Act requires companies to obtain permits and, if necessary,
install control equipment to remove emissions when making a major modification or a change in operation if either is expected to cause a significant net increase in emissions.



The EPA has requested information from Westar Energy under Section 114 regarding projects and maintenance activities that
have been conducted since 1980 at the three coal-fired plants it operates. On January 22, 2004, the EPA notified Westar Energy that certain projects completed at Jeffrey Energy Center violated pre-construction permitting requirements of the Clean
Air Act.



10



---

##### Table of Contents

Westar Energy is in discussions with the EPA concerning this matter in an attempt to reach a settlement.
Westar Energy expects that any settlement with the EPA could require Westar Energy to update or install emissions controls at Jeffrey Energy Center over an agreed upon number of years. Additionally, Westar Energy might be required to update or
install emissions controls at its other coal-fired plants, pay fines or penalties, or take other remedial action. Together, these costs could be material. The EPA informed Westar Energy that it has referred this matter to the Department of Justice
(DOJ) for it to consider whether to pursue an enforcement action in federal district court. We believe that costs related to updating or installing emissions controls would qualify for recovery through rates. If Westar Energy were to reach a
settlement with the EPA, Westar Energy may be assessed a penalty. The penalty could be material and may not be recovered in rates. We anticipate that a portion of any of these potential costs would be allocated to us.



7. ICE STORM



On January 4 and 5, 2005, substantially all of our service territory experienced a severe ice storm. The storm interrupted
electric service in a large portion of our service territory and damaged a significant portion of our electric distribution system. On March 22, 2005, we received an accounting authority order from the KCC that allows us to accumulate and defer for
recovery the maintenance costs related to system restoration, as well as accumulate and record a carrying charge on the deferred balance. As of March 31, 2005, we have recorded $22.6 million as a regulatory asset related to these costs. Recovery of
these costs is to be considered as part of our rate review as discussed in Note 3, Rate Matters and Regulation.



8. LEGAL PROCEEDINGS



We are involved in various legal, environmental and regulatory proceedings. We believe that adequate provisions have been made and accordingly believe
that the ultimate disposition of such matters will not have a material adverse effect on our consolidated financial position or results of operations.



9. RELATED PARTY TRANSACTIONS



Our cash management function, including cash receipts and disbursements, is performed by Westar Energy. An intercompany account is used to record receipts
and disbursements between Westar Energy and us and between WR Receivables and us. The net amount payable to affiliates was approximately $63.2 million at March 31, 2005 and approximately $91.5 million at December 31, 2004 as reflected on our
consolidated balance sheets.



Westar Energy provides all
employees we use. Certain operating expenses have been allocated to us from Westar Energy. These expenses are allocated, depending on the nature of the expense, based on allocation studies, net investment, number of customers and/or other
appropriate factors. We believe such allocation procedures are reasonable.



We declared and paid dividends of $20.0 million to Westar Energy for the three months ended March 31, 2005 and $25.0 million for the same period of 2004.



11



---

##### Table of Contents

10. DEBT



On May 6, 2005, Westar Energy amended and restated its revolving credit facility dated March 12, 2004 to extend the term and reduce borrowing costs. The
amended and restated revolving credit facility matures on May 6, 2010. The facility allows Westar Energy to borrow up to an aggregate of $350.0 million, including letters of credit up to a maximum aggregate amount of $100.0 million. So long as there
is no default or event of default under the revolving credit facility, Westar Energy may elect to increase the aggregate amount of borrowings under this facility to $500 million by increasing the commitment of one or more lenders who have agreed to
such increase, or by adding one or more new lenders with the consent of the Administrative Agent and letter of credit issuing bank, which will not be unreasonably withheld. All borrowings under the revolving credit facility are secured by our first
mortgage bonds.



11. WCNOC INTERIM PENSION AND POST-RETIREMENT BENEFIT
DISCLOSURE



As a co-owner of WCNOC, we are indirectly
responsible for 47% of the liabilities and expenses associated with the WCNOC pension and post-retirement plans. We accrue our 47% of the WCNOC cost of pension and post-retirement benefits during the years an employee provides service. The following
table summarizes the net periodic costs for our 47% share of the WCNOC pension and post-retirement benefit plans.



|                                           |  |                  |       |   |                          |   |      |      |  |      |     |  |   |    
|------------------------------------------ |  | ---------------- | ----- | - | ------------------------ | - | ---- | ---- |  | ---- | --- |  | - | ---
|                                           |  | Pension Benefits |       |   | Post-retirement Benefits
|Three Months Ended March 31,               |  | 2005             |       |   | 2004                     |   |      | 2005 |  | 2004
|                                           |  | (In Thousands)  
|Components of Net Periodic Cost (Benefit): |  |                  |       |   |                          |   |      |      |  |      |     |  |   |    
|Service cost                               |  | $                | 713   |   |                          | $ | 620  |      |  | $    | 59  |  | $ | 62 
|Interest cost                              |  |                  | 943   |   |                          |   | 795  |      |  |      | 96  |  |   | 87 
|Expected return on plan assets             |  |                  | (788  | ) |                          |   | (670 | )    |  |      |    |  |   |   
|Amortization of:                           |  |                  |       |   |                          |   |      |      |  |      |     |  |   |    
|Transition obligation, net                 |  |                  | 14    |   |                          |   | 14   |      |  |      | 15  |  |   | 15 
|Prior service costs                        |  |                  | 8     |   |                          |   | 7    |      |  |      |    |  |   |   
|Loss, net                                  |  |                  | 339   |   |                          |   | 195  |      |  |      | 42  |  |   | 36 
|                                           |  |                  |       |   |                          |   |      |      |  |      |     |  |   |    
|Net periodic cost                          |  | $                | 1,229 |   |                          | $ | 961  |      |  | $    | 212 |  | $ | 200
|                                           |  |                  |       |   |                          |   |      |      |  |      |     |  |   |    



12



---

##### Table of Contents

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



INTRODUCTION



We are a regulated electric utility in Kansas and a wholly owned subsidiary of Westar Energy. We provide rate-regulated electric service, together with
the electric utility operations of Westar Energy, using the name Westar Energy. We produce, transmit and sell electricity at retail in Kansas and at wholesale in a multi-state region in the central United States under the regulation of the KCC and
FERC.



The following managements discussion and analysis
reflects several significant events that affected our consolidated results of operations over the course of the three months ended March 31, 2005. We experienced an ice storm in our service territory in January 2005 causing us to incur approximately
$32.0 million in costs to restore our system. As of March 31, 2005, we have recorded $22.6 million as a regulatory asset related to the associated maintenance costs.



As you read Managements Discussion and Analysis, please refer to our condensed consolidated financial statements and
the accompanying notes, which contain our operating results.



CRITICAL
ACCOUNTING ESTIMATES



Our discussion and analysis of
financial conditions and results of operations are based on our condensed consolidated financial statements, which have been prepared in conformity with GAAP. Note 2 of the Notes to Consolidated Financial Statements, Summary of Significant
Accounting Policies, contains a summary of our significant accounting policies, many of which require the use of estimates and assumptions by management. The policies highlighted in our 2004 Form 10-K have an impact on our reported results
that may be material due to the levels of judgment and subjectivity necessary to account for uncertain matters or susceptibility of matters subject to change.



From December 31, 2004 through March 31, 2005, we have not experienced any significant changes in our critical accounting estimates. For additional
information, see our 2004 Form 10-K.



OPERATING RESULTS



We evaluate operating results based on income from operations. We have
various classifications of sales, defined as follows:



Retail: Sales of energy to residential, commercial and industrial customers.



Other retail: Sales of energy for lighting public streets and highways, net of revenues reserved for rebates.



Tariff-based wholesale: Sales of energy to electric cooperatives, municipalities and other electric utilities, the rate for which is generally
based on cost as prescribed by FERC tariffs. Also includes changes in valuations of contracts that have yet to settle.



Market-based wholesale: Sales of energy to other wholesale customers, the rate for which is based on prevailing market rates as allowed by our FERC
approved market-based tariff. Also includes changes in valuations of contracts that have yet to settle.



13



---

##### Table of Contents

Energy marketing: Includes (1) financially settled products and physical transactions sourced
outside our control area; and (2) changes in valuations for contracts that have yet to settle that may not be recorded either in cost of fuel or tariff- or market-based wholesale revenues.



Transmission: Reflects transmission revenues received, including
those based on a tariff with the Southwest Power Pool (SPP).



Other: Miscellaneous electric revenues including ancillary service revenues and rent from electric property leased to others.



Regulated electric utility sales are significantly impacted by, among other factors, rate regulation, customer conservation efforts, wholesale demand, the
overall economy of our service area, the weather and competitive forces. Our wholesale sales are impacted by, among other factors, demand, cost of fuel and purchased power, price volatility and available generation capacity.



Three Months Ended March 31, 2005 Compared to Three Months Ended March 31,
2004: Below we discuss our operating results for the three months ended March 31, 2005 as compared to the results for the three months ended March 31, 2004. Changes in results of operations are as follows:



|                                    |  |                              |         |   |      |   |         |  |   |          |   |  |        |  
|----------------------------------- |  | ---------------------------- | ------- | - | ---- | - | ------- |  | - | -------- | - |  | ------ | -
|                                    |  | Three Months Ended March 31, |        
|                                    |  | 2005                         |         |   | 2004 |   | Change  |  |   | % Change |  
|                                    |  | (In Thousands)               |        
|SALES:                              |  |                              |         |   |      |   |         |  |   |          |   |  |        |  
|Residential                         |  | $                            | 46,930  |   |      | $ | 47,533  |  | $ | (603     | ) |  | (1.3   | )
|Commercial                          |  |                              | 38,615  |   |      |   | 37,312  |  |   | 1,303    |   |  | 3.5    |  
|Industrial                          |  |                              | 35,789  |   |      |   | 36,937  |  |   | (1,148   | ) |  | (3.1   | )
|Other retail                        |  |                              | 260     |   |      |   | 249     |  |   | 11       |   |  | 4.4    |  
|                                    |  |                              |         |   |      |   |         |  |   |          |   |  |        |  
|Total Retail Sales                  |  |                              | 121,594 |   |      |   | 122,031 |  |   | (437     | ) |  | (0.4   | )
|Tariff-based wholesale              |  |                              | 4,998   |   |      |   | 4,478   |  |   | 520      |   |  | 11.6   |  
|Market-based wholesale              |  |                              | 29,224  |   |      |   | 22,235  |  |   | 6,989    |   |  | 31.4   |  
|Energy marketing                    |  |                              | (1,916  | ) |      |   | 971     |  |   | (2,887   | ) |  | (297.3 | )
|Transmission (a)                    |  |                              | 9,277   |   |      |   | 9,337   |  |   | (60      | ) |  | (0.6   | )
|Other                               |  |                              | 2,593   |   |      |   | 3,039   |  |   | (446     | ) |  | (14.7  | )
|                                    |  |                              |         |   |      |   |         |  |   |          |   |  |        |  
|Total Sales                         |  |                              | 165,770 |   |      |   | 162,091 |  |   | 3,679    |   |  | 2.3    |  
|                                    |  |                              |         |   |      |   |         |  |   |          |   |  |        |  
|OPERATING EXPENSES:                 |  |                              |         |   |      |   |         |  |   |          |   |  |        |  
|Fuel used for generation (b)        |  |                              | 44,513  |   |      |   | 45,310  |  |   | (797     | ) |  | (1.8   | )
|Purchased power                     |  |                              | 4,655   |   |      |   | 9,731   |  |   | (5,076   | ) |  | (52.2  | )
|Operating and maintenance           |  |                              | 60,000  |   |      |   | 54,963  |  |   | 5,037    |   |  | 9.2    |  
|Depreciation and amortization       |  |                              | 22,986  |   |      |   | 22,753  |  |   | 233      |   |  | 1.0    |  
|Selling, general and administrative |  |                              | 20,900  |   |      |   | 17,743  |  |   | 3,157    |   |  | 17.8   |  
|                                    |  |                              |         |   |      |   |         |  |   |          |   |  |        |  
|Total Operating Expenses            |  |                              | 153,054 |   |      |   | 150,500 |  |   | 2,554    |   |  | 1.7    |  
|                                    |  |                              |         |   |      |   |         |  |   |          |   |  |        |  
|INCOME FROM OPERATIONS              |  | $                            | 12,716  |   |      | $ | 11,591  |  | $ | 1,125    |   |  | 9.7    |  
|                                    |  |                              |         |   |      |   |         |  |   |          |   |  |        |  

---

|(a) | Transmission: For the three months ended March 31, 2005, our transmission costs were approximately $8.3 million. This amount, less approximately $0.6 million that was
retained by the SPP as administration cost, was returned to us as revenues. For the three months ended March 31, 2004, our transmission costs were approximately $8.3 million with an administration cost of approximately $0.5 million retained by the
SPP.
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(b) | Fuel used for generation: Includes cost of fuel burned, changes in fair value of fuel contracts and allocated net dispatch costs, which are net changes or benefits related to
energy transactions allocated to us by our parent.
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



14



---

##### Table of Contents

The following table reflects changes in electric sales volumes, as measured by thousands of megawatt
hours (MWh) of electricity. No sales volumes are shown for energy marketing, transmission, or other. Energy marketing activities are unrelated to the electricity we generate.



|                       |  |                              |  |       |  |        |   |  |          |  
|---------------------- |  | ---------------------------- |  | ----- |  | ------ | - |  | -------- | -
|                       |  | Three Months Ended March 31, | 
|                       |  | 2005                         |  | 2004  |  | Change |   |  | % Change |  
|                       |  | (Thousands of MWh)           | 
|Residential            |  | 640                          |  | 651   |  | (11    | ) |  | (1.7     | )
|Commercial             |  | 615                          |  | 600   |  | 15     |   |  | 2.5      |  
|Industrial             |  | 814                          |  | 845   |  | (31    | ) |  | (3.7     | )
|Other retail           |  | 11                           |  | 10    |  | 1      |   |  | 10.0     |  
|                       |  |                              |  |       |  |        |   |  |          |  
|Total Retail           |  | 2,080                        |  | 2,106 |  | (26    | ) |  | (1.2     | )
|Tariff-based wholesale |  | 134                          |  | 100   |  | 34     |   |  | 34.0     |  
|Market-based wholesale |  | 702                          |  | 720   |  | (18    | ) |  | (2.5     | )
|                       |  |                              |  |       |  |        |   |  |          |  
|Total                  |  | 2,916                        |  | 2,926 |  | (10    | ) |  | (0.3     | )
|                       |  |                              |  |       |  |        |   |  |          |  



Tariff-based wholesale
sales increased due primarily to the increase in MWh of electricity sold. Westar Energys combined system had more energy available during the three months ended March 31, 2005 than it did during the same period of 2004 because of unplanned
outages and reduced operating capability experienced at various times throughout the three months ended March 31, 2004 at Jeffrey Energy Center.



Market-based wholesale sales increased due to an approximate 35% increase in the average price per MWh. The decrease in energy marketing was due primarily
to having a net loss position in 2005 as compared with a net gain position in 2004 in the settlement and the fair value of positions receiving mark-to-market accounting treatment.



We used approximately 16% less fuel that, despite higher average fuel prices, decreased our fuel expense by approximately
15%. Westar Energy operates our combined system based on what is most economical for the combined companies at any given time. When less expensive power is available from Westar Energys central and northeastern Kansas control area, the amount
of costs for that power we are allocated is typically higher than when less expensive power is available in our control area. This was the case in 2005 due primarily to outages at LaCygne Generating Station and Wolf Creek in 2005 that caused us to
rely on our other sources of power. The effect of these outages and the allocated dispatch costs was partially offset by the unplanned outages or reduced operating capability experienced at various times at Jeffrey Energy Center in 2004. Fuel used
for generation decreased approximately $6.1 million, which was offset by higher allocated costs of $4.9 million and higher expense related to emissions allowances.



Purchased power expenses decreased due primarily to a 71% decrease in volumes purchased. As discussed in the previous
paragraph, because of the unplanned outages or reduced operating capability, the available resources of Westar Energys combined system and because, at times, it was more economical to purchase power than to operate our available generating
units during 2004, we had higher purchased power expense in the three months ended March 31, 2004.



Operating and maintenance expense increased due primarily to an increase in maintenance expenses at LaCygne Generating Station that was partially offset
by a decline in the maintenance expense at Jeffrey Energy Center due to the outage work at that plant in 2004. The remainder of the increase was caused primarily by increased maintenance of our distribution system, primarily related to higher tree
trimming expense.



Selling, general and administrative expenses
increased for the three months ended March 31, 2005 due primarily to an increase in uncollectible accounts and increases in general administrative expenses. Partially offsetting the increase in selling, general and administrative expenses was a
decline in employee-related expenses allocated to us from Westar Energy. In the three months ended March 31, 2004, Westar Energy expensed amounts related to the vesting of previously awarded restricted share units, a portion of which was allocated
to us.



15



---

##### Table of Contents

LIQUIDITY AND CAPITAL RESOURCES



Most of our cash requirements consist of capital and maintenance expenditures designed to improve and maintain facilities
that provide electric service and meet future customer service requirements. Our ability to provide the cash or debt to fund our capital expenditures depends on many things, including available resources, Westar Energys and our financial
condition and current market conditions.



We expect our
internally generated cash, advances from Westar Energy, availability of cash through Westar Energys credit facilities and access to capital markets to be sufficient to fund operations and debt service payments. We do not maintain independent
short-term credit facilities and rely on Westar Energy for short-term cash needs. If Westar Energy is unable to borrow under its credit facilities, we could have a short-term liquidity problem that could require us to obtain a credit facility for
our short-term cash needs and that could result in higher borrowing costs.



On May 6, 2005, Westar Energy amended and restated its revolving credit facility dated March 12, 2004 to extend the term and reduce borrowing costs. The amended and restated revolving credit facility matures on May 6,
2010. The facility allows Westar Energy to borrow up to an aggregate of $350.0 million, including letters of credit up to a maximum aggregate amount of $100.0 million. So long as there is no default or event of default under the revolving credit
facility, Westar Energy may elect to increase the aggregate amount of borrowings under this facility to $500 million by increasing the commitment of one or more lenders who have agreed to such increase, or by adding one or more new lenders with the
consent of the Administrative Agent and letter of credit issuing bank, which will not be unreasonably withheld. All borrowings under the revolving credit facility are secured by our first mortgage bonds.



A default by Westar Energy or any of its significant subsidiaries under other
indebtedness totaling more than $25 million is a default under this facility. Westar Energy is required to maintain a consolidated indebtedness to consolidated capitalization ratio not greater than 0.65 to 1.0 at all times. Available liquidity under
the facility is not impacted by a decline in Westar Energys credit ratings. Also, the facility does not contain a material adverse effect clause requiring Westar Energy to represent, prior to each borrowing, that no event resulting in a
material adverse effect has occurred.



OFF-BALANCE SHEET ARRANGEMENTS



From December 31, 2004 through March 31, 2005, there have
been no material changes in our off-balance sheet arrangements. For additional information, see our 2004 Form 10-K.



CONTRACTUAL OBLIGATIONS



From December 31, 2004 through March 31, 2005, there have been no material changes outside the ordinary course of business in our contractual obligations.
For additional information, see our 2004 Form 10-K.



OTHER INFORMATION



Payment of Rebates



On July 21, 2003, Westar Energy and we entered into a Stipulation and
Agreement (Stipulation) with the KCC staff and other intervenors in the docket considering the Debt Reduction Plan. The KCC issued an order approving the Stipulation on July 25, 2003. The principal terms of the Stipulation included a requirement for
Westar Energy and us to pay customer rebates of $10.5 million on May 1, 2005 and $10.0 million on January 1, 2006. We currently estimate we will be responsible for 47% of the rebate. Ultimate allocation will be determined by the KCC. We will rebate
approximately $5.0 million in May 2005, which will appear as credits on customers billing statements in May and June 2005.



16



---

##### Table of Contents

Fair Value of Energy Marketing Contracts



The tables below show the fair value of energy marketing and fuel contracts that were outstanding at March 31, 2005, their
sources and maturity periods:



|                                                                                                               |  |                         |        |  
|-------------------------------------------------------------------------------------------------------------- |  | ----------------------- | ------ | -
|                                                                                                               |  | Fair Value of Contracts |       
|                                                                                                               |  | (In Thousands)          |       
|Net fair value of contracts outstanding at the beginning of the period                                         |  | $                       | 1,625  |  
|Contracts outstanding at the beginning of the period that were realized or otherwise settled during the period |  |                         | (1,305 | )
|Changes in fair value of contracts outstanding at the beginning and end of the period                          |  |                         | (2,090 | )
|Changes in fair value of new contracts entered into during the period                                          |  |                         | 287    |  
|                                                                                                               |  |                         |        |  
|Fair value of contracts outstanding at the end of the period                                                   |  | $                       | (1,483 | )
|                                                                                                               |  |                         |        |  



The sources of the
fair values of the financial instruments related to these contracts are summarized in the following table:



|                                                                                              |  |                                          |        |   |                           |   |        |                    |  |   |     |  
|--------------------------------------------------------------------------------------------- |  | ---------------------------------------- | ------ | - | ------------------------- | - | ------ | ------------------ |  | - | --- | -
|                                                                                              |  | Fair Value of Contracts at End of Period |       
|Sources of Fair Value                                                                         |  | Total Fair Value                         |        |   | Maturity Less Than 1 Year |   |        | Maturity 1-3 Years | 
|                                                                                              |  | (In Thousands)                           |       
|Prices provided by other external sources (swaps and forwards)                                |  | $                                        | (2,260 | ) |                           | $ | (2,196 | )                  |  | $ | (64 | )
|Prices based on the Black Option Pricing model (options and other) (a)                        |  |                                          | 777    |   |                           |   | 777    |                    |  |   |    |  
|                                                                                              |  |                                          |        |   |                           |   |        |                    |  |   |     |  
|Total fair value of contracts outstanding                                                     |  | $                                        | (1,483 | ) |                           | $ | (1,419 | )                  |  | $ | (64 | )
|                                                                                              |  |                                          |        |   |                           |   |        |                    |  |   |     |  
|(a)    The
Black Option Pricing model is a variant of the Black-Scholes Option Pricing model. | 



New Accounting Pronouncement



In March 2005, the FASB issued FIN 47, Accounting
for Conditional Asset Retirement Obligations. FIN 47 clarifies that the term conditional asset retirement obligation as used in SFAS No. 143, refers to a legal obligation to perform an asset retirement activity in which the timing
or method of settlement are conditional on a future event. An entity is required to recognize a liability for the fair value of a conditional asset retirement obligation if the fair value of the liability can be reasonably estimated. Uncertainty
about the timing or method of settlement of a conditional asset retirement obligation should be factored into the measurement of the liability when sufficient information exists. FIN 47 also clarifies when an entity would have sufficient information
to reasonably estimate the fair value of an asset retirement obligation. FIN 47 is effective for the year ended December 31, 2005. We are currently evaluating what impact FIN 47 will likely have on our consolidated results of operations.



17



---

##### Table of Contents

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK



Information required by Item 3 is omitted pursuant to General Instruction H(2)(c) to Form 10-Q.



ITEM 4. CONTROLS AND PROCEDURES



We are a wholly owned subsidiary of Westar Energy and all evaluations of our controls and procedures were conducted in conjunction with those undertaken by Westar Energy. Under the supervision and with the participation of Westar
Energys management, and including our president and our principal financial and accounting officer, we have evaluated the effectiveness of the design and operation of our disclosure controls and procedures as defined in Rule 13a-15(e) of the
Securities Exchange Act of 1934. These controls and procedures are designed to ensure that material information relating to the company is communicated to our president and our principal financial and accounting officer. Based on that evaluation,
our president and our principal financial and accounting officer concluded that, as of March 31, 2005, our disclosure controls and procedures are effective to ensure that information required to be disclosed by us in reports that we file or submit
under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the time periods specified in Securities and Exchange Commission rules and forms.



There were no changes in our internal controls over financial reporting during the three months ended March 31, 2005 that
have materially affected or are reasonably likely to materially affect our internal control over financial reporting.



18



---

##### Table of Contents

KANSAS GAS AND ELECTRIC COMPANY



PART II. Other Information



ITEM 1. LEGAL PROCEEDINGS



We are
involved in various legal, environmental and regulatory proceedings. We believe adequate provisions have been made and accordingly believe that the ultimate disposition of such matters will not have a material adverse effect upon our consolidated
financial position or results of operations.



ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS



Information required by Item 4 is omitted pursuant to General Instruction H(2)(b) to Form 10-Q.



ITEM 3. DEFAULTS UPON SENIOR SECURITIES



Information required by Item 4 is omitted pursuant to General Instruction H(2)(b) to Form 10-Q.



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



Information required by Item 4 is omitted pursuant to General Instruction H(2)(b) to Form 10-Q.



ITEM 5. OTHER INFORMATION



None



ITEM 6. EXHIBITS



|      |  |                                                                                                                                                                                                                           
|----- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|4     |  | Forty-Fourth Supplemental Indenture dated May 6, 2005 between Kansas Gas and Electric Company and BNY Midwest Trust Company, as Trustee                                                                                   
|      | 
|31(a) |  | Certification of Principal Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 certifying the quarterly report provided for the period ended March 31,
2005                                       
|      | 
|31(b) |  | Certification of Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 certifying the quarterly report provided for the period ended March 31,
2005                                       
|      | 
|32    |  | Certifications pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 certifying the quarterly report provided for the quarter ended March 31, 2005 (furnished and not to be considered
filed as part of the Form 10-Q)



19



---

##### Table of Contents

SIGNATURE



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.





|      |  |              |  |  |  |                                 |  |                             
|----- |  | ------------ |  |  |  | ------------------------------- |  | ----------------------------
|      |  |              |  |  |  | KANSAS GAS AND ELECTRIC COMPANY
|      |  |              |  | 
|Date: |  | May 10, 2005 |  |  |  | By:                             |  | /s/ Mark A. Ruelle          
|      |  |              |  |  |  |                                 |  | Mark A. Ruelle,             
|      |  |              |  |  |  |                                 |  | Vice President and Treasurer



20