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 June 30, 2005

or [ ] TRANSITION REPORT PURSUANT SECTION
 13 OR 15(d) OF THE SECURITIESEXCHANGE ACT OF 1934

For the transition period from _______ to _______

|CommissionFile Number |  | Registrant, State of Incorporation,Address and Telephone Number                                                                               |  | I.R.S. EmployerIdentification Number
|--------------------- |  | --------------------------------------------------------------------------------------------------------------------------------------------- |  | ------------------------------------
|
|001-32206             |  | GREAT PLAINS ENERGY INCORPORATED
(A Missouri Corporation)1201 Walnut StreetKansas City, Missouri 64106(816) 556-2200www.greatplainsenergy.com |  | 43-1916803                          
|1-707                 |  | KANSAS CITY POWER & LIGHT COMPANY
(A Missouri Corporation)1201 Walnut StreetKansas City, Missouri 64106(816) 556-2200www.kcpl.com             |  | 44-0308720                          

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. Great Plains Energy Incorporated  Yes  X
   No  _       Kansas City Power & Light
Company  Yes  _    No  X

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

As of August 1, 2005, the number of
shares outstanding of (i) Great Plains Energys common stock was 74,645,747 and (ii)
Kansas City Power & Light Companys common stock was one, which was held by Great
Plains Energy Incorporated.

Great Plains Energy Incorporated and
Kansas City Power & Light Company separately file this combined Quarterly Report on
Form 10-Q. Information contained herein relating to an individual registrant and its
subsidiaries is filed by such registrant on its own behalf. Each registrant makes
representations only as to information relating to itself and its subsidiaries.

This report should be read in its
entirety. No one section of the report deals with all aspects of the subject matter. It
should be read in conjunction with the consolidated financial statements and related notes
and with the managements discussion and analysis included in the companies
2004 Form 10-K.

# CAUTIONARY STATEMENTS
REGARDING CERTAIN FORWARD-LOOKING INFORMATION

Statements made in this report
that are not based on historical facts are forward-looking, may involve risks and
uncertainties, and are intended to be as of the date when made. In connection with the
safe harbor provisions of the Private Securities Litigation Reform Act of 1995, the
registrants are providing a number of important factors that could cause actual results to
differ materially from the provided forward-looking information. These important factors
include:

- future economic conditions in the regional, national and international markets, including but not limited to regional and
     national wholesale electricity markets
- market perception of the energy industry and the Company
- changes in business strategy, operations or development plans
- effects of current or proposed state and federal legislative and regulatory actions or developments, including, but not
     limited to, deregulation, re-regulation and restructuring of the electric utility industry and constraints placed on the
     Company's actions by the Public Utility Holding Company Act of 1935
- adverse changes in applicable laws, regulations, rules, principles or practices governing tax, accounting and environmental
     matters including, but not limited to, air quality
- financial market conditions and performance including, but not limited to, changes in interest rates and in availability and
     cost of capital and the effects on the Company's pension plan assets and costs
- credit ratings
- inflation rates
- effectiveness of risk management policies and procedures and the ability of counterparties to satisfy their contractual
     commitments
- impact of terrorist acts
- increased competition including, but not limited to, retail choice in the electric utility industry and the entry of new
     competitors
- ability to carry out marketing and sales plans
- weather conditions including weather-related damage
- cost, availability, quality and deliverability of fuel
- ability to achieve generation planning goals and the occurrence of unplanned generation outages
- delays in the anticipated in-service dates of additional generating capacity
- nuclear operations
- ability to enter new markets successfully and capitalize on growth opportunities in non-regulated businesses
- performance of projects undertaken by the Company's non-regulated businesses and the success of efforts to invest in and
     develop new opportunities and
- other risks and uncertainties.

This list of factors is not
all-inclusive because it is not possible to predict all factors.

2

# GLOSSARY OF TERMS

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

|Abbreviation or Acronym | Definition                                                                                                            
|----------------------- | ----------------------------------------------------------------------------------------------------------------------
|35 Act                  | Public Utility Holding Company Act of 1935, as amended                                                                
|CAIR                    | Clean Air Interstate Rule                                                                                             
|Clean Air Act           | Clean Air Act Amendments of 1990                                                                                      
|CO2                     | Carbon Dioxide                                                                                                        
|Compact                 | Central Interstate Low-Level Radioactive Waste Compact                                                                
|Company                 | Great Plains Energy Incorporated and its subsidiaries                                                                 
|Consolidated KCP&L      | KCP&L and its wholly owned subsidiaries                                                                               
|Digital Teleport        | Digital Teleport, Inc.                                                                                                
|DOE                     | Department of Energy                                                                                                  
|DTI                     | DTI Holdings, Inc. and its subsidiaries, Digital Teleport, Inc.     and Digital Teleport of Virginia, Inc.            
|EBITDA                  | Earnings before interest, income taxes, depreciation and amortization                                                 
|EEI                     | Edison Electric Institute                                                                                             
|EIRR                    | Environmental Improvement Revenue Refunding                                                                           
|EPA                     | Environmental Protection Agency                                                                                       
|EPS                     | Earnings per common share                                                                                             
|FASB                    | Financial Accounting Standards Board                                                                                  
|FELINE PRIDESSM         | Flexible Equity Linked Preferred Increased Dividend Equity Securities,     a service mark of Merrill Lynch & Co., Inc.
|FERC                    | The Federal Energy Regulatory Commission                                                                              
|FIN                     | Financial Accounting Standards Board Interpretation                                                                   
|GPP                     | Great Plains Power Incorporated, a wholly owned subsidiary     of Great Plains Energy                                 
|Great Plains Energy     | Great Plains Energy Incorporated and its subsidiaries                                                                 
|Holdings                | DTI Holdings, Inc.                                                                                                    
|HSS                     | Home Service Solutions Inc., a wholly owned subsidiary of KCP&L                                                       
|IEC                     | Innovative Energy Consultants Inc., a wholly owned subsidiary     of Great Plains Energy                              
|KCC                     | The State Corporation Commission of the State of Kansas                                                               
|KCP&L                   | Kansas City Power & Light Company, a wholly owned subsidiary     of Great Plains Energy                               
|KLT Gas                 | KLT Gas Inc., a wholly owned subsidiary of KLT Inc.                                                                   
|KLT Gas portfolio       | KLT Gas natural gas properties                                                                                        
|KLT Inc.                | KLT Inc., a wholly owned subsidiary of Great Plains Energy                                                            
|KLT Investments         | KLT Investments Inc., a wholly owned subsidiary of KLT Inc.                                                           
|KLT Telecom             | KLT Telecom Inc., a wholly owned subsidiary of KLT Inc.                                                               
|KW                      | Kilowatt                                                                                                              
|kWh                     | Kilowatt hour                                                                                                         
|MAC                     | Material Adverse Change                                                                                               
|MISO                    | Midwest Independent Transmission System Operator, Inc.                                                                
|MPSC                    | Missouri Public Service Commission                                                                                    
|MW                      | Megawatt                                                                                                              
|MWh                     | Megawatt hour                                                                                                         
|NEIL                    | Nuclear Electric Insurance Limited                                                                                    
|NOx                     | Nitrogen Oxide                                                                                                        

3

|Abbreviation or Acronym | Definition                                                                           
|----------------------- | -------------------------------------------------------------------------------------
|NRC                     | Nuclear Regulatory Commission                                                        
|NSPS                    | New Source Performance Standards                                                     
|OCI                     | Other Comprehensive Income                                                           
|PJM                     | PJM Interconnection                                                                  
|Receivables Company     | Kansas City Power & Light Receivables Company, a wholly owned     subsidiary of KCP&L
|RTO                     | Regional Transmission Organization                                                   
|SEC                     | Securities and Exchange Commission                                                   
|SECA                    | Seams Elimination Charge Adjustment                                                  
|SE Holdings             | SE Holdings, L.L.C.                                                                  
|Services                | Great Plains Energy Services Incorporated                                            
|SFAS                    | Statement of Financial Accounting Standards                                          
|SO2                     | Sulfur Dioxide                                                                       
|SPP                     | Southwest Power Pool, Inc.                                                           
|Strategic Energy        | Strategic Energy, L.L.C., a subsidiary of KLT Energy Services                        
|T - Lock                | Treasury Lock                                                                        
|WCNOC                   | Wolf Creek Nuclear Operating Corporation                                             
|Wolf Creek              | Wolf Creek Generating Station                                                        
|Worry Free              | Worry Free Service, Inc., a wholly owned subsidiary of HSS                           

4

|PART I - FINANCIAL INFORMATIONItem 1. Consolidated Financial Statements                              
|-----------------------------------------------------------------------------------------------------
|GREAT PLAINS ENERGYConsolidated Balance Sheets(Unaudited)                                            
|
|                                                                                                     
|(thousands)                                                                                          
|
|Cash and cash equivalents                                                                            
|Restricted cash                                                                                      
|Receivables, net                                                                                     
|Fuel inventories, at average cost                                                                    
|Materials and supplies, at average cost                                                              
|Deferred income taxes                                                                                
|Assets of discontinued operations                                                                    
|Derivative instruments                                                                               
|Other                                                                                                
|                                                                                                     
|Total                                                                                                
|                                                                                                     
|Nonutility Property and Investments                                                                  
|Affordable housing limited partnerships                                                              
|Nuclear decommissioning trust fund                                                                   
|Other                                                                                                
|                                                                                                     
|Total                                                                                                
|                                                                                                     
|Utility Plant, at Original Cost                                                                      
|Electric                                                                                             
|Less-accumulated depreciation                                                                        
|                                                                                                     
|Net utility plant in service                                                                         
|Construction work in progress                                                                        
|Nuclear fuel, net of amortization of $107,284 and $127,631                                           
|                                                                                                     
|Total                                                                                                
|                                                                                                     
|Deferred Charges and Other Assets                                                                    
|Regulatory assets                                                                                    
|Prepaid pension costs                                                                                
|Goodwill                                                                                             
|Other                                                                                                
|                                                                                                     
|Total                                                                                                
|                                                                                                     
|Total                                                                                                
|                                                                                                     
|The accompanying Notes to Consolidated Financial Statements are an integral part of these statements.

5

|GREAT PLAINS ENERGYConsolidated Balance Sheets(Unaudited)                                            
|-----------------------------------------------------------------------------------------------------
|
|                                                                                                     
|(thousands)                                                                                          
|
|Notes payable                                                                                        
|Commercial paper                                                                                     
|Current maturities of long-term debt                                                                 
|EIRR bonds classified as current                                                                     
|Accounts payable                                                                                     
|Accrued taxes                                                                                        
|Accrued interest                                                                                     
|Accrued payroll and vacations                                                                        
|Accrued refueling outage costs                                                                       
|Supplier collateral                                                                                  
|Liabilities of discontinued operations                                                               
|Other                                                                                                
|                                                                                                     
|Total                                                                                                
|                                                                                                     
|Deferred Credits and Other Liabilities                                                               
|Deferred income taxes                                                                                
|Deferred investment tax credits                                                                      
|Asset retirement obligations                                                                         
|Pension liability                                                                                    
|Other                                                                                                
|                                                                                                     
|Total                                                                                                
|                                                                                                     
|Capitalization                                                                                       
|Common shareholders' equity                                                                          
|Common stock-150,000,000 shares authorized without par value                                         
|74,671,646 and 74,394,423 shares issued, stated value                                                
|Unearned compensation                                                                                
|Capital stock premium and expense                                                                    
|Retained earnings                                                                                    
|Treasury stock-32,084 and 28,488 shares, at cost                                                     
|Accumulated other comprehensive loss                                                                 
|                                                                                                     
|Total                                                                                                
|Cumulative preferred stock $100 par value                                                            
|3.80% - 100,000 shares issued                                                                        
|4.50% - 100,000 shares issued                                                                        
|4.20% - 70,000 shares issued                                                                         
|4.35% - 120,000 shares issued                                                                        
|                                                                                                     
|Total                                                                                                
|Long-term debt (Note 8)                                                                              
|                                                                                                     
|Total                                                                                                
|                                                                                                     
|Commitments and Contingencies (Note 11)                                                              
|                                                                                                     
|Total                                                                                                
|                                                                                                     
|The accompanying Notes to Consolidated Financial Statements are an integral part of these statements.

6

|GREAT PLAINS ENERGYConsolidated Statements of Income(Unaudited)                                      
|-----------------------------------------------------------------------------------------------------
|
|
|                                                                                                     
|Operating Revenues                                                                                   
|Electric revenues - KCP&L                                                                            
|Electric revenues - Strategic Energy                                                                 
|Other revenues                                                                                       
|                                                                                                     
|Total                                                                                                
|                                                                                                     
|Operating Expenses                                                                                   
|Fuel                                                                                                 
|Purchased power - KCP&L                                                                              
|Purchased power - Strategic Energy                                                                   
|Other                                                                                                
|Maintenance                                                                                          
|Depreciation and amortization                                                                        
|General taxes                                                                                        
|Gain on property                                                                                     
|                                                                                                     
|Total                                                                                                
|                                                                                                     
|Operating income                                                                                     
|Non-operating income                                                                                 
|Non-operating expenses                                                                               
|Interest charges                                                                                     
|                                                                                                     
|Income from continuing operations before income taxes,                                               
|minority interest in subsidiaries and loss from equity                                               
|investments                                                                                          
|Income taxes                                                                                         
|Minority interest in subsidiaries                                                                    
|Loss from equity investments, net of income taxes                                                    
|                                                                                                     
|Income from continuing operations                                                                    
|Discontinued operations, net of income taxes (Note 7)                                                
|                                                                                                     
|Net income                                                                                           
|Preferred stock dividend requirements                                                                
|                                                                                                     
|Earnings available for common shareholders                                                           
|                                                                                                     
|Average number of common shares outstanding                                                          
|Basic and diluted earnings (loss) per common share                                                   
|Continuing operations                                                                                
|Discontinued operations                                                                              
|                                                                                                     
|Basic and diluted earnings per common share                                                          
|                                                                                                     
|Cash dividends per common share                                                                      
|                                                                                                     
|The accompanying Notes to Consolidated Financial Statements are an integral part of these statements.

7

|GREAT PLAINS ENERGYConsolidated Statements of Cash Flows(Unaudited)                                  
|-----------------------------------------------------------------------------------------------------
|
|                                                                                                     
|(thousands)                                                                                          
|Net income                                                                                           
|Less: Discontinued operations, net of income taxes                                                   
|                                                                                                     
|Income from continuing operations                                                                    
|Adjustments to reconcile income to net cash from operating activities:                               
|Depreciation and amortization                                                                        
|Amortization of:                                                                                     
|Nuclear fuel                                                                                         
|Other                                                                                                
|Deferred income taxes, net                                                                           
|Investment tax credit amortization                                                                   
|Loss from equity investments, net of income taxes                                                    
|Gain on property                                                                                     
|Minority interest in subsidiaries                                                                    
|Other operating activities (Note 4)                                                                  
|                                                                                                     
|Net cash from operating activities                                                                   
|                                                                                                     
|Cash Flows from Investing Activities                                                                 
|Utility capital expenditures                                                                         
|Allowance for borrowed funds used during construction                                                
|Purchases of investments                                                                             
|Purchases of nonutility property                                                                     
|Proceeds from sale of assets and investments                                                         
|Purchase of additional indirect interest in Strategic Energy                                         
|Hawthorn No. 5 partial insurance recovery                                                            
|Hawthorn No. 5 partial litigation settlements                                                        
|Other investing activities                                                                           
|                                                                                                     
|Net cash from investing activities                                                                   
|                                                                                                     
|Cash Flows from Financing Activities                                                                 
|Issuance of common stock                                                                             
|Issuance of long-term debt                                                                           
|Issuance fees                                                                                        
|Repayment of long-term debt                                                                          
|Net change in short-term borrowings                                                                  
|Dividends paid                                                                                       
|Other financing activities                                                                           
|                                                                                                     
|Net cash from financing activities                                                                   
|                                                                                                     
|Net Change in Cash and Cash Equivalents                                                              
|Cash and Cash Equivalents from Continuing Operations                                                 
|at Beginning of Year                                                                                 
|                                                                                                     
|Cash and Cash Equivalents from Continuing Operations                                                 
|at End of Year                                                                                       
|                                                                                                     
|The accompanying Notes to Consolidated Financial Statements are an integral part of these statements.

8

|GREAT PLAINS ENERGYConsolidated Statements of Common Shareholders' Equity(Unaudited)                 
|-----------------------------------------------------------------------------------------------------
|
|                                                                                                     
|
|(thousands, except share amounts)                                                                    
|Beginning balance                                                                                    
|Issuance of common stock                                                                             
|Issuance of restricted common stock                                                                  
|                                                                                                     
|Ending balance                                                                                       
|                                                                                                     
|Unearned Compensation                                                                                
|Beginning balance                                                                                    
|Issuance of restricted common stock                                                                  
|Forfeiture of restricted common stock                                                                
|Compensation expense recognized                                                                      
|                                                                                                     
|Ending balance                                                                                       
|                                                                                                     
|Capital Stock Premium and Expense                                                                    
|Beginning balance                                                                                    
|Issuance of common stock                                                                             
|FELINE PRIDESSM purchase contract                                                                    
|adjustment, allocated fees and expenses                                                              
|Other                                                                                                
|                                                                                                     
|Ending balance                                                                                       
|                                                                                                     
|Retained Earnings                                                                                    
|Beginning balance                                                                                    
|Net income                                                                                           
|Loss on reissuance of treasury stock                                                                 
|Dividends:                                                                                           
|Common stock                                                                                         
|Preferred stock - at required rates                                                                  
|Options                                                                                              
|                                                                                                     
|Ending balance                                                                                       
|                                                                                                     
|Treasury Stock                                                                                       
|Beginning balance                                                                                    
|Treasury shares acquired                                                                             
|Treasury shares reissued                                                                             
|                                                                                                     
|Ending balance                                                                                       
|                                                                                                     
|Accumulated Other Comprehensive Loss                                                                 
|Beginning balance                                                                                    
|Derivative hedging activity, net of tax                                                              
|Minimum pension obligation, net of tax                                                               
|                                                                                                     
|Ending balance                                                                                       
|                                                                                                     
|Total Common Shareholders' Equity                                                                    
|                                                                                                     
|The accompanying Notes to Consolidated Financial Statements are an integral part of these statements.

9

|GREAT PLAINS ENERGYConsolidated Statements of Comprehensive Income(Unaudited)                        
|-----------------------------------------------------------------------------------------------------
|
|
|                                                                                                     
|(thousands)                                                                                          
|Net income                                                                                           
|                                                                                                     
|Other comprehensive income                                                                           
|Gain on derivative hedging instruments                                                               
|Income taxes                                                                                         
|                                                                                                     
|Net gain on derivative hedging instruments                                                           
|Reclassification to expenses, net of tax                                                             
|                                                                                                     
|Derivative hedging activity, net of tax                                                              
|                                                                                                     
|Change in minimum pension obligation                                                                 
|Income taxes                                                                                         
|                                                                                                     
|Net change in minimum pension obligation                                                             
|                                                                                                     
|Comprehensive income                                                                                 
|                                                                                                     
|The accompanying Notes to Consolidated Financial Statements are an integral part of these statements.

10

|KANSAS CITY POWER & LIGHT COMPANYConsolidated Balance Sheets(Unaudited)                                                                          
|-------------------------------------------------------------------------------------------------------------------------------------------------
|
|                                                                                                                                                 
|(thousands)                                                                                                                                      
|
|Cash and cash equivalents                                                                                                                        
|Receivables, net                                                                                                                                 
|Fuel inventories, at average cost                                                                                                                
|Materials and supplies, at average cost                                                                                                          
|Deferred income taxes                                                                                                                            
|Prepaid expenses                                                                                                                                 
|Derivative instruments                                                                                                                           
|                                                                                                                                                 
|Total                                                                                                                                            
|                                                                                                                                                 
|Nonutility Property and Investments                                                                                                              
|Nuclear decommissioning trust fund                                                                                                               
|Other                                                                                                                                            
|                                                                                                                                                 
|Total                                                                                                                                            
|                                                                                                                                                 
|Utility Plant, at Original Cost                                                                                                                  
|Electric                                                                                                                                         
|Less-accumulated depreciation                                                                                                                    
|                                                                                                                                                 
|Net utility plant in service                                                                                                                     
|Construction work in progress                                                                                                                    
|Nuclear fuel, net of amortization of $107,284 and $127,631                                                                                       
|                                                                                                                                                 
|Total                                                                                                                                            
|                                                                                                                                                 
|Deferred Charges and Other Assets                                                                                                                
|Regulatory assets                                                                                                                                
|Prepaid pension costs                                                                                                                            
|Other                                                                                                                                            
|                                                                                                                                                 
|Total                                                                                                                                            
|                                                                                                                                                 
|Total                                                                                                                                            
|                                                                                                                                                 
|The disclosures regarding KCP&L included in the accompanying Notes to Consolidated Financial Statements are an integral part of these statements.

11

|KANSAS CITY POWER & LIGHT COMPANYConsolidated Balance Sheets(Unaudited)                                                                          
|-------------------------------------------------------------------------------------------------------------------------------------------------
|
|                                                                                                                                                 
|(thousands)                                                                                                                                      
|
|Notes payable to Great Plains Energy                                                                                                             
|Commercial paper                                                                                                                                 
|Current maturities of long-term debt                                                                                                             
|EIRR bonds classified as current                                                                                                                 
|Accounts payable                                                                                                                                 
|Accrued taxes                                                                                                                                    
|Accrued interest                                                                                                                                 
|Accrued payroll and vacations                                                                                                                    
|Accrued refueling outage costs                                                                                                                   
|Other                                                                                                                                            
|                                                                                                                                                 
|Total                                                                                                                                            
|                                                                                                                                                 
|Deferred Credits and Other Liabilities                                                                                                           
|Deferred income taxes                                                                                                                            
|Deferred investment tax credits                                                                                                                  
|Asset retirement obligations                                                                                                                     
|Pension liability                                                                                                                                
|Other                                                                                                                                            
|                                                                                                                                                 
|Total                                                                                                                                            
|                                                                                                                                                 
|Capitalization                                                                                                                                   
|Common shareholder's equity                                                                                                                      
|Common stock-1,000 shares authorized without par value                                                                                           
|1 share issued, stated value                                                                                                                     
|Retained earnings                                                                                                                                
|Accumulated other comprehensive loss                                                                                                             
|                                                                                                                                                 
|Total                                                                                                                                            
|Long-term debt (Note 8)                                                                                                                          
|                                                                                                                                                 
|Total                                                                                                                                            
|                                                                                                                                                 
|Commitments and Contingencies (Note 11)                                                                                                          
|                                                                                                                                                 
|Total                                                                                                                                            
|                                                                                                                                                 
|The disclosures regarding KCP&L included in the accompanying Notes to Consolidated Financial Statements are an integral part of these statements.

12

|KANSAS CITY POWER & LIGHT COMPANYConsolidated Statements of Income(Unaudited)                                                                    
|-------------------------------------------------------------------------------------------------------------------------------------------------
|
|
|                                                                                                                                                 
|(thousands)                                                                                                                                      
|Electric revenues                                                                                                                                
|Other revenues                                                                                                                                   
|                                                                                                                                                 
|Total                                                                                                                                            
|                                                                                                                                                 
|Operating Expenses                                                                                                                               
|Fuel                                                                                                                                             
|Purchased power                                                                                                                                  
|Other                                                                                                                                            
|Maintenance                                                                                                                                      
|Depreciation and amortization                                                                                                                    
|General taxes                                                                                                                                    
|(Gain) Loss on property                                                                                                                          
|                                                                                                                                                 
|Total                                                                                                                                            
|                                                                                                                                                 
|Operating income                                                                                                                                 
|Non-operating income                                                                                                                             
|Non-operating expenses                                                                                                                           
|Interest charges                                                                                                                                 
|                                                                                                                                                 
|Income before income taxes and minority interest                                                                                                 
|in subsidiaries                                                                                                                                  
|Income taxes                                                                                                                                     
|Minority interest in subsidiaries                                                                                                                
|                                                                                                                                                 
|Net income                                                                                                                                       
|                                                                                                                                                 
|The disclosures regarding KCP&L included in the accompanying Notes to Consolidated Financial Statements are an integral part of these statements.

13

|KANSAS CITY POWER & LIGHT COMPANYConsolidated Statements of Cash Flows(Unaudited)                                                                
|-------------------------------------------------------------------------------------------------------------------------------------------------
|
|                                                                                                                                                 
|(thousands)                                                                                                                                      
|Net income                                                                                                                                       
|Adjustments to reconcile income to net cash from operating activities:                                                                           
|Depreciation and amortization                                                                                                                    
|Amortization of:                                                                                                                                 
|Nuclear fuel                                                                                                                                     
|Other                                                                                                                                            
|Deferred income taxes, net                                                                                                                       
|Investment tax credit amortization                                                                                                               
|Gain on property                                                                                                                                 
|Minority interest in subsidiaries                                                                                                                
|Other operating activities (Note 4)                                                                                                              
|                                                                                                                                                 
|Net cash from operating activities                                                                                                               
|                                                                                                                                                 
|Cash Flows from Investing Activities                                                                                                             
|Utility capital expenditures                                                                                                                     
|Allowance for borrowed funds used during construction                                                                                            
|Purchases of investments                                                                                                                         
|Purchases of nonutility property                                                                                                                 
|Proceeds from sale of assets                                                                                                                     
|Hawthorn No. 5 partial insurance recovery                                                                                                        
|Hawthorn No. 5 partial litigation settlements                                                                                                    
|Other investing activities                                                                                                                       
|                                                                                                                                                 
|Net cash from investing activities                                                                                                               
|                                                                                                                                                 
|Cash Flows from Financing Activities                                                                                                             
|Net change in short-term borrowings                                                                                                              
|Dividends paid to Great Plains Energy                                                                                                            
|Equity contribution from Great Plains Energy                                                                                                     
|Issuance fees                                                                                                                                    
|                                                                                                                                                 
|Net cash from financing activities                                                                                                               
|                                                                                                                                                 
|Net Change in Cash and Cash Equivalents                                                                                                          
|Cash and Cash Equivalents at Beginning of Year                                                                                                   
|                                                                                                                                                 
|Cash and Cash Equivalents at End of Period                                                                                                       
|                                                                                                                                                 
|The disclosures regarding KCP&L included in the accompanying Notes to Consolidated Financial Statements are an integral part of these statements.

14

|KANSAS CITY POWER & LIGHT COMPANYConsolidated Statements of Common Shareholder's Equity(Unaudited)                                               
|-------------------------------------------------------------------------------------------------------------------------------------------------
|
|                                                                                                                                                 
|
|(thousands, except share amounts)                                                                                                                
|Beginning balance                                                                                                                                
|Equity contribution from Great Plains Energy                                                                                                     
|                                                                                                                                                 
|Ending balance                                                                                                                                   
|                                                                                                                                                 
|Retained Earnings                                                                                                                                
|Beginning balance                                                                                                                                
|Net income                                                                                                                                       
|Dividends:                                                                                                                                       
|Common stock held by Great Plains Energy                                                                                                         
|                                                                                                                                                 
|Ending balance                                                                                                                                   
|                                                                                                                                                 
|Accumulated Other Comprehensive Loss                                                                                                             
|Beginning balance                                                                                                                                
|Derivative hedging activity, net of tax                                                                                                          
|Minimum pension obligation, net of tax                                                                                                           
|                                                                                                                                                 
|Ending balance                                                                                                                                   
|                                                                                                                                                 
|Total Common Shareholder's Equity                                                                                                                
|                                                                                                                                                 
|The disclosures regarding KCP&L included in the accompanying Notes to Consolidated Financial Statements are an integral part of these statements.

15

|KANSAS CITY POWER & LIGHT COMPANYConsolidated Statements of Comprehensive Income(Unaudited)                                                      
|-------------------------------------------------------------------------------------------------------------------------------------------------
|
|
|                                                                                                                                                 
|(thousands)                                                                                                                                      
|Net income                                                                                                                                       
|                                                                                                                                                 
|Other comprehensive income                                                                                                                       
|Gain (loss) on derivative hedging instruments                                                                                                    
|Income taxes                                                                                                                                     
|                                                                                                                                                 
|Net gain (loss) on derivative hedging instruments                                                                                                
|Reclassification to expenses, net of tax                                                                                                         
|                                                                                                                                                 
|Derivative hedging activity, net of tax                                                                                                          
|                                                                                                                                                 
|Change in minimum pension obligation                                                                                                             
|Income taxes                                                                                                                                     
|                                                                                                                                                 
|Net change in minimum pension obligation                                                                                                         
|                                                                                                                                                 
|Comprehensive income                                                                                                                             
|                                                                                                                                                 
|The disclosures regarding KCP&L included in the accompanying Notes to Consolidated Financial Statements are an integral part of these statements.

16

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

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

# 1. ORGANIZATION

Great Plains Energy, a Missouri
corporation incorporated in 2001, is a public utility holding company registered with and
subject to the regulation of the Securities and Exchange Commission (SEC) under the Public
Utility Holding Company Act of 1935, as amended (35 Act). Great Plains Energy does not own
or operate any significant assets other than the stock of its subsidiaries.

Great Plains Energy has five direct
subsidiaries:

- KCP&L is an integrated, regulated electric utility, which provides electricity to customers primarily in the states of
         Missouri and Kansas.  KCP&L's wholly owned subsidiary, Home Service Solutions Inc. (HSS) sold its wholly owned subsidiary,
         Worry Free Service, Inc. (Worry Free) in February 2005.
- KLT Inc. is an intermediate holding company that primarily holds, directly or indirectly, interests in Strategic Energy,
         L.L.C. (Strategic Energy) and affordable housing limited partnerships.  KLT Inc. also wholly owns KLT Gas Inc. (KLT Gas).
         See Note 7 for additional information regarding KLT Gas discontinued operations.
- Great Plains Power Incorporated (GPP) focused on the development of wholesale generation.  During the second quarter of
         2005, GPP sold to KCP&L, at cost, all capital assets relating to the siting and permitting process for KCP&L's construction
         of Iatan No. 2.  GPP has no further plans for development of wholesale generation at this time.
- Innovative Energy Consultants Inc. (IEC) is an intermediate holding company that holds an indirect interest in Strategic
         Energy.  IEC does not own or operate any assets other than its indirect interest in Strategic Energy.  When combined with
         KLT Inc.'s indirect interest in Strategic Energy, the Company owns just under 100% of the indirect interest in Strategic
         Energy.  Strategic Energy provides competitive electricity supply services in several electricity markets offering retail
         choice.
- Great Plains Energy Services Incorporated (Services) was formed to provide services at cost to Great Plains Energy and its
         subsidiaries, including consolidated KCP&L, as a service company under the 35 Act.

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

17

# 2. CASH

Cash and Cash Equivalents Cash equivalents consist of highly
liquid investments with original maturities of three months or less. For Great Plains
Energy this includes Strategic Energys cash held in trust of $19.5 million and
$21.0 million at June 30, 2005, and December 31, 2004, respectively.

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

# 

Restricted CashStrategic Energy has entered into
Master Power Purchase and Sale Agreements with its power suppliers. Certain of these
agreements contain provisions whereby, to the extent Strategic Energy has a net exposure
to the purchased power supplier, collateral requirements are to be maintained. Collateral
posted in the form of cash to Strategic Energy is restricted by agreement, but would
become unrestricted in the event of a default by the purchased power supplier. Strategic
Energy had no restricted cash collateral at June 30, 2005. Restricted cash collateral was
$7.7 million at December 31, 2004.

# 3. BASIC AND DILUTED
EARNINGS PER COMMON SHARE CALCULATION

There was no significant dilutive
effect on Great Plains Energys EPS from other securities for the three months ended
and year to date June 30, 2005 and 2004. To determine basic EPS, preferred stock dividend
requirements are deducted from income from continuing operations and net income before
dividing by average number of common shares outstanding. The earnings (loss) per share
impact of discontinued operations, net of income taxes, is determined by dividing
discontinued operations, net of income taxes, by the average number of common shares
outstanding. Diluted EPS assumes the issuance of common shares applicable to stock
options, performance shares, restricted stock and FELINE PRIDESSM calculated
using the treasury stock method.

The following table reconciles Great
Plains Energys basic and diluted EPS from continuing operations.

|                                                   
|---------------------------------------------------
|
|
|                                                   
|(thousands, except per share amounts)              
|Income from continuing operations                  
|Less: preferred stock dividend requirements        
|                                                   
|Income available to common shareholders            
|                                                   
|Common Shares Outstanding                          
|Average number of common shares outstanding        
|Add: effect of dilutive securities                 
|                                                   
|Diluted average number of common shares outstanding
|                                                   
|Basic and diluted EPS from continuing operations   
|                                                   

As of June 30, 2005 and 2004, there
were no anti-dilutive shares applicable to stock options, performance shares or restricted
stock. As of June 30, 2005 and 2004, 6.5 million FELINE PRIDES had no dilutive effect
because the number of common shares to be issued in accordance with the

18

settlement rate,
assuming applicable market value equal to the average price during the period, would be
equal to the number of shares Great Plains Energy could re-purchase in the market at the
average price during the period.

In August 2005, the Board of
Directors declared a quarterly dividend of $0.415 per share on Great Plains Energys
common stock. The common dividend is payable September 20, 2005, to shareholders of record
as of August 29, 2005. The Board of Directors also declared regular dividends on Great
Plains Energys preferred stock, payable December 1, 2005, to shareholders of record
as of November 9, 2005.

# 4. SUPPLEMENTAL CASH
FLOW INFORMATION

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

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

Significant Non-Cash Items During the first quarter of 2005, HSS
completed the sale of Worry Free. As part of the transaction, HSS received cash of $0.3
million and notes receivable totaling $5.2 million, net of a $3.0 million allowance.

19

The
notes receivable had no effect on Great Plains Energys and consolidated
KCP&Ls cash flows with the exception of $0.1 million receipt of payments on the
notes during the second quarter of 2005.

# 5. RECEIVABLES

The Companys receivables are
detailed in the following table.

|                                                                                                                                                                  
|------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
|                                                                                                                                                                  
|(thousands)                                                                                                                                                       
|Customer accounts receivable (a) (b)                                                                                                                              
|Other receivables                                                                                                                                                 
|Allowance for doubtful accounts                                                                                                                                   
|                                                                                                                                                                  
|Consolidated KCP&L receivables                                                                                                                                    
|Other Great Plains Energy                                                                                                                                         
|Other receivables                                                                                                                                                 
|Allowance for doubtful accounts                                                                                                                                   
|                                                                                                                                                                  
|Great Plains Energy receivables                                                                                                                                   
|                                                                                                                                                                  
|(a)  At December 31, 2004, KCP&L's customer accounts receivable were sold
    to       Receivables Company.                                                       
|(b)  Customer accounts receivable included unbilled receivables of $49.2 million
          and $31.2 million at June 30, 2005 and December 31, 2004, respectively.

KCP&L had a revolving agreement,
which expired in January 2005, to sell all of its right, title and interest in the
majority of its customer accounts receivable to Kansas City Power & Light Receivables
Company (Receivables Company), which in turn sold most of the receivables to outside
investors. The expired agreement was structured as a true sale under which the creditors
of Receivables Company were entitled to be satisfied out of the assets of Receivables
Company prior to any value being returned to KCP&L or its creditors. Accounts
receivable sold under the expired revolving agreement totaled $84.9 million at December
31, 2004. As a result of the sale to outside investors, Receivables Company received up to
$70 million in cash, which was forwarded to KCP&L as consideration for its sale. At
December 31, 2004, Receivables Company had received $65.0 million in cash.

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

|                                   
|-----------------------------------
|
|
|                                   
|Gross proceeds on sale of          
|accounts receivable                
|Collections                        
|Loss on sale of accounts receivable
|Late fees                          
|                                   

Consolidated KCP&Ls other
receivables at June 30, 2005 and December 31, 2004, consisted primarily of receivables
from partners in jointly owned electric utility plants and wholesale sales receivables.
The December 31, 2004, balance also included accounts receivable held by Worry Free. Great
Plains Energys other receivables at June 30, 2005 and December 31, 2004, were
primarily the accounts receivable held by Strategic Energy, including unbilled receivables
of $101.4 million and $103.0 million, respectively.

20

In July 2005, KCP&L entered into
a new three-year revolving agreement to sell all of its retail electric accounts
receivable to Receivables Company, which in turn sold an undivided percentage ownership
interest in the accounts receivable to an outside investor. In accordance with Statement
of Financial Accounting Standards (SFAS) No. 140, Accounting for Transfers and
Servicing of Financial Assets and Extinguishment of Liabilities, the agreements
qualify as a sale under which the creditors of Receivables Company are entitled to be
satisfied out of the assets of Receivables Company prior to any value being returned to
KCP&L or its creditors. As a result of the July 2005 sale to an outside investor,
Receivables Company received $70 million in cash, which was forwarded to KCP&L as
consideration for its sale. The new agreement allows for a maximum outstanding principal
amount sold to the outside investor of $100 million during the period June 1 through
October 31, and $70 million during the period November 1 through May 31 of each year.

# 6. ACQUIRED INTANGIBLE
ASSETS

In May 2004, Great Plains Energy,
through IEC, completed its purchase of an additional 11.45% indirect interest in Strategic
Energy bringing Great Plains Energys indirect ownership interest in Strategic Energy
to just under 100%. The acquired share of intangible assets and related liabilities are
detailed in the following table.

|                             
|-----------------------------
|
|                             
|
|                             
|Amortized intangible assets  
|Supply contracts             
|Customer relationships       
|Asset information systems    
|                             
|Total                        
|Unamortized intangible assets
|Strategic Energy trade name  
|                             
|Total intangible assets      
|                             
|Amortized related liabilities
|Retail contracts             
|                             

Amortization expense for the acquired
share of intangible assets and related liabilities is detailed in the following tables.

|                        
|------------------------
|
|
|                        
|(millions)              
|Intangible assets       
|Related liabilities     
|                        
|Net amortization expense
|                        

21

|                                                                             
|-----------------------------------------------------------------------------
|
|                                                                             
|
|                                                                             
|(millions)                                                                   
|Intangible assets                                                            
|Related liabilities                                                          
|                                                                             
|Net amortization expense                                                     
|                                                                             
|(a)  Amount represents the remaining estimated amortization expense for 2005.

# 7. KLT GAS DISCONTINUED
OPERATIONS

In February 2004, the Board of
Directors approved the sale of the KLT Gas natural gas properties (KLT Gas portfolio) and
discontinuation of the gas business. Since the approval, the KLT Gas portfolio has been
reported as discontinued operations in accordance with SFAS No. 144 Accounting for
the Impairment or Disposal of Long-lived Assets. During 2004, KLT Gas completed
sales of substantially all of the KLT Gas portfolio. During the second quarter of 2005, a
legal reserve related to these discontinued operations was recorded. See Note 13 for more
information. At June 30, 2005, and December 31, 2004, KLT Gas had $2.7 million and $0.7
million of current assets and $6.4 million and $2.1 million of current liabilities
recorded in assets and liabilities from discontinued operations, respectively. The
following table summarizes the discontinued operations.

|                                            
|--------------------------------------------
|
|                                            
|(millions)                                  
|Revenues                                    
|                                            
|Loss from operations, including impairments,
|before income taxes                         
|Income taxes                                
|                                            
|Discontinued operations, net of income taxes
|                                            

The following table summarizes the
cash flows from the discontinued operations.

|                                              
|----------------------------------------------
|
|                                              
|(millions)                                    
|Net cash from operating activities            
|Net cash from investing activities            
|                                              
|Net change in cash and cash equivalents       
|Cash and cash equivalents at beginning of year
|                                              
|Cash and cash equivalents at end of year      
|                                              

22

# 8. CAPITALIZATION

Great Plains Energy and consolidated
KCP&Ls long-term debt is detailed in the following table.

|                                                                    
|--------------------------------------------------------------------
|
|                                                                    
|(thousands)                                                         
|General Mortgage Bonds                                              
|7.95%*** Medium-Term Notes                                          
|2.74%* and 2.26%** EIRR bonds                                       
|Senior Notes                                                        
|7.125%                                                              
|6.500%                                                              
|6.000%                                                              
|Unamortized discount                                                
|EIRR bonds                                                          
|2.29%*** Series A & B                                               
|2.38%*** Series C                                                   
|2.29%*** Series D                                                   
|2.10%** Combustion Turbine Synthetic Lease                          
|Current liabilities                                                 
|EIRR bonds classified as current                                    
|Current maturities                                                  
|                                                                    
|Total consolidated KCP&L excluding current liabilities              
|Other Great Plains Energy                                           
|4.25% FELINE PRIDES Senior Notes                                    
|7.71%* and 7.64%** Affordable Housing Notes                         
|Current maturities                                                  
|                                                                    
|Total consolidated Great Plains Energy excluding current maturities 
|                                                                    
|*  Weighted-average rate as of June 30, 2005                        
|**  Weighted-average rate as of December 31, 2004                   
|***  Weighted-average rate as of June 30, 2005 and December 31, 2004

KCP&L exercised its early
termination option in the Combustion Turbine Synthetic Lease and purchased the leased
property during the second quarter of 2005. The purchase was funded through the issuance
of commercial paper.

Amortization of Debt Expense
Great Plains Energys and
consolidated KCP&Ls amortization of debt expense is detailed in the following
table.

|                         
|-------------------------
|
|
|                         
|(millions)               
|Consolidated KCP&L       
|Other Great Plains Energy
|                         
|Total Great Plains Energy
|                         

Short-Term Borrowings
And Short-Term Bank Lines of CreditGreat Plains Energy has a $550
million revolving credit facility with a group of banks that expires in December 2009. A
default by Great Plains Energy or any of its significant subsidiaries of other

23

indebtedness totaling more
than $25.0 million is a default under the current facility.
Under the terms of this agreement, Great Plains Energy is required to maintain a
consolidated indebtedness to consolidated capitalization ratio, as defined in the
agreement, not greater than 0.65 to 1.00 at all times. At June 30, 2005, the Company was
in compliance with this covenant. At June 30, 2005, Great Plains Energy had $16.0 million
of outstanding borrowings with an interest rate of 3.98% and had issued letters of credit
totaling $6.5 million under the credit facility as credit support for Strategic
Energy. At December 31, 2004, Great Plains Energy had $20.0 million of outstanding
borrowings with an interest rate of 3.04% and had issued letters of credit totaling
$8.0 million under the credit facility as credit support for Strategic Energy.

KCP&L has a $250 million
revolving credit facility with a group of banks that expires in December 2009, to provide
support for its issuance of commercial paper and other general purposes. A default by
KCP&L on other indebtedness totaling more than $25.0 million is a default under the
current facility. Under the terms of the agreement, KCP&L is required to maintain a
consolidated indebtedness to consolidated capitalization ratio, as defined in the
agreement, not greater than 0.65 to 1.00 at all times. At June 30, 2005, KCP&L was in
compliance with this covenant. At June 30, 2005, KCP&L had $173.8 million of
commercial paper outstanding and no borrowings under the facility. The weighted-average
interest rate of the commercial paper was 3.33%. At December 31, 2004, KCP&L had no
short-term borrowings or commercial paper outstanding.

Strategic Energy has a $125 million
revolving credit facility with a group of banks that expires in June 2007. Great Plains
Energy has guaranteed $25.0 million of this facility. A default by Strategic Energy of
other indebtedness, as defined in the facility, totaling more than $7.5 million is a
default under the facility. Under the terms of this agreement, Strategic Energy is
required to maintain a minimum net worth of $62.5 million, a maximum funded indebtedness
to EBITDA ratio of 2.25 to 1.00, a minimum fixed charge coverage ratio of at least 1.05 to
1.00 and a minimum debt service coverage ratio of at least 4.00 to 1.00, as those terms
are defined in the agreement. In the event of a breach of one or more of these four
covenants, so long as no other default has occurred, Great Plains Energy may cure the
breach through a cash infusion, a guarantee increase or a combination of the two. At June
30, 2005, Strategic Energy was in compliance with these covenants. At June 30, 2005,
$72.5 million in letters of credit had been issued and there were no borrowings under
the agreement. At December 31, 2004, $69.2 million in letters of credit had been
issued and there were no borrowings under the agreement.

# 9. PENSION PLANS AND
OTHER EMPLOYEE BENEFITS

Pension Plans and Other
Employee BenefitsThe Company maintains defined benefit
pension plans for substantially all employees, including officers, of KCP&L, Services
and Wolf Creek Nuclear Operating Corporation (WCNOC). Pension benefits under these plans
reflect the employees compensation, years of service and age at retirement.

In addition to providing pension
benefits, the Company provides certain postretirement health care and life insurance
benefits for substantially all retired employees of KCP&L, Services and WCNOC. The
cost of postretirement benefits charged to KCP&L are accrued during an employees
years of service and recovered through rates.

24

The following tables provide the
components of net periodic benefit costs prior to the effects of capitalization and
sharing with joint-owners of power plants.

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

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

Equity Compensation The Companys Long-Term
Incentive Plan is an equity compensation plan approved by its shareholders. The Long-Term
Incentive Plan permits the grant of restricted stock, stock options, limited stock
appreciation rights and performance shares to officers and other employees of the Company
and its subsidiaries. In accordance with the provisions of SFAS No. 123, Accounting
for Stock-Based Compensation, compensation expense and accrued dividends related to
equity compensation are recognized over the stated vesting period. Forfeitures of equity
compensation are recognized when incurred and previously recorded compensation expense
related to the forfeited shares is reversed. The maximum number of shares of Great Plains
Energy common stock that can be issued under the plan is 3.0 million. At June 30, 2005,
2.0 million shares remained available for future issuance.

Performance SharesThe payment of performance shares is
contingent upon achievement of specific performance goals over a stated period of time as
approved by the Compensation Committee of the Companys Board of Directors. The
number of performance shares ultimately paid can vary from the number of shares initially
granted depending on company performance over stated vesting periods. Performance shares
have a value equal to the fair market value of the shares on the grant date with accruing
dividends. Year to date June 30, 2005, performance shares granted totaled 182,130; 17,024
of these shares were forfeited. Additionally, year to date June 30, 2005, 5,690 of the
19,313 granted performance shares outstanding at December 31, 2004, were forfeited.
Performance shares granted and outstanding totaled 178,729 at June 30, 2005. For the three
months ended and year to date June 30, 2005, the Company recognized compensation
expense of $0.4 million and $0.7 million, respectively, for performance shares and
reversed an insignificant amount of previously recognized compensation expense related to
forfeited shares. There was no compensation expense for performance shares for the same
periods of 2004.

25

Restricted Stock Restricted stock cannot be sold or
otherwise transferred by the recipient prior to vesting and has a value equal to the fair
market value of the shares on the grant date. Restricted stock granted year to date June
30, 2005, totaled 76,375 shares; 3,502 of these shares were forfeited. Restricted stock
shares issued in 2005 vest on a graded schedule over a stated period of time with accruing
reinvested dividends. For the three months ended and year to date June 30, 2005, the
Company recognized compensation expense of $0.4 million and $0.7 million, respectively,
for restricted stock and reversed an insignificant amount of previously recognized
compensation expense related to forfeited shares. For the same periods in 2004, the
Company recognized compensation expense of $0.1 million and $0.2 million, respectively.

Cash-Based Long-Term Incentives
In 2005, Strategic Energy initiated
long-term incentives designed to reward officers and key members of management with a cash
performance payment for achieving specific performance goals over a stated period of time,
commencing January 1, 2005. For the three months ended and year to date June 30,
2005, compensation expense of $0.4 million and $0.8 million, respectively, was recognized
for the cash-based incentives.

# 10. RELATED PARTY
TRANSACTIONS AND RELATIONSHIPS

Pursuant to a service agreement
approved by the SEC under the 35 Act, consolidated KCP&L receives various support and
administrative services from Services. These services are billed to consolidated KCP&L
at cost based on payroll and other expenses incurred by Services for the benefit of
consolidated KCP&L. These costs totaled $15.5 million and $30.9 million for the three
months ended and year to date June 30, 2005, respectively, and $15.3 million and
$31.0 million for the same periods in 2004. These costs consisted primarily of employee
compensation, benefits and fees associated with various professional services. At
June 30, 2005, and December 31, 2004, consolidated KCP&L had a net intercompany
payable to Services of $5.5 million and $9.2 million, respectively. On August 1, 2005,
approximately 80% of Services employees were transferred to KCP&L to better
align resources with the operating business, leaving 65 employees at Services.

# 11. COMMITMENTS AND
CONTINGENCIES

Nuclear Liability and Insurance
The owners of Wolf Creek, a nuclear
generating station, (Owners) maintain nuclear insurance for Wolf Creek in four areas:
liability, worker radiation, property and accidental outage. These policies contain
certain industry standard exclusions, including, but not limited to, ordinary wear and
tear, and war. Both the nuclear liability and property insurance programs subscribed to by
members of the nuclear power generating industry include industry aggregate limits for
non-certified acts of, as defined by the Terrorism Risk Insurance Act, terrorism-related
losses, including replacement power costs. An industry aggregate limit of $0.3 billion
exists for liability claims, regardless of the number of non-certified acts affecting Wolf
Creek or any other nuclear energy liability policy or the number of policies in place. An
industry aggregate limit of $3.2 billion plus any reinsurance recoverable by Nuclear
Electric Insurance Limited (NEIL), the Owners insurance provider, exists for property
claims, including accidental outage power costs for acts of terrorism affecting Wolf Creek
or any other nuclear energy facility property policy within twelve months from the date of
the first act. These limits are the maximum amount to be paid to members who sustain
losses or damages from these types of terrorist acts. For certified acts of terrorism, the
individual policy limits apply. In addition, industry-wide retrospective assessment
programs (discussed below) can apply once these insurance programs have been exhausted.

Liability Insurance Pursuant to the Price-Anderson Act,
the Owners are required to insure against public liability claims resulting from nuclear
incidents to the full limit of public liability, which is currently $10.8 billion. This

26

limit of liability consists of the
maximum available commercial insurance of $0.3 billion,
and the remaining $10.5 billion is provided through an industry-wide retrospective
assessment program mandated by the Nuclear Regulatory Commission (NRC). Under this
retrospective assessment program, the Owners can be assessed up to $100.6 million ($47.3
million, KCP&Ls 47% share) per incident at any commercial reactor in the
country, payable at no more than $10 million ($4.7 million, KCP&Ls 47% share)
per incident per year. This assessment is subject to an inflation adjustment based on the
Consumer Price Index and applicable premium taxes. This assessment also applies in excess
of our worker radiation claims insurance. In addition, the U.S. Congress could impose
additional revenue-raising measures to pay claims. If the $10.8 billion liability
limitation is insufficient, management believes the U.S. Congress will consider taking
whatever action is necessary to compensate the public for valid claims.

The Energy Policy Act of 2005, which
is expected to be signed by President Bush on August 8, 2005, includes the Price-Anderson
Amendments Act of 2005. The Price-Anderson Amendments Act of 2005 amends the
Price-Anderson Act to increase the annual limit on retrospective assessments from $10
million to $15 million per reactor per incident and reauthorizes the Price-Anderson Act
through 2025.

Property, Decontamination, Premature Decommissioning and Extra Expense Insurance 
The Owners carry decontamination liability, premature decommissioning liability and property damage insurance for Wolf
Creek totaling approximately $2.8 billion ($1.3 billion, KCP&Ls 47% share). NEIL
provides this insurance.

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

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

Under all NEIL policies, the Owners
are subject to retrospective assessments if NEIL losses, for each policy year, exceed the
accumulated funds available to the insurer under that policy. The estimated maximum amount
of retrospective assessments under the current policies could total about
$26.5 million ($12.4 million, KCP&Ls 47% share) per policy year.

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

Low-Level Waste The Low-Level Radioactive Waste
Policy Amendments Act of 1985 mandated that the various states, individually or through
interstate compacts, develop alternative low-level radioactive waste disposal facilities.
The states of Kansas, Nebraska, Arkansas, Louisiana and Oklahoma formed the Central
Interstate Low-Level Radioactive Waste Compact (Compact) and selected a site in northern
Nebraska to locate a disposal facility. WCNOC and the owners of the other five nuclear
units in the Compact provided most of the pre-construction financing for this project.
KCP&Ls net investment in the Compact was $7.4 million at June 30, 2005, and
December 31, 2004.

27

On December 18, 1998, the application
for a license to construct this project was denied. After the license denial, WCNOC, the
Compact Commission (Commission) and others filed a lawsuit in federal court contending
Nebraska officials acted in bad faith while handling the license application. In September
2002, the U.S. District Court Judge presiding over the lawsuit issued his decision in the
case finding that the State of Nebraska acted in bad faith in processing the license
application for a low-level radioactive waste disposal site in Nebraska and rendered a
judgment on behalf of the Commission in the amount of $151.4 million against the state.
After the U.S. Court of Appeals affirmed the decision, Nebraska and the Commission settled
the case by Nebraska agreeing to pay the Commission a one-time amount of $145.8
million. At the request of the Commission, WCNOC along with other members of the Compact,
filed with the Commission their claims for refund. On August 1, 2005, WCNOC received a
refund of $19.6 million ($9.2 million, KCP&Ls 47% share), including pre-judgment
interest and attorneys fees. The Commission continues to explore alternative
long-term waste disposal capability and will retain a portion of the settlement, above the
amounts refunded, until it determines what role it will take in the development of
alternative disposal capability.

Wolf Creek continues to dispose of
its low-level radioactive waste at the reopened disposal facility at Barnwell, South
Carolina. South Carolina intends to gradually decrease the amount of waste it allows from
outside its compact until around 2008 when it intends to no longer accept waste from
generators outside its compact. Wolf Creek remains able to dispose of some of its
radioactive waste at a facility in Utah. Although management is unable to predict when a
permanent disposal facility for Wolf Creek low-level radioactive waste might become
available, this issue is not expected to affect continued operation of Wolf Creek.

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

Environmental-related
legislation is continuously proposed before Congress. Such legislation typically includes
various compliance dates and compliance limits. Such legislation could have the potential
for a significant financial impact on KCP&L, including the installation of new
pollution control equipment to achieve compliance. However, KCP&L would seek recovery
of capital costs and expenses for such compliance through rates. KCP&L will continue
to monitor proposed legislation.

KCP&L operates in an
environmentally responsible manner and seeks to use current technology to avoid and treat
contamination. KCP&L regularly conducts environmental audits designed to ensure
compliance with governmental regulations and to detect contamination. Governmental bodies;
however, may impose additional or more restrictive environmental regulations that could
require substantial changes to operations or facilities at a significant cost. At June 30,
2005 and December 31, 2004, KCP&L had $0.3 million accrued for environmental
remediation expenses. The accrual covers water monitoring at one site. The amounts accrued
were established on an undiscounted basis and KCP&L does not currently have an
estimated time frame over which the accrued amounts may be paid out.

Discussed below are issues that may
require material expenditures to comply with environmental laws and regulations.
Expenditure estimates provided below include the accelerated environmental upgrade
expenditures contemplated in the State of Missouri Public Service Commission (MPSC) and
The State

28

Corporation Commission of the State of Kansas (KCC) agreements discussed in Note
12. KCP&Ls expectation is that any such expenditures will be recovered through
rates.

NOx and
SO2 Regulations - Clean Air Interstate Rule In the May 12, 2005, Federal
Register, the Environmental Protection Agency (EPA) published the Clean Air Interstate
Rule (CAIR), which requires reductions in SO2 and NOx emissions in
28 states including Missouri. This final regulation was effective July 11, 2005.

The reduction in both SO2and NOx emissions will be accomplished through establishment of permanent
statewide caps for NOx effective January 1, 2009, and SO2
effective January 1, 2010. More restrictive caps will be effective on January 1,
2015. KCP&Ls coal-fired plants located in Missouri are subject to CAIR, while
its coal-fired plants in Kansas are not.

KCP&L will need to incur
significant capital costs, purchase power or purchase emission allowances to implement the
emission reductions required by CAIR at its Missouri plants. Analysis of the regulations
indicates that selective catalytic reduction technology for NOx control and
scrubbers for SO2 control will likely be required for some of KCP&Ls
Missouri plants. Currently, KCP&L estimates that additional capital expenditures to
comply with these regulations on all existing Missouri plants could range from $470
million to $690 million. The timing of the installation of such control equipment is
currently being developed. KCP&L continues to refine these preliminary estimates and
explore alternatives. The ultimate cost of these regulations could be significantly
different from the amounts estimated above. As discussed below, certain of the control
technology for SO2 and NOx will also aid in the control of mercury.

KCP&L is currently allocated
approximately 50,000 tons of SO2 allowances per year to support its emissions
of approximately 50,000 tons per year. KCP&L has accumulated over 190,000 tons of
allocated SO2 allowances. KCP&L is permitted to sell excess SO2allowances in accordance with KCP&Ls comprehensive energy plan as approved
by the MPSC and KCC. See Note 12 for more information.

In the July 6, 2005, Federal
Register, the EPA published regulations on best available retrofit technology (BART) that
amended its July 1999 regional haze regulations regarding emission controls for industrial
facilities emitting air pollutants that reduce visibility. The BART regulations apply to
KCP&Ls coal-fired plants and are effective September 6, 2005. The BART
requirement directs state air quality agencies to identify whether emissions from sources
subject to BART are below limits set by the state, or whether retrofit measures are needed
to reduce the emissions below those limits. Based on the results of the state air quality
studies, it is anticipated that KCP&L could substantially achieve compliance at its
Missouri plants by making capital expenditures to comply with CAIR. Additional capital
expenditures to comply with the regulations at KCP&Ls Kansas plants could range
from $220 million to $360 million.

Mercury Emissions
In July 2000, the National Research
Council published its findings of a study under the Clean Air Act, which stated that power
plants that burn fossil fuels, particularly coal, generate the greatest amount of mercury
emissions from man-made sources. In the March 29, 2005, Federal Register, the EPA reversed
its December 2000 finding that it was appropriate and necessary to regulate
fossil fuel-fired power plants under section 112 of the Clean Air Act, concluding that the
earlier finding lacked foundation and that recent information demonstrates that it is not
appropriate or necessary to regulate fossil fuel-fired power plants under section 112. The
EPA therefore removed coal- and oil-fired power plants from the section 112(c) list. Under
section 112 of the Clean Air Act, the EPA would have been required to issue Maximum
Available Control Technology standards for affected facilities and would have been
prohibited from using cap and trade provisions for achieving compliance.

29

In the May 12, 2005, Federal
Register, the EPA published the Clean Air Mercury Rule, which regulates mercury emissions
from coal-fired power plants located in 48 states including Kansas and Missouri under the
New Source Performance Standards (NSPS) of the Clean Air Act. This final regulation was
effective July 18, 2005. This final rule establishes a market-based cap-and-trade program
that will reduce nationwide utility emissions of mercury in two phases. The first phase
cap is effective January 1, 2010, and establishes a permanent nationwide cap of 38 tons of
mercury for coal-fired power plants. The first phase cap is anticipated to be met by
KCP&L taking advantage of mercury reductions achieved through capital expenditures to
comply with CAIR and BART. The second phase is effective January 1, 2018, and establishes
a permanent nationwide cap of 15 tons of mercury for coal-fired power plants. When fully
implemented, this final rule will reduce utility emissions of mercury by nearly 70% from
current emissions of 48 tons per year.

Facilities will demonstrate
compliance with the standard by holding one allowance for each ounce of mercury emitted in
any given year and allowances will be readily transferable among all regulated facilities
nationwide. Under the cap and trade program, KCP&L will be able to purchase mercury
allowances or elect to install pollution control equipment to achieve compliance. While it
is expected that mercury allowances will be available in sufficient quantities for
purchase in the 2010-2018 timeframe, the significant reduction in the nationwide cap in
2018 may hamper KCP&Ls ability to obtain reasonably priced allowances beyond
2018. Therefore, capital expenditures may be required in the 2016-2018 timeframe to
install additional mercury pollution control equipment. If KCP&L were required to
install mercury control equipment on all of its coal-fired power plants, it is anticipated
that chemical injection would provide the required control. The incremental projected cost
to KCP&L, above the costs to comply with CAIR and BART, for mercury control ranges
from $10 million to $20 million. KCP&L is a participant in the Department of Energy
(DOE) project at the Sunflower Electric Holcomb plant to investigate control technology
options for mercury removal from coal-fired plants burning sub bituminous coal.

The EPAs actions to de-list
mercury under section 112 of the Clean Air Act and sign the Clean Air Mercury Rule remain
controversial and subject to challenge.

Carbon Dioxide At a December 1997 meeting in Kyoto,
Japan, delegates from 167 nations, including the U.S., agreed to a treaty (Kyoto Protocol)
that would require a 7% reduction in U.S. CO2 emissions below 1990 levels, a
nearly 30% cut from current levels. On March 28, 2001, the Bush administration announced
it will not negotiate implementation of the Kyoto Protocol and it will not send the Kyoto
Protocol to the U.S. Senate for ratification.

On February 14, 2002, President Bush
unveiled his Clear Skies Initiative, which included a climate change policy. The climate
change policy is a voluntary program that relies heavily on incentives to encourage
industry to voluntarily limit emissions. The strategy includes tax credits, energy
conservation programs, funding for research into new technologies, and a plan to encourage
companies to track and report their emissions so that companies could gain credits for use
in any future emissions trading program. The greenhouse strategy links growth in emissions
of greenhouse gases to economic output. The administrations strategy is intended to
reduce the greenhouse gas intensity of the U.S. economy by 18% over the next 10 years.
Greenhouse gas intensity measures the ratio of greenhouse gas emissions to economic output
as measured by Gross Domestic Product (GDP). Under this plan, as the economy grows,
greenhouse gases also would continue to grow, although at a slower rate than they would
have without these policies in place. When viewed per unit of economic output, the rate of
emissions would drop. The plan projects that the U.S. would lower its rate of greenhouse
gas emissions from an estimated 183 metric tons per $1 million of GDP in 2002 to 151
metric tons per $1 million of GDP by 2012.

30

On December 19, 2002, Great Plains
Energy joined the Power Partners through Edison Electric Institute (EEI). Power Partners
is a voluntary program with the DOE under which utilities commit to undertake measures to
reduce, avoid or sequester CO2 emissions. On January 17, 2003, the EEI sent a
letter to numerous Administration officials, in which the EEI committed to work with the
government over the next decade to reduce the power sectors CO2 emissions
per kWh generated (carbon intensity) by the equivalent of 3% to 5% of the current level.
On December 13, 2004, Power Partners entered into a cooperative umbrella MOU with the DOE.
This MOU contains supply and demand-side actions as well as offset projects that will be
undertaken to reduce the power sectors CO2 emissions per kWh generated
over the next decade consistent with the EEI commitment of 3% to 5%.

Air Particulate Matter and Ozone
In July 1997, the EPA revised ozone
and particulate matter air quality standards creating a new eight-hour ozone standard and
establishing a new standard for particulate matter less than 2.5 microns (PM-2.5) in
diameter. These standards were challenged in Federal court. However, the courts ultimately
denied all state, industry and environmental groups petitions for review and thus upheld
as valid the EPAs new eight-hour ozone and PM-2.5 National Ambient Air Quality
Standards (NAAQS). On December 17, 2004, the EPA designated the Kansas City area as
attainment with respect to the PM-2.5 NAAQS. In the May 3, 2005, Federal Register, the EPA
published a final rule that designated Jackson, Platte, Clay and Cass counties in Missouri
and Johnson, Linn, Miami and Wyandotte counties in Kansas as attainment with respect to
the eight-hour ozone NAAQS effective June 2, 2005.

Water Use Regulations On February 16, 2004, the EPA
finalized the Phase II rule implementing Section 316(b) of the Clean Water Act
establishing standards for cooling water intake structures at existing facilities. The
final rule was published in the July 9, 2004, Federal Register with an effective date of
September 7, 2004. This final regulation is applicable to certain existing power producing
facilities that employ cooling water intake structures that withdraw 50 million gallons or
more per day and use 25% or more of that water for cooling purposes. KCP&L is required
to complete a Section 316(b) comprehensive demonstration study on each of its generating
facilities intake structures by the end of 2007. KCP&L plans to complete the
comprehensive demonstration studies by the end of 2006 at an expected cost of $0.3 million
to $0.5 million per facility. Depending on the outcome of the comprehensive demonstration
studies, facilities may be required to implement technological, operational or restoration
measures to achieve compliance. Compliance with the final rule is expected to be achieved
between 2011 and 2014. Until the Section 316(b) comprehensive demonstration studies are
completed, the impact of this final rule cannot be quantified.

Energy Policy Act of 2005 In July 2005, Congress passed the
Energy Policy Act of 2005, which is expected to be signed by President Bush on August 8,
2005. The Energy Policy Act of 2005 repeals, effective six months after enactment, the 35 Act, which currently places certain limitations
and approval requirements on registered public utility holding company systems with respect to matters such as aquisitions, business
combinations and activities, securities and affiliate transactions, and provides certain utility consumer protection authority to the Federal
Energy Regulatory Commission (FERC) and the states. Among other things, the Energy Policy
Act of 2005 also revises the Public Utility Regulatory Policy Act (PURPA) to eliminate
mandatory power purchase obligations; requires FERC to provide transmission investment
incentives; accelerates depreciation on transmission lines and pollution control
equipment; provides for the extension of tax credits for wind energy generation; requires
large municipals and cooperatives to provide open transmission access; and authorizes the
creation of an Electric Reliability Organization to establish and enforce mandatory
reliability standards subject to FERC oversight. Management has not yet fully determined
its impact on Great Plains Energy and consolidated KCP&L.

31

Pennsylvania Gross Receipts Tax Contingency
In January 2005, Strategic Energy was
advised by the Pennsylvania Department of Revenue of a potential tax deficiency relating
to state gross receipts tax on Strategic Energys Provider of Last Resort (POLR)
revenues from 2000 to 2002. During the first quarter of 2005, Strategic Energy reached a
final settlement with the State of Pennsylvania for all three years with no deficiency
related to the POLR revenues.

Income Tax ContingenciesManagement evaluates and records
contingent tax liabilities based on the probability of ultimately sustaining the tax
deductions or income positions. Management assesses the probabilities of successfully
defending the tax deductions or income positions based upon statutory, judicial or
administrative authority.

At June 30, 2005, and December 31,
2004, the Company had $13.5 million and $13.4 million, respectively, of liabilities
for contingencies related to tax deductions or income positions taken on the
Companys tax returns. Consolidated KCP&L had liabilities of $3.6 million
and $3.7 million at June 30, 2005, and December 31, 2004, respectively.
Management believes the tax deductions or income positions are properly treated on such
tax returns, but has recorded reserves based upon its assessment of the probabilities that
certain deductions or income positions may not be sustained when the returns are audited.
The tax returns containing these tax deductions or income positions are currently under
audit or will likely be audited. The timing of the resolution of these audits is
uncertain. If the positions are ultimately sustained, the Company will reverse these tax
provisions to income. If the positions are not ultimately sustained, the Company may be
required to make cash payments plus interest and/or utilize the Companys federal and
state credit carryforwards.

# 12.  REGULATORY MATTERS

Executing On Strategic Intent
KCP&L has continued to make
progress in implementing its comprehensive energy plan during 2005. Early in the third
quarter of 2005, KCP&L received approvals from the MPSC and KCC on its previously
filed agreements regarding its comprehensive energy plan. The agreements were reached
between KCP&L, the Commission staffs and certain key parties in the respective
jurisdictions. The following are brief descriptions of the major provisions of the
approved agreements.

- KCP&L will make energy infrastructure investments as summarized in the table below.

|                                                                                                         
|---------------------------------------------------------------------------------------------------------
|
|
|
|                                                                                                         
|(millions)                                                                                               
|Iatan No. 2                                                                                              
|                                                                                                         
|Wind Generation (a)                                                                                      
|Environmental                                                                                            
|Asset Management                                                                                         
|Customer Programs                                                                                        
|                                                                                                         
|                                                                                                         
|Total(b)                                                                                                 
|                                                                                                         
|(a)  The agreements call for the possible addition of another 100 MW of wind generation in 2008 if       
|supported by a detailed evaluation.                                                                      
|(b)  Includes approximately $60 million of investments related to a railroad bridge, a substation and    
|transmission lines.  Wind generation includes approximately $2 million of transmission and               
|distribution investment.  A decision regarding recovery of costs in Kansas related to the railroad bridge
|is deferred to future rate cases, which reduces the total to $1,231 million in the Kansas agreement.     

32

- KCP&L's current rates will remain in place until 2007, unless significant events impact KCP&L.  The first rate case will be filed in
2006, with any rate adjustments going into effect in 2007.  The last rate case defined in the agreements is expected to be filed in
2009, with rates effective near the time Iatan No. 2 is placed in service.  Two additional rate cases could be filed in 2007 and 2008
at KCP&L's discretion.
- The Kansas agreement allows KCP&L to recover, on a dollar-for-dollar basis with no profit to the company, actual fuel and purchased
power expense incurred through an energy cost adjustment that would take effect for Kansas in 2007.  Similarly, an interim energy
charge, based on forecasted costs and subject to customer refund, would take effect for Missouri customers in 2007.
- KCP&L may sell SO2 emission allowances during the term of the agreements.  The sales proceeds will be recorded as a regulatory
liability for ratemaking purposes and will be amortized over time.
- KCP&L's annual pension costs before amounts capitalized, for regulatory purposes, are established at $22 million until 2007 through
the creation of a regulatory asset or liability, as appropriate.
- The depreciable life of Wolf Creek Generating Station for Missouri regulatory purposes will be increased from 40 to 60 years.  The
Missouri agreement calls for $10.3 million, on an annual jurisdictional basis, of additional amortization expense to be recorded upon
the effective date of the agreement to offset the reduction in depreciation expense due to the change in depreciable life.  The
60-year Missouri depreciable life will match the current Kansas regulatory depreciable life.
- The agreements are intended to provide KCP&L with regulatory mechanisms to be able to recover the prudent costs of its investments as
they are placed in service and an opportunity to maintain targeted credit ratios over the five-year term of the agreements.

The agreements provide regulatory
clarity on certain items. However, normal regulatory risk will continue to exist as the
commissions establish rates in the rate cases, including, but not limited to, the actual
amount of costs to be recovered through rates, the return on equity, the capital structure
utilized and expenses to be recovered. KCP&L projects that, if the cost of the plan is
included in rate base, the rate increases to support the five year plan and increasing
operating expenses would average approximately 3-4% annually, over the same time period.

The comprehensive energy plan is
currently expected to be funded through a mix of sources as detailed in the following
table.

|                                            
|--------------------------------------------
|
|                                            
|Anticipated contribution from rate increases
|New equity financing                        
|Debt financing                              
|2007 equity from 2004 FELINE PRIDES         
|Internal funds and other                    
|                                            

Actual funding sources may differ
from this estimated mix and may be affected by various factors, including, but not limited
to, the results of the rate proceedings and market conditions.

33

Southwest Power Pool
Regional Transmission Organization  Under FERC Order 2000, KCP&L, as
an investor-owned utility, is strongly encouraged to join a FERC approved Regional
Transmission Organization (RTO). RTOs combine transmission operations of utility
businesses into regional organizations that schedule transmission services and monitor the
energy market to ensure regional transmission reliability and non-discriminatory access.
The Southwest Power Pool (SPP), of which KCP&L is a member, obtained approval from
FERC as an RTO in a January 24, 2005, order. KCP&L intends on participating in the SPP
RTO; however, state regulatory approvals are required. KCP&L anticipates making the
necessary applications to the MPSC and KCC during the third quarter of 2005. A
cost/benefit analysis was conducted under the direction of the SPP Regional State
Committee (composed of state commissions from the states where the SPP RTO operates) and
the final report was issued April 25, 2005. The analysis indicates the implementation of
an energy imbalance market within the SPP would provide net benefits of approximately $373
million over a 10-year period to the transmission-owning members of the SPP RTO; however,
there was no significant documented impact for KCP&L over the 10-year period. During
June 2005, SPP filed its plans for the energy imbalance market with FERC. It is currently
anticipated that the SPP energy imbalance market will start on May 1, 2006.

FERC Market Power Inquiry KCP&L is authorized by FERC to
sell wholesale power at market-based rates. As a condition of that authority, KCP&L
must submit to FERC an updated market power analysis every three years. KCP&L
submitted its most recent update in 2004. In December 2004, FERC issued an order finding
that KCP&L potentially has generation market power in its own control area and the
control area of the Kansas City, Kansas Board of Public Utilities (KCBPU). With respect to
those control areas, FERC instructed KCP&L (i) to submit a delivered price test (DPT)
analysis demonstrating that KCP&L does not possess generation market power; (ii)
propose generation market power mitigation measures; or (iii) accept FERCs
default cost-based rates for wholesale power sales or propose alternate cost-based rates
(with cost support for such rates).

In February 2005, KCP&L submitted
a DPT analysis demonstrating that, if KCP&Ls native load obligations are
considered, KCP&L does not possess market power in its control area or the control
area of KCBPU. KCBPU subsequently submitted comments to FERC contesting KCP&Ls
DPT analysis to which KCP&L has responded to FERC with expert testimony refuting
KCBPUs comments and reiterating that KCP&Ls submitted DPT analysis
demonstrates that KCP&L does not have generation market power in KCBPUs control
area. KCP&L anticipates that FERC will issue its final determination in this
proceeding by September 2005.

FERC explained in its December 2004
Order that all market-based, wholesale sales into KCP&Ls control area and
KCBPUs control area that occur between March 7, 2005, and the date FERC issues a
final order concerning KCP&Ls alleged market power are subject to refund if FERC
ultimately concludes that KCP&L possesses market power. Any such refund would be based
on the difference between wholesale sales at KCP&Ls market-based rates and sales
at FERC-determined cost-based rates. In addition, any such FERC determination would
require that any wholesale sales made by KCP&L within those control areas in the
future be made at cost-based rates. This restriction with regard to future wholesale sales
would continue at least until the time required for FERC to determine that the SPP market
satisfies FERCs market power concerns. The implementation of the SPP market is
currently anticipated to occur in May 2006.

KCP&L makes very few
market-based, wholesale sales to customers with loads that sink within KCP&Ls or
KCBPUs control areas. Therefore, even if FERC determines that KCP&L has market
power, and imposes the refund obligation and restriction on future wholesale sales
described above, the financial impact on KCP&L would not be material. However, it is
possible that FERC could define sales within KCP&Ls control area more broadly to
include wholesale sales to customers with loads that

34

sink outside KCP&Ls control
area, but where such customers choose to take delivery of the energy at a bus within
KCP&Ls control area. Although KCP&L would vigorously contest such a
definition, the estimated refunds to customers or loss of revenue to KCP&L in that
instance, absent mitigation, could be as high as approximately $30 million through the end
of 2005, which reflects current projections of prices and MWh sales. Management does not
consider this to be a probable outcome.

Seams Elimination Charge Adjustment
Seams Elimination Charge Adjustment
(SECA) is a transitional pricing mechanism intended to compensate transmission owners for
the revenue lost as a result of FERCs elimination of regional through and out rates
between PJM Interconnection (PJM) and the Midwest Independent Transmission System
Operator, Inc. (MISO) during a sixteen-month transition period from December 1, 2004
through March 31, 2006. Each relevant PJM and MISO zone and the load-serving entities
within that zone will be allocated a portion of the SECA based on transmission services
provided to that zone during 2002 and 2003. There are several unresolved matters and legal
challenges to the SECA that are pending before FERC on rehearing.

In the second quarter of 2005, PJM
and MISO began invoicing Strategic Energy for these charges, based on allocations in
compliance filings made by transmission owners and accepted by FERC, subject to refund and
adjustment. Strategic Energy recorded purchased power expenses totaling $7.2 million
in the second quarter of 2005 for these charges covering billings for the transition
period through June 30, 2005. The compliance filings allocate approximately $1 million of
charges per month, through March 2006. Management is unable to predict the outcome of
legal and regulatory challenges to the SECA mechanism.

Management believes that a number of
issues exist related to the SECA allocations. FERC established a schedule for resolution
of certain SECA issues, including the issue of shifting SECA allocations to the shipper.
The shipper in Strategic Energys situation is the wholesale supplier, which, through
a contract with Strategic Energy, delivered power to various zones in which Strategic
Energy was supplying retail customers. In most instances, the shipper was the purchaser of
through and out transmission service and therefore included the cost of the through and
out rate in its energy price. Management believes, but cannot assure, that Strategic
Energy should not ultimately be responsible for the current level of SECA charges.

# 13. LEGAL PROCEEDINGS

Strategic Energy On March 23, 2004, Robert C.
Haberstroh filed suit for breach of employment contract and violation of the Pennsylvania
Wage Payment Collection Act against Strategic Energy Partners, Ltd. (Partners), SE
Holdings, L.L.C. (SE Holdings) and Strategic Energy in the Court of Common Pleas of
Allegheny County, Pennsylvania. Mr. Haberstroh claims that he acquired an equity interest
in Partners under the terms of his employment agreement and that through a series of
transactions, Mr. Haberstrohs equity interest became an equity interest in SE
Holdings. In 2001, Mr. Haberstrohs employment was terminated and SE Holdings
redeemed his equity interest. Mr. Haberstroh is seeking the loss of his non-equity
compensation (including salary, bonus and benefits) and equity compensation and associated
distributions (his equity interest in SE Holdings).

Strategic Energy has filed a
counterclaim against Mr. Haberstroh for breach of contract. SE Holdings, and its direct
and indirect owners, have agreed to indemnify Strategic Energy and IEC against any
judgment or settlement of Mr. Haberstrohs claim that relates to his alleged equity
interest in SE Holdings, up to approximately $8 million plus any dividends or interest
received in relation to his alleged interest.

35

KLT GasOn July 28, 2004, KLT Gas received a
Notice and Demand for Arbitration Pursuant to Joint Operating Agreement from SWEPI LP
doing business as Shell Western E&P and formerly known as Shell Western E&P Inc.
(Shell). Prior to the October 2004 sale (with a July 1, 2004, effective date) of KLT
Gas working interests in certain oil and gas leases in Duval County, Texas to Shell,
KLT Gas had a 50% working interest in the leases. Shell held the other 50% working
interest and was the operator of the properties under a joint operating agreement, as
amended (JOA). Three groups of current or past lessors filed suit against Shell in Duval
County, Texas, alleging various claims against Shell. Additionally, Shell has been party
to ongoing proceedings before the Texas Railroad Commission relating to a well drilled on
acreage adjacent to the properties of Shell and KLT Gas mentioned above. Through
arbitration, Shell is seeking recovery from KLT Gas of 50% of the fees and costs incurred
in the three lawsuits and the Texas Railroad Commission proceedings and settlement
proceeds paid with respect to the three lawsuits, which Shell asserts totals approximately
$5.9 million for KLT Gas share, including interest. Shell is also seeking a
declaration that the fees and costs incurred and settlement proceeds paid, including any
fees and costs incurred in the future, are reimbursable expenses under the JOA. Shell is
seeking a ruling compelling KLT Gas to pay Shell immediately all sums deemed to be due
pursuant to the arbitration. On August 17, 2004, KLT Gas submitted its notice of defense
generally asserting that there is no contractual basis or implied duty for reimbursement
or contribution regarding the settlements and there is no contractual basis for
reimbursement or contribution regarding the Texas Railroad Commission proceedings. KLT Gas
also asserted counterclaims based upon misrepresentations and promissory estoppel, gross
negligence in imprudent operations, full accounting under the JOA and offset. The parties
completed arbitration during the second quarter of 2005 and the arbitrators ruling
is expected in August 2005. In the second quarter of 2005, KLT Gas recorded a legal
reserve related to these matters, which are reported as discontinued operations.

Hawthorn No. 5 Subrogation Litigation
KCP&L filed suit on April 3,
2001, in Jackson County, Missouri Circuit Court against multiple defendants who are
alleged to have responsibility for the Hawthorn No. 5 boiler explosion. KCP&L and
National Union Fire Insurance Company of Pittsburgh, Pennsylvania (National Union) have
entered into a subrogation allocation agreement under which recoveries in this suit are
generally allocated 55% to National Union and 45% to KCP&L. Certain defendants have
been dismissed from the suit and various defendants have settled with KCP&L. Trial of
this case with the one remaining defendant resulted in a March 2004 jury verdict finding
KCP&Ls damages as a result of the explosion were $452 million. After deduction
of amounts received from pre-trial settlements with other defendants and an amount for
KCP&Ls comparative fault (as determined by the jury), the verdict would have
resulted in an award against the defendant of approximately $97.6 million (of which
KCP&L would have received $33 million pursuant to the subrogation allocation agreement
after payment of attorneys fees). In response to post-trial pleadings filed by the
defendant, in May 2004 the trial judge reduced the award against the defendant to $0.2
million. Both KCP&L and the defendant have appealed this case to the Court of Appeals
for the Western District of Missouri.

KLT Telecom On December 31, 2001, a subsidiary of
KLT Telecom Inc. (KLT Telecom), DTI Holdings, Inc. (Holdings) and its subsidiaries Digital
Teleport Inc. (Digital Teleport) and Digital Teleport of Virginia, Inc., filed separate
voluntary petitions in the Bankruptcy Court for the Eastern District of Missouri for
reorganization under Chapter 11 of the U.S. Bankruptcy Code. DTI Holdings and its two
subsidiaries are collectively called DTI. In 2003, the Bankruptcy Court
confirmed the plan of reorganization for these three companies.

KLT Telecom originally acquired a 47%
interest in DTI in 1997. On February 8, 2001, KLT Telecom acquired control of DTI by
purchasing shares from another Holdings shareholder, Richard D. Weinstein (Weinstein),
increasing its ownership to 83.6%. In connection with this purchase, KLT Telecom granted

36

Weinstein a put option. The put option provided for the sale by Weinstein of his remaining
shares in Holdings to KLT Telecom during a period beginning September 1, 2003, and ending
August 31, 2005. The put option provides for an aggregate exercise price for these
remaining shares equal to their fair market value with an aggregate floor amount of $15
million. The floor amount of the put option was fully reserved during 2001. On September
2, 2003, Weinstein delivered to KLT Telecom notice of the exercise of his put option. KLT
Telecom declined to pay Weinstein any amount under the put option because, among other
things, the stock of Holdings had been cancelled and extinguished pursuant to the joint
Chapter 11 plan confirmed by the Bankruptcy Court. Weinstein has sued KLT Telecom for
allegedly breaching the put option and seeks damages of at least $15 million plus
statutory interest. In April 2005, summary judgment in the Weinstein litigation was
granted in favor of KLT Telecom, and Weinstein has appealed this judgment to the Missouri
Court of Appeals for the Eastern District. The $15 million reserve has not been reversed
pending the outcome of the appeal process.

# 14. ASSET RETIREMENT
OBLIGATIONS

In March 2005, Financial Accounting
Standards Board (FASB) issued FASB Interpretation (FIN) No. 47, Accounting for
Conditional Asset Retirement Obligations. FIN No. 47 clarifies that the term
conditional asset retirement obligation as used in FASB Statement No. 143,
Accounting for Asset Retirement Obligation, refers to a legal obligation to
perform an asset retirement activity in which the timing and/or method of settlement are
conditional on a future event that may or may not be within the control of the entity.
Accordingly, 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. Great Plains Energy and consolidated KCP&L are required to adopt
the provisions of FIN No. 47 by December 31, 2005, although earlier adoption is permitted.
Management is currently evaluating the impact of FIN No. 47, and has not yet determined
the impact on Great Plains Energy and consolidated KCP&Ls consolidated financial
statements.

# 15. SEGMENT AND RELATED
INFORMATION

Great Plains Energy Great Plains Energy has two
reportable segments based on its method of internal reporting, which generally segregates
the reportable segments based on products and services, management responsibility and
regulation. The two reportable business segments are KCP&L, an integrated, regulated
electric utility, which provides reliable, affordable electricity to customers; and
Strategic Energy, a competitive electricity supplier, which operates in several
electricity markets offering retail choice. Other includes the operations of HSS, GPP,
Services, all KLT Inc. operations other than Strategic Energy, unallocated corporate
charges and intercompany eliminations. Intercompany eliminations include insignificant
amounts of intercompany financing related activities. The summary of significant
accounting policies applies to all of the reportable segments. For segment reporting, each
segments income taxes include the effects of allocating holding company tax
benefits. Segment performance is evaluated based on net income.

37

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

|                             
|-----------------------------
|
|                             
|(millions)                   
|Operating revenues           
|Depreciation and amortization
|Interest charges             
|Income taxes                 
|Loss from equity investments 
|Discontinued operations      
|Net income (loss)            
|                             

|                             
|-----------------------------
|
|                             
|(millions)                   
|Operating revenues           
|Depreciation and amortization
|Interest charges             
|Income taxes                 
|Loss from equity investments 
|Discontinued operations      
|Net income (loss)            
|                             

|                             
|-----------------------------
|
|                             
|(millions)                   
|Operating revenues           
|Depreciation and amortization
|Interest charges             
|Income taxes                 
|Loss from equity investments 
|Discontinued operations      
|Net income (loss)            
|                             

|                             
|-----------------------------
|
|                             
|(millions)                   
|Operating revenues           
|Depreciation and amortization
|Interest charges             
|Income taxes                 
|Loss from equity investments 
|Discontinued operations      
|Net income (loss)            
|                             

38

|                                                                                
|--------------------------------------------------------------------------------
|
|                                                                                
|(millions)                                                                      
|Assets                                                                          
|Capital expenditures (a)                                                        
|                                                                                
|December 31, 2004                                                               
|Assets                                                                          
|Capital expenditures (a)                                                        
|                                                                                
|(a) Capital expenditures reflect year to date amounts for the periods presented.

Consolidated KCP&L The following tables reflect
summarized financial information concerning consolidated KCP&Ls reportable
segment. Other includes the operations of HSS and intercompany eliminations. Intercompany
eliminations include insignificant amounts of intercompany financing related activities.

|                             
|-----------------------------
|
|                             
|(millions)                   
|Operating revenues           
|Depreciation and amortization
|Interest charges             
|Income taxes                 
|Net income (loss)            
|                             

|                             
|-----------------------------
|
|                             
|(millions)                   
|Operating revenues           
|Depreciation and amortization
|Interest charges             
|Income taxes                 
|Net income (loss)            
|                             

|                             
|-----------------------------
|
|                             
|(millions)                   
|
|Operating revenues           
|Depreciation and amortization
|Interest charges             
|Income taxes                 
|Net income (loss)            
|                             

|                             
|-----------------------------
|
|                             
|(millions)                   
|Operating revenues           
|Depreciation and amortization
|Interest charges             
|Income taxes                 
|Net income (loss)            
|                             

39

|                                                                                
|--------------------------------------------------------------------------------
|
|                                                                                
|(millions)                                                                      
|Assets                                                                          
|Capital expenditures (a)                                                        
|                                                                                
|December 31, 2004                                                               
|Assets                                                                          
|Capital expenditures (a)                                                        
|                                                                                
|(a) Capital expenditures reflect year to date amounts for the periods presented.

# 16. DERIVATIVE
INSTRUMENTS

The Companys activities expose
it to a variety of market risks including interest rates and commodity prices. Management
has established risk management policies and strategies to reduce the potentially adverse
effects that the volatility of the markets may have on its operating results. The
Companys risk management activities, including the use of derivatives, are subject
to the management, direction and control of internal risk management committees. The
Companys interest rate risk management strategy uses derivative instruments to
adjust the Companys liability portfolio to optimize the mix of fixed and floating
rate debt within an established range. In addition, the Company uses derivative
instruments to hedge against future interest rate fluctuations on anticipated debt
issuances. The Company maintains commodity-price risk management strategies that use
derivative instruments to reduce the effects of fluctuations on purchased power expense
caused by commodity price volatility. Counterparties on commodity derivatives and interest
rate swap agreements expose the Company to credit loss in the event of nonperformance.
This credit loss is limited to the cost of replacing these contracts at current market
rates less the application of counterparty collateral held. Derivative instruments
measured at fair value are recorded on the balance sheet as an asset or liability. Changes
in the fair value are recognized currently in net income unless specific hedge accounting
criteria are met.

Fair Value Hedges 
Interest Rate Risk ManagementIn 2002, KCP&L remarketed its
1998 Series A, B, and D EIRR bonds totaling $146.5 million to a five-year fixed interest
rate of 4.75% ending October 1, 2007. Simultaneously with the remarketing, KCP&L
entered into an interest rate swap for the $146.5 million based on the London Interbank
Offered Rate (LIBOR) to effectively create a floating interest rate obligation. The
transaction is a fair value hedge with no ineffectiveness. Changes in the fair market
value of the swap are recorded on the balance sheet as an asset or liability with an
offsetting entry to the respective debt balances with no net impact on net income. The
fair value of the swap was a liability of $0.7 million and an asset of $0.7 million at
June 30, 2005 and December 31, 2004, respectively.

Cash Flow Hedges 
Treasury LockIn the second quarter of 2005,
KCP&L entered into a Treasury Lock (T-Lock) to hedge against interest rate
fluctuations on the U.S. Treasury rate component of long-term debt that KCP&L plans to
issue within the next six months. The T-Lock will be settled simultaneously with the
issuance of the long-term fixed rate debt. The T-Lock effectively removes the uncertainty
with respect to the U.S. Treasury rate component of the debt to be issued, thereby
enabling KCP&L to predict with greater assurance what its future interest costs on
that debt will be. The T-Lock is accounted for as a cash flow hedge and the fair value is
recorded as a current asset or liability with an offsetting entry to other comprehensive
income (OCI), to the extent the hedge is effective, until the forecasted transaction
occurs. No ineffectiveness has been recorded on the T-Lock. The pre-tax gain or loss on
the T-Lock recorded to OCI will be reclassified to interest expense over the life of the
future debt issuance.

40

Cash Flow Hedges 
Commodity Risk Management KCP&Ls risk management
policy is to use derivative hedge instruments to mitigate its exposure to market price
fluctuations on a portion of its projected natural gas purchases to meet generation
requirements for retail and firm wholesale sales. As of June 30, 2005, KCP&L had
hedged approximately 70% of its remaining 2005-projected natural gas usage for retail load
and firm MWh sales. These hedging instruments are designated as cash flow hedges. The fair
values of these instruments are recorded as current assets or current liabilities with an
offsetting entry to OCI for the effective portion of the hedge. To the extent the hedges
are not effective, the ineffective portion of the change in fair market value is recorded
currently in fuel expense. KCP&L did not record any gains or losses due to
ineffectiveness for the three months ended or year to date June 30, 2005 or 2004. When the
natural gas is purchased, the amounts in OCI are reclassified to fuel expense in the
consolidated income statement.

Strategic Energy maintains a
commodity-price risk management strategy that uses forward physical energy purchases and
other derivative instruments to reduce the effects of fluctuations on purchased power
expense caused by commodity-price volatility. Derivative instruments are used to limit the
unfavorable effect that price increases will have on electricity purchases, effectively
fixing the future purchase price of electricity for the applicable forecasted usage and
protecting Strategic Energy from significant price volatility. The maximum term over which
Strategic Energy is hedging its exposure and variability of future cash flows is 4.5 years
and 3.1 years at June 30, 2005, and December 31, 2004, respectively.

Certain forward fixed price purchases
and swap agreements are designated as cash flow hedges. The fair values of these
instruments are recorded as assets or liabilities with an offsetting entry to OCI for the
effective portion of the hedge. To the extent the hedges are not effective, the
ineffective portion of the change in fair market value is recorded currently in purchased
power. When the forecasted purchase is completed, the amounts in OCI are reclassified to
purchased power. Purchased power for the three months ended and year to date June 30,
2005, includes no gain or loss and $2.1 million gain, respectively, due to ineffectiveness
of the cash flow hedges. Strategic Energy did not record any gains or losses due to
ineffectiveness for the three months ended and year to date June 30, 2004.

As part of its commodity-price risk
management strategy, Strategic Energy also enters into economic hedges (non-hedging
derivatives) that do not qualify for hedge accounting. The changes in the fair value of
these derivative instruments recorded as a component of purchased power were a $2.8
million gain and a $0.2 million loss for the three months ended June 30, 2005 and 2004,
respectively, and a $5.7 million gain and a $0.5 million loss year to date June 30, 2005
and 2004, respectively.

41

The notional and estimated fair
values of the Companys derivative instruments are summarized in the following table.
The fair values of these derivatives are recorded on the consolidated balance sheets.

|                       
|-----------------------
|
|                       
|
|                       
|(millions)             
|Swap contracts         
|Cash flow hedges       
|Non-hedging derivatives
|Forward contracts      
|Cash flow hedges       
|Non-hedging derivatives
|Treasury Lock          
|Cash flow hedges       
|Consolidated KCP&L     
|Swap contracts         
|Cash flow hedges       
|Treasury Lock          
|Cash flow hedges       
|                       

The amounts recorded in accumulated
OCI related to the cash flow hedges are summarized in the following table.

|                         
|-------------------------
|
|
|                         
|(millions)               
|Current assets           
|Other deferred charges   
|Other current liabilities
|Deferred income taxes    
|Other deferred credits   
|                         
|Total                    
|                         

The amounts reclassified to expenses
are summarized in the following table.

|                       
|-----------------------
|
|
|                       
|(millions)             
|Purchased power expense
|Minority interest      
|Income taxes           
|                       
|OCI                    
|                       

42

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

The Managements Discussion and
Analysis of Financial Condition and Results of Operations that follows is a combined
presentation for Great Plains Energy and consolidated KCP&L, both registrants under
this filing. The discussion and analysis by management focuses on those factors that had a
material effect on the financial condition and results of operations of the registrants
during the periods presented.

# OVERVIEW

Great Plains Energy is a public
utility holding company registered with and subject to the regulation of the SEC under the
35 Act. Great Plains Energy does not own or operate any significant assets other than the
stock of its subsidiaries. Great Plains Energys direct subsidiaries are KCP&L,
KLT Inc., GPP, IEC and Services. As a diversified energy company, Great Plains
Energys reportable business segments include KCP&L and Strategic Energy.

Executing On Strategic Intent
During the first half of 2005, the
Company has initiated several important steps in executing on its Strategic Intent.
Strategic Energy has continued to move forward with several initiatives to improve
marketing and supply procurement. A few examples of initiatives for supply procurement
include improving load aggregation strategies and exploring additional commodity hedging
strategies. Marketing initiatives underway include exploring new channels for targeting
new customers, product innovation and expanded communication with customers.

KCP&L has continued to make
progress in implementing its comprehensive energy plan during 2005. Early in the third
quarter of 2005, KCP&L received approvals from the MPSC and KCC on its previously
filed agreements regarding its comprehensive energy plan. The agreements were reached
between KCP&L, the Commission staffs and certain key parties in the respective
jurisdictions.

The next steps in the implementation
of KCP&Ls comprehensive energy plan are to begin design and construction of the
environmental retrofits and the development of the wind project. KCP&L is working
closely with public officials on siting the project and continues to evaluate wind project
developers for the project, which is targeted for completion in 2006. Agreements are being
finalized with Iatan No. 2 partners and the costing and sourcing process for
construction of the plant has begun. Iatan No. 2 environmental permitting will continue
and remains on track with all permitting expected to be completed by early 2006.
Additionally, development and implementation of several demand management programs are
expected to be started before the end of 2005.

43

The following are brief descriptions
of the major provisions of the approved agreements.

- KCP&L will make energy infrastructure investments as summarized in the table below.

|                                                                                                         
|---------------------------------------------------------------------------------------------------------
|
|
|
|                                                                                                         
|(millions)                                                                                               
|Iatan No. 2                                                                                              
|                                                                                                         
|Wind Generation (a)                                                                                      
|Environmental                                                                                            
|Asset Management                                                                                         
|Customer Programs                                                                                        
|                                                                                                         
|                                                                                                         
|Total(b)                                                                                                 
|                                                                                                         
|(a)  The agreements call for the possible addition of another 100 MW of wind generation in 2008 if       
|supported by a detailed evaluation.                                                                      
|(b)  Includes approximately $60 million of investments related to a railroad bridge, a substation and    
|transmission lines.  Wind generation includes approximately $2 million of transmission and               
|distribution investment.  A decision regarding recovery of costs in Kansas related to the railroad bridge
|is deferred to future rate cases, which reduces the total to $1,231 million in the Kansas agreement.     

- KCP&L's current rates will remain in place until 2007, unless significant events impact KCP&L.  The first rate case will be filed in
2006, with any rate adjustments going into effect in 2007.  The last rate case defined in the agreements is expected to be filed in
2009, with rates effective near the time Iatan No. 2 is placed in service.  Two additional rate cases could be filed in 2007 and 2008
at KCP&L's discretion.
- The Kansas agreement allows KCP&L to recover, on a dollar-for-dollar basis with no profit to the company, actual fuel and purchased
power expense incurred through an energy cost adjustment that would take effect for Kansas in 2007.  Similarly, an interim energy
charge, based on forecasted costs and subject to customer refund, would take effect for Missouri customers in 2007.
- KCP&L may sell SO2 emission allowances during the term of the agreements.  The sales proceeds will be recorded as a regulatory
liability for ratemaking purposes and will be amortized over time.
- KCP&L's annual pension costs before amounts capitalized, for regulatory purposes, are established at $22 million until 2007 through
the creation of a regulatory asset or liability, as appropriate.
- The depreciable life of Wolf Creek Generating Station for Missouri regulatory purposes will be increased from 40 to 60 years.  The
Missouri agreement calls for $10.3 million, on an annual jurisdictional basis, of additional amortization expense to be recorded upon
the effective date of the agreement to offset the reduction in depreciation expense due to the change in depreciable life.  The
60-year Missouri depreciable life will match the current Kansas regulatory depreciable life.
- The agreements are intended to provide KCP&L with regulatory mechanisms to be able to recover the prudent costs of its investments as
they are placed in service and an opportunity to maintain targeted credit ratios over the five-year term of the agreements.

44

The agreements provide regulatory
clarity on certain items. However, normal regulatory risk will continue to exist as the
commissions establish rates in the rate cases, including, but not limited to, the actual
amount of costs to be recovered through rates, the return on equity, the capital structure
utilized and expenses to be recovered. KCP&L projects that, if the cost of the plan is
included in rate base, the rate increases to support the five year plan and increasing
operating expenses would average approximately 3-4% annually, over the same time period.

The comprehensive energy plan is
currently expected to be funded through a mix of sources as detailed in the following
table.

|                                            
|--------------------------------------------
|
|                                            
|Anticipated contribution from rate increases
|New equity financing                        
|Debt financing                              
|2007 equity from 2004 FELINE PRIDES         
|Internal funds and other                    
|                                            

Actual funding sources may differ
from this estimated mix and may be affected by various factors, including, but not limited
to, the results of the rate proceedings and market conditions.

In July 2005, Missouri Governor Blunt
signed into law a bill authorizing the MPSC to approve rate adjustment mechanisms for the
pass-through of fuel costs and environmental costs to Missouri regulated utility customers
beginning January 1, 2006. In the agreement entered into between KCP&L and the MPSC
staff, KCP&L agreed not to utilize any of these mechanisms, outside of a general rate
case, through June 2015.

Energy Policy Act of 2005 In July 2005, Congress passed the
Energy Policy Act of 2005, which is expected to be signed by President Bush on August 8,
2005. The Energy Policy Act of 2005 repeals, effective six months after enactment, the 35 Act, which currently places certain limitations
and approval requirements on registered public utility holding company systems with respect to matters such as aquisitions, business
combinations and activities, securities and affiliate transactions, and provides certain utility consumer protection authority to the Federal
Energy Regulatory Commission (FERC) and the states. Among other things, the Energy Policy
Act of 2005 also revises the Public Utility Regulatory Policy Act (PURPA) to eliminate
mandatory power purchase obligations; requires FERC to provide transmission investment
incentives; accelerates depreciation on transmission lines and pollution control
equipment; provides for the extension of tax credits for wind energy generation; requires
large municipals and cooperatives to provide open transmission access; and authorizes the
creation of an Electric Reliability Organization to establish and enforce mandatory
reliability standards subject to FERC oversight. Management has not yet fully determined
its impact on Great Plains Energy and consolidated KCP&L.

KCP&L KCP&L is an integrated, regulated
electric utility that engages in the generation, transmission, distribution and sale of
electricity. KCP&L has over 4,000 MWs of generating capacity and has transmission and
distribution facilities that provide reliable affordable electricity to approximately
500,000 customers in the states of Missouri and Kansas. KCP&L has continued to
experience modest load growth annually through increased customer usage and additional
customers. Rates charged for electricity are below the national average. KCP&Ls
wholly owned subsidiary, HSS, sold its wholly owned subsidiary, Worry Free, in February
2005.

45

FERC Market Power Inquiry KCP&L is authorized by FERC to
sell wholesale power at market-based rates. In December 2004, FERC issued an order finding
that KCP&L potentially has generation market power in its own control area and the
control area of the Kansas City, Kansas Board of Public Utilities. See Note 12 to the
consolidated financial statements for further information regarding FERC market power
inquiry.

Southwest Power Pool Regional Transmission Organization
Under FERC Order 2000, KCP&L, as
an investor-owned utility, is strongly encouraged to join a FERC approved RTO. See Note 12
to the consolidated financial statements for further information.

Strategic Energy Great Plains Energy owns just under
100% of the indirect interest in Strategic Energy. Strategic Energy provides competitive
retail electricity supply services by entering into contracts with its customers to supply
electricity. Strategic Energy does not own any generation, transmission or distribution
facilities. Of the states that offer retail choice, Strategic Energy operates in
California, Maryland, Massachusetts, Michigan, New Jersey, New York, Ohio, Pennsylvania
and Texas.

In addition to competitive retail
electricity supply services, Strategic Energy records insignificant wholesale revenues and
purchased power expense incidental to the retail services provided. Strategic Energy also
provides strategic planning, consulting and billing and scheduling services in the natural
gas and electricity markets. In the second quarter of 2005, Strategic Energy entered into
a contract with a customer for services including load management, administration and
billing. Strategic Energy expects to manage 1.0 million MWhs over a twelve-month term
beginning in October 2005. Retail gross margin per MWh and MWhs in backlog do not reflect
the incidental wholesale sales or services contracts; however, these activities are
expected to have a positive impact on Strategic Energys earnings.

Strategic Energy serves approximately
8,700 customers including numerous Fortune 500 companies, smaller companies and
governmental entities. Strategic Energy provides competitive electricity supply to
approximately 51,000 commercial, institutional and small manufacturing accounts. Strategic
Energys customer retention rate for the three months ended and year to date June 30,
2005, was approximately 70%. MWhs delivered in 2005 are projected to range from 17.5 to
21.0 million. Strategic Energy currently expects the retail gross margin per MWh (retail
revenues less retail purchased power divided by retail MWhs delivered) on new customer
contracts entered into in 2005 to average from $2.50 to $4.00 and gross margin per MWh
delivered in 2005 to average $4.50 to $5.20.

Based solely on expected usage under
current signed contracts, Strategic Energy has forecasted future MWh commitments (backlog)
of 8.9 million for the remainder of 2005 and 6.4 million and 2.1 million for 2006 and
2007, respectively. In some markets, wholesale power prices in 2005 have continued to rise
faster than host utility rates. In markets where this occurs, the savings competitive
suppliers can offer to customers are reduced or in some markets are unavailable.
Additionally, in those markets where wholesale power prices are lower than host utility
rates, Strategic Energy continues to face strong competition from other competitive
suppliers.

Seams Elimination Charge
Adjustment SECA is a transitional pricing
mechanism intended to compensate transmission owners for the revenue lost as a result of
FERCs elimination of regional through and out rates between PJM and the MISO during
a sixteen-month transition period from December 1, 2004 through March 31, 2006. See Note
12 to the consolidated financial statements for further information regarding SECA and the
impact on Strategic Energy.

46

California The 1996 California Assembly Bill
1890 restructured the California electricity industry and provided for the right of Direct
Access. Direct Access permits customers to buy their power from an electric service
provider (ESP) instead of from an investor owned utility (IOU). On September 20, 2001, the
California Public Utility Commission (CPUC) issued a ruling suspending Direct Access for
customers not already on Direct Access. A referendum entitled The Repeal of
Electricity Deregulation and Black-out Prevention Act and backed by The Utility
Reform Network will appear on the ballot in a California special election in November
2005. The referendum allows existing Direct Access customers to continue to receive
service from an ESP, but prohibits their return to Direct Access if they moved to bundled
service for a period of time. The referendum also proposes to change the role of the CPUC,
retroactively sets renewable energy requirements and requires an ESP to obtain cost
recovery of resource adequacy requirements through a rate proceeding. The Independent
Energy Producers (IEP) filed an unsuccessful legal challenge based in part on the
constitutionality of the referendum. The California Supreme Court issued an Order allowing
the referendum to be placed on the ballot with the right to retain jurisdiction and
address the constitutional issues after the election. The passage of this initiative could
undermine ongoing efforts to lift the existing suspension of Direct Access.

# RELATED PARTY
TRANSACTIONS

See Note 10 to the consolidated
financial statements for information regarding related party transactions.

# GREAT PLAINS ENERGY
RESULTS OF OPERATIONS

The following table summarizes Great
Plains Energys comparative results of operations.

|                                          
|------------------------------------------
|
|
|                                          
|                                          
|Operating revenues                        
|Fuel                                      
|Purchased power - KCP&L                   
|Purchased power - Strategic Energy        
|Other operating expenses                  
|Depreciation and amortization             
|Gain on property                          
|                                          
|Operating income                          
|Non-operating income (expenses)           
|Interest charges                          
|Income taxes                              
|Minority interest in subsidiaries         
|Loss from equity investments              
|                                          
|Income from continuing operations         
|Discontinued operations                   
|                                          
|Net income                                
|Preferred dividends                       
|                                          
|Earnings available for common shareholders
|                                          

47

Great Plains Energys earnings
in the three months ended June 30, 2005, detailed in the following table, decreased
to $21.5 million, or $0.29 per share, from $41.2 million, or $0.59 per share, compared to
the same period of 2004.

|                                                                                                                                                                                                                                                     
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
|                                                                                                                                                                                                                                                     
|
|                                                                                                                                                                                                                                                     
|(millions)                                                                                                                                                                                                                                           
|KCP&L                                                                                                                                                                                                                                                
|Subsidiary operations                                                                                                                                                                                                                                
|                                                                                                                                                                                                                                                     
|Consolidated KCP&L                                                                                                                                                                                                                                   
|Strategic Energy                                                                                                                                                                                                                                     
|Other non-regulated operations                                                                                                                                                                                                                       
|Discontinued operations (KLT Gas)                                                                                                                                                                                                                    
|Preferred dividends                                                                                                                                                                                                                                  
|                                                                                                                                                                                                                                                     
|Total                                                                                                                                                                                                                                                
|                                                                                                                                                                                                                                                     
|The earnings per share of any segment does not represent a direct legal interest in the asset and
liabilities allocated to any one segment but rather represents a direct equity interest in Great Plains
Energy's assets and liabilities as a whole.

Great Plains Energys earnings
year to date June 30, 2005, detailed in the following table, decreased to $41.3
million, or $0.55 per share, from $68.1 million, or $0.98 per share, compared to the same
period of 2004.

|                                                                                                                                                                                                                                                     
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
|                                                                                                                                                                                                                                                     
|
|                                                                                                                                                                                                                                                     
|(millions)                                                                                                                                                                                                                                           
|KCP&L                                                                                                                                                                                                                                                
|Subsidiary operations                                                                                                                                                                                                                                
|                                                                                                                                                                                                                                                     
|Consolidated KCP&L                                                                                                                                                                                                                                   
|Strategic Energy                                                                                                                                                                                                                                     
|Other non-regulated operations                                                                                                                                                                                                                       
|Discontinued operations (KLT Gas)                                                                                                                                                                                                                    
|Preferred dividends                                                                                                                                                                                                                                  
|                                                                                                                                                                                                                                                     
|Total                                                                                                                                                                                                                                                
|                                                                                                                                                                                                                                                     
|The earnings per share of any segment does not represent a direct legal interest in the asset and
liabilities allocated to any one segment but rather represents a direct equity interest in Great Plains
Energy's assets and liabilities as a whole.

Scheduled and forced plant
maintenance for the three months ended and year to date June 30, 2005, compared to the
same periods of 2004, continued to have an impact on earnings at KCP&L. Retail
revenues increased as a result of warmer June 2005 weather; however, the increase was more
than offset by decreased wholesale revenues driven by lower MWhs generated primarily due
to plant maintenance outages. Fuel expense increased despite the lower generation
primarily due to increased coal and coal transportation costs and less nuclear usage in
the fuel mix. Operating expenses increased primarily due to higher pension and employee
related expenses. Additionally, storms restoration increased operating expenses year to
date June 30, 2005, compared to the same period of 2004.

Average retail gross margin on
Strategic Energys MWhs delivered declined for the three months ended and year to
date June 30, 2005, compared to the same periods of 2004. A continuing environment of

48

higher energy prices and forward electricity prices and the roll-off of older, higher
margin contracts combined with expenses for SECA recorded in the second quarter of 2005 to
negatively impact average retail gross margins. Partially offsetting the negative impact
were favorable net changes in the fair value of energy related derivative instruments.

Higher reductions in affordable
housing limited partnerships decreased other non-regulated operations earnings $4.4
million for the three months ended and $3.6 million year to date June 30, 2005, compared
to the same periods of 2004. Discontinued operations for the three months ended and year
to date June 30, 2005, reflects a legal reserve related to the KLT Gas portfolio
assets sold in 2004. See Note 7 to the consolidated financial statements for information
regarding the discontinued operations. Discontinued operations year to date June 30,
2004, reflects a loss of $1.2 million due to the write down of the KLT Gas portfolio to
its estimated net realizable value and a loss of $0.8 million from the wind down
operations.

# CONSOLIDATED KCP&L
RESULTS OF OPERATIONS

The following discussion of
consolidated KCP&L results of operations includes KCP&L, an integrated, regulated
electric utility and HSS, an unregulated subsidiary of KCP&L. References to KCP&L,
in the discussion that follows, reflect only the operations of the utility. The following
table summarizes consolidated KCP&Ls comparative results of operations.

|                                 
|---------------------------------
|
|
|                                 
|                                 
|Operating revenues               
|Fuel                             
|Purchased power                  
|Other operating expenses         
|Depreciation and amortization    
|Gain on property                 
|                                 
|Operating income                 
|Non-operating income (expenses)  
|Interest charges                 
|Income taxes                     
|Minority interest in subsidiaries
|                                 
|Net income                       
|                                 

Consolidated KCP&Ls net
income decreased $3.3 million for the three months ended and $14.2 million year to date
June 30, 2005, compared to the same periods of 2004. Retail revenues increased as a
result of warmer June 2005 weather; however, the increase was more than offset by
decreased wholesale revenues. The lower wholesale revenues were driven primarily by lower
MWhs generated mostly attributable to the timing and scope of forced and scheduled
outages, particularly Wolf Creeks 2005 spring scheduled refueling outage. Fuel
expense increased despite the lower generation primarily due to increased coal and coal
transportation costs and less nuclear usage in the fuel mix. Operating expenses increased
primarily due to higher pension and employee related expenses. Year to date June 30, 2005,
operating expenses also increased due to storm restoration costs. Decreased income tax
expense partially offset the decreases to net income reflecting lower taxable income and
the allocation of tax benefits from holding company losses pursuant to the Companys
intercompany tax allocation agreement.

49

# Consolidated KCP&L
Sales Revenues and MWh Sales

|                           
|---------------------------
|
|
|                           
|Retail revenues            
|Residential                
|Commercial                 
|Industrial                 
|Other retail revenues      
|                           
|Total retail               
|Wholesale revenues         
|Other revenues             
|                           
|KCP&L electric revenues    
|Subsidiary revenues        
|                           
|Consolidated KCP&L revenues
|                           

|                        
|------------------------
|
|
|                        
|Retail revenues         
|Residential             
|Commercial              
|Industrial              
|Other retail MWh sales  
|                        
|Total retail            
|Wholesale MWh sales     
|                        
|KCP&L electric MWh sales
|                        

Retail revenues increased $11.2
million for the three months ended and $11.5 million year to date June 30, 2005,
compared to the same periods of 2004 due to warmer June 2005 weather and continued load
growth of approximately 2%, adjusted for weather. Load growth consists of higher usage per
customer and the addition of new customers. Weather most significantly affects residential
customers usage patterns. Residential usage per customer increased 13% for the month
of June 2005 compared to June 2004 driven by a 79% increase in cooling degree days.

Bulk power sales, the major component
of wholesale sales, vary with system requirements, generating unit and purchased power
availability, fuel costs and requirements of other electric systems. Less than 1% of
revenues include an automatic fuel adjustment provision. Wholesale revenues decreased
$12.7 million for the three months ended and $27.2 million year to date June 30,
2005, compared to the same periods of 2004 due to decreased MWhs sold. Significant
decreases in MWhs sold were driven by scheduled and forced plant outages, which decreased
net MWhs generated 7% for the three months ended and 8% year to date. Additionally, retail
sales increased 5% for the three months ended and 3% year to date June 30, 2005, compared
to the same periods of 2004, which resulted in less MWhs available for wholesale sales.
KCP&Ls coal base load equivalent availability factor increased slightly for the
three months ended and was relatively unchanged year to date June 30, 2005, compared to
the same periods of 2004; however, Wolf Creeks availability was 50% lower for the
three months ended and 30% lower year to date mostly due to its scheduled spring 2005
refueling outage. The effect on wholesale revenues of the decreased MWhs sold was
partially offset by 20% and 13% increases in the average market price per MWh sold to
$38.37 and $36.49 for the three months ended and year to date June 30, 2005,
respectively, compared to the same periods in 2004. The higher average prices per

50

MWh were
primarily due to higher natural gas prices combined with transmission constraints and
outages in the region.

Consolidated KCP&L
Fuel and Purchased Power The fuel cost per MWh generated and
the purchased power cost per MWh has a significant impact on the results of operations for
KCP&L. Generation fuel mix can change the fuel cost per MWh generated substantially.
Nuclear fuel cost per MWh generated is substantially less than the cost of coal per MWh
generated, which is significantly lower than the cost of natural gas and oil per MWh
generated. The cost per MWh for purchased power is significantly higher than the cost per
MWh of coal and nuclear generation. KCP&L continually evaluates its system
requirements, the availability of generating units, availability and cost of fuel supply
and purchased power, and the requirements of other electric systems to provide reliable
power economically.

KCP&Ls nuclear unit, Wolf
Creek, accounts for approximately 20% of its baseload capacity and over a three year
period averages over 20% of KCP&Ls MWhs generated. KCP&L expects its cost of
nuclear fuel to remain relatively stable through the year 2009. Replacement power costs
for scheduled Wolf Creek outages are accrued evenly over the units 18-month
operating cycle.

KCP&L has been monitoring
railroad cycle times for coal deliveries since the third quarter of 2004. Rail companies
have experienced longer cycle times for coal deliveries to utilities across the country.
In mid-May 2005, western rail service further deteriorated as a result of two train
derailments that occurred on the primary rail line serving the Powder River Basin (PRB).
Significant sections of track on this rail line must be repaired before normal train
operations from the PRB can resume. Recent rail company notices indicate the track
maintenance will likely continue through November 2005 and PRB deliveries will be reduced
by 15% to 20% until that time. This affects all users of PRB coal. Approximately 98% of
KCP&Ls coal requirements come from the PRB and originate on the Burlington
Northern Santa Fe and the Union Pacific railroads, both of which have been affected by the
current rail situation. As a result, KCP&L coal inventories are below desired levels.
In response to reduced inventory levels, KCP&L has begun to implement modest coal
conservation measures by reducing coal generation. Less MWhs available to sell in the
wholesale market are anticipated over the second half of 2005 as these strategies are
implemented; however, given the widespread nature of the rail service issues, increases in
wholesale prices could partially compensate for lost MWh sales. Currently, management does
not anticipate a material impact on KCP&Ls financial results; however,
management cannot predict with certainty the impact of the situation and acutual results could be materially different.
Management is monitoring the situation closely and steps will be taken, as necessary, to
maintain an adequate energy supply to our native load and firm requirements customers.

Fuel expense increased $2.5 million
for the three months ended and $3.4 million year to date June 30, 2005, compared to
the same periods of 2004, driven by a combination of the cost of coal and coal
transportation and changes in the fuel mix to higher cost generation. The increases were
offset by $3.9 million for the three months ended and $7.0 million year to date as a
result of less MWhs generated and a favorable coal physical inventory adjustment.
KCP&Ls existing coal contracts have been entered into over time at higher prices
as the coal market price has risen creating an increase in coal costs. Additionally, the
coal transportation contracts contain annual escalation factors. Less nuclear and higher
natural gas generation in the 2005 fuel mix was driven by the number and duration of
scheduled and forced plant outages.

Purchased power expense decreased
$0.5 million and $1.5 million for the three months ended and year to date June 30,
2005, compared to the same periods in 2004. MWhs purchased decreased 22% for the three
months ended and 28% year to date; however, the effect of the lower MWhs purchased was
mostly offset by 34% and 30% increases in the average price per MWh purchased for the
three months ended and year to date June 30, 2005, respectively, compared to the same
periods in 2004.

51

The increased prices were driven by more purchases during higher priced
peak hours as a result of scheduled and forced plant outages and overall higher prices due
to higher natural gas prices combined with transmission constraints and outages in the
region.

Consolidated KCP&L Other
Operating Expenses (including other operating, maintenance and general taxes)Consolidated KCP&Ls other operating expenses increased $3.9
million for the three months ended June 30, 2005, compared to the same period of
2004, primarily due to the following:

- increased pension expense of $1.3 million primarily due to the amortization of prior year investment losses and
         slightly lower discount rates,
- increased employee related expenses of $2.7 million including severance and incentive compensation,
- increased outside services and regulatory expenses of $1.2 million including expenses related to the
         comprehensive energy plan and
- increased general taxes of $1.1
million mostly due to increases in assessed property valuations and mill levies.

Partial offsets to the increase in
other operating expenses included:

- decreased transmission service expense of $1.3 million primarily due to lower wholesale MWhs sold and
- decreased production operations and maintenance expenses of $1.8 million primarily due to the timing and scope of
         plant outages.

Consolidated KCP&Ls other
operating expenses increased $15.4 million year to date June 30, 2005, compared to
the same period of 2004, primarily due to the following:

- increased pension expense of $3.2 million primarily due to the amortization of prior year investment losses and
         slightly lower discount rates,
- increased employee related expenses of $3.2 million including severance and incentive compensation,
- increased outside services and regulatory expenses of $2.0 million including expenses related to the
         comprehensive energy plan,
- increased general taxes of $1.8 million mostly due to increases in assessed property valuations and mill levies,
- increased expenses of $4.7 million due to higher restoration costs for a January 2005 ice storm and June 2005
         wind storms compared to the 2004 wind storm restoration costs and
- increased production operations and maintenance expenses of $2.3 million primarily due to scheduled and forced
         plant maintenance in 2005.

Partially offsetting the increase in
other operating expenses was:

- decreased transmission service expense of $3.3 million primarily due to lower wholesale MWhs sold.

Pension expense is $3.2 million
higher year to date June 30, 2005, compared to the same period of 2004; however, $5.1
million of the year to date pension expense will be reversed and recorded as a regulatory
asset in the third quarter of 2005 consistent with the regulatory agreements approved by
the MPSC and KCC.

52

Consolidated KCP&L Interest Charges
Consolidated KCP&Ls
interest charges decreased $1.7 million for the three months ended and $4.3 million year
to date June 30, 2005, compared to the same periods of 2004. The decrease was
primarily due to the 2004 redemption of KCP&Ls $154.6 million 8.3% Junior
Subordinated Deferred Interest Bonds with proceeds from a Great Plains Energy equity
contribution.

Consolidated KCP&L Income Taxes
Consolidated KCP&Ls income
taxes decreased $4.8 million for the three months ended and $16.0 million year to date
June 30, 2005, compared to the same periods of 2004, primarily due to lower taxable
income. The allocation of tax benefits from holding company losses pursuant to the
Companys intercompany tax allocation agreement of $1.3 million for the three months
ended and $2.8 million year to date June 30, 2005, also contributed to the decrease.

# STRATEGIC ENERGY RESULTS
OF OPERATIONS

The following table summarizes
Strategic Energys comparative results of operations.

|                                 
|---------------------------------
|
|
|                                 
|                                 
|Operating revenues               
|Purchased power                  
|Other operating expenses         
|Depreciation and amortization    
|                                 
|Operating income                 
|Non-operating income (expenses)  
|Interest charges                 
|Income taxes                     
|Minority interest in subsidiaries
|                                 
|Net income                       
|                                 

Strategic Energys net income
decreased $5.6 million for the three months ended and $2.1 million year to date June 30,
2005, compared to the same periods of 2004. Retail MWhs delivered increased slightly to
5.2 million for the three months ended and 3% to 9.8 million year to date June 30,
2005, with higher deliveries in Texas, Michigan and New Jersey partially offset by a
decline in Massachusetts. The increased MWhs delivered were more than offset by a
continuing environment of higher energy prices and forward electricity prices and the
roll-off of older, higher margin contracts, which negatively impacted average retail gross
margins in the three months ended and year to date June 30, 2005, compared to the same
periods of 2004. These effects on average retail gross margins combined with $7.2 million
of SECA charges recorded in the second quarter of 2005 resulted in declines in the average
retail gross margin on MWhs delivered of 35% to $3.85 for the three months ended and 14%
to $5.45 year to date June 30, 2005, compared to $5.95 and $6.35 for the same periods of
2004.

The impact of the high prices and
SECA charges was partially offset by $3.0 million for the three months ended and $8.3
million year to date June 30, 2005, favorable net changes in fair value related to energy
contracts that do not qualify for hedge accounting and from hedge ineffectiveness,
compared to the same periods of 2004. Year to date June 30, 2005, was also favorably
impacted by a $1.2 million partial reversal of a tax reserve. The impacts of SECA charges
and the net change in fair value related to energy contracts that do not qualify for hedge
accounting and from hedge ineffectiveness reduced the average retail gross margin per MWh
by $0.80 for the three months ended June 30, 2005,

53

and combined with the partial reversal
of a tax reserve increased the average retail gross margin per MWh by $0.25 year to date
June 30, 2005, compared to the same periods of 2004.

Strategic Energy Purchased Power
Purchased power is the cost component
of Strategic Energys average retail gross margin previously discussed. Strategic
Energy primarily purchases power under forward physical delivery contracts to supply
electricity to its retail energy customers based on projected usage. In certain RTO and
ISO markets, load-serving entities are required to sell to and purchase power from the
RTO/ISO rather than directly transact with suppliers and end use customers. The sale and
purchase activity related to these certain RTO/ISO markets is reflected on a net basis in
Strategic Energys purchased power. Additionally, Strategic Energy sells any retail
electricity supply in excess of actual customer requirements back into the wholesale
market. The proceeds from the sale of excess supply of electricity are recorded as a
reduction of purchased power. The amount of excess retail supply sales that reduced
purchased power was $30.8 million for the three months ended and $55.3 million year to
date June 30, 2005, compared to $46.7 million and $84.0 million for the same periods of
2004, respectively.

Purchased power is also impacted by
the net change in fair value related to energy contracts that do not qualify for hedge
accounting and from hedge ineffectiveness. Strategic Energy utilizes derivative
instruments, including forward physical delivery contracts, in the procurement of
electricity. See Note 16 to the consolidated financial statements for more information.
Additionally, the cost of supplying electricity to retail customers can vary widely by
geographic market. This variability can be affected by many factors, including, but not
limited to, geographic differences in the cost per MWh of purchased power, renewable
energy requirements and capacity charges due to regional purchased power availability and
requirements of other electricity providers and differences in transmission charges.

# OTHER NON REGULATED
ACTIVITIES

Investment in Affordable
Housing Limited Partnerships  KLT Investments KLT Investments Inc.s (KLT
Investments) net loss for the three months ended June 30, 2005, totaled $2.5 million
(including an after tax reduction of $5.3 million in its affordable housing investment)
compared to net income of $3.2 million for the three months ended June 30, 2004
(including an after tax reduction of $0.9 million in its affordable housing investment).
KLT Investments net income included accrued tax credits of $3.9 million and $4.5
million for the three months ended June 30, 2005, and 2004, respectively. Net income
year to date June 30, 2005 totaled $0.5 million (including an after tax reduction of
$5.3 million in its affordable housing investment) compared to net income of $6.4 million
year to date June 30, 2004 (including an after tax reduction of $1.7 million in its
affordable housing investment). KLT Investments net income included accrued tax
credits of $7.8 million and $9.1 million year to date June 30, 2005 and 2004,
respectively.

At June 30, 2005, KLT
Investments had $30.4 million in affordable housing limited partnerships. Approximately
59% of these investments were recorded at cost; the equity method was used for the
remainder. Tax expense is reduced in the year tax credits are generated. The investments
generate future cash flows from tax credits and tax losses of the partnerships. The
investments also generate cash flows from the sales of the properties. For most
investments, tax credits are received over ten years. A change in accounting principle
relating to investments made after May 19, 1995, requires the use of the equity
method when a company owns more than 5% in a limited partnership investment. Of the
investments recorded at cost, $17.5 million exceed this 5% level but were made before May
19, 1995. Management does not anticipate making additional investments in affordable
housing limited partnerships at this time.

On a quarterly basis, KLT Investments
compares the cost of properties accounted for by the cost method to the total of projected
residual value of the properties and remaining tax credits to be

54

received. Based on the
latest comparison, KLT Investments reduced its investments in affordable housing limited
partnerships by $8.6 million for the three months ended and year to date June 30,
2005, compared to $1.4 million and $2.7 million for the three months ended and year to
date June 30, 2004, respectively. Pre-tax reductions in affordable housing investments are
estimated to be $1 million, $1 million and $2 million for the remainder of 2005 through
2007, respectively. These projections are based on the latest information available but
the ultimate amount and timing of actual reductions could be significantly different from
the above estimates. The properties underlying the partnership investment are subject to
certain risks inherent in real estate ownership and management. Even after these estimated
reductions, earnings from the investments in affordable housing are expected to be
positive for the years 2005 through 2007.

GREAT PLAINS ENERGY AND
CONSOLIDATED KCP&L SIGNIFICANT BALANCE SHEET CHANGES (JUNE 30, 2005 COMPARED TO
DECEMBER 31, 2004)

- Great Plains Energy's restricted cash and supplier collateral decreased $7.7 million due to Strategic Energy's
         suppliers posting letters of credit rather than cash to satisfy collateral requirements.
- Great Plains Energy's and consolidated KCP&L's receivables increased $96.7 million and $78.1 million,
         respectively.  The expiration of KCP&L's previous customer accounts receivables sales agreement increased
         receivables $65.0 million.  KCP&L's receivables also increased $26.1 million primarily due to seasonal increases
         from higher rates and usage.  Strategic Energy's receivables increased $14.3 million due to the combination of
         increased MWh deliveries and higher average prices due to seasonality.  Partially offsetting these increases was
         a $5.0 million decrease in KCP&L's wholesale receivables due to lower MWhs available for wholesale.
- Great Plains Energy's and consolidated KCP&L's deferred income taxes - current asset decreased $13.1 million and
         $4.7 million, respectively.  Consolidated KCP&L's deferred income taxes decreased $4.2 million due to a lower
         nuclear fuel outage reserve resulting from the completion of the scheduled spring 2005 refueling outage.  The
         change in the fair value of Strategic Energy's derivatives lowered deferred income taxes $4.8 million.
- Great Plains Energy's derivative instruments - current assets increased $17.7 million.  Strategic Energy's energy
         related derivative instruments increased $17.5 million due to an increase in fair value as a result of changes in
         forward market prices for power and increased MWh volume.
- Great Plains Energy's other - current assets increased $8.6 million.  Strategic Energy's deposits with suppliers
         increased $10.6 million as a result of prepaying an ISO for power and posting cash collateral for transactions
         with the MISO, which began wholesale electricity and transmission service on April 1, 2005.
- Great Plains Energy's affordable housing limited partnerships decreased by $10.9 million due to an $8.6 million
         reduction in the valuation of the properties held by KLT Investments.
- Great Plains Energy's and consolidated KCP&L's other - deferred charges and other assets increased $6.8 million
         and $4.5 million, respectively, due to a reclass from accrued taxes of an $8.8 million income tax refund
         receivable that management expects to be delayed until the related IRS audit cycle can be completed.
- Great Plains Energy's and consolidated KCP&L's commercial paper increased $173.8 million primarily due to KCP&L's
         issuance of commercial paper to fund the buyout of the Combustion Turbine Synthetic Lease property.

55

- Great Plains Energy's accounts payable increased $30.6 million.  Seasonal power purchases and higher seasonal
         prices increased Strategic Energy's accounts payable $24.0 million.  Also contributing to the increase was $3.5
         million accrued for SECA charges.
- Great Plains Energy's and consolidated KCP&L's accrued taxes increased $10.0 million and $24.0 million,
         respectively.  KCP&L's property taxes increased $14.0 million due to an increase in 2005 accrued property taxes
         offset by payments of property taxes accrued at December 31, 2004.  KCP&L's income taxes increased $9.0 million
         due to a reclass of an $8.8 million income tax refund receivable to other deferred charges and other assets.
         These increases were partially offset by an $11.0 million decrease in accrued taxes due to the payment of accrued
         gross receipts taxes, settlement of state audits and the reversal of a reserve related to these audits.
- Great Plains Energy's liabilities of discontinued operations increased $4.3 million due to the accrual of a legal
         reserve recorded in the second quarter of 2005.
- Great Plains Energy's accumulated other comprehensive loss decreased $7.3 million primarily due to the increase
         in fair value of Strategic Energy's energy related derivative instruments as a result of changes in forward
         market prices for power and increased MWh volume.  The decrease was partially offset by the $1.4 million increase
         in other comprehensive loss related to the decrease in the fair value of the T-Lock.
- Great Plains Energy's and consolidated KCP&L's long-term debt decreased $147.5 million and $146.6 million,
         respectively, due to KCP&L's decision to exercise its early termination option and buyout the Combustion Turbine
         Synthetic Lease through the issuance of commercial paper.

# CAPITAL REQUIREMENTS AND
LIQUIDITY

Great Plains Energy operates through
its subsidiaries and has no material assets other than the stock of its subsidiaries.
Great Plains Energys ability to make payments on its debt securities and its ability
to pay dividends is dependent on its receipt of dividends or other distributions from its
subsidiaries and proceeds from the issuance of its securities.

Great Plains Energys capital
requirements are principally comprised of KCP&Ls utility construction and other
capital expenditures, debt maturities, pension benefit plan funding requirements discussed
below and credit support provided to Strategic Energy. These items as well as additional
cash and capital requirements for the companies that have significantly changed from the
levels disclosed in the companies 2004 Form 10-K are discussed below.

Great Plains Energys liquid
resources at June 30, 2005, consisted of $76.5 million of cash and cash equivalents on
hand, including $0.7 million at consolidated KCP&L, and $615.9 million of unused bank
lines of credit. The unused lines consisted of $76.2 million from KCP&Ls
revolving credit facility, $52.5 million from Strategic Energys revolving credit
facility and $487.2 million from Great Plains Energys revolving credit facility. See
the Debt Agreements section below for more information on these agreements. Early in the
third quarter of 2005, Great Plains Energys liquid resources increased
$83.0 million primarily due to KCP&Ls repayment of $111.8 million of
commercial paper with the $70 million in proceeds from the recent sales of accounts
receivable under the new agreement and cash from operations. The increase was offset by
additional issuances of letters of credit by Great Plains Energy and Strategic Energy.

KCP&L expects to meet day-to-day
operating requirements including interest payments, construction requirements (excluding
new generating capacity and environmental compliance on existing generating units) and
dividends to Great Plains Energy with internally generated funds. However, it might not be

56

able to meet these requirements with internally generated funds because of the effect of
inflation on operating expenses, the level of MWh sales, regulatory actions, compliance
with future environmental regulations and the availability of generating units. The funds
Great Plains Energy and consolidated KCP&L need to retire maturing debt will be
provided from operations, the issuance of long and short-term debt and/or the issuance of
equity or equity-linked instruments. In addition, the Company may issue debt, equity
and/or equity-linked instruments to finance growth or take advantage of new opportunities.

Strategic Energy expects to meet
day-to-day operating requirements including interest payments, credit support fees,
capital expenditures and dividends to its indirect interest holders with internally
generated funds. However, it might not be able to meet these requirements with internally
generated funds because of the effect of inflation on operating expenses, the level of MWh
sales, commodity-price volatility and the effects of counterparty non-performance.

Cash Flows From Operations
Great Plains Energy and consolidated
KCP&L generated positive cash flows from operating activities for the periods
presented. The decrease in cash flows from operating activities for Great Plains Energy
and consolidated KCP&L year to date June 30, 2005, compared to the same period in 2004
was primarily due to the expiration of KCP&Ls previous customer accounts
receivables sales agreement. Additionally, income from continuing operations decreased
$25.3 million and $14.2 million for Great Plains Energy and consolidated KCP&L,
respectively, and the other changes in working capital detailed in Note 4 to the
consolidated financial statements impacted operating cash flows. The individual components
of working capital vary with normal business cycles and operations. In addition, the
timing of the Wolf Creek outage affects the refueling outage accrual, deferred income
taxes and amortization of nuclear fuel. Great Plains Energys decrease in cash flows
from operations was also partially offset by the effect of an $8.4 million decrease in
deposits with suppliers compared to the same period in 2004.

Investing Activities Great Plains Energys and
consolidated KCP&Ls cash used for investing activities varies with the timing of
utility capital expenditures and purchases of investments and nonutility property.
Investing activities are offset by the proceeds from the sale of properties and insurance
recoveries. Great Plains Energys and consolidated KCP&Ls utility capital
expenditures increased $120.6 million and $122.3 million, respectively, year to date June
30, 2005, compared to the same period in 2004 primarily due to KCP&L exercising its
early termination option in the Combustion Turbine Synthetic Lease and the subsequent
$154.0 million purchase of the leased property. The increase was partially offset by the
$28.5 million buyout of KCP&Ls operating lease for vehicles and heavy equipment
in 2004. In 2005, KCP&L received $10.0 million of insurance recoveries related to
Hawthorn No. 5.

Financing Activities The change in Great Plains
Energys and Consolidated KCP&Ls cash flows from financing activities year
to date June 30, 2005, compared to the same period in 2004 reflects KCP&Ls
$173.8 million increase in commercial paper, primarily for the purchase of the Combustion
Turbine Synthetic Lease property. This increase at consolidated KCP&L was offset by a
$150.0 million equity contribution from Great Plains Energy in the first six months of
2004. The effect of KCP&Ls commercial paper issuance was more than offset at
Great Plains Energy by proceeds of $150.0 million from the June 2004 issuance of 5.0
million shares of common stock at $30 per share and proceeds of $163.6 million from the
issuance of 6.5 million FELINE PRIDES. Fees related to these issuances were $10.2 million.

As a registered public utility
holding company, Great Plains Energy must receive authorization from the SEC under the 35
Act to issue securities. Great Plains Energy is currently authorized to issue up to $1.2
billion of debt and equity through December 31, 2005. Great Plains Energy has utilized
$712.8

57

million of this amount at June 30, 2005, which is a $2.8 million increase from the
$710.0 million at December 31, 2004, detailed in the Companys 2004 Form 10-K. This
increase was due to common stock issuances of $4.3 million and $4.0 million under the
Companys Long-Term Incentive Plan and Dividend Reinvestment and Direct Stock
Purchase Plan, respectively, mostly offset by a $5.5 million decrease in the outstanding
balance on Great Plains Energys revolving credit facility. In July 2005, Great
Plains Energy filed an application with the SEC under the 35 Act seeking authority for
Great Plains Energy to issue up to $500 million of securities during the period January 1,
2006 through December 31, 2007, among other requested authorizations. Under the 35 Act
repeal provisions of the Energy Policy Act of 2005, Great Plains Energys current
35 Act authorizations will continue to be effective until the repeal date of the 35 Act.
Management believes the remaining amounts of securities currently authorized will be
sufficient through the repeal date and anticipates withdrawing Great Plains Energys
application.

KCP&L is planning to file a shelf
registration statement for authority to issue up to $450 million (including $255 million
already registered) in debt securities in 2005. This authorization will preserve
KCP&Ls flexibility to access the capital markets for long-term debt. In the
second quarter of 2005, KCP&L entered into a T-Lock to hedge against interest rate
fluctuations on the U.S. Treasury rate component of long-term debt that KCP&L plans to
issue under the new registration statement within the next six months. The T-Lock will be
settled simultaneously with the issuance of the long-term fixed rate debt. See the Cash
Flow Hedges  Treasury Lock discussion in Note 16 to the consolidated financial
statements for additional information.

In July 2005, KCP&L entered into
a revolving agreement to sell all of its retail electric accounts receivable to
Receivables Company, which sold an undivided percentage ownership interest in the accounts
receivable to an outside investor. Receivables Company received $70 million in cash from
the outside investor, which was forwarded to KCP&L as consideration for its sale. See
Note 5 to the consolidated financial statements for additional information.

Under its current SEC authorization,
Great Plains Energy cannot issue securities other than common stock unless (i) the
security to be issued, if rated, is rated investment grade by one nationally recognized
statistical rating organization, (ii) all of its outstanding securities that are rated
(except for its preferred stock) are rated investment grade by one nationally recognized
statistical rating organization, and (iii) it has maintained common equity as a percentage
of consolidated capitalization (as reflected on its consolidated balance sheets as of the
end of each quarter) of at least 30%. Great Plains Energy was in compliance with these
conditions as of June 30, 2005.

KCP&Ls long-term financing
activities are subject to the authorization of the MPSC. In June 2004, the MPSC authorized
KCP&L to issue up to $600 million of long-term debt through March 31, 2006. The
authorization contains the following conditions, among others: (i) no more than $150.0
million of the authorized debt can be used for purposes other than refinancing existing
securities and (ii) the proceeds of the authorized debt must be used exclusively for the
benefit of KCP&Ls regulated operations. In June 2005, KCP&L filed an
application with the MPSC for authority to issue up to $635 million of long-term debt and
enter into interest rate hedging instruments in connection with such debt through December
31, 2009.

Issuances of short-term debt by
KCP&L are subject to SEC authorization under the 35 Act. Under the current
authorization, KCP&L may issue and have outstanding at any given time up to $500
million of short-term debt. Under this authorization, KCP&L cannot issue short-term
debt (other than commercial paper or short-term bank facilities) unless (i) the short-term
debt to be issued, if rated, is rated investment grade by one nationally recognized
statistical rating organization, (ii) all of its outstanding securities that are rated are
rated investment grade by one nationally recognized statistical rating organization, (iii)
all of the outstanding rated securities of Great Plains Energy (except preferred stock)

58

are rated investment grade and (iv) Great Plains Energy and KCP&L have maintained
common equity as a percentage of consolidated capitalization (as reflected on their
consolidated balance sheets as of the end of each quarter) of at least 30%. KCP&L was
in compliance with these conditions as of June 30, 2005.

Debt Agreements Great Plains Energy has a $550
million revolving credit facility with a group of banks that expires in December 2009. The
facility contains a Material Adverse Change (MAC) clause that requires Great Plains Energy
to represent, prior to receiving funding, that no MAC has occurred. The clause does,
however, permit the Company to access the facility even in the event of a MAC in order to
repay maturing commercial paper. Available liquidity under this facility is not impacted
by a decline in credit ratings unless the downgrade results in a MAC or occurs in the
context of a merger, consolidation or sale. A default by Great Plains Energy or any of its
significant subsidiaries of other indebtedness totaling more than $25.0 million is a
default under the current facility. Under the terms of this agreement, Great Plains Energy
is required to maintain a consolidated indebtedness to consolidated capitalization ratio,
as defined in the agreement, not greater than 0.65 to 1.00 at all times. At June 30, 2005,
the Company was in compliance with this covenant. At June 30, 2005, Great Plains Energy
had $16.0 million of outstanding borrowings with an interest rate of 3.98% and had
issued letters of credit totaling $6.5 million under the credit facility as credit
support for Strategic Energy. At June 30, 2005, Great Plains Energy had
$487.2 million available under this facility due to limitations under its 35 Act
authorization.

KCP&L has a $250 million
revolving credit facility with a group of banks that expires in December 2009 to provide
support for its issuance of commercial paper and other general purposes. The facility
contains a MAC clause that requires KCP&L to represent, prior to receiving funding,
that no MAC has occurred. The clause does, however, permit KCP&L to access the
facility even in the event of a MAC in order to repay maturing commercial paper. Available
liquidity under this facility is not impacted by a decline in credit ratings unless the
downgrade results in a MAC or occurs in the context of a merger, consolidation or sale. A
default by KCP&L on other indebtedness totaling more than $25.0 million is a default
under the current facility. Under the terms of the agreement, KCP&L is required to
maintain a consolidated indebtedness to consolidated capitalization ratio, as defined in
the agreement, not greater than 0.65 to 1.00 at all times. At June 30, 2005, KCP&L was
in compliance with this covenant. At June 30, 2005, KCP&L had $173.8 million of
commercial paper outstanding with a weighted average interest rate of 3.33%.

Strategic Energy has a $125 million
revolving credit facility with a group of banks that expires in June 2007. Great Plains
Energy has guaranteed $25.0 million of this facility. The facility contains a MAC clause
that requires Strategic Energy to represent, prior to receiving funding, that no MAC has
occurred. A default by Strategic Energy of other indebtedness, as defined in the facility,
totaling more than $7.5 million is a default under the facility. Under the terms of this
agreement, Strategic Energy is required to maintain a minimum net worth of $62.5 million,
a maximum funded indebtedness to EBITDA ratio of 2.25 to 1.00, a minimum fixed charge
coverage ratio of at least 1.05 to 1.00 and a minimum debt service coverage ratio of at
least 4.00 to 1.00, as those terms are defined in the agreement. In the event of a breach
of one or more of these four covenants, so long as no other default has occurred, Great
Plains Energy may cure the breach through a cash infusion, a guarantee increase or a
combination of the two. At June 30, 2005, Strategic Energy was in compliance with these
covenants. At June 30, 2005, $72.5 million in letters of credit had been issued and
there were no borrowings under the agreement, leaving $52.5 million of capacity available
for loans and additional letters of credit.

Great Plains Energy has agreements
with KLT Investments associated with notes KLT Investments issued to acquire its
affordable housing investments. Great Plains Energy has agreed not to take certain actions
including, but not limited to, merging, dissolving or causing the dissolution of KLT

59

Investments, or withdrawing amounts from KLT Investments if the withdrawals would result
in KLT Investments not being in compliance with minimum net worth and cash balance
requirements. The agreements also give KLT Investments lenders the right to have KLT
Investments repurchase the notes if Great Plains Energys senior debt rating falls
below investment grade or if Great Plains Energy ceases to own at least 80% of
KCP&Ls stock. At June 30, 2005, KLT Investments had $3.3 million in outstanding
notes, including current maturities.

Under stipulations with the MPSC and
the KCC, Great Plains Energy and KCP&L maintain common equity at not less than 30% and
35%, respectively, of total capitalization. Pursuant to an SEC order, Great Plains
Energys and KCP&Ls authorization to issue securities is conditioned on
maintaining a consolidated common equity capitalization of at least 30% and complying with
other conditions described above.

Pensions The Company maintains defined benefit
plans for substantially all employees, including officers, of KCP&L, Services and
WCNOC and incurs significant costs in providing the plans, with the majority incurred by
KCP&L. Plans are funded to meet the requirements of the Employee Retirement Income
Security Act of 1974 (ERISA) with additional contributions made when financially
appropriate.

For the year, the Company has
contributed $1.9 million toward the 2005 expected ERISA funding requirement of $4.7
million, all of which will be paid by KCP&L. Management believes the Company has
adequate access to capital resources through cash flows from operations or through
existing lines of credit to support the remaining funding requirement.

Participants in the plans may request
a lump-sum cash payment upon termination of their employment. A change in payment
assumptions could result in increased cash requirements from pension plan assets with the
Company being required to accelerate future funding. Under the terms of the pension plans,
the Company reserves the right to amend or terminate the plans, and from time to time
benefits have changed.

Supplemental Capital
Requirements and Liquidity Information Great Plains Energys and
consolidated KCP&Ls contractual obligations were relatively unchanged at June
30, 2005, compared to December 31, 2004.

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

As a registered public utility
holding company system, Great Plains Energy must receive authorization from the SEC, under
the 35 Act, to issue guarantees on behalf of its subsidiaries. Under its current SEC
authorization, guarantees cannot be issued unless (i) all of its outstanding securities
that are rated (except for its preferred stock) are rated investment grade and (ii) it has
maintained common equity as a percentage of consolidated capitalization (as reflected on
its consolidated balance sheets as of the end of each quarter) of at least 30%. Great
Plains Energy was in compliance with these conditions as of June 30, 2005. Great Plains
Energy is currently authorized to issue up to $600 million of guarantees on behalf of its
subsidiaries and the nonutility subsidiaries have $300 million of authorization for
guarantees they can issue on behalf of other nonutility subsidiaries. The nonutility
subsidiaries cannot issue guarantees unless Great Plains Energy is in compliance with its
conditions to issue guarantees.

60

Great Plains Energys and
consolidated KCP&Ls guarantees were relatively unchanged at June 30, 2005,
compared to December 31, 2004.

# RISK FACTORS

Actual results in future periods for
Great Plains Energy and consolidated KCP&L could differ materially from historical
results and the forward-looking statements contained in this report. Factors that might
cause or contribute to such differences include, but are not limited to, those discussed
below and in the Managements Discussion and Analysis, Risk Factors section included
in the companies 2004 Form 10-K. These and many other factors described in this
report, including the factors listed in the Cautionary Statements Regarding Certain
Forward-Looking Information and Quantitative and Qualitative Disclosures About
Market Risks sections of this report, could adversely affect the results of
operations and financial position of Great Plains Energy and consolidated KCP&L. Risk
factors of consolidated KCP&L are also risk factors for Great Plains Energy.

Strategic Energy has
Wholesale Electricity Supplier Concentration and Credit RiskCredit risk represents the loss that
Strategic Energy could incur if a counterparty failed to perform under its contractual
obligations. To reduce its credit exposure, Strategic Energy enters into payment netting
agreements with certain counterparties that permit Strategic Energy to offset receivables
and payables with such counterparties. Strategic Energy further reduces credit risk with
certain counterparties by entering into agreements that enable Strategic Energy to
terminate the transaction or modify collateral thresholds upon the occurrence of
credit-related events.

Based on guidelines set by Strategic
Energys Exposure Management Committee, counterparty credit risk is monitored by
routinely evaluating the credit quality and performance of its suppliers. Among other
things, Strategic Energy monitors counterparty credit ratings, liquidity and results of
operations. As a result of these evaluations, Strategic Energy establishes counterparty
credit limits and adjusts the amount of collateral required from its suppliers, among
other measures.

Strategic Energy enters into forward
contracts with multiple suppliers. At June 30, 2005, Strategic Energys five largest
suppliers under forward supply contracts represented 72% of the total future committed
purchases. Four of Strategic Energys five largest suppliers, or their guarantors,
are rated investment grade; and the non-investment grade rated supplier collateralizes its
position with Strategic Energy. In the event of supplier non-delivery or default,
Strategic Energys results of operations could be affected to the extent the cost of
replacement power exceeded the combination of the contracted price with the supplier and
the amount of collateral held by Strategic Energy to mitigate its credit risk with the
supplier. In addition to the collateral, if any, that the supplier provides, Strategic
Energys risk is further mitigated by the obligation of the supplier to make a
default payment equal to the shortfall and to pay liquidated damages in the event of a
failure to deliver power. Strategic Energys results of operations could also be
affected, in a given period, if it were required to make a payment upon termination of a
supplier contract to the extent that the contracted price with the supplier exceeded the
market value of the contract at the time of termination.

61

The following table provides
information on Strategic Energys credit exposure to suppliers, net of collateral, as
of June 30, 2005. It further delineates the exposure by the credit rating of
counterparties and provides guidance on the concentration of credit risk and an indication
of the maturity of the credit risk by credit rating of the counterparties.

|                    
|--------------------
|
|                    
|External rating     
|Investment Grade    
|Non-Investment Grade
|Internal rating     
|Investment Grade    
|Non-Investment Grade
|                    
|Total               
|                    

|                    
|--------------------
|
|                    
|
|                    
|External rating     
|Investment Grade    
|Non-Investment Grade
|Internal rating     
|Investment Grade    
|Non-Investment Grade
|                    
|Total               
|                    

External ratings are determined by
using publicly available credit ratings of the counterparty. If a counterparty has
provided a guarantee by a higher rated entity, the determination has been based on the
rating of its guarantor. Internal ratings are determined by, among other things, an
analysis of the counterpartys financial statements and consideration of publicly
available credit ratings of the counterpartys parent. Investment grade
counterparties are those with a minimum senior unsecured debt rating of BBB- from Standard
& Poors or Baa3 from Moodys. Exposure before credit collateral has been
calculated considering all netting agreements in place, netting accounts payable and
receivable exposure with net mark-to-market exposure. Exposure before credit collateral,
after consideration of all netting agreements, is impacted significantly by the power
supply volume under contract with a given counterparty and the relationship between
current market prices and contracted power supply prices. Credit collateral includes the
amount of cash deposits and letters of credit received from counterparties. Net exposure
has only been calculated for those counterparties to which Strategic Energy is exposed and
excludes counterparties exposed to Strategic Energy. At June 30, 2005, Strategic Energy
had exposure before collateral to non-investment grade counterparties totaling $40.0
million, of which 77% is scheduled to mature in less than two years. In addition,
Strategic Energy held collateral totaling $30.8 million limiting its exposure to these
non-investment grade counterparties to $9.2 million.

Strategic Energy is continuing to
pursue a strategy of contracting with national and regional counterparties that have
direct supplies and assets in the region of demand. Strategic Energy is also

62

continuing to
manage its counterparty portfolio through disciplined margining, collateral requirements
and contract based netting of credit exposures against payable balances.

# ITEM 3. QUANTITATIVE AND
QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Great Plains Energy and consolidated
KCP&L are exposed to market risks associated with commodity price and supply, interest
rates and equity prices. Market risks are handled in accordance with established policies,
which may include entering into various derivative transactions. In the normal course of
business, Great Plains Energy and consolidated KCP&L also face risks that are either
non-financial or non-quantifiable. Such risks principally include business, legal,
operational and credit risks and are discussed elsewhere in this document as well as in
the 2004 Form 10-K and therefore are not represented here.

Great Plains Energy and consolidated
KCP&L interim period disclosures about market risk included in quarterly reports on
Form 10-Q address material changes, if any from the most recently filed annual report on
Form 10-K. Therefore, these interim period disclosures should be read in connection with
Item 7A. Quantitative and Qualitative Disclosures About Market Risk, included in our 2004
Form 10-K, incorporated herein by reference. Strategic Energy has historically utilized
certain derivative instruments to protect against significant price volatility for
purchased power that have qualified for the normal purchase normal sale exception, in
accordance with SFAS No. 133, as amended. However, as certain markets continue to develop,
some derivative instruments may no longer qualify for the normal purchase normal sale
exception. As such, Strategic Energy is designating these derivative instruments as cash
flow hedges, which could result in future increased volatility in derivative assets and
liabilities, OCI and net income above levels historically experienced. Derivative
instruments that were designated as normal purchase normal sale are accounted for by
accrual accounting, which requires the effects of the derivative to be recorded when the
derivative contract settles. Accordingly, the increase in derivatives accounted for as
cash flow hedges, and the corresponding decrease in derivatives accounted for as normal
purchases and normal sales transactions, may affect the timing and nature of accounting
recognition, but does not change the underlying economics of the transactions. Otherwise,
there have been no material changes in Great Plains Energys or consolidated
KCP&Ls market risk since December 31, 2004.

# ITEM 4. CONTROLS AND
PROCEDURES

Disclosure Controls and Procedures
Great Plains Energy and KCP&L
carried out evaluations of their disclosure controls and procedures (as defined in Rules
13a-15(e) or 15d-15(e) under the Securities Exchange Act of 1934, as amended) as of the
end of the fiscal quarter ended June 30, 2005. These evaluations were conducted under the
supervision, and with the participation, of each companys management, including the
chief executive officer and chief financial officer, or person performing similar
functions, of each company and the companies disclosure committee.

Based upon these evaluations, the
chief executive officer and chief financial officer of Great Plains Energy, and the chief
executive officer and chief financial officer of KCP&L, respectively, have concluded
as of the end of the period covered by this report that the disclosure controls and
procedures of Great Plains Energy and KCP&L are functioning effectively to provide
reasonable assurance that: (i) the information required to be disclosed by the respective
companies in the reports that they file or submit under the Securities Exchange Act of
1934, as amended, is recorded, processed, summarized and reported within the time periods
specified in the SECs rules and forms, and (ii) the information required to be
disclosed by the respective companies in the reports that they file or submit under the
Securities Exchange Act of 1934, as amended, is accumulated and communicated to their
respective management, including the principal executive and principal financial officers,
or persons performing similar functions, as appropriate to allow timely decisions
regarding required disclosure.

63

Changes in Internal
Control Over Financial ReportingThere has been no change in Great
Plains Energys or KCP&Ls internal control over financial reporting that
occurred during the quarterly period ended June 30, 2005, that has materially affected, or
is reasonably likely to materially affect, those companies internal control over
financial reporting.

# PART II  OTHER
INFORMATION

# ITEM 1. LEGAL PROCEEDINGS

KCP&L Stipulations
and AgreementsOn March 28, 2005, and April 27,
2005, KCP&L filed Stipulations and Agreements with the MPSC and KCC, respectively,
containing a regulatory plan and other provisions. The Stipulations and Agreements are
discussed in the Executing on Strategic Intent section of Item 2. Managements
Discussion and Analysis of Financial Condition and Results of Operations, which is
incorporated herein by reference. Parties to the MPSC Stipulation and Agreement are
KCP&L, the Staff of the MPSC, Office of Public Counsel, Praxair, Inc., Missouri
Industrial Energy Consumers, Ford Motor Company, Aquila, Inc., The Empire District
Electric Company, Missouri Joint Municipal Electric Utility Commission, the City of Kansas
City, MO and the Missouri Department of Natural Resources. Parties to the KCC Stipulation
and Agreement are KCP&L, the Staff of the KCC, Sprint, Inc. and the Kansas Hospital
Association.

The MPSC issued an order on July 28,
2005, approving the Stipulation and Agreement as amended by the parties. The KCC issued an order on August 5, 2005,
approving the KCC Stipulation and Agreement.

Weinstein v. KLT Telecom Richard D. Weinstein (Weinstein)
filed suit against KLT Telecom in September 2003 in the St. Louis County, Missouri Circuit
Court. KLT Telecom acquired a controlling interest in Holdings in February 2001 through
the purchase of approximately two-thirds of the Holdings stock held by Weinstein. In
connection with that purchase, KLT Telecom entered into a put option in favor of
Weinstein, which granted Weinstein an option to sell to KLT Telecom his remaining shares
of Holdings stock. The put option provided for an aggregate exercise price for the
remaining shares equal to their fair market value with an aggregate floor amount of $15
million and was exercisable between September 1, 2003, and August 31, 2005. In June 2003,
the stock of Holdings was cancelled and extinguished pursuant to the joint Chapter 11 plan
confirmed by the Bankruptcy Court. In September 2003, Weinstein delivered a notice of
exercise of his claimed rights under the put option. KLT Telecom rejected the notice of
exercise. KLT Telecom denied that Weinstein has any remaining rights or claims pursuant to
the put option and denied any obligation to pay Weinstein any amount under the put option.
Subsequent to KLT Telecoms rejection of his notice of exercise, Weinstein filed suit
alleging breach of contract. Weinstein sought damages of at least $15 million, plus
statutory interest. In April 2005, summary judgment was granted in favor of KLT Telecom,
and Weinstein has appealed this judgment to the Missouri Court of Appeals for the Eastern
District. The $15 million reserve has not been reversed pending the outcome of the appeal
process.

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

None.

# ITEM 3. DEFAULTS UPON
SENIOR SECURITIES

None.

64

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

Great Plains Energy Great Plains Energys annual
meeting of shareholders was held on May 3, 2005. The shareholders elected eleven directors
and ratified the appointment of Deloitte & Touche LLP as independent auditors.

Election of Directors The eleven persons named below were
elected, as proposed in the proxy statement pursuant to Regulation 14A of the Securities
Exchange Act of 1934, as amended, to serve as directors until Great Plains Energys
annual meeting in 2006 and until their successors are elected and qualified.

|Nominee                 |  |  |  | Votes For  |  |  | Votes Withheld |  |  | Total Votes* | 
|----------------------- |  |  |  | ---------- |  |  | -------------- |  |  | ------------ | 
|                        |  |  | 
|David L. Bodde          |  |  |  | 66,004,797 |  |  | 624,823        |  |  | 66,629,620   | 
|Michael J. Chesser      |  |  |  | 65,995,882 |  |  | 624,823        |  |  | 66,620,705   | 
|William H. Downey       |  |  |  | 66,039,158 |  |  | 624,823        |  |  | 66,663,981   | 
|Mark A. Ernst           |  |  |  | 66,073,894 |  |  | 624,823        |  |  | 66,698,717   | 
|Randall C. Ferguson, Jr |  |  |  | 65,880,064 |  |  | 624,823        |  |  | 66,504,887   | 
|William K. Hall         |  |  |  | 65,616,852 |  |  | 624,823        |  |  | 66,241,675   | 
|Luis A Jimenez          |  |  |  | 66,051,179 |  |  | 624,823        |  |  | 66,676,002   | 
|James A. Mitchell       |  |  |  | 66,031,520 |  |  | 624,823        |  |  | 66,656,343   | 
|William C. Nelson       |  |  |  | 65,981,809 |  |  | 624,823        |  |  | 66,606,632   | 
|Linda H. Talbot         |  |  |  | 65,978,748 |  |  | 624,823        |  |  | 66,603,571   | 
|Robert H. West          |  |  |  | 65,940,527 |  |  | 624,823        |  |  | 66,565,350   | 

* No votes were cast against the nominees due to cumulative voting.

Ratification of Independent Auditors 
Great Plains Energy shareholders
ratified the appointment of Deloitte & Touche LLP as independent auditors for 2005.
The voting regarding the appointment of auditors was as follows:

|                      |  | Votes For |  | Votes Against |  | Abstentions |         | Total Votes | 
|--------------------- |  | --------- |  | ------------- |  | ----------- | ------- | ----------- | 
|                      |  |           | 
|Deloitte & Touche LLP |  |           |  | 65,767,076    |  |             | 421,870 |             | 

KCP&L Great Plains Energy is
KCP&Ls sole shareholder. By a unanimous written consent dated as of May 3, 2005,
Great Plains Energy, as the sole shareholder, elected the following directors of Great
Plains Energy as the directors of KCP&L for the ensuing year and until their
successors are duly elected and qualified, or until their resignations: David L. Bodde,
Michael J. Chesser, William H. Downey, Mark A. Ernst, Randall C. Ferguson, Jr., Luis A.
Jimenez, James A. Mitchell, William C. Nelson and Linda H. Talbot.

# ITEM 5. OTHER INFORMATION

None.

65

# ITEM 6. EXHIBITS

# Great Plains Energy
Documents

|ExhibitNumber | Description of Document                                       
|------------- | --------------------------------------------------------------
|12.1          | Ratio of Earnings to Fixed Charges.                           
|31.1.a        | Rule 13a-14(a)/15d-14(a) Certifications of Michael J. Chesser.
|31.1.b        | Rule 13a-14(a)/15d-14(a) Certifications of Terry Bassham.     
|32.1          | Section 1350 Certifications.                                  

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

# KCP&L Documents

|ExhibitNumber | Description of Document                                                                                                                                                                                                                                                                                                                       
|------------- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|10.2.a        | Stipulation and Agreement filed April 27, 2005, among Kansas City Power & Light Company, the Staff of
                     the State Corporation Commission of the State of Kansas, Sprint, Inc., and the Kansas Hospital
                     Association.                                                                                   
|10.2.b        | Purchase and Sale Agreement dated as of July 1, 2005, between Kansas City Power & Light Company, as
                     Originator, and Kansas City Power & Light Receivables Company, as Buyer.                                                                                                                                             
|10.2.c        | Receivables Sale Agreement dated as of July 1, 2005, among Kansas City Power & Light Receivables
                     Company, as the Seller, Kansas City Power & Light Company, as the Initial Collection Agent, The Bank
                     of Tokyo-Mitsubishi, Ltd., New York Branch, as the Agent, and Victory Receivables Corporation.
|12.2          | Ratio of Earnings to Fixed Charges.                                                                                                                                                                                                                                                                                                           
|31.2.a        | Rule 13a-14(a)/15d-14(a) Certifications of William H. Downey.                                                                                                                                                                                                                                                                                 
|31.2.b        | Rule 13a-14(a)/15d-14(a) Certifications of Terry Bassham.                                                                                                                                                                                                                                                                                     
|32.2          | Section 1350 Certifications.                                                                                                                                                                                                                                                                                                                  

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

66

SIGNATURES

Pursuant to the requirements of the
Securities Exchange Act of 1934, Great Plains Energy Incorporated and Kansas City
Power & Light Company have duly caused this report to be signed on its behalf by
the undersigned thereunto duly authorized.

|                       | GREAT PLAINS ENERGY INCORPORATED                                        
|---------------------- | ------------------------------------------------------------------------
|Dated:  August 8, 2005 | By:  /s/Michael J. Chesser
(Michael J. Chesser)(Chief Executive Officer)
|Dated:  August 8, 2005 | By:  /s/Lori A. Wright
(Lori A. Wright)
(Principal Accounting Officer)  
|                       | KANSAS CITY POWER & LIGHT COMPANY                                       
|Dated:  August 8, 2005 | By:  /s/William H. Downey
(William H. Downey)
(Chief Executive Officer) 
|Dated:  August 8, 2005 | By:  /s/Lori A. Wright
(Lori A. Wright)
(Principal Accounting Officer)  

67