UNITED
        STATES
 SECURITIES
        AND EXCHANGE COMMISSION
 Washington,
        D.C. 20549
 
 **FORM
        10-Q**
  
 [X]
        QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
 EXCHANGE
        ACT OF 1934
 
 For
        the
        quarterly period ended **June
        30, 2007**
 
 or
 
 [
        ]
        TRANSITION REPORT PURSUANT SECTION 13 OR 15(d) OF THE SECURITIES
 EXCHANGE
        ACT OF 1934
 
 For
        the
        transition period from _______ to _______
 
 **Exact
                  name of registrant as specified in its charter,****Commission**
              
              **state
                  of incorporation, address of principal**
              
              **I.R.S.
                  Employer****File
                  Number**
              
              **executive
                  offices and telephone number**
              
              **Identification
                  Number**001-32206
              
              **GREAT
                  PLAINS ENERGY INCORPORATED**
              
              43-1916803(A
                  Missouri Corporation)1201
                  Walnut StreetKansas
                  City, Missouri 64106(816)
                  556-2200www.greatplainsenergy.com000-51873
              
              **KANSAS
                  CITY POWER & LIGHT COMPANY**
              
              44-0308720(A
                  Missouri Corporation)1201
                  Walnut StreetKansas
                  City, Missouri 64106(816)
                  556-2200www.kcpl.com
 
 Indicate
                  by check mark whether the registrant (1) has filed all reports
                  required to
                  be filed by Section 13 or 15(d) of theSecurities
                  Exchange Act of 1934 during the preceding 12 months (or for such
                  shorter
                  period that the registrant was required tofile
                  such reports), and (2) has been subject to such filing requirements
                  for
                  the past 90 days.Great
                  Plains Energy Incorporated
              Yes
              
              No
              X
              
              Kansas
                  City Power & Light Company
              Yes
              
              No
              XIndicate
                  by check mark whether the registrant is a large accelerated filer,
                  an
                  accelerated filer, or a non-accelerated filer. Seedefinition
                  of “accelerated filer and large accelerated filer” in Rule 12b-2 of the
                  Exchange Act.Great
                  Plains Energy Incorporated
              Large
                  accelerated filer
              X
              Accelerated
                  filer
              _
              Non-accelerated
                  filer
              _Kansas
                  City Power & Light Company
              Large
                  accelerated filer
              _
              Accelerated
                  filer
              _
              Non-accelerated
                  filer
              XIndicate
                  by check mark whether the registrant is a shell company (as defined
                  in
                  Rule 12b-2 of the Exchange Act).Great
                  Plains Energy Incorporated
              Yes
              _
              No
              X
              
              Kansas
                  City Power & Light Company
              Yes
              _
              No
              XOn July
                  31, 2007, Great Plains Energy Incorporated had 86,098,176 shares
                  of common
                  stock outstanding.On July
                  31, 2007, Kansas City Power & Light Company had one share of common
                  stock outstanding, which was held byGreat
                  Plains Energy Incorporated.
 This
            combined Quarterly Report on Form 10-Q is being filed by Great Plains
            Energy
            Incorporated (Great Plains Energy) and Kansas City Power & Light Company
            (KCP&L).  KCP&L is a wholly owned subsidiary of Great Plains Energy
            and represents a significant portion of its assets, liabilities, revenues,
            expenses and operations. Thus, all information contained in this report
            relates
            to, and is filed by, Great Plains Energy.  Information that is specifically
            identified in this report as relating solely to Great Plains Energy,
            such as its
            financial statements and all information relating to Great Plains Energy’s other
            operations, businesses and subsidiaries, including Strategic Energy,
            L.L.C.
            (Strategic Energy), does not relate to, and is not filed by, KCP&L. 
KCP&L makes no representation as to that information.  Neither Great
            Plains Energy nor Strategic Energy have any obligation in respect of
            KCP&L’s
            debt securities and holders of such securities should not consider Great
            Plains
            Energy’s or Strategic Energy’s financial resources or results of operations in
            making a decision with respect to KCP&L’s debt
            securities.
 This
            report should be read in its entirety.  No one section of the report deals
            with all aspects of the subject matter.  It should be read in conjunction
            with the consolidated financial statements and related notes and with
            the
            management’s discussion and analysis included in the 2006 Form 10-K for each of
            Great Plains Energy and KCP&L.
  **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.  Forward-looking statements include, but are not limited to,
            statements regarding projected delivered volumes and margins, the outcome
            of
            regulatory proceedings, cost estimates of the comprehensive energy plan
            and
            other matters affecting future operations.  In connection with the safe
            harbor provisions of the Private Securities Litigation Reform Act of
            1995, the
            registrants are providing a number of important factors that could cause
            actual
            results to differ materially from the provided forward-looking information.
             These important factors include: future economic conditions in the
            regional, national and international markets, including but not limited
            to
            regional and national wholesale electricity markets; market perception
            of the
            energy industry, Great Plains Energy and KCP&L; changes in business
            strategy, operations or development plans; effects of current or proposed
            state
            and federal legislative and regulatory actions or developments, including,
            but
            not limited to, deregulation, re-regulation and restructuring of the
            electric
            utility industry; decisions of regulators regarding rates KCP&L can charge
            for electricity; adverse changes in applicable laws, regulations, rules,
            principles or practices governing tax, accounting and environmental matters
            including, but not limited to, air and water quality; financial market
            conditions and performance including, but not limited to, changes in
            interest
            rates and in availability and cost of capital and the effects on pension
            plan
            assets and costs; credit ratings; inflation rates; effectiveness of risk
            management policies and procedures and the ability of counterparties
            to satisfy
            their contractual commitments; impact of terrorist acts; increased competition
            including, but not limited to, retail choice in the electric utility
            industry
            and the entry of new competitors; ability to carry out marketing and
            sales
            plans; weather conditions including weather-related damage; cost, availability,
            quality and deliverability of fuel; ability to achieve generation planning
            goals
            and the occurrence and duration of unplanned generation outages; delays
            in the
            anticipated in-service dates and cost increases of additional generating
            capacity; nuclear operations; ability to enter new markets successfully
            and
            capitalize on growth opportunities in non-regulated businesses and the
            effects
            of competition; workforce risks including compensation and benefits costs;
            performance of projects undertaken by non-regulated businesses and the
            success
            of efforts to invest in and develop new opportunities; the ability to
            successfully complete merger, acquisition or divestiture plans (including
            the
            acquisition of Aquila, Inc., and Aquila’s sale of assets to Black Hills
            Corporation) and other risks and uncertainties.
  This
            list
            of factors is not all-inclusive because it is not possible to predict
            all
            factors.  Part II Item 1A Risk Factors included in this report together
            with the risk factors included in the 2006 Form 10-K for each of Great
            Plains
            Energy and KCP&L under Part I Item 1A, should be carefully read for further
            understanding of potential risks to the companies.  Other sections of this
            report and other periodic
 2
 reports
            filed by the companies with the Securities and Exchange Commission (SEC)
            should
            also be read for more information regarding risk factors.  Great
            Plains Energy and KCP&L undertake no obligation to publicly update or revise
            any forward-looking statement, whether as a result of new information,
            future
            events or otherwise.
  **GLOSSARY
          OF TERMS**
  The
        following is a glossary of frequently used abbreviations or acronyms that
        are
        found throughout this report.
 
 **Abbreviation
                  or Acronym**
              
              **Definition****Aquila**
              
              Aquila,
                Inc.**ARO**
              
              Asset
                Retirement Obligation**BART**
              
              Best
                  available retrofit technology**Black
                  Hills**
              
              Black
                Hills Corporation**CAIR**
              
              Clean
                  Air Interstate Rule**CAMR**
              
              Clean
                  Air Mercury Rule**Clean
                Air Act**
              
              Clean
                Air Act Amendments of 1990**CO****2**
              
              Carbon
                  Dioxide**Company**
              
              Great
                  Plains Energy Incorporated and its subsidiaries**Consolidated
                  KCP&L**
              
              KCP&L
                  and its wholly owned subsidiaries**Digital
                Teleport**
              
              Digital
                Teleport, Inc.**DOE**
              
              Department
                  of Energy**EBITDA**
              
              Earnings
                  before interest, income taxes, depreciation and
                  amortization**ECA**
              
              Energy
                Cost Adjustment**EEI**
              
              Edison
                  Electric Institute**EIRR**
              
              Environmental
                  Improvement Revenue Refunding**EPA**
              
              Environmental
                  Protection Agency**EPS**
              
              Earnings
                  per common share**ERISA**
              
              Employee
                Retirement Income Security Act of 1974**FASB**
              
              Financial
                  Accounting Standards Board**FELINE
                  PRIDES****SM**
              
              Flexible
                  Equity Linked Preferred Increased Dividend Equity Securities,a
                  service mark of Merrill Lynch & Co., Inc.**FERC**
              
              The
                  Federal Energy Regulatory Commission**FIN**
              
              Financial
                  Accounting Standards Board Interpretation**FSS**
              
              Forward
                  Starting Swaps**GAAP**
              
              Generally
                  Accepted Accounting Principles**GPP**
              
              Great
                Plains Power Incorporated**Great
                  Plains Energy**
              
              Great
                  Plains Energy Incorporated and its subsidiaries**Holdings**
              
              DTI
                Holdings, Inc.**HSS**
              
              Home
                  Service Solutions Inc., a wholly owned subsidiary of KCP&L**IEC**
              
              Innovative
                  Energy Consultants Inc., a wholly owned subsidiary
                of
                  Great Plains Energy**ISO**
              
              Independent
                  System Operator**KCC**
              
              The
                  State Corporation Commission of the State of Kansas**KCP&L**
              
              Kansas
                  City Power & Light Company, a wholly owned subsidiary
                of
                  Great Plains Energy**KDHE**
              
              Kansas
                Department of Health and Environment**KLT
                  Gas**
              
              KLT
                  Gas Inc., a wholly owned subsidiary of KLT Inc.**KLT
                  Inc.**
              
              KLT
                  Inc., a wholly owned subsidiary of Great Plains Energy**KLT
                  Investments**
              
              KLT
                  Investments Inc., a wholly owned subsidiary of KLT
                  Inc.
 3
 **Abbreviation
                  or Acronym**
              
              **Definition****KLT Telecom**
              
              KLT Telecom Inc., a wholly
                owned
                subsidiary of KLT Inc.**kW**
              
              Kilowatt**kWh**
              
              Kilowatt
                  hour**MAC**
              
              Material
                  Adverse Change**MD&A**
              
              Management’s
                  Discussion and Analysis of Financial Condition
                  andResults
                  of Operations**MDNR**
              
              Missouri Department of Natural
                Resources**MISO**
              
              Midwest
                  Independent Transmission System Operator,
                  Inc.**MPSC**
              
              Public
                  Service Commission of the State of Missouri**MW**
              
              Megawatt





**MWh**
            
            Megawatt
                hour**NEIL**
            
            Nuclear
                Electric Insurance Limited**NO****x**
            
            Nitrogen
                Oxide**NPNS**
            
            Normal
                Purchases and Normal Sales**NRC**
            
            Nuclear
                Regulatory Commission**OCI**
            
            Other
                Comprehensive Income**PJM**
            
            PJM
                Interconnection, LLC**PRB**
            
            Powder
                River Basin**PURPA**
            
            Public Utility Regulatory
              Policy
              Act**Receivables
                Company**
            
            Kansas
                City Power & Light Receivables Company, a wholly owned
              subsidiary
                of KCP&L**RTO**
            
            Regional
                Transmission Organization**SEC**
            
            Securities
                and Exchange Commission**SECA**
            
            Seams
                Elimination Charge Adjustment**Services**
            
            Great
                Plains Energy Services Incorporated**SFAS**
            
            Statement
                of Financial Accounting Standards**SIP**
            
            State
                Implementation Plan**SO****2**
            
            Sulfur
                Dioxide**SPP**
            
            Southwest
                Power Pool, Inc.**STB**
            
            Surface
                Transportation Board**Strategic
                Energy**
            
            Strategic
                Energy, L.L.C., a subsidiary of KLT Energy Services**T
                - Lock**
            
            Treasury
                Locks**Union
                Pacific**
            
            Union
                Pacific Railroad Company**WCNOC**
            
            Wolf
                Creek Nuclear Operating Corporation**Wolf
                Creek**
            
            Wolf
                Creek Generating Station


4
 **PART
          I - FINANCIAL INFORMATION**
 **ITEM
          1. CONSOLIDATED FINANCIAL STATEMENTS**


**GREAT
                PLAINS ENERGY****Consolidated
                Balance Sheets**(Unaudited)**June
                30**
            
            
            December
                31**2007**
            
            
            2006**ASSETS**
            
            (thousands)**Current
                Assets**Cash
                and cash equivalents
            
            **$**
            **43,715**
            
            
            $
            61,823Restricted
                cash
            
            ****
            **249**
            
            
            
            -Receivables,
                net
            
            ****
            **411,044**
            
            
            
            339,399Fuel
                inventories, at average cost
            
            ****
            **41,276**
            
            
            
            27,811Materials
                and supplies, at average cost
            
            ****
            **61,513**
            
            
            
            59,829Deferred
                refueling outage costs
            
            ****
            **9,839**
            
            
            
            13,921Refundable
                income taxes
            
            ****
            **22,048**
            
            
            
            9,832Deferred
                income taxes
            
            ****
            **24,932**
            
            
            
            39,566Derivative
                instruments
            
            ****
            **6,068**
            
            
            
            6,884Other
            
            ****
            **14,604**
            
            
            
            11,717Total
            
            ****
            **635,288**
            
            
            
            570,782**Nonutility
                Property and Investments**Affordable
                housing limited partnerships
            
            ****
            **20,242**
            
            
            
            23,078Nuclear
                decommissioning trust fund
            
            ****
            **108,541**
            
            
            
            104,066Other
            
            ****
            **14,755**
            
            
            
            15,663Total
            
            ****
            **143,538**
            
            
            
            142,807**Utility
                Plant, at Original Cost**Electric
            
            ****
            **5,383,993**
            
            
            
            5,268,485Less-accumulated
                depreciation
            
            ****
            **2,526,676**
            
            
            
            2,456,199Net
                utility plant in service
            
            ****
            **2,857,317**
            
            
            
            2,812,286Construction
                work in progress
            
            ****
            **294,060**
            
            
            
            214,493Nuclear
                fuel, net of amortization of $111,740 and $103,381
            
            ****
            **52,623**
            
            
            
            39,422Total
            
            ****
            **3,204,000**
            
            
            
            3,066,201**Deferred
                Charges and Other Assets**Regulatory
                assets
            
            ****
            **429,096**
            
            
            
            434,392Goodwill
            
            ****
            **88,139**
            
            
            
            88,139Derivative
                instruments
            
            ****
            **38,222**
            
            
            
            3,544Other
            
            ****
            **37,921**
            
            
            
            29,795Total
            
            ****
            **593,378**
            
            
            
            555,870Total
            
            **$**
            **4,576,204**
            
            
            $
            4,335,660The
                accompanying Notes to Consolidated Financial Statements are an integral
                part of these statements.


5


**GREAT
                PLAINS ENERGY****Consolidated
                Balance Sheets**(Unaudited)**June
                30**
            
            
            December
                31**2007**
            
            
            2006**LIABILITIES
                AND CAPITALIZATION**
            
            (thousands)**Current
                Liabilities**Notes
                payable
            
            **$**
            **36,000**
            
            
            $
            -Commercial
                paper
            
            ****
            **317,575**
            
            
            
            156,400Current
                maturities of long-term debt
            
            ****
            **534**
            
            
            
            389,634EIRR
                bonds classified as current
            
            ****
            **145,853**
            
            
            
            144,742Accounts
                payable
            
            ****
            **357,454**
            
            
            
            322,724Accrued
                taxes
            
            ****
            **37,087**
            
            
            
            24,106Accrued
                interest
            
            ****
            **16,660**
            
            
            
            14,082Accrued
                compensation and benefits
            
            ****
            **22,327**
            
            
            
            33,266Pension
                and post-retirement liability
            
            ****
            **1,037**
            
            
            
            1,037Derivative
                instruments
            
            ****
            **55,033**
            
            
            
            91,482Other
            
            ****
            **21,314**
            
            
            
            25,520Total
            
            ****
            **1,010,874**
            
            
            
            1,202,993**Deferred
                Credits and Other Liabilities**Deferred
                income taxes
            
            ****
            **632,193**
            
            
            
            622,847Deferred
                investment tax credits
            
            ****
            **27,749**
            
            
            
            28,458Asset
                retirement obligations
            
            ****
            **93,382**
            
            
            
            91,824Pension
                and post-retirement liability
            
            ****
            **189,927**
            
            
            
            176,189Regulatory
                liabilities
            
            ****
            **118,450**
            
            
            
            114,674Derivative
                instruments
            
            ****
            **6,683**
            
            
            
            61,146Other
            
            ****
            **75,115**
            
            
            
            49,103Total
            
            ****
            **1,143,499**
            
            
            
            1,144,241**Capitalization**Common
                shareholders' equityCommon
                stock-150,000,000 shares authorized without par value86,145,091
                and 80,405,035 shares issued, stated value
            
            ****
            **1,056,155**
            
            
            
            896,817Retained
                earnings
            
            ****
            **468,970**
            
            
            
            493,399Treasury
                stock-72,553 and 53,499 shares, at cost
            
            ****
            **(2,218**
            **)**
            
            
            (1,614
            )Accumulated
                other comprehensive income (loss)
            
            ****
            **4,400**
            
            
            
            (46,686
            )Total
            
            ****
            **1,527,307**
            
            
            
            1,341,916Cumulative
                preferred stock $100 par value3.80%
                - 100,000 shares issued
            
            ****
            **10,000**
            
            
            
            10,0004.50%
                - 100,000 shares issued
            
            ****
            **10,000**
            
            
            
            10,0004.20%
                - 70,000 shares issued
            
            ****
            **7,000**
            
            
            
            7,0004.35%
                - 120,000 shares issued
            
            ****
            **12,000**
            
            
            
            12,000Total
            
            ****
            **39,000**
            
            
            
            39,000Long-term
                debt (Note 8)
            
            ****
            **855,524**
            
            
            
            607,510Total
            
            ****
            **2,421,831**
            
            
            
            1,988,426**Commitments
                and Contingencies (Note 14)**
            
            ****Total
            
            **$**
            **4,576,204**
            
            
            $
            4,335,660The
                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**
            
            
            **Year
                to Date****June
                30**
            
            
            **June
                30**As
              Adjusted*
            
            
            
            As
              Adjusted***2007**
            
            
            2006
            
            
            **2007**
            
            
            2006**Operating
                Revenues**
            
            (thousands,
                except per share amounts)Electric
                revenues - KCP&L
            
            **$**
            **319,143**
            
            
            $
            290,891
            
            
            **$**
            **574,795**
            
            
            $
            531,281Electric
                revenues - Strategic Energy
            
            ****
            **485,002**
            
            
            
            350,506
            
            
            ****
            **892,987**
            
            
            
            668,518Other
                revenues
            
            ****
            **483**
            
            
            
            707
            
            
            ****
            **1,122**
            
            
            
            1,490Total
            
            ****
            **804,628**
            
            
            
            642,104
            
            
            ****
            **1,468,904**
            
            
            
            1,201,289**Operating
                Expenses**Fuel
            
            ****
            **57,952**
            
            
            
            55,297
            
            
            ****
            **110,616**
            
            
            
            101,797Purchased
                power - KCP&L
            
            ****
            **22,751**
            
            
            
            8,570
            
            
            ****
            **39,106**
            
            
            
            13,687Purchased
                power - Strategic Energy
            
            ****
            **479,791**
            
            
            
            329,347
            
            
            ****
            **821,349**
            
            
            
            655,105Skill
                set realignment costs
            
            ****
            **-**
            
            
            
            5,123
            
            
            ****
            **-**
            
            
            
            14,516Operating
                expenses - KCP&L
            
            ****
            **74,020**
            
            
            
            64,810
            
            
            ****
            **147,661**
            
            
            
            127,240Selling,
                general and administrative - non-regulated
            
            ****
            **19,963**
            
            
            
            14,842
            
            
            ****
            **42,678**
            
            
            
            28,519Maintenance
            
            ****
            **23,145**
            
            
            
            24,548
            
            
            ****
            **52,979**
            
            
            
            46,507Depreciation
                and amortization
            
            ****
            **45,819**
            
            
            
            39,250
            
            
            ****
            **90,861**
            
            
            
            78,196General
                taxes
            
            ****
            **26,909**
            
            
            
            27,764
            
            
            ****
            **54,781**
            
            
            
            55,408(Gain)
                loss on property
            
            ****
            **8**
            
            
            
            (696
            )
            
            ****
            **11**
            
            
            
            (597
            )Other
            
            ****
            **2**
            
            
            
            -
            
            
            ****
            **156**
            
            
            
            10Total
            
            ****
            **750,360**
            
            
            
            568,855
            
            
            ****
            **1,360,198**
            
            
            
            1,120,388Operating
                income
            
            ****
            **54,268**
            
            
            
            73,249
            
            
            ****
            **108,706**
            
            
            
            80,901Non-operating
                income
            
            ****
            **2,100**
            
            
            
            3,904
            
            
            ****
            **6,873**
            
            
            
            6,889Non-operating
                expenses
            
            ****
            **(946**
            **)**
            
            
            (1,311
            )
            
            ****
            **(3,649**
            **)**
            
            
            (3,452
            )Interest
                charges
            
            ****
            **(17,914**
            **)**
            
            
            (17,816
            )
            
            ****
            **(39,613**
            **)**
            
            
            (35,139
            )Income
                before income taxesand
                loss from equity investments
            
            ****
            **37,508**
            
            
            
            58,026
            
            
            ****
            **72,317**
            
            
            
            49,199Income
                taxes
            
            ****
            **(11,564**
            **)**
            
            
            (19,301
            )
            
            ****
            **(22,628**
            **)**
            
            
            (11,291
            )Loss
                from equity investments, net of income taxes
            
            ****
            **(350**
            **)**
            
            
            (289
            )
            
            ****
            **(729**
            **)**
            
            
            (579
            )Net
                income
            
            ****
            **25,594**
            
            
            
            38,436
            
            
            ****
            **48,960**
            
            
            
            37,329Preferred
                stock dividend requirements
            
            ****
            **411**
            
            
            
            412
            
            
            ****
            **823**
            
            
            
            823Earnings
                available for common shareholders
            
            **$**
            **25,183**
            
            
            $
            38,024
            
            
            **$**
            **48,137**
            
            
            $
            36,506Average
                number of common shares outstanding
            
            ****
            **85,556**
            
            
            
            76,997
            
            
            ****
            **84,192**
            
            
            
            75,834Basic
                and diluted earnings per common share
            
            **$**
            **0.29**
            
            
            $
            0.49
            
            
            **$**
            **0.57**
            
            
            $
            0.48Cash
                dividends per common share
            
            **$**
            **0.415**
            
            
            $
            0.415
            
            
            **$**
            **0.83**
            
            
            $
            0.83The
                accompanying Notes to Consolidated Financial Statements are an integral
                part of these statements.*See
                Note 5 for additional information regarding deferred refueling outage
                costs.


7


**GREAT
                  PLAINS ENERGY****Consolidated
                  Statements of Cash Flows**(Unaudited)As
                  Adjusted***Year
                  to Date June 30**
              
              **2007**
              
              
              2006**Cash
                  Flows from Operating Activities**
              
              (thousands)Net
                  income
              
              **$**
              **48,960**
              
              
              $
              37,329Adjustments
                  to reconcile income to net cash from operating activities:Depreciation
                  and amortization
              
              ****
              **90,861**
              
              
              
              78,196Amortization
                  of:Nuclear
                  fuel
              
              ****
              **8,359**
              
              
              
              7,822Other
              
              ****
              **4,355**
              
              
              
              4,666Deferred
                  income taxes, net
              
              ****
              **17,723**
              
              
              
              (15,715
              )Investment
                  tax credit amortization
              
              ****
              **(709**
              **)**
              
              
              (1,523
              )Loss
                  from equity investments, net of income taxes
              
              ****
              **729**
              
              
              
              579Gain
                  (loss) on property
              
              ****
              **11**
              
              
              
              (597
              )Fair
                  value impacts from energy contracts
              
              ****
              **(39,822**
              **)**
              
              
              37,925Other
                  operating activities (Note 3)
              
              ****
              **(73,168**
              **)**
              
              
              (36,316
              )Net
                  cash from operating activities
              
              ****
              **57,299**
              
              
              
              112,366**Cash
                  Flows from Investing Activities**Utility
                  capital expenditures
              
              ****
              **(194,702**
              **)**
              
              
              (229,910
              )Allowance
                  for borrowed funds used during construction
              
              ****
              **(6,378**
              **)**
              
              
              (2,549
              )Purchases
                  of investments and nonutility property
              
              ****
              **(2,083**
              **)**
              
              
              (3,505
              )Proceeds
                  from sale of assets and investments
              
              ****
              **24**
              
              
              
              206Purchases
                  of nuclear decommissioning trust investments
              
              ****
              **(34,021**
              **)**
              
              
              (26,387
              )Proceeds
                  from nuclear decommissioning trust investments
              
              ****
              **32,178**
              
              
              
              24,574Other
                  investing activities
              
              ****
              **(8,680**
              **)**
              
              
              (818
              )Net
                  cash from investing activities
              
              ****
              **(213,662**
              **)**
              
              
              (238,389
              )**Cash
                  Flows from Financing Activities**Issuance
                  of common stock
              
              ****
              **5,412**
              
              
              
              149,363Issuance
                  of long-term debt
              
              ****
              **247,955**
              
              
              
              -Issuance
                  fees
              
              ****
              **(190**
              **)**
              
              
              (5,728
              )Repayment
                  of long-term debt
              
              ****
              **(225,500**
              **)**
              
              
              (872
              )Net
                  change in short-term borrowings
              
              ****
              **197,175**
              
              
              
              44,500Dividends
                  paid
              
              ****
              **(72,184**
              **)**
              
              
              (65,197
              )Equity
                  forward settlement
              
              ****
              **(12,322**
              **)**
              
              
              -Other
                  financing activities
              
              ****
              **(2,091**
              **)**
              
              
              (2,935
              )Net
                  cash from financing activities
              
              ****
              **138,255**
              
              
              
              119,131**Net
                  Change in Cash and Cash Equivalents**
              
              ****
              **(18,108**
              **)**
              
              
              (6,892
              )**Cash
                  and Cash Equivalents at Beginning of Year**
              
              ****
              **61,823**
              
              
              
              103,068**Cash
                  and Cash Equivalents at End of Period**
              
              **$**
              **43,715**
              
              
              $
              96,176The
                  accompanying Notes to Consolidated Financial Statements are an
                  integral
                  part of these statements.*
                  See Note 5 for additional information regarding deferred refueling
                  outage
                  costs.
  8


**GREAT
                PLAINS ENERGY****Consolidated
                Statements of Common Shareholders' Equity**(Unaudited)As
                Adjusted***Year
                to Date June 30**
            
            **2007**
            
            
            2006**Shares**
            
            
            **Amount**
            
            
            Shares
            
            
            Amount**Common
                Stock**
            
            (thousands,
                except share amounts)Beginning
                balance
            
            ****
            **80,405,035**
            
            
            **$**
            **896,817**
            
            
            
            74,783,824
            
            
            $
            744,457Issuance
                of common stock
            
            ****
            **5,395,529**
            
            
            ****
            **169,006**
            
            
            
            5,436,566
            
            
            
            149,363Issuance
                of restricted common stock
            
            ****
            **344,527**
            
            
            ****
            **11,016**
            
            
            
            46,826
            
            
            
            1,320Common
                stock issuance fees
            
            
            
            
            
            ****
            **-**
            
            
            
            
            
            
            
            (5,190
            )Equity
                compensation expense
            
            
            
            
            
            ****
            **606**
            
            
            
            
            
            
            
            1,103Equity
                forward settlement
            
            
            
            
            
            ****
            **(12,322**
            **)**
            
            
            
            
            
            
            -Unearned
                CompensationIssuance
                of restricted common stock
            
            
            
            
            
            ****
            **(11,016**
            **)**
            
            
            
            
            
            
            (1,355
            )Forfeiture
                of restricted common stock
            
            
            
            
            
            ****
            **35**
            
            
            
            
            
            
            
            56Compensation
                expense recognized
            
            
            
            
            
            ****
            **2,011**
            
            
            
            
            
            
            
            640Other
            
            ****
            
            
            
            ****
            **2**
            
            
            
            
            
            
            
            31Ending
                balance
            
            ****
            **86,145,091**
            
            
            ****
            **1,056,155**
            
            
            
            80,267,216
            
            
            
            890,425**Retained
                Earnings**Beginning
                balance
            
            
            
            
            
            ****
            **493,399**
            
            
            
            
            
            
            
            498,632Cumulative
                effect of a change in accounting principle (Note 12)
            
            ****
            **(931**
            **)**
            
            
            
            
            
            
            -Net
                income
            
            
            
            
            
            ****
            **48,960**
            
            
            
            
            
            
            
            37,329Dividends:Common
                stock
            
            
            
            
            
            ****
            **(71,361**
            **)**
            
            
            
            
            
            
            (64,326
            )Preferred
                stock - at required rates
            
            
            
            
            
            ****
            **(823**
            **)**
            
            
            
            
            
            
            (823
            )Performance
                shares
            
            
            
            
            
            ****
            **(274**
            **)**
            
            
            
            
            
            
            (82
            )Ending
                balance
            
            ****
            
            
            
            ****
            **468,970**
            
            
            
            
            
            
            
            470,730**Treasury
                Stock**Beginning
                balance
            
            ****
            **(53,499**
            **)**
            
            ****
            **(1,614**
            **)**
            
            
            (43,376
            )
            
            
            (1,304
            )Treasury
                shares acquired
            
            ****
            **(19,054**
            **)**
            
            ****
            **(604**
            **)**
            
            
            (3,519
            )
            
            
            (99
            )Treasury
                shares reissued
            
            
            -
            
            
            
            -
            
            
            
            1,215
            
            
            
            36Ending
                balance
            
            ****
            **(72,553**
            **)**
            
            ****
            **(2,218**
            **)**
            
            
            (45,680
            )
            
            
            (1,367
            )**Accumulated
                Other Comprehensive Income (Loss)**Beginning
                balance
            
            
            
            
            
            ****
            **(46,686**
            **)**
            
            
            
            
            
            
            (7,727
            )Derivative
                hedging activity, net of tax
            
            
            
            
            
            ****
            **51,092**
            
            
            
            
            
            
            
            (35,293
            )Unrecognized
                pension expense, net of tax
            
            
            
            
            
            ****
            **(6**
            **)**
            
            
            
            
            
            
            -Ending
                balance
            
            ****
            
            
            
            ****
            **4,400**
            
            
            
            
            
            
            
            (43,020
            )**Total
                Common Shareholders' Equity**
            
            ****
            
            
            
            **$**
            **1,527,307**
            
            
            ****
            
            
            
            $
            1,316,768The
                accompanying Notes to Consolidated Financial Statements are an integral
                part of these statements.*See
                Note 5 for additional information regarding deferred refueling outage
                costs.


9


**GREAT
                PLAINS ENERGY****Consolidated
                Statements of Comprehensive Income**(Unaudited)**Three
                Months Ended**
            
            
            **Year
                to Date****June
                30**
            
            
            **June
                30**As
                Adjusted*
            
            
            As
                Adjusted***2007**
            
            
            2006
            
            
            **2007**
            
            
            2006(thousands)Net
                income
            
            **$**
            **25,594**
            
            
            $
            38,436
            
            
            **$**
            **48,960**
            
            
            $
            37,329Other
                comprehensive income (loss)Gain
                (loss) on derivative hedging instruments
            
            ****
            **(45,549**
            **)**
            
            
            (36,461
            )
            
            ****
            **48,543**
            
            
            
            (77,164
            )Income
                taxes
            
            ****
            **18,632**
            
            
            
            15,052
            
            
            ****
            **(19,933**
            **)**
            
            
            32,335Net
                gain (loss) on derivative hedging instruments
            
            ****
            **(26,917**
            **)**
            
            
            (21,409
            )
            
            ****
            **28,610**
            
            
            
            (44,829
            )Reclassification
                to expenses, net of tax
            
            ****
            **9,640**
            
            
            
            4,314
            
            
            ****
            **22,482**
            
            
            
            9,536Derivative
                hedging activity, net of tax
            
            ****
            **(17,277**
            **)**
            
            
            (17,095
            )
            
            ****
            **51,092**
            
            
            
            (35,293
            )Change
                in unrecognized pension expense
            
            ****
            **(291**
            **)**
            
            
            -
            
            
            ****
            **(156**
            **)**
            
            
            -Income
                taxes
            
            ****
            **202**
            
            
            
            -
            
            
            ****
            **150**
            
            
            
            -Net
                change in unrecognized pension expense
            
            ****
            **(89**
            **)**
            
            
            -
            
            
            ****
            **(6**
            **)**
            
            
            -Comprehensive
                income
            
            **$**
            **8,228**
            
            
            $
            21,341
            
            
            **$**
            **100,046**
            
            
            $
            2,036The
                accompanying Notes to Consolidated Financial Statements are an integral
                part of these statements.*See
                Note 5 for additional information regarding deferred refueling outage
                costs.


10


**KANSAS
                CITY POWER & LIGHT COMPANY****Consolidated
                Balance Sheets**(Unaudited)**June
                30**
            
            
            December
                31**2007**
            
            
            2006**ASSETS**
            
            (thousands)**Current
                Assets**Cash
                and cash equivalents
            
            **$**
            **3,764**
            
            
            $
            1,788Receivables,
                net
            
            ****
            **140,872**
            
            
            
            114,294Fuel
                inventories, at average cost
            
            ****
            **41,276**
            
            
            
            27,811Materials
                and supplies, at average cost
            
            ****
            **61,513**
            
            
            
            59,829Deferred
                refueling outage costs
            
            ****
            **9,839**
            
            
            
            13,921Refundable
                income taxes
            
            ****
            **2,794**
            
            
            
            7,229Deferred
                income taxes
            
            ****
            **1,961**
            
            
            
            52Prepaid
                expenses
            
            ****
            **12,313**
            
            
            
            9,673Derivative
                instruments
            
            ****
            **944**
            
            
            
            179Total
            
            ****
            **275,276**
            
            
            
            234,776**Nonutility
                    Property and Investments**Nuclear
                decommissioning trust fund
            
            ****
            **108,541**
            
            
            
            104,066Other
            
            ****
            **6,278**
            
            
            
            6,480Total
            
            ****
            **114,819**
            
            
            
            110,546**Utility
                Plant, at Original Cost**Electric
            
            ****
            **5,383,993**
            
            
            
            5,268,485Less-accumulated
                depreciation
            
            ****
            **2,526,676**
            
            
            
            2,456,199Net
                utility plant in service
            
            ****
            **2,857,317**
            
            
            
            2,812,286Construction
                work in progress
            
            ****
            **294,060**
            
            
            
            214,493Nuclear
                fuel, net of amortization of $111,740 and $103,381
            
            ****
            **52,623**
            
            
            
            39,422Total
            
            ****
            **3,204,000**
            
            
            
            3,066,201**Deferred
                Charges and Other Assets**Regulatory
                assets
            
            ****
            **429,096**
            
            
            
            434,392Derivative
                instruments
            
            ****
            **25**
            
            
            
            -Other
            
            ****
            **8,962**
            
            
            
            13,584Total
            
            ****
            **438,083**
            
            
            
            447,976Total
            
            **$**
            **4,032,178**
            
            
            $
            3,859,499The
                disclosures regarding Consolidated KCP&L included in the accompanying
                Notes to Consolidated FinancialStatements
                are an integral part of these statements.


11


**KANSAS
                CITY POWER & LIGHT
                COMPANY****Consolidated
                Balance Sheets**(Unaudited)**June
                30**
            
            
            December
                31**2007**
            
            
            2006**LIABILITIES
                AND CAPITALIZATION**
            
            (thousands)**Current
                Liabilities**Notes
                payable to Great Plains Energy
            
            **$**
            **600**
            
            
            $
            550Commercial
                paper
            
            ****
            **317,575**
            
            
            
            156,400Current
                maturities of long-term debt
            
            ****
            **-**
            
            
            
            225,500EIRR
                bonds classified as current
            
            ****
            **145,853**
            
            
            
            144,742Accounts
                payable
            
            ****
            **172,468**
            
            
            
            181,805Accrued
                taxes
            
            ****
            **33,214**
            
            
            
            18,165Accrued
                interest
            
            ****
            **11,886**
            
            
            
            12,461Accrued
                compensation and benefits
            
            ****
            **21,770**
            
            
            
            24,641Pension
                and post-retirement liability
            
            ****
            **841**
            
            
            
            841Derivative
                instruments
            
            ****
            **1,184**
            
            
            
            2,687Other
            
            ****
            **8,363**
            
            
            
            8,469Total
            
            ****
            **713,754**
            
            
            
            776,261**Deferred
                Credits and Other Liabilities**Deferred
                income taxes
            
            ****
            **635,719**
            
            
            
            660,046Deferred
                investment tax credits
            
            ****
            **27,749**
            
            
            
            28,458Asset
                retirement obligations
            
            ****
            **93,382**
            
            
            
            91,824Pension
                and post-retirement liability
            
            ****
            **175,954**
            
            
            
            164,189Regulatory
                liabilities
            
            ****
            **118,450**
            
            
            
            114,674Derivative
                instruments
            
            ****
            **-**
            
            
            
            39Other
            
            ****
            **57,319**
            
            
            
            33,678Total
            
            ****
            **1,108,573**
            
            
            
            1,092,908**Capitalization**
            
            ****Common
                shareholder's equityCommon
                stock-1,000 shares authorized without par value1
                share issued, stated value
            
            ****
            **1,021,656**
            
            
            
            1,021,656Retained
                earnings
            
            ****
            **324,115**
            
            
            
            354,802Accumulated
                other comprehensive income
            
            ****
            **8,879**
            
            
            
            6,685Total
            
            ****
            **1,354,650**
            
            
            
            1,383,143Long-term
                debt (Note 8)
            
            ****
            **855,201**
            
            
            
            607,187Total
            
            ****
            **2,209,851**
            
            
            
            1,990,330**Commitments
                and Contingencies (Note 14)**
            
            ****Total
            
            **$**
            **4,032,178**
            
            
            $
            3,859,499The
                disclosures regarding consolidated KCP&L included in the accompanying
                Notes to Consolidated FinancialStatements
                are an integral part of these statements.


12


**KANSAS
                CITY POWER & LIGHT
                COMPANY****Consolidated
                Statements of Income**(Unaudited)**Three
                Months Ended**
            
            
            **Year
                to Date****June
                30**
            
            
            **June
                30**As
              Adjusted*
            
            
            
            As
              Adjusted***2007**
            
            
            2006
            
            
            **2007**
            
            
            2006**Operating
                Revenues**
            
            (thousands)Electric
                revenues
            
            **$**
            **319,143**
            
            
            $
            290,891
            
            
            **$**
            **574,795**
            
            
            $
            531,281**Operating
                Expenses**Fuel
            
            ****
            **57,952**
            
            
            
            55,297
            
            
            ****
            **110,616**
            
            
            
            101,797Purchased
                power
            
            ****
            **22,751**
            
            
            
            8,570
            
            
            ****
            **39,106**
            
            
            
            13,687Skill
                set realignment costs
            
            ****
            **-**
            
            
            
            4,937
            
            
            ****
            **-**
            
            
            
            14,230Operating
                expenses - KCP&L
            
            ****
            **74,020**
            
            
            
            64,810
            
            
            ****
            **147,661**
            
            
            
            127,240Maintenance
            
            ****
            **23,072**
            
            
            
            24,549
            
            
            ****
            **52,906**
            
            
            
            46,496Depreciation
                and amortization
            
            ****
            **43,749**
            
            
            
            37,346
            
            
            ****
            **86,760**
            
            
            
            74,346General
                taxes
            
            ****
            **27,475**
            
            
            
            26,875
            
            
            ****
            **54,348**
            
            
            
            53,164(Gain)
                loss on property
            
            ****
            **8**
            
            
            
            (695
            )
            
            ****
            **11**
            
            
            
            (598
            )Other
            
            ****
            **2**
            
            
            
            -
            
            
            ****
            **156**
            
            
            
            10Total
            
            ****
            **249,029**
            
            
            
            221,689
            
            
            ****
            **491,564**
            
            
            
            430,372Operating
                income
            
            ****
            **70,114**
            
            
            
            69,202
            
            
            ****
            **83,231**
            
            
            
            100,909Non-operating
                income
            
            ****
            **1,149**
            
            
            
            2,822
            
            
            ****
            **4,722**
            
            
            
            4,535Non-operating
                expenses
            
            ****
            **(933**
            **)**
            
            
            (1,235
            )
            
            ****
            **(2,346**
            **)**
            
            
            (2,292
            )Interest
                charges
            
            ****
            **(16,723**
            **)**
            
            
            (15,046
            )
            
            ****
            **(34,933**
            **)**
            
            
            (29,904
            )Income
                before income taxes
            
            ****
            **53,607**
            
            
            
            55,743
            
            
            ****
            **50,674**
            
            
            
            73,248Income
                taxes
            
            ****
            **(17,114**
            **)**
            
            
            (19,150
            )
            
            ****
            **(12,183**
            **)**
            
            
            (23,643
            )Net
                income
            
            **$**
            **36,493**
            
            
            $
            36,593
            
            
            **$**
            **38,491**
            
            
            $
            49,605The
                disclosures regarding consolidated KCP&L included in the accompanying
                Notes to Consolidated FinancialStatements
                are an integral part of these statements.*See
                Note 5 for additional information regarding deferred refueling outage
                costs.


13


**KANSAS
                  CITY POWER & LIGHT
                  COMPANY****Consolidated
                  Statements of Cash Flows**(Unaudited)As
                  Adjusted***Year
                  to Date June 30**
              
              **2007**
              
              
              2006**Cash
                  Flows from Operating Activities**
              
              (thousands)Net
                  income
              
              **$**
              **38,491**
              
              
              $
              49,605Adjustments
                  to reconcile income to net cash from operating activities:Depreciation
                  and amortization
              
              ****
              **86,760**
              
              
              
              74,346Amortization
                  of:Nuclear
                  fuel
              
              ****
              **8,359**
              
              
              
              7,822Other
              
              ****
              **2,808**
              
              
              
              3,302Deferred
                  income taxes, net
              
              ****
              **(804**
              **)**
              
              
              (1,070
              )Investment
                  tax credit amortization
              
              ****
              **(709**
              **)**
              
              
              (1,523
              )Gain
                  (loss) on property
              
              ****
              **11**
              
              
              
              (598
              )Other
                  operating activities (Note 3)
              
              ****
              **(40,728**
              **)**
              
              
              (26,710
              )Net
                  cash from operating activities
              
              ****
              **94,188**
              
              
              
              105,174**Cash
                  Flows from Investing Activities**Utility
                  capital expenditures
              
              ****
              **(194,702**
              **)**
              
              
              (229,910
              )Allowance
                  for borrowed funds used during construction
              
              ****
              **(6,378**
              **)**
              
              
              (2,549
              )Purchases
                  of nonutility property
              
              ****
              **(23**
              **)**
              
              
              (42
              )Proceeds
                  from sale of assets
              
              ****
              **24**
              
              
              
              206Purchases
                  of nuclear decommissioning trust investments
              
              ****
              **(34,021**
              **)**
              
              
              (26,387
              )Proceeds
                  from nuclear decommissioning trust investments
              
              ****
              **32,178**
              
              
              
              24,574Other
                  investing activities
              
              ****
              **(3,882**
              **)**
              
              
              (818
              )Net
                  cash from investing activities
              
              ****
              **(206,804**
              **)**
              
              
              (234,926
              )**Cash
                  Flows from Financing Activities**Issuance
                  of long-term debt
              
              ****
              **247,955**
              
              
              
              -Repayment
                  of long-term debt
              
              ****
              **(225,500**
              **)**
              
              
              -Net
                  change in short-term borrowings
              
              ****
              **161,225**
              
              
              
              50,500Dividends
                  paid to Great Plains Energy
              
              ****
              **(69,000**
              **)**
              
              
              (54,001
              )Equity
                  contribution from Great Plains Energy
              
              ****
              **-**
              
              
              
              134,615Issuance
                  fees
              
              ****
              **(88**
              **)**
              
              
              (469
              )Net
                  cash from financing activities
              
              ****
              **114,592**
              
              
              
              130,645**Net
                  Change in Cash and Cash Equivalents**
              
              ****
              **1,976**
              
              
              
              893**Cash
                  and Cash Equivalents at Beginning of Year**
              
              ****
              **1,788**
              
              
              
              2,961**Cash
                  and Cash Equivalents at End of Period**
              
              **$**
              **3,764**
              
              
              $
              3,854The
                  disclosures regarding consolidated KCP&L included in the accompanying
                  Notes to Consolidated FinancialStatements
                  are an integral part of these statements.*
                  See Note 5 for additional information regarding deferred refueling
                  outage
                  costs.
  14


**KANSAS
                CITY POWER & LIGHT COMPANY****Consolidated
                Statements of Common Shareholder's Equity**(Unaudited)As
                Adjusted***Year
                to Date June 30**
            
            **2007**
            
            
            2006**Shares**
            
            
            **Amount**
            
            
            Shares
            
            
            Amount(thousands,
                except share amounts)**Common
                Stock**
            
            ****
            **1**
            
            
            **$**
            **1,021,656**
            
            
            
            1
            
            
            $
            1,021,656**Retained
                Earnings**Beginning
                balance
            
            
            
            
            
            ****
            **354,802**
            
            
            
            
            
            
            
            294,481Cumulative
                effect of a change in accounting principle (Note 12)
            
            ****
            **(178**
            **)**
            
            
            
            
            
            
            -Net
                income
            
            
            
            
            
            ****
            **38,491**
            
            
            
            
            
            
            
            49,605Dividends:Common
                stock held by Great Plains Energy
            
            
            
            
            
            ****
            **(69,000**
            **)**
            
            
            
            
            
            
            (54,001
            )Ending
                balance
            
            ****
            
            
            
            ****
            **324,115**
            
            
            
            
            
            
            
            290,085**Accumulated
                Other Comprehensive Income (Loss)**Beginning
                balance
            
            
            
            
            
            ****
            **6,685**
            
            
            
            
            
            
            
            (29,909
            )Derivative
                hedging activity, net of tax
            
            
            
            
            
            ****
            **2,194**
            
            
            
            
            
            
            
            3,178Ending
                balance
            
            ****
            
            
            
            ****
            **8,879**
            
            
            
            
            
            
            
            (26,731
            )**Total
                Common Shareholder's Equity**
            
            ****
            
            
            
            **$**
            **1,354,650**
            
            
            ****
            
            
            
            $
            1,285,010The
                disclosures regarding consolidated KCP&L included in the accompanying
                Notes to Consolidated FinancialStatements
                are an integral part of these statements.*See
                Note 5 for additional information regarding deferred refueling outage
                costs.


15


**KANSAS
                CITY POWER & LIGHT
                COMPANY****Consolidated
                Statements of Comprehensive Income**(Unaudited)**Three
                Months Ended**
            
            
            **Year
                to Date****June
                30**
            
            
            **June
                30**As
                Adjusted*
            
            
            As
                Adjusted***2007**
            
            
            2006
            
            
            **2007**
            
            
            2006(thousands)Net
                income
            
            **$**
            **36,493**
            
            
            $
            36,593
            
            
            **$**
            **38,491**
            
            
            $
            49,605Other
                comprehensive incomeGain
                on derivative hedging instruments
            
            ****
            **3,162**
            
            
            
            1,894
            
            
            ****
            **3,742**
            
            
            
            5,293Income
                taxes
            
            ****
            **(1,190**
            **)**
            
            
            (712
            )
            
            ****
            **(1,407**
            **)**
            
            
            (1,990
            )Net
                gain on derivative hedging instruments
            
            ****
            **1,972**
            
            
            
            1,182
            
            
            ****
            **2,335**
            
            
            
            3,303Reclassification
                to expenses, net of tax
            
            ****
            **(78**
            **)**
            
            
            (63
            )
            
            ****
            **(141**
            **)**
            
            
            (125
            )Derivative
                hedging activity, net of tax
            
            ****
            **1,894**
            
            
            
            1,119
            
            
            ****
            **2,194**
            
            
            
            3,178Comprehensive
                income
            
            **$**
            **38,387**
            
            
            $
            37,712
            
            
            **$**
            **40,685**
            
            
            $
            52,783The
                disclosures regarding consolidated KCP&L included in the accompanying
                Notes to Consolidated Financial Statements are anintegral
                part of these statements.*See
                Note 5 for additional information regarding deferred refueling outage
                costs.


16


**GREAT
      PLAINS ENERGY INCORPORATED**


**KANSAS
      CITY POWER & LIGHT COMPANY**


**Notes
      to Unaudited Consolidated Financial Statements**




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




**1.**
            **SUMMARY
                OF SIGNIFICANT ACCOUNTING
                POLICIES**




**Organization**


Great
      Plains Energy is a public utility holding company and does not own or operate
      any significant assets other than the stock of its
      subsidiaries.  Great Plains Energy has four wholly owned direct
      subsidiaries with operations or active subsidiaries:




·
            KCP&L
                is an integrated, regulated electric utility that provides electricity
                to
                customers primarily in the states of Missouri and
                Kansas.  KCP&L has two wholly owned subsidiaries, Kansas
                City Power & Light Receivables Company (Receivables Company) and Home
                Service Solutions Inc. (HSS).  HSS has no active
                operations.




·
            KLT
                Inc. is an intermediate holding company that primarily holds an indirect
                interest in Strategic Energy, L.L.C. (Strategic Energy), which provides
                competitive retail electricity supply services in several electricity
                markets offering retail choice, and holds investments in affordable
                housing limited partnerships.  KLT Inc. also wholly owns KLT Gas
                Inc. (KLT Gas), which has no active
                operations.




·
            Innovative
                Energy Consultants Inc. (IEC) is an intermediate holding company
                that
                holds an indirect interest in Strategic Energy.  IEC does not
                own or operate any assets other than its indirect interest in Strategic
                Energy.  When combined with KLT Inc.’s indirect interest in
                Strategic Energy, the Company indirectly owns 100% of Strategic
                Energy.




·
            Great
                Plains Energy Services Incorporated (Services) provides services
                at cost
                to Great Plains Energy and its subsidiaries, including consolidated
                KCP&L.




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




**Cash
      and Cash Equivalents**


Cash
      equivalents consist of highly liquid investments with original maturities of
      three months or less at acquisition.  For Great Plains Energy, this
      includes Strategic Energy’s cash held in trust of $5.4 million and $8.8 million
      at June 30, 2007, and December 31, 2006, respectively.




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




17


**Basic
      and Diluted Earnings Per Common Share Calculation**


There
      was
      no significant dilutive effect on Great Plains Energy’s EPS from other
      securities for the three months ended and year to date June 30, 2007 and
      2006.  To determine basic EPS, preferred stock dividend requirements
      are deducted from net income before dividing by the average number of common
      shares outstanding.  The effect of dilutive securities, calculated
      using the treasury stock method, assumes the issuance of common shares
      applicable to stock options, performance shares, restricted stock, a forward
      sale agreement and FELINE PRIDESSM.




The
      following table reconciles Great Plains Energy’s basic and diluted
      EPS.


**Three
                Months Ended**
            
            
            
            **Year
                to Date****June
                30**
            
            
            
            **June
                30****As
              Adjusted**
            
            
            
            
            **As
              Adjusted****2007**
            
            
            **2006**
            
            
            
            **2007**
            
            
            **2006****Income**
            
            (millions,
                except per share amounts)Net
                income
            
            $
            25.6
            
            
            $
            38.4
            
            
            
            $
            49.0
            
            
            $
            37.3Less:
                preferred stock dividend requirements
            
            
            0.5
            
            
            
            0.4
            
            
            
            
            0.9
            
            
            
            0.8Income
                available to common shareholders
            
            $
            25.1
            
            
            $
            38.0
            
            
            
            $
            48.1
            
            
            $
            36.5**Common
                Shares Outstanding**Average
                number of common shares outstanding
            
            
            85.6
            
            
            
            77.0
            
            
            
            
            84.2
            
            
            
            75.8Add:
                effect of dilutive securities
            
            
            0.2
            
            
            
            -
            
            
            
            
            0.4
            
            
            
            -Diluted
                average number of common shares outstanding
            
            
            85.8
            
            
            
            77.0
            
            
            
            
            84.6
            
            
            
            75.8**Basic
                and diluted EPS**
            
            $
            0.29
            
            
            $
            0.49
            
            
            
            $
            0.57
            
            
            $
            0.48


The
      computation of diluted EPS excludes anti-dilutive shares for the three months
      ended and year to date June 30, 2007, of 126,463 performance shares and 364,802
      restricted stock shares.  There were no anti-dilutive shares
      applicable to FELINE PRIDES, stock options or a forward sale
      agreement.  FELINE PRIDES settled in the first quarter of 2007 and the
      forward sale agreement settled in the second quarter of 2007.  For the
      three months ended and year to date June 30, 2006, the computation of diluted
      EPS excludes anti-dilutive shares of 183,874 and 89,715 performance shares
      and
      166,007 and 121,181 restricted stock shares,
      respectively.  Additionally, for the three months ended and year to
      date June 30, 2006, 6.5 million of anti-dilutive FELINE PRIDES were excluded
      from the computation of diluted EPS and there were no anti-dilutive shares
      applicable to stock options or a forward sale agreement.


**Dividends
        Declared**
 In
        July
        2007, the Board of Directors declared a quarterly dividend of $0.415 per
        share
        on Great Plains Energy’s common stock.  The common dividend is payable
        September 20, 2007, to shareholders of record as of August 29,
        2007.  The Board of Directors also declared regular dividends on Great
        Plains Energy’s preferred stock, payable December 1, 2007, to shareholders of
        record as of November 8, 2007.
  **2.**
              **ANTICIPATED
                  ACQUISITION OF AQUILA,
                  INC.**
  On
        February 6, 2007, Great Plains Energy entered into an agreement to acquire
        all
        outstanding shares of Aquila, Inc. (Aquila) for $1.80 in cash plus 0.0856
        of a
        share of Great Plains Energy common stock for each share of Aquila common
        stock.  Immediately prior to Great Plains Energy’s acquisition of
        Aquila, Black Hills Corporation (Black Hills) will acquire Aquila’s electric
        utility in Colorado and its gas utilities in Colorado, Kansas, Nebraska and
        Iowa.  Each of the two transactions is conditioned on the completion
        of the other transaction and is expected to close in the first quarter of
        2008.  Following closing, Great Plains Energy will own Aquila and its
        Missouri-based utilities consisting of the Missouri
 18
 Public
        Service and St. Joseph Light & Power divisions, as well as Aquila’s merchant
        service operations, which primarily consist of the 340MW Crossroads power
        generating facility and residual natural gas contracts.
  Great
        Plains Energy’s acquisition of Aquila was unanimously approved by both Great
        Plains Energy’s and Aquila’s Boards of Directors and is subject to the approval
        of Great Plains Energy’s shareholders for the issuance of common stock to be
        received by Aquila’s shareholders in the merger; approval of Aquila shareholders
        of the merger; regulatory approvals from the Public Service Commission of
        the
        State of Missouri (MPSC), The State Corporation Commission of the State of
        Kansas (KCC), and The Federal Energy Regulatory Commission (FERC);
        Hart-Scott-Rodino antitrust review; the closing of the asset sale to Black
        Hills; as well as other customary conditions.  In April 2007, Great
        Plains Energy, KCP&L and Aquila filed joint applications with the MPSC and
        KCC for approval of the acquisition of Aquila by Great Plains Energy. 
These filings are expected to be updated in August 2007.  In May 2007,
        Great Plains Energy filed with the Securities and Exchange Commission (SEC),
        a
        registration statement including a joint proxy (which was amended in June
        2007)
        with Aquila for the Great Plains Energy and Aquila special shareholder meetings
        expected to occur in late third quarter or early fourth quarter of
        2007.  In May 2007, Great Plains Energy, KCP&L, Aquila and Black
        Hills filed a joint application (which was amended in June 2007) with FERC
        for
        approval of the transactions.  Various parties have submitted protests
        to the FERC application.  Great Plains Energy and Aquila submitted their
        respective Hart-Scott-Rodino pre-merger notifications in July 2007 relating
        to
        the acquisition of Aquila by Great Plains Energy.  The thirty-day
        initial waiting period will expire on August 27, 2007, unless the period
        is
        terminated earlier or extended.
  Direct
        transaction costs of the acquisition incurred by Great Plains Energy of $13.2
        million at June 30, 2007, are deferred and will be included in purchase
        accounting treatment upon consummation of the acquisition unless regulatory
        accounting treatment is authorized.  The MPSC and KCC applications
        requested authorization to amortize these costs plus transition-related costs,
        excluding labor costs, over a five-year period beginning January 1, 2008,
        or the
        month immediately following consummation of the merger, whichever occurs
        later.  Transition-related costs, excluding labor costs, were $1.3
        million for the three months ended and year to date June 30,
        2007.  The MPSC and KCC applications proposed to regulators that
        estimated synergy savings resulting from the transaction be shared between
        retail electric customers and Great Plains Energy shareholders for a period
        of
        five years.  Additionally, the MPSC application requested approval for
        the use of the additional amortization mechanism for Aquila’s Missouri-based
        utilities, as implemented in KCP&L’s 2006 rate case, once Aquila achieves
        financial metrics necessary to support an investment-grade credit
        rating.  The MPSC application also requested authorization for the
        distribution of proceeds from the Black Hills asset sale by Aquila to fund
        substantially all of the cash portion of the merger consideration to Aquila
        shareholders.  The FERC application requested a declaration that the
        distribution will not violate the Federal Power Act.
  A
        purported class action lawsuit was filed against Aquila and certain of its
        individual directors and officers in February 2007, in Jackson County, Missouri,
        Circuit Court seeking, among other things, an injunction against the
        consummation of the proposed transaction.  In July 2007, an amended
        lawsuit was filed to include Great Plains Energy as a defendant, alleging
        that
        Great Plains Energy aided and abetted alleged breaches of fiduciary duties
        by
        the named Aquila directors and officers.  Great Plains Energy has not
        been served with this amended complaint.  Great Plains Energy believes
        it has strong defenses and will vigorously defend this lawsuit.
  19
 **3.**
              **SUPPLEMENTAL
                  CASH FLOW INFORMATION**


***Great
                Plains Energy Other Operating Activities*****As
                Adjusted****Year
                to Date June 30**
            
            **2007**
            
            
            **2006**Cash
                flows affected by changes in:
            
            (millions)Receivables
            
            $
            (71.6
            )
            
            $
            (31.0
            )Fuel
                inventories
            
            
            (14.3
            )
            
            
            (12.8
            )Materials
                and supplies
            
            
            (1.7
            )
            
            
            (1.2
            )Accounts
                payable
            
            
            5.2
            
            
            
            (16.2
            )Accrued
                taxes
            
            
            9.4
            
            
            
            24.7Accrued
                interest
            
            
            (0.7
            )
            
            
            0.3Deferred
                refueling outage costs
            
            
            4.1
            
            
            
            3.1Deposits
                with suppliers
            
            
            -
            
            
            
            (3.4
            )Pension
                and post-retirement benefit obligations
            
            
            9.9
            
            
            
            4.3Allowance
                for equity funds used during construction
            
            
            (0.3
            )
            
            
            (2.1
            )Deferred
                merger costs
            
            
            (10.4
            )
            
            
            -Proceeds
                from forward starting swaps
            
            
            3.3
            
            
            
            -Other
            
            
            (6.1
            )
            
            
            (2.0
            )Total
                other operating activities
            
            $
            (73.2
            )
            
            $
            (36.3
            )Cash
                paid during the period:Interest
            
            $
            38.7
            
            
            $
            33.4Income
                taxes
            
            $
            3.4
            
            
            $
            14.9Non-cash
                investing activities:Liabilities
                assumed for capital expenditures
            
            $
            61.5
            
            
            $
            15.0


***Consolidated
                KCP&L Other Operating Activities*****As
                Adjusted****Year
                to Date June 30**
            
            **2007**
            
            
            **2006**Cash
                flows affected by changes in:
            
            (millions)Receivables
            
            $
            (26.6
            )
            
            $
            (27.5
            )Fuel
                inventories
            
            
            (14.3
            )
            
            
            (12.8
            )Materials
                and supplies
            
            
            (1.7
            )
            
            
            (1.2
            )Accounts
                payable
            
            
            (39.2
            )
            
            
            (14.5
            )Accrued
                taxes
            
            
            25.1
            
            
            
            30.4Accrued
                interest
            
            
            (0.5
            )
            
            
            0.3Deferred
                refueling outage costs
            
            
            4.1
            
            
            
            3.1Pension
                and post-retirement benefit obligations
            
            
            8.6
            
            
            
            2.5Allowance
                for equity funds used during construction
            
            
            (0.3
            )
            
            
            (2.1
            )Proceeds
                from forward starting swaps
            
            
            3.3
            
            
            
            -Other
            
            
            0.8
            
            
            
            (4.9
            )Total
                other operating activities
            
            $
            (40.7
            )
            
            $
            (26.7
            )Cash
                paid during the period:Interest
            
            $
            34.6
            
            
            $
            28.5Income
                taxes
            
            $
            -
            
            
            $
            11.4Non-cash
                investing activities:Liabilities
                assumed for capital expenditures
            
            $
            61.3
            
            
            $
            14.3


20


**Significant
      Non-Cash Items**


In
        February 2007, Great Plains Energy issued 5.2 million shares of common stock
        in
        satisfaction of the FELINE PRIDES stock purchase contracts and the retirement
        of
        the $163.6 million FELINE PRIDES Senior Notes.
  **4.**
              **RECEIVABLES**
  The
        Company’s receivables are detailed in the following table.


**June
                30**
            **December
                31****2007**
            **2006****Consolidated
                KCP&L**
            
            (millions)Customer
                accounts receivable (a)
            
            $
            57.1
            
            
            $
            35.2Allowance
                for doubtful accounts
            
            
            (1.2
            )
            
            
            (1.1
            )Other
                receivables
            
            
            85.0
            
            
            
            80.2Consolidated
                KCP&L receivables
            
            
            140.9
            
            
            
            114.3**Other
                Great Plains Energy**Other
                receivables
            
            
            276.2
            
            
            
            229.2Allowance
                for doubtful accounts
            
            
            (6.1
            )
            
            
            (4.1
            )Great
                Plains Energy receivables
            
            $
            411.0
            
            
            $
            339.4(a)Customer
                accounts receivable included unbilled receivables of $52.1 million
                and
                $32.0 million atJune
                30, 2007, andDecember
                31, 2006, respectively.


Consolidated
      KCP&L’s other receivables at June 30, 2007, and December 31, 2006, consisted
      primarily of receivables from partners in jointly owned electric utility plants
      and wholesale sales receivables.  Great Plains Energy’s other
      receivables at June 30, 2007, and December 31, 2006, consisted primarily of
      accounts receivable held by Strategic Energy, including unbilled receivables
      of
      $150.0 million and $95.0 million, respectively.




KCP&L
      sells all of its retail electric accounts receivable to its wholly owned
      subsidiary, Receivables Company, which in turn sells an undivided percentage
      ownership interest in the accounts receivable to Victory Receivables
      Corporation, an independent outside investor.  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 2.5% of the outstanding principal amount of the
      receivables sold to Receivables Company.  KCP&L does not recognize
      a servicing asset or liability because management determined the collection
      agent fee earned by KCP&L approximates market value.


21


Information
      regarding KCP&L’s sale of accounts receivable to Receivables Company is
      reflected in the following tables.


**Receivables**
            
            
            **Consolidated****Three
                Months Ended June 30, 2007**
            
            **KCP&L**
            
            
            **Company**
            
            
            **KCP&L**(millions)Receivables
                (sold) purchased
            
            $
            (266.4
            )
            
            $
            266.4
            
            
            $
            -Gain
                (loss) on sale of accounts receivable (a)
            
            
            (3.3
            )
            
            
            3.0
            
            
            
            (0.3
            )Servicing
                fees
            
            
            0.7
            
            
            
            (0.7
            )
            
            
            -Fees
                to outside investor
            
            
            -
            
            
            
            (1.0
            )
            
            
            (1.0
            )**Cash
                flows during the period**Cash
                from customers transferred toReceivables
                Company
            
            
            (240.5
            )
            
            
            240.5
            
            
            
            -Cash
                paid to KCP&L for receivables purchased
            
            
            237.4
            
            
            
            (237.4
            )
            
            
            -Servicing
                fees
            
            
            0.7
            
            
            
            (0.7
            )
            
            
            -Interest
                on intercompany note
            
            
            0.6
            
            
            
            (0.6
            )
            
            
            -


**Receivables**
            
            
            **Consolidated****Year
                to Date June 30, 2007**
            
            **KCP&L**
            
            
            **Company**
            
            
            **KCP&L**(millions)Receivables
                (sold) purchased
            
            $
            (492.2
            )
            
            $
            492.2
            
            
            $
            -Gain
                (loss) on sale of accounts receivable (a)
            
            
            (5.8
            )
            
            
            5.3
            
            
            
            (0.5
            )Servicing
                fees
            
            
            1.4
            
            
            
            (1.4
            )
            
            
            -Fees
                to outside investor
            
            
            -
            
            
            
            (2.0
            )
            
            
            (2.0
            )**Cash
                flows during the period**Cash
                from customers transferred toReceivables
                Company
            
            
            (472.4
            )
            
            
            472.4
            
            
            
            -Cash
                paid to KCP&L for receivables purchased
            
            
            467.0
            
            
            
            (467.0
            )
            
            
            -Servicing
                fees
            
            
            1.4
            
            
            
            (1.4
            )
            
            
            -Interest
                on intercompany note
            
            
            1.2
            
            
            
            (1.2
            )
            
            
            -


**Receivables**
            
            
            **Consolidated****Three
                Months Ended June 30, 2006**
            
            **KCP&L**
            
            
            **Company**
            
            
            **KCP&L**(millions)Receivables
                (sold) purchased
            
            $
            (252.1
            )
            
            $
            252.1
            
            
            $
            -Gain
                (loss) on sale of accounts receivable (a)
            
            
            (2.5
            )
            
            
            2.2
            
            
            
            (0.3
            )Servicing
                fees
            
            
            0.6
            
            
            
            (0.6
            )
            
            
            -Fees
                to outside investor
            
            
            -
            
            
            
            (1.0
            )
            
            
            (1.0
            )**Cash
                flows during the period**Cash
                from customers transferred toReceivables
                Company
            
            
            (218.5
            )
            
            
            218.5
            
            
            
            -Cash
                paid to KCP&L for receivables purchased
            
            
            216.3
            
            
            
            (216.3
            )
            
            
            -Servicing
                fees
            
            
            0.6
            
            
            
            (0.6
            )
            
            
            -Interest
                on intercompany note
            
            
            0.5
            
            
            
            (0.5
            )
            
            
            -


22


**Receivables**
            
            
            **Consolidated****Year
                to Date June 30, 2006**
            
            **KCP&L**
            
            
            **Company**
            
            
            **KCP&L**(millions)Receivables
                (sold) purchased
            
            $
            (449.3
            )
            
            $
            449.3
            
            
            $
            -Gain
                (loss) on sale of accounts receivable (a)
            
            
            (4.5
            )
            
            
            4.3
            
            
            
            (0.2
            )Servicing
                fees
            
            
            1.2
            
            
            
            (1.2
            )
            
            
            -Fees
                to outside investor
            
            
            -
            
            
            
            (1.8
            )
            
            
            (1.8
            )**Cash
                flows during the period**Cash
                from customers transferred toReceivables
                Company
            
            
            (431.0
            )
            
            
            431.0
            
            
            
            -Cash
                paid to KCP&L for receivables purchased
            
            
            426.7
            
            
            
            (426.7
            )
            
            
            -Servicing
                fees
            
            
            1.2
            
            
            
            (1.2
            )
            
            
            -Interest
                on intercompany note
            
            
            0.8
            
            
            
            (0.8
            )
            
            
            -(a)The
                net gain (loss) is the result of the timing difference inherent in
                collecting receivables and over the life of the agreement will net to
                zero.


**5.**
            **NUCLEAR
                PLANT**




KCP&L
      owns 47% of Wolf Creek Nuclear Operating Corporation (WCNOC), the operating
      company for Wolf Creek Generating Station (Wolf Creek), KCP&L’s only nuclear
      generating unit.  Wolf Creek is regulated by the Nuclear Regulatory
      Commission (NRC), with respect to licensing, operations and safety-related
      requirements.




**Nuclear
      Plant Decommissioning Costs**


KCP&L’s
      decommissioning trust is reported at fair value on Great Plains Energy’s and
      consolidated KCP&L’s balance sheets and is invested in assets as detailed in
      the following table.


**June
                30**
            
            
            **December
                31****2007**
            
            
            **2006****Total
                Unrealized**
            
            
            
            **Total
                Unrealized****Fair
                Value**
            **Gains**
            
            
            **Fair
                Value**
            **Gains**(millions)Equity
                securities
            
            $
            53.7
            
            $
            9.7
            
            
            $
            50.6
            
            $
            10.8Debt
                securities
            
            
            52.3
            
            
            (1.3
            )
            
            
            50.4
            
            
            (0.5
            )Other
            
            
            2.5
            
            
            -
            
            
            
            3.1
            
            
            -Total
            
            $
            108.5
            
            $
            8.4
            
            
            $
            104.1
            
            $
            10.3


The
      weighted average maturity of debt securities held by the trust at June 30,
      2007,
      and December 31, 2006, was 7.6 years and 6.8 years, respectively.




23


The
      costs
      of securities sold are determined on the basis of specific
      identification.  The following table summarizes the gains and losses
      from the sale of securities by the nuclear decommissioning trust
      fund.


**Three
                Months Ended**
            
            
            **Year
                to Date****June
                30**
            
            
            **June
                30****2007**
            
            **2006**
            
            
            **2007**
            
            **2006**(millions)Realized
                Gains
            
            $
            2.5
            
            $
            1.6
            
            
            $
            4.4
            
            $
            3.2Realized
                Losses
            
            
            (0.2
            )
            
            (0.3
            )
            
            
            (0.5
            )
            
            (0.6
            )


***Deferred
      Refueling Outage Costs***


In
      December 2006, Great Plains Energy and consolidated KCP&L adopted Financial
      Accounting Standards Board (FASB) Staff Position (FSP) No. AUG AIR-1,
“Accounting for Planned Major Maintenance Activities,” and retrospectively
      adjusted prior periods.  FSP No. AUG AIR-1 prohibits the use of the
      accrue-in-advance method of accounting for planned major maintenance
      activities.  Prior to adoption, KCP&L utilized the
      accrue-in-advance method for incremental costs to be incurred during scheduled
      Wolf Creek refueling outages.  KCP&L adopted the deferral method
      to account for operations and maintenance expenses incurred for scheduled
      refueling outages to be amortized evenly (monthly) over the unit’s 18 month
      operating cycle until the next scheduled outage.  Replacement power
      costs during the outage are expensed as incurred.




There
      were no overall impacts to the June 30, 2006, statement of cash flows for Great
      Plains Energy and consolidated KCP&L.  The overall impact to Great
      Plains Energy’s and KCP&L’s consolidated statements of income for the three
      months ended and year to date June 30, 2006, was a $0.8 million increase in
      net
      income, or $0.01 per share, and a $1.8 million increase in net income, or $0.02
      per share, respectively.  The following line items within the
      consolidated statements of income were impacted by the change.


**As**
            
            
            
            
            **As****Originally
                Reported**
            
            
            
            
            **Originally
                Reported****Three
                Months Ended**
            **As**
            
            
            **Effect
                of**
            **Year
                to Date**
            **As**
            
            
            **Effect
                of****June
                30, 2006**
            **Adjusted**
            
            
            **Change**
            **June
                30, 2006**
            **Adjusted**
            
            
            **Change****Great
                Plains Energy**
            
            (millions)Fuel
            
            $
            56.2
            
            
            $
            55.3
            
            
            $
            (0.9
            )
            
            $
            103.6
            
            
            $
            101.8
            
            
            $
            (1.8
            )Operating
                expense -KCP&L
            
            
            64.8
            
            
            
            64.8
            
            
            
            -
            
            
            
            127.3
            
            
            
            127.2
            
            
            
            (0.1
            )Maintenance
            
            
            24.9
            
            
            
            24.5
            
            
            
            (0.4
            )
            
            
            47.5
            
            
            
            46.5
            
            
            
            (1.0
            )Income
                taxes
            
            
            (18.9
            )
            
            
            (19.4
            )
            
            
            (0.5
            )
            
            
            (10.2
            )
            
            
            (11.3
            )
            
            
            (1.1
            )**Consolidated
                KCP&L**Fuel
            
            $
            56.2
            
            
            $
            55.3
            
            
            $
            (0.9
            )
            
            $
            103.6
            
            
            $
            101.8
            
            
            $
            (1.8
            )Operating
                expense -KCP&L
            
            
            64.8
            
            
            
            64.8
            
            
            
            -
            
            
            
            127.3
            
            
            
            127.2
            
            
            
            (0.1
            )Maintenance
            
            
            24.9
            
            
            
            24.5
            
            
            
            (0.4
            )
            
            
            47.5
            
            
            
            46.5
            
            
            
            (1.0
            )Income
                taxes
            
            
            (18.7
            )
            
            
            (19.2
            )
            
            
            (0.5
            )
            
            
            (22.6
            )
            
            
            (23.7
            )
            
            
            (1.1
            )


**6.**
            **REGULATORY
                MATTERS**




**KCP&L’s
      Comprehensive Energy Plan**


In
      March
      2007, KCP&L, the Sierra Club and the Concerned Citizens of Platte County
      entered into a Collaboration Agreement that resolved disputes among the
      parties.  KCP&L agreed to pursue a set of initiatives including
      energy efficiency, additional wind generation, lower emission permit levels
      at
      its Iatan and LaCygne generating stations and other initiatives designed to
      offset carbon dioxide


24


emissions.  See
      Note 14 for additional information.  KCP&L will address these
      matters in its future integrated energy resource plan in collaboration with
      stakeholders.  Full implementation of the terms of the agreement will
      necessitate approval from the appropriate authorities, as some of the
      initiatives in this agreement require either enabling legislation or regulatory
      approval.  Pursuant to the terms of the agreement, the Sierra Club
      agreed to dismiss its appeal of the approval of KCP&L’s regulatory plan by
      the KCC.  The appeal by the Sierra Club and Concerned Citizens of
      Platte County of the MPSC’s approval of KCP&L’s regulatory plan was also
      dismissed.  The parties filed a joint stipulation of dismissal with
      prejudice of the appeal of the Iatan air permit.




**KCP&L
      Regulatory Proceedings**


On
      February 1, 2007, KCP&L filed a request with the MPSC for an annual rate
      increase of $45 million or 8.3%, which, if approved, would take effect January
      1, 2008.  On March 1, 2007, KCP&L filed a request with KCC for an
      annual rate increase of $47 million or 10.8%, along with a proposed energy
      cost
      adjustment clause, which, if approved, would take effect January 1,
      2008.  The rate increases were filed in order to help recover costs of
      air quality improvement investments included in KCP&L’s Comprehensive Energy
      Plan as well as higher fuel and other operational costs.




In
      July
      2007, the MPSC Staff filed its case regarding KCP&L’s rate
      request.  In its filing, the Staff asserted that KCP&L’s annual
      revenues should be increased by $0.7 million, before adjustments resulting
      from
      the September 30, 2007, true-up of test year information.  The Staff’s
      filing assumed adjustments resulting from this true-up would increase revenue
      requirements by $14 million, resulting in a required increase in annual revenues
      of $14.7 million.  This amount reflects approximately $15 million to
      $17 million in accelerated depreciation, which the Staff asserts will maintain
      certain KCP&L credit ratios at investment-grade levels as provided for in
      the stipulation and agreement approved by the MPSC in 2005.




25


**Regulatory
      Assets and Liabilities**


KCP&L’s
      regulatory assets and liabilities are detailed in the following
      table.


**June
                30**
            
            **December
                31****2007**
            
            **2006****Regulatory
                Assets**
            
            (millions)Taxes
                recoverable through future rates
            
            $
            70.7
            
            
            $
            81.7Loss
                on reacquired debt
            
            
            6.1
            
            
            
            6.4Change
                in depreciable life of Wolf Creek
            
            
            45.4
            
            
            
            45.4Cost
                of removal
            
            
            8.7
            
            
            
            8.2Asset
                retirement obligations
            
            
            17.7
            
            
            
            16.9SFAS
                158 pension and post-retirement costs
            
            
            188.0
            
            
            
            190.0Other
                pension and post-retirement costs
            
            
            72.6
            
            
            
            66.9Surface
                Transportation Board litigation expenses
            
            
            1.6
            
            
            
            1.7Deferred
                customer programs
            
            
            8.5
            
            
            
            5.92006
                rate case expenses
            
            
            2.1
            
            
            
            2.62007
                rate case expenses
            
            
            0.5
            
            
            
            -Other
            
            
            7.2
            
            
            
            8.7Total
            
            $
            429.1
            
            
            $
            434.4**Regulatory
                Liabilities**Emission
                allowances
            
            $
            64.7
            
            
            $
            64.5Asset
                retirement obligations
            
            
            39.1
            
            
            
            35.6Additional
                Wolf Creek amortization (Missouri)
            
            
            14.6
            
            
            
            14.6Total
            
            $
            118.4
            
            
            $
            114.7


Except
      as
      noted below, regulatory assets for which costs have been incurred have been
      included (or are expected to be included, for costs incurred subsequent to
      the
      most recently approved rate case) in KCP&L’s rate base, thereby providing a
      return on invested costs.  Certain regulatory assets do not result
      from cash expenditures and therefore do not represent investments included
      in
      rate base or have offsetting liabilities that reduce rate base.  The
      regulatory asset for Statement of Financial Accounting Standards (SFAS) 158
      pension and post-retirement costs at June 30, 2007, includes $11.2 million,
      net
      of related liabilities, not included in rate base, representing the difference
      between funding and expenses recognized for the pension and post-retirement
      plans, which will be amortized in accordance with SFAS No. 87, “Employers’
Accounting for Pensions.”  The regulatory asset for other pension and
      post-retirement costs at June 30, 2007, includes $31.8 million representing
      pension settlements and financial and regulatory accounting method
      differences.  The pension settlements will be amortized over a
      five-year period beginning with the effective date of rates approved in
      KCP&L’s next rate case.  The accounting method difference will be
      eliminated over the life of the pension plans.  Certain insignificant
      items in Regulatory Assets – Other are also not included in rate
      base.




**Revenue
      Sufficiency Guarantee**


Since
      the
      April 2005 implementation of Midwest Independent Transmission System Operator
      Inc. (MISO) market operations, MISO’s business practice manuals and other
      instructions to market participants have stated that Revenue Sufficiency
      Guarantee (RSG) charges will not be imposed on day-ahead virtual offers to
      supply power not supported by actual generation.  RSG charges are
      collected by MISO in order to compensate generators that are standing by to
      supply electricity when called upon by MISO.  In April 2006, FERC
      issued an order regarding MISO RSG charges.  In its order, FERC
      interpreted MISO's tariff to require that virtual supply offers be included
      in
      the calculation of RSG charges and that to the extent that MISO did not charge
      market participants RSG charges on virtual supply offers, MISO violated its
      tariff.  The FERC order required MISO to recalculate RSG rates back to
      April 1, 2005, and make refunds to customers who paid RSG charges on imbalances,
      with interest,


26


reflecting
      the recalculated charges.  In order to make such refunds, RSG charges
      could have been retroactively imposed on market participants who submitted
      virtual supply offers during the recalculation period.  Strategic
      Energy was among the MISO participants that could have been subject to a
      retroactive assessment from MISO for RSG charges on virtual supply offers it
      submitted during the recalculation period.  In October 2006, FERC
      issued an order on rehearing of the April 2006 order stating it would not assess
      RSG charges on virtual supply offers going back to April
      1,
      2005, but ordered prospective allocation of RSG to virtual transactions and
      directed MISO to propose a tariff change that would assess RSG costs to virtual
      supply offers based on principles of cost causation within 60 days of the
      October 2006 order.




In
      March
      2007, FERC issued an order denying requests for rehearing of its October 2006
      order, which refused to allow MISO to retroactively assess RSG charges on
      virtual supply offers.  Also in March 2007, FERC rejected MISO’s
      tariff filing that would have established a new RSG charge prospectively and
      instructed MISO to recalculate RSG charges from April 2006
      forward.  Parties, including Strategic Energy, have appealed and filed
      requests for rehearing.  Management believes the ultimate outcome of
      this matter will not have a significant impact on the Company’s financial
      position or results of operations; however, the actual exposure, if any, could
      ultimately be greater than management’s estimate depending on the outcome of
      appeals and the requests pending before FERC.  Management is unable to
      predict the outcome of any appeals or further requests for
      rehearing.




**Seams
      Elimination Charge Adjustment**


Seams
      Elimination Charge Adjustment (SECA) is a transitional pricing mechanism
      authorized by FERC and intended to compensate transmission owners for the
      revenue lost as a result of FERC’s elimination of regional through and out rates
      between PJM Interconnection, LLC (PJM) and MISO during a 16-month transition
      period from December 1, 2004, through March 31, 2006.  Each
      relevant PJM and MISO zone and the load-serving entities within that zone were
      allocated a portion of SECA based on transmission services provided to that
      zone
      during 2002 and 2003.  For the three months ended and year to date
      June 30, 2007, Strategic Energy recorded a reduction of purchased power expenses
      of $1.0 million and $1.9 million, respectively, to reflect recoveries obtained
      through settlements primarily with Transmission Owners.  For the three
      months ended June 30, 2006, Strategic Energy recorded a reduction of purchased
      power expense of $2.4 million for SECA, which offset $2.7 million of expense
      recorded in the first quarter.  Strategic Energy billed $0.9 million
      for the three months ended and $1.3 million year to date June 30, 2006, of
      its
      SECA costs to its retail customers.  No further retail customer
      billings are anticipated pending the outcome of proceedings discussed
      below.




There
      are
      several unresolved matters and legal challenges related to SECA that are pending
      before FERC on rehearing.  In 2006, FERC held hearings on the justness
      and reasonableness of the SECA rate and on attempts by suppliers to shift SECA
      to wholesale counterparties and subsequently, a favorable initial decision
      was
      extended by an administrative law judge, which could potentially result in
      a
      refund of prior SECA payments, including payments made by Strategic
      Energy.  Management is awaiting FERC action and is unable to predict
      the outcome of legal and regulatory challenges to the SECA
      mechanism.




**Investigation
      of Strategic Energy Non-Compliance**


During
      the first quarter of 2007, Strategic Energy identified and self-reported an
      event of non-compliance to one of the primary market regulators
      where Strategic Energy conducts scheduling and settlement operations. 
The regulator subsequently notified Strategic Energy in April 2007 of its intent
      to conduct an investigation and that investigation is currently on-going. 
Management does not believe there will be any adverse actions or events as
      an
      outcome of this investigation significantly beyond the amount of penalty
      recorded at June 30, 2007.




27


**7.**
            **SHORT-TERM
                BORROWINGS AND SHORT-TERM BANK LINES OF
                CREDIT**




Great
      Plains Energy has a $600 million revolving credit facility with a group of
      banks
      that expires in May 2011.  A default by Great Plains Energy or any of
      its significant subsidiaries on other indebtedness totaling more than $25.0
      million is a default under the facility.  Under the terms of this
      agreement, Great Plains Energy is required to maintain a consolidated
      indebtedness to consolidated capitalization ratio, as defined in the agreement,
      not greater than 0.65 to 1.00 at all times.  At June 30, 2007, Great
      Plains Energy was in compliance with this covenant.  At June 30, 2007,
      Great Plains Energy had $36.0 million of outstanding borrowings with a weighted
      average interest rate of 5.67% and had issued letters of credit totaling
      $109.8 million under the credit facility as credit support for Strategic
      Energy.  At December 31, 2006, Great Plains Energy had no cash
      borrowings and had issued letters of credit totaling $103.7 million under
      the credit facility as credit support for Strategic Energy.




KCP&L
      has a $400 million revolving credit facility with a group of banks to provide
      support for its issuance of commercial paper and other general corporate
      purposes that expires in May 2011.  A default by KCP&L on other
      indebtedness totaling more than $25.0 million is a default under the
      facility.  Under the terms of the agreement, KCP&L is required to
      maintain a consolidated indebtedness to consolidated capitalization ratio,
      as
      defined in the agreement, not greater than 0.65 to 1.00 at all
      times.  At June 30, 2007, KCP&L was in compliance with this
      covenant.  At June 30, 2007, KCP&L had $317.6 million of
      commercial paper outstanding, at a weighted-average interest rate of 5.61%,
      $6.8
      million of letters of credit and no cash borrowings under the
      facility.  At December 31, 2006, KCP&L had $156.4 million of
      commercial paper outstanding, at a weighted-average interest rate of 5.38%,
      $8.7
      million of letters of credit and no cash borrowings under the
      facility.




Great
      Plains Energy and KCP&L may transfer and re-transfer up to $200 million of
      unused lender commitments between Great Plains Energy’s and KCP&L’s
      revolving credit facilities, so long as the aggregate lender commitments under
      either facility does not exceed $600 million and the aggregate lender
      commitments under both facilities does not exceed $1 billion.  On July
      10, 2007, Great Plains Energy and KCP&L issued a notice pursuant to the
      terms of the credit agreements to transfer $200 million of unused lender
      commitments from the Great Plains Energy credit agreement to the KCP&L
      credit agreement, effective as of July 17, 2007.  As of the effective
      date of the notice, the maximum aggregate amount available under the Great
      Plains Energy credit agreement was reduced to $400 million, and the maximum
      aggregate amount available under the KCP&L credit agreement was increased to
      $600 million.




Strategic
      Energy has a $135 million revolving credit facility with a group of banks that
      expires in June 2009.  As long as Strategic Energy is in compliance
      with the agreement, it may increase this amount by up to $15 million by
      increasing the commitment of one or more lenders that have agreed to such
      increase, or by adding one or more lenders with the consent of the
      administrative agent.  Great Plains Energy guarantees $12.5 million of
      this facility.  Under this facility, Strategic Energy may loan a
      maximum of $20 million to Great Plains Energy.  A default by Strategic
      Energy on other indebtedness, as defined in the facility, totaling more than
      $7.5 million is a default under the facility.  Under the terms of this
      agreement, Strategic Energy is required to maintain a minimum net worth of
      $75.0
      million, a minimum fixed charge coverage ratio of at least 1.05 to 1.00 and
      a
      minimum debt service coverage ratio of at least 4.00 to 1.00, as those terms
      are
      defined in the agreement.  In addition, under the terms of this
      agreement, Strategic Energy is required to maintain a maximum funded
      indebtedness to EBITDA ratio, as defined in the agreement, of 3.00 to 1.00,
      on a
      quarterly basis through June 30, 2007, and 2.75 to 1.00
      thereafter.  In the event of a breach of one or more of these four
      covenants, so long as no other default has occurred, Great Plains Energy may
      cure the breach through a cash infusion, a guarantee increase or a combination
      of the two.  At June 30, 2007, Strategic Energy was in compliance with
      these covenants.  At June 30, 2007, $36.6 million in letters of credit
      had been issued and there were no cash borrowings under the
      agreement.  At December 31, 2006, $59.8 million in letters of
      credit


28


had
      been
      issued and there were no cash borrowings under the agreement.




**8.**
            **LONG-TERM
                DEBT AND EIRR BONDS CLASSIFIED AS CURRENT
                LIABILITIES**




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


**June
                  30**
              
              **December
                  31****Year
                  Due**
              
              **2007**
              
              **2006****Consolidated
                  KCP&L**
              
              
              
              (millions)General
                  Mortgage Bonds7.95%
                  Medium-Term Notes
              
              2007
              
              $             -
              
              $          0.53.92%*
                  EIRR bonds
              
              2012-2035
              
              158.8
              
              158.8Senior
                  Notes6.00%
              
              
              
              -
              
              225.06.50%
              
              2011
              
              150.0
              
              150.05.85%
              
              2017
              
              250.0
              
              -6.05%
              
              2035
              
              250.0
              
              250.0Unamortized
                  discount
              
              
              
              (3.6)
              
              (1.6)EIRR
                  bonds4.75%
                  Series A & B
              
              2015
              
              106.0
              
              105.24.75%
                  Series D
              
              2017
              
              39.8
              
              39.54.65%
                  Series 2005
              
              2035
              
              50.0
              
              50.0Current
                  liabilitiesCurrent
                  maturities
              
              
              
              -
              
              (225.5)EIRR
                  bonds classified as current
              
              
              
              (145.8)
              
              (144.7)Total
                  consolidated KCP&L excluding current maturities
              
              
              855.2
              
              607.2**Other
                  Great Plains Energy**7.74%
                  Affordable Housing Notes
              
              2007-2008
              
              0.9
              
              0.94.25%
                  FELINE PRIDES Senior Notes
              
              
              
              -
              
              163.6Current
                  maturities
              
              
              
              (0.6)
              
              (164.2)Total
                  consolidated Great Plains Energy excluding current
                  maturities
              
              $      855.5
              
              $      607.5*   Weighted-average
                  interest rates at June 30, 2007.
 **Effective
        Interest Rates on KCP&L’s Unsecured Notes at June 30,
        2007**
 Interest
        rate swaps on KCP&L’s Series A, B and D EIRR bonds resulted in an effective
        interest rate of 6.32%.  As a result of amortizing the gain recognized
        in other comprehensive income (OCI) on KCP&L’s 2005 Treasury Locks
        (T-Locks), the effective interest rate on KCP&L’s 6.05% Senior Notes is
        5.78%.  During June 2007, KCP&L issued $250.0 million of 5.85%
        unsecured Senior Notes, maturing in 2017.  As a result of amortizing
        the gain recognized in OCI on KCP&L’s 2006 Forward Starting Swaps (FSS), the
        effective interest rate on KCP&L’s 5.85% Senior Notes is 5.72%.
  29
 **Amortization
        of Debt Expense**
 Great
        Plains Energy’s and consolidated KCP&L’s amortization of debt expense is
        detailed in the following table.


**Three
                Months Ended**
            
            **Year
                to Date****June
                30**
            
            **June
                30****2007**
            
            **2006**
            
            
            **2007**
            
            **2006**(millions)Consolidated
                KCP&L
            
            $
            0.3
            
            $
            0.5
            
            
            $
            0.8
            
            $
            1.0Other
                Great Plains Energy
            
            
            0.1
            
            
            0.1
            
            
            
            0.7
            
            
            0.3Total
                Great Plains Energy
            
            $
            0.4
            
            $
            0.6
            
            
            $
            1.5
            
            $
            1.3


**EIRR
      Bonds Classified as Current Liabilities**


KCP&L
      classified its 4.75% Series A, B and D EIRR bonds with maturity dates of 2015
      and 2017 as current liabilities at June 30, 2007 and December 31,
      2006.  The bonds must be remarketed by October 1, 2007.  If
      the bonds cannot be remarketed, KCP&L is obligated to either purchase or
      retire the bonds.  As a result, KCP&L classifies these bonds as
      current liabilities in accordance with Emerging Issues Task Force (EITF) D-61
      “Classification by the Issuer of Redeemable Instruments That Are Subject to
      Remarketing Agreements.”




**9.**
            **COMMON
                SHAREHOLDERS’ EQUITY**




In
      2006,
      Great Plains Energy entered into a forward sale agreement with Merrill Lynch
      Financial Markets, Inc. (forward purchaser) for 1.8 million shares of Great
      Plains Energy common stock.  In April 2007, Great Plains Energy
      elected to terminate the forward sale agreement and settle it in
      cash.  Based on the difference between Great Plains Energy’s average
      stock price of $32.60 over the period used to determine the settlement and
      the
      then-applicable forward price of $25.58, Great Plains Energy paid $12.3 million
      to Merrill Lynch Financial Markets, Inc.




**10.**
            **PENSION
                PLANS AND OTHER EMPLOYEE
                BENEFITS**




The
      Company maintains defined benefit pension plans for substantially all employees,
      including officers, of KCP&L, Services and WCNOC and incurs significant
      costs in providing the plans, with the majority incurred by
      KCP&L.  Pension benefits under these plans reflect the employees’
compensation, years of service and age at retirement.  The market
      value of plan assets is determined using a five-year average of
      assets.




Pension
      expense for KCP&L is recorded in accordance with rate orders from the MPSC
      and KCC that allow KCP&L to record the difference between pension costs
      under SFAS No. 87, “Employers’ Accounting for Pensions,” and pension costs for
      ratemaking to be recognized as a regulatory asset or liability.




In
      addition to providing pension benefits, the Company provides certain
      post-retirement health care and life insurance benefits for substantially all
      retired employees of KCP&L, Services and WCNOC.  In January 2007,
      the post-retirement plan was amended.  The change, reflected in the
      second quarter, increased the accumulated post-retirement benefit obligation
      by
      $19.5 million and will increase post-retirement expense by $2.9 million for
      2007.  The cost of post-retirement benefits charged to KCP&L are
      accrued during an employee's years of service and recovered through
      rates.


30


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


**Pension
                Benefits**
            
            
            **Other
                Benefits****Three
                Months Ended June 30**
            
            **2007**
            
            
            **2006**
            
            
            **2007**
            
            
            **2006****Components
                of net periodic benefit cost**
            
            (millions)Service
                cost
            
            $
            4.7
            
            
            $
            4.7
            
            
            $
            0.3
            
            
            $
            0.2Interest
                cost
            
            
            7.5
            
            
            
            7.7
            
            
            
            1.0
            
            
            
            0.8Expected
                return on plan assets
            
            
            (7.5
            )
            
            
            (8.2
            )
            
            
            (0.2
            )
            
            
            (0.2
            )Prior
                service cost
            
            
            1.1
            
            
            
            1.1
            
            
            
            0.7
            
            
            
            -Recognized
                net actuarial loss
            
            
            8.9
            
            
            
            8.0
            
            
            
            0.1
            
            
            
            0.2Transition
                obligation
            
            
            -
            
            
            
            -
            
            
            
            0.3
            
            
            
            0.3Settlement
                charge
            
            
            -
            
            
            
            7.5
            
            
            
            -
            
            
            
            -Net
                periodic benefit cost beforeregulatory
                adjustment
            
            
            14.7
            
            
            
            20.8
            
            
            
            2.2
            
            
            
            1.3Regulatory
                adjustment
            
            
            (2.2
            )
            
            
            (7.7
            )
            
            
            -
            
            
            
            -Net
                periodic benefit cost
            
            $
            12.5
            
            
            $
            13.1
            
            
            $
            2.2
            
            
            $
            1.3


**Pension
                Benefits**
            
            
            **Other
                Benefits****Year
                to Date June 30**
            
            **2007**
            
            
            **2006**
            
            
            **2007**
            
            
            **2006****Components
                of net periodic benefit cost**
            
            (millions)Service
                cost
            
            $
            9.2
            
            
            $
            9.4
            
            
            $
            0.5
            
            
            $
            0.4Interest
                cost
            
            
            14.9
            
            
            
            15.4
            
            
            
            1.8
            
            
            
            1.5Expected
                return on plan assets
            
            
            (14.8
            )
            
            
            (16.4
            )
            
            
            (0.4
            )
            
            
            (0.3
            )Prior
                service cost
            
            
            2.2
            
            
            
            2.2
            
            
            
            0.7
            
            
            
            0.1Recognized
                net actuarial loss
            
            
            17.7
            
            
            
            16.0
            
            
            
            0.3
            
            
            
            0.4Transition
                obligation
            
            
            -
            
            
            
            -
            
            
            
            0.6
            
            
            
            0.6Settlement
                and termination charge
            
            
            -
            
            
            
            7.5
            
            
            
            0.3
            
            
            
            -Net
                periodic benefit cost beforeregulatory
                adjustment
            
            
            29.2
            
            
            
            34.1
            
            
            
            3.8
            
            
            
            2.7Regulatory
                adjustment
            
            
            (4.2
            )
            
            
            (15.3
            )
            
            
            -
            
            
            
            -Net
                periodic benefit cost
            
            $
            25.0
            
            
            $
            18.8
            
            
            $
            3.8
            
            
            $
            2.7


**11.**
            **EQUITY
                COMPENSATION**




Great
      Plains Energy’s Long-Term Incentive Plan is an equity compensation plan approved
      by Great Plains Energy’s shareholders.  KCP&L does not have an
      equity compensation plan; however, KCP&L officers participate in Great
      Plains Energy’s Long-Term Incentive Plan.  The Long-Term Incentive
      Plan permits the grant of restricted stock, stock options, limited stock
      appreciation rights and performance shares to officers of the Company and its
      subsidiaries.  Forfeiture rates are based on historical forfeitures
      and future expectations and are reevaluated annually.


31


The
      following table summarizes Great Plains Energy’s and KCP&L’s equity
      compensation expense and associated income tax benefits.


**Three
                Months Ended**
            
            **Year
                to Date****June
                30**
            
            
            **June
                30****2007**
            
            
            **2006**
            
            
            **2007**
            
            
            **2006****Compensation
                expense**
            
            (millions)Great
                Plains Energy
            
            $
            1.5
            
            
            $
            0.9
            
            
            $
            2.6
            
            
            $
            1.7KCP&L
            
            
            0.9
            
            
            
            0.7
            
            
            
            1.7
            
            
            
            1.1**Income
                tax benefits**Great
                Plains Energy
            
            
            0.6
            
            
            
            0.3
            
            
            
            1.0
            
            
            
            0.4KCP&L
            
            
            0.3
            
            
            
            0.3
            
            
            
            0.6
            
            
            
            0.3


**Performance
      Shares**


Performance
      share activity year to date June 30, 2007, is summarized in the following
      table.  Performance adjustment represents the number of performance
      shares ultimately paid that can vary from the number of shares initially granted
      depending on Company performance, based on internal and external measures,
      over
      stated performance periods.


**Grant
                Date****Performance**
            
            **Shares**
            
            **Fair
                Value***Beginning
                balance
            
            
            254,771
            
            
            $
            29.56Performance
                adjustment
            
            
            (22,070
            )Granted
            
            
            123,542
            
            
            
            32.00Issued
            
            
            (42,169
            )
            
            
            30.27Forfeited
            
            
            (2,503
            )
            
            
            31.96Ending
                balance
            
            
            311,571
            
            
            
            30.36*  weighted-average




At
      June
      30, 2007, the remaining weighted-average contractual term was 1.6
      years.  The weighted-average grant-date fair value of shares granted
      for the three months ended and year to date June 30, 2007, was $32.87 and
      $32.00, respectively.  There was no activity for performance shares
      during the three months ended June 30, 2006.  The weighted-average
      grant-date fair value for shares granted year to date June 30, 2006 was
      $28.20.  At June 30, 2007, there was $4.2 million of total
      unrecognized compensation expense, net of forfeiture rates, related to
      performance shares granted under the Long-Term Incentive Plan, which will be
      recognized over the remaining weighted-average contractual term.  No shares
      were issued during the three months ended June 30, 2007 and 2006.  The
      total fair value of shares issued year to date June 30, 2007 and 2006 was $1.3
      million and $0.3 million, respectively.





32


**Restricted
      Stock**


Restricted
      stock activity year to date June 30, 2007, is summarized in the following
      table.


**Nonvested**
            
            
            
            **Grant
                Date****Restricted
                stock**
            
            **Shares**
            
            **Fair
                Value***Beginning
                balance
            
            
            140,603
            
            
            $
            29.75Issued
            
            
            344,527
            
            
            
            31.97Vested
            
            
            (10,486
            )
            
            
            30.09Forfeited
            
            
            (1,215
            )
            
            
            28.81Ending
                balance
            
            
            473,429
            
            
            
            31.36*  weighted-average




At
      June
      30, 2007, the remaining weighted-average contractual term was 1.8
      years.  The weighted-average grant-date fair value of shares granted
      for the three months ended and year to date June 30, 2007 was $32.87 and $31.97,
      respectively.  The weighted-average grant-date fair value of shares
      granted for the three months ended and year to date June 30, 2006, was $28.81
      and $28.22, respectively.  As of June 30, 2007, there was $8.7 million
      of total unrecognized compensation expense, net of forfeiture rates, related
      to
      nonvested restricted stock granted under the Long-Term Incentive Plan, which
      will be recognized over the remaining weighted-average contractual term. 
The total fair value of shares vested for the three months ended was
      insignificant and $0.3 million year to date June 30, 2007.  No shares
      vested during the same periods in 2006.





**12.**
            **TAXES**




Components
      of income tax expense (benefit) are detailed in the following
      tables.


**Three
                Months Ended**
            
            
            **Year
                to Date****June
                30**
            
            
            **June
                30****As
              Adjusted**
            
            
            
            **As
              Adjusted****Great
                Plains Energy**
            
            **2007**
            
            **2006**
            
            **2007**
            
            **2006**Current
                income taxes
            
            (millions)Federal
            
            $
            16.5
            
            
            $
            18.8
            
            
            $
            6.1
            
            
            $
            29.3State
            
            
            2.6
            
            
            
            1.6
            
            
            
            -
            
            
            
            1.4Total
            
            
            19.1
            
            
            
            20.4
            
            
            
            6.1
            
            
            
            30.7Deferred
                income taxesFederal
            
            
            (6.0
            )
            
            
            (0.2
            )
            
            
            13.3
            
            
            
            (13.7
            )State
            
            
            (1.2
            )
            
            
            (0.1
            )
            
            
            3.9
            
            
            
            (4.2
            )Total
            
            
            (7.2
            )
            
            
            (0.3
            )
            
            
            17.2
            
            
            
            (17.9
            )Investment
                tax credit amortization
            
            
            (0.3
            )
            
            
            (0.7
            )
            
            
            (0.7
            )
            
            
            (1.5
            )Total
            
            $
            11.6
            
            
            $
            19.4
            
            
            $
            22.6
            
            
            $
            11.3


33


**Three
                Months Ended**
            
            
            **Year
                to Date****June
                30**
            
            
            **June
                30****As
                Adjusted**
            
            
            
            **As
                Adjusted****Consolidated
                KCP&L**
            
            **2007**
            
            **2006**
            
            **2007**
            
            **2006**Current
                income taxes
            
            (millions)Federal
            
            $
            16.9
            
            
            $
            16.9
            
            
            $
            11.4
            
            
            $
            23.5State
            
            
            2.6
            
            
            
            2.0
            
            
            
            2.3
            
            
            
            2.7Total
            
            
            19.5
            
            
            
            18.9
            
            
            
            13.7
            
            
            
            26.2Deferred
                income taxesFederal
            
            
            (2.0
            )
            
            
            0.8
            
            
            
            (0.8
            )
            
            
            (0.9
            )State
            
            
            (0.1
            )
            
            
            0.2
            
            
            
            -
            
            
            
            (0.1
            )Total
            
            
            (2.1
            )
            
            
            1.0
            
            
            
            (0.8
            )
            
            
            (1.0
            )Investment
                tax credit amortization
            
            
            (0.3
            )
            
            
            (0.7
            )
            
            
            (0.7
            )
            
            
            (1.5
            )Total
            
            $
            17.1
            
            
            $
            19.2
            
            
            $
            12.2
            
            
            $
            23.7


**Income
      Tax Expense (Benefit) and Effective Income Tax Rates**


Income
      tax expense and the effective income tax rates reflected in the financial
      statements and the reasons for their differences from the statutory federal
      rates are detailed in the following tables.


**Income
                Tax Expense**
            
            **Income
                Tax Rate****Great
                Plains Energy**
            
            
            
            **As
                Adjusted**
            
            
            
            
            **As
                Adjusted****Three
                Months Ended June 30**
            
            **2007**
            
            **2006**
            
            **2007**
            
            
            **2006**(millions)Federal
                statutory income tax
            
            $
            13.1
            
            
            $
            20.2
            
            
            
            35.0
            %
            
            
            35.0
            %Differences
                between book and taxdepreciation
                not normalized
            
            
            0.8
            
            
            
            0.5
            
            
            
            2.3
            
            
            
            0.9Amortization
                of investment tax credits
            
            
            (0.3
            )
            
            
            (0.7
            )
            
            
            (1.0
            )
            
            
            (1.3
            )Federal
                income tax credits
            
            
            (1.7
            )
            
            
            (1.2
            )
            
            
            (4.4
            )
            
            
            (2.1
            )State
                income taxes
            
            
            0.5
            
            
            
            0.9
            
            
            
            1.4
            
            
            
            1.6Changes
                in uncertain tax positions, net
            
            
            0.4
            
            
            
            0.9
            
            
            
            1.0
            
            
            
            1.5Other
            
            
            (1.2
            )
            
            
            (1.2
            )
            
            
            (3.2
            )
            
            
            (2.2
            )Total
            
            $
            11.6
            
            
            $
            19.4
            
            
            
            31.1
            %
            
            
            33.4
            %


**Income
                Tax Expense**
            
            **Income
                Tax Rate****Great
                Plains Energy**
            
            
            
            **As
                Adjusted**
            
            
            
            
            **As
                Adjusted****Year
                to Date June 30**
            
            **2007**
            
            **2006**
            
            **2007**
            
            
            **2006**(millions)Federal
                statutory income tax
            
            $
            25.1
            
            
            $
            17.0
            
            
            
            35.0
            %
            
            
            35.0
            %Differences
                between book and taxdepreciation
                not normalized
            
            
            1.7
            
            
            
            0.7
            
            
            
            2.4
            
            
            
            1.5Amortization
                of investment tax credits
            
            
            (0.7
            )
            
            
            (1.5
            )
            
            
            (1.0
            )
            
            
            (3.1
            )Federal
                income tax credits
            
            
            (3.8
            )
            
            
            (2.4
            )
            
            
            (5.3
            )
            
            
            (4.9
            )State
                income taxes
            
            
            2.2
            
            
            
            (0.9
            )
            
            
            3.1
            
            
            
            (1.9
            )Changes
                in uncertain tax positions, net
            
            
            0.2
            
            
            
            0.1
            
            
            
            0.2
            
            
            
            0.1Other
            
            
            (2.1
            )
            
            
            (1.7
            )
            
            
            (2.8
            )
            
            
            (3.5
            )Total
            
            $
            22.6
            
            
            $
            11.3
            
            
            
            31.6
            %
            
            
            23.2
            %


34


**Income
                Tax Expense**
            
            **Income
                Tax Rate****Consolidated
                KCP&L**
            
            
            
            **As
                Adjusted**
            
            
            
            
            **As
                Adjusted****Three
                Months Ended June 30**
            
            **2007**
            
            **2006**
            
            **2007**
            
            
            **2006**(millions)Federal
                statutory income tax
            
            $
            18.7
            
            
            $
            19.5
            
            
            
            35.0
            %
            
            
            35.0
            %Differences
                between book and taxdepreciation
                not normalized
            
            
            0.8
            
            
            
            0.5
            
            
            
            1.6
            
            
            
            0.9Federal
                income tax credits
            
            
            (1.3
            )
            
            
            -
            
            
            
            (2.4
            )
            
            
            -Amortization
                of investment tax credits
            
            
            (0.3
            )
            
            
            (0.7
            )
            
            
            (0.7
            )
            
            
            (1.4
            )State
                income taxes
            
            
            1.4
            
            
            
            1.3
            
            
            
            2.5
            
            
            
            2.4Changes
                in uncertain tax positions, net
            
            
            0.4
            
            
            
            0.4
            
            
            
            0.7
            
            
            
            0.7Parent
                company tax benefits
            
            
            (1.5
            )
            
            
            (1.1
            )
            
            
            (2.8
            )
            
            
            (2.0
            )Other
            
            
            (1.1
            )
            
            
            (0.7
            )
            
            
            (2.0
            )
            
            
            (1.2
            )Total
            
            $
            17.1
            
            
            $
            19.2
            
            
            
            31.9
            %
            
            
            34.4
            %


**Income
                Tax Expense**
            
            **Income
                Tax Rate****Consolidated
                KCP&L**
            
            
            
            **As
                Adjusted**
            
            
            
            
            **As
                Adjusted****Year
                to Date June 30**
            
            **2007**
            
            **2006**
            
            **2007**
            
            
            **2006**(millions)Federal
                statutory income tax
            
            $
            17.7
            
            
            $
            25.6
            
            
            
            35.0
            %
            
            
            35.0
            %Differences
                between book and taxdepreciation
                not normalized
            
            
            1.7
            
            
            
            0.7
            
            
            
            3.4
            
            
            
            1.0Federal
                income tax credits
            
            
            (3.1
            )
            
            
            -
            
            
            
            (6.1
            )
            
            
            -Amortization
                of investment tax credits
            
            
            (0.7
            )
            
            
            (1.5
            )
            
            
            (1.4
            )
            
            
            (2.1
            )State
                income taxes
            
            
            1.3
            
            
            
            1.7
            
            
            
            2.6
            
            
            
            2.4Changes
                in uncertain tax positions, net
            
            
            0.2
            
            
            
            0.5
            
            
            
            0.3
            
            
            
            0.7Parent
                company tax benefits
            
            
            (3.2
            )
            
            
            (2.2
            )
            
            
            (6.3
            )
            
            
            (3.0
            )Other
            
            
            (1.7
            )
            
            
            (1.1
            )
            
            
            (3.5
            )
            
            
            (1.7
            )Total
            
            $
            12.2
            
            
            $
            23.7
            
            
            
            24.0
            %
            
            
            32.3
            %


**Deferred
      Income Taxes**


Great
      Plains Energy’s deferred income taxes – current assets decreased $14.6 million
      primarily due to temporary differences resulting from changes in the fair value
      of Strategic Energy’s energy-related derivative instruments of $16.4
      million.




**Uncertain
      Tax Positions**


In
      2006,
      the FASB issued FASB Interpretation (FIN) No. 48, “Accounting for Uncertainty in
      Income Taxes,” an interpretation of SFAS No. 109, “Accounting for Income
      Taxes.”  FIN No. 48 establishes a “more-likely-than-not” recognition
      threshold that must be met before a tax benefit can be recognized in the
      financial statements with various additional disclosures required and is
      effective for fiscal years beginning after December 15, 2006.  Upon
      adoption of FIN No. 48 on January 1, 2007, Great Plains Energy recognized an
      $18.8 million increase in the liability for unrecognized tax
      benefits.  This increase was offset by a $0.9 million decrease to the
      January 1, 2007, balance of retained earnings, a $17.9 million decrease in
      deferred taxes, a $4.0 million decrease in accrued taxes and a $4.0 million
      increase in accrued interest.  The total amount of unrecognized tax
      benefits at January 1, 2007, was $23.5 million of which $3.5 million would
      impact the effective tax rate, if recognized.  Consolidated KCP&L
      recognized a $19.8 million increase in the liability for unrecognized tax
      benefits.  This increase was offset by a $0.2 million decrease to the
      January 1, 2007, balance of retained earnings, a $15.7 million decrease in
      deferred taxes and a $3.9 million decrease in accrued taxes.




35


The
      total
      amount of unrecognized tax benefits at January 1, 2007, was $21.6 million of
      which $1.6 million would impact the effective tax rate, if
      recognized.




In
      addition with the adoption of FIN No. 48, Great Plains Energy and consolidated
      KCP&L elected to make an accounting policy change to recognize interest
      accrued related to unrecognized tax benefits in interest expense and penalties
      in non-operating expenses.  As of the date of adoption, Great Plains
      Energy and consolidated KCP&L had $6.4 million and $2.4 million,
      respectively, accrued for the payment of interest.  No amounts were
      accrued for penalties with respect to unrecognized tax benefits.  At
      June 30, 2007, Great Plains Energy and consolidated KCP&L had $7.2 million
      and $2.7 million, respectively, accrued for the payment of
      interest.




Subsequent
      to adoption, Great Plains Energy filed amended returns based on research and
      development tax credit studies completed for the 2000 through 2004 tax
      years.  This resulted in a release of unrecognized tax benefits of
      $2.2 million for both Great Plains Energy and consolidated
      KCP&L.  In addition, Great Plains Energy and consolidated
      KCP&L recognized an increase of $1.7 million in the liability for
      unrecognized tax benefits for year to date June 30, 2007.  At June 30,
      2007, the total amount of uncertain tax benefits for Great Plains Energy and
      consolidated KCP&L was $23.0 million and $21.1 million,
      respectively.




Great
      Plains Energy files a consolidated federal income tax return as well as unitary
      and combined income tax returns in several state jurisdictions with Kansas
      and
      Missouri being the most significant.  Great Plains Energy and its
      subsidiaries have completed examinations by federal and state taxing authorities
      for taxable years prior to 2000; however several tax issues remain unresolved
      for tax years 2000 through 2003.  During 2006, the IRS commenced an
      audit of Great Plains Energy and its subsidiaries for taxable years 2004 through
      2005 and is expected to complete the audit by the end of 2008.




It
      is
      reasonably possible that, as a result of a settlement agreement for the federal
      audit of the 2000 through 2003 tax years expected to be reached by June 2008,
      federal and state unrecognized tax benefits related primarily to the timing
      of
      tax deductions would be recognized by Great Plains Energy and consolidated
      KCP&L, as well as reversal of accrued interest for the relevant tax
      years.  As of the date of adoption, an estimate of the range of the
      reasonably possible recognition of unrecognized tax benefits, net of reversal
      of
      accrued interest, was $5 million to $7 million for Great Plains Energy and
      $7
      million to $9 million for consolidated KCP&L.  At June 30, 2007,
      an estimate of the range of the reasonably possible recognition of unrecognized
      tax benefits, net of reversal of accrued interest, is $4 million to $6 million
      for Great Plains Energy and $6 million to $8 million for consolidated
      KCP&L.




**13.**
            **RELATED
                PARTY TRANSACTIONS AND
                RELATIONSHIPS**




Consolidated
      KCP&L receives various support and administrative services from
      Services.  These services are billed to consolidated KCP&L at
      cost, based on payroll and other expenses, incurred by Services for the benefit
      of consolidated KCP&L.  These costs totaled $3.2 million and $7.8
      million for the three months ended and year to date June 30, 2007, respectively,
      and $5.1 million and $9.5 million for the same periods in 2006.  These
      costs consisted primarily of employee compensation, benefits and fees associated
      with various professional services.  At June 30, 2007, and December
      31, 2006, consolidated KCP&L had a short-term intercompany payable to
      Services of $0.9 million and $2.5 million, respectively.  Also at June
      30, 2007, and December 31, 2006, consolidated KCP&L had a long-term
      intercompany payable to Services of $6.2 million and $5.7 million, respectively,
      related to unrecognized pension expense.  At June 30, 2007, and
      December 31, 2006, consolidated KCP&L’s balance sheets reflect a note
      payable from HSS to Great Plains Energy of $0.6 million.




36


**14.**
            **COMMITMENTS
                AND CONTINGENCIES**




**Environmental
      Matters**


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




KCP&L
      seeks to use current environmental technology.  KCP&L conducts
      environmental audits designed to ensure compliance with governmental
      regulations.  At June 30, 2007, and December 31, 2006, KCP&L had
      $0.3 million accrued for environmental remediation expenses.  The
      accrual covers water monitoring at one site.  The amounts accrued were
      established on an undiscounted basis and KCP&L does not currently have an
      estimated time frame over which the accrued amounts may be paid
      out.




Environmental-related
      legislation is continually introduced in Congress.  Such legislation
      typically includes various compliance dates and compliance
      limits.  The recent change in political control of both chambers in
      Congress increased the probability that legislation will be enacted to address
      global climate change and impose a national mandate to produce a set percentage
      of electricity from renewable forms of energy, such as wind.  Such
      legislation could have the potential for a significant financial impact on
      KCP&L, including the cost to install new pollution control equipment to
      achieve compliance.  KCP&L would seek recovery of capital costs
      and expenses for such compliance through rate increases; however, there can
      be
      no assurance that such rate increases would be granted.  KCP&L
      will continue to monitor proposed legislation.  The probability and
      impact of such legislation cannot be reasonably estimated at this
      time.




KCP&L
      is aware of subpoenas issued by a Federal grand jury to certain third parties
      seeking documents relating to capital projects at Iatan No.
      1.  KCP&L has not received a subpoena, and has not been informed
      of the scope of the grand jury inquiry.  KCP&L believes that it is
      in compliance with all relevant laws and regulations; however, the ultimate
      outcome of these grand jury activities cannot presently be determined, nor
      can
      the liability that could potentially result from a negative outcome presently
      be
      reasonably estimated.




The
        following table contains current estimates of expenditures to comply with
        environmental laws and regulations described below.  The ultimate cost
        of these regulations could be significantly different from the amounts
        estimated.  The demand for environmental projects among utilities in
        the United States continues to present upward pressure on pricing and lead
        times
        for environmental control equipment, resulting in increases to the upper
        end of
        the estimated range from what was disclosed in Great Plains Energy’s and
        consolidated KCP&L’s 2006 Form 10-K.  KCP&L continues to
        refine its cost estimates detailed in the table below, which include accelerated
        environmental upgrade expenditures outlined in KCP&L’s Comprehensive Energy
        Plan, and explore alternatives.  The allocation between states is
        based on location of the facilities and has no bearing as to recovery in
        jurisdictional rates.  The table does not reflect potential costs
        relating to additional wind generation, energy efficiency and other CO2
        emission offsets contemplated by the Collaboration Agreement among KCP&L,
        Sierra Club and Concerned Citizens of Platte County.  Potential costs
        relating to the additional wind generation and energy efficiency investments
        that are subject to regulatory approval cannot be reasonably estimated at
        this
        time.  The potential capital costs of the Collaboration Agreement
        provisions relating to emission limits at Iatan and LaCygne generating stations
        are within the overall estimated capital cost ranges disclosed
        below.  As well, the potential costs relating to the additional offset
        of approximately 711,000 tons of CO2
        emissions under the Collaboration Agreement cannot be reasonably estimated
        at
        this time.


37


KCP&L
      will evaluate the available operational and capital resource alternatives,
      and
      will select the most cost-effective
      mix of actions to achieve this additional offset.  KCP&L expects
      to seek recovery of the costs associated with the Collaboration Agreement
      through rate increases; however, there can be no assurance that such rate
      increases would be granted.


**Clean
                Air Estimated Required**
            
            
            
            
            
            
            
            
            
            
            **Estimated****Environmental
                Expenditures**
            
            **Missouri**
            **Kansas**
            **Total**
            **Timetable**(millions)CAIR
            
            $406
            -
            1,017
            $
            -
            
            $406
            -
            1,017
            2006
                - 2015Incremental
                BART
            
            
            -
            
            278
            -
            610
            278
            -
            610
            2006
                - 2017Incremental
                CAMR
            
            11
            -
            15
            5
            -
            6
            16
            -
            21
            2008
                - 2018Estimated
                required environmental expenditures
            
            $417
            -
            1,032
            $283
            -
            616
            $700
            -
            1,648


Expenditure
            estimates provided in the table above include, but are not limited to,
            the
            accelerated environmental upgrade expenditures included in KCP&L’s
            Comprehensive Energy Plan as disclosed in Great Plains Energy’s and consolidated
            KCP&L’s 2006 Form 10-K.  These expenditures are expected to reduce
            SO2,
            NOx,
            mercury and air particulate matter emissions.  The table above has
            been adjusted from what was disclosed in Great Plains Energy’s and consolidated
            KCP&L’s 2006 Form 10-K to remove approximately $41 million for the first
            phase of environmental upgrades at LaCygne No. 1, installation of selective
            catalytic reduction equipment, which was completed and placed into service
            during the second quarter of 2007.
 ***Clean
        Air Interstate Rule***


The
      Environmental Protection Agency (EPA) Clean Air Interstate Rule (CAIR) requires
      reductions in SO2 and NOx
      emissions in 28
      states, including Missouri.  The reduction in both SO2 and NOx
      emissions will be
      accomplished through establishment of permanent statewide caps for NOx effective
      January 1, 2009, and SO2 effective




January 1,
      2010.  More restrictive caps will be effective January 1,
      2015.  KCP&L’s fossil fuel-fired plants located in Missouri are
      subject to CAIR, while its fossil fuel-fired plants in Kansas are
      not.




KCP&L
      expects to meet the emissions reductions required by CAIR at its Missouri plants
      through a combination of pollution control capital projects and the purchase
      of
      emission allowances in the open market as needed.  The final CAIR rule
      establishes a market-based cap-and-trade program.  Missouri has
      approved a State Implementation Plan (SIP), which includes an emission allowance
      allocation mechanism, and is awaiting EPA’s approval of the
      SIP.  Facilities will demonstrate compliance with CAIR by holding
      sufficient allowances for each ton of SO2 and NOx
      emitted in any given
      year, with SO2
      emission allowances transferable among all regulated facilities nationwide
      and
      NOx emission
      allowances transferable among all regulated facilities within the 28 CAIR
      states.  KCP&L will also be allowed to utilize unused SO2 emission
      allowances
      that it has accumulated during previous years of the Acid Rain Program to meet
      the more stringent CAIR requirements.  At June 30, 2007, KCP&L had
      accumulated unused SO2 emission
      allowances
      sufficient to support just over 122,000 tons of SO2
      emissions under the provisions of the Acid Rain program, which are recorded
      in
      inventory at zero cost.  KCP&L is permitted to sell excess SO2 emission
      allowances
      in accordance with KCP&L’s Comprehensive Energy Plan as approved by the MPSC
      and KCC.




Analysis
      of the final CAIR rule indicates that NOx and SO2
      control may be
      required for KCP&L’s Montrose Station in Missouri, in addition to the
      environmental upgrades at Iatan No. 1 included in the Comprehensive Energy
      Plan.  The timing and necessity of the installation of such control
      equipment is currently being developed, and as required by the Collaboration
      Agreement with Sierra Club and Concerned Citizens of Platte County, a study
      will
      be completed in 2008 to assess potential future use of Montrose Station,
      including without limitation, retiring, re-powering and upgrading the
      units.  As


38


discussed
      below, some of the control technology for SO2 and NOx
      will also aid in the
      control of mercury.




***Best
      Available Retrofit Technology Rule***


The
      EPA
      best available retrofit technology rule (BART) directs state air quality
      agencies to identify whether visibility-reducing emissions from sources subject
      to BART are below limits set by the state or whether retrofit measures are
      needed to reduce emissions.  BART applies to specific eligible
      facilities including LaCygne Nos. 1 and 2 in Kansas and Iatan No. 1 and Montrose
      No. 3 in Missouri.  The CAIR suggests that states that meet the CAIR
      requirements through installation of environmental control equipment may also
      meet BART requirements for individual sources.  Missouri has included
      this understanding as part of its CAIR SIP.  Depending on the timing
      of installation of environmental control equipment and the availability of
      SO2
      emission allowances, the estimated required environmental expenditures presented
      in the table above could shift from CAIR to incremental BART for
      Missouri.   Kansas is not a CAIR state and therefore BART will
      impact LaCygne Nos. 1 and 2.  KCP&L is in discussions with the
      Kansas Department of Health and Environment (KDHE) and anticipates submitting
      a
      BART analysis for LaCygne Station in 2007.  States must submit a BART
      implementation plan in 2007 with required emission controls.  In the
      Collaboration Agreement with Sierra Club and Concerned Citizens of Platte
      County, KCP&L agreed to seek, through the BART regulation process, a consent
      agreement with the KDHE incorporating limits for stack particulate matter
      emissions, as well as limits for NOx
      and SO2
      emissions at its LaCygne Station that will be below the presumptive limits
      under
      BART.  KCP&L further agreed to use its best efforts to install
      emission control technologies to reduce those emissions from the LaCygne Station
      prior to the required compliance date under BART, but in no event later than
      June 1, 2015.  KCP&L further agreed to issue requests for proposal
      for the equipment required to comply with BART by December 31, 2008, requesting
      that construction commence by December 31, 2010.




***Mercury
      Emissions***


The
      EPA
      Clean Air Mercury Rule (CAMR) regulates mercury emissions from coal-fired power
      plants located in 48 states, including Kansas and Missouri, under the New Source
      Performance Standards of the Clean Air Act.  The rule established a
      market-based cap-and-trade program that will reduce nationwide utility emissions
      of mercury in two phases.  The first phase cap is effective
      January 1, 2010, and will establish a permanent nationwide cap of 38 tons
      of mercury for coal-fired power plants.  Management anticipates
      meeting the first phase cap by taking advantage of KCP&L’s mercury
      reductions achieved through capital expenditures to comply with CAIR and
      BART.  The second phase is effective January 1, 2018, and will
      establish a permanent nationwide cap of 15 tons of mercury for coal-fired power
      plants.  When fully implemented, the rule will reduce utility
      emissions of mercury by nearly 70% from current emissions of 48 tons per
      year.  Both Missouri and Kansas have approved the SIPs implementing
      the CAMR cap-and-trade program and are awaiting EPA’s approval of the
      rules.




Facilities
      will demonstrate compliance with the standard by holding allowances for each
      ounce of mercury emitted in any given year and allowances will be readily
      transferable among facilities nationwide.  Under the cap-and-trade
      program, KCP&L will be able to purchase mercury allowances or elect to
      install pollution control equipment to achieve compliance.  While it
      is expected that mercury allowances will be available in sufficient quantities
      for purchase in the 2010-2018 timeframe, the significant reduction in the
      nationwide cap in 2018 may hamper KCP&L’s ability to obtain reasonably
      priced allowances beyond 2018.  Management expects capital
      expenditures will be required to install additional pollution control equipment
      to meet the second phase cap.  During the ensuing years, management
      will closely monitor advances in technology for removal of mercury from Powder
      River Basin (PRB) coal and expects to make decisions regarding second phase
      removal based on then available technology to meet the 2018 compliance
      date.  KCP&L participated in the Department of Energy (DOE)
      National Energy Technology Laboratory project to investigate control technology
      options for mercury removal from coal-fired plants burning sub-bituminous
      coal.




39


***Carbon
      Dioxide***


Many
      bills concerning CO2are being debated in the U.S.
      Congress.  There are various compliance dates and nationwide caps
      stipulated in the bills.  These bills have the potential for a
      significant financial impact on KCP&L in connection with achieving
      compliance with the proposed new nationwide limits.  However, the
      financial consequences to KCP&L cannot be determined until final legislation
      is passed.  Management will continue to monitor the progress of these
      bills.




KCP&L
      is a member of the Power Partners through Edison Electric Institute
      (EEI).  Power Partners is a voluntary program with the DOE under which
      utilities commit to undertake measures to reduce, avoid or sequester CO2
      emissions.  In 2004, Power Partners entered into a cooperative
      umbrella memorandum of understanding (MOU) with the DOE.  This MOU
      contains supply and demand-side actions as well as offset projects that will
      be
      undertaken to reduce the power sector’s CO2 emissions
      per kWh
      generated (carbon intensity), consistent with the EEI’s 2003 commitment of a 3%
      to 5% reduction over the next decade.  Power Partners’ January 2007
      annual report indicates it is on track to reach that goal.




As
      previously discussed, KCP&L has entered into a Collaboration Agreement that
      includes various provisions regarding wind generation, energy efficiency and
      other CO2
      emission offsets.




***Ozone***


In
      June
      2007, the Missouri Department of Natural Resources (MDNR) and KDHE submitted
      to
      EPA for approval their respective maintenance plans for the control of ozone
      for
      the Kansas City area.  As part of the SIP requirements, contingency
      control measures were included.  These measures would go into effect
      only if associated triggers (such as a violation of the eight-hour ozone
      standard) occur.  It is anticipated the proposed controls for CAIR and
      BART will provide the required contingency control measures at KCP&L’s
      generation facilities.




In
      June
      2007, monitor data indicated that the Kansas City area violated the eight-hour
      ozone national ambient air quality standard.  The monitor data must be
      quality-assured and provided to EPA before the violation will be confirmed
      and
      for EPA to respond to the violation.  Upon quality assurance of the
      monitoring data, Missouri and Kansas will implement the responses established
      in
      the maintenance plans for control of ozone, upon approval by EPA.  The
      responses in both states do not require additional controls at KCP&L’s
      generation facilities beyond the currently proposed controls for CAIR and
      BART.  EPA has various options over and above the implementation of
      the maintenance plans for control of ozone to address a confirmed
      violation.  These options include, but are not limited to, designating
      the area “non-attainment” and requiring a new regulatory plan to reduce
      emissions or leaving the designation unchanged, but still requiring a new
      regulatory plan.  At this time, management is unable to predict how
      the EPA will respond or how that response will impact KCP&L’s operations,
      but the EPA’s response could have a significant impact on Great Plains Energy's
      and consolidated KCP&L's results of operations and financial
      position.  Management will continue to monitor the response and be
      involved in any regulatory developments to the extent possible.




Also
      in
      June 2007, EPA issued a proposal for comment to reduce the existing eight-hour
      ozone national ambient air quality standard.  The proposal recommends
      an ozone standard within a range of 0.07 to 0.075 parts per million
      (ppm).  EPA also is taking comments on alternative standards within a
      range from 0.06 ppm up to the level of the current eight-hour ozone standard,
      which is 0.08 ppm.  The Kansas City area may have difficulty attaining
      a revised standard in the future.  EPA will take public comment for 90
      days and issue final standards by March 12, 2008.  Although it is
      difficult to determine the ultimate impact of the proposal at this time, it
      could have a significant impact on Great Plains Energy's and consolidated
      KCP&L's results of operations and financial position.  Management
      will continue to monitor proposed revisions to the standard.




***Sulfuric
      Acid Mist BACT Analysis – Iatan Station***


As
      a
      requirement of the Iatan Station air permit and the Collaboration Agreement,
      KCP&L submitted a


40


best
      available control technology (BACT) analysis for sulfuric acid mist to MDNR
      in
      June 2007.  MDNR will conduct its own BACT analysis and determine the
      final emission limit.  Although KCP&L believes the emission limit
      submitted is a BACT limit and it can be achieved by the currently proposed
      emission control equipment, MDNR may ultimately determine a BACT limit for
      sulfuric acid mist that could require additional control
      equipment.  The above table does not reflect the potential costs for
      additional controls that may be required to meet such a
      determination.  If MDNR does make such a determination, KCP&L will
      evaluate the available operational and capital resource alternatives, and will
      select the most cost-effective mix of actions to achieve
      compliance.




***Water
      Use Regulations***


The
      Clean
      Water Act (Act) establishes standards for cooling water intake
      structures.  Section 316(b) of the Act applies to certain existing
      power producing facilities that employ cooling water intake structures that
      withdraw 50 million gallons or more per day from lakes and rivers and use 25%
      or
      more of that water for cooling purposes.  EPA had previously issued
      regulations that required KCP&L to conduct demonstration studies regarding
      the impact of its generating facilities’ intake structures on aquatic life that
      were expected to cost a total of $1.2 million to $2.0 million.  In
      July 2007, EPA suspended many of those regulations and indicated it will
      consider further rulemaking on this matter.  At this time, management
      is unable to predict how the EPA will respond or how that response will impact
      KCP&L’s operations.  Management will monitor any subsequent
      rulemaking.




KCP&L
      holds a permit from the MDNR covering water discharge from its Hawthorn
      Station.  The permit authorizes KCP&L, among other things, to
      withdraw water from the Missouri river for cooling purposes and return the
      heated water to the Missouri river.  KCP&L has applied for a
      renewal of this permit and the EPA has submitted an interim objection letter
      regarding the allowable amount of heat that can be contained in the returned
      water.  Until this matter is resolved, KCP&L continues to operate
      under its current permit.  KCP&L cannot predict the outcome of
      this matter; however, while less significant outcomes are possible, this matter
      may require KCP&L to reduce its generation at Hawthorn Station, install
      cooling towers or both, any of which could adversely affect
      KCP&L.  The outcome could also affect the terms of water permit
      renewals at KCP&L’s Iatan and Montrose Stations.




**Contractual
      Obligations**


Great
      Plains Energy’s and consolidated KCP&L’s contractual obligations for
      KCP&L’s Comprehensive Energy Plan were $429.0 million for the remainder of
      2007 and $471.8 million, $139.0 million and $12.5 million for the years 2008
      through 2010, respectively.  Great Plains Energy’s and consolidated
      KCP&L’s other contractual obligations have not significantly changed outside
      of the ordinary course of business at June 30, 2007, compared to December 31,
      2006.




**15.**
            **LEGAL
                PROCEEDINGS**




**Union
      Pacific**


In
      2005,
      KCP&L filed a rate complaint case with the Surface Transportation Board
      (STB) charging that Union Pacific Railroad Company’s (Union Pacific) rates for
      transporting coal from the PRB in Wyoming to KCP&L’s Montrose Station are
      unreasonably high.  Prior to the end of 2005, the rates were
      established under a contract with Union Pacific.  Efforts to extend
      the term of the contract were unsuccessful and Union Pacific is the only service
      for coal transportation from the PRB to Montrose Station.  A
      procedural schedule was issued by the STB in May 2007, directing KCP&L and
      Union Pacific to submit reply evidence on August 20, 2007.  Given this
      expedited schedule, the STB has indicated it may issue a final decision on
      this
      rate complaint in the fourth quarter of 2007.  Until the case is
      decided, KCP&L is paying the higher tariff rates subject to
      refund.




**Hawthorn
      No. 5 Insurance Litigation**


KCP&L
      received reimbursement for the 1999 Hawthorn No. 5 boiler explosion under a
      property damage insurance policy with Travelers Property Casualty Company of
      America (Travelers).  Travelers


41


filed
      suit in the U.S. District Court for the Eastern District of Missouri in November
      2005, against National Union, and KCP&L was added as a defendant in June
      2006.  The case was subsequently transferred to, and is pending in,
      the U.S. District Court for the Western District of
      Missouri.  Travelers seeks recovery of $10 million that KCP&L
      recovered through subrogation litigation.  Management is unable to
      predict the outcome of this case.




**Emergis
      Technologies, Inc.**


In
      March
      2006, Emergis Technologies, Inc. f/k/a BCE Emergis Technologies, Inc. (Emergis)
      filed suit against KCP&L in Federal District Court for the Western District
      of Missouri, alleging infringement of a patent, entitled “Electronic Invoicing
      and Payment System” and seeking unspecified monetary damages and injunctive
      relief.  This patent relates to automated electronic bill presentment
      and payment systems, particularly those involving Internet billing and
      collection.  In March 2006, KCP&L filed a response and denied
      infringing the patent.  KCP&L counterclaimed for a declaration
      that the patent is invalid and not infringed.  Emergis responded to
      KCP&L’s counterclaims in April 2006.  Court ordered mediation
      occurred in July 2006, but the case was not resolved.  Management does
      not expect the outcome of this case to have a significant impact on Great Plains
      Energy's or consolidated KCP&L's results of operations and financial
      position.




**Spent
      Nuclear Fuel and Radioactive Waste**


In
      2004,
      KCP&L and the other two Wolf Creek owners filed suit against the United
      States in the U.S. Court of Federal Claims seeking an unspecified amount of
      monetary damages resulting from the government’s failure to begin accepting
      spent fuel for disposal in January 1998, as the government was required to
      do by
      the Nuclear Waste Policy Act of 1982.  Approximately sixty other
      similar cases are pending before that court.  A handful of the cases
      have received damages awards, most of which are on appeal now.  The
      Wolf Creek case is on a court-ordered stay until further order of the court
      to
      allow for some of the earlier cases to be decided first by an appellate
      court.  Another Federal court has already determined that the
      government breached its obligation to begin accepting spent fuel for
      disposal.  The questions now before the court in the pending cases are
      whether and to what extent the utilities are entitled to monetary damages for
      that breach.  KCP&L management cannot predict the outcome of this
      case.




**Class
      Action Complaint**


In
      2005,
      a class action complaint for breach of contract was filed against Strategic
      Energy in the Court of Common Pleas of Allegheny County,
      Pennsylvania.  The plaintiffs purportedly represent the interests of
      certain customers in Pennsylvania who entered intoPower Supply Coordination
      Service Agreements (Agreements) for a certain product in
      Pennsylvania.  The complaint seeks monetary damages alleged to be in
      excess of $25,000, attorney fees and costs and a declaration that the customers
      may terminate their Agreements with Strategic Energy.  In response to
      Strategic Energy’s preliminary objections, plaintiffs filed an amended complaint
      in July 2006, and Strategic Energy filed its preliminary objections in July
      2007.  Plaintiff’s counsel recently notified Strategic Energy that
      they intend to activate the litigation.  Management is unable to
      predict the outcome of this case.




**Texas
      Customer Dispute**


In
      February 2006, a customer in Texas that procures electricity for schools
      notified Strategic Energy that it had selected another provider for its school
      members during the time it was under contract with Strategic
      Energy.  Strategic Energy exercised it rights under the agreement for
      breach.  In June 2006, Strategic Energy received a notice of demand
      for arbitration from the customer pursuant to the agreement.  In July
      2007, the parties settled this matter.  The final agreement will not
      have a material impact on the Company’s financial position or results of
      operations.




**Weinstein
      v. KLT Telecom**


Richard
      D. Weinstein (Weinstein) filed suit against KLT Telecom Inc. (KLT Telecom)
      in
      September


42


2003
      in
      the St. Louis County, Missouri Circuit Court.  KLT Telecom acquired a
      controlling interest in DTI Holdings, Inc. (Holdings) in February 2001 through
      the purchase of approximately two-thirds of the Holdings stock held by
      Weinstein.  In connection with that purchase, KLT Telecom entered into
      a put option in favor of Weinstein, which granted Weinstein an option to sell
      to
      KLT Telecom his remaining shares of Holdings stock.  The put option
      provided for an aggregate exercise price for the remaining shares equal to
      their
      fair market value with an aggregate floor amount of $15 million and was
      exercisable between September 1, 2003, and August 31, 2005.  In June
      2003, the stock of Holdings was cancelled and extinguished pursuant to the
      joint
      Chapter 11 plan confirmed by the Bankruptcy Court.  In September 2003,
      Weinstein delivered a notice of exercise of his claimed rights under the put
      option.  KLT Telecom rejected the notice of exercise, and Weinstein
      filed suit, alleging breach of contract.  Weinstein sought damages of
      at least $15 million, plus statutory interest.  In April 2005, summary
      judgment was granted in favor of KLT Telecom, and Weinstein appealed this
      judgment to the Missouri Court of Appeals for the Eastern
      District.  In May 2006, the Court of Appeals affirmed the
      judgment.  In July 2006, Weinstein filed an application for transfer
      of this case to the Missouri Supreme Court, which was granted.  Oral
      arguments were presented to the Supreme Court in December 2006.  In
      May 2007, the Missouri Supreme Court reversed the summary judgment and remanded
      the case to the trial court.  A $15 million reserve was recorded in
      2001 for this matter.




**16.**
            **SEGMENTS
                AND RELATED INFORMATION**




**Great
      Plains Energy**


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




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


**Three
                Months Ended**
            
            
            
            
            **Strategic**
            
            
            
            
            **Great
                Plains****June
                30, 2007**
            
            **KCP&L**
            
            
            **Energy**
            
            
            **Other**
            
            **Energy**(millions)Operating
                revenues
            
            $
            319.1
            
            
            $
            485.5
            
            
            $
            -
            
            
            $
            804.6Depreciation
                and amortization
            
            
            (43.8
            )
            
            
            (2.1
            )
            
            
            -
            
            
            
            (45.9
            )Interest
                charges
            
            
            (16.7
            )
            
            
            (0.7
            )
            
            
            (0.5
            )
            
            
            (17.9
            )Income
                taxes
            
            
            (17.1
            )
            
            
            4.1
            
            
            
            1.4
            
            
            
            (11.6
            )Loss
                from equity investments
            
            
            -
            
            
            
            -
            
            
            
            (0.3
            )
            
            
            (0.3
            )Net
                income (loss)
            
            
            36.5
            
            
            
            (6.5
            )
            
            
            (4.4
            )
            
            
            25.6


43


**As
                Adjusted****Three
                Months Ended**
            
            
            
            
            **Strategic**
            
            
            
            
            **Great
                Plains****June
                30, 2006**
            
            **KCP&L**
            
            
            **Energy**
            
            
            **Other**
            
            **Energy**(millions)Operating
                revenues
            
            $
            290.9
            
            
            $
            351.2
            
            
            $
            -
            
            
            $
            642.1Depreciation
                and amortization
            
            
            (37.3
            )
            
            
            (2.0
            )
            
            
            -
            
            
            
            (39.3
            )Interest
                charges
            
            
            (15.0
            )
            
            
            (0.6
            )
            
            
            (2.2
            )
            
            
            (17.8
            )Income
                taxes
            
            
            (19.2
            )
            
            
            (2.7
            )
            
            
            2.5
            
            
            
            (19.4
            )Loss
                from equity investments
            
            
            -
            
            
            
            -
            
            
            
            (0.3
            )
            
            
            (0.3
            )Net
                income (loss)
            
            
            36.6
            
            
            
            4.2
            
            
            
            (2.4
            )
            
            
            38.4


**Year
                to Date**
            
            
            
            
            **Strategic**
            
            
            
            
            
            **Great
                Plains****June
                30, 2007**
            
            **KCP&L**
            
            
            **Energy**
            
            
            **Other**
            
            
            **Energy**(millions)Operating
                revenues
            
            $
            574.8
            
            
            $
            894.1
            
            
            $
            -
            
            
            $
            1,468.9Depreciation
                and amortization
            
            
            (86.8
            )
            
            
            (4.1
            )
            
            
            -
            
            
            
            (90.9
            )Interest
                charges
            
            
            (34.9
            )
            
            
            (1.5
            )
            
            
            (3.2
            )
            
            
            (39.6
            )Income
                taxes
            
            
            (12.2
            )
            
            
            (13.8
            )
            
            
            3.4
            
            
            
            (22.6
            )Loss
                from equity investments
            
            
            -
            
            
            
            -
            
            
            
            (0.7
            )
            
            
            (0.7
            )Net
                income (loss)
            
            
            38.6
            
            
            
            20.6
            
            
            
            (10.2
            )
            
            
            49.0


**As
                Adjusted****Year
                to Date**
            
            
            
            
            **Strategic**
            
            
            
            
            
            **Great
                Plains****June
                30, 2006**
            
            **KCP&L**
            
            
            **Energy**
            
            
            **Other**
            
            
            **Energy**(millions)Operating
                revenues
            
            $
            531.3
            
            
            $
            670.0
            
            
            $
            -
            
            
            $
            1,201.3Depreciation
                and amortization
            
            
            (74.3
            )
            
            
            (3.9
            )
            
            
            -
            
            
            
            (78.2
            )Interest
                charges
            
            
            (29.9
            )
            
            
            (0.9
            )
            
            
            (4.3
            )
            
            
            (35.1
            )Income
                taxes
            
            
            (23.7
            )
            
            
            7.2
            
            
            
            5.2
            
            
            
            (11.3
            )Loss
                from equity investments
            
            
            -
            
            
            
            -
            
            
            
            (0.6
            )
            
            
            (0.6
            )Net
                income (loss)
            
            
            49.6
            
            
            
            (6.7
            )
            
            
            (5.6
            )
            
            
            37.3


**Strategic**
            
            
            
            
            **Great
                Plains****KCP&L**
            
            
            **Energy**
            
            
            **Other**
            
            **Energy****June
                30, 2007**
            
            (millions)Assets
            
            $
            4,030.6
            
            
            $
            490.1
            
            
            $
            55.5
            
            
            $
            4,576.2Capital
                expenditures (a)
            
            
            194.7
            
            
            
            2.1
            
            
            
            -
            
            
            
            196.8**December
                31, 2006**Assets
            
            $
            3,858.0
            
            
            $
            459.6
            
            
            $
            18.1
            
            
            $
            4,335.7Capital
                expenditures (a)
            
            
            476.0
            
            
            
            3.9
            
            
            
            0.2
            
            
            
            480.1(a)Capital
                expenditures reflect year to date amounts for the periods
                presented.


44


**Consolidated
      KCP&L**


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


**Three
                Months Ended**
            
            
            
            
            
            
            
            **Consolidated****June
                30, 2007**
            
            **KCP&L**
            
            
            **Other**
            
            
            **KCP&L**(millions)Operating
                revenues
            
            $
            319.1
            
            
            $
            -
            
            
            $
            319.1Depreciation
                and amortization
            
            
            (43.8
            )
            
            
            -
            
            
            
            (43.8
            )Interest
                charges
            
            
            (16.7
            )
            
            
            -
            
            
            
            (16.7
            )Income
                taxes
            
            
            (17.1
            )
            
            
            -
            
            
            
            (17.1
            )Net
                income
            
            
            36.5
            
            
            
            -
            
            
            
            36.5


**As
                Adjusted****Three
                Months Ended**
            
            
            
            
            
            
            
            **Consolidated****June
                30, 2006**
            
            **KCP&L**
            
            
            **Other**
            
            
            **KCP&L**(millions)Operating
                revenues
            
            $
            290.9
            
            
            $
            -
            
            
            $
            290.9Depreciation
                and amortization
            
            
            (37.3
            )
            
            
            -
            
            
            
            (37.3
            )Interest
                charges
            
            
            (15.0
            )
            
            
            -
            
            
            
            (15.0
            )Income
                taxes
            
            
            (19.2
            )
            
            
            -
            
            
            
            (19.2
            )Net
                income
            
            
            36.6
            
            
            
            -
            
            
            
            36.6


**Year
                to Date**
            
            
            
            
            
            
            
            **Consolidated****June
                30, 2007**
            
            **KCP&L**
            
            
            **Other**
            
            
            **KCP&L**(millions)Operating
                revenues
            
            $
            574.8
            
            
            $
            -
            
            
            $
            574.8Depreciation
                and amortization
            
            
            (86.8
            )
            
            
            -
            
            
            
            (86.8
            )Interest
                charges
            
            
            (34.9
            )
            
            
            -
            
            
            
            (34.9
            )Income
                taxes
            
            
            (12.2
            )
            
            
            -
            
            
            
            (12.2
            )Net
                income (loss)
            
            
            38.6
            
            
            
            (0.1)
            
            
            
            38.5


**As
                Adjusted****Year
                to Date**
            
            
            
            
            
            
            
            **Consolidated****June
                30, 2006**
            
            **KCP&L**
            
            
            **Other**
            
            
            **KCP&L**(millions)Operating
                revenues
            
            $
            531.3
            
            
            $
            -
            
            
            $
            531.3Depreciation
                and amortization
            
            
            (74.3
            )
            
            
            -
            
            
            
            (74.3
            )Interest
                charges
            
            
            (29.9
            )
            
            
            -
            
            
            
            (29.9
            )Income
                taxes
            
            
            (23.7
            )
            
            
            -
            
            
            
            (23.7
            )Net
                income
            
            
            49.6
            
            
            
            -
            
            
            
            49.6


45


**Consolidated****KCP&L**
            
            
            **Other**
            
            
            **KCP&L****June
                30, 2007**
            
            (millions)Assets
            
            $
            4,030.6
            
            
            $
            1.6
            
            
            $
            4,032.2Capital
                expenditures (a)
            
            
            194.7
            
            
            
            -
            
            
            
            194.7**December
                31, 2006**Assets
            
            $
            3,858.0
            
            
            $
            1.5
            
            
            $
            3,859.5Capital
                expenditures (a)
            
            
            476.0
            
            
            
            -
            
            
            
            476.0(a)Capital
                expenditures reflect year to date amounts for the periods
                presented.


**17.**
            **DERIVATIVE
                INSTRUMENTS**




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




**Fair
      Value Hedges - Interest Rate Risk Management**


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




**Cash
      Flow Hedges - Forward Starting Swaps**


In
      2006,
      KCP&L entered into two Forward Starting Swaps (FSS) to hedge against
      interest rate fluctuations on the $250.0 million 10-year long-term debt that
      KCP&L issued in the second quarter of 2007.  The FSS settled
      simultaneously with the issuance of the long-term fixed rate
      debt.  The FSS removed most of the interest rate and credit spread
      uncertainty with respect to debt to be issued, thereby enabling KCP&L to
      predict with greater assurance what its future interest costs on that debt
      would
      be.  The FSS were accounted for as a cash flow hedge and no
      ineffectiveness was recorded on the FSS.  A pre-tax gain of $3.3
      million on the FSS was recorded to OCI and is being reclassified to interest
      expense over the life of the 10-year debt.  An insignificant amount
      was reclassified from OCI to interest expense subsequent to the debt
      issuance.




**Cash
      Flow Hedges - Treasury Locks**


In
      2007,
      GPE entered into three T-Locks to hedge against interest rate fluctuations
      on
      the U.S.


46


Treasury
      rate component on future issuances of long-term debt.  The T-Locks
      will settle simultaneously with the issuance of the long-term fixed rate
      debt.  The T-Locks remove the uncertainty with respect to the U.S.
      Treasury rate component of the debt to be issued, thereby enabling GPE to
      predict with greater assurance what its future interest costs on that debt
      will
      be.  The T-Locks are accounted for as cash flow hedges and the fair
      value is recorded as a current asset or liability with an offsetting entry
      to
      OCI, to the extent the hedges are effective, until the forecasted transaction
      occurs.  No ineffectiveness has been recorded on the
      T-Locks.  The pre-tax gain or loss on the T-Locks recorded to OCI will
      be reclassified to interest expense over the life of the future debt
      issuance.




In
      2006,
      Great Plains Energy entered into a T-Lock to hedge against interest rate
      fluctuations on future issuances of long-term debt.  In the first
      quarter of 2007, the T-Lock expired with no corresponding debt
      issuance.  The $0.2 million gain recorded in OCI at December 31, 2006,
      and the first quarter fair value loss of $0.1 million was reclassified to
      interest expense as cash flow ineffectiveness.




In
      2005,
      KCP&L entered into two T-Locks to hedge against interest rate fluctuations
      on the U.S. Treasury rate component of the $250.0 million 30-year long-term
      debt
      that KCP&L issued.  The T-Locks settled simultaneously with the
      issuance of the long-term fixed rate debt.  The T-Locks removed the
      uncertainty with respect to the U.S. Treasury rate component of the debt to
      be
      issued, thereby enabling KCP&L to predict with greater assurance what its
      future interest costs on that debt would be.  The T-Locks were
      accounted for as cash flow hedges and no ineffectiveness was recorded on the
      T-Locks.  A pre-tax gain of $12.0 million on the T-Locks was recorded
      to OCI and is being reclassified to interest expense over the life of the issued
      30-year debt.  At June 30, 2007, KCP&L had $11.3 million recorded
      in OCI for the 2005 T-Locks.




**Cash
      Flow Hedges - Commodity Risk Management**


KCP&L’s
      risk management policy is to use derivative instruments to mitigate its exposure
      to market price fluctuations on a portion of its projected natural gas purchases
      to meet generation requirements for retail and firm wholesale
      sales.  As of June 30, 2007, KCP&L had hedged 66% and 9% of its
      2007 and 2008 projected natural gas usage for retail load and firm MWh sales,
      respectively, primarily by utilizing fixed forward physical contracts and
      financial calls.  The fair values of these instruments are recorded as
      assets or liabilities with an offsetting entry to OCI for the effective portion
      of the hedge.  To the extent the hedges are not effective, the
      ineffective portion of the change in fair market value is recorded currently
      in
      fuel expense.  KCP&L did not record any gains or losses due to
      ineffectiveness during the three months ended and year to date June 30, 2007
      and
      2006.




KCP&L
      has entered into an economic hedge (non-hedging derivative) that does not
      qualify for cash flow hedge accounting.  The change in the fair value
      of this derivative instrument recorded as a component of electric revenues
      was a
      gain of $0.4 million for both the three months ended and year to date June
      30,
      2007.




Strategic
      Energy maintains a commodity-price risk management strategy that uses forward
      physical energy purchases and other derivative instruments to reduce the effects
      of fluctuations in purchased power expense caused by commodity-price
      volatility.  Derivative instruments are used to limit the unfavorable
      effect that price increases will have on electricity purchases, effectively
      fixing the future purchase price of electricity for the applicable forecasted
      usage and protecting Strategic Energy from significant price
      volatility.  The maximum term over which Strategic Energy hedged its
      exposure and variability of future cash flows was 5.5 years at both June 30,
      2007, and December 31, 2006.




Certain
      forward fixed price purchases and swap agreements are designated as cash flow
      hedges.  The fair values of these instruments are recorded as assets
      or liabilities with an offsetting entry to OCI for the effective portion of
      the
      hedge.  To the extent the hedges are not effective, the ineffective
      portion of the change in fair market value is recorded currently in purchased
      power.  When the forecasted


47


purchase
      is completed, the amounts in OCI are reclassified to purchased power
      expense.  Purchased power expense for the three months ended and year
      to date June 30, 2007, includes a loss of $7.7 million and a gain of $21.6
      million, respectively, due to ineffectiveness of the cash flow hedges, and
      a
      $3.4 million and $14.0 million loss for the same periods of 2006.




As
      part
      of its commodity-price risk management strategy, Strategic Energy also enters
      into economic hedges (non-hedging derivatives) that do not qualify for cash
      flow
      hedge accounting.  The changes in the fair value of these derivative
      instruments recorded as a component of purchased power expense were a loss
      of
      $9.8 million and a gain of $1.4 million for the three months ended June 30,
      2007
      and 2006, respectively, and a $18.2 million gain and $23.9 million loss year
      to
      date June 30, 2007 and 2006, respectively.




The
      fair
      value of non-hedging derivatives at June 30, 2007, also includes certain forward
      contracts at Strategic Energy that were amended during 2005.  Prior to
      being amended, the contracts were accounted for under the NPNS election in
      accordance with SFAS No. 133.  As a result of being amended, the
      contracts no longer qualify for NPNS exceptions or cash flow hedge accounting
      and are now accounted for as non-hedging derivatives with the fair value at
      amendment being recorded as a deferred liability that will be reclassified
      to
      net income as the contracts settle.  For the three months ended June
      30, 2007 and 2006, Strategic Energy amortized $0.1 million and $0.9 million,
      respectively, of the deferred liability to purchased power expense related
      to
      the delivery of power under the contracts.  Year to date June 30, 2007
      and 2006, Strategic Energy amortized $0.4 million and $4.6 million,
      respectively, of the deferred liability to purchased power expense related
      to
      the delivery of power under the contracts.  Strategic Energy will
      amortize the remaining deferred liability over the remaining original contract
      lengths, which end in the first quarter of 2008.  After the amendment,
      Strategic Energy is recording the change in fair value of these contracts to
      purchased power expense.


48


The
      notional and recorded fair values of the companies’ derivative instruments are
      summarized in the following table.  The fair values of these
      derivatives are recorded on the consolidated balance sheets.


**June
                30**
            
            
            **December
                31****2007**
            
            
            **2006****Notional**
            
            
            
            
            **Notional****Contract**
            
            **Fair**
            
            
            **Contract**
            
            **Fair****Amount**
            
            **Value**
            
            
            **Amount**
            
            **Value****Great
                Plains Energy**
            
            (millions)Swap
                contractsCash
                flow hedges
            
            $
            298.1
            
            
            $
            (13.4
            )
            
            $
            477.5
            
            
            $
            (38.9
            )Non-hedging
                derivatives
            
            
            96.3
            
            
            
            (5.3
            )
            
            
            37.1
            
            
            
            (6.8
            )Forward
                contractsCash
                flow hedges
            
            
            1,077.2
            
            
            
            10.1
            
            
            
            871.5
            
            
            
            (69.7
            )Non-hedging
                derivatives
            
            
            330.8
            
            
            
            (8.2
            )
            
            
            250.7
            
            
            
            (24.8
            )Anticipated
                debt issuanceForward
                starting swap
            
            
            -
            
            
            
            -
            
            
            
            225.0
            
            
            
            (0.4
            )Treasury
                lock
            
            
            350.0
            
            
            
            (0.1
            )
            
            
            77.6
            
            
            
            0.2Interest
                rate swapsFair
                value hedges
            
            
            146.5
            
            
            
            (0.6
            )
            
            
            146.5
            
            
            
            (1.8
            )**Consolidated
                KCP&L**Swap
                contractsCash
                flow hedges
            
            
            5.9
            
            
            
            0.6
            
            
            
            -
            
            
            
            -Forward
                contractsCash
                flow hedges
            
            
            5.7
            
            
            
            (0.5
            )
            
            
            6.1
            
            
            
            (0.5
            )Non-hedging
                derivatives
            
            
            3.4
            
            
            
            0.4
            
            
            
            -
            
            
            
            -Anticipated
                debt issuanceForward
                starting swap
            
            
            -
            
            
            
            -
            
            
            
            225.0
            
            
            
            (0.4
            )Interest
                rate swapsFair
                value hedges
            
            
            146.5
            
            
            
            (0.6
            )
            
            
            146.5
            
            
            
            (1.8
            )


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


**Great
                Plains Energy**
            
            
            **Consolidated
                KCP&L****June
                30**
            
            **December
                31**
            
            **June
                30**
            
            **December
                31****2007**
            
            **2006**
            
            **2007**
            
            **2006**(millions)Current
                assets
            
            $
            16.0
            
            
            $
            12.7
            
            
            $
            14.8
            
            
            $
            12.0Other
                deferred charges
            
            
            26.9
            
            
            
            1.7
            
            
            
            -
            
            
            
            -Other
                current liabilities
            
            
            (32.1
            )
            
            
            (56.3
            )
            
            
            (0.5
            )
            
            
            (1.3
            )Deferred
                income taxes
            
            
            (3.4
            )
            
            
            32.1
            
            
            
            (5.4
            )
            
            
            (4.0
            )Other
                deferred credits
            
            
            (1.4
            )
            
            
            (35.3
            )
            
            
            -
            
            
            
            -Total
            
            $
            6.0
            
            
            $
            (45.1
            )
            
            $
            8.9
            
            
            $
            6.7


Great
      Plains Energy’s accumulated OCI in the table above at June 30, 2007, includes a
      loss of $29.9 million that is expected to be reclassified to expenses over
      the
      next twelve months.  Consolidated KCP&L’s accumulated OCI includes
      an insignificant amount that is expected to be reclassified to expense over
      the
      next twelve months.




49


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


**Three
                Months Ended**
            
            
            **Year
                to Date****June
                30**
            
            
            **June
                30****2007**
            
            
            **2006**
            
            
            **2007**
            
            
            **2006****Great
                Plains Energy**
            
            (millions)Purchased
                power expense
            
            $
            16.4
            
            
            $
            7.5
            
            
            $
            38.3
            
            
            $
            16.6Interest
                expense
            
            
            (0.1
            )
            
            
            (0.2
            )
            
            
            (0.2
            )
            
            
            (0.2
            )Income
                taxes
            
            
            (6.6
            )
            
            
            (3.0
            )
            
            
            (15.5
            )
            
            
            (6.9
            )OCI
            
            $
            9.7
            
            
            $
            4.3
            
            
            $
            22.6
            
            
            $
            9.5**Consolidated
                KCP&L**Interest
                expense
            
            $
            (0.1
            )
            
            $
            (0.2
            )
            
            $
            (0.2
            )
            
            $
            (0.2
            )Income
                taxes
            
            
            -
            
            
            
            0.1
            
            
            
            0.1
            
            
            
            0.1OCI
            
            $
            (0.1
            )
            
            $
            (0.1
            )
            
            $
            (0.1
            )
            
            $
            (0.1
            )


**18.**
            **JOINTLY
                OWNED ELECTRIC UTILITY
                PLANTS**




KCP&L’s
      share of jointly owned electric utility plants at June 30, 2007, is detailed
      in
      the following table.


**Wolf
                Creek**
            
            **LaCygne**
            
            **Iatan
                No. 1**
            
            **Iatan
                No. 2****Unit**
            
            **Units**
            
            **Unit**
            
            **Unit**(millions,
                except MW amounts)KCP&L's
                share
            
            
            47 %
            
            
            50%
            
            
            70%
            
            
            
            55%Utility
                plant in service
            
            $
            1,379.6
            
            $
            391.0
            
            $
            273.9
            
            
            $
            -Accumulated
                depreciation
            
            
            745.9
            
            
            258.3
            
            
            197.2
            
            
            
            -Nuclear
                fuel, net
            
            
            52.6
            
            
            -
            
            
            -
            
            
            
            -Construction
                work in progress
            
            
            28.8
            
            
            1.1
            
            
            57.3
            
            
            
            152.1KCP&L's
                2007 accredited capacity-MWs
            
            
            548
            
            
            709
            
            
            460
            (a)
            
            
            -(a)The
                Iatan No. 2 air permit limits KCP&L's accredited capacity of Iatan No.
                1 to 460 MWs from469
                MWs until the airquality control equipment included in the Comprehensive Energy Plan
              isoperational.


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


**19.**
              **NEW
                  ACCOUNTING STANDARDS**
  **SFAS
        No. 159**
 In
        February 2007, the FASB issued SFAS No. 159, “The Fair Value Option for
        Financial Assets and Financial Liabilities—Including an amendment of FASB
        Statement No. 115.”  This statement provides companies with an option
        to report selected financial assets and liabilities at fair value, with changes
        in fair value recorded in earnings.  The statement is effective for
        Great Plains Energy and consolidated KCP&L January 1, 2008, with earlier
        application permitted in certain circumstances.  Management is
        currently evaluating the impact of SFAS No. 159 and has not yet determined
        the
        impact on Great Plains Energy’s and consolidated KCP&L’s consolidated
        financial statements.
   50
 **ITEM
        2.  MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
        RESULTS OF OPERATIONS**
  The
        MD&A that follows is a combined presentation for Great Plains Energy and
        consolidated KCP&L, both registrants under this filing.  The
        discussion and analysis by management focuses on those factors that had a
        material effect on the financial condition and results of operations of the
        registrants during the periods presented.
  Great
        Plains Energy is a public utility holding company and does not own or operate
        any significant assets other than the stock of its
        subsidiaries.  Great Plains Energy’s direct subsidiaries with
        operations or active subsidiaries are KCP&L, KLT Inc., IEC and
        Services.  As a diversified energy company, Great Plains Energy’s
        reportable business segments include KCP&L and Strategic
        Energy.
  **Executive
        Summary**
 At
        KCP&L, both retail and wholesale revenues were higher for the three months
        ended June 30, 2007, compared to the same period last year; however, outages
        at
        base load generating units during the second quarter of 2007 led to increased
        purchased power expense.  Retail revenues were higher year to date
        June 30, 2007, compared to the same period last year; however, outages at
        base
        load generating units during the first half of 2007 led to increased use
        of
        natural gas, increased purchased power expense and increased maintenance
        expense.  For both the three months ended and year to date June 30,
        2007, KCP&L experienced higher pension costs due to the increased level of
        pension costs in KCP&L’s rates effective January 1, 2007, and higher
        depreciation expense.
  On
          May 9,
          2007, KCP&L experienced a pipe rupture at Iatan No. 1 which resulted in two
          fatalities.  The repair and precautionary work on Iatan No. 1 resulted
          in an 18-day outage.  An Occupational Safety and Health Administration
          (OSHA) investigation is on-going and expected to be completed before the
          end of
          the year.  Management is unable to predict the outcome of this
          investigation.
  At
        Strategic Energy, average retail gross margin per MWh for the three months
        ended
        June 30, 2007, decreased compared to the same period last year primarily
        due to
        the changes in fair value related to non-hedging energy contracts and from
        hedge
        ineffectiveness.  Average retail gross margins per MWh without the
        impact of unrealized fair value gains and losses on energy contracts decreased
        primarily due to the disposition of previously-acquired power at lower than
        contracted prices caused by early terminations in the small business segment,
        lower SECA recoveries and the absence of settlements of supplier
        contracts.
  Average
        retail gross margin per MWh year to date June 30, 2007, increased compared
        to
        the same period last year primarily due to the changes in fair value related
        to
        non-hedging energy contracts and from hedge ineffectiveness.  Average
        retail gross margins per MWh without the impact of unrealized fair value
        gains
        and losses on energy contracts decreased primarily due to increased purchased
        power expense associated with a resettlement attributable to under-reported
        deliveries to one of the primary market regulators where Strategic Energy
        conducts scheduling and settlement operations, the disposition of
        previously-acquired power at lower than contracted prices and the absence
        of
        settlements of supplier contracts.  Strategic Energy also experienced
        an increase in bad debt expense in the small business segment and recognized
        potential penalty expense related to the purchased power adjustment for
        under-reported deliveries.
  **Anticipated
        Acquisition of Aquila, Inc.**
 In
        February 2007, Great Plains Energy entered into an agreement to acquire all
        outstanding shares of Aquila for $1.80 in cash plus 0.0856 of a share of
        Great
        Plains Energy common stock for each share of Aquila common
        stock.  Immediately prior to Great Plains Energy’s acquisition of
        Aquila, Black Hills will acquire Aquila’s electric utility in Colorado and its
        gas utilities in Colorado, Kansas, Nebraska and Iowa
 51
 plus
        associated liabilities for a total of $940 million in cash, subject to closing
        adjustments.  Each of the two transactions is conditioned on the
        completion of the other transaction and is expected to close in the first
        quarter of 2008.  In April 2007, Great Plains Energy, KCP&L and
        Aquila filed joint applications with the MPSC and KCC for approval of the
        acquisition of Aquila by Great Plains Energy.  These filings are expected
        to be updated in August 2007 and orders are expected in the first
        quarter of 2008.  In May 2007, Great Plains Energy filed a
        registration statement with the SEC including a joint proxy (which was amended
        in June 2007) with Aquila for the Great Plains Energy
        and Aquila special shareholder meetings expected to occur in late third quarter
        or early fourth quarter of 2007.  In May 2007, Great Plains Energy,
        KCP&L, Aquila and Black Hills filed a joint application (which was amended
        in June 2007) with FERC for approval of the transactions.  Various parties
        have submitted protests to the FERC application.  Great Plains Energy
        and Aquila submitted their respective Hart-Scott-Rodino pre-merger notifications
        in July 2007 relating to the acquisition of Aquila by Great Plains
        Energy.  The thirty-day initial waiting period will expire on August
        27, 2007, unless the period is terminated earlier or
        extended.  Development of an integration plan is
        underway.  See Note 2 to the consolidated financial statements for
        additional information.
  **EXECUTING
        ON STRATEGIC INTENT**
  **KCP&L’s
        Comprehensive Energy Plan**
 KCP&L
        continues to execute on its Comprehensive Energy Plan.  The first
        phase of environmental upgrades at LaCygne No. 1, installation of selective
        catalytic reduction equipment, was completed and placed into service during
        the
        second quarter of 2007.  Environmental upgrades at Iatan No. 1 are
        currently underway and completion is scheduled for the second half of
        2008.  Construction of Iatan No. 2 is on-going and on schedule for
        completion in 2010.  The stack has been completed, water pipes have
        been laid, and foundations for the turbine, boiler and pulverizer are currently
        in process.
  In
        March
        2007, KCP&L, the Sierra Club and the Concerned Citizens of Platte County
        entered into a Collaboration Agreement that resolved disputes among the parties
        and KCP&L agreed to pursue a set of initiatives including energy efficiency,
        additional wind generation, lower emission permit levels at its Iatan and
        LaCygne generating stations and other initiatives designed to offset carbon
        dioxide emissions.  Under the Collaboration Agreement, KCP&L will,
        among other things, pursue increasing its wind generation capacity by 100
        MW by
        year-end 2010 and another 300 MW by year-end 2012, subject to regulatory
        approval.  In April 2007, KCP&L issued a request for proposals to
        develop this wind generation in Missouri and/or Kansas.  The request
        is an outgrowth of commitments under the Comprehensive Energy
        Plan.  See Notes 6 and 14 to the consolidated financial statements for
        additional information.
  **KCP&L
        Regulatory Proceedings**
 On
        February 1, 2007, KCP&L filed a request with the MPSC for an annual rate
        increase of $45 million or 8.3%, which, if approved, would take effect January
        1, 2008.  Evidentiary hearings on this case have been scheduled for
        October 2007, with a decision expected in December 2007.  On March 1,
        2007, KCP&L filed a request with KCC for an annual rate increase of $47
        million or 10.8%, along with a proposed energy cost adjustment clause, which,
        if
        approved, would take effect January 1, 2008.  Evidentiary hearings on
        this case have been scheduled for September 2007, with a decision expected
        in
        December 2007.  The rate increases were filed in order to help recover
        costs of air quality improvement investments included in KCP&L’s
        Comprehensive Energy Plan as well as higher fuel and other operational
        costs.
  In
        July
        2007, the MPSC Staff filed its case regarding KCP&L’s rate
        request.  In its filing, the Staff asserted that KCP&L’s annual
        revenues should be increased by $0.7 million, before adjustments resulting
        from
        the September 30, 2007, true-up of test year information.  The Staff’s
        filing assumed adjustments resulting from this true-up would increase revenue
        requirements by $14 million, resulting in a required increase in annual revenues
        of $14.7 million.  This amount reflects approximately $15 million
 52
 to
        $17
        million in accelerated depreciation, which the Staff asserts will maintain
        certain KCP&L credit ratios at investment-grade levels as provided for in
        the stipulation and agreement approved by the MPSC in 2005.
  **KCP&L
        BUSINESS OVERVIEW**
  KCP&L
        is an integrated, regulated electric utility that engages in the generation,
        transmission, distribution
        and sale of electricity.  KCP&L has over 4,000 MWs of generating
        capacity and has transmission and distribution facilities that provide
        electricity to over 506,000 customers in the states of Missouri and
        Kansas.  KCP&L has continued to experience modest load
        growth.  Load growth consists of higher usage per customer and the
        addition of new customers.  Retail electricity rates are below the
        national average.
  KCP&L’s
        residential customers’ usage is significantly affected by
        weather.  Bulk power sales, the major component of wholesale sales,
        vary with system requirements, generating unit and purchased power availability,
        fuel costs and requirements of other electric systems.  Less than 1%
        of revenues currently include an automatic fuel adjustment
        provision.
  KCP&L’s
        nuclear unit, Wolf Creek,
        accounts for approximately 20%of KCP&L’s base load
        capacity.  KCP&L defers operations and maintenance expenses
        incurred for scheduled refueling outages and amortizes these expenses evenly
        (monthly) over the unit’s 18 month operating cycle until the next scheduled
        outage.  Replacement power costs during refueling outages are expensed
        as incurred.  The next refueling outage is scheduled to begin in March
        2008.
  The
        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 substantially change the fuel cost per MWh generated.  Nuclear
        fuel cost per MWh generated is substantially less than the cost of coal per
        MWh
        generated, which is significantly lower than the cost of natural gas and
        oil per
        MWh generated.  The cost per MWh for purchased power is generally
        significantly higher than the cost per MWh of coal and nuclear
        generation.  KCP&L continually evaluates its system requirements,
        the availability of generating units, availability and cost of fuel supply
        and
        purchased power, and the requirements of other electric systems to provide
        reliable power economically.
  **STRATEGIC
        ENERGY BUSINESS OVERVIEW**
  Great
        Plains Energy indirectly owns 100% of Strategic Energy.  Strategic
        Energy does not own any generation, transmission or distribution
        facilities.  Strategic Energy provides competitive retail electricity
        supply services by entering into power supply contracts to supply electricity
        to
        its end-use customers.  Of the states that offer retail choice,
        Strategic Energy operates in California, Connecticut, Illinois, Maryland,
        Massachusetts, Michigan, New Jersey, New York, Ohio, Pennsylvania and
        Texas.  In addition to competitive retail electricity supply services,
        Strategic Energy also provides strategic planning, consulting and billing
        and
        scheduling services in the natural gas and electricity markets.
  The
        cost
        of supplying electric service to retail customers can vary widely by geographic
        market.  This variability can be affected by many factors, including,
        but not limited to, geographic differences in the cost per MWh of purchased
        power, renewable energy requirements and capacity charges due to regional
        purchased power availability and requirements of other electricity providers
        and
        differences in transmission charges.
  Strategic
        Energy provides services to approximately 108,500 commercial, institutional
        and
        small manufacturing accounts (for approximately 26,700 customers) including
        numerous Fortune 500 companies, smaller companies and governmental
        entities.  Strategic Energy offers an array of products designed to
        meet the various requirements of a diverse customer base including fixed
        price,
        index-
 53
 based
        and
        month-to-month renewal products.  Strategic Energy’s volume-based
        customer retention rate, excluding month-to-month customers on market-based
        rates was 40% for the three months ended and
        47%
        year to date June 30, 2007.  The corresponding volume-based customer
        retention rates including month-to-month customers on market-based rates
        was 49%
        and 57%, respectively.  These retention rates are lower than the
        typical rates experienced by Strategic Energy, reflecting Strategic Energy's
        decision not to renew two large customer accounts.  Absent these two
        accounts, retention rates would have been in line with those experienced
        in the
        first quarter of 2007.
  Management
        has focused sales and marketing efforts on states that currently provide
        a more
        competitive pricing environment in relation to host utility default
        rates.  In these states, Strategic Energy continues to experience
        improvement in certain key metrics, including forecasted future MWh commitments
        (backlog) growth.  Total backlog grew to 36.7 million MWh at June 30,
        2007, compared to 25.7 million MWh at June 30, 2006.  Based solely on
        expected MWh usage under current signed contracts, Strategic Energy has backlog
        of 10.3 million MWh for the remainder of 2007, 13.4 million MWh and 6.1 million
        MWh for the years 2008 and 2009, respectively, and 6.9 million MWh over the
        years 2010 through 2012.  Strategic Energy expects to deliver
        additional MWhs above amounts currently in backlog through new and renewed
        term
        contracts and MWh deliveries to month-to-month customers.  Strategic
        Energy’s projected MWh deliveries for 2007 are in the range of 18 million to 22
        million MWhs.
  Strategic
        Energy currently expects the average retail gross margin per MWh (retail
        revenues less retail purchased power divided by retail MWhs delivered) delivered
        in 2007 to average $4.00 to $5.00.  This range excludes unrealized
        changes in fair value of non-hedging energy contracts and from hedge
        ineffectiveness because management does not predict the future impact of
        these
        unrealized changes.  Actual retail gross margin per MWh may differ
        from these estimates.
  **RELATED
        PARTY TRANSACTIONS**
  See
        Note
        13 to the consolidated financial statements for information regarding related
        party transactions.
  54
 **GREAT
        PLAINS ENERGY RESULTS OF OPERATIONS**
  The
        following table summarizes Great Plains Energy’s comparative results of
        operations.


**Three
                Months Ended**
            
            
            **Year
                to Date****June
                30**
            
            
            **June
                30****As
                Adjusted**
            
            
            
            
            
            **As
                Adjusted****2007**
            
            **2006**
            
            
            **2007**
            
            
            **2006**(millions)Operating
                revenues
            
            $
            804.6
            
            $
            642.1
            
            
            $
            1,468.9
            
            
            $
            1,201.3Fuel
            
            
            (57.9
            )
            
            (55.3
            )
            
            
            (110.6
            )
            
            
            (101.8
            )Purchased
                power
            
            
            (502.5
            )
            
            (337.9
            )
            
            
            (860.4
            )
            
            
            (668.8
            )Other
                operating expenses
            
            
            (144.0
            )
            
            (131.9
            )
            
            
            (298.3
            )
            
            
            (257.7
            )Skill
                set realignment costs
            
            
            -
            
            
            (5.1
            )
            
            
            -
            
            
            
            (14.5
            )Depreciation
                and amortization
            
            
            (45.9
            )
            
            (39.3
            )
            
            
            (90.9
            )
            
            
            (78.2
            )Gain
                on property
            
            
            -
            
            
            0.7
            
            
            
            -
            
            
            
            0.6Operating
                income
            
            
            54.3
            
            
            73.3
            
            
            
            108.7
            
            
            
            80.9Non-operating
                income and expenses
            
            
            1.1
            
            
            2.6
            
            
            
            3.2
            
            
            
            3.4Interest
                charges
            
            
            (17.9
            )
            
            (17.8
            )
            
            
            (39.6
            )
            
            
            (35.1
            )Income
                taxes
            
            
            (11.6
            )
            
            (19.4
            )
            
            
            (22.6
            )
            
            
            (11.3
            )Loss
                from equity investments
            
            
            (0.3
            )
            
            (0.3
            )
            
            
            (0.7
            )
            
            
            (0.6
            )Net
                income
            
            
            25.6
            
            
            38.4
            
            
            
            49.0
            
            
            
            37.3Preferred
                dividends
            
            
            (0.5
            )
            
            (0.4
            )
            
            
            (0.9
            )
            
            
            (0.8
            )Earnings
                available for common shareholders
            
            $
            25.1
            
            $
            38.0
            
            
            $
            48.1
            
            
            $
            36.5


In
        December 2006, Great Plains Energy and consolidated KCP&L adopted Financial
        Accounting Standards Board (FASB) Staff Position (FSP) No. AUG AIR-1,
“Accounting for Planned Major Maintenance Activities,” and retrospectively
        adjusted prior periods.  FSP No. AUG AIR-1 prohibits the use of the
        accrue-in-advance method of accounting for planned major maintenance
        activities.  Prior to adoption, KCP&L utilized the
        accrue-in-advance method for incremental costs to be incurred during scheduled
        Wolf Creek refueling outages.  KCP&L adopted the deferral method
        to account for operations and maintenance expenses incurred for scheduled
        refueling outages to be amortized evenly (monthly) over the unit’s 18 month
        operating cycle until the next scheduled outage.  Replacement power
        costs during the outage are expensed as incurred.  See Note 5 to the
        consolidated financial statements for additional information.
  **Three
        Months Ended June 30, 2007, Compared to June 30, 2006**
 Great
        Plains Energy’s earnings for the three months ended June 30, 2007, decreased to
        $25.1 million, or $0.29 per share, from earnings of $38.0 million, or $0.49
        per
        share, in the same period in 2006.
  Consolidated
        KCP&L’s net income remained relatively unchanged for the three months ended
        June 30, 2007, compared to the same period in 2006.  Increased retail
        and wholesale revenues were offset by increased purchased power expense due
        to
        outages at KCP&L’s base load generating units, including the 18-day
        unplanned outage at Iatan No. 1, increased pension expense and increased
        amortization per 2006 rate orders as well as increased depreciation related
        to
        the Spearville Wind Energy Facility.
  Strategic
        Energy had a net loss of $6.5 million for the three months ended June 30,
        2007,
        compared to $4.2 million of net income for the same period in 2006 due to
        the
        impact of a $9.2 million after-tax decrease in changes in fair value related
        to
        non-hedging energy contracts and from hedge ineffectiveness.
  55
 **Year
        to Date June 30, 2007, Compared to June 30, 2006**
 Great
        Plains Energy’s earnings year to date June 30, 2007, increased to $48.1 million,
        or $0.57 per share, from $36.5 million, or $0.48 per share, in the same period
        in 2006.
 
 Consolidated
        KCP&L’s net income decreased $11.1 million year to date June 30, 2007,
        compared to the same period in 2006.  A scheduled maintenance outage
        which was extended by several days at Iatan No. 1 during the first quarter
        of
        2007 and outages at KCP&L’s base load generating units during the first and
        second quarter of 2007, including the unplanned outage at Iatan No. 1, led
        to increased fuel, purchased power and maintenance
        expense.  Additionally, pension expense, depreciation and amortization
        and interest expense increased.  These decreases to net income were
        partially offset by an increase in retail revenue and the absence of skill
        set
        realignment costs.
 
 Strategic
        Energy had net income of $20.6 million year to date June 30, 2007, compared
        to a
        $6.7 million net loss in the same period in 2006.  This change is
        primarily due to the impact of a $45.9 million after-tax increase in changes
        in
        fair value related to non-hedging energy contracts and from hedge
        ineffectiveness.  This increase was partially offset by increased
        purchased power expense due to a resettlement attributable to under-reported
        deliveries and the disposition of previously-acquired power at lower than
        contracted prices caused by early terminations in the small business
        segment.  Strategic Energy also experienced an increase in bad debt
        expense in the small business segment and recognized potential penalty expense
        related to the purchased power adjustment for under-reported
        deliveries.
  The
        decrease in other non-regulated activities year to date June 30, 2007, compared
        to the same period in 2006, is primarily attributable to a decline in available
        tax credits from affordable housing investment and overall higher expenses
        at
        the holding company primarily due to $3.4 million of transition costs related
        to
        the anticipated acquisition of Aquila.
  56
 **CONSOLIDATED
        KCP&L RESULTS OF OPERATIONS**
  The
        following discussion of consolidated KCP&L results of operations includes
        KCP&L, an integrated, regulated electric utility and HSS, an unregulated
        inactive subsidiary of KCP&L.  In the discussion that follows,
        references to KCP&L reflect only the operations of the
        utility.  The following table summarizes consolidated KCP&L's
        comparative results of operations.


**Three
                Months Ended**
            
            
            **Year
                to Date****June
                30**
            
            
            **June
                30****As
                Adjusted**
            
            
            
            
            **As
                Adjusted****2007**
            
            **2006**
            
            **2007**
            
            
            **2006**(millions)Operating
                revenues
            
            $
            319.1
            
            $
            290.9
            
            
            $
            574.8
            
            
            $
            531.3Fuel
            
            
            (57.9
            )
            
            (55.3
            )
            
            
            (110.6
            )
            
            
            (101.8
            )Purchased
                power
            
            
            (22.7
            )
            
            (8.6
            )
            
            
            (39.1
            )
            
            
            (13.7
            )Other
                operating expenses
            
            
            (124.6
            )
            
            (116.3
            )
            
            
            (255.1
            )
            
            
            (227.0
            )Skill
                set realignment costs
            
            
            -
            
            
            (4.9
            )
            
            
            -
            
            
            
            (14.2
            )Depreciation
                and amortization
            
            
            (43.8
            )
            
            (37.3
            )
            
            
            (86.8
            )
            
            
            (74.3
            )Gain
                on property
            
            
            -
            
            
            0.7
            
            
            
            -
            
            
            
            0.6Operating
                income
            
            
            70.1
            
            
            69.2
            
            
            
            83.2
            
            
            
            100.9Non-operating
                income and expenses
            
            
            0.2
            
            
            1.6
            
            
            
            2.4
            
            
            
            2.3Interest
                charges
            
            
            (16.7
            )
            
            (15.0
            )
            
            
            (34.9
            )
            
            
            (29.9
            )Income
                taxes
            
            
            (17.1
            )
            
            (19.2
            )
            
            
            (12.2
            )
            
            
            (23.7
            )Net
                income
            
            $
            36.5
            
            $
            36.6
            
            
            $
            38.5
            
            
            $
            49.6


**Consolidated
        KCP&L Sales Revenues and MWh Sales**


**Three
                Months Ended**
            
            
            
            
            
            **Year
                to Date****June
                30**
            
            
            **%**
            
            
            **June
                30**
            
            
            **%****2007**
            
            **2006**
            
            
            **Change**
            
            
            **2007**
            
            **2006**
            
            
            **Change**Retail
                revenues
            
            (millions)
            
            
            
            
            
            (millions)Residential
            
            $
            102.1
            
            $
            97.9
            
            
            4
            
            
            $
            188.8
            
            $
            170.2
            
            
            11Commercial
            
            
            124.3
            
            
            115.0
            
            
            8
            
            
            
            228.3
            
            
            207.5
            
            
            10Industrial
            
            
            28.0
            
            
            26.7
            
            
            5
            
            
            
            51.7
            
            
            48.9
            
            
            6Other
                retail revenues
            
            
            2.4
            
            
            2.2
            
            
            9
            
            
            
            4.9
            
            
            4.4
            
            
            10Total
                retail
            
            
            256.8
            
            
            241.8
            
            
            6
            
            
            
            473.7
            
            
            431.0
            
            
            10Wholesale
                revenues
            
            
            58.5
            
            
            46.2
            
            
            27
            
            
            
            92.7
            
            
            93.7
            
            
            (1
            )Other
                revenues
            
            
            3.8
            
            
            2.9
            
            
            31
            
            
            
            8.4
            
            
            6.6
            
            
            29Consolidated
                KCP&L revenues
            
            $
            319.1
            
            $
            290.9
            
            
            10
            
            
            $
            574.8
            
            $
            531.3
            
            
            8





57


**Three
                Months Ended**
            
            
            
            
            **Year
                to Date****June
                30**
            
            
            **%**
            
            **June 30**
            **%****2007**
            
            **2006**
            
            
            **Change**
            
            **2007**
            
            **2006**
            
            
            **Change**Retail
                MWh sales
            
            (thousands)
            
            
            
            
            (thousands)Residential
            
            1,235
            
            1,305
            
            
            (5)
            
            2,527
            
            2,463
            
            
            3Commercial
            
            1,865
            
            1,835
            
            
            2
            
            3,663
            
            3,537
            
            
            4Industrial
            
            549
            
            555
            
            
            (1)
            
            1,055
            
            1,064
            
            
            (1)Other
                retail MWh sales
            
            25
            
            20
            
            
            12
            
            48
            
            42
            
            
            11Total
                retail
            
            3,674
            
            3,715
            
            
            (1)
            
            7,293
            
            7,106
            
            
            3Wholesale
                MWh sales
            
            1,362
            
            1,078
            
            
            26
            
            2,248
            
            2,182
            
            
            3KCP&L
                electric MWh sales
            
            5,036
            
            4,793
            
            
            5
            
            9,541
            
            9,288
            
            
            3


Retail
        revenues increased $15.0 million for the three months ended and $42.7 million
        year to date June 30, 2007, compared to the same periods in 2006 primarily
        due
        to new retail rates effective January 1, 2007, growth in the number of customers
        and higher usage per customer.  For the three months ended June 30,
        2007, these increases in retail revenues were partially offset by unfavorable
        weather in 2007, with a 29% decrease in cooling degree days.
  Wholesale
        revenues increased $12.3 million for the three months ended June 30, 2007,
        compared to the same period in 2006 due to a 26% increase in wholesale MWh
        sales
        slightly offset by a 7% decrease in the average market price per MWh to
        $43.09.  Wholesale revenues were relatively unchanged year to date
        June 30, 2007, compared to the same period in 2006.  In the first
        quarter of 2007, wholesale MWh sales decreased 20% as a result of a 3% decrease
        in MWhs generated due to planned and unplanned plant outages as well as an
        increase in retail load.  Additionally, wholesale revenues year to
        date were also impacted by a 14% decrease in the average market price per
        MWh to
        $41.91 primarily due to lower gas prices in early 2007.
  **Consolidated
        KCP&L Fuel and Purchased Power**


**Three
                Months Ended**
            
            
            
            **Year
                to Date****June
                30**
            
            **%**
            
            **June
                30**
            
            **%****2007**
            
            **2006**
            
            **Change**
            
            **2007**
            
            **2006**
            
            **Change**Net
                MWhs Generated by Fuel Type
            
            (thousands)
            
            
            
            (thousands)Coal
            
            3,440
            
            3,471
            
            (1
            )
            6,597
            
            6,878
            
            (4
            )Nuclear
            
            1,215
            
            1,215
            
            
            
            2,423
            
            2,425
            
            -Natural
                gas and oil
            
            190
            
            175
            
            9
            
            244
            
            176
            
            39Wind
            
            64
            
            -
            
            N/A
            
            137
            
            -
            
            N/ATotal
                Generation
            
            4,909
            
            4,861
            
            1
            
            9,401
            
            9,479
            
            (1
            )


KCP&L’s
        coal base load equivalent availability factor decreased to 74% and 72% for
        the
        three months ended and year to date June 30, 2007, respectively, from 80%
        for
        the same periods in 2006 primarily due to outages at base load generating
        units.
  Fuel
        expense increased $2.6 million for the three months ended June 30, 2007,
        compared to the same period in 2006 due to higher coal and coal transportation
        costs and higher natural gas prices.  Fuel expense increased $8.8
        million year to date June 30, 2007, compared to the same period in 2006 despite
        a 1% decrease in net MWhs generated.  This increase in fuel expense
        was primarily due to more natural gas in the fuel mix, which has higher cost
        compared to other fuel types, driven by less coal generation due to planned
        and
        unplanned plant outages.  Higher coal and coal transportation costs
        and higher natural gas prices also contributed to the increased fuel expense
        year to date June 30, 2007.
  58
 Purchased
        power expense increased $14.1 million for the three months ended June 30,
        2007,
        compared to the same period in 2006 primarily due to a 188% increase in MWh
        purchases to support MWh sales commitments under firm contracts due to the
        impact of outages at base load generating units.  Purchased power
        expense increased $25.4 million year to date June 30, 2007, compared to the
        same
        period in 2006 primarily due to a 203% increase in MWh purchases to support
        increased retail load and MWh sales commitments under firm contracts due
        to the
        impact of planned and unplanned plant outages on net MWhs
        generated.
  **Consolidated
        KCP&L Other Operating Expenses *(including operating expenses –
KCP&L, maintenance, general taxes and other)***
 Consolidated
        KCP&L's other operating expenses increased $8.3 million for the three months
        ended June 30, 2007, compared to the same period in 2006 primarily due to
        the
        following:
  ·
              increased
                  pension expense of $4.8 million primarily due to the increased
                  level of
                  pension costs in KCP&L’s rates effective January 1,
                  2007,
  ·
              increased
                  plant operations expenses of $1.8 million primarily due to unplanned
                  outages,
  ·
              increased
                  labor expenses of $1.2 million primarily due to filling open positions
                  subsequent to the skill set realignment
                  process,
  ·
              increased
                  transmission expenses of $2.0 million primarily due to increased
                  transmission usage charges as a result of the increased wholesale
                  MWh
                  sales and increased Southwest Power Pool, Inc. (SPP) fees
                  and
  ·
              increased
                  gross receipts tax expense of $0.9 million due to the increase
                  in
                  revenues.
  Partially
        offsetting the increase in other operating expenses was decreased incentive
        compensation expense of $5.4 million.
  Consolidated
        KCP&L’s other operating expenses increased $28.1 million year to date June
        30, 2007, compared to the same period in 2006 primarily due to the
        following:
  ·
              increased
                  pension expenses of $9.7 million due to the increased level of
                  pension
                  costs in KCP&L’s rates effective January 1,
                  2007,
  ·
              increased
                  plant operations and maintenance expenses of $9.1 million primarily
                  due to
                  planned and unplanned outages and the addition of the Spearville
                  Wind
                  Energy Facility in the third quarter of
                  2006,
  ·
              increased
                  labor expense of $2.0 million primarily due to filling open positions
                  subsequent to the skill set realignment
                  process,
  ·
              increased
                  transmission expenses of $3.5 million primarily due to increased
                  transmission usage charges as a result of the increased wholesale
                  MWh
                  sales and increased SPP fees,
  ·
              increased
                  gross receipts tax expense of $1.9 million due to the increase
                  in revenues
                  and
  ·
              increased
                  employee-related expenses of $1.2
                  million.
  Partially
        offsetting the increase in other operating expenses was decreased incentive
        compensation expense of $4.7 million.
  **Consolidated
        KCP&L Depreciation and Amortization**
 Consolidated
        KCP&L’s depreciation and amortization costs increased $6.5 million for the
        three months ended and $12.5 million year to date June 30, 2007, compared
        to the
        same periods in 2006 primarily due to additional amortization pursuant to
        2006
        rate case orders of $3.0 million for the three months ended and $5.9 million
        year to date June 30, 2007.  Additionally, depreciation increased $1.8
        million
 59
 and
        $3.6
        million for the three months ended and year to date June 30, 2007, due to
        wind
        generation assets placed in service in the third quarter of 2006.
  **Consolidated
        KCP&L Interest Charges**
 Consolidated
        KCP&L’s interest charges increased $1.7 million and $5.0 million for the
        three months ended and year to date June 30, 2007, respectively, compared
        to the
        same periods in 2006, primarily due to an increase in commercial paper
        borrowings.
 
 **Consolidated
        KCP&L Income Taxes**
 Consolidated
        KCP&L’s income taxes decreased $2.1 million for the three months ended and
        $11.5 million year to date June 30, 2007, compared to the same periods in
        2006
        due to a decrease in pre-tax income.  Additionally, KCP&L
        recognized wind credits in the amount of $1.3 million for the three months
        ended
        and $2.7 million year to date June 30, 2007, for generation at the Spearville
        Wind Energy Facility.
  **STRATEGIC
        ENERGY RESULTS OF OPERATIONS**
  The
        following table summarizes Strategic Energy's comparative results of
        operations.


**Three
                Months Ended**
            
            
            **Year
                to Date****June
                30**
            
            
            **June
                30****2007**
            
            
            **2006**
            
            
            **2007**
            
            
            **2006**(millions)Operating
                revenues
            
            $
            485.5
            
            $
            351.2
            
            
            $
            894.1
            
            
            $
            670.0Purchased
                power
            
            
            (479.8
            )
            
            (329.3
            )
            
            
            (821.3
            )
            
            
            (655.1
            )Other
                operating expenses
            
            
            (14.5
            )
            
            (13.4
            )
            
            
            (35.0
            )
            
            
            (25.9
            )Depreciation
                and amortization
            
            
            (2.1
            )
            
            (2.0
            )
            
            
            (4.1
            )
            
            
            (3.9
            )Operating
                income (loss)
            
            
            (10.9
            )
            
            6.5
            
            
            
            33.7
            
            
            
            (14.9
            )Non-operating
                income and expenses
            
            
            1.0
            
            
            1.0
            
            
            
            2.2
            
            
            
            1.9Interest
                charges
            
            
            (0.7
            )
            
            (0.6
            )
            
            
            (1.5
            )
            
            
            (0.9
            )Income
                taxes
            
            
            4.1
            
            
            (2.7
            )
            
            
            (13.8
            )
            
            
            7.2Net
                income (loss)
            
            $
            (6.5
            )
            $
            4.2
            
            
            $
            20.6
            
            
            $
            (6.7
            )


Strategic
        Energy’s retail MWh deliveries increased 27% to 5.1 million for the three months
        ended and 21% to 9.3 million year to date June 30, 2007, compared to the
        same
        periods in 2006.
  Strategic
        Energy had a net loss of $6.5 million for the three months ended June 30,
        2007,
        compared to $4.2 million of net income for the same period in 2006 due to
        the
        impact of a $9.2 million after-tax decrease in changes in fair value related
        to
        non-hedging energy contracts and from hedge
        ineffectiveness.  Strategic Energy also experienced lower average
        retail gross margin per MWh and higher bad debt expense, partially offset
        by
        lower employee-related expenses.
  Strategic
        Energy had net income of $20.6 million year to date June 30, 2007, compared
        to a
        net loss of $6.7 million for the same period in 2006 due to the impact of
        a
        $45.9 million after-tax increase in changes in fair value related to non-hedging
        energy contracts and from hedge ineffectiveness.  Partially offsetting
        this increase to net income was increased purchased power associated with
        a
        resettlement attributable to under-reported deliveries and the disposition
        of
        previously-acquired power at lower than contract prices caused by early
        terminations in the small business segment.  Strategic Energy also
        experienced increased bad debt expense in the small business segment and
        recognized potential penalty expense related to the purchased power adjustment
        for under-reported deliveries.
  60
 **Average
        Retail Gross Margin per MWh Without Fair Value
        Impacts**


**Three
                Months Ended**
            
            
            **Year
                to Date****June
                30**
            
            
            **June
                30****2007**
            
            
            **2006**
            
            
            **2007**
            
            
            **2006**Average
                retail gross margin per MWh
            
            $
            1.03
            
            
            $
            5.32
            
            
            $
            7.73
            
            
            $
            1.76Change
                in fair value related to non-hedging energycontracts
                and from cash flow hedge ineffectiveness
            
            
            3.46
            
            
            
            0.52
            
            
            
            (4.30
            )
            
            
            4.97Average
                retail gross margin per MWh withoutfair
                value impacts
            
            $
            4.49
            
            
            $
            5.84
            
            
            $
            3.43
            
            
            $
            6.73


Average
        retail gross margin per MWh without fair value impacts is a non-GAAP financial
        measure that differs from GAAP because it excludes the impact of unrealized
        fair
        value gains or losses.  Fair value impacts result from changes in fair
        value of non-hedging energy contracts and from hedge ineffectiveness associated
        with MWhs under contract but not yet delivered.  By not reflecting the
        impact of unrealized fair value gains or losses, this non-GAAP financial
        measure
        does not reflect the volatility recognized in the Company’s consolidated
        statement of income as a result of the unrealized fair value gains or losses
        in
        the periods presented related to energy under contract for future delivery
        to
        customers.  The fair value of energy under contract but not yet
        delivered fluctuates from the time the contract is entered into until the
        energy
        is delivered to customers.  However, the ultimate value realized by
        Strategic Energy under the customer sales contracts is determined when the
        electricity supply contract settles at the originally contracted price at
        the
        time of delivery to customers.  Management and the Board of Directors
        use this as a measurement of Strategic Energy’s realized retail gross margin per
        delivered MWh, which are settled at contracted prices upon
        delivery.  Because certain of Strategic Energy’s derivative supply
        contracts do not meet the requirements for cash flow hedge designation and
        certain other derivative supply contracts designated as cash flow hedges
        have a
        level of ineffectiveness, Strategic Energy recognizes unrealized gains or
        losses
        during the term of these derivative supply contracts prior to delivery while
        the
        associated customer sales contracts are not subject to fair value accounting
        treatment and therefore do not result in unrecognized gains or losses being
        recorded during the term prior to delivery.  By removing these
        non-cash timing differences that occur during the term of the contracts prior
        to
        delivery and impact only one side of the overall buy-sell transaction,
        management believes this non-GAAP financial measure provides investors with
        a
        measure of average retail gross margin per MWh that more accurately reflects
        Strategic Energy’s realized margin on delivered MWhs.
  As
        detailed in the table above, average retail gross margin per MWh without
        the
        impact of unrealized fair value gains and losses decreased to $4.49 for the
        three months ended June 30, 2007, compared to $5.84 for the same period in
        2006.  This decrease is attributable to the disposition of
        previously-acquired power at lower than contracted prices caused by early
        terminations in the small business segment, lower SECA recoveries and the
        absence of settlements of supplier contracts.
  The
        average retail gross margin per MWh without the impact of unrealized fair
        value
        gains and losses decreased to $3.43 year to date June 30, 2007, compared
        to
        $6.73 for the same period in 2006.  This decrease is attributable to
        the disposition of previously-acquired power at lower than contracted prices
        caused by early terminations in the small business segment, increased purchased
        power expense associated with a resettlement attributable to under-reported
        deliveries and the absence of settlements of supplier
        contracts.  Partially offsetting these decreases was an increase in
        net SECA recoveries.
  **Strategic
        Energy Purchased Power**
 Purchased
        power is the cost component of Strategic Energy’s average retail gross
        margin.  Strategic Energy purchases electricity from power suppliers
        based on forecasted peak demand for its retail customers.  Actual
        customer demand does not always equate to the volume purchased based on
 61
 forecasted
        peak demand.  Consequently, Strategic Energy makes short-term power
        purchases in the wholesale market when necessary to meet actual customer
        requirements.  Strategic Energy also sells any excess retail
        electricity supply over actual customer requirements back into the wholesale
        market.  These sales occur on many contracts, are usually short-term
        power sales (day ahead) and typically settle within the reporting
        period.  Excess retail electricity supply sales also include long-term
        and short-term forward physical sales to wholesale counterparties, which
        are
        accounted for on a mark-to-market basis.  Strategic Energy typically
        executes these transactions to manage basis and credit risks.  The
        proceeds from excess retail supply sales are recorded as a reduction of
        purchased power, as they do not represent the quantity of electricity consumed
        by Strategic Energy’s customers.  The amount of excess retail supply
        sales that reduced purchased power was $16.8 million for the three months
        ended
        and $31.2 million year to date June 30, 2007, compared to $34.2 million and
        $65.4 million for the same periods in 2006,
        respectively.  Additionally, in certain markets, Strategic Energy is
        required to sell to and purchase power from a RTO/ISO rather than directly
        transact with suppliers and end use customers.  The sale and purchase
        activity related to these certain RTO/ISO markets is reflected on a net basis
        in
        Strategic Energy’s purchased power.
  Strategic
        Energy utilizes derivative instruments, including forward physical delivery
        contracts, in the procurement of electricity.  Purchased power is also
        impacted by the net change in fair value related to non-hedging energy contracts
        and from cash flow hedge ineffectiveness.  Net changes in fair value
        increased purchased power expenses by $17.5 million for the three months
        ended
        June 30, 2007, compared to an increase of $2.0 million for the same period
        in
        2006.  Net changes in fair value decreased $39.8 million year to date
        June 30, 2007, compared to an increase of $37.9 million for the same period
        in
        2006.  These changes are a result of volatility in the forward market
        prices for power combined with Strategic Energy designating more derivative
        instruments as cash flow hedges that no longer qualify for the NPNS
        election.  See Note 17 to the consolidated financial statements for
        more information.
  **Strategic
        Energy Other Operating Expenses *(including selling, general and
        administrative – non-regulated and general taxes)***
 Strategic
        Energy’s other operating expenses increased $1.1 million for the three months
        ended June 30, 2007, compared to the same period in 2006 primarily due to
        a $3.0
        million increase in bad debt expense attributable to the small business segment,
        which has a higher default rate than Strategic Energy’s larger customers,
        partially offset by lower employee-related expenses.
  Strategic
        Energy’s other operating expenses increased $9.1 million year to date June 30,
        2007, compared to the same period in 2006 due to a $6.2 million increase
        in bad
        debt expense combined with potential penalty expense related to the purchased
        power adjustment for under-reported deliveries recorded in the first quarter
        of
        2007.  Strategic Energy expects bad debt expense to trend downward for
        the remainder of 2007.
  **Strategic
        Energy Income Taxes**
 Strategic
        Energy had a tax benefit of $4.1 million for the three months ended June
        30,
        2007, compared to tax expense of $2.7 million for the same period in 2006
        due to
        a pre-tax loss for the three months ended June 30, 2007, compared to pre-tax
        income for the same period in 2006.  The deferred tax benefit
        increased $6.3 million related to the net changes in fair value related to
        non-hedging energy contracts and hedge ineffectiveness for the three months
        ended June 30, 2007, compared to the same period in 2006.
  Strategic
        Energy had tax expense of $13.8 million year to date June 30, 2007, compared
        to
        a tax benefit of $7.2 million for the same period in 2006 due to pre-tax
        income
        year to date June 30, 2007, compared to a pre-tax loss for the same period
        in
        2006.  The deferred tax expense related to the net changes in fair
        value related to non-hedging energy contracts and from hedge ineffectiveness
        was
 62
 $16.2
        million year to date June 30, 2007, compared to a tax benefit of $15.6 million
        for the same period in 2006.
  **GREAT
        PLAINS ENERGY AND CONSOLIDATED KCP&L SIGNIFICANT BALANCE SHEET CHANGES (June
        30, 2007 compared to December 31, 2006)**
   ·
              Great
                  Plains Energy’s and consolidated KCP&L’s receivables increased $71.6
                  million and $26.6 million, respectively.  KCP&L’s
                  receivables increased $21.8 million due to seasonal increases from
                  higher
                  summer tariff rates and usage and $6.2 million due to additional
                  receivables from joint owners related to Comprehensive Energy Plan
                  projects.  Strategic Energy’s receivables increased $47.8
                  million primarily due to increased revenues and an increase in
                  days
                  outstanding partially offset by a higher allowance for doubtful
                  accounts
                  primarily due to an increase in the aging of the small business
                  customer
                  segment.
  ·
              Great
                  Plains Energy’s and consolidated KCP&L’s fuel inventories increased
                  $13.5 million primarily due to increased coal inventory due to
                  planned and
                  unplanned plant outages as well as increased coal and coal transportation
                  costs.
  ·
              Great
                  Plains Energy’s refundable income taxes increased $12.2 million primarily
                  due to a $6.0 million reclassification of an income tax receivable
                  from
                  other deferred charges, an $8.2 million impact of the adoption
                  of FIN No.
                  48, which was mostly a reclassification from deferred income taxes,
                  partially offset by an increase in accruals for current taxable
                  income.  Consolidated KCP&L’s refundable income taxes decreased
                  $4.4 million due to an increase in accruals for current taxable
                  income,
                  which decrease refundable income taxes, partially offset by a $6.0
                  million
                  reclassification of an income tax receivable from other deferred
                  charges
                  and a $5.7 million impact of the adoption of FIN No. 48, which
                  was mostly
                  a reclassification from deferred income
                  taxes.
  ·
              Great
                  Plains Energy’s deferred income taxes – current assets decreased $14.6
                  million primarily due to temporary differences resulting from changes
                  in
                  the fair value of Strategic Energy’s energy-related derivative instruments
                  of $16.4 million.
  ·
              Great
                  Plains Energy’s derivative instruments, including current and deferred
                  assets and liabilities, increased $124.8 million to a $17.4 million
                  net
                  liability primarily due to a $122.5 million increase in the fair
                  value of
                  Strategic Energy’s energy-related derivative instruments as a result of
                  increases in the forward market prices for
                  power.
  ·
              Great
                  Plains Energy’s and consolidated KCP&L’s combined electric utility
                  plant and construction work in progress increased $195.1 million
                  primarily due to $103.1 million related to KCP&L’s Comprehensive
                  Energy Plan, including $20.6 million for environmental upgrades
                  and $82.5
                  million related to the construction of Iatan No. 2, and normal
                  construction activity.
  ·
              Great
                  Plains Energy’s other deferred charges and other assets increased $8.1
                  million primarily due to deferred costs associated with Great Plains
                  Energy’s anticipated acquisition of Aquila partially offset by a decrease
                  at consolidated KCP&L.  Consolidated KCP&L’s other
                  deferred charges and other assets decreased $4.6 million primarily
                  due to
                  a $6.0 million reclassification of an income tax receivable to
                  refundable
                  income taxes.
  ·
              Great
                  Plains Energy’s notes payable increased $36.0 million due to borrowings on
                  its short-term credit facility used to settle a forward sale agreement
                  for
                  $12.3 million, with the remainder due to the timing of cash
                  payments.
  ·
              Great
                  Plains Energy’s and consolidated KCP&L’s commercial paper increased
                  $161.2 million primarily due to a decrease in operating cash flows
                  resulting from higher operating expense due to the impact of outages
                  at
                  KCP&L’s base load generating
                  units.
      ·
              Great
                  Plains Energy’s and consolidated KCP&L’s current maturities of
                  long-term debt decreased $389.1 million and $225.5 million, respectively,
                  due to Great Plains Energy’s
    63
     settlement
                    of the FELINE PRIDES Senior Notes by issuing $163.6 million of
                    common
                    stock and KCP&L’s repayment of $225.0 million 6.00% Senior Notes at
                    maturity.
 ·
              Great
                  Plains Energy’s and consolidated KCP&L’s accrued taxes increased $13.0
                  million and $15.0 million, respectively, due to increases in property
                  tax
                  accruals resulting from the timing of tax
                  payments.
  ·
              Great
                  Plains Energy’s and consolidated KCP&L’s accrued compensation and
                  benefits decreased $10.9 million and $2.9 million, respectively,
                  primarily
                  due to the 2007 payments of employee incentive compensation accrued
                  at
                  December 31, 2006.
  ·
              Great
                  Plains Energy’s and consolidated KCP&L’s other – deferred credits and
                  other liabilities increased $26.0 million and $23.6 million, respectively,
                  primarily due to a $21.1 million impact of the adoption of FIN
                  48, which
                  was mostly a reclassification from deferred income
                  taxes.
  ·
              Great
                  Plains Energy’s accumulated other comprehensive income at June 30, 2007,
                  was a $51.1 million increase from the $46.7 million loss at December
                  31,
                  2006, primarily due to changes in the fair value of Strategic Energy’s
                  energy-related derivative
                  instruments.
  ·
              Great
                  Plains Energy and consolidated KCP&L’s long-term debt increased $248.0
                  million to reflect KCP&L’s issuance of $250.0 million of 5.85% Senior
                  Notes.
  **CAPITAL
        REQUIREMENTS AND LIQUIDITY**
  Great
        Plains Energy operates through its subsidiaries and has no material assets
        other
        than the stock of its subsidiaries.  Great Plains Energy’s ability to
        make payments on its debt securities and its ability to pay dividends is
        dependent on its receipt of dividends or other distributions from its
        subsidiaries and proceeds from the issuance of its securities.
  Great
        Plains Energy’s capital requirements are principally comprised of KCP&L’s
        utility construction and other capital expenditures, debt maturities and
        credit
        support provided to Strategic Energy.  These items as well as
        additional cash and capital requirements for the companies are discussed
        below.
  Great
        Plains Energy's liquid resources at June 30, 2007, consisted of $43.7 million
        of
        cash and cash equivalents on hand, including $3.8 million at consolidated
        KCP&L, and $628.2 million of unused bank lines of credit.  The
        unused lines at June 30, 2007, consisted of $75.6 million from KCP&L's
        revolving credit facility, $98.4 million from Strategic Energy’s revolving
        credit facility and $454.2 million from Great Plains Energy's revolving credit
        facility.  In July 2007, pursuant to the terms of their credit
        agreements, Great Plains Energy and KCP&L transferred $200 million of unused
        lender commitments from the Great Plains Energy credit agreement to the
        KCP&L credit agreement.  See the Debt Agreements section below for
        more information on these agreements.  At July 31, 2007, Great Plains
        Energy's unused bank lines of credit decreased $51.2 million from the amount
        at
        June 30, 2007, due to more letters of credit outstanding mostly due to higher
        collateral requirements at Strategic Energy.
  KCP&L
        currently expects to fund its Comprehensive Energy Plan expenditures from
        a
        combination of internal and external sources including, but not limited to,
        contributions from rate increases, capital contributions to KCP&L from Great
        Plains Energy's equity issuances and new short and long-term debt
        financing.
  KCP&L
        expects to meet day-to-day cash flow requirements including interest payments,
        construction requirements (excluding its comprehensive energy plan), dividends
        to Great Plains Energy and pension benefit plan funding requirements, discussed
        below, with internally generated funds.  KCP&L may 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 will be provided from operations, the
        issuance of long and short-
 64
 term
        debt
        and/or the issuance of equity or equity-linked instruments.  In
        addition, the Company may issue debt, equity and/or equity-linked instruments
        to
        finance growth or take advantage of new opportunities.
  Strategic
        Energy expects to meet day-to-day cash flow requirements including interest
        payments, credit support fees and capital expenditures with internally generated
        funds.  Strategic Energy may 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, seasonal working capital requirements,
        commodity-price volatility and the effects of counterparty
        non-performance.
  In
        February 2007, Great Plains Energy entered into an agreement to acquire
        Aquila.  See Note 2 to the consolidated financial statements for
        additional information.
  **Cash
        Flows from Operating Activities**
 Great
        Plains Energy and consolidated KCP&L generated positive cash flows from
        operating activities for the periods presented.  Great Plains Energy’s
        cash flows from operating activities year to date June 30, 2007, decreased
        primarily due to lower net income at Strategic Energy after considering non-cash
        after-tax fair value impacts from energy contracts, an increase in receivables
        at Strategic Energy due to increased revenues and an increase in days
        outstanding and $10.4 million of costs associated with the anticipated
        acquisition of Aquila.  Other changes in working capital detailed in
        Note 3 to the consolidated financial statements also impacted operating cash
        flows.  Consolidated KCP&L’s cash flows from operating activities
        year to date June 30, 2007, decreased primarily due to the changes in working
        capital detailed in Note 3 to the consolidated financial
        statements.  The timing of the Wolf Creek outage affects the deferred
        refueling outage costs, deferred income taxes and amortization of nuclear
        fuel.  The individual components of working capital vary with normal
        business cycles and operations.
  **Cash
        Flows from Investing Activities**
 Great
        Plains Energy’s and consolidated KCP&L’s cash used for investing activities
        varies with the timing of utility capital expenditures and purchases of
        investments and nonutility property.  Investing activities are offset
        by the proceeds from the sale of properties and insurance
        recoveries.  KCP&L’s cash utility capital expenditures decreased
        $35.2 million year to date June 30, 2007, compared to the same period in
        2006
        primarily due to expenditures in 2006 of $11.0 million to upgrade a transmission
        line and $13.8 million to purchase automated meter reading
        equipment.
  **Cash
        Flows from Financing Activities**
 Great
        Plains Energy’s cash flows from financing activities year to date June 30, 2007,
        reflect consolidated KCP&L’s repayment and issuance of Senior Notes, an
        increase in short-term borrowings and the $12.3 million settlement of an
        equity
        forward contract at Great Plains Energy.  Consolidated KCP&L’s
        financing activities year to date June 30, 2007, reflect KCP&L’s repayment
        of its $225.0 million 6.00% Senior Notes at maturity, issuance, at a discount,
        of $250.0 million 5.85% Senior Notes that mature in 2017 and an increase
        in
        short-term borrowings.  Consolidated KCP&L’s short-term borrowings
        have increased primarily due to a decrease in operating cash flows year to
        date
        June 30, 2007, resulting from higher operating expense due to the impact
        of
        outages at KCP&L’s base load generating units.
  **Financing
        Authorization**
 Under
        stipulations with the MPSC and KCC, Great Plains Energy and KCP&L must
        maintain common equity at not less than 30% and 35%, respectively, of total
        capitalization.  KCP&L’s long-term financing activities are
        subject to the authorization of the MPSC.  In 2005, the MPSC
        authorized KCP&L to issue up to $635.0 million of long-term debt and to
        enter into interest rate hedging instruments in connection
 65
 with
        such
        debt through December 31, 2009.  KCP&L has $135.0 million of
        authorization remaining.
  During
        2006, FERC authorized KCP&L to issue up to a total of $600.0 million in
        outstanding short-term d ebt
        instruments through February 2008.  The authorizations are subject to
        four restrictions: (i) proceeds of debt backed by utility assets must be
        used
        for utility purposes; (ii) if any utility assets that secure authorized debt
        are
        divested or spun off, the debt must follow the assets and also be divested
        or
        spun off; (iii) if any proceeds of the authorized debt are used for non-utility
        purposes, the debt must follow the non-utility assets (specifically, if the
        non-utility assets are divested or spun off, then a proportionate share of
        the
        debt must follow the divested or spun off non-utility assets); and (iv) if
        utility assets financed by the authorized short-term debt are divested or
        spun
        off to another entity, a proportionate share of the debt must also be divested
        or spun off.
  **Significant
        Financing Activities**
 In
        the
        second quarter of 2007, KCP&L issued $250.0 million of 5.85% unsecured
        Senior Notes.  The proceeds from this issuance were used to repay a
        short-term intercompany loan from Great Plains Energy.  KCP&L used
        the proceeds from the intercompany loan to repay its $225.0 million unsecured
        6.00% Senior Notes at maturity.
  In
        2006,
        Great Plains Energy entered into a forward sale agreement with Merrill Lynch
        Financial Markets, Inc. (forward purchaser) for 1.8 million shares of Great
        Plains Energy common stock.  In April 2007, Great Plains Energy
        elected to terminate the forward sale agreement and settle it in
        cash.  Based on the difference between Great Plains Energy’s average
        stock price of $32.60 over the period used to determine the settlement and
        the
        then-applicable forward price of $25.58, Great Plains Energy paid $12.3 million
        to Merrill Lynch Financial Markets, Inc.
  In
        January 2007, KCP&L received authorization from FERC, as part of its
        aggregate $600.0 million short-term debt authorization, to issue an aggregate
        of
        $150 million of short-term debt in connection with participation in the Great
        Plains Energy money pool for a period of three years.  The money pool
        was an internal financing arrangement in which up to $150 million of funds
        deposited into the money pool by Great Plains Energy and Strategic Energy
        could
        be lent on a short-term basis to KCP&L.  The money pool was
        terminated in July 2007.
  **Debt
        Agreements**
 See
        Note
        7 to the consolidated financial statements for discussion of Great Plains
        Energy’s, KCP&L’s and Strategic Energy’s revolving credit
        facilities.  Strategic Energy’s facility contains a Material Adverse
        Change (MAC) clause that requires Strategic Energy to represent prior to
        receiving funding, that no MAC has occurred.
  **Credit
        Ratings**
 None
        of
        the companies’ outstanding debt, except for the notes associated with affordable
        housing investments, requires the acceleration of interest and/or principal
        payments in the event of a ratings downgrade, unless the downgrade occurs
        in the
        context of Great Plains Energy or KCP&L entering into a merger,
        consolidation or sale.  In the event of a downgrade, the companies
        and/or their subsidiaries may be subject to increased interest costs on their
        credit facilities.  The anticipated acquisition of Aquila will not be
        a merger, consolidation or sale that would trigger acceleration of interest
        and/or principal payments.
  **Pensions**
 The
        Company maintains defined benefit plans for substantially all employees of
        KCP&L, Services and WCNOC and incurs significant costs in providing the
        plans, with the majority incurred by KCP&L.  All plans meet the
        funding requirements of the Employee Retirement Income Security Act of 1974
        (ERISA) with additional contributions made when deemed financially
        advantageous.
  66
 Year
        to
        date June 30, 2007, the Company contributed $18.4 million to the plans and
        an
        additional $14.3 million is expected to be contributed during the remainder
        of
        2007, all paid by KCP&L.  Management believes KCP&L has
        adequate access to capital resources through cash flows from operations or through
        existing lines of credit to support the funding requirements.
  Participants
        in the plans may request a lump-sum cash payment upon termination of their
        employment.  A change in payment assumptions could result in increased
        cash requirements from pension plan assets with the Company being required
        to
        accelerate future funding.  Under the terms of the pension plans, the
        Company reserves the right to amend or terminate the plans, and from time
        to
        time benefits have changed.  See Note 10 to the consolidated financial
        statements for additional information.
 
 **Strategic
        Energy Supplier Concentration and Credit**
 Strategic
        Energy enters into forward physical contracts with multiple
        suppliers.  At June 30, 2007, Strategic Energy’s five largest
        suppliers under forward supply contracts represented 71% of the total future
        dollar committed purchases.  The five largest suppliers, or their
        guarantors, are rated investment grade.  In the event of supplier
        non-delivery or default, Strategic Energy’s results of operations could be
        affected to the extent the cost of replacement power exceeded the combination
        of
        the contracted price with the supplier and the amount of collateral held
        by
        Strategic Energy to mitigate its credit risk with the supplier.  In
        addition to the collateral, if any, that the supplier provides, Strategic
        Energy’s risk may be further mitigated by the obligation of the supplier to make
        a default payment equal to the shortfall and to pay liquidated damages in
        the
        event of a failure to deliver power.  There is no assurance that the
        supplier in such an instance would make the default payment and/or pay
        liquidated damages.  Strategic Energy’s results of operations and
        financial position could also be affected, in a given period, if it were
        required to make a payment upon termination of a supplier contract to the
        extent
        the contracted price with the supplier exceeded the market value of the contract
        at the time of termination.
  The
        following tables provide information on Strategic Energy’s credit exposure to
        suppliers, net of collateral, at June 30, 2007.


**Number
                Of**
            
            **Net
                Exposure Of****Counterparties**
            
            **Counterparties****Exposure**
            
            
            
            
            
            
            
            **Greater
                Than**
            
            **Greater
                Than****Before
                Credit**
            
            
            **Credit**
            
            
            **Net**
            
            **10%
                Of Net**
            
            **10%
                of Net****Rating**
            
            **Collateral**
            
            
            **Collateral**
            
            
            **Exposure**
            
            **Exposure**
            
            **Exposure**External
                rating
            
            (millions)
            
            
            
            
            
            (millions)Investment
                Grade
            
            $
            8.9
            
            
            $
            -
            
            
            $
            8.9
            
            
            3
            
            
            $
            8.9Non-Investment
                Grade
            
            
            7.5
            
            
            
            7.4
            
            
            
            0.1
            
            
            -
            
            
            
            -Internal
                ratingNon-Investment
                Grade
            
            
            2.7
            
            
            
            1.7
            
            
            
            1.0
            
            
            -
            
            
            
            -Total
            
            $
            19.1
            
            
            $
            9.1
            
            
            $
            10.0
            
            
            3
            
            
            $
            8.9


**Maturity
                Of Credit Risk Exposure Before Credit Collateral****Less
                Than**
            
            
            
            
            **Total****Rating**
            **2
                Years**
            
            **2
                - 5 Years**
            
            
            **Exposure**External
                rating
            
            (millions)Investment
                Grade
            
            $
            1.4
            
            
            $
            7.5
            
            
            $
            8.9Non-Investment
                Grade
            
            
            4.5
            
            
            
            3.0
            
            
            
            7.5Internal
                ratingNon-Investment
                Grade
            
            
            1.5
            
            
            
            1.2
            
            
            
            2.7Total
            
            $
            7.4
            
            
            $
            11.7
            
            
            $
            19.1


67
 External
        ratings are determined by using publicly available credit ratings of the
        counterparty.  If a counterparty has provided a guarantee by a higher
        rated entity, the determination has been based on the rating of its
        guarantor.  Internal ratings are determined by, among other things, an
        analysis of the counterparty’s
        financial statements and consideration of publicly available credit ratings
        of
        the counterparty’s parent.  Investment grade counterparties are those
        with a minimum senior unsecured debt rating of BBB- from Standard & Poor’s
        or Baa3 from Moody’s Investors Service.  Exposure before credit
        collateral has been calculated considering all netting agreements in place,
        netting accounts payable and receivable exposure with net mark-to-market
        exposure.  Exposure before credit collateral, after consideration of
        all netting agreements, is impacted significantly by the power supply volume
        under contract with a given counterparty and the relationship between current
        market prices and contracted power supply prices.  Credit collateral
        includes the amount of cash deposits and letters of credit received from
        counterparties.  Net exposure has only been calculated for those
        counterparties to which Strategic Energy is exposed and excludes counterparties
        exposed to Strategic Energy.
  At
        June
        30, 2007, Strategic Energy had exposure before collateral to non-investment
        grade counterparties totaling $10.2 million, of which 60% is scheduled to
        mature
        in less than two years.  In addition, Strategic Energy held collateral
        totaling $9.1 million limiting its exposure to these non-investment grade
        counterparties to $1.1 million.
  Strategic
        Energy contracts with national and regional counterparties that have direct
        supplies and assets in the region of demand.  Strategic Energy also
        manages its counterparty portfolio through disciplined margining, collateral
        requirements and contract-based netting of credit exposures against payable
        balances.
  **Supplemental
        Capital Requirements and Liquidity Information**
 Great
        Plains Energy’s and consolidated KCP&L’s contractual obligations for
        KCP&L’s Comprehensive Energy Plan were $429.0 million for the remainder of
        2007 and $471.8 million, $139.0 million and $12.5 million for the years 2008
        through 2010, respectively.  Great Plains Energy’s and consolidated
        KCP&L’s other contractual obligations have not significantly changed outside
        of the ordinary course of business at June 30, 2007, compared to December
        31,
        2006.
  Great
        Plains Energy and consolidated KCP&L adopted the provisions of FASB
        Interpretation No. 48, “Accounting for Uncertainty in Income Taxes,” an
        interpretation of SFAS No. 109, ”Accounting for Income Taxes” on January 1,
        2007.  At June 30, 2007, the total liability for unrecognized tax
        benefits for Great Plains Energy and consolidated KCP&L was $23.0 million
        and $21.1 million, respectively.  Great Plains Energy and consolidated
        KCP&L are unable to determine reasonably reliable estimates of the period of
        cash settlement with the respective taxing authorities.
  **Off-Balance
        Sheet Arrangements**
 In
        the
        normal course of business, Great Plains Energy and certain of its subsidiaries
        enter into various agreements providing financial or performance assurance
        to
        third parties on behalf of certain subsidiaries.  Such agreements
        include, for example, guarantees, stand-by letters of credit and surety
        bonds.  These agreements are entered into primarily to support or
        enhance the creditworthiness otherwise attributed to a subsidiary on a
        stand-alone basis, thereby facilitating the extension of sufficient credit
        to
        accomplish the subsidiaries’ intended business purposes.  Great Plains
        Energy’s and consolidated KCP&L’s guarantees were relatively unchanged at
        June 30, 2007, compared to December 31, 2006.
  **New
        Accounting Standards**
 See
        Note
        19 of the consolidated financial statements for information regarding new
        accounting standards.
  68
 **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,
        regulatory, operational and credit risks and are discussed elsewhere in this
        document as well as in the 2006 Form 10-K and therefore are not represented
        here.
  Great
        Plains Energy and consolidated KCP&L interim period disclosures about market
        risk included in quarterly reports on Form 10-Q address material changes,
        if
        any, from the most recently filed annual report on Form
        10-K.  Therefore, these interim period disclosures should be read in
        connection with Item 7A. Quantitative and Qualitative Disclosures About Market
        Risk, included in the 2006 Form 10-K of each of Great Plains Energy and
        KCP&L, incorporated herein by reference.
  Strategic
        Energy maintains a commodity-price risk management strategy that uses derivative
        instruments including forward physical energy purchases, to minimize
        significant, unanticipated net income fluctuations caused by commodity-price
        volatility.  In certain markets where Strategic Energy operates,
        entering into forward fixed price contracts is cost
        prohibitive.  Financial derivative instruments, including swaps, are
        used to limit the unfavorable effect that price increases will have on
        electricity purchases, effectively fixing the future purchase price of
        electricity for the applicable forecasted usage and protecting Strategic
        Energy
        from significant price volatility.  At June 30, 2007, a hypothetical
        10% increase in the market price of purchased power could result in an $8.2
        million increase in purchased power expense for the remainder of
        2007.
  **ITEM
        4.  CONTROLS AND PROCEDURES**
  **Disclosure
        Controls and Procedures**
 Great
        Plains Energy carried out evaluations of its disclosure controls and procedures
        (as defined in Rules 13a-15(e) or 15d-15(e) under the Securities Exchange
        Act of
        1934, as amended) as of the end of the fiscal quarter ended June 30,
        2007.  These evaluations were conducted under the supervision, and
        with the participation, of the company’s management, including the chief
        executive officer, chief financial officer and the disclosure
        committee.
  Based
        upon these evaluations, the chief executive officer and chief financial officer
        of Great Plains Energy have concluded as of the end of the period covered
        by
        this report that the disclosure controls and procedures of Great Plains Energy
        are functioning effectively to provide reasonable assurance that: (i) the
        information required to be disclosed by the company in the reports that it
        files
        or submits under the Securities Exchange Act of 1934, as amended, is recorded,
        processed, summarized and reported within the time periods specified in the
        SEC’s rules and forms, and (ii) the information required to be disclosed by the
        company in the reports that it files or submits under the Securities Exchange
        Act of 1934, as amended, is accumulated and communicated to management,
        including the principal executive and principal financial officers, as
        appropriate to allow timely decisions regarding required
        disclosure.
  **Changes
        in Internal Control Over Financial Reporting**
 There
        has
        been no change in Great Plains Energy’s internal control over financial
        reporting that occurred during the quarterly period ended June 30, 2007,
        that
        has materially affected, or is reasonably likely to materially affect, the
        company’s internal control over financial reporting.
  69
 **ITEM
        4T.  CONTROLS AND PROCEDURES**
  **Disclosure
        Controls and Procedures**
 KCP&L
        carried out evaluations of its disclosure controls and procedures (as defined
        in
        Rules 13a-15(e) or 15d-15(e) under the Securities Exchange Act of 1934, as
        amended) as of the end of the fiscal quarter ended June 30,
        2007.  These evaluations were conducted under the supervision, and
        with the participation,
        of the company’s management, including the chief executive officer, chief
        financial officer and the disclosure committee.
  Based
        upon these evaluations, the chief executive officer and chief financial officer
        of KCP&L have concluded as of the end of the period covered by this report
        that the disclosure controls and procedures of KCP&L are functioning
        effectively to provide reasonable assurance that: (i) the information required
        to be disclosed by the company in the reports that it files or submits under
        the
        Securities Exchange Act of 1934, as amended, is recorded, processed, summarized
        and reported within the time periods specified in the SEC’s rules and forms, and
        (ii) the information required to be disclosed by the company in the reports
        that
        it files or submits under the Securities Exchange Act of 1934, as amended,
        is
        accumulated and communicated to management, including the principal executive
        and principal financial officers, as appropriate to allow timely decisions
        regarding required disclosure.
  **Changes
        in Internal Control Over Financial Reporting**
 There
        has
        been no change in KCP&L’s internal control over financial reporting that
        occurred during the quarterly period ended June 30, 2007, that has materially
        affected, or is reasonably likely to materially affect, the company’s internal
        control over financial reporting.
  **PART
        II *–*OTHER INFORMATION**
  **ITEM
        1.  LEGAL PROCEEDINGS**
  **KCP&L
        Missouri 2007 Rate Case**
 On
        February 1, 2007, KCP&L filed a retail rate case with the MPSC, requesting
        an annual rate increase effective January 1, 2008, of approximately $45 million
        over current levels.  In July 2007, the MPSC Staff filed its case
        regarding KCP&L’s rate request.  In its filing, the Staff asserted
        that KCP&L’s annual revenues should be increased by $0.7 million, before
        adjustments resulting from the September 30, 2007, true-up of test year
        information.  The Staff’s filing assumed adjustments resulting from
        this true-up would increase revenue requirements by $14 million, resulting
        in a
        required increase in annual revenues of $14.7 million.  This amount
        reflects approximately $15 million to $17 million in accelerated depreciation,
        which the Staff asserts will maintain certain KCP&L credit ratios at
        investment-grade levels as provided for in the stipulation and agreement
        approved by the MPSC in 2005.
  **KCP&L
        Regulatory Plan Appeals**
 On
        March
        28, 2005, and April 27, 2005, KCP&L filed Stipulations and Agreements with
        the MPSC and KCC, respectively, containing a regulatory plan and other
        provisions related to its comprehensive energy plan.  The MPSC issued
        its Report and Order approving the Stipulation and Agreement on July 28,
        2005,
        and KCC issued its Order Approving Stipulation and Agreement on August 5,
        2005.  The Sierra Club and Concerned Citizens of Platte County, two
        nonprofit corporations, appealed the MPSC’s decision and the circuit court’s
        affirmation of that decision to the Missouri Court of Appeals for the Western
        District.  The Sierra Club also appealed the KCC’s decision and the
        district court’s affirmation of that decision to the Kansas Court of
        Appeals.  On March 19, 2007, KCP&L, the Sierra Club and the
        Concerned Citizens of Platte County entered into a Collaboration Agreement
        to
        settle various matters related to the appeals.  Consequently, the
        pending appeals were dismissed by the Kansas Court of Appeals and by the
        Missouri Supreme Court.
  **Kansas
        City Power & Light Company v. Union Pacific Railroad
        Company**
 On
        October 12, 2005, KCP&L filed a rate complaint case with the STB charging
        that Union Pacific rates
 70
 for
        transporting coal from the PRB in Wyoming to KCP&L’s Montrose Station are
        unreasonably high.  Prior to the end of 2005, the rates were
        established under a contract with Union Pacific.  Efforts to extend
        the term of the contract were unsuccessful and Union Pacific is the only
        service
        for coal transportation from the PRB to Montrose Station.  A
        procedural schedule was issued by the STB in May 2007, directing KCP&L and
        Union Pacific to submit reply evidence on August 20, 2007.  Given this expedited
        schedule, the STB has indicated it may issue a final decision on this rate
        complaint in the fourth quarter of 2007.  Until the case is decided,
        KCP&L is paying the higher tariff rates subject to refund.
  **Aquila
        Transaction Proceedings**
 On
        April
        4, 2007, Great Plains Energy, KCP&L and Aquila submitted joint applications
        to the MPSC and KCC seeking approval of the proposed acquisition by Great
        Plains
        Energy of Aquila.  In the MPSC filing, the companies requested that
        Aquila be authorized to use an additional amortization mechanism to maintain
        credit ratios once Aquila achieves financial metrics necessary to support
        an
        investment-grade credit rating.  Aquila and KCP&L also requested
        authorization to amortize transaction and incremental transition-related
        costs
        over five years, and to collectively retain for a five year period 50 percent
        of
        estimated synergy savings resulting from the transaction.  Aquila
        further requested approval to transfer to Great Plains Energy approximately
        $677
        million of the proceeds from the sale of its non-Missouri utility operations
        to
        Black Hills to fund substantially all of the cash portion of the merger
        consideration payable to its shareholders by Great Plains Energy.  In
        the KCC filing, KCP&L requested similar regulatory treatment of costs and
        synergies.  An evidentiary hearing in the MPSC case is scheduled in
        December 2007.
  On
        May
        25, 2007, Great Plains Energy, KCP&L, Aquila and Black Hills filed a joint
        application (which was amended in June 2007) with FERC seeking approval of
        the proposed acquisition by Great Plains Energy of Aquila and certain Aquila
        Colorado electric assets by Black Hills, and for a declaratory order that
        the
        transfer of proceeds from Aquila to Great Plains Energy will not constitute
        a
        payment of funds properly included in a capital account in a manner contrary
        to
        the Federal Power Act.  Various parties have submitted protests to the FERC
        application.  Great Plains Energy and Aquila submitted their
        respective Hart-Scott-Rodino pre-merger notifications in July 2007 relating
        to
        the acquisition of Aquila by Great Plains Energy.  The thirty-day
        initial waiting period will expire on August 27, 2007, unless the period
        is
        terminated earlier or extended.
  A
        purported class action lawsuit was filed against Aquila and certain of its
        individual directors and officers on February 8, 2007, in Jackson County,
        Missouri, Circuit Court seeking, among other things, an injunction against
        the
        consummation of the proposed transaction.  In July 2007, an amended
        lawsuit was filed to include Great Plains Energy as a defendant, alleging
        that
        Great Plains Energy aided and abetted alleged breaches of fiduciary duties
        by
        the named Aquila directors and officers.  Great Plains Energy has not
        been served with this amended complaint.  Great Plains Energy believes
        it has strong defenses and will vigorously defend this lawsuit.
  71
 **Weinstein
        v. KLT Telecom**
 Richard
        D. Weinstein (Weinstein) filed suit against KLT Telecom Inc. (KLT Telecom)
        in
        September 2003 in the St. Louis County, Missouri Circuit Court. KLT Telecom
        acquired a controlling interest in DTI Holdings, Inc. (Holdings) in February
        2001 through the purchase of approximately two-thirds of the Holdings stock
        held
        by Weinstein.  In connection with that purchase, KLT Telecom entered
        into a put option in favor of Weinstein, which granted Weinstein an option
        to
        sell to KLT Telecom his remaining shares of Holdings stock.  The put
        option provided for an aggregate exercise price for the remaining shares
        equal
        to their fair market value with an aggregate floor amount of $15 million
        and was
        exercisable between September 1, 2003, and August 31, 2005.  In June
        2003, the stock of Holdings was cancelled and extinguished pursuant to the
        joint
        Chapter 11 plan confirmed by the Bankruptcy Court.  In September 2003,
        Weinstein delivered a notice of exercise of his claimed rights under the
        put
        option.  KLT Telecom rejected the notice of exercise, and Weinstein
        filed suit alleging breach of contract.  Weinstein sought damages of
        at least $15 million, plus statutory interest.  In April 2005, summary
        judgment was granted in favor of KLT Telecom, and Weinstein appealed this
        judgment to the Missouri Court of Appeals for the Eastern
        District.  On May 16, 2006, the Court of Appeals affirmed the
        judgment.  Weinstein filed a motion for transfer of this case to the
        Missouri Supreme Court, which was granted.  On May 29, 2007, the
        Supreme Court reversed the summary judgment and remanded the case
        to
        the trial court.  A $15 million reserve was recorded in 2001 for this
        matter.
 
 **Other
        Proceedings**
 The
        companies are parties to various other lawsuits and regulatory proceedings
        in
        the ordinary course of their respective businesses.  For information
        regarding other lawsuits and proceedings, see Notes 6, 14 and 15 to the
        consolidated financial statements.  Such descriptions are incorporated
        herein by reference.
  **ITEM
        1A.  RISK FACTORS**
  Actual
        results in future periods for Great Plains Energy and consolidated KCP&L
        could differ materially from historical results and the forward-looking
        statements contained in this report.  Factors that might cause or
        contribute to such differences include, but are not limited to, those discussed
        below and in Item 1A. Risk Factors included in the 2006 Form 10-K of each
        of
        Great Plains Energy and KCP&L.  The companies’ businesses are
        influenced by many factors that are difficult to predict, involve uncertainties
        that may materially affect actual results, and are often beyond the companies’
control.  Additional risks and uncertainties not presently known or
        that the companies’ management currently believes to be immaterial may also
        adversely affect the companies.  The information presented below
        updates the risk factors described in the 2006 Form 10-K of each of Great
        Plains
        Energy and KCP&L.  This information, as well as the other
        information included in this report and in the other documents filed with
        the
        SEC, should be carefully considered before making an investment in the
        securities of Great Plains Energy and KCP&L.  Risk factors of
        consolidated KCP&L are also risk factors for Great Plains
        Energy.
  **The
        outcome of KCP&L’s pending and future retail rate proceedings could have a
        material impact on its business and are largely outside its
        control.**
 The
        rates
        that KCP&L is allowed to charge its customers are the single most important
        item influencing its results of operations, financial position and
        liquidity.  These rates are subject to the determination, in large
        part, of governmental entities outside of KCP&L’s control, including the
        MPSC, KCC and FERC.  Decisions made by these entities could have a
        material impact on KCP&L’s business including its results of operations and
        financial position.
  In
        February 2007, KCP&L filed a request with the MPSC to increase the annual
        rates charged to its retail customers in Missouri by approximately $45
        million.  KCP&L also filed a request with KCC in March 2007 to
        increase the annual rates it is permitted to charge its Kansas retail customers
        by approximately $47 million.  The requested rate increases are
        subject to the approvals of the MPSC and
 72
 KCC,
        respectively, which are expected to rule on the requests in December 2007,
        with
        any rate changes taking effect on January 1, 2008.  It is possible
        that the MPSC and/or KCC will authorize a lower rate increase than what
        KCP&L has requested, or no increase or a rate
        reduction.  Additionally, the December 2006 order of the MPSC
        authorizing an increase in annual rates of approximately $51 million has
        been
        appealed in the Missouri courts.  It is possible that the MPSC order
        could be vacated and the proceedings remanded to the MPSC.  Management
        cannot predict or provide any assurances regarding the outcome of these
        proceedings.
  As
        a part
        of the Missouri and Kansas stipulations approved by the MPSC and KCC in 2005,
        KCP&L began implementation of its Comprehensive Energy
        Plan.  Under the Comprehensive Energy Plan, KCP&L agreed to
        undertake certain projects, including building and owning a portion of Iatan
        No.
        2, installing a new wind-powered generating facility, installing environmental
        upgrades to certain existing plants, infrastructure improvements and demand
        management, distributed generation, and customer efficiency and affordability
        programs.  In March 2007, KCP&L entered into a Collaboration
        Agreement with the Sierra Club and Concerned Citizens of Platte County that
        provides for increases in KCP&L’s wind generation capacity and energy
        efficiency initiatives, reductions in certain emission permit levels at its
        Iatan and LaCygne generating stations, and projects to offset certain carbon
        dioxide emissions. Most,
        but
        not all, of these commitments are conditioned on regulatory
        approval.  A reduction or rejection by the MPSC or KCC of rate
        increase requests reflecting the costs of projects under the comprehensive
        energy plan or Collaboration Agreement may result in increased financing
        requirements or a significant adverse effect on KCP&L’s results of
        operations and financial position, or both.
  In
        response to competitive, economic, political, legislative and regulatory
        pressures, KCP&L may be subject to rate moratoriums, rate refunds, limits on
        rate increases or rate reductions, including phase-in plans designed to spread
        the impact of rate increases over an extended period of time for the benefit
        of
        customers.  Any or all of these could have a significant adverse
        effect on KCP&L’s results of operations and financial position.
  **The
        Company is Subject to Environmental Laws and the Incurrence of Environmental
        Liabilities**
 The
        Company is subject to regulation by federal, state and local authorities
        with
        regard to air quality and other environmental matters primarily through
        KCP&L’s operations.  The generation, transmission and distribution
        of electricity produces and requires disposal of certain hazardous products,
        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 Great Plains
        Energy’s and consolidated KCP&L’s results of operations and financial
        position.
  The
        Clean
        Air Act requires companies to obtain permits and, if necessary, install control
        equipment to reduce emissions when making a major modification or a change
        in
        operation if either is expected to cause a significant net increase in
        emissions.  The Sierra Club and Concerned Citizens of Platte County
        have claimed that modifications were made to Iatan No. 1 in violation of
        Clean
        Air Act regulations.  Although KCP&L has entered into a
        Collaboration Agreement with those parties that provides, among other things,
        for the release of such claims, the Collaboration Agreement does not bind
        any
        other entity.  KCP&L is aware of subpoenas issued by a Federal
        grand jury to certain third parties seeking documents relating to capital
        projects at Iatan No. 1.  KCP&L has not received a subpoena, and
        has not been informed of the scope of the grand jury
        inquiry.  KCP&L believes that it is in compliance with all
        relevant laws and regulations; however, the ultimate outcome of these grand
        jury
        activities cannot presently be determined, nor can the costs and other
        liabilities that could potentially result from a negative outcome presently
        be
        reasonably estimated.  There is no assurance these costs, if any,
        could be recovered in rates.
  73
 New
        environmental laws and regulations, including but not limited to regulation
        of
        carbon dioxide and other greenhouse gases, affecting KCP&L’s operations may
        be adopted, and new interpretations of existing laws and regulations could
        be
        adopted or become applicable to KCP&L or its facilities, which may
        substantially increase its environmental expenditures in the
        future.  New facilities, or modifications of existing facilities, may
        require new environmental permits or amendments to existing
        permits.  Delays in the environmental permitting process, denials of
        permit applications, and conditions imposed in permits may materially affect
        the
        cost and timing of the generation and environmental retrofit projects included
        in the comprehensive energy plan, among other projects, and thus materially
        affect KCP&L’s results of operations and financial position.  In
        addition, KCP&L may not be able to recover all of its costs for
        environmental expenditures through rates in the future.  Under current
        law, KCP&L is also generally responsible for any on-site liabilities
        associated with the environmental condition of its facilities that it has
        previously owned or operated, regardless of whether the liabilities arose
        before, during or after the time it owned or operated the
        facilities.  The incurrence of material environmental costs or
        liabilities, without related rate recovery, could have a material adverse
        effect
        on KCP&L’s results of operations and financial position.  See Note
        14 to the consolidated financial statements for additional information regarding
        environmental matters.
  ***Fossil
        Fuel and Transportation Prices Impact KCP&L’s
        Costs***
 KCP&L's
        electric tariffs in Missouri and Kansas do not contain an automatic fuel
        adjustment clause.  This exposes KCP&L to risk from changes in the
        market prices of coal, natural gas and purchased power.  Changes in
        KCP&L’s fuel mix due to electricity demand, plant availability,
        transportation issues, fuel prices and other factors can also adversely affect
        KCP&L’s fuel and purchased power costs.
  KCP&L
        does not hedge its entire exposure from fossil fuel and transportation price
        volatility.  Consequently, its results of operations and financial
        position may be materially impacted by changes in these prices until increased
        costs are recovered in rates.  KCP&L filed a rate case with the
        KCC in March 2007 to implement a mechanism to fully recover its fuel and
        purchased power costs allocated to its Kansas operations.  However,
        even if the mechanism is approved, it will not be effective until January
        2008.  KCP&L does not have, and has not requested, an energy cost
        adjustment mechanism for its Missouri operations.
  ***Wholesale
        Electricity Prices Affect Costs and Revenue, Creating Earnings
        Volatility***
 KCP&L's
        ability to maintain or increase its level of wholesale sales depends on the
        wholesale market price, transmission availability and the availability of
        KCP&L’s generation for wholesale sales, among other factors.  A
        substantial portion of KCP&L’s wholesale sales are made in the spot market,
        and thus KCP&L has immediate exposure to wholesale price
        changes.  Declines in wholesale market price or availability of
        generation or transmission constraints in the wholesale markets could reduce
        KCP&L's wholesale sales and adversely affect KCP&L’s results of
        operations and financial position.  If the aggregate margin on
        KCP&L’s wholesale sales exceeds a certain level, KCP&L is required to
        treat the Missouri jurisdictional portion of this excess as a regulatory
        liability.
 
 KCP&L
        is also exposed to price risk because at times it purchases power to meet
        its
        customers’ needs.  The cost of these purchases may be affected by the
        timing of customer demand and/or unavailability of KCP&L’s lower-priced
        generating units.  Wholesale power prices can be volatile and
        generally increase in times of high regional demand and high natural gas
        prices.  KCP&L filed a rate case with the KCC in March 2007 to
        implement a mechanism to fully recover its fuel and purchased power costs
        allocated to its Kansas operations.  However, even if the mechanism is
        approved, it will not be effective until January 2008.  KCP&L does
        not have, and has not requested, an energy cost adjustment mechanism for
        its
        Missouri operations.
  Strategic
        Energy operates in competitive retail electricity markets, competing against
        the
        host utilities and other retail suppliers.  Wholesale electricity
        costs, which account for a significant portion of its
 74
 operating
        expenses, can materially affect Strategic Energy’s ability to attract and retain
        retail electricity customers.  There is also a regulatory lag that
        slows the adjustment of host public utility rates in response to changes
        in
        wholesale prices.  This lag can negatively affect Strategic Energy’s
        ability to compete in a rising wholesale price environment.  Strategic
        Energy manages wholesale electricity risk by establishing risk limits and
        entering into contracts to offset some****of its positions to
        balance energy supply and demand; however, Strategic Energy does not hedge
        its
        entire exposure to electricity price volatility.  Consequently, its
        results of operations and financial position may be materially impacted by
        changes in the wholesale price of electricity.
  **Great
        Plains Energy is subject to business and regulatory uncertainties as a result
        of
        the anticipated acquisition of Aquila, Inc., which could adversely affect
        its
        business.**
 On
        February 6, 2007, Great Plains Energy entered into definitive agreements
        under
        which it would acquire all the outstanding shares of
        Aquila.  Immediately prior to this acquisition, Black Hills will
        acquire from Aquila its electric utility in Colorado and its gas utilities
        in
        Colorado, Kansas, Nebraska and Iowa.  These transactions are complex,
        and are subject to Great Plains Energy and Aquila shareholder approvals,
        numerous regulatory approvals and other conditions.  The timing of,
        and the conditions imposed by, regulatory approvals may delay, or give rise
        to
        the ability to terminate the transactions.  In addition,
        several shareholder lawsuits have been filed against Aquila seeking to enjoin
        the transactions and recover alleged damages.  In the event of
        termination, Great Plains Energy would be required to write-off its deferred
        transaction costs, which could be material.  The conditions imposed by
        regulatory approvals could increase the costs, or decrease the benefits,
        anticipated by Great Plains Energy from the transaction.
  While
        it
        is anticipated that Great Plains Energy, KCP&L and Aquila will be rated
        investment grade after the transactions close, Great Plains Energy and KCP&L
        credit ratings have been negatively affected after the announcement of the
        proposed acquisition, and may be further negatively affected.  Credit
        rating downgrades could result in higher financing costs and potentially
        limit
        the companies’ access to the capital and credit markets, impact the regulatory
        rate treatment provided KCP&L, or both.
  Great
        Plains Energy entered into the transaction agreements with the expectation
        that
        the acquisition would result in various benefits to it and KCP&L including,
        among other things, synergies, cost savings and operating
        efficiencies.  Although Great Plains Energy expects to achieve the
        anticipated benefits of the acquisition, achieving them cannot be
        assured.  Great Plains Energy, KCP&L and Aquila proposed to
        regulators that the benefits resulting from the transaction be shared between
        retail electric customers and Great Plains Energy shareholders, and requested
        certain other regulatory assurances.  There is no assurance regarding
        the amount of benefit-sharing, or other regulatory treatment, in rate cases
        occurring after the closing of the transactions.
  Most
        of
        the Aquila employees remaining after the sale to Black Hills are expected
        to
        become employees of KCP&L.  KCP&L employees will operate and
        manage both KCP&L properties and Aquila’s properties, and KCP&L will
        charge Aquila for the cost of these services.  Procurement of goods
        and services for both KCP&L and Aquila is expected to be done by KCP&L,
        with the cost of goods and services used by Aquila being billed to
        Aquila.  These expected arrangements may pose risks to KCP&L,
        including possible claims by Aquila or third parties arising from actions
        of
        KCP&L employees in operating Aquila’s properties and providing other
        services to Aquila.  KCP&L’s claims for reimbursement for goods
        and services provided to Aquila will be unsecured and rank equally with other
        unsecured obligations of Aquila.  KCP&L’s ability to be reimbursed
        for the costs incurred for the benefit of Aquila depends on the financial
        ability of Aquila to make such payments.
  Additionally,
        Aquila’s utility operations are subject to regulation by numerous government
        entities, including the MPSC and FERC.  As such, a successful
        acquisition of Aquila will subject Great Plains Energy to additional regulatory
        risk.
  75
 **The
        outcome of legal proceedings cannot be predicted.  An adverse finding
        could have a material adverse effect on Great Plains Energy’s and KCP&L’s
        financial condition.**
 Great
        Plains Energy and KCP&L are party to various material litigation and
        regulatory matters arising out of their business operations.  The
        ultimate outcome of these matters cannot presently be determined, nor can
        the
        liability that could potentially result from a negative outcome in each case
        presently be reasonably estimated.  The liability Great Plains Energy
        and KCP&L may ultimately incur with respect to any of these cases in the
        event of a negative outcome may be in excess of amounts currently reserved
        and
        insured against with respect to such matters and, as a result, these matters
        may
        have a material adverse effect on the consolidated financial position of
        Great
        Plains Energy, KCP&L or both.
  **ITEM
        2.  UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF
        PROCEEDS**
  The
        following table provides information regarding purchases by Great Plains
        Energy
        of its equity securities during the second quarter of 2007.


**Issuer
                Purchases of Equity Securities****Maximum
                Number****Total
                Number of**
            
            **(or
                Approximate****Shares
                (or Units)**
            
            **Dollar
                Value) of****Total**
            
            
            
            **Purchased
                as**
            
            **Shares
                (or Units)****Number
                of**
            **Average**
            **Part
                of Publicly**
            
            **that
                May Yet Be****Shares**
            **Price
                Paid**
            **Announced**
            
            **Purchased
                Under****(or
                Units)**
            **per
                Share**
            **Plans
                or**
            
            **the
                Plans or****Month**
            **Purchased**
            **(or
                Unit)**
            **Programs**
            
            **Programs**April
                1-30
            
            518
            (1)
            
            $32.66
            
            
            -
            
            
            
            N/AMay
                1-31
            
            103
            (1)
            
            32.90
            
            
            -
            
            
            
            N/AJune
                1-30
            
            -
            
            
            -
            
            
            -
            
            
            
            N/ATotal
            
            621
            
            
            $32.70
            
            
            -
            
            
            
            N/A(1)Represents
                shares of common stock surrendered to Great Plains Energy by certain
                officers to pay taxes related to the issuance ofrestricted
              stock and performance shares.


**ITEM
        3.  DEFAULTS UPON SENIOR SECURITIES**
  None.
  **ITEM
        4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY
        HOLDERS**
  **Great
        Plains Energy**
 Great
        Plains Energy’s annual meeting of shareholders was held on May 1,
        2007.  The shareholders elected eleven directors, ratified the
        appointment of Deloitte & Touche LLP as independent registered public
        accountants for 2007 and approved amendments to the Long-Term Incentive
        Plan.
  76
 The
        eleven persons named below were elected, as proposed in the proxy statement,
        to
        serve as directors until Great Plains Energy’s annual meeting in 2008 and until
        their successors are elected and qualified.


Nominee
            
            Votes
                For
            
            Votes
                WithheldDavid
                L. Bodde
            
            76,322,421
            
            1,572,056Michael
                J. Chesser
            
            75,910,474
            
            1,984,002William
                H. Downey
            
            75,924,504
            
            1,969,973Mark
                A. Ernst
            
            75,877,496
            
            2,016,981Randall
                C. Ferguson, Jr.
            
            76,594,086
            
            1,300,391William
                K. Hall
            
            76,372,089
            
            1,522,388Luis
                A. Jimenez
            
            75,478,927
            
            2,415,550James
                A. Mitchell
            
            75,881,588
            
            2,012,889William
                C. Nelson
            
            75,343,646
            
            2,550,831Linda
                H. Talbot
            
            75,592,090
            
            2,302,387Robert
                H. West
            
            75,426,504
            
            2,467,972


No
        votes
        were cast against the nominees due to cumulative voting.
 
 Great
        Plains Energy shareholders ratified the appointment of Deloitte & Touche LLP
        as independent registered public accountants for 2007.  The voting
        regarding the appointment was as follows:


Votes
                For
            
            Votes
                Against
            
            Abstentions77,165,732
            
            375,854
            
            352,888


Great
        Plains Energy shareholders approved amendments to the Long-Term Incentive
        Plan.  The voting regarding the amendments was as
        follows:


Votes
                For
            
            Votes
                Against
            
            Abstentions
            
            Broker
                Non-Votes40,610,931
            
            7,884,279
            
            987,480
            
            28,411,785




**KCP&L**
 Great
        Plains Energy is KCP&L’s sole shareholder.  By a unanimous written
        consent dated as of May 1, 2007, Great Plains Energy, as the sole shareholder,
        elected the following directors of Great Plains Energy as the directors of
        KCP&L for the ensuing year and until their successors are duly elected and
        qualified, or until their resignations:  David L. Bodde; Michael J.
        Chesser; William H. Downey; Mark A. Ernst; Randall C. Ferguson, Jr.; Luis
        A.
        Jimenez; James A. Mitchell; William C. Nelson and Linda H. Talbot.
  **ITEM
        5.  OTHER INFORMATION**
  None.
   77
 **ITEM
        6.  EXHIBITS**
  **Great
        Plains Energy Documents**


Exhibit
              Number
            
            Description
                of Document3.1
            *
            Bylaws
                of Great Plains Energy Incorporated as amended May 1, 2007 (Exhibit
                3.1
              to
                Form 8-K dated May 1, 2007).10.1.1
            
            Letter
                Agreement dated as of June 29, 2007 to Asset Purchase Agreement and
              Partnership
                Interests Purchase Agreement by and among Aquila, Inc., Black
                Hills
              Corporation,
                Great Plains Energy Incorporated, and Gregory Acquisition Corp.,
              dated
                February 6, 2007.10.1.2
            
            Notice
                of Election to Transfer Unused Commitment between the Great Plains
              Energy
                Incorporated and Kansas City Power & Light Company Credit Agreements
              dated
                as of May 11, 2006, with Bank of America, N.A., as Administrative
                Agent,
              JPMorgan
                Chase Bank, N.A., as Syndication Agent, BNP Paribas, The Bank of
              Tokyo-Mitsubishi
                UFJ, Limited, Chicago Branch and Wachovia Bank N.A., as Co-
              Documentation
                Agents, The Bank of New York, KeyBank National Association,
              The
                Bank of Nova Scotia, UMB Bank, N.A., and Commerce Bank, N.A.10.1.3
            +*
            Great
                    Plains Energy Incorporated Long-Term Incentive Plan as amended
                    May 1,
                  2007
                    (Exhibit 10.1 to Form 8-K filed May 4, 2007).10.1.4
            +*
            Great
                  Plains Energy Incorporated Kansas City Power & Light Company Annual
                Incentive
                  Plan amended effective as of January 1, 2007 (Exhibit 10.2 to Form
                  8-
                K
                  filed May 4, 2007).10.1.5
            +*
            Strategic
                  Energy, L.L.C. Executive Committee Annual Incentive Plan dated
                  as of
                January
                  1, 2007 (Exhibit 10.3 to Form 8-K filed May 4, 2007).10.1.6
            +
            Strategic
                  Energy, L.L.C. Executive Committee Annual Incentive Plan dated
                  as of
                January
                  1, 2007.12.1
            
            Computation
                of Ratio of Earnings to Fixed Charges.31.1.a
            
            Rule
                13a-14(a)/15d-14(a) Certifications of Michael J. Chesser.31.1.b
            
            Rule
                13a-14(a)/15d-14(a) Certifications of Terry Bassham.32.1
            
            Section
                1350 Certifications.


*Filed
        with the SEC as exhibits to prior SEC filings and are incorporated herein
        by
        reference and made a part hereof.  The SEC filing and the exhibit
        number of the documents so filed, and incorporated herein by reference, are
        stated in parenthesis in the description of such exhibit.
  +
        Indicates management contract or compensatory plan or arrangement.
  Copies
        of
        any of the exhibits filed with the SEC in connection with this document may
        be
        obtained from Great Plains Energy upon written request.
   78
 **KCP&L
        Documents**


Exhibit
                Number
            
            Description
                of Document1.1
            *
            Underwriting
                Agreement dated May 30, 2007, among Kansas City Power & Light
              Company
                and Banc of America Securities LLC and Wachovia Capital Markets,
                LLC, as
              representatives
                of the several underwriters named therein (Exhibit 1.1 to Form 8-K
              dated
                June 4, 2007).4.1
            *
            Indenture
                dated as of May 1, 2007, between Kansas City Power & Light Company and
              The
                Bank of New York Trust Company, N.A., as trustee (Exhibit 4.1 to
                Form 8-K
                dated
              June
                4, 2007).4.2
            *
            Supplemental
                Indenture No. 1 dated as of June 4, 2007 between Kansas City Power
&
              Light
                Company and The Bank of New York Trust Company, N.A., as trustee
                (Exhibit
              4.2
                to Form 8-K dated June 4, 2007).10.2.1
            *
            Notice
                of Election to Transfer Unused Commitment between the Great Plains
                Energy
              Incorporated
                and Kansas City Power & Light Company Credit Agreements dated as of
              May
                11, 2006, with Bank of America, N.A., as Administrative Agent, JPMorgan
                Chase
              Bank,
                N.A., as Syndication Agent, BNP Paribas, The Bank of Tokyo-Mitsubishi
                UFJ,
              Limited,
                Chicago Branch and Wachovia Bank N.A., as Co-Documentation Agents,
                The
              Bank
                of New York, KeyBank National Association, The Bank of Nova Scotia,
                UMB
              Bank,
                N.A., and Commerce Bank, N.A. (filed as Exhibit 10.1.2
                hereto).12.2
            
            Computation
                of Ratio of Earnings to Fixed Charges.31.2.a
            
            Rule
                13a-14(a)/15d-14(a) Certifications of William H. Downey.31.2.b
            
            Rule
                13a-14(a)/15d-14(a) Certifications of Terry Bassham.32.2
            
            Section
                1350 Certifications.


***Filed with the SEC as exhibits to prior SEC filings and are incorporated
        herein by reference and made a part hereof.  The SEC filings and the
        exhibit number of the documents so filed, and incorporated herein by reference,
        are stated in parenthesis in the description of such exhibit.
  Copies
        of
        any of the exhibits filed with the SEC in connection with this document may
        be
        obtained from KCP&L upon written request.
   79
 **SIGNATURES**
  Pursuant
        to the requirements of the Securities Exchange Act of 1934, Great Plains
        Energy
        Incorporated and Kansas City Power & Light Company have duly caused
        this report to be signed on its behalf by the undersigned thereunto duly
        authorized.







**GREAT
                PLAINS ENERGY INCORPORATED**Dated:  August
                3, 2007
            By:  /s/Michael
                J. Chesser(Michael
                J. Chesser)(Chief
                Executive Officer)Dated:  August
                3, 2007
            By:  /s/Lori
                A. Wright(Lori
                A. Wright)(Principal
                Accounting Officer)





**KANSAS
                CITY POWER & LIGHT COMPANY**Dated:  August
                3, 2007
            By:  /s/William
                H. Downey(William
                H. Downey)(Chief
                Executive Officer)Dated:  August
                3, 2007
            By:  /s/Lori
                A. Wright(Lori
                A. Wright)(Principal
                Accounting Officer)





80