UNITED STATES
SECURITIES AND EXCHANGE COMMISSIONWashington, D.C. 20549

# Form 10-Q

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

For the quarterly
period ended March 31, 2003

or

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

For the transition
period from _______ to _______

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

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

|Registrant                       | Title of each class
|-------------------------------- | -------------------
|
|Great Plains Energy Incorporated |                    
|                                 |                    
|                                 |                    
|                                 |                    

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

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

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

The number of shares outstanding of
Great Plains Energys Common stock at May 7, 2003, was 69,189,049 shares.

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.

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.

This report should be read in its
entirety. No one section of the report deals with all aspects of the subject matter.

# 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:

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

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                  |           
|ARB                     |           
|CO2                     |           
|COLI                    |           
|Clean Air Act           |           
|Compact                 |           
|Company                 |           
|Consolidated KCP&L      |           
|DTI                     |           
|                        |           
|Digital Teleport        |           
|EIRR                    |           
|EPA                     |           
|EPS                     |           
|ERISA                   |           
|FASB                    |           
|FERC                    |           
|GPP                     |           
|                        |           
|Great Plains Energy     |           
|HSS                     |           
|Holdings                |           
|IEC                     |           
|                        |           
|IRS                     |           
|ISO                     |           
|KCC                     |           
|KCP&L                   |           
|                        |           
|KLT Gas                 |           
|KLT Energy Services     |           
|KLT Inc.                |           
|KLT Investments         |           
|KLT Telecom             |           
|MAC                     |           
|MACT                    |           
|MISO                    |           
|MPSC                    |           
|MWh                     |           
|NEIL                    |           
|NOx                     |           
|NRC                     |           
|OCI                     |           
|RSAE                    |           
|RTO                     |           

3

|Abbreviation or Acronym | Definition
|----------------------- | ----------
|
|Receivables Company     |           
|SEC                     |           
|SPP                     |           
|SFAS                    |           
|Strategic Energy        |           
|WCNOC                   |           
|Wolf Creek              |           
|Worry Free              |           

4

# 

# PART I - FINANCIAL
INFORMATION Item 1. Consolidated Financial Statements

GREAT PLAINS ENERGY
                                    Consolidated Balance Sheets
                            (Unaudited)

|                                                           | March 31 | 
|---------------------------------------------------------- | -------- | 
|2002                                                      
|
|(thousands)                                               
|
|ASSETS                                                     |          | 
|Current Assets                                             |          | 
|Cash and cash equivalents                                  |          | 
|Restricted cash                                            |          | 
|Receivables                                                |          | 
|Fuel inventories, at average cost                          |          | 
|Materials and supplies, at average cost                    |          | 
|Deferred income taxes                                      |          | 
|Other                                                      |          | 
|                                                           |          | 
|Total                                                      |          | 
|
|Nonutility Property and Investments                        |          | 
|Affordable housing limited partnerships                    |          | 
|Gas property and investments                               |          | 
|Nuclear decommissioning trust fund                         |          | 
|Other                                                      |          | 
|                                                           |          | 
|Total                                                      |          | 
|
|Utility Plant, at Original Cost                            |          | 
|Electric                                                   |          | 
|Less-accumulated depreciation                              |          | 
|                                                           |          | 
|Net utility plant in service                               |          | 
|Construction work in progress                              |          | 
|Nuclear fuel, net of amortization of $125,411 and $121,951 |          | 
|                                                           |          | 
|Total                                                      |          | 
|
|Deferred Charges                                           |          | 
|Regulatory assets                                          |          | 
|Prepaid pension costs                                      |          | 
|Goodwill                                                   |          | 
|Other deferred charges                                     |          | 
|                                                           |          | 
|Total                                                      |          | 
|
|Total                                                      |          | 
|
|                                                           |          | 
|LIABILITIES AND CAPITALIZATION                             |          | 
|Current Liabilities                                        |          | 
|Notes payable                                              |          | 
|Current maturities of long-term debt                       |          | 
|EIRR bonds classified as current                           |          | 
|Accounts payable                                           |          | 
|Accrued taxes                                              |          | 
|Accrued interest                                           |          | 
|Accrued payroll and vacations                              |          | 
|Accrued refueling outage costs                             |          | 
|Supplier collateral                                        |          | 
|Other                                                      |          | 
|                                                           |          | 
|Total                                                      |          | 
|
|Deferred Credits and Other Liabilities                     |          | 
|Deferred income taxes                                      |          | 
|Deferred investment tax credits                            |          | 
|Asset retirement obligation                                |          | 
|Accrued nuclear decommissioning costs                      |          | 
|Pension liability                                          |          | 
|Other                                                      |          | 
|                                                           |          | 
|Total                                                      |          | 
|
|Capitalization (see statements)                            |          | 
|
|Commitments and Contingencies (Note 6)                     |          | 
|
|Total                                                      |          | 
|

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

5

GREAT PLAINS ENERGY                                                  Consolidated
Statements of Capitalization                                          (Unaudited)

|                                                              | March 31 | 
|------------------------------------------------------------- | -------- | 
|2002                                                         
|
|(thousands)                                                  
|
|Long-term Debt (excluding current maturities)                 |          | 
|General Mortgage Bonds                                        |          | 
|Medium-Term Notes due 2004-07,                                |          | 
|7.55%*** weighted-average rate                                |          | 
|2.29%* and 2.48%** EIRR bonds due 2012-23                     |          | 
|EIRR bonds classified as current liabilities                  |          | 
|Senior Notes                                                  |          | 
|7.125% due 2005                                               |          | 
|6.500% due 2011                                               |          | 
|6.000% due 2007                                               |          | 
|Unamortized discount                                          |          | 
|EIRR bonds                                                    |          | 
|2.32%* and 2.41%** Series A & B due 2015                      |          | 
|2.32%* and 2.41%** Series D due 2017                          |          | 
|4.50%*** Series C due 2017                                    |          | 
|EIRR bonds classified as current liabilities                  |          | 
|Subsidiary Obligations                                        |          | 
|R.S. Andrews Enterprises, Inc. long-term debt                 |          | 
|5.65%* and 5.70%** weighted-average rate due 2004-16          |          | 
|Affordable Housing Notes                                      |          | 
|7.84%*** weighted-average rate due 2004-08                    |          | 
|                                                              |          | 
|Total                                                         |          | 
|
|Company-obligated Mandatorily Redeemable Preferred Securities |          | 
|of a trust holding solely KCP&L Subordinated Debentures       |          | 
|
|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                                                         |          | 
|
|Common Stock Equity                                           |          | 
|Common stock-150,000,000 shares authorized without par value  |          | 
|69,196,322 shares issued, stated value                        |          | 
|Capital stock premium and expense                             |          | 
|Retained earnings (see statements)                            |          | 
|Treasury stock                                                |          | 
|Accumulated other comprehensive income (loss)                 |          | 
|Gain on derivative hedging instruments                        |          | 
|Minimum pension obligation                                    |          | 
|                                                              |          | 
|Total                                                         |          | 
|
|Total                                                         |          | 
|

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

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

6

GREAT PLAINS ENERGY
                      Consolidated Statements of Income
                                 (Unaudited)

|Three months ended March 31                               | 2003 | 
|--------------------------------------------------------- | ---- | 
|
|(thousands)                                              
|Operating Revenues                                        |      | 
|Electric revenues - KCP&L                                 |      | 
|Electric revenues - Strategic Energy                      |      | 
|Other revenues                                            |      | 
|                                                          |      | 
|Total                                                     |      | 
|
|Operating Expenses                                        |      | 
|Fuel                                                      |      | 
|Purchased power - KCP&L                                   |      | 
|Purchased power - Strategic Energy                        |      | 
|Other                                                     |      | 
|Maintenance                                               |      | 
|Depreciation and depletion                                |      | 
|General taxes                                             |      | 
|Loss on property                                          |      | 
|                                                          |      | 
|Total                                                     |      | 
|
|Operating income                                          |      | 
|Loss from equity investments                              |      | 
|Minority interest in subsidiaries                         |      | 
|Non-operating income                                      |      | 
|Non-operating expenses                                    |      | 
|Interest charges                                          |      | 
|
|Income (loss) before income taxes and cumulative          |      | 
|effect of a change in accounting principle                |      | 
|Income taxes                                              |      | 
|
|Income (loss) before cumulative effect                    |      | 
|of a change in accounting principle                       |      | 
|Cumulative effect to January 1, 2002, of                  |      | 
|a change in accounting principle                          |      | 
|
|Net income (loss)                                         |      | 
|Preferred stock dividend requirements                     |      | 
|                                                          |      | 
|Earnings (loss) available for common stock                |      | 
|
|Average number of common shares outstanding               |      | 
|Basic and diluted earnings (loss) per common share before |      | 
|cumulative effect of a change in accounting principle     |      | 
|Cumulative effect to January 1, 2002, of a change         |      | 
|in accounting principle                                   |      | 
|                                                          |      | 
|Basic and diluted earnings (loss) per common share        |      | 
|
|                                                          |      | 
|Cash dividends per common share                           |      | 
|

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

7

GREAT PLAINS ENERGY
                                              Consolidated Statements of Cash Flows
                              (Unaudited)

|Three months ended March 31                           | 2003 | 
|----------------------------------------------------- | ---- | 
|
|(thousands)                                          
|Cash Flows from Operating Activities                  |      | 
|Net income (loss)                                     |      | 
|Adjustments to reconcile income (loss) to net cash    |      | 
|from operating activities:                            |      | 
|Cumulative effect of a change in accounting principle |      | 
|Depreciation and depletion                            |      | 
|Amortization of:                                      |      | 
|Nuclear fuel                                          |      | 
|Other                                                 |      | 
|Deferred income taxes (net)                           |      | 
|Investment tax credit amortization                    |      | 
|Loss from equity investments                          |      | 
|Loss on property                                      |      | 
|Allowance for equity funds used during construction   |      | 
|Deferred storm costs                                  |      | 
|Minority interest                                     |      | 
|Other operating activities (Note 3)                   |      | 
|                                                      |      | 
|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             |      | 
|Other investing activities                            |      | 
|                                                      |      | 
|Net cash from investing activities                    |      | 
|
|Cash Flows from Financing Activities                  |      | 
|Issuance of long-term debt                            |      | 
|Repayment of long-term debt                           |      | 
|Net change in short-term borrowings                   |      | 
|Dividends paid                                        |      | 
|Other financing activities                            |      | 
|                                                      |      | 
|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 accompanying Notes to
Consolidated Financial Statements are an integral part of these statements.

8

GREAT PLAINS ENERGY
             Consolidated Statements of Comprehensive Income
                             (Unaudited)

|Three months ended March 31                           | 2003 | 
|----------------------------------------------------- | ---- | 
|
|(thousands)                                          
|Net income (loss)                                     |      | 
|
|Other comprehensive income :                          |      | 
|Gain on derivative hedging instruments                |      | 
|Income tax expense                                    |      | 
|                                                      |      | 
|Net gain on derivative hedging instruments            |      | 
|                                                      |      | 
|Change in minimum pension obligation                  |      | 
|Income tax expense                                    |      | 
|                                                      |      | 
|Net change in minimum pension obligation              |      | 
|                                                      |      | 
|Reclassification to revenues and expenses, net of tax |      | 
|
|Comprehensive Income (Loss)                           |      | 
|

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

GREAT PLAINS ENERGY
            Consolidated Statements of Retained Earnings
                             (Unaudited)

|Three months ended March 31         | 2003 | 
|----------------------------------- | ---- | 
|
|(thousands)                        
|Beginning Balance                   |      | 
|Net income (loss)                   |      | 
|
|                                    |      | 
|Dividends Declared                  |      | 
|Preferred stock - at required rates |      | 
|Common stock                        |      | 
|
|                                    |      | 
|Ending Balance                      |      | 
|

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

9

KANSAS CITY POWER & LIGHT
COMPANY                                               Consolidated Balance Sheets
                              (Unaudited)

|                                                           | March 31 | 
|---------------------------------------------------------- | -------- | 
|2002                                                      
|
|(thousands)                                               
|ASSETS                                                     |          | 
|Current Assets                                             |          | 
|Cash and cash equivalents                                  |          | 
|Receivables                                                |          | 
|Fuel inventories, at average cost                          |          | 
|Materials and supplies, at average cost                    |          | 
|Deferred income taxes                                      |          | 
|Other                                                      |          | 
|                                                           |          | 
|Total                                                      |          | 
|
|Nonutility Property and Investments                        |          | 
|Nuclear decommissioning trust fund                         |          | 
|Other                                                      |          | 
|                                                           |          | 
|Total                                                      |          | 
|
|Utility Plant, at Original Cost                            |          | 
|Electric                                                   |          | 
|Less-accumulated depreciation                              |          | 
|                                                           |          | 
|Net utility plant in service                               |          | 
|Construction work in progress                              |          | 
|Nuclear fuel, net of amortization of $125,411 and $121,951 |          | 
|                                                           |          | 
|Total                                                      |          | 
|
|Deferred Charges                                           |          | 
|Regulatory assets                                          |          | 
|Prepaid pension costs                                      |          | 
|Goodwill                                                   |          | 
|Other deferred charges                                     |          | 
|                                                           |          | 
|Total                                                      |          | 
|
|Total                                                      |          | 
|
|                                                           |          | 
|LIABILITIES AND CAPITALIZATION                             |          | 
|Current Liabilities                                        |          | 
|Notes payable                                              |          | 
|Current maturities of long-term debt                       |          | 
|EIRR bonds classified as current                           |          | 
|Accounts payable                                           |          | 
|Accrued taxes                                              |          | 
|Accrued interest                                           |          | 
|Accrued payroll and vacations                              |          | 
|Accrued refueling outage costs                             |          | 
|Other                                                      |          | 
|                                                           |          | 
|Total                                                      |          | 
|
|Deferred Credits and Other Liabilities                     |          | 
|Deferred income taxes                                      |          | 
|Deferred investment tax credits                            |          | 
|Asset retirement obligation                                |          | 
|Accrued nuclear decommissioning costs                      |          | 
|Pension liability                                          |          | 
|Other                                                      |          | 
|                                                           |          | 
|Total                                                      |          | 
|
|Capitalization (see statements)                            |          | 
|
|Commitments and Contingencies (Note 6)                     |          | 
|
|Total                                                      |          | 
|

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

10

KANSAS CITY POWER & LIGHT
COMPANY                                                   Consolidated Statements of
Capitalization                                     (Unaudited)

|                                                              | March 31 | 
|------------------------------------------------------------- | -------- | 
|2002                                                         
|
|(thousands)                                                  
|Long-term Debt (excluding current maturities)                 |          | 
|General Mortgage Bonds                                        |          | 
|Medium-Term Notes due 2004-07,                                |          | 
|7.55%*** weighted-average rate                                |          | 
|2.29%* and 2.48%** EIRR bonds due 2012-23                     |          | 
|EIRR bonds classified as current liabilities                  |          | 
|Senior Notes                                                  |          | 
|7.125% due 2005                                               |          | 
|6.500% due 2011                                               |          | 
|6.000% due 2007                                               |          | 
|Unamortized discount                                          |          | 
|EIRR bonds                                                    |          | 
|2.32%* and 2.41%** Series A & B due 2015                      |          | 
|2.32%* and 2.41%** Series D due 2017                          |          | 
|4.50%*** Series C due 2017                                    |          | 
|EIRR bonds classified as current liabilities                  |          | 
|Subsidiary Obligations                                        |          | 
|R.S. Andrews Enterprises, Inc. long-term debt                 |          | 
|5.65%* and 5.70%** weighted-average rate due 2004-16          |          | 
|                                                              |          | 
|Total                                                         |          | 
|
|Company-obligated Mandatorily Redeemable Preferred Securities |          | 
|of a trust holding solely KCP&L Subordinated Debentures       |          | 
|
|Common Stock Equity                                           |          | 
|Common stock-1,000 shares authorized without par value        |          | 
|1 share issued, stated value                                  |          | 
|Retained earnings (see statements)                            |          | 
|Accumulated other comprehensive income (loss)                 |          | 
|Gain on derivative hedging instruments                        |          | 
|Minimum pension obligation                                    |          | 
|                                                              |          | 
|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
COMPANY                  Consolidated Statements of Income
                            (Unaudited)

|Three months ended March 31                      | 2003 | 
|------------------------------------------------ | ---- | 
|
|(thousands)                                     
|Operating Revenues                               |      | 
|Electric revenues                                |      | 
|Other revenues                                   |      | 
|                                                 |      | 
|Total                                            |      | 
|
|Operating Expenses                               |      | 
|Fuel                                             |      | 
|Purchased power                                  |      | 
|Other                                            |      | 
|Maintenance                                      |      | 
|Depreciation and depletion                       |      | 
|General taxes                                    |      | 
|Gain on property                                 |      | 
|                                                 |      | 
|Total                                            |      | 
|
|Operating income                                 |      | 
|Non-operating income                             |      | 
|Non-operating expenses                           |      | 
|Interest charges                                 |      | 
|
|Income (loss) before income taxes and cumulative |      | 
|effect of a change in accounting principle       |      | 
|Income taxes                                     |      | 
|
|Income (loss) before cumulative effect           |      | 
|of a change in accounting principle              |      | 
|Cumulative effect to January 1, 2002, of         |      | 
|a change in accounting principle                 |      | 
|
|Net income (loss)                                |      | 
|

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

12

KANSAS CITY POWER & LIGHT
COMPANY                                            Consolidated Statements of Cash Flows
                               (Unaudited)

|Three months ended March 31                           | 2003 | 
|----------------------------------------------------- | ---- | 
|
|(thousands)                                          
|Cash Flows from Operating Activities                  |      | 
|Net income (loss)                                     |      | 
|Adjustments to reconcile income (loss) to net cash    |      | 
|from operating activities:                            |      | 
|Cumulative effect of a change in accounting principle |      | 
|Depreciation and depletion                            |      | 
|Amortization of:                                      |      | 
|Nuclear fuel                                          |      | 
|Other                                                 |      | 
|Deferred income taxes (net)                           |      | 
|Investment tax credit amortization                    |      | 
|Gain on property                                      |      | 
|Allowance for equity funds used during construction   |      | 
|Deferred storm costs                                  |      | 
|Other operating activities (Note 3)                   |      | 
|                                                      |      | 
|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             |      | 
|Other investing activities                            |      | 
|                                                      |      | 
|Net cash from investing activities                    |      | 
|
|Cash Flows from Financing Activities                  |      | 
|Issuance of long-term debt                            |      | 
|Repayment of long-term debt                           |      | 
|Net change in short-term borrowings                   |      | 
|Dividends paid to Great Plains Energy                 |      | 
|Equity contribution from Great Plains Energy          |      | 
|Other financing activities                            |      | 
|                                                      |      | 
|Net cash from financing activities                    |      | 
|
|Net Change in Cash and Cash Equivalents               |      | 
|Cash and Cash Equivalents 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.

13

KANSAS CITY POWER & LIGHT
COMPANY               Consolidated Statements of Comprehensive Income
                              (Unaudited)

|Three months ended March 31                           | 2003 | 
|----------------------------------------------------- | ---- | 
|
|(thousands)                                          
|Net income (loss)                                     |      | 
|
|Other comprehensive income :                          |      | 
|Gain on derivative hedging instruments                |      | 
|Income tax expense                                    |      | 
|                                                      |      | 
|Net gain on derivative hedging instruments            |      | 
|                                                      |      | 
|Change in minimum pension obligation                  |      | 
|Income tax expense                                    |      | 
|                                                      |      | 
|Net change in minimum pension obligation              |      | 
|                                                      |      | 
|Reclassification to revenues and expenses, net of tax |      | 
|
|Comprehensive Income (Loss)                           |      | 
|

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

KANSAS CITY POWER & LIGHT
COMPANY              Consolidated Statements of Retained Earnings
                              (Unaudited)

|Three months ended March 31              | 2003 | 
|---------------------------------------- | ---- | 
|
|(thousands)                             
|Beginning Balance                        |      | 
|Net income (loss)                        |      | 
|
|                                         |      | 
|Dividends Declared                       |      | 
|Common stock held by Great Plains Energy |      | 
|
|                                         |      | 
|Ending Balance                           |      | 
|

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

14

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

In managements opinion, the
consolidated interim financial statements reflect all adjustments (which, unless otherwise
noted, include only normal recurring adjustments) necessary to present fairly the results
of operations for the interim periods presented. These statements and notes should be read
in connection with the financial statements and related notes included in the combined
2002 annual report on Form 10-K, of Great Plains Energy and consolidated KCP&L.

The notes to consolidated financial
statements that follow are a combined presentation for Great Plains Energy and
consolidated KCP&L, both registrants under this filing.

# 1. ORGANIZATION

Great Plains Energy currently has
four direct subsidiaries:

| | o |  | KCP&L is an integrated, regulated electric utility company that serves retail
customers in the states of Missouri and Kansas. KCP&L is one of Great Plains
Energys three reportable segments. KCP&L has one wholly-owned subsidiary, Home
Service Solutions Inc. (HSS). HSS has invested in two companies, R.S. Andrews Enterprises,
Inc. (RSAE) and Worry Free Service, Inc. (Worry Free). RSAE and Worry Free provide
energy-related residential and commercial services. KCP&L and its subsidiaries are
referred to as consolidated KCP&L.
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | o |  | KLT Inc. is an investment company that primarily holds interests in Strategic Energy,
L.L.C. (Strategic Energy), KLT Gas Inc. (KLT Gas), DTI and affordable housing limited
partnerships. Strategic Energy and KLT Gas are the other two reportable segments of Great
Plains Energy. DTI has filed voluntary bankruptcy petitions. See Note 7 for additional
information concerning DTIs bankruptcy petitions.
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | o |  | Great Plains Power Incorporated (GPP) focuses on the development of wholesale generation.
During 2002, management decided to limit the operations of GPP until market conditions
improve or the Company makes further changes in its business strategy. GPP has made no
significant investments to date.
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | o |  | Innovative Energy Consultants Inc. (IEC) holds an interest in Strategic Energy. IEC does
not own or operate any assets other than its indirect interest in Strategic Energy.
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------

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

# 2. CASH

Cash and Cash EquivalentsCash and cash equivalents consist of
highly liquid investments with original maturities of three months or less. For Great
Plains Energy this includes Strategic Energys cash held in trust of $13.2 million at
March 31, 2003, and $11.4 million at December 31, 2002.

15

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

Restricted CashStrategic Energy has entered into
Master Power Purchase and Sale Agreements with its purchased 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 and
would become unrestricted in the event of a default by the purchased power supplier.
Restricted cash collateral at March 31, 2003, was $59.9 million. There were no such cash
collateral deposits at December 31, 2002.

# 3. SUPPLEMENTAL CASH
FLOW INFORMATION

|                                              
|----------------------------------------------
|March 31                                      
|2003                                          
|(thousands)                                   
|Great Plains Energy Other Operating Activities
|Cash flows affected by changes in:            
|Receivables                                   
|Fuel inventories                              
|Materials and supplies                        
|Accounts payable                              
|Accrued taxes and current income taxes        
|Accrued interest                              
|Wolf Creek refueling outage accrual           
|Pension and postretirement benefit obligations
|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 and current income taxes        
|Accrued interest                              
|Wolf Creek refueling outage accrual           
|Pension and postretirement benefit obligations
|Other                                         
|Total other operating activities              
|Cash paid during the period:                  
|Interest                                      
|Income taxes                                  

16

KCP&L adopted Statement of
Financial Accounting Standards (SFAS) No. 143, Accounting for Asset Retirement
Obligations, on January 1, 2003, and recorded a liability for asset retirement
obligations of $99.2 million and increased property and equipment, net of accumulated
depreciation, by $18.3 million. KCP&L is a regulated utility subject to the provisions
of SFAS No. 71, Accounting for the Effects of Certain Types of Regulation, and
management believes it is probable that any differences between expenses under SFAS No. 143 and expenses
recovered currently in rates will be recoverable in future rates. As a result, the $80.9
million cumulative effect of the adoption of SFAS No. 143 was recorded as a regulatory
asset and therefore, had no impact on net income. The adoption of SFAS No. 143 had no
effect on Great Plains Energy and consolidated KCP&Ls cash flows for the three
months ended March 31, 2003.

KLT Gas also adopted SFAS No. 143 and
recorded a liability for asset retirement obligations of $1.2 million, increased gas
property and investments by $1.0 million and increased operating expense by $0.2 million
for the immaterial cumulative effect of the accounting change.

# 4. RECEIVABLES

The Companys accounts
receivables are comprised of the following:

|                                      |     
|------------------------------------- | ----
|2003                                  | 2002
|(thousands)                          
|Customer accounts receivable sold to  |     
|Receivables Company                   |     
|KCP&L other receivables               |     
|Consolidated KCP&L receivables        |     
|Great Plains Energy other receivables |     
|Great Plains Energy receivables       |     

KCP&L has entered into a
revolving agreement, which expires in October 2003, to sell all of its right, title and
interest in the majority of its customer accounts receivable to Kansas City Power &
Light Receivables Company (Receivables Company), which in turn sells most of the
receivables to outside investors. KCP&L expects the agreement to be renewed annually.
Accounts receivable sold under this revolving agreement totaled $79.9 million at March 31,
2003, and $89.2 million at December 31, 2002. These sales included unbilled receivables of
$22.4 million at March 31, 2003, and $27.2 million at December 31, 2002. As a result of
the sales to outside investors, Receivables Company received $70 million in cash, which
was forwarded to KCP&L as consideration for its sale. The agreement is structured as a
true sale under which the creditors of Receivables Company are entitled to be satisfied
out of the assets of Receivables Company prior to any value being returned to KCP&L or
its creditors.

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

17

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

|                                             
|---------------------------------------------
|March 31                                     
|2003                                         
|(thousands)                                  
|Gross proceeds on sale of accounts receivable
|Collections                                  
|Loss on sale of accounts receivable          
|Late fees                                    

KCP&L other receivables at March
31, 2003, and December 31, 2002, consist primarily of receivables from partners in
jointly-owned electric utility plants, wholesale sales receivables and accounts receivable
held by RSAE and Worry Free. Great Plains Energy other receivables at March 31, 2003, and
December 31, 2002, are primarily the accounts receivable held by Strategic Energy
including unbilled revenues held by Strategic Energy of $54.0 million at March 31, 2003,
and $57.3 million at December 31, 2002.

# 5. CAPITALIZATION

Great Plains Energy syndicated a $225
million, revolving credit facility with a group of banks in the first quarter of 2003.
This facility replaced a $205 million syndicated facility and a $20 million credit
facility with a bank. The line has a 364-day term but may be extended for an additional
year at the Companys option. 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 redeem maturing commercial paper. Available liquidity
under this facility is not impacted by a decline in credit ratings unless the downgrade
occurs in the context of a merger, consolidation or sale. A default by Great Plains Energy
or any of its significant subsidiaries of material other indebtedness totaling more than
$25.0 million is also a default under this bank line. Under the terms of this agreement,
Great Plains Energy is required to maintain a consolidated indebtedness to consolidated
capitalization ratio not greater than 0.65 to 1.0 at all times and an interest coverage
ratio greater than 2.25 to 1.0. At March 31, 2003, the Company was in compliance with
these covenants. At March 31, 2003, Great Plains Energy had $126.0 million of outstanding
borrowings under this facility with a weighted-average interest rate of 2.27%.

KCP&Ls short-term
borrowings consist of funds borrowed from banks or through the sale of commercial paper as
needed. As of March 31, 2003, there was no commercial paper outstanding. A default by
KCP&L on other indebtedness is a default under these bank line agreements. Under the
terms of certain bank line agreements, KCP&L is required to maintain a consolidated
indebtedness to consolidated capitalization ratio not greater than 0.65 to 1.0 at all
times.

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

During the first quarter of 2003,
RSAE extended the termination date of its $25 million line of credit to March 14, 2004. At
March 31, 2003, RSAE had $23.6 million of outstanding borrowings under the facility at an
average interest rate of 4.75% and had issued letters of credit utilizing the remainder.
In early May 2003, the facility was increased to $27 million.

18

KCP&L Financing I (Trust) has
previously issued $150.0 million of 8.3% preferred securities. The sole asset of the Trust
is the $154.6 million principal amount of 8.3% Junior Subordinated Deferrable Interest
Debentures, due 2037, issued by KCP&L.

# 6. COMMITMENTS AND
CONTINGENCIES

# Nuclear Liability and
Insurance

Liability Insurance The Price-Anderson Act currently
limits the combined public liability of nuclear reactor owners to $9.4 billion for claims
that could arise from a single nuclear incident. The owners of Wolf Creek, a nuclear
generating station, (the Owners) carry the maximum available commercial insurance of $0.2
billion. Secondary Financial Protection, an assessment plan mandated by the Nuclear
Regulatory Commission (NRC), provides insurance for the $9.2 billion balance.

Under Secondary Financial Protection,
if there were a catastrophic nuclear incident involving any of the nations licensed
reactors, the Owners would be subject to a maximum retrospective assessment per incident
of up to $88 million ($41 million, KCP&Ls 47% share). The Owners are jointly and
severally liable for these charges, payable at a rate not to exceed $10 million ($5
million, KCP&Ls 47% share) per incident per year, excluding applicable premium
taxes. The assessment, most recently revised in 1998, is subject to an inflation
adjustment based on the Consumer Price Index and renewal of the Price-Anderson Act by
Congress.

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

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

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

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

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

Low-Level WasteThe Low-Level Radioactive Waste
Policy Amendments Act of 1985 mandated that the various states, individually or through
interstate compacts, develop alternative low-level radioactive waste disposal facilities.
The states of Kansas, Nebraska, Arkansas, Louisiana and Oklahoma formed the Central

19

Interstate Low-Level Radioactive Waste Compact (Compact) and selected a site in northern
Nebraska to locate a disposal facility. Wolf Creek Nuclear Operating Corporation (WCNOC)
and the owners of the other five nuclear units in the Compact provided most of the
pre-construction financing for this project. KCP&Ls net investment in the
Compact was $7.4 million at March 31, 2003, and December 31, 2002.

Significant opposition to the project
has been raised by Nebraska officials and residents in the area of the proposed facility
and attempts have been made through litigation and proposed legislation in Nebraska to
slow down or stop development of the facility. On December 18, 1998, the application for a
license to construct this project was denied. After the license denial, WCNOC and others
filed a lawsuit in federal court contending Nebraska officials acted in bad faith while
handling the license application. In September 2002, the U.S. District Court Judge
presiding over the Central Interstate Compact Commissions federal bad
faith lawsuit against the State of Nebraska issued his decision in the case finding
clear evidence that the State of Nebraska acted in bad faith in processing the license
application for a low-level radioactive waste disposal site in Nebraska and rendered a
judgment in the amount of $151.4 million against the state. The state has appealed this
decision to the 8th Circuit, U.S. Court of Appeals. Based on the favorable
outcome of this trial, in KCP&Ls opinion, there is a greater possibility of
reversing the states license denial once the decision in this case is final.

In May 1999, the Nebraska legislature
passed a bill withdrawing Nebraska from the Compact. In August 1999, the Nebraska Governor
gave official notice of the withdrawal to the other member states. Withdrawal will not be
effective for five years and will not, of itself, nullify the site license proceeding.

Environmental MattersKCP&Ls operations are
subject to regulation by federal, state and local authorities with regard to air and other
environmental matters. The generation and transmission of electricity produces and
requires disposal of certain hazardous products which 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 KCP&L.

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 March
31, 2003, and December 31, 2002, KCP&L had $1.9 million accrued for environmental
remediation expenses covering water monitoring at one site and unasserted claims for
remediation at a second site. The amounts accrued were established on an undiscounted
basis and KCP&L does not currently have an estimated time frame over which the accrued
amounts may be paid out. Expenditures to comply with environmental laws and regulations
have not been material in amount during the periods presented and are not expected to be
material in the upcoming years with the exception of the issues discussed below.

Certain
Air Toxic SubstancesIn July 2000, the National Research
Council published its findings of a study under the Clean Air Act Amendments of 1990
(Clean Air Act), which stated that power plants that burn fossil fuels, particularly coal,
generate the greatest amount of mercury emissions. As a result, in December 2000, the
Environmental Protection Agency (EPA) announced it would propose Maximum Achievable
Control Technology (MACT) requirements by December 2003 to reduce mercury emissions and
issue final rules by December 2004. Until the rules are proposed, KCP&L cannot predict
the likelihood or compliance costs of such regulations.

20

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

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

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

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

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

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

Carbon
Dioxide At a December 1997 meeting in Kyoto,
Japan, delegates from 167 nations, including the United States, agreed to a treaty (Kyoto
Protocol) that would require a seven percent reduction in United States

21

carbon dioxide
(CO2) emissions below 1990 levels. Although the United States agreed to the
Kyoto Protocol, the treaty has not been sent to Congress for ratification. The financial
impact on KCP&L of future requirements in the reduction of CO2 emissions
cannot be determined until specific regulations are adopted.

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

Proposed
Water Use RegulationsIn February 2002, the EPA issued
proposed rules related to certain existing power producing facilities that employ cooling
water intake structures that withdraw 50 million gallons or more per day and use 25% or
more of that water for cooling purposes. The proposed rules establish national minimum
performance requirements designed to minimize adverse environmental impact. The EPA must
take final action by August 2003. KCP&L will continue to monitor the progress of this
rulemaking. The impact of these proposed rules has not yet been quantified, however,
KCP&Ls generating stations would be affected.

Strategic Energy
Purchased Power Energy CommitmentsStrategic Energy has entered into
agreements to purchase electricity at various fixed prices to meet the estimated demand
requirements of long-term sales agreements with its customers. Commitments at March 31,
2003, under these agreements total $1,082.7 million through 2010. Commitments for the
remainder of 2003 total $418.9 million, and for the years 2004 through 2007 total $343.0
million, $248.0 million, $52.5 million, and $8.6 million, respectively. See Note 15 for
further discussion.

KCP&L LeasesIn 2001, KCP&L entered into a
synthetic lease arrangement with a Trust (Lessor) to finance the purchase, installation,
assembly and construction of five combustion turbines and related property and equipment
that will add 385 MWs of peaking capacity (Project). The Trust is a special-purpose entity
and has an aggregate financing commitment from third-party equity and debt participants of
$176 million. At March 31, 2003, cumulative project costs were approximately $138.7
million. Upon a default during the lease period, KCP&Ls maximum obligation to
the Lessor equals 100% of project costs. KCP&Ls rental obligation, which
reflects interest payments only, is expected to be approximately $27.6 million in the
aggregate.

In January 2003, the Financial
Accounting Standards Board (FASB) issued Interpretation No. 46, Consolidation of
Variable Interest Entities. The Interpretation clarifies the application of
Accounting Research Bulletin (ARB) No. 51, Consolidated Financial Statements,
to certain entities in which equity investors do not have the characteristics of a
controlling financial interest or do not have sufficient equity at risk for the entity to
finance its activities without additional subordinated financial support from other
parties (Variable Interest Entities). The Trust, acting as Lessor in the synthetic lease
arrangement discussed above, is considered a Variable Interest Entity under the
Interpretation. Because KCP&L has variable interests in the Trust, including among
other things, a residual value guarantee provided to the Lessor, KCP&L is the primary
beneficiary of the Trust. Accordingly, KCP&L will be required to consolidate the Trust
effective July 1, 2003. Great Plains Energys and consolidated KCP&Ls
utility plant and long-term debt will increase by the total project cost upon
consolidation of the Trust.

22

# 

Internal Revenue Service
Settlement  Corporate-Owned Life Insurance (COLI)In November 2002, KCP&L accepted
a settlement offer related to COLI from the Internal Revenue Service (IRS). The offer
allowed 20% of the interest originally deducted and taxed only 20% of the gain on
surrender of the COLI policies. KCP&L surrendered the policies in February 2003.
KCP&L will make cash payments to the IRS during 2003 of approximately $1.3 million to
satisfy the liability associated with the surrender. The remaining $9.9 million related to
the disallowed interest will be paid upon completion of the 1995  1998 IRS audit.

7.
          DTI HOLDINGS, INC. AND SUBSIDIARIES BANKRUPTCY UPDATE

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, which cases have been
procedurally consolidated. Holdings and its two subsidiaries are collectively called
DTI.

In December 2002, Digital Teleport
entered into an agreement to sell substantially all of its assets (Asset Sale) to
CenturyTel Fiber Company II, LLC (Century Tel), a nominee of CenturyTel, Inc. (Asset
Purchase Agreement). The Asset Sale was approved by the Bankruptcy Court on February 13,
2003, but the Asset Purchase Agreement contains conditions to closing, which include among
other items the receipt of all necessary regulatory approvals, which must either be
satisfied or waived by July 15, 2003. The Asset Sale, if it is consummated, will produce
$38 million of gross sale proceeds, subject to certain closing adjustments, $3.8 million
of which will be escrowed (Escrow Funds). The Escrow Funds will be disbursed 180 days
following the closing of the Asset Sale, subject to any reduction for the amount of claims
by Century Tel for breaches of representations and warranties of Digital Teleport under
the Asset Purchase Agreement. Assuming full release of the Escrow Funds, the proceeds of
the Asset Sale together with Digital Teleports cash on hand are expected to total
approximately $47 million (Anticipated Assets).

The Company believes that KLT Telecom
has a valid and perfected security interest in virtually all of Digital Teleports
assets to secure repayment of approximately $50 million (including accrued interest) of
indebtedness which would entitle KLT Telecom to receive all of the Anticipated Assets,
leaving no distribution to other creditors of Digital Teleport. The Bankruptcy Court,
however, has not ruled on the validity of KLT Telecoms security interest in Digital
Teleports assets, and, absent the settlements described below, there is a
possibility that the Bankruptcy Court would disallow this security interest or otherwise
subordinate KLT Telecoms claims to other Digital Teleport creditors claims. To
expedite the Digital Teleport bankruptcy case process, including the resolution of
creditors claims and possible claims against the Company, KLT Telecom, KLT Inc.,
KCP&L, Great Plains Energy, Digital Teleport and the Official Unsecured Creditors
Committee of Digital Teleport (Creditors Committee) entered into a Settlement Agreement as
of December 23, 2002 (Teleport Settlement Agreement).

Under the Teleport Settlement
Agreement, Digital Teleport, the Creditors Committee and three members of the Creditors
Committee holding claims against Digital Teleport will release claims and possible causes
of action against the Company and any other entity currently or previously a member of the
Great Plains Energy or KCP&L consolidated tax group, and creditors receiving payments
will be deemed to receive such payments in full satisfaction of their claims against
Digital Teleport. In addition, the Teleport Settlement Agreement provides for the receipt
by KLT Telecom of an assignment of claims of Digital Teleport, the Creditors Committee and
the bankruptcy estate of Digital Teleport against any officer or director of Digital
Teleport, or any other person or entity.

The Teleport Settlement Agreement
does not purport to resolve (i) three priority proofs of claim by the Missouri Department
of Revenue in the aggregate amount of $2,848,446 (collectively, the MODOR

23

Claim); (ii) an
unsecured proof of claim by Gary Douglass, the former Chief Financial Officer of DTI, in
the amount of $2,055,900 (Douglass Claim); or (iii) any claims by Holdings against KLT
Telecom, KLT Inc., KCP&L and Great Plains Energy, or by creditors of Holdings,
including the holders of $265 million of Senior Discount Notes of Holdings as to which no
proof of claim has been filed in the Digital Teleport bankruptcy proceeding. Digital
Teleport has filed objections to the MODOR Claim and the Douglass Claim asserting that
each claim should be disallowed in full. The Bankruptcy Court has conducted an evidentiary
hearing regarding the MODOR Claim, but has not yet ruled on this matter. Digital Teleport
has advised that MODOR conceded during the evidentiary hearing that MODOR would not
contest the disallowance of approximately $1.3 million of the MODOR Claim. The Bankruptcy
Court has disallowed the Douglass claim. In lieu of an appeal or motion to reconsider the
Bankruptcy Courts ruling regarding the Douglass Claim, Digital Teleport and Douglass
have entered into a settlement agreement that would afford Douglass a $15,000 general
unsecured claim against Digital Teleport, which settlement has been scheduled for
Bankruptcy Court consideration and approval on May 20, 2003.

The Teleport Settlement Agreement
provides for a pro rata distribution from the Anticipated Assets ranging from 82.5% to 90%
of the sum of (i) the non-priority unsecured claims of approximately $10.3 million held by
Digital Teleports trade creditors, (ii) an amended claim of $1 million by Union
Electric Co. d/b/a Ameren UE, and (iii) the allowed, non-priority unsecured portions, if
any, of the Douglass Claim and the MODOR Claim, with the exact percentage being determined
by the extent to which the MODOR Claim and the Douglass Claim are resolved in the Digital
Teleport bankruptcy proceeding and are not disallowed. After the payment of
administrative, secured and priority claims (which claims, excluding the MODOR Claim, are
estimated to total approximately $3 million), the Teleport Settlement Agreement provides
for the balance of the Anticipated Assets to be distributed to KLT Telecom, subject to the
resolution of the MODOR Claim and the Douglass Claim, and subject, further, to a possible
payment to the creditors of Holdings as described below.

In an objection to a motion by
Digital Teleport for an extension of time in which to propose a Chapter 11 plan, the
largest creditor of Holdings (Creditor) asserted that Holdings, Digital Teleport and their
creditors have claims against KLT Telecom, KLT Inc., KCP&L and Great Plains Energy
based on theories of breach of contract, fraudulent conveyance, recharacterization of
debt, subordination and breach of fiduciary duty. Among other things, the Creditor
asserted that certain tax benefits should have been paid to Holdings and Digital Teleport,
rather than to KLT Telecom as provided in the October 1, 2001, Great Plains Energy tax
allocation agreement. These claims are resolved by the Holdings Settlement Agreement
discussed below, effective upon confirmation of the Chapter 11 Plan and closing of the
Asset Sale. The Company believes that it has meritorious defenses to these claims.

On March 14, 2003, KLT Telecom, KLT
Inc., Great Plains Energy, KCP&L, Holdings, The Bank of New York (as trustee of an
Indenture, as amended, relating to the senior discount notes issued by Holdings)
(Trustee), the Creditor and two other principal noteholders of Holdings (collectively, the
Noteholders) entered into a Settlement Agreement and Plan Term Sheet (the Holdings
Settlement Agreement).

Under the Holdings Settlement
Agreement, KLT Telecom agreed to pay to the Holdings bankruptcy estate the sum of
approximately $13.8 million from the distribution that KLT Telecom will receive under the
Teleport Settlement Agreement for distribution to unsecured creditors of Holdings. In
addition, Holdings, the Trustee and the Noteholders will release claims and possible
causes of action against the Company and any other entity currently or previously a member
of the Great Plains Energy or KCP&L consolidated tax group, and creditors receiving
payments will be deemed to receive such payments in full satisfaction of their claims
against Holdings. In addition, the Holdings Settlement Agreement provides for the receipt
by KLT Telecom of an assignment of claims of Holdings, the bankruptcy estate of Holdings,
the Trustee and the Noteholders against any officer or director of Holdings, or any other
person or entity.

24

Within 190 days after the closure of
the Asset Sale, KLT Inc. and KLT Telecom will pay a base sum of $1.6 million to certain
executives of Digital Teleport for entering into employment agreements required as a
condition precedent to the Asset Sale. This sum will be increased based upon the amount of
Escrow Funds released to Digital Teleport, but the sum is not anticipated to exceed $2.5
million (collectively, the Payment). The Payment will be made pursuant to a December 26,
2002 letter from KLT Inc. and KLT Telecom to Mr. Paul Pierron, President of Digital
Teleport.

Digital Teleport, Digital Teleport of
Virginia and Holdings have prepared a joint Chapter 11 plan (Chapter 11 Plan) and
disclosure statement reflecting the Asset Sale, the Teleport Settlement Agreement, and the
Holdings Settlement Agreement. A confirmation hearing by the Bankruptcy Court is scheduled
for June 9, 2003. Confirmation of the Chapter 11 Plan is subject to a vote of creditors
and the approval of the Bankruptcy Court. Although approval cannot be assured, it is
currently expected that the Chapter 11 Plan will be confirmed due to the level of support
for the plan by certain members of the Creditors Committee and the Holdings noteholders.
The Chapter 11 Plan contemplates that Digital Teleport, Holdings, and Digital Teleport of
Virginia will be liquidated after distribution of those companies assets to their
creditors pursuant to the Chapter 11 Plan, the Teleport Settlement Agreement and the
Holdings Settlement Agreement. The Teleport Settlement Agreement and the Holdings
Settlement Agreement, if approved by the Bankruptcy Court in confirming the Chapter 11
Plan, resolve all material issues and disputes among the parties to those agreements.

The ultimate impact of the Chapter 11
Plan, the Asset Sale, the Teleport Settlement Agreement, and the Holdings Settlement
Agreement will not be determined until final resolution of the matters set forth above.
Because of DTIs filing for bankruptcy protection under the U.S. Bankruptcy Code, KLT
Telecom no longer has control over nor can it exert significant influence over DTI. As a
consequence, as of December 31, 2001, DTI was de-consolidated and is presented on the cost
basis. Consequently, KLT Telecom did not include in its financial results the ongoing
results of operations, earnings or losses incurred by DTI since December 31, 2001, and
will not do so during the remaining period of the DTI bankruptcy.

# 8. BASIC AND DILUTED
EARNINGS (LOSS) PER COMMON SHARE CALCULATION

There was no dilutive effect on Great
Plains Energys earnings (loss) per share (EPS) from other securities for the three
months ended March 31, 2003 and 2002. To determine EPS, preferred stock dividend
requirements are deducted from both income before cumulative effect of a change in
accounting principle and net income before dividing by average number of common shares
outstanding. The EPS impact of the cumulative effect of a change in accounting principle
is determined by dividing the cumulative effect of a change in accounting principle by the
average number of common shares outstanding.

25

The following table reconciles Great
Plains Energys calculation of basic and diluted EPS before cumulative effect of a
change in accounting principle:

|Three months ended                         | Income |  | Shares |        | EPS
|------------------------------------------ | ------ |  | ------ | ------ | ---
|(thousands except per share amounts)      
|Income before cumulative effect            |        |  | $      | 14,555 |    
|Less: Preferred stock dividend requirement |        |  |        | 411    |    
|Basic EPS                                  |        | 
|Income available to common stockholders    |        |  |        | 14,144 |    
|Add: effect of dilutive securities         |        |  |        |        |    
|Diluted EPS                                |        |  | $      | 14,144 |    

|Three months ended                         | Income |  | Shares |        | EPS
|------------------------------------------ | ------ |  | ------ | ------ | ---
|(thousands except per share amounts)      
|Loss before cumulative effect              |        |  | $      | (2,897 | )  
|Less: Preferred stock dividend requirement |        |  |        | 412    |    
|Basic EPS                                  |        | 
|Income available to common stockholders    |        |  |        | (3,309 | )  
|Add: effect of dilutive securities         |        |  |        |        |    
|Diluted EPS                                |        |  | $      | (3,309 | )  

Options to purchase 341,572 shares
and 177,770 shares of common stock as of March 31, 2003 and 2002, respectively, were
excluded from the computation of diluted EPS because the option exercise prices were
greater than the market price of the common shares at the end of the respective periods.

# 9. RETAIL RATE MATTERS

At the end of January 2002, a severe
ice storm occurred throughout large portions of the Midwest, including the greater Kansas
City metropolitan area. In 2002, the State Corporation Commission of the State of Kansas
(KCC) approved a stipulation and agreement regarding the treatment of the Kansas portion
of the ice storm costs. Pursuant to the stipulation and agreement, KCP&L implemented a
retail rate reduction January 1, 2003, and began calculating depreciation expense on Wolf
Creek using a 60 year life instead of a 40 year life. For the three months ended March 31,
2003, KCP&L retail revenues decreased approximately $2.6 million and depreciation
expense decreased approximately $1.9 million as a result of the stipulation and agreement.
The reduction in depreciation expense has been recorded as a regulatory asset.

In 2002, the Missouri Public Service
Commission (MPSC) approved KCP&Ls application for an accounting authority order
related to the Missouri jurisdictional portion of the storm costs. The order allows
KCP&L to defer and amortize $20.1 million, representing the Missouri portion of the
storm, through January 2007. The amortization began in September 2002 and will amortize
approximately $4.6 million annually for the remainder of the amortization period. For the
three months ended March 31, 2003, KCP&L amortized $1.1 million of deferred ice storm
costs.

# 10. STOCK OPTIONS

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

26

October 1, 1995. Compensation
expense recorded for the three months ended March 31, 2002, was immaterial.

The following table illustrates the
effect on net income (loss) and earnings (loss) per share for Great Plains Energy if the
fair value method had been applied to all periods presented.

|                                      
|--------------------------------------
|March 31                              
|2003                                  
|(thousands except per share amounts)  
|Net income (loss), as reported        
|Pro forma net income (loss) as if fair
|value method were applied             
|Basic and diluted earnings (loss)     
|per common share, as reported         
|Pro forma basic and diluted earnings  
|(loss) per common share               

# 11. RELATED PARTY
TRANSACTIONS AND RELATIONSHIPS

Custom Energy Holdings, L.L.C. holds
100% of the direct ownership interests in Strategic Energy. Great Plains Energy holds an
89% indirect ownership position in Strategic Energy. SE Holdings, L.L.C. (SE Holdings)
owns the remaining 11% indirect ownership position in Strategic Energy. Richard Zomnir,
President and Chief Executive Officer of Strategic Energy, holds a 56% interest in SE
Holdings and certain other employees of Strategic Energy hold the remaining interests in
SE Holdings.

SE Holdings has a put option to sell
all or part of its 11% interest in Strategic Energy to Custom Energy Holdings at any time
within the 90 days following January 31, 2004, under certain circumstances, at fair market
value. Fair market value would be determined by the mutual agreement of the parties or if
an agreement cannot be reached, by third party appraisal.

Custom Energy Holdings business
and affairs are controlled and managed by a three member Management Committee composed of
one representative designated by KLT Energy Services Inc. (KLT Energy Services), one
representative designated by IEC, and one representative designated by SE Holdings.
Certain actions (including amendment of Custom Energy Holdings operating agreement,
approval of actions in contravention of the operating agreement, approval of a dissolution
of Custom Energy Holdings, additional capital contributions and assumption of recourse
indebtedness) require the unanimous consent of all the members of Custom Energy Holdings.
Certain other actions (including mergers with Custom Energy Holdings, acquisitions by
Custom Energy Holdings, assumption of non-recourse indebtedness, sales of substantial
assets, approval of distributions, filing of registration statements, partition of assets,
admission of new members and transfers of interests in Custom Energy Holdings) can be
approved by the Management Committee, but to the extent they affect the rights,
obligations, assets or business of Strategic Energy, the approval of the Strategic Energy
Management Committee is also required.

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

27

# 12. GUARANTEES

In the normal course of business,
Great Plains Energy and certain of its subsidiaries enter into various agreements
providing financial or performance assurance to third parties on behalf of certain
subsidiaries. Such agreements include, for example, guarantees, 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 prescribed in FASB Interpretation
No. 45, Guarantors Accounting and Disclosure Requirements for Guarantees,
Including Guarantees of Indebtedness of Others, the Company began recording a
liability for the fair value of the obligation it has undertaken for guarantees issued
after December 31, 2002. The liability recognition requirements of FASB Interpretation No.
45 are to be applied on a prospective basis to guarantees issued or modified after
December 31, 2002, while the disclosure requirements are to be applied to all guarantees.
The interpretation does not encompass guarantees of the Companys own future
performance, such as credit support provided to its subsidiaries. As of March 31, 2003,
KCP&L recorded an immaterial amount for the fair value of guarantees issued for the
residual value of vehicles and heavy equipment under an operating lease.

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

|                          |          
|------------------------- | ---------
|amount of future         
|payments under           
|Guarantor                 | guarantee
|(millions)               
|KCP&L                     |          
|                          |          
|                          |          
|                          |          
|                          |          
|KCP&L                     |          
|                          |          
|                          |          
|Total consolidated KCP&L  |          
|                          |          
|                          |          
|KLT Inc.                  |          
|                          |          
|                          |          
|                          |          
|KLT Energy Services       |          
|                          |          
|                          |          
|                          |          
|Total Great Plains Energy |          
|                          |          

In 2001, KCP&L entered into a
synthetic lease arrangement with a Trust (Lessor). At the end of the lease term (October
2006), KCP&L may choose to sell the project for the Lessor, guaranteeing to the Lessor
a residual value for the Project in an amount which may be up to 83.21% of the project
cost. As a result of the new consolidation requirements of FASB Interpretation No. 46, the
synthetic lease

28

arrangement will be consolidated in the third quarter of 2003. See Note 6
for additional information regarding KCP&Ls synthetic lease arrangement.

# 13. ASSET RETIREMENT
OBLIGATIONS

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

The adoption of SFAS No. 143 changed
the accounting for and the method used to report KCP&Ls obligation to
decommission its 47% share of Wolf Creek. The legal obligation to decommission Wolf Creek
was incurred when the plant was placed in service in 1985. The estimated liability,
recognized on KCP&Ls balance sheet at January 1, 2003, is based on a third party
nuclear decommissioning study conducted in 2002. KCP&L used a credit-adjusted risk
free discount rate of 6.42% to calculate the retirement obligation. This rate is based on
the rate KCP&L could issue 30-year bonds, adjusted downward to reflect the portion of
the anticipated costs in current year dollars that have been funded to date through the
tax-qualified trust fund. The cumulative impact of prior decommissioning accruals recorded
consistent with rate orders issued by the MPSC and KCC have been reversed and a new
regulatory contra-asset for such amounts has been established. Amounts collected through
these rate orders have been deposited in a legally restricted external trust fund. The
fair market value of the trust fund was $63.5 million and $63.3 million at March 31, 2003
and December 31, 2002, respectively.

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

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

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

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

29

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

KCP&L has legal asset retirement
obligations for certain other assets where it is not possible to estimate the time period
when the obligations will be settled. Consequently, the retirement obligations cannot be
measured at this time. For transmission easements obtained by condemnation, KCP&L must
remove its transmission lines if the line is de-energized. It is extremely difficult to
obtain siting for new transmission lines. Consequently, KCP&L does not anticipate
de-energizing any of its existing lines. KCP&L also operates, under state permits, ash
landfills at several of its power plants. While the life of the ash landfill at one plant
can be estimated and is included in the estimated liabilities above, the future life of
ash landfills at other permitted landfills cannot be estimated. KCP&L can continue to
maintain permits for these landfills after the adjacent plant is closed.

The following table illustrates the
effect on asset retirement obligations if the provisions of SFAS No. 143 had been applied
beginning January 1, 2000. Pro forma amounts for the periods prior to the January 1, 2003,
adoption were measured using assumptions consistent with the period of adoption.

|                                                |      |      |      |      |  | 
|----------------------------------------------- | ---- | ---- | ---- | ---- |  | 
|March 31                                       
|2000                                            | 2001 | 2002 | 2003
|(millions)                                     
|Asset retirement obligation beginning of period |      |      | $    | 81.9 |  | 
|Additions                                       |      |      |      | -    |  | 
|Accretion                                       |      |      |      | 5.4  |  | 
|Asset retirement obligation end of period       |      |      | $    | 87.3 |  | 
|Other Great Plains Energy                       |      |      |      |      |  | 
|Asset retirement obligation beginning of period |      |      | $    | 0.9  |  | 
|Additions                                       |      |      |      | -    |  | 
|Accretion                                       |      |      |      | -    |  | 
|Asset retirement obligation end of period       |      |      | $    | 0.9  |  | 
|Consolidated Great Plains Energy                |      |      |      |      |  | 
|Asset retirement obligation beginning of period |      |      | $    | 82.8 |  | 
|Additions                                       |      |      |      | -    |  | 
|Accretion                                       |      |      |      | 5.4  |  | 
|Asset retirement obligation end of period       |      |      | $    | 88.2 |  | 

# 14. SEGMENT AND RELATED
INFORMATION

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

30

The tables below reflect summarized
financial information concerning Great Plains Energys reportable segments. Prior
year information has been reclassified to conform to the current presentation.

|Three Months Ended           |        |         |       |        |   |  | 
|---------------------------- | ------ | ------- | ----- | ------ | - |  | 
|KCP&L                        | Energy | KLT Gas | Other | Energy
|(millions)                  
|Operating revenues           |        |         | $     | 234.4  |   |  | 
|Depreciation and depletion   |        |         |       | (34.6  | ) |  | 
|Loss from equity investments |        |         |       | -      |   |  | 
|Interest charges             |        |         |       | (17.8  | ) |  | 
|Income taxes                 |        |         |       | (10.7  | ) |  | 
|Net income (loss)            |        |         |       | 13.4   |   |  | 

|Three Months Ended            |        |         |       |        |   |  | 
|----------------------------- | ------ | ------- | ----- | ------ | - |  | 
|KCP&L                         | Energy | KLT Gas | Other | Energy
|(millions)                   
|Operating revenues            |        |         | $     | 198.9  |   |  | 
|Depreciation and depletion    |        |         |       | (35.8  | ) |  | 
|Loss from equity investments  |        |         |       | -      |   |  | 
|Interest charges              |        |         |       | (19.0  | ) |  | 
|Income taxes                  |        |         |       | 6.6    |   |  | 
|Cumulative effect of a change |        |         |       |        |   |  | 
|in accounting principle       |        |         |       | -      |   |  | 
|Net income (loss)             |        |         |       | (6.9   | ) |  | 

|                                        |        |     |       |         |  | 
|--------------------------------------- | ------ | --- | ----- | ------- |  | 
|KCP&L                                   | Energy | Gas | Other | Energy 
|(millions)                             
|Assets                                  |        |     | $     | 3,108.8 |  | 
|Capital and investment expenditures (a) |        |     |       | 30.2    |  | 

|December 31, 2002                      
|---------------------------------------
|Assets                                 
|Capital and investment expenditures (a)

(a) Capital and
investment expenditures reflect year to date amounts for the periods presented.

Consolidated KCP&L The table below reflects summarized
financial information concerning consolidated KCP&Ls reportable segment. Other
includes the operations of HSS and immaterial intercompany eliminations.

|Three Months Ended         |       |       |   |      
|-------------------------- | ----- | ----- | - | -----
|KCP&L                      | Other | KCP&L
|(millions)                
|Operating revenues         |       |       | $ | 234.4
|Depreciation and depletion |       |       |   | (34.6
|Interest charges           |       |       |   | (17.8
|Income taxes               |       |       |   | (10.7
|Net income (loss)          |       |       |   | 13.4 

31

|Three Months Ended            |       |       |   |      
|----------------------------- | ----- | ----- | - | -----
|KCP&L                         | Other | KCP&L
|(millions)                   
|Operating revenues            |       |       | $ | 198.9
|Depreciation and depletion    |       |       |   | (35.8
|Interest charges              |       |       |   | (19.0
|Income taxes                  |       |       |   | 6.6  
|Cumulative effect of a change |       |      
|in accounting principle       |       |       |   | -    
|Net loss                      |       |       |   | (6.9 

|                                        |       |       |   |        
|--------------------------------------- | ----- | ----- | - | -------
|KCP&L                                   | Other | KCP&L
|(millions)                             
|Assets                                  |       |       | $ | 3,108.8
|Capital and investment expenditures (a) |       |       |   | 30.2   
|December 31, 2002                       |       |      
|Assets                                  |       |       | $ | 3,084.5
|Capital and investment expenditures (a) |       |       |   | 135.5  

(a) Capital and
investment expenditures reflect year to date amounts for the periods presented.

# 15. DERIVATIVE FINANCIAL
INSTRUMENTS

Derivative instruments are accounted
for in accordance with SFAS No. 133 Accounting for Derivative Instruments and
Hedging Activities. SFAS No. 133 requires that every derivative instrument be
recorded on the balance sheet as an asset or liability measured at its fair value and that
changes in the fair value be recognized currently in earnings unless specific hedge
accounting criteria are met.

Derivative Instruments
and Hedging ActivitiesThe 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 interest rate risk
management strategy uses derivative instruments to adjust the Companys liability
portfolio to optimize the mix of fixed and floating rate debt within an established range.
The Company maintains commodity-price risk management strategies that use derivative
instruments to minimize significant, unanticipated earnings fluctuations caused by
commodity price volatility.

The Companys risk management
activities, including the use of derivatives, are subject to the management, direction and
control of internal risk management committees.

Interest Rate Risk
ManagementKCP&L utilizes interest rate
management derivatives to adjust its liability portfolio to optimize the mix of fixed and
floating rate debt within an established range.

In 2002, KCP&L remarketed its
1998 Series A, B, and D Environmental Improvement Revenue Refunding (EIRR) bonds totaling
$146.5 million to a 5-year fixed interest rate of 4.75% ending October 1, 2007.
Simultaneously with the remarketing, KCP&L entered into an interest rate swap for the
$146.5 million based on LIBOR to effectively create a floating interest rate obligation.
The transaction is a fair value hedge with the assumption of no ineffectiveness under SFAS
No. 133. Changes in the fair

32

market value of the swap are recorded on the balance sheet as
an asset with an offset to the respective debt balances with no impact on earnings. At
March 31, 2003, the fair value of the swap was $4.8 million.

KCP&L has two interest rate swap
agreements in place to fix the interest rate on $30 million of floating-rate long-term
debt. These swaps do not meet the criteria to qualify for hedge accounting. The swap
agreements expire in June 2003 and effectively fix the interest at a weighted-average rate
of 3.88%. The fair market values of these agreements are recorded as current assets or
liabilities and changes in the fair market value of these instruments is recorded as
interest expense in the income statement.

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

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

As a result of supplying electricity
to retail customers under fixed rate contracts, Strategic Energys policy is to match
customers projected demand with fixed price purchases. In certain markets where
Strategic Energy operates, entering into forward fixed price contracts is cost
prohibitive. By entering into swap contracts for a portion of its forecasted purchases in
these markets, the future purchase price of electricity is effectively fixed under these
swap contracts protecting Strategic Energy from price volatility. The swap contracts limit
the unfavorable effect that price increases will have on electricity purchases. Under SFAS
No. 133, the majority of the swap agreements are designated as cash flow hedges resulting
in the difference between the market value of energy and the hedge value being recorded as
other comprehensive income (loss). To the extent that the hedges are not effective, the
ineffective portion of the changes in fair market value will be recorded directly in
purchased power.

In March 2003, Strategic Energy
initiated a termination agreement with a swap counterparty due to credit and performance
concerns. Strategic Energy received a $4.8 million fair value settlement. The swap was
designated as a cash flow hedge of a forecasted transaction and Strategic Energy
management believes the forecasted transaction will occur; therefore, the gain remains in
other comprehensive income and will be reclassified to earnings in the same period during
which the forecasted transaction affects earnings.

KLT Gas risk management policy
is to use firm sales agreements or financial hedge instruments to mitigate its exposure to
market price fluctuations on up to 85% of its daily natural gas production. KLT Gas is
currently developing and testing gas properties; therefore, no production was hedged in
2002 or 2003.

33

The amounts recorded related to the
cash flow hedges in Other Comprehensive Income (OCI) are summarized in the following
tables:

Great Plains Energy
activity for the three months ended March 31, 2003

|                               |               |              |      |      |   | 
|------------------------------ | ------------- | ------------ | ---- | ---- | - | 
|(Decrease) in                 
|December 31                    | Comprehensive | March 31    
|2002                           | Income        | Reclassified | 2003
|Assets                         | (millions)   
|Cash                           |               |              | $    | -    |   | 
|Other current assets           |               |              |      | 3.0  |   | 
|Liabilities and capitalization |               |             
|Other current liabilities      |               |              |      | (1.6 | ) | 
|Other comprehensive            |               |             
|income                         |               |              |      | (0.9 | ) | 
|Deferred income taxes          |               |              |      | (0.7 | ) | 
|Other deferred credits         |               |              |      | 0.2  |   | 

Consolidated KCP&L activity
for the three months ended March 31, 2003

|                               |               |              |          |      |   | 
|------------------------------ | ------------- | ------------ | -------- | ---- | - | 
|(Decrease) in                 
|December 31                    | Comprehensive |              | March 31
|2002                           | Income        | Reclassified | 2003    
|Assets                         | (millions)   
|Other current assets           |               |              | $        | 0.3  |   | 
|Liabilities and capitalization |               |             
|Other comprehensive            |               |             
|income                         |               |              |          | (0.2 | ) | 
|Deferred income taxes          |               |              |          | (0.1 | ) | 

Great Plains Energy
activity for the three months ended March 31, 2002

|                               |               |              |      |       |   | 
|------------------------------ | ------------- | ------------ | ---- | ----- | - | 
|(Decrease) in                 
|December 31                    | Comprehensive | March 31    
|2001                           | Income        | Reclassified | 2002
|Assets                         | (millions)   
|Other current assets           |               |              | $    | (0.2  | ) | 
|Other deferred debits          |               |              |      | -     |   | 
|Liabilities and capitalization |               |             
|Other current liabilities      |               |              |      | (12.7 | ) | 
|Other comprehensive            |               |             
|income                         |               |              |      | 12.1  |   | 
|Deferred income taxes          |               |              |      | 8.5   |   | 
|Other deferred credits         |               |              |      | (7.7  | ) | 

34

Consolidated KCP&L activity
for the three months ended March 31, 2002

|                               |               |              |      |      |  
|------------------------------ | ------------- | ------------ | ---- | ---- | -
|(Decrease) in                 
|December 31                    | Comprehensive | March 31    
|2001                           | Income        | Reclassified | 2002
|Assets                         | (millions)   
|Other current assets           |               |              | $    | (0.2 | )
|Liabilities and capitalization |               |             
|Other current liabilities      |               |              |      | (0.1 | )
|Other comprehensive            |               |             
|income                         |               |              |      | 0.2  |  
|Deferred income taxes          |               |              |      | 0.1  |  

Reclassified to earnings
for the three months ended March 31,

|                           |     
|-------------------------- | ----
|2003                       | 2002
|(millions)                
|Fuel expense               |     
|Purchased power expense    |     
|Minority interest          |     
|Income taxes               |     
|Other comprehensive income |     

35

# 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 follow are a combined
presentation for Great Plains Energy and 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. It should be read in conjunction with the accompanying consolidated
financial statements and related notes and with the managements discussion and
analysis included in the companies 2002 annual report on Form 10-K.

# 

Great Plains Energy
IncorporatedAs a diversified energy company,
Great Plains Energys reportable business segments include:

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

The Companys goal is to become a
premier diversified energy company that achieves annual growth in earnings per share in a
financially disciplined manner. To achieve this goal, Great Plains Energy intends to focus
on its three reportable segments of business:

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

# Critical Accounting
Policies

# 

Regulatory MattersAt the end of January 2002, a severe
ice storm occurred throughout large portions of the Midwest, including the greater Kansas
City metropolitan area. In 2002, the KCC approved a stipulation and agreement regarding
the treatment of the Kansas portion of the ice storm costs. Pursuant to the stipulation
and agreement, KCP&L implemented a retail rate reduction January 1, 2003, and began
calculating depreciation expense on Wolf Creek using a 60 year life instead of a 40 year
life. For the three months ended March 31, 2003, KCP&L retail revenues decreased
approximately $2.6 million and depreciation expense decreased approximately $1.9 million
as a result of the stipulation and agreement. The reduction in depreciation expense has
been recorded as a regulatory asset.

In 2002, the MPSC approved
KCP&Ls application for an accounting authority order related to the Missouri
jurisdictional portion of the storm costs. The order allows KCP&L to defer and
amortize $20.1 million, representing the Missouri portion of the storm costs,
through January 2007. The amortization began in September 2002 and will amortize
approximately $4.6 million annually for the remainder of the amortization period. For the
three months ended March 31, 2003, KCP&L amortized $1.1 million of deferred ice storm
costs.

36

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

The adoption of SFAS No. 143 changed
the accounting for and the method used to report KCP&Ls obligation to
decommission its 47% share of Wolf Creek. The legal obligation to decommission Wolf Creek
was incurred when the plant was placed in service in 1985. The estimated liability,
recognized on KCP&Ls balance sheet at January 1, 2003, is based on a third party
nuclear decommissioning study conducted in 2002. KCP&L used a credit-adjusted risk
free discount rate of 6.42% to calculate the retirement obligation. This rate is based on
the rate KCP&L could issue 30-year bonds, adjusted downward to reflect the portion of
the anticipated costs in current year dollars that have been funded to date through the
tax-qualified trust fund. The cumulative impact of prior decommissioning accruals recorded
consistent with rate orders issued by the MPSC and KCC have been reversed and a new
regulatory contra-asset for such amounts has been established. Amounts collected through
these rate orders have been deposited in a legally restricted external trust fund. The
fair market value of the trust fund was $63.5 million and $63.3 million at March 31, 2003
and December 31, 2002, respectively.

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

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

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

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

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

If the provisions of SFAS No. 143 had
been applied to the consolidated balance sheets presented, Consolidated KCP&Ls
liability for asset retirement obligations would have been $99.2 million at

37

December 31, 2002. Great Plains Energys liability for asset retirement obligations
at December 31, 2002, would have been $100.4 million, reflecting consolidated
KCP&Ls liability and the KLT Gas liability of $1.2 million.

KCP&L has legal asset retirement
obligations for certain other assets where it is not possible to estimate the time period
when the obligations will be settled. Consequently, the retirement obligations cannot be
measured at this time. For transmission easements obtained by condemnation, KCP&L must
remove its transmission lines if the line is de-energized. It is extremely difficult to
obtain siting for new transmission lines. Consequently, KCP&L does not anticipate
de-energizing any of its existing lines. KCP&L also operates, under state permits, ash
landfills at several of its power plants. While the life of the ash landfill at one plant
can be estimated and is included in the estimated liabilities above, the future life of
ash landfills at other permitted landfills cannot be estimated. KCP&L can continue to
maintain permits for these landfills after the adjacent plant is closed.

Although the liability for Wolf Creek
decommissioning costs recorded under the new ARO method will be substantially the same at
the end of Wolf Creeks life as the liability that would have been recorded under the
former ratemaking method, the rate at which the liability will increase will be different
under the two methods. In the near term, the ARO liability will be higher than the
liability under the former method. Because KCP&L is subject to SFAS No. 71, the
difference in the recognition of the liability will have no impact on earnings.

Prior to the adoption of SFAS No.
143, KLT Gas did not record asset retirement costs and liabilities, or the associated
depreciation and accretion. Retirement costs would have been charged to expense when
incurred in the period of settlement. Under SFAS No. 143, KLT Gas reserve for
depreciation and asset retirement liabilities will increase systematically over the asset
life up to the time of settlement with corresponding increases in expense.

# Great Plains Energy
Results of Operations

|                                          
|------------------------------------------
|March 31                                  
|2003                                      
|(millions)                                
|Operating revenues                        
|Fuel                                      
|Purchased power - KCP&L                   
|Purchased power - Strategic Energy        
|Revenues, net of                          
|fuel and purchased power                  
|Other operating expenses                  
|Depreciation and depletion                
|Loss on property                          
|Operating income                          
|Loss from equity investments              
|Non-operating income (expenses)           
|Interest charges                          
|Income taxes                              
|Cumulative effect of a change             
|in accounting principle                   
|Net income (loss)                         
|Preferred dividends                       
|Earnings (loss) available for common stock

38

Great Plains Energys three
months ended March 31, 2003 earnings, as detailed in the table below, increased to $14.1
million, or $0.20 per share, from a loss of $6.3 million, or $(0.10) per share, compared
to the same period of 2002.

|                                     |                     |      |      |     
|------------------------------------ | ------------------- | ---- | ---- | ----
|Earnings (Loss)                      | Plains Energy Share
|2003                                 | 2002                | 2003 | 2002
|(millions)                          
|
|KCP&L                                |                     |      | $    | 13.4
|Subsidiary operations                |                     |      |      | (1.5
|Cumulative effect to January 1, 2002 |                     |     
|of a change in accounting principle  |                     |      |      | -   
|Consolidated KCP&L                   |                     |      |      | 11.9
|Strategic Energy                     |                     |      |      | 9.8 
|KLT Gas                              |                     |      |      | (6.5
|Other non-regulated operations       |                     |      |      | (1.1
|Total                                |                     |      | $    | 14.1

KCP&L earnings increased $20.3
million for the three months ended March 31, 2003, compared to the same period of 2002.
KCP&L revenue, net of fuel and purchased power increased $26.9 million primarily due
to a significant increase in the price per MWh of wholesale sales driven by an approximate
doubling of natural gas prices. This increase combined with the $13.7 million net decrease
in storm costs more than offset a $3.0 million increase in pension expense and a $2.1
million increase in power plant maintenance. The amortization of the Missouri
jurisdictional portion of the storm costs totaled $1.1 million in the first quarter of
2003. During the first quarter of 2002, KCP&L expensed $14.8 million for the Kansas
jurisdictional portion of the storm costs.

Strategic Energys earnings
increased $2.9 million for the three months ended March 31, 2003, compared to the same
period of 2002. The increase is the result of a $7.9 million increase in revenues net of
purchased power primarily due to a 70% increase in MWhs sold. This increase was offset
slightly by an increase in administrative and general expenses. In addition to the
continued growth, Great Plains Energys ownership of Strategic Energy was
increased by 5.8% in the fourth quarter of 2002.

KLT Gas continues to focus on the
testing and development of several unconventional natural gas properties. In the first
quarter of 2003, KLT Gas recorded an after tax impairment charge of $5.5 million on a
Rocky Mountain project in response to lower revised estimates of future gas production.

Other non-regulated operations
included, among other things, a $1.9 million increase in earnings primarily due to lower
reductions in affordable housing limited partnerships in the first quarter of 2003
compared to 2002.

The 2002 cumulative effect of
a change in accounting principle reflects RSAEs write-down of
goodwill due to the adoption of SFAS No. 142, Goodwill and Other Intangible
Assets.

39

Consolidated KCP<he following discussion of
consolidated KCP&L results of operations includes KCP&L, an integrated 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 integrated electric utility.

Consolidated KCP&L
Business OverviewAs an integrated electric utility,
KCP&L engages in the generation, transmission, distribution and sale of electricity.

KCP&Ls power business will
have over 4,000 megawatts of generating capacity following the completion of five
combustion turbine units that will add 385 megawatts of peaking capacity. Construction
began during the third quarter of 2002 and the units are on schedule to be online this
summer. KCP&L has entered into a five-year construction and synthetic operating lease
transaction with a Trust for the five combustion turbines. The total estimated cost for
the purchase, installation, assembly and construction of the five combustion turbines is
$176 million. Under FASB Interpretation No. 46, KCP&L will be required to consolidate
the Trust effective July 1, 2003. KCP&Ls utility plant and long-term debt
will increase by the total project costs. Because of the manner in which the current
synthetic lease is treated for covenant purposes in the Companys and
KCP&Ls financing arrangements, as well as by the rating agencies, liquidity and
credit ratings are not expected to be impacted by this new accounting standard.

KCP&Ls delivery business
consists of transmission and distribution facilities that serve over 485,000 customers as
of March 31, 2003. KCP&L continues to experience load growth approximating the
historical average of 2.0% to 2.5% annually through increased customer usage and
additional customers. Rates charged for electricity are below the national average.

At the end of January 2002, a severe
ice storm occurred throughout large portions of the Midwest, including the greater Kansas
City metropolitan area. At its peak, the storm caused over 300,000 customer outages
throughout the KCP&L service territory, an unprecedented level in the KCP&Ls
120-year history. Crews from other utilities in numerous states were called in to assist
in the restoration of power and power was restored in nine days. Total costs related to
the January ice storm were approximately $51.3 million of which $14.7 million were capital
expenditures and therefore charged to utility plant. KCP&L expensed a total of $16.5
million in 2002 for the Kansas jurisdictional portion of the storm costs and deferred
$20.1 million of the storm costs applicable to Missouri. Estimated costs recorded in the
three months ended March 31, 2002, were $45.4 million which included $12.5 million for
capital expenditures, $14.8 million applicable to Kansas, and $18.1 million applicable to
Missouri. In January 2003, Edison Electric Institute honored KCP&L for exemplary
performance and dedication in restoring power to customers during the storm and recognized
KCP&L by awarding it the associations annual Emergency Response
Award.

Under the Federal Energy Regulatory
Commission (FERC) Order 2000, KCP&L, as an investor-owned utility, is strongly
encouraged to join a FERC approved Regional Transmission Organization (RTO). RTOs combine
regional transmission operations of utility businesses into a regional organization that
schedules transmission services and monitors the energy market to ensure regional
transmission reliability and non-discriminatory access. During the first quarter of 2002,
the Southwest Power Pool, Inc. (SPP) and the Midwest Independent System Operator (MISO)
voted to consolidate the two organizations to create a larger Midwestern RTO, a non-profit
organization that will operate in twenty states and one Canadian province. During March
2003, SPP and MISO mutually agreed to terminate the process of consolidating the
organizations. Since KCP&L is a member of the SPP and was expected to participate in
the RTO created by the consolidation, KCP&Ls RTO participation is uncertain.
Subsequent to the termination of the merger between SPP and MISO, the SPP formulated and
approved a Strategic Plan for SPP. The plan includes provisions for SPP to become
compliant

40

with FERC Order 2000. It is anticipated that a detailed plan for becoming Order
2000 compliant, including a schedule, will be presented to the SPP Board of Directors at
the Boards June 2003 meeting. KCP&L is directly participating in this process.

During the third quarter of 2002, the
FERC issued a Notice of Proposed Rulemaking to Remedy Undue Discrimination through Open
Access Transmission Service and Standard Electricity Market Design. The proposed
rulemaking is designed to establish a single non-discriminatory open access transmission
tariff with a single transmission service that is applicable to all users of the
interstate transmission grid. All public utilities that own, control or operate interstate
transmission facilities would be required to become independent transmission providers,
turn over the operation of their transmission facilities to an RTO that meets the
definition of an independent transmission provider or contract with an entity that meets
the definition of an independent transmission provider. KCP&L filed comments with the
FERC on the proposed rulemaking in November 2002. In late April 2003, the FERC issued a
white paper titled Wholesale Power Market Platform, in response to comments
received on its proposed rulemaking. In the white paper, the FERC stated its intent to
require all public utilities to join an RTO or Independent System Operator (ISO).
The FERC also stressed that a significant role will be played by regional authorities and
state committees in setting up regional power markets. The proposal allows for phase-in
implementation and sequencing tailored to each region. The FERC also indicated that
divestiture is not required to achieve independent operation of the transmission system.
Companies may remain vertically integrated under an RTO or ISO. Additionally, as proposed,
each RTO or ISO would be required to have a clear transmission cost recovery policy
outlined in its tariff. The FERC will accept comments on the white paper before issuing a
final rule.

KCP&L has a wholly-owned
unregulated subsidiary, HSS, that holds investments in businesses primarily in residential
services. HSS is comprised of two direct subsidiaries, RSAE and Worry Free. HSS is
evaluating strategic alternatives concerning its investments, which could include a
possible sale of a portion or all of the businesses.

HSS has recorded losses from its
investment in RSAE that resulted in a negative investment balance. As a result of these
losses, the minority interest in RSAE was reduced to zero. Accordingly, as long as RSAE is
consolidated, any future losses of RSAE would be recorded by HSS at 100%, which will
further decrease the investment below zero.

41

Consolidated KCP&L
Results of OperationsThe following table summarizes
consolidated KCP&Ls comparative results of operations.

|                               
|-------------------------------
|March 31                       
|2003                           
|(millions)                     
|Operating revenues             
|Fuel                           
|Purchased power                
|Revenues, net of               
|fuel and purchased power       
|Other operating expenses       
|Depreciation and depletion     
|Gain on property               
|Operating income               
|Non-operating income (expenses)
|Interest charges               
|Income taxes                   
|Cumulative effect of a change  
|in accounting principle        
|Net income (loss)              

Consolidated KCP&L earnings
increased $22.9 million primarily due to increased earnings from KCP&L of $20.3
million for the three months ended March 31, 2003, compared to the same period of 2002.
KCP&Ls revenue, net of fuel and purchased power increased $26.9 million
primarily due to a significant increase in the price per MWh of wholesale sales driven by
an approximate doubling of natural gas prices and an increase in wholesale MWh sales. This
increase combined with a $13.7 million net decrease in storm costs more than offset a $3.0
million increase in pension expense and a $2.1 million increase in power plant
maintenance.

The amortization of the Missouri
jurisdictional portion of the storm costs totaled $1.1 million in the first quarter of
2003. During the first quarter of 2002, KCP&L expensed $14.8 million for the Kansas
jurisdictional portion of the storm costs.

The Company adopted SFAS No. 142,
effective January 1, 2002. In accordance with SFAS No. 142, the Company completed its
transition impairment test of RSAE goodwill and determined that a $3.0 million write-down
of goodwill was required. As a result, KCP&Ls consolidated net income for the
three months ended March 31, 2002, reflects the $3.0 million cumulative effect to January
1, 2002, of a change in accounting principle. Ongoing annual impairment tests are required
by SFAS No. 142. No subsequent write-downs have been required.

42

# Consolidated KCP&L
Sales Revenues and MWh Sales

|                            |            |       
|--------------------------- | ---------- | ------
|March 31                    | %         
|2003                        | 2002       | Change
|Retail revenues             | (millions)
|Residential                 |            |       
|Commercial                  |            |       
|Industrial                  |            |       
|Other retail revenues       |            |       
|Total retail                |            |       
|Wholesale revenues          |            |       
|Other revenues              |            |       
|KCP&L electric revenues     |            |       
|Subsidiary revenues         |            |       
|Consolidated KCP&L revenues |            |       

|                         |             |       
|------------------------ | ----------- | ------
|March 31                 | %          
|2003                     | 2002        | Change
|Retail MWh sales         | (thousands)
|Residential              |             |       
|Commercial               |             |       
|Industrial               |             |       
|Other retail MWh sales   |             |       
|Total retail             |             |       
|Wholesale MWh sales      |             |       
|KCP&L electric MWh sales |             |       
|                         |             |       

Retail revenues increased $6.9
million for the three months ended March 31, 2003 compared to the same period of 2002
primarily due to favorable weather and continued load growth. The increase was partially
offset by $2.6 million associated with the Kansas rate decrease effective January 1, 2003.
See Critical Accounting Policies for additional information. Less than 1% of revenues
include an automatic fuel adjustment provision.

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. Wholesale revenues
increased $28.8 million primarily due to a 77% increase in the bulk power price per MWh
sold. The price increase, driven by an approximate doubling of natural gas prices,
accounted for approximately two thirds of the revenue increase. A 74% increase in
wholesale MWh sales, mostly attributable to increased plant availability and additional
opportunities for off-peak sales, accounted for the remainder.

# 

KCP&L Fuel and
Purchased PowerThe fuel cost per MWh generated and
the purchased power cost per MWh have 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 costs per MWh generated remain substantially less than the
cost of coal per MWh generated. Replacement power costs for planned Wolf Creek outages are
accrued evenly over the units operating cycle. KCP&L expects its cost of nuclear
fuel to remain fairly constant through the year 2008. Coal has a significantly lower cost
per MWh generated than natural gas and oil. KCP&Ls procurement strategies
continue to provide delivered coal costs below the regional average. The cost per MWh for
purchased power is still significantly higher than the fuel cost per MWh of coal and
nuclear

43

generation. KCP&L continually evaluates its system requirements, the
availability of generating units, availability and cost of fuel supply, availability and
cost of purchased power and the requirements of other electric systems to provide reliable
power economically. Fossil plants averaged 74% of total generation and the nuclear plant
the remainder over the last three years.

Fuel costs increased $3.4 million for
the three months ended March 31, 2003, compared to the same period of 2002 primarily due
to a 21% increase in net MWh generated. The increase was partially offset by lower fuel
cost per MWh generated due to additional coal and less natural gas and oil in the
generation fuel mix and a reduction in the cost of uranium and coal.

Purchased power expenses increased
$5.2 million for the three months ended March 31, 2003 compared to the same period of 2002
primarily due to a 70% increase in the cost per MWh purchased driven by an approximate
doubling of natural gas prices.

Consolidated KCP&L
Other Operating Expenses (including operating, maintenance and general taxes)Consolidated KCP&Ls other
operating expenses decreased $7.7 million for the three months ended March 31, 2003,
compared to the same period of 2002 primarily due to the following:

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

Consolidated KCP&L
DepreciationConsolidated KCP&Ls
depreciation expense decreased $1.5 million for the three months ended March 31, 2003,
compared to the same period of 2002 primarily due to the change to a 60 year life for Wolf
Creek pursuant to 2002 KCC approved stipulation and agreement. The change decreased
depreciation expense approximately $1.9 million.

Consolidated KCP&L
Interest ChargesConsolidated KCP&Ls
interest charges decreased $1.2 million for the three months ended March 31, 2003,
compared to the same period of 2002 primarily due to decreased interest rates on long-term
debt and decreased short-term borrowings. Additionally, KCP&L repaid $104.0 million of
medium-term notes during the first quarter of 2003.

Wolf CreekWolf Creek, a nuclear unit, is 20% of
KCP&Ls base load generating capacity and 14% of KCP&Ls total
generating capacity, including the addition of five leased combustion turbines scheduled
to go online this summer. Wolf Creeks operating performance has remained strong over
the last three years, contributing an average of 26% of KCP&Ls annual MWh
generation while operating at an average capacity of 92%. Wolf Creek has the lowest fuel
cost per MWh generated of any of KCP&Ls generating units.

KCP&L accrues the incremental
operating, maintenance and replacement power costs for planned outages evenly over the
units operating cycle, normally 18 months. As actual outage expenses are incurred,
the refueling liability and related deferred tax asset are reduced. Wolf Creek returned to
service on April 27, 2002, following a 35-day refueling and maintenance outage that began
on March 23, 2002. The next outage is scheduled for the fall of 2003 and is estimated to
be approximately 35 days.

44

There has been significant opposition
and delays to, development of a low-level radioactive waste disposal facility. See Note 6
to the consolidated financial statements for additional information. An inability to
complete this project would require KCP&L to write-off its net investment in the
project, which was $7.4 million at March 31, 2003. KCP&L, and the other owners of Wolf
Creek, could also still be required to participate in development of an alternate site.

Ownership and operation of a nuclear
generating unit exposes KCP&L to risks regarding decommissioning costs at the end of
the units life and to potential retrospective assessments and property losses in
excess of insurance coverage. These risks are more fully discussed in the related sections
of Note 6 to the consolidated financial statements.

# Strategic Energy

Strategic Energy
Business OverviewStrategic Energy provides power
supply coordination services by entering into long-term contracts with its customers to
supply electricity that Strategic Energy purchases under long-term contracts to manage its
customers electricity needs. In return, Strategic Energy receives an ongoing
management fee, which is included in the contracted sales price for the electricity.
Strategic Energy operates in several electricity markets offering retail choice, including
Pennsylvania, California, Ohio, New York, Massachusetts and Texas. Strategic Energy
entered the Michigan market, signing its first customers during the first quarter of 2003,
and is targeting expansion into New Jersey before the end of 2003. This would expand
Strategic Energys operations into eight of the sixteen states that offer retail
choice. Strategic Energy also provides strategic planning and consulting services in the
natural gas and electricity markets.

Great Plains Energys indirect
ownership in Strategic Energy totals 89%. In the normal course of business, Great Plains
Energy and KLT Inc. enter into various agreements providing financial or performance
assurance to third parties on behalf of Strategic Energy. 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
Strategic Energy on a stand-alone basis, thereby facilitating the extension of sufficient
credit to accomplish Strategic Energys intended business purposes.

At March 31, 2003, Strategic Energy
provided power supply coordination services on behalf of approximately 33,800 commercial,
institutional and small manufacturing accounts. Strategic Energys customer base is
very diverse. Strategic Energy served approximately 5,200 customers, including numerous
Fortune 500 companies, smaller companies, and governmental entities. Based solely on
current signed contracts and expected usage, Strategic Energy has forecasted future MWh
commitments of 10.3 million for the remainder of 2003 and 8.9 million, 5.6 million, and
1.3 million for the years 2004 through 2006, respectively. Strategic Energy expects to
also supply additional MWh sales in these years through growth in existing markets by
re-signing existing customers and signing new customers as well as through expansion into
new markets.

Strategic Energy maintains a
commodity-price risk management strategy that uses forward physical energy purchases and
derivative instruments to minimize significant, unanticipated earnings fluctuations caused
by commodity-price volatility. As a result of supplying electricity to retail customers
under fixed rate contracts, Strategic Energys policy is to match customers
demand with fixed price purchases. In certain markets where Strategic Energy operates,
entering into forward fixed price contracts is cost prohibitive. By entering into swap
contracts for a portion of its forecasted purchases in these markets, the future purchase
price of electricity is effectively fixed under these swap contracts. The swap contracts
limit the unfavorable effect that price increases will have on electricity purchases.
Under SFAS No. 133, all of the swap agreements are currently designated as cash
flow hedges

45

resulting in the difference between the market value of energy and the hedge
value being recorded as other comprehensive income (loss). At March 31, 2003, the
accumulated comprehensive gain, net of income taxes and minority interest, reflected in
Great Plains Energys consolidated statements of capitalization included a $3.5
million gain related to such cash flow hedges. However, substantially all of the energy
hedged with the swaps has been sold to customers through contracts at prices different
than the fair market value used to value the swaps. Therefore, Strategic Energy does not
anticipate realizing the gain represented in comprehensive income.

During the third quarter of 2002, the
FERC issued a Notice of Proposed Rulemaking to Remedy Undue Discrimination through Open
Access Transmission Service and Standard Electricity Market Design. The proposed
rulemaking is designed to establish a single non-discriminatory open access transmission
tariff with a single transmission service that is applicable to all users of the
interstate transmission grid. Strategic Energy has evaluated the impact of the proposed
rulemaking on its operations and provided comments to the FERC that are generally
supportive of the provisions of the proposal, but suggested some changes to the proposed
rule. In late April 2003, the FERC issued a white paper titled Wholesale Power
Market Platform, in response to comments received on its proposed rulemaking. In the
white paper, the FERC stated its intent to require all public utilities to join an RTO or
Independent System Operator (ISO). The FERC also stressed that a significant role will be
played by regional authorities and state committees in setting up regional power markets.
The proposal allows for phase-in implementation and sequencing tailored to each region.
The FERC also indicated that divestiture is not required to achieve independent operation
of the transmission system. Companies may remain vertically integrated under an RTO or
ISO. Additionally, as proposed, each RTO or ISO would be required to have a clear
transmission cost recovery policy outlined in its tariff. The FERC will accept comments on
the white paper before issuing a final rule.

# 

Strategic Energy
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 obtain,
to terminate or to reset the terms of transactions after specified time periods or upon
the occurrence of credit-related events.

Based on guidelines set by its
Exposure Management Committee, Strategic Energy monitors its counterparty credit risk by
evaluating the credit quality and performance of its suppliers on a routine basis. Among
other things, Strategic Energy monitors counterparty credit ratings, liquidity and results
of operations. As a result of these evaluations, Strategic Energy may, among other things,
establish counterparty credit limits and adjust the amount of collateral required from its
suppliers.

Strategic Energy enters into forward
contracts with multiple suppliers. At March 31, 2003, Strategic Energys five largest
suppliers under forward supply contracts represented 68% of the total future committed
purchases. 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.
Strategic Energys results of operations could also be affected, in a given period,
if it was 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.

46

The following table provides
information on Strategic Energys credit exposure, net of collateral, as of March 31,
2003. 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.

|                     |                |              |            |            |          |  | 
|-------------------- | -------------- | ------------ | ---------- | ---------- | -------- |  | 
|Counterparties       | Counterparties
|Exposure             | Greater Than   | Greater Than
|Before Credit        | Credit         | Net          | 10% Of Net | 10% of Net
|Rating               | Collateral     | Collateral   | Exposure   | Exposure   | Exposure
|(millions)           | (millions)    
|
|External rating      |                |              |            |            |          |  | 
|Investment Grade     |                |              | $          | 27.3       |          |  | 
|Non-Investment Grade |                |              |            | 32.7       |          |  | 
|Internal rating      |                |             
|Investment Grade     |                |              |            | 1.2        |          |  | 
|Non-Investment Grade |                |              |            | 43.8       |          |  | 
|Total                |                |              | $          | 105.0      |          |  | 

|                     |              |            
|-------------------- | ------------ | -----------
|Exposure            
|Less Than            | Greater Than
|Rating               | 2 Years      | 2 - 5 Years
|(millions)          
|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 Standard & Poors
rating of BBB- or a Moodys rating of Baa3. 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. Credit collateral includes the
amount of cash deposits and letters of credit received from counterparties. Net exposure
has only been calculated for those counterparties Strategic Energy is exposed to and
excludes counterparties exposed to Strategic Energy.

At March 31, 2003, Strategic Energy
had exposure before collateral to non-investment grade counterparties totaling $76.5
million of which 86% is scheduled to mature in less than two years. In addition, Strategic
Energy held collateral totaling $65.6 million limiting its exposure to these
non-investment grade counterparties to $10.9 million.

Strategic Energy is continuing to
pursue a strategy to shift away from national to regional counterparties that have direct
supplies and assets in the region of demand. Strategic Energy is also continuing to
address counterparty issues with strict margining and collateral requirements, netting of
credit

47

exposures against payable balances, preferences for higher credit quality
counterparties, and in some cases, replacement of lower quality counterparty contracts.

During the first quarter of 2003,
Strategic Energy terminated all purchase power supply contracts with a single,
non-investment grade counterparty. The effect of the termination resulted in a $6.0
million termination payment from Strategic Energy to the terminated counterparty,
representing the present value adjusted difference between the prevailing market rates at
the time of termination and the original purchase power contract rates.

Simultaneous with the contract
termination, Strategic Energy entered into new purchase power supply contracts with
investment grade counterparties on substantially the same terms and conditions as the
terminated contracts at then current market rates.

The $6.0 million termination
payment was recorded as a $10.8 million cost of purchased power partially offset by a $4.8
million gain on a terminated swap transaction with the counterparty that remains in other
comprehensive income. The effect of the termination payment on purchased power was more
than offset in the three months ended March 31, 2003, by reductions in purchased power
from the sale of Strategic Energys excess supply of electricity in the wholesale
market. See Strategic Energy Purchased Power section for more information regarding the
cost of purchased power. See Note 15 to the consolidated financial statements for more
information concerning the termination of the swap transaction.

# 

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

|                               
|-------------------------------
|March 31                       
|2003                           
|(millions)                     
|Operating revenues             
|Purchased power                
|Revenues, net of               
|purchased power                
|Other operating expenses       
|Depreciation                   
|Operating income               
|Non-operating income (expenses)
|Interest charges               
|Income taxes                   
|Net income                     

Strategic Energys earnings
increased $2.9 million for the three months ended March 31, 2003, compared to the same
period of 2002, primarily due to continued growth in retail electric sales from the
expansion into new markets and continued sales efforts in existing markets. In addition to
continued growth, Great Plains Energys ownership of Strategic Energy was increased
by 5.8% in the fourth quarter of 2002. These increases were partially offset by increased
labor and benefits as well as other general and administrative expenses and income taxes
due to increased sales in states with higher income tax rates. Also, total gross margin
per MWh decreased to $7.70 for the three months ended March 31, 2003, compared to $9.50
for the same period of 2002, primarily due to the roll-off of higher margin contracts that
were obtained during periods of high volatility in late 2000 and early 2001 and increased
competition.

48

# 

Strategic Energy
Operating RevenuesOperating revenues from Strategic
Energy increased $82.8 million for the three months ended March 31, 2003, compared to the
same period in 2002. The following table reflects Strategic Energys operating
revenues.

|                         |      |       
|------------------------ | ---- | ------
|March 31                 | %   
|2003                     | 2002 | Change
|(millions)              
|Electric - Retail        |      |       
|Electric - Wholesale     |      |       
|Other                    |      |       
|Total Operating Revenues |      |       

At March 31, 2003, Strategic Energy
served approximately 5,200 customers, compared to approximately 4,000 customers at March
31, 2002. These customers represented approximately 33,800 accounts and 21,500 accounts at
March 31, 2003 and 2002, respectively. Strategic Energy may provide periodic billing
credits to its customers resulting from its power supply coordination efforts. The amounts
credited back to the customer are treated as a reduction of retail electric revenues when
determined to be payable.

Retail electric revenues increased
$82.7 million for the three months ended March 31, 2003, compared to the same period in
2002, primarily due to increased retail MWh sales, partially offset by a 6% decrease in
average retail revenues per MWh. Retail MWhs sold increased approximately 70%
to 3.8 million for the three months ended March 31, 2003, from 2.2 million for the same
period in 2002, primarily from strong sales efforts in re-signing customers as well as
signing new customers in markets in which Strategic Energy continued to experience
favorable conditions for growth. Several factors contribute to changes in the average
retail revenues per MWh, including the underlying price of the commodity, the nature and
type of products offered and the mix of sales by geographic market.

Strategic Energy
Purchased PowerTo supply its retail contracts,
Strategic Energy purchases long-term blocks of electricity under forward contracts in
fixed quantities at fixed prices from power suppliers based on projected usage. Strategic
Energy sells any excess retail supply of electricity back into the wholesale market. The
proceeds from the sale of excess supply of electricity is recorded as a reduction of
purchased power. The amount of excess retail supply sales that reduced purchased power for
the three months ended March 31, 2003 was $54.0 million, compared to $21.3 million for the
same period in 2002.

As previously discussed, Strategic
Energy operates in several retail choice electricity markets. The cost of supplying
electricity to retail customers can vary widely by geographic market. This variability can
be affected by many factors including, among other items, geographic differences in the
cost per MWh of purchased power and capacity charges due to regional purchased power
availability and requirements of other electricity providers and differences in
transmission charges. However, Strategic Energy has mitigated the effects of higher supply
costs by entering into long-term, full-requirements contracts with customers that are
priced to the customers based on the cost of the associated supply contract.

Purchased power increased $74.9
million for the three months ended March 31, 2003, compared to the same period in 2002,
primarily due to the 70% increase in MWh purchases to supply the increase in retail MWh
sales discussed above. This increase was partially offset by a 4% decrease in the cost per
MWh of purchased power.

49

Strategic Energy Other Operating ExpensesStrategic
Energys other operating expenses as a percentage of operating revenues decreased to
4.1% for the three months ended March 31, 2003 from 4.8% for the same period in 2002, due
to Strategic Energys efforts in leveraging its infrastructure and the effects of
achieving economies of scale. Strategic Energy continued to experience increased labor and
benefits as well as other general and administrative expenses for the three months ended
March 31, 2003, compared to the same period in 2002. The increase is primarily due to
higher labor and benefit costs from the addition of employees and increasing health care
related costs, higher profit sharing and deferred compensation expense which are tied to
earnings and financial performance, and higher other general and administrative expenses
associated with higher sales volumes, geographic market expansion, and regulatory and
market development initiatives.

# KLT Gas

KLT Gas Business OverviewKLT Gas is focused on exploring for,
developing and producing unconventional natural gas resources, including coalbed methane
properties. KLT Gas believes that unconventional natural gas resources provide an
economically attractive alternative source of supply to meet the growing demand for
natural gas in North America. Additionally, KLT Gas management team has experience
and expertise in identifying, testing and producing unconventional natural gas properties
and, as a result, it believes its expertise provides a competitive advantage in this niche
of the exploration and production sector.

Although gas prices have been
volatile historically, KLT Gas continues to believe that the long-term future price
scenarios for natural gas appear strong. Environmental concerns, especially air quality,
and the increased demand for natural gas for new electric generating capacity are
contributing to this projected growth in demand.

KLT Gas leased properties are
primarily located in Colorado, Kansas and Wyoming with some leases in Nebraska and Texas.
These leased properties cover approximately 237,000 undeveloped acres. The testing of this
acreage is in accordance with KLT Gas exploration plan and capital budget. The
timing of the testing may vary from current plans based upon obtaining the required
environmental and regulatory approvals and permits and future changes in market
conditions.

In March 2003, KLT Gas completed the
sale of approximately 30,000 undeveloped acres in Kansas. KLT Gas follows the full cost
accounting method for its natural gas properties, under which the acreage sale is
accounted for as an adjustment to capitalized costs with the gain not
recognized in earnings.

During the first quarter of 2003, KLT
Gas leased additional acreage in the Rocky Mountain region. Exploration of the newly
acquired acreage is anticipated to begin during the second half of 2003. In addition, KLT
Gas continued to test a new prospect in Colorado as well as the development of a pilot
project in the Powder River Basin and two additional projects in the Rocky Mountain
region.

50

KLT Gas Results of
OperationsThe following table summarizes KLT
Gas comparative results of operations.

|                               
|-------------------------------
|March 31                       
|2003                           
|(millions)                     
|Operating revenues             
|Other operating expenses       
|Depreciation and depletion     
|Loss on property               
|Operating income (loss)        
|Non-operating income (expenses)
|Interest charges               
|Income taxes                   
|Net loss                       

KLT Gas loss for the three
months ended March 31, 2003, increased $6.4 million compared to the same period of 2002.
Throughout 2002 and the first quarter of 2003, KLT Gas has been developing and testing gas
properties, as well as continuing production at its South Texas properties. KLT Gas
net loss for the three months ended March 31, 2003, includes an impairment of $9.0 million
on a Rocky Mountain project, which reduced earnings by $5.5 million. The impairment was in
response to lower revised estimates of future gas production from that property.

KLT Gas Income TaxesKLT Gas recorded tax credits related
to its investment in natural gas properties of $1.4 million for the three months ended
March 31, 2002. The law that allowed substantially all of these credits expired at the end
of 2002.

# Other Non Regulated
Activities

# 

Investment in Affordable
Housing Limited Partnerships  KLT InvestmentsKLT Investments Inc.s (KLT
Investments) earnings for the three months ended March 31, 2003, totaled $2.4 million
(including an after tax reduction of $1.5 million in its affordable housing investment)
compared to earnings of $0.5 million for the three months ended March 31, 2002 (including
an after tax reduction of $3.4 million in its affordable housing investment). KLT
Investments earnings include accrued tax credits of $4.8 million in both the
three months ended March 31, 2003 and 2002.

At March 31, 2003, KLT Investments
had $65.5 million in affordable housing limited partnerships. Approximately 66% 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. KLT Investments projects tax credits to run through 2009. A
change in accounting principle relating to investments made after May 19, 1995, requires
the use of the equity method when a company owns more than 5% in a limited partnership
investment. Of the investments recorded at cost, $42.1 million exceed this 5% level but
were made before May 19, 1995. KLT Investments management does not anticipate making
additional investments in affordable housing limited partnerships at this time.

51

On a quarterly basis, KLT Investments
compares the cost of those properties accounted for by the cost method to the total of
projected residual value of the properties and remaining tax credits to be received.
Estimated residual values are based on studies performed by an independent firm. Based on
the latest comparison, pretax reductions in affordable housing investments were $2.3
million and $5.3 million for the three months ended March 31, 2003 and 2002, respectively.
Pretax reductions in affordable housing investments are estimated to be $10 million for
the remainder of 2003 and $7 million, $10 million, and $3 million for the years 2003
through 2006, respectively. These projections are based on the latest information
available but the ultimate amount and timing of actual reductions could be significantly
different from the above estimates. The properties underlying the partnership investment
are subject to certain risks inherent in real estate ownership and management. Even after
these estimated reductions, earnings from the investments in affordable housing are
expected to be positive for the years 2003 through 2006.

Subsidiary of KLT
Telecom Files for Bankruptcy  DTIThe accounting treatment related to
DTI and its 2001 bankruptcy is complex and is addressed in greater detail in Note 19 to
the consolidated financial statements of the Companies 2002 annual report on From
10-K. Additionally, Note 7 of the consolidated financial statements in this quarterly
report on Form 10-Q is incorporated by reference in this portion of Managements
Discussion and Analysis. Both notes should be read as a component of this discussion.

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

In December 2002, Digital Teleport
entered into an agreement to sell substantially all of its assets (Asset Sale) to
CenturyTel Fiber Company II, LLC (CenturyTel), a nominee of CenturyTel, Inc. (Asset
Purchase Agreement). The Asset Sale was approved by the Bankruptcy Court on February 13,
2003, but the Asset Purchase Agreement contains conditions to closing which include among
other items the receipt of all necessary regulatory approvals, which must either be
satisfied or waived by July 15, 2003.

In the Digital Teleport bankruptcy
case, KLT Telecom, KLT Inc., KCP&L, Great Plains Energy, Digital Teleport and the
Official Unsecured Creditors Committee of Digital Teleport entered into a Settlement
Agreement as of December 23, 2002 (Teleport Settlement Agreement). The Teleport Settlement
Agreement provides that unsecured creditors will receive up to 90 cents on each dollar of
approved claims after the consummation of the Asset Sale, and that the remaining estate
balance after the payment of administrative expenses and all other claims will be
distributed to KLT Telecom. The Teleport Settlement Agreement, if approved by the
Bankruptcy Court, resolves all material issues and disputes among the parties to that
agreement.

In addition, in the Holdings
bankruptcy case, KLT Telecom, KLT Inc., Great Plains Energy, KCP&L, Holdings, The Bank
of New York (as trustee of an Indenture, as amended, relating to the senior discount notes
issued by Holdings) (Trustee) and three principal noteholders of Holdings (the
Noteholders) entered into a Settlement Agreement and Plan Term Sheet as of March 14, 2003
(Holdings Settlement Agreement). The Holdings Settlement Agreement provides, among other
things, for the payment by KLT Telecom to the Holdings bankruptcy estate of approximately
$13.8 million from the distribution that KLT Telecom will receive under the Teleport
Settlement Agreement. The Holdings Settlement Agreement, if approved by the Bankruptcy
Court, resolves all material issues and disputes that may exist among the parties to that
agreement.

52

The Teleport Settlement Agreement and
the Holdings Settlement Agreement are incorporated into a joint Chapter 11 plan filed by
the three DTI entities. It is anticipated that the plan will be voted upon, and ultimately
subject to confirmation by the Bankruptcy Court at a hearing on June 9, 2003.

Because of DTIs bankruptcy
filings, KLT Telecom no longer has control over nor can it exert significant
influence over DTI. As a consequence, as of December 31, 2001, DTI was
de-consolidated and is presented on the cost basis. Consequently, KLT Telecom did not
include in its financial results the ongoing results of operations, earnings or losses
incurred by DTI since December 31, 2001, and will not do so during the remaining period of
the DTI bankruptcy proceedings.

|Significant Balance Sheet Changes
|---------------------------------
|
|o                                
|                                 
|o                                
|                                 
|                                 
|                                 
|o                                
|                                 
|                                 
|                                 
|                                 
|                                 
|o                                
|                                 
|                                 
|o                                
|                                 
|o                                
|                                 
|o                                
|                                 
|                                 

# 

Capital Requirements and
LiquidityGreat 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 from its subsidiaries and
proceeds from the sale of its securities.

Great Plains Energys capital
requirements are principally comprised of KCP&Ls utility capital expenditures,
KLT Gas capital expenditures, and KCP&Ls pension benefit plan funding
requirements discussed below. Additional cash and capital requirements for the companies,
including long-term debt requirements, are discussed below.

Great Plains Energys liquid
resources at March 31, 2003, included cash flows from operations of subsidiaries, $105.8
million cash and cash equivalents on hand and $255.0 million of unused bank lines of
credit. The unused lines consisted of $126.0 million from KCP&Ls short-term bank
lines of credit,

53

$30.0 million from Strategic Energys bank line of credit, and $99.0
million from Great Plains Energys revolving credit facilities. See the debt
agreements section below for more information on these agreements.

Great Plains Energy and consolidated
KCP&L generated positive cash flows from operating activities for the periods
presented. The increase in cash flows from operating activities for Great Plains Energy
and consolidated KCP&L for the three months ended March 31, 2003, compared to the same
period of 2002 is due to increased net income before non-cash expenses and the changes in
working capital detailed in Note 2 to the consolidated financial statements. The
individual components of working capital vary with normal business cycles and operations.
Also, the timing of the Wolf Creek outage affects the refueling outage accrual, deferred
income taxes and amortization of nuclear fuel.

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. Utility capital expenditures and the allowance for borrowed funds used during
construction decreased $7.3 million for the three months ended March 31, 2003, compared to
2002 primarily due to $12.5 million of capital expenditures as a result of the January
2002 ice storm.

The change in Great Plains Energy and
consolidated KCP&Ls cash flows from financing activities reflects the equity
infusion of $100.0 million from Great Plains Energy to KCP&L and KCP&Ls
subsequent redemption of $104.0 million of medium-term notes. Great Plains Energy
essentially funded the infusion with proceeds from its common stock offering in late 2002;
however, prior to the infusion, Great Plains Energy used the offering proceeds
to repay short-term borrowings in late 2002 and then re-borrowed in the first quarter
of 2003 to make the equity infusion into KCP&L at the time of redemption. The increase
in dividends paid by Great Plains Energy is primarily attributable to the public offering
of 6.9 million of common shares in late 2002.

KCP&L expects to meet day-to-day
operating requirements including interest payments, construction requirements (excluding
new generating capacity) and dividends 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, 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
(detailed below) 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.

Great Plains Energy filed a
registration statement in April 2002 for the issuance of an aggregate amount up to $300
million of any combination of senior debt securities, subordinated debt securities, trust
preferred securities, convertible securities, or common stock. The registration statement
became effective in November 2002 and Great Plains Energy issued $151.8 million of common
stock. The proceeds were used for repayment of debt and general corporate purposes.

As a registered public utility
holding company, Great Plains Energy must receive authorization from the Securities and
Exchange Commission (SEC) under the Public Utility Holding Company Act of 1935 (35 Act) to
issue equity or debt. Great Plains Energy is currently authorized to issue up to $450.0
million of debt and equity. Great Plains Energy has utilized $423.8 million of this amount
as follows: (i) $39.0 million in preferred stock issued in connection with the October 1,
2001, reorganization; (ii) $225.0 million in revolving credit facilities and (iii) $159.8
million in common equity issued in a public offering and in connection with IECs
acquisition of an indirect ownership interest in Strategic Energy. Great

54

Plains Energy has
filed an application with the SEC seeking an additional $750 million in authorization and
anticipates the SEC will act on the application in 2003.

KCP&L is planning to file a
registration statement for up to $255 million in debt securities in the current year. This
will preserve KCP&Ls flexibility to access the capital markets for long-term
debt if required.

KCP&L has entered into a
revolving agreement, which expires in October 2003, to sell all of its right, title and
interest in the majority of its customer accounts receivable to Receivables Company, which
in turn sells most of the receivables to outside investors. KCP&L expects the
agreement to be renewed annually. See Note 4 to the consolidated financial statements.

Debt AgreementsGreat Plains Energy syndicated a $225
million, revolving credit facility with a group of banks in the first quarter of 2003.
This facility replaced a $205 million syndicated facility and a $20 million credit
facility with a bank. The line has a 364-day term but may be extended for an additional
year at the Companys option. The facility contains a 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 redeem maturing commercial paper. Available liquidity under this facility is
not impacted by a decline in credit ratings unless the downgrade occurs in the context of
a merger, consolidation or sale. A default by Great Plains Energy or any of its
significant subsidiaries of material other indebtedness totaling more than $25.0 million
is a default under this bank line. Under the terms of this agreement, Great Plains Energy
is required to maintain a consolidated indebtedness to consolidated capitalization ratio
not greater than 0.65 to 1.0 at all times and an interest coverage ratio greater than 2.25
to 1.0. At March 31, 2003, the Company was in compliance with these covenants.

Strategic Energy has a $30 million
bank line of credit which matures in May 2003. The line of credit contains a MAC clause
that requires Strategic Energy to represent, prior to receiving any funding, that no MAC
has occurred. Strategic Energy is currently negotiating a $95 million, 364-day senior
secured revolving credit facility. The new facility will replace the $30 million bank line
of credit and a $25 million letter of credit facility. The increase will enhance Strategic
Energys liquidity including its ability to provide credit support for
purchased power and regulatory requirements.

KCP&Ls primary sources of
liquidity are cash flows from operations and bilateral credit lines totaling $126.0
million with six banks (as of March 31, 2003). KCP&L uses these lines to provide
support for its issuance of commercial paper, none of which was outstanding at March 31,
2003. These bank facilities are each for a 364-day term and mature at various times
throughout the year. Five of the facilities totaling $111.0 million can be extended for
one year under their term out provisions. KCP&L has MAC clauses in two agreements
covering $50.0 million of available bilateral credit lines. These two facilities require
KCP&L to represent, prior to receiving funding, that no MAC has occurred. Under one of
these agreements totaling $35 million, KCP&L is able to access the facility even in
the event of a MAC in order to redeem maturing commercial paper. KCP&Ls
available liquidity under these facilities is not impacted by a decline in credit ratings
unless the downgrade occurs in the context of a merger, consolidation or sale. A default
by KCP&L on other indebtedness is a default under these bank line agreements. Under
the terms of certain bank line agreements, KCP&L is required to maintain a
consolidated indebtedness to consolidated capitalization ratio not greater than 0.65 to
1.0 at all times. At March 31, 2003, the Company was in compliance with the covenant.

RSAE has a $25 million line of credit
with a bank. The facility was renewed in March 2003 for another 364-day term. Great Plains
Energy ensures adequate capital to operate RSAE through an agreement supporting this
facility. At March 31, 2003, the facility was fully drawn. In early May 2003, the facility
was increased to $27 million.

55

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

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
Investments, or withdrawing amounts from KLT Investments if the withdrawals would result
in KLT Investments to not be 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 March 31, 2003, KLT Investments had $19.7 million in
outstanding notes, including current maturities.

Pursuant to agreements with the MPSC
and the KCC, KCP&L maintains its common equity at not less than 35% of total
capitalization. Additionally, Great Plains Energy maintains its consolidated common equity
at not less than 30% of total consolidated capitalization.

PensionsKCP&L maintains defined benefit
plans for substantially all of its employees. KCP&Ls policy is to fund
the plan on an actuarial basis to provide assets sufficient to meet benefits to be paid to
plan participants consistent with the funding requirements of the Employee Retirement
Income Security Act of 1974 (ERISA). Contributions of $1.6 million and $1.0 million were
made in 2002 and 2001, respectively.

Due to sharp declines in the debt and
equity markets since the third quarter of 2000, the value of assets held in the trusts to
satisfy pension plan obligations has decreased significantly. As a result, under the
minimum funding requirements of ERISA, KCP&L will be required to fund approximately
$9.8 million ($7.3 million was funded in April 2003) and $21.3 million during 2003 and
2004, respectively. Management believes KCP&L has adequate access to capital resources
through cash flows from operations or through existing lines of credit to support this
funding.

Participants in the plans may request
a lump-sum cash payment upon termination of their employment, which could result in
increased cash requirements from pension plan assets and KCP&L being required to
accelerate future funding. While it is difficult to estimate future cash requirements due
to uncertain market conditions and other factors, additional funding may be required in
future years.

Under the terms of the pension plans,
KCP&L reserves the right to amend or terminate the plans, and from time to time
benefits have changed.

Supplemental Capital
Requirements and Liquidity InformationGreat Plains Energys other
long-term obligations, net increased approximately 5% at March 31, 2003, over the $1,466.3
million level at December 31, 2002, reflecting increases in 2004 and 2005 for new
Strategic Energy purchased power contracts. All other contractual cash obligations for
Great Plains Energy and consolidated KCP&L were relatively unchanged at March 31,
2003, compared to December 31, 2002.

GuaranteesIn 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

56

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 prescribed in FASB Interpretation
No. 45, the Company began recording a liability for the fair value of obligations
it undertakes for guarantees issued after December 31, 2002. The interpretation does not
encompass guarantees of the Companys own future performance, such as Great Plains
Energys guarantees to support Strategic Energy power purchases and regulatory
requirements. KCP&L began recording an immaterial amount for the fair value of
guarantees issued in 2003 for the residual value of vehicles and heavy equipment under an
operating lease.

Great Plains Energys total
guarantees at March 31, 2003, decreased $14.7 million from the December 31, 2002, total of
$241.0 million reflecting a decrease in the credit support guarantees Great Plains Energy
provides on behalf of Strategic Energy for its power purchases and regulatory
requirements.

# 

Environmental MattersKCP&Ls operations are
subject to regulation by federal, state and local authorities with regard to air and other
environmental matters. The generation and transmission of electricity produces and
requires disposal of certain hazardous products which 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 KCP&L.

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. See Note 6
to the consolidated financial statements.

57

# 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 not represented in the following analysis.

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, interim period disclosures should be read in connection with the
quantitative and qualitative disclosures about market risk included in our 2002 combined
annual report on Form 10-K. There have been no material changes in Great Plains
Energys or consolidated KCP&Ls market risk since December 31, 2002.

# ITEM 4. CONTROLS AND
PROCEDURES

Within 90 days in advance of the
filing of this report, Great Plains Energy and KCP&L carried out evaluations, under
the supervision and with the participation of each companys management, including
the chief executive officer and chief financial officer of those companies and the
disclosure committee, of the effectiveness of the companies disclosure controls and
procedures. Based upon these evaluations, the chief executive officer and chief financial
officer of Great Plains Energy and KCP&L have concluded that the disclosure controls
and procedures of those companies are functioning effectively to provide reasonable
assurance that the information required to be disclosed by those 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
Securities and Exchange Commissions rules and forms.

There have been no significant
changes to Great Plains Energys or KCP&Ls internal controls or in other
factors that could significantly affect these controls subsequent to the date of the
evaluation described above.

58

# PART II  OTHER
INFORMATION

# ITEM 1. LEGAL PROCEEDINGS

On December 31, 2001, a subsidiary of
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 in Case Nos. 01-54369-399, 01-54370-399 and
01-54371-399. These cases have been consolidated for joint procedural administration.
Holdings and its two subsidiaries are collectively called DTI. KLT Telecom is
a creditor in the proceedings, and KCP&L has an immaterial trade claim in the Digital
Teleport bankruptcy proceedings. KLT Telecom agreed to provide up to $5 million in
debtor-in-possession financing (DIP Loan) to Digital Teleport for a term of 18 months
during the bankruptcy process if it achieves certain financial goals. The Bankruptcy Court
approved the DIP Loan on February 18, 2002, but no advances have been made under the DIP
Loan to date.

On January 14, 2003, Digital Teleport
announced it had filed with the Bankruptcy Court a settlement agreement among KLT Telecom,
KLT Inc., Great Plains Energy, KCP&L, Digital Teleport and the Official Unsecured
Creditors Committee of Digital Teleport (Creditors Committee) that will provide unsecured
creditors up to 90 cents on each dollar of approved claims after the consummation of the
asset sale described in the next paragraph (Teleport Settlement Agreement). Under the
Teleport Settlement Agreement, Digital Teleport will distribute to KLT Telecom the
remaining estate balance after the payment of administrative expenses and all other
claims. The Teleport Settlement Agreement also provides that Digital Teleport, the
Creditors Committee and certain Creditors Committee members will release claims and
possible causes of action against KLT Telecom, KLT Inc., Great Plains Energy, KCP&L
and all other entities currently or previously a member of the Great Plains Energy or
KCP&L consolidated tax group, and creditors receiving payments will be deemed to
receive such payments in full satisfaction of their claims against Digital Teleport. In
addition, KLT Telecom will receive an assignment of claims of Digital Teleport, the
Creditors Committee and the bankruptcy estate of Digital Teleport against any officer or
director of Digital Teleport, or any other person or entity.

On February 13, 2003, the Bankruptcy
Court approved Digital Teleports sale of substantially of all of its assets to
CenturyTel Fiber Company II, LLC (Asset Sale) for $38 million, subject to certain closing
adjustments, $3.8 million of which will be escrowed (Escrow Funds). The Asset Sale is
subject to conditions to closing which include, among other items, the receipt of all
necessary regulatory approvals, which must either be satisfied or waived by July 15, 2003.

On March 14, 2003, KLT Telecom, KLT
Inc., Great Plains Energy, KCP&L, Holdings, The Bank of New York (as trustee of an
Indenture, as amended, relating to the senior discount notes issued by Holdings) (the
Trustee) and three principal noteholders of Holdings (the Noteholders) entered into a
Settlement Agreement and Plan Term Sheet (Holdings Settlement Agreement) resolving all
material issues and disputes that may exist among the parties to the Holdings Settlement
Agreement. Under the Holdings Settlement Agreement, KLT Telecom agreed to pay to the
Holdings bankruptcy estate the sum of approximately $13.8 million from the distribution
that KLT Telecom will receive under the Teleport Settlement Agreement for distribution to
unsecured creditors of Holdings. In addition, Holdings, the Trustee and the Noteholders
will release claims and possible causes of action against KLT Telecom, KLT Inc., Great
Plains Energy, KCP&L and all other entities currently or previously a member of the
Great Plains Energy or KCP&L consolidated tax group, and creditors receiving payments
will be deemed to receive such payments in full satisfaction of their claims against
Holdings. Further, KLT Telecom will receive an assignment of claims of Holdings, the
Trustee and the Noteholders against any officer or director of Holdings, or any other
person or entity.

59

The Teleport Settlement Agreement and
the Holdings Settlement Agreement are incorporated into a joint bankruptcy plan filed by
DTI on April 1, 2003. It is anticipated that the plan will be voted upon, and ultimately
subject to confirmation by the Bankruptcy Court at a hearing on June 9, 2003. The plan
contemplates that DTI will be liquidated after distribution of those companies
assets to their creditors pursuant to the plan. For further information regarding the DTI
bankruptcy proceedings, see Note 7 to the consolidated financial statements, which is
incorporated by reference.

# ITEM 5. OTHER INFORMATION

On April 1, 2003, Great Plains Energy
formed Great Plains Energy Services Incorporated (Services), which will provide services
at cost to Great Plains Energy and certain of its subsidiaries, including KCP&L, as a
service company under the 35 Act. Approximately 400 KCP&L employees were transferred
to Services. Great Plains Energy does not anticipate any material financial or operational
effects on the Company or KCP&L resulting from the creation of Services and the
transfer of KCP&L employees.

# ITEM 6.     EXHIBITS AND
REPORTS ON FORM 8-K

# EXHIBITS

Great
Plains Energy Documents

|       |                        
|------ | -----------------------
|Number | Description of Document
|
|10.1.a |                        
|       |                        
|10.1.b |                        
|       |                        
|10.1.c |                        
|       |                        
|       |                        
|       |                        
|       |                        
|10.1.d |                        
|       |                        
|       |                        
|       |                        
|       |                        
|10.1.e |                        
|       |                        
|       |                        
|10.1.f |                        
|       |                        
|       |                        
|       |                        

60

|10.1.g |  |  |  | Guaranty issued by Great Plains Energy Incorporated in favor of The Cincinnati Gas & Electric            | 
|------ |  |  |  | -------------------------------------------------------------------------------------------------------- | 
|       |  |  |  | Company, dated as of January 1, 2003, and First Amendment to Guaranty by and between Great               | 
|       |  |  |  | Plains Energy Incorporated and The Cincinnati Gas & electric Company, dated as of March 7, 2003.         | 
|       | 
|99.1   |  |  |  | Certification of CEO and CFO Pursuant to 18 U.S.C. Section 1350, As Adopted Pursuant to Section          | 
|       |  |  |  | 906 of the Sarbanes-Oxley Act of 2002.                                                                   | 
|       | 
|       |  |  |  | Great Plains Energy agrees to furnish to the Securities and Exchange Commission upon request any         | 
|       |  |  |  | instrument with respect to long-term debt as to which the total amount of securities authorized          | 
|       |  |  |  | does not exceed 10% of total assets of Great Plains Energy and its subsidiaries on a consolidated basis. | 

+ Indicates management
contract or compensatory plan or arrangement.

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

# Kansas City Power &
Light Company Documents

|       |                        
|------ | -----------------------
|Number | Description of Document
|      
|99.2   |                        
|       |                        
|       |                        
|       |                        
|       |                        
|       |                        
|       |                        

# REPORTS ON FORM 8-K

Great
Plains Energy Incorporated

Great
Plains Energy Incorporated filed on March 14, 2003, a report on Form 8-K dated March 13,
2003, including a press release regarding the retirement of Bernard J. Beaudoin, Chairman
of the Board, President and Chief Executive Officer of Great Plains Energy Incorporated
and Chairman of the Board and Chief Executive Officer of Kansas City Power & Light
Company effective by year-end.

Great
Plains Energy Incorporated filed on April 16, 2003, a report on Form 8-K dated April 15,
2003, furnishing a press release regarding pre-earnings release information.

Great
Plains Energy Incorporated filed on April 24, 2003, a report on Form 8-K dated April 23,
2003, furnishing a press release regarding 2003 first quarter earnings information and
accompanying financials.

61

Kansas
City Power & Light Company

Kansas
City Power & Light Company filed on March 14, 2003, a report on Form 8-K dated March
13, 2003, including a press release regarding the retirement of Bernard J. Beaudoin,
Chairman

of the Board, President and Chief Executive Officer of Great Plains Energy
Incorporated and Chairman of the Board and Chief Executive Officer of Kansas City Power
& Light Company effective by year-end.

Kansas
City Power & Light Company filed on April 16, 2003, a report on Form 8-K dated April
15, 2003, furnishing a press release regarding pre-earnings release information.

Kansas
City Power & Light Company filed on April 24, 2003, a report on Form 8-K dated April
23, 2003, furnishing a press release regarding 2003 first quarter earnings information and
accompanying financials.

62

# 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:  May 9, 2003 |  |                                 
|                    |  |                                 
|                    |  |                                 
|                    | 
|Dated:  May 9, 2003 |  |                                 
|                    |  |                                 
|                    |  |                                 

|                    |  | KANSAS CITY POWER & LIGHT COMPANY
|------------------- |  | ---------------------------------
|
|Dated:  May 9, 2003 |  |                                  
|                    |  |                                  
|                    |  |                                  
|                    | 
|Dated:  May 9, 2003 |  |                                  
|                    |  |                                  
|                    |  |                                  

63

# CERTIFICATIONS

I, Bernard J. Beaudoin, certify that:

|1. | I have reviewed this quarterly report on Form 10-Q of Great Plains Energy
          Incorporated;
|-- | -------------------------------------------------------------------------------------------------

|2. | Based on my knowledge, this quarterly report does not contain any untrue
          statement of a material fact or omit to state a material fact necessary to make
          the statements made, in light of the circumstances under which such statements
          were made, not misleading with respect to the period covered by this quarterly
          report;
|-- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|3. | Based on my knowledge, the financial statements, and other financial information
          included in this quarterly report, fairly present in all material respects the
          financial condition, results of operations and cash flows of the registrant as
          of, and for, the periods presented in this quarterly report;
|-- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|4. | The registrants other certifying officers and I are responsible for
          establishing and maintaining disclosure controls and procedures (as defined in
          Exchange Act Rules 13a-14 and 15d-14) for the registrant and have:
|-- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | a) |  | designed such disclosure controls and procedures to ensure that material
               information relating to the registrant, including its consolidated subsidiaries,
               is made known to us by others within those entities, particularly during the
               period in which this quarterly report is being prepared;
| | -- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | b) |  | evaluated the effectiveness of the registrants disclosure controls and
               procedures as of a date within 90 days prior to the filing date of this
               quarterly report (the Evaluation Date); and
| | -- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | c) |  | presented in this quarterly report our conclusions about the effectiveness of
               the disclosure controls and procedures based on our evaluation as of the
               Evaluation Date;
| | -- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|5. | The registrants other certifying officers and I have disclosed, based on
          our most recent evaluation, to the registrants auditors and the audit
          committee of registrants board of directors (or persons performing the
          equivalent functions):
|-- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | a) |  | all significant deficiencies in the design or operation of internal controls
               which could adversely affect the registrants ability to record, process,
               summarize and report financial data and have identified for the
               registrants auditors any material weaknesses in internal controls; and
| | -- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | b) |  | any fraud, whether or not material, that involves management or other employees
               who have a significant role in the registrants internal controls; and
| | -- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------

|6. | The registrants other certifying officers and I have indicated in this
          quarterly report whether there were significant changes in internal controls or
          in other factors that could significantly affect internal controls subsequent to
          the date of our most recent evaluation, including any corrective actions with
          regard to significant deficiencies and material weaknesses.
|-- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Date: May 9, 2003

| |  | 
| |  | 
| |  | 
| |  | 
| |  | 
| |  | 

64

# CERTIFICATIONS

I, Andrea F. Bielsker, certify that:

|1. | I have reviewed this quarterly report on Form 10-Q of Great Plains Energy
          Incorporated;
|-- | -------------------------------------------------------------------------------------------------

|2. | Based on my knowledge, this quarterly report does not contain any untrue
          statement of a material fact or omit to state a material fact necessary to make
          the statements made, in light of the circumstances under which such statements
          were made, not misleading with respect to the period covered by this quarterly
          report;
|-- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|3. | Based on my knowledge, the financial statements, and other financial information
          included in this quarterly report, fairly present in all material respects the
          financial condition, results of operations and cash flows of the registrant as
          of, and for, the periods presented in this quarterly report;
|-- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|4. | The registrants other certifying officers and I are responsible for
          establishing and maintaining disclosure controls and procedures (as defined in
          Exchange Act Rules 13a-14 and 15d-14) for the registrant and have:
|-- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | a) |  | designed such disclosure controls and procedures to ensure that material
               information relating to the registrant, including its consolidated subsidiaries,
               is made known to us by others within those entities, particularly during the
               period in which this quarterly report is being prepared;
| | -- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | b) |  | evaluated the effectiveness of the registrants disclosure controls and
               procedures as of a date within 90 days prior to the filing date of this
               quarterly report (the Evaluation Date); and
| | -- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | c) |  | presented in this quarterly report our conclusions about the effectiveness of
               the disclosure controls and procedures based on our evaluation as of the
               Evaluation Date;
| | -- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|5. | The registrants other certifying officers and I have disclosed, based on
          our most recent evaluation, to the registrants auditors and the audit
          committee of registrants board of directors (or persons performing the
          equivalent functions):
|-- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | a) |  | all significant deficiencies in the design or operation of internal controls
               which could adversely affect the registrants ability to record, process,
               summarize and report financial data and have identified for the
               registrants auditors any material weaknesses in internal controls; and
| | -- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | b) |  | any fraud, whether or not material, that involves management or other employees
               who have a significant role in the registrants internal controls; and
| | -- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------

|6. | The registrants other certifying officers and I have indicated in this
          quarterly report whether there were significant changes in internal controls or
          in other factors that could significantly affect internal controls subsequent to
          the date of our most recent evaluation, including any corrective actions with
          regard to significant deficiencies and material weaknesses.
|-- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Date: May 9, 2003

| |  | 
| |  | 
| |  | 
| |  | 
| |  | 
| |  | 

65

# CERTIFICATIONS

I, Bernard J. Beaudoin, certify that:

|1. | I have reviewed this quarterly report on Form 10-Q of Kansas City Power &
          Light Company;
|-- | --------------------------------------------------------------------------------------------------

|2. | Based on my knowledge, this quarterly report does not contain any untrue
          statement of a material fact or omit to state a material fact necessary to make
          the statements made, in light of the circumstances under which such statements
          were made, not misleading with respect to the period covered by this quarterly
          report;
|-- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|3. | Based on my knowledge, the financial statements, and other financial information
          included in this quarterly report, fairly present in all material respects the
          financial condition, results of operations and cash flows of the registrant as
          of, and for, the periods presented in this quarterly report;
|-- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|4. | The registrants other certifying officers and I are responsible for
          establishing and maintaining disclosure controls and procedures (as defined in
          Exchange Act Rules 13a-14 and 15d-14) for the registrant and have:
|-- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | a) |  | designed such disclosure controls and procedures to ensure that material
               information relating to the registrant, including its consolidated subsidiaries,
               is made known to us by others within those entities, particularly during the
               period in which this quarterly report is being prepared;
| | -- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | b) |  | evaluated the effectiveness of the registrants disclosure controls and
               procedures as of a date within 90 days prior to the filing date of this
               quarterly report (the Evaluation Date); and
| | -- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | c) |  | presented in this quarterly report our conclusions about the effectiveness of
               the disclosure controls and procedures based on our evaluation as of the
               Evaluation Date;
| | -- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|5. | The registrants other certifying officers and I have disclosed, based on
          our most recent evaluation, to the registrants auditors and the audit
          committee of registrants board of directors (or persons performing the
          equivalent functions):
|-- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | a) |  | all significant deficiencies in the design or operation of internal controls
               which could adversely affect the registrants ability to record, process,
               summarize and report financial data and have identified for the
               registrants auditors any material weaknesses in internal controls; and
| | -- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | b) |  | any fraud, whether or not material, that involves management or other employees
               who have a significant role in the registrants internal controls; and
| | -- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------

|6. | The registrants other certifying officers and I have indicated in this
          quarterly report whether there were significant changes in internal controls or
          in other factors that could significantly affect internal controls subsequent to
          the date of our most recent evaluation, including any corrective actions with
          regard to significant deficiencies and material weaknesses.
|-- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Date: May 9, 2003

| |  | 
| |  | 
| |  | 
| |  | 
| |  | 
| |  | 

66

# CERTIFICATIONS

I, Andrea F. Bielsker, certify that:

|1. | I have reviewed this quarterly report on Form 10-Q of Kansas City Power &
          Light Company;
|-- | --------------------------------------------------------------------------------------------------

|2. | Based on my knowledge, this quarterly report does not contain any untrue
          statement of a material fact or omit to state a material fact necessary to make
          the statements made, in light of the circumstances under which such statements
          were made, not misleading with respect to the period covered by this quarterly
          report;
|-- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|3. | Based on my knowledge, the financial statements, and other financial information
          included in this quarterly report, fairly present in all material respects the
          financial condition, results of operations and cash flows of the registrant as
          of, and for, the periods presented in this quarterly report;
|-- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|4. | The registrants other certifying officers and I are responsible for
          establishing and maintaining disclosure controls and procedures (as defined in
          Exchange Act Rules 13a-14 and 15d-14) for the registrant and have:
|-- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | a) |  | designed such disclosure controls and procedures to ensure that material
               information relating to the registrant, including its consolidated subsidiaries,
               is made known to us by others within those entities, particularly during the
               period in which this quarterly report is being prepared;
| | -- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | b) |  | evaluated the effectiveness of the registrants disclosure controls and
               procedures as of a date within 90 days prior to the filing date of this
               quarterly report (the Evaluation Date); and
| | -- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | c) |  | presented in this quarterly report our conclusions about the effectiveness of
               the disclosure controls and procedures based on our evaluation as of the
               Evaluation Date;
| | -- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|5. | The registrants other certifying officers and I have disclosed, based on
          our most recent evaluation, to the registrants auditors and the audit
          committee of registrants board of directors (or persons performing the
          equivalent functions):
|-- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | a) |  | all significant deficiencies in the design or operation of internal controls
               which could adversely affect the registrants ability to record, process,
               summarize and report financial data and have identified for the
               registrants auditors any material weaknesses in internal controls; and
| | -- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | b) |  | any fraud, whether or not material, that involves management or other employees
               who have a significant role in the registrants internal controls; and
| | -- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------

|6. | The registrants other certifying officers and I have indicated in this
          quarterly report whether there were significant changes in internal controls or
          in other factors that could significantly affect internal controls subsequent to
          the date of our most recent evaluation, including any corrective actions with
          regard to significant deficiencies and material weaknesses.
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Date: May 9, 2003

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