UNITED
              STATES
 SECURITIES
              AND EXCHANGE COMMISSION
 Washington,
              D.C. 20549
 
 **FORM
              10-Q**
  
 [X]
              QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
 EXCHANGE
              ACT OF 1934
 
 For
              the
              quarterly period ended **March
              31, 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 May 4,
                        2007, Great Plains Energy Incorporated had 85,998,338 shares
                        of common
                        stock outstanding.On May
                        4, 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**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.**KLT
                        Telecom**
                    
                    KLT
                        Telecom Inc., a wholly owned subsidiary of KLT Inc.**KW**
                    
                    Kilowatt
  3
 **Abbreviation
                        or Acronym**
                    
                    **Definition****kWh**
                    
                    Kilowatt
                        hour**MAC**
                    
                    Material
                        Adverse Change**MD&A**
                    
                    Management’s
                        Discussion and Analysis of Financial Condition andResults
                        of Operations**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)**March
                      31**
                  
                  December
                      31**2007**
                  
                  2006**ASSETS**
                  
                  (thousands)**Current
                      Assets**Cash
                      and cash equivalents
                  
                  **$**
                  **37,279**
                  
                  $
                  61,823Receivables,
                      net
                  
                  
                  **326,801**
                  
                  
                  339,399Fuel
                      inventories, at average cost
                  
                  
                  **29,677**
                  
                  
                  27,811Materials
                      and supplies, at average cost
                  
                  
                  **60,229**
                  
                  
                  59,829Deferred
                      refueling outage costs
                  
                  
                  **11,818**
                  
                  
                  13,921Refundable
                      income taxes
                  
                  
                  **21,693**
                  
                  
                  9,832Deferred
                      income taxes
                  
                  
                  **-**
                  
                  
                  39,566Derivative
                      instruments
                  
                  
                  **27,693**
                  
                  
                  6,884Other
                  
                  
                  **11,705**
                  
                  
                  11,717Total
                  
                  
                  **526,895**
                  
                  
                  570,782**Nonutility
                      Property and Investments**Affordable
                      housing limited partnerships
                  
                  
                  **21,018**
                  
                  
                  23,078Nuclear
                      decommissioning trust fund
                  
                  
                  **106,163**
                  
                  
                  104,066Other
                  
                  
                  **14,796**
                  
                  
                  15,663Total
                  
                  
                  **141,977**
                  
                  
                  142,807**Utility
                      Plant, at Original Cost**Electric
                  
                  
                  **5,302,130**
                  
                  
                  5,268,485Less-accumulated
                      depreciation
                  
                  
                  **2,491,508**
                  
                  
                  2,456,199Net
                      utility plant in service
                  
                  
                  **2,810,622**
                  
                  
                  2,812,286Construction
                      work in progress
                  
                  
                  **257,443**
                  
                  
                  214,493Nuclear
                      fuel, net of amortization of $107,542 and $103,381
                  
                  
                  **36,333**
                  
                  
                  39,422Total
                  
                  
                  **3,104,398**
                  
                  
                  3,066,201**Deferred
                      Charges and Other Assets**Regulatory
                      assets
                  
                  
                  **427,481**
                  
                  
                  434,392Goodwill
                  
                  
                  **88,139**
                  
                  
                  88,139Derivative
                      instruments
                  
                  
                  **27,881**
                  
                  
                  3,544Other
                  
                  
                  **38,881**
                  
                  
                  29,795Total
                  
                  
                  **582,382**
                  
                  
                  555,870Total
                  
                  **$**
                  **4,355,652**
                  
                  $
                  4,335,660The
                      accompanying Notes to Consolidated Financial Statements are
                      an integral
                      part of these statements.
  5
 **GREAT
                        PLAINS ENERGY****Consolidated
                        Balance Sheets**(Unaudited)**March
                        31**
                    
                    December
                        31**2007**
                    
                    2006**LIABILITIES
                        AND CAPITALIZATION**
                    
                    (thousands)**Current
                        Liabilities**Notes
                        payable
                    
                    **$**
                    **241,000**
                    
                    $
                    -Commercial
                        paper
                    
                    
                    **224,061**
                    
                    
                    156,400Current
                        maturities of long-term debt
                    
                    
                    **1,034**
                    
                    
                    389,634EIRR
                        bonds classified as current
                    
                    
                    **145,291**
                    
                    
                    144,742Accounts
                        payable
                    
                    
                    **298,177**
                    
                    
                    322,724Accrued
                        taxes
                    
                    
                    **40,225**
                    
                    
                    24,106Accrued
                        interest
                    
                    
                    **19,340**
                    
                    
                    14,082Accrued
                        payroll and vacations
                    
                    
                    **22,673**
                    
                    
                    33,266Pension
                        and post-retirement liability
                    
                    
                    **1,037**
                    
                    
                    1,037Deferred
                        income taxes
                    
                    
                    **1,467**
                    
                    
                    -Derivative
                        instruments
                    
                    
                    **9,343**
                    
                    
                    91,482Other
                    
                    
                    **20,890**
                    
                    
                    25,520Total
                    
                    
                    **1,024,538**
                    
                    
                    1,202,993**Deferred
                        Credits and Other Liabilities**Deferred
                        income taxes
                    
                    
                    **634,743**
                    
                    
                    622,847Deferred
                        investment tax credits
                    
                    
                    **28,104**
                    
                    
                    28,458Asset
                        retirement obligations
                    
                    
                    **92,601**
                    
                    
                    91,824Pension
                        liability
                    
                    
                    **141,993**
                    
                    
                    143,170Regulatory
                        liabilities
                    
                    
                    **116,340**
                    
                    
                    114,674Derivative
                        instruments
                    
                    
                    **14,297**
                    
                    
                    61,146Other
                    
                    
                    **92,759**
                    
                    
                    82,122Total
                    
                    
                    **1,120,837**
                    
                    
                    1,144,241**Capitalization**Common
                        shareholders' equityCommon
                        stock-150,000,000 shares authorized without par value86,056,254
                        and 80,405,035 shares issued, stated value
                    
                    
                    **1,064,445**
                    
                    
                    896,817Retained
                        earnings
                    
                    
                    **479,713**
                    
                    
                    493,399Treasury
                        stock-71,933 and 53,499 shares, at cost
                    
                    
                    **(2,198**
                    **)**
                    
                    (1,614
                    )Accumulated
                        other comprehensive income (loss)
                    
                    
                    **21,766**
                    
                    
                    (46,686
                    )Total
                    
                    
                    **1,563,726**
                    
                    
                    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 7)
                    
                    
                    **607,551**
                    
                    
                    607,510Total
                    
                    
                    **2,210,277**
                    
                    
                    1,988,426**Commitments
                        and Contingencies (Note 12)**Total
                    
                    **$**
                    **4,355,652**
                    
                    $
                    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)As
                          Adjusted**Three
                          Months Ended March 31**
                      
                      **2007**
                      2006**Operating
                          Revenues**
                      
                      (thousands,
                          except per share amounts)Electric
                          revenues - KCP&L
                      
                      **$**
                      **255,652**
                      
                      $
                      240,390Electric
                          revenues - Strategic Energy
                      
                      
                      
                      **407,985**
                      
                      
                      318,012Other
                          revenues
                      
                      
                      
                      **639**
                      
                      
                      783Total
                      
                      
                      
                      **664,276**
                      
                      
                      559,185**Operating
                          Expenses**Fuel
                      
                      
                      
                      **52,664**
                      
                      
                      46,500Purchased
                          power - KCP&L
                      
                      
                      
                      **16,355**
                      
                      
                      5,117Purchased
                          power - Strategic Energy
                      
                      
                      
                      **341,558**
                      
                      
                      325,758Skill
                          set realignment costs
                      
                      
                      
                      **-**
                      
                      
                      9,393Other
                      
                      
                      
                      **96,510**
                      
                      
                      76,117Maintenance
                      
                      
                      
                      **29,834**
                      
                      
                      21,959Depreciation
                          and amortization
                      
                      
                      
                      **45,042**
                      
                      
                      38,946General
                          taxes
                      
                      
                      
                      **27,872**
                      
                      
                      27,644Loss
                          on property
                      
                      
                      
                      **3**
                      
                      
                      99Total
                      
                      
                      
                      **609,838**
                      
                      
                      551,533Operating
                          income
                      
                      
                      
                      **54,438**
                      
                      
                      7,652Non-operating
                          income
                      
                      
                      
                      **4,773**
                      
                      
                      2,985Non-operating
                          expenses
                      
                      
                      
                      **(2,703**
                      **)**
                      
                      (2,141
                      )Interest
                          charges
                      
                      
                      
                      **(21,699**
                      **)**
                      
                      (17,323
                      )Income
                          before income taxes and loss from equity investments
                      
                      **34,809**
                      
                      
                      (8,827
                      )Income
                          taxes
                      
                      
                      
                      **(11,064**
                      **)**
                      
                      8,010Loss
                          from equity investments, net of income taxes
                      
                      
                      
                      **(379**
                      **)**
                      
                      (290
                      )Net
                          income (loss)
                      
                      
                      
                      **23,366**
                      
                      
                      (1,107
                      )Preferred
                          stock dividend requirements
                      
                      
                      
                      **412**
                      
                      
                      411Earnings
                          (loss) available for common shareholders
                      
                      **$**
                      **22,954**
                      
                      $
                      (1,518
                      )Average
                          number of common shares outstanding
                      
                      
                      
                      **82,813**
                      
                      
                      74,659Basic
                          and diluted earnings (loss) per common share
                      
                      **$**
                      **0.28**
                      
                      $
                      (0.02
                      )Cash
                          dividends per common share
                      
                      **$**
                      **0.415**
                      
                      $
                      0.415The
                          accompanying Notes to Consolidated Financial Statements
                          are an integral
                          part of these statements.
   7
  **GREAT
                        PLAINS ENERGY****Consolidated
                        Statements of Cash Flows**(Unaudited)As
                        Adjusted**Three
                        Months Ended March 31**
                    
                    **2007**
                    
                    2006**Cash
                        Flows from Operating Activities**
                    
                    (thousands)Net
                        income (loss)
                    
                    **$**
                    **23,366**
                    
                    $
                    (1,107
                    )Adjustments
                        to reconcile income to net cash from operating activities:Depreciation
                        and amortization
                    
                    
                    **45,042**
                    
                    
                    38,946Amortization
                        of:Nuclear
                        fuel
                    
                    
                    **4,161**
                    
                    
                    3,890Other
                    
                    
                    **2,735**
                    
                    
                    2,334Deferred
                        income taxes, net
                    
                    
                    **24,416**
                    
                    
                    (16,426
                    )Investment
                        tax credit amortization
                    
                    
                    **(354**
                    **)**
                    
                    (761
                    )Loss
                        from equity investments, net of income taxes
                    
                    
                    **379**
                    
                    
                    290Loss
                        on property
                    
                    
                    **3**
                    
                    
                    99Fair
                        value impacts from energy contracts
                    
                    
                    **(57,347**
                    **)**
                    
                    35,874Other
                        operating activities (Note 3)
                    
                    
                    **(37,676**
                    **)**
                    
                    (5,715
                    )Net
                        cash from operating activities
                    
                    
                    **4,725**
                    
                    
                    57,424**Cash
                        Flows from Investing Activities**Utility
                        capital expenditures
                    
                    
                    **(67,627**
                    **)**
                    
                    (73,899
                    )Allowance
                        for borrowed funds used during construction
                    
                    
                    **(3,209**
                    **)**
                    
                    (898
                    )Purchases
                        of investments and nonutility property
                    
                    
                    **(826**
                    **)**
                    
                    (2,058
                    )Proceeds
                        from sale of assets and investments
                    
                    
                    **-**
                    
                    
                    109Purchases
                        of nuclear decommissioning trust investments
                    
                    
                    **(30,455**
                    **)**
                    
                    (15,586
                    )Proceeds
                        from nuclear decommissioning trust investments
                    
                    
                    **29,530**
                    
                    
                    14,698Other
                        investing activities
                    
                    
                    **(5,044**
                    **)**
                    
                    (791
                    )Net
                        cash from investing activities
                    
                    
                    **(77,631**
                    **)**
                    
                    (78,425
                    )**Cash
                        Flows from Financing Activities**Issuance
                        of common stock
                    
                    
                    **2,847**
                    
                    
                    2,599Issuance
                        fees
                    
                    
                    **(1**
                    **)**
                    
                    (32
                    )Repayment
                        of long-term debt
                    
                    
                    **(225,000**
                    **)**
                    
                    -Net
                        change in short-term borrowings
                    
                    
                    **308,661**
                    
                    
                    35,900Dividends
                        paid
                    
                    
                    **(36,074**
                    **)**
                    
                    (31,516
                    )Other
                        financing activities
                    
                    
                    **(2,071**
                    **)**
                    
                    (1,465
                    )Net
                        cash from financing activities
                    
                    
                    **48,362**
                    
                    
                    5,486**Net
                        Change in Cash and Cash Equivalents**
                    
                    
                    **(24,544**
                    **)**
                    
                    (15,515
                    )**Cash
                        and Cash Equivalents at Beginning of Year**
                    
                    
                    **61,823**
                    
                    
                    103,068**Cash
                        and Cash Equivalents at End of Period**
                    
                    **$**
                    **37,279**
                    
                    $
                    87,553The
                        accompanying Notes to Consolidated Financial Statements are
                        an integral
                        part of these statements.
   8
  **GREAT
                        PLAINS ENERGY****Consolidated
                        Statements of Common Shareholders' Equity**(Unaudited)As
                        Adjusted**Three
                        Months Ended March 31**
                    
                    **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
                    
                    
                    **5,311,867**
                    
                    
                    **166,441**
                    
                    
                    100,507
                    
                    
                    2,599Issuance
                        of restricted common stock
                    
                    
                    **339,352**
                    
                    
                    **10,846**
                    
                    
                    46,826
                    
                    
                    1,320Equity
                        compensation expense
                    
                    
                    
                    
                    
                    **330**
                    
                    
                    
                    
                    
                    510Unearned
                        CompensationIssuance
                        of restricted common stock
                    
                    
                    
                    
                    
                    **(10,846**
                    **)**
                    
                    
                    
                    
                    (1,320
                    )Forfeiture
                        of restricted common stock
                    
                    
                    
                    
                    
                    **35**
                    
                    
                    
                    
                    
                    -Compensation
                        expense recognized
                    
                    
                    
                    
                    
                    **820**
                    
                    
                    
                    
                    
                    306Other
                    
                    
                    
                    
                    **2**
                    
                    
                    
                    
                    
                    31Ending
                        balance
                    
                    
                    **86,056,254**
                    
                    
                    **1,064,445**
                    
                    
                    74,931,157
                    
                    
                    747,903**Retained
                        Earnings**Beginning
                        balance
                    
                    
                    
                    
                    
                    **493,399**
                    
                    
                    
                    
                    
                    498,632Cumulative
                        effect of a change in accounting principle (Note 10)
                    
                    **(931**
                    **)**
                    
                    
                    
                    
                    -Net
                        income
                    
                    
                    
                    
                    
                    **23,366**
                    
                    
                    
                    
                    
                    (1,107
                    )Dividends:Common
                        stock
                    
                    
                    
                    
                    
                    **(35,663**
                    **)**
                    
                    
                    
                    
                    (31,057
                    )Preferred
                        stock - at required rates
                    
                    
                    
                    
                    
                    **(412**
                    **)**
                    
                    
                    
                    
                    (411
                    )Performance
                        shares
                    
                    
                    
                    
                    
                    **(46**
                    **)**
                    
                    
                    
                    
                    (89
                    )Ending
                        balance
                    
                    
                    
                    
                    **479,713**
                    
                    
                    
                    
                    465,968**Treasury
                        Stock**Beginning
                        balance
                    
                    
                    **(53,499**
                    **)**
                    
                    **(1,614**
                    **)**
                    
                    (43,376
                    )
                    
                    (1,304
                    )Treasury
                        shares acquired
                    
                    
                    **(18,434**
                    **)**
                    
                    **(584**
                    **)**
                    
                    (1,460
                    )
                    
                    (42
                    )Ending
                        balance
                    
                    
                    **(71,933**
                    **)**
                    
                    **(2,198**
                    **)**
                    
                    (44,836
                    )
                    
                    (1,346
                    )**Accumulated
                        Other Comprehensive Income (Loss)**Beginning
                        balance
                    
                    
                    
                    
                    
                    **(46,686**
                    **)**
                    
                    
                    
                    
                    (7,727
                    )Derivative
                        hedging activity, net of tax
                    
                    
                    
                    
                    
                    **68,369**
                    
                    
                    
                    
                    
                    (18,198
                    )Unrecognized
                        pension expense, net of tax
                    
                    
                    
                    
                    
                    **83**
                    
                    
                    
                    
                    
                    -Ending
                        balance
                    
                    
                    
                    
                    **21,766**
                    
                    
                    
                    
                    (25,925
                    )**Total
                        Common Shareholders' Equity**
                    
                    
                    
                    **$**
                    **1,563,726**
                    
                    
                    
                    $
                    1,186,600The
                        accompanying Notes to Consolidated Financial Statements are
                        an integral
                        part of these statements.
  9
  **GREAT
                        PLAINS ENERGY****Consolidated
                        Statements of Comprehensive Income**(Unaudited)As
                        Adjusted**Three
                        Months Ended March 31**
                    
                    **2007**
                    
                    2006(thousands)Net
                        income (loss)
                    
                    **$**
                    **23,366**
                    
                    $
                    (1,107
                    )Other
                        comprehensive income (loss)Gain
                        (loss) on derivative hedging instruments
                    
                    
                    **94,092**
                    
                    
                    (40,703
                    )Income
                        taxes
                    
                    
                    **(38,565**
                    **)**
                    
                    17,283Net
                        gain (loss) on derivative hedging instruments
                    
                    
                    **55,527**
                    
                    
                    (23,420
                    )Reclassification
                        to expenses, net of tax
                    
                    
                    **12,842**
                    
                    
                    5,222Derivative
                        hedging activity, net of tax
                    
                    
                    **68,369**
                    
                    
                    (18,198
                    )Change
                        in unrecognized pension expense
                    
                    
                    **135**
                    
                    
                    -Income
                        taxes
                    
                    
                    **(52**
                    **)**
                    
                    -Net
                        change in unrecognized pension expense
                    
                    
                    **83**
                    
                    
                    -Comprehensive
                        income (loss)
                    
                    **$**
                    **91,818**
                    
                    $
                    (19,305
                    )The
                        accompanying Notes to Consolidated Financial Statements are
                        an integral
                        part of thesestatements.
  10
  **KANSAS
                        CITY POWER & LIGHT COMPANY****Consolidated
                        Balance Sheets**(Unaudited)**March
                        31**
                    
                    December
                        31**2007**
                    
                    2006**ASSETS**
                    
                    (thousands)**Current
                        Assets**Cash
                        and cash equivalents
                    
                    **$**
                    **2,323**
                    
                    $
                    1,788Receivables,
                        net
                    
                    
                    **88,127**
                    
                    
                    114,294Fuel
                        inventories, at average cost
                    
                    
                    **29,677**
                    
                    
                    27,811Materials
                        and supplies, at average cost
                    
                    
                    **60,229**
                    
                    
                    59,829Deferred
                        refueling outage costs
                    
                    
                    **11,818**
                    
                    
                    13,921Refundable
                        income taxes
                    
                    
                    **5,442**
                    
                    
                    7,229Deferred
                        income taxes
                    
                    
                    **812**
                    
                    
                    52Prepaid
                        expenses
                    
                    
                    **8,956**
                    
                    
                    9,673Derivative
                        instruments
                    
                    
                    **921**
                    
                    
                    179Total
                    
                    
                    **208,305**
                    
                    
                    234,776**Nonutility
                        Property and Investments**Nuclear
                        decommissioning trust fund
                    
                    
                    **106,163**
                    
                    
                    104,066Other
                    
                    
                    **6,389**
                    
                    
                    6,480Total
                    
                    
                    **112,552**
                    
                    
                    110,546**Utility
                        Plant, at Original Cost**Electric
                    
                    
                    **5,302,130**
                    
                    
                    5,268,485Less-accumulated
                        depreciation
                    
                    
                    **2,491,508**
                    
                    
                    2,456,199Net
                        utility plant in service
                    
                    
                    **2,810,622**
                    
                    
                    2,812,286Construction
                        work in progress
                    
                    
                    **257,443**
                    
                    
                    214,493Nuclear
                        fuel, net of amortization of $107,542 and $103,381
                    
                    
                    **36,333**
                    
                    
                    39,422Total
                    
                    
                    **3,104,398**
                    
                    
                    3,066,201**Deferred
                        Charges and Other Assets**Regulatory
                        assets
                    
                    
                    **427,481**
                    
                    
                    434,392Derivative
                        instruments
                    
                    
                    **65**
                    
                    
                    -Other
                    
                    
                    **14,698**
                    
                    
                    13,584Total
                    
                    
                    **442,244**
                    
                    
                    447,976Total
                    
                    **$**
                    **3,867,499**
                    
                    $
                    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)**March
                        31**
                    
                    December
                        31**2007**
                    
                    2006**LIABILITIES
                        AND CAPITALIZATION**
                    
                    (thousands)**Current
                        Liabilities**Intercompany
                        payables to Great Plains Energy
                    
                    **$**
                    **225,600**
                    
                    $
                    550Commercial
                        paper
                    
                    
                    **224,061**
                    
                    
                    156,400Current
                        maturities of long-term debt
                    
                    
                    **500**
                    
                    
                    225,500EIRR
                        bonds classified as current
                    
                    
                    **145,291**
                    
                    
                    144,742Accounts
                        payable
                    
                    
                    **143,936**
                    
                    
                    181,805Accrued
                        taxes
                    
                    
                    **34,180**
                    
                    
                    18,165Accrued
                        interest
                    
                    
                    **14,290**
                    
                    
                    12,461Accrued
                        payroll and vacations
                    
                    
                    **21,171**
                    
                    
                    24,641Pension
                        and post-retirement liability
                    
                    
                    **841**
                    
                    
                    841Derivative
                        instruments
                    
                    
                    **1,837**
                    
                    
                    2,687Other
                    
                    
                    **8,300**
                    
                    
                    8,469Total
                    
                    
                    **820,007**
                    
                    
                    776,261**Deferred
                        Credits and Other Liabilities**Deferred
                        income taxes
                    
                    
                    **645,428**
                    
                    
                    660,046Deferred
                        investment tax credits
                    
                    
                    **28,104**
                    
                    
                    28,458Asset
                        retirement obligations
                    
                    
                    **92,601**
                    
                    
                    91,824Pension
                        liability
                    
                    
                    **130,876**
                    
                    
                    132,216Regulatory
                        liabilities
                    
                    
                    **116,340**
                    
                    
                    114,674Derivative
                        instruments
                    
                    
                    **-**
                    
                    
                    39Other
                    
                    
                    **75,652**
                    
                    
                    65,651Total
                    
                    
                    **1,089,001**
                    
                    
                    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
                    
                    
                    **322,622**
                    
                    
                    354,802Accumulated
                        other comprehensive income
                    
                    
                    **6,985**
                    
                    
                    6,685Total
                    
                    
                    **1,351,263**
                    
                    
                    1,383,143Long-term
                        debt (Note 7)
                    
                    
                    **607,228**
                    
                    
                    607,187Total
                    
                    
                    **1,958,491**
                    
                    
                    1,990,330**Commitments
                        and Contingencies (Note 12)**Total
                    
                    **$**
                    **3,867,499**
                    
                    $
                    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)As
                        Adjusted**Three
                        Months Ended March 31**
                    
                    **2007**
                    
                    2006**Operating
                        Revenues**
                    
                    (thousands)Electric
                        revenues
                    
                    **$**
                    **255,652**
                    
                    $
                    240,390**Operating
                        Expenses**Fuel
                    
                    
                    **52,664**
                    
                    
                    46,500Purchased
                        power
                    
                    
                    **16,355**
                    
                    
                    5,117Skill
                        set realignment costs
                    
                    
                    **-**
                    
                    
                    9,293Other
                    
                    
                    **73,795**
                    
                    
                    62,440Maintenance
                    
                    
                    **29,834**
                    
                    
                    21,947Depreciation
                        and amortization
                    
                    
                    **43,011**
                    
                    
                    37,000General
                        taxes
                    
                    
                    **26,873**
                    
                    
                    26,289Loss
                        on property
                    
                    
                    **3**
                    
                    
                    97Total
                    
                    
                    **242,535**
                    
                    
                    208,683Operating
                        income
                    
                    
                    **13,117**
                    
                    
                    31,707Non-operating
                        income
                    
                    
                    **3,573**
                    
                    
                    1,713Non-operating
                        expenses
                    
                    
                    **(1,413**
                    **)**
                    
                    (1,057
                    )Interest
                        charges
                    
                    
                    **(18,210**
                    **)**
                    
                    (14,858
                    )Income
                        (loss) before income taxes
                    
                    
                    **(2,933**
                    **)**
                    
                    17,505Income
                        taxes
                    
                    
                    **4,931**
                    
                    
                    (4,493
                    )Net
                        income
                    
                    **$**
                    **1,998**
                    
                    $
                    13,012The
                        disclosures regarding consolidated KCP&L included in the accompanying
                        Notes toConsolidated
                        Financial Statements are an integral part of these
                        statements.
  13
  **KANSAS
                        CITY POWER & LIGHT COMPANY****Consolidated
                        Statements of Cash Flows**(Unaudited)As
                        Adjusted**Three
                        Months Ended March 31**
                    
                    **2007**
                    
                    2006**Cash
                        Flows from Operating Activities**
                    
                    (thousands)Net
                        income
                    
                    **$**
                    **1,998**
                    
                    $
                    13,012Adjustments
                        to reconcile income to net cash from operating activities:Depreciation
                        and amortization
                    
                    
                    **43,011**
                    
                    
                    37,000Amortization
                        of:Nuclear
                        fuel
                    
                    
                    **4,161**
                    
                    
                    3,890Other
                    
                    
                    **1,690**
                    
                    
                    1,650Deferred
                        income taxes, net
                    
                    
                    **1,339**
                    
                    
                    (1,996
                    )Investment
                        tax credit amortization
                    
                    
                    **(354**
                    **)**
                    
                    (761
                    )Loss
                        on property
                    
                    
                    **3**
                    
                    
                    97Other
                        operating activities (Note 3)
                    
                    
                    **(10,469**
                    **)**
                    
                    1,392Net
                        cash from operating activities
                    
                    
                    **41,379**
                    
                    
                    54,284**Cash
                        Flows from Investing Activities**Utility
                        capital expenditures
                    
                    
                    **(67,627**
                    **)**
                    
                    (73,899
                    )Allowance
                        for borrowed funds used during construction
                    
                    
                    **(3,209**
                    **)**
                    
                    (898
                    )Purchases
                        of nonutility property
                    
                    
                    **(6**
                    **)**
                    
                    (28
                    )Proceeds
                        from sale of assets
                    
                    
                    **-**
                    
                    
                    109Purchases
                        of nuclear decommissioning trust investments
                    
                    
                    **(30,455**
                    **)**
                    
                    (15,586
                    )Proceeds
                        from nuclear decommissioning trust investments
                    
                    
                    **29,530**
                    
                    
                    14,698Other
                        investing activities
                    
                    
                    **(2,787**
                    **)**
                    
                    (791
                    )Net
                        cash from investing activities
                    
                    
                    **(74,554**
                    **)**
                    
                    (76,395
                    )**Cash
                        Flows from Financing Activities**Repayment
                        of long-term debt
                    
                    
                    **(225,000**
                    **)**
                    
                    -Net
                        change in short-term borrowings
                    
                    
                    **292,711**
                    
                    
                    41,900Dividends
                        paid to Great Plains Energy
                    
                    
                    **(34,000**
                    **)**
                    
                    (20,000
                    )Issuance
                        fees
                    
                    
                    **(1**
                    **)**
                    
                    (32
                    )Net
                        cash from financing activities
                    
                    
                    **33,710**
                    
                    
                    21,868**Net
                        Change in Cash and Cash Equivalents**
                    
                    
                    **535**
                    
                    
                    (243
                    )**Cash
                        and Cash Equivalents at Beginning of Year**
                    
                    
                    **1,788**
                    
                    
                    2,961**Cash
                        and Cash Equivalents at End of Period**
                    
                    **$**
                    **2,323**
                    
                    $
                    2,718The
                        disclosures regarding consolidated KCP&L included in the accompanying
                        Notes to Consolidated FinancialStatements
                        are an integral part of these statements.
  14
  **KANSAS
                        CITY POWER & LIGHT COMPANY****Consolidated
                        Statements of Common Shareholder's Equity**(Unaudited)As
                        Adjusted**Three
                        Months Ended March 31**
                    
                    **2007**
                    
                    2006**Shares**
                    
                    **Amount**
                    
                    Shares
                    
                    Amount(thousands,
                        except share amounts)**Common
                        Stock**
                    
                    
                    **1**
                    
                    **$**
                    **1,021,656**
                    
                    
                    1
                    
                    $
                    887,041**Retained
                        Earnings**Beginning
                        balance
                    
                    
                    
                    
                    
                    **354,802**
                    
                    
                    
                    
                    
                    294,481Cumulative
                        effect of a change in accounting principle (Note 10)
                    
                    **(178**
                    **)**
                    
                    
                    
                    
                    -Net
                        income
                    
                    
                    
                    
                    
                    **1,998**
                    
                    
                    
                    
                    
                    13,012Dividends:Common
                        stock held by Great Plains Energy
                    
                    
                    
                    
                    
                    **(34,000**
                    **)**
                    
                    
                    
                    
                    (20,000
                    )Ending
                        balance
                    
                    
                    
                    
                    **322,622**
                    
                    
                    
                    
                    287,493**Accumulated
                        Other Comprehensive Income (Loss)**Beginning
                        balance
                    
                    
                    
                    
                    
                    **6,685**
                    
                    
                    
                    
                    
                    (29,909
                    )Derivative
                        hedging activity, net of tax
                    
                    
                    
                    
                    
                    **300**
                    
                    
                    
                    
                    
                    2,059Ending
                        balance
                    
                    
                    
                    
                    **6,985**
                    
                    
                    
                    
                    (27,850
                    )**Total
                        Common Shareholder's Equity**
                    
                    
                    
                    **$**
                    **1,351,263**
                    
                    
                    
                    $
                    1,146,684The
                        disclosures regarding consolidated KCP&L included in the accompanying
                        Notes to Consolidated FinancialStatements
                      are an integral part of these
                      statements.
  15
  **KANSAS
                        CITY POWER & LIGHT COMPANY****Consolidated
                        Statements of Comprehensive Income**(Unaudited)As
                        Adjusted**Three
                        Months Ended March 31**
                    
                    **2007**
                    
                    2006(thousands)Net
                        income
                    
                    **$**
                    **1,998**
                    
                    $
                    13,012Other
                        comprehensive incomeGain
                        on derivative hedging instruments
                    
                    
                    **580**
                    
                    
                    3,399Income
                        taxes
                    
                    
                    **(217**
                    **)**
                    
                    (1,278
                    )Net
                        gain on derivative hedging instruments
                    
                    
                    **363**
                    
                    
                    2,121Reclassification
                        to expenses, net of tax
                    
                    
                    **(63**
                    **)**
                    
                    (62
                    )Derivative
                        hedging activity, net of tax
                    
                    
                    **300**
                    
                    
                    2,059Comprehensive
                        income
                    
                    **$**
                    **2,298**
                    
                    $
                    15,071The
                        disclosures regarding consolidated KCP&L included in the accompanying
                        Notes toConsolidated
                        Financial Statements are an integral part of these
                        statements.





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
                      indirect
                      interests 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 $6.5 million and $8.8
              million at March
              31, 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 (Loss) Per Common Share Calculation**
 There
              was
              no significant dilutive effect on Great Plains Energy’s EPS from other
              securities for the three months ended March 31, 2007 and 2006. To determine
              basic EPS, preferred stock dividend requirements are deducted from
              net income
              (loss) 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 PRIDES SM .
  The
              following table reconciles Great Plains Energy’s basic and diluted
              EPS.
 **As
                          Adjusted****Three
                          Months Ended March 31**
                      
                      **2007**
                      
                      **2006****Income**
                      (millions,
                          except per share amounts)Net
                          income (loss)
                      
                      $
                      23.4
                      
                      $
                      (1.1)Less:
                          preferred stock dividend requirements
                      
                      
                      0.4
                      
                      
                      0.4Earnings
                          (loss) available for common shareholders
                      
                      $
                      23.0
                      
                      $
                      (1.5)**Common
                          Shares Outstanding**Average
                          number of common shares outstanding
                      
                      
                      82.8
                      
                      
                      74.7Add:
                          effect of dilutive securities
                      
                      
                      0.5
                      
                      
                      -Diluted
                          average number of common shares outstanding
                      
                      
                      83.3
                      
                      
                      74.7**Basic
                          and diluted EPS**
                      
                      $
                      0.28
                      
                      $
                      (0.02)
 The
                computation of diluted EPS for the three months ended March 31, 2007 ,
                excludes anti-dilutive shares of 116,008 performance shares and 339,352
                restricted stock shares. Additionally, 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.
 At
          March
          31, 2006 ,
          203,319
          performance shares, 166,792 restricted stock shares, 109,472 stock options
          and
          6.5 million FELINE PRIDES were excluded from the diluted earnings calculation
          because the Company had a net loss; therefore, no potential common shares
          are
          included in the calculation because the effect is anti-dilutive.
  In
          May
          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 June 20, 2007, to shareholders of record
          as of
          May 30, 2007. The Board of Directors also declared regular dividends on
          Great
          Plains Energy’s preferred stock, payable September 1, 2007, to shareholders of
          record as of August 13, 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). Immediately prior to Great
          Plains
          Energy’s acquisition of Aquila, Black Hills Corporation 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 Public Service and St. Joseph Light
&
Power divisions, as well as Aquila’s merchant service operations, which
          primarily consists of the 340MW Crossroads power generating facility and
          residual natural gas contracts.
  Great
          Plains Energy will acquire all outstanding shares of Aquila for $1.80 in
          cash
          plus 0.0856 a share of Great Plains Energy common stock for each share
          of Aquila
          common stock in a transaction valued at approximately $1.7 billion, or
          $4.54 per
          share, based on Great Plains Energy’s closing stock price on
 18
 February
          6, 2007. In addition, Great Plains Energy will assume approximately $1
          billion
          of Aquila’s debt. The proceeds from the asset sale to Black Hills Corporation
          will be used to fund substantially all of the cash portion of the consideration
          to Aquila shareholders and to reduce existing Aquila debt.
  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 of 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; 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. In May 2007, Great Plains Energy filed with the Securities and
          Exchange
          Commission (SEC), a registration statement including a joint proxy with
          Aquila
          for the Great Plains Energy and Aquila special shareholder meetings expected
          to
          occur in the third quarter of 2007.
  Direct
          transaction costs of the acquisition incurred by Great Plains Energy of
          $9.9
          million at March
          31, 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 non-incremental 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 non-incremental labor costs, were
          insignificant for the three months ended March 31, 2007. The MPSC and KCC
          applications proposed to regulators that 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.
  19
 **3.**
              **SUPPLEMENTAL
                  CASH FLOW INFORMATION**
 ***Great
                    Plains Energy Other Operating Activities*****As
                    Adjusted****Three
                    Months Ended March 31**
                
                **2007**
                **2006**Cash
                    flows affected by changes in:
                
                (millions)Receivables
                
                $
                12.7
                
                $
                18.3Fuel
                    inventories
                
                
                (2.0
                )
                
                (4.1
                )Materials
                    and supplies
                
                
                (0.4
                )
                
                (0.5
                )Accounts
                    payable
                
                
                (37.6
                )
                
                (29.3
                )Accrued
                    taxes
                
                
                1.0
                
                
                4.8Accrued
                    interest
                
                
                2.0
                
                
                (0.2
                )Deferred
                    refueling outage costs
                
                
                2.1
                
                
                1.5Pension
                    and post-retirement benefit assets and obligations
                
                
                6.7
                
                
                4.7Allowance
                    for equity funds used during construction
                
                
                (0.1
                )
                
                (0.9
                )Deferred
                    merger costs
                
                
                (7.1
                )
                
                -Other
                
                
                (15.0
                )
                
                -Total
                    other operating activities
                
                $
                (37.7
                )
                $
                (5.7
                )Cash
                    paid during the period:Interest
                
                $
                18.6
                
                $
                16.8Income
                    taxes
                
                $
                3.2
                
                $
                14.0Non-cash
                    investing activities:Liabilities
                    assumed for capital expenditures
                
                $
                36.5
                
                $
                17.0
  ***Consolidated
                      KCP&L Other Operating Activities*****As
                      Adjusted****Three
                      Months Ended March 31**
                  
                  **2007**
                  **2006**Cash
                      flows affected by changes in:
                  
                  (millions)Receivables
                  
                  $
                  26.2
                  
                  $
                  5.9Fuel
                      inventories
                  
                  
                  (2.0
                  )
                  
                  (4.1
                  )Materials
                      and supplies
                  
                  
                  (0.4
                  )
                  
                  (0.5
                  )Accounts
                      payable
                  
                  
                  (51.3
                  )
                  
                  (16.8
                  )Accrued
                      taxes
                  
                  
                  13.1
                  
                  
                  11.8Accrued
                      interest
                  
                  
                  1.9
                  
                  
                  (0.2
                  )Deferred
                      refueling outage costs
                  
                  
                  2.1
                  
                  
                  1.5Pension
                      and post-retirement benefit assets and obligations
                  
                  
                  6.1
                  
                  
                  4.3Allowance
                      for equity funds used during construction
                  
                  
                  (0.1
                  )
                  
                  (0.9
                  )Other
                  
                  
                  (6.1
                  )
                  
                  0.4Total
                      other operating activities
                  
                  $
                  (10.5
                  )
                  $
                  1.4Cash
                      paid during the period:Interest
                  
                  $
                  15.8
                  
                  $
                  14.5Income
                      taxes
                  
                  $
                  -
                  
                  $
                  11.4Non-cash
                      investing activities:Liabilities
                      assumed for capital expenditures
                  
                  $
                  36.4
                  
                  $
                  16.6
 **Significant
        Non-Cash Items**
 In
          February 2007, Great Plains Energy issued $163.6 million of common stock
          in
          satisfaction of the FELINE PRIDES stock purchase contracts and the retirement
          of
          the $163.6 million FELINE PRIDES Senior Notes.
  20
 **4.**
              **RECEIVABLES**  The
          Company’s receivables are detailed in the following table .
 **March
                      31**
                  **December
                      31****2007**
                  **2006****Consolidated
                      KCP&L**
                  (millions)Customer
                      accounts receivable(a)
                  
                  $
                  29.7
                  $
                  35.2Allowance
                      for doubtful accounts
                  
                  
                  (1.1)
                  
                  (1.1
                  )Other
                      receivables
                  
                  
                  59.5
                  
                  80.2Consolidated
                      KCP&L receivables
                  
                  
                  88.1
                  
                  114.3**Other
                      Great Plains Energy**Other
                      receivables
                  
                  
                  247.0
                  
                  229.2Allowance
                      for doubtful accounts
                  
                  
                  (8.3)
                  
                  (4.1
                  )Great
                      Plains Energy receivables
                  
                  $
                  326.8
                  
                  $
                  339.4(a)Customer
                      accounts receivable included unbilled receivables of $29.7
                      millionand
                      $32.0 million at March 31, 2007, and December 31, 2006,
                      respectively.
  Consolidated
          KCP&L’s other receivables at March 31, 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 March 31, 2007, and December 31, 2006, consisted primarily
          of
          accounts receivable held by Strategic Energy, including unbilled receivables
          of
          $120.8 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.
  Information
          regarding KCP&L’s sale of accounts receivable to Receivables Company is
          reflected in the following tables .
 **Receivables**
                  
                  **Consolidated****Three
                      Months Ended March 31, 2007**
                  
                  **KCP&L**
                  
                  **Company**
                  
                  **KCP&L**(millions)Receivables
                      (sold) purchased
                  
                  $
                  (225.8
                  )
                  $
                  225.8
                  
                  $
                  -Gain
                      (loss) on sale of accounts receivable(a)
                  
                  
                  (2.5
                  )
                  
                  2.3
                  
                  
                  (0.2)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
                  
                  
                  (231.9
                  )
                  
                  231.9
                  
                  
                  -Cash
                      paid to KCP&L for receivables purchased
                  
                  
                  229.6
                  
                  
                  (229.6
                  )
                  
                  -Servicing
                      fees
                  
                  
                  0.7
                  
                  
                  (0.7
                  )
                  
                  -Interest
                      on intercompany note
                  
                  
                  0.6
                  
                  
                  (0.6
                  )
                  
                  -
  21
 **Receivables**
                
                **Consolidated****Three
                    Months Ended March 31, 2006**
                
                **KCP&L**
                
                **Company**
                
                **KCP&L**(millions)Receivables
                    (sold) purchased
                
                $
                (197.2
                )
                $
                197.2
                
                $
                -Gain
                    (loss) on sale of accounts receivable(a)
                
                
                (2.0
                )
                
                2.1
                
                
                0.1Servicing
                    fees
                
                
                0.6
                
                
                (0.6
                )
                
                -Fees
                    to outside investor
                
                
                -
                
                
                (0.8
                )
                
                (0.8)**Cash
                    flows during the period**Cash
                    from customers transferred toReceivables
                    Company
                
                
                (212.5
                )
                
                212.5
                
                
                -Cash
                    paid to KCP&L for receivables purchased
                
                
                210.4
                
                
                (210.4
                )
                
                -Servicing
                    fees
                
                
                0.6
                
                
                (0.6
                )
                
                -Interest
                    on intercompany note
                
                
                0.3
                
                
                (0.3
                )
                
                -(a)Any
                      net gain (loss) is the result of the timing difference inherent
                      in
                      collecting receivables andover
                  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.
  ***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 of until the next scheduled outage.
              Replacement power costs during the outage are expensed as incurred.
  22
 There
              were no overall impacts to the March 31, 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 March 31, 2006, was a $1.0 million increase in net income, or
              $0.01 per
              share. The following line items within the consolidated statements
              of income
              were impacted by the change.
 **As****Originally
                    Reported****Three
                    Months Ended**
                **As**
                
                **Effect
                    of****March
                    31, 2006**
                **Adjusted**
                
                **Change****Great
                    Plains Energy**
                (millions)Fuel
                
                
                $  
                    47.4
                
                $
                46.5
                
                $
                (0.9)Other
                
                
                76.2
                
                
                76.1
                
                
                (0.1)Maintenance
                
                
                22.6
                
                
                22.0
                
                
                (0.6)Income
                    taxes
                
                
                8.7
                
                
                8.1
                
                
                (0.6)**Consolidated
                    KCP&L**Fuel
                
                
                $   47.4
                
                $
                46.5
                
                $
                (0.9)Other
                
                
                62.5
                
                
                62.4
                
                
                (0.1)Maintenance
                
                
                22.6
                
                
                22.0
                
                
                (0.6)Income
                    taxes
                
                
                (3.9)
                
                
                (4.5)
                
                
                (0.6)
 **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 emissions. See Note 12 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
          withdrew its appeal of KCC’s approval of KCP&L’s regulatory plan and 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.
  23
 **Regulatory
          Assets and Liabilities**
 The
          table
          that follows updates KCP&L’s regulatory assets and liabilities for activity
          since disclosed in Note 6 of Great Plains Energy’s and KCP&L’s 2006 Form
          10-K.
 **March
                    31**
                
                **December
                    31****2007**
                
                **2006****Regulatory
                    Assets**
                
                (millions)Taxes
                    recoverable through future rates
                
                $
                80.5
                
                $
                81.7Decommission
                    and decontaminate federal uraniumenrichment
                    facilities
                
                
                0.4
                
                
                0.6Loss
                    on reacquired debt
                
                
                6.2
                
                
                6.4January
                    2002 incremental ice storm costs (Missouri)
                
                
                -
                
                
                0.4Change
                    in depreciable life of Wolf Creek
                
                
                45.4
                
                
                45.4Cost
                    of removal
                
                
                8.8
                
                
                8.2Asset
                    retirement obligations
                
                
                17.3
                
                
                16.9SFAS
                    158 pension and post-retirement costs
                
                
                179.8
                
                
                190.0Other
                    pension and post-retirement costs
                
                
                70.4
                
                
                66.9Surface
                    Transportation Board litigation expenses
                
                
                1.6
                
                
                1.7Deferred
                    customer programs
                
                
                7.1
                
                
                5.92006
                    rate case expenses
                
                
                2.4
                
                
                2.62007
                    rate case expenses
                
                
                0.3
                
                
                -Other
                
                
                7.3
                
                
                7.7Total
                
                $
                427.5
                
                $
                434.4**Regulatory
                    Liabilities**Emission
                    allowances
                
                $
                64.5
                
                $
                64.5Asset
                    retirement obligations
                
                
                37.2
                
                
                35.6Additional
                    Wolf Creek amortization (Missouri)
                
                
                14.6
                
                
                14.6Total
                
                $
                116.3
                
                $
                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 SFAS
          158 pension and post-retirement costs at March 31, 2007, includes $15.1
          million,
          net of related liabilities, not included in rate base representing the
          difference between funding and expenses recognized of the pension and
          post-retirement plans, which will be amortized in accordance with Statement
          of
          Financial Accounting Standards (SFAS) No. 87, “Employers’ Accounting for
          Pensions.” The regulatory asset for other pension and post-retirement costs at
          March 31, 2007, includes $27.0 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,
 24
 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, 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
          March
          2007, FERC released 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 may attempt
          to
          appeal and some, including Strategic Energy, have filed requests for rehearing
          of certain of the FERC determinations. 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 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 March 31, 2007, Strategic Energy recorded
          a
          reduction of purchased power expenses of $0.9 million for a SECA transmission
          owner recovery. For the same period in 2006, Strategic Energy recorded
          purchased
          power expense of $2.7 million and billed $0.4 million 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 three months ended March 31, 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.  Management does not
          believe there will be any adverse actions or events as an outcome of this
          investigation beyond the amount of penalty recorded at March 31,
          2007.
  25
 **7.**
              **CAPITALIZATION**  Great
          Plains Energy and consolidated KCP&L’s long-term debt is detailed in the
          following table .
 **March
                      31**
                  
                  **December
                      31****Year
                      Due**
                  
                  **2007**
                  
                  **2006****Consolidated
                      KCP&L**
                  
                  
                  
                  (millions)General
                      Mortgage Bonds7.95%
                      Medium-Term Notes
                  
                  2007
                  
                  $
                  0.5
                  
                  $
                  0.53.75%*
                      EIRR bonds
                  
                  2012-2035
                  
                  
                  158.8
                  
                  
                  158.8Senior
                      Notes6.00%
                  
                  
                  
                  
                  -
                  
                  
                  225.06.50%
                  
                  2011
                  
                  
                  150.0
                  
                  
                  150.06.05%
                  
                  2035
                  
                  
                  250.0
                  
                  
                  250.0Unamortized
                      discount
                  
                  
                  
                  
                  (1.6)
                  
                  
                  (1.6)EIRR
                      bonds4.75%
                      Series A & B
                  
                  2015
                  
                  
                  105.6
                  
                  
                  105.24.75%
                      Series D
                  
                  2017
                  
                  
                  39.7
                  
                  
                  39.54.65%
                      Series 2005
                  
                  2035
                  
                  
                  50.0
                  
                  
                  50.0Current
                      liabilitiesCurrent
                      maturities
                  
                  
                  
                  
                  (0.5)
                  
                  
                  (225.5)EIRR
                      bonds classified as current
                  
                  
                  
                  
                  (145.3)
                  
                  
                  (144.7)Total
                      consolidated KCP&L excluding current maturities
                  
                  
                  
                  
                  607.2
                  
                  
                  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
                  $
                  607.5
                  
                  $
                  607.5*
                      Weighted-average interest rates at March 31, 2007.
 **Effective
            Interest Rates on KCP&L’s Unsecured Notes at March 31,
            2007**
 Interest
            rate swaps on KCP&L’s Series A, B and D EIRR bonds resulted in an effective
            interest rate of 5.85%. 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%.
  **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 March 31**
                
                **2007**
                
                **2006**(millions)Consolidated
                    KCP&L
                
                $
                0.5
                
                $
                0.5Other
                    Great Plains Energy
                
                
                0.6
                
                
                0.2Total
                    Great Plains Energy
                
                $
                1.1
                
                $
                0.7
 **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,
 26
 as
          defined in the agreement, not greater than 0.65 to 1.00 at all times. At
          March
          31, 2007, the Company was in compliance with this covenant. At March 31,
          2007,
          Great Plains Energy had $241.0 million of outstanding borrowings with a
          weighted
          average interest rate of 5.68% and had issued letters of credit totaling
          $110.8 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. 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. 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 March 31, 2007, KCP&L was in compliance with
          this covenant. At March 31, 2007, KCP&L had $224.1 million of commercial
          paper outstanding, at a weighted-average interest rate of 5.52%, $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.
  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 March 31,
          2007,
          Strategic Energy was in compliance with these covenants. At March 31, 2007,
          $42.5 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 had been issued and there were no cash borrowings under
          the
          agreement.
  **8.**
              **PENSION
                  PLANS AND OTHER EMPLOYEE BENEFITS**  **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. Pension benefits under
          these plans reflect the employees’ compensation, years of service and age at
          retirement.
  27
 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 to enhance medical benefits for the management
          employees.  The change, to be reflected in the second quarter, will
          increase the accumulated post-retirement benefit obligation $19.5 million
          and
          will increase post-retiremnet expense $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.
  The
          following table provides the components of net periodic benefit costs prior
          to
          the effects of capitalization and sharing with joint-owners of power
          plants.
 **Pension
                    Benefits**
                
                **Other
                    Benefits****Three
                    Months Ended March 31**
                
                **2007**
                
                **2006**
                
                **2007**
                
                **2006****Components
                    of net periodic benefit cost**
                
                (millions)Service
                    cost
                
                $
                4.5
                
                $
                4.7
                
                $
                0.2
                
                $
                0.2Interest
                    cost
                
                
                7.4
                
                
                7.7
                
                
                0.8
                
                
                0.7Expected
                    return on plan assets
                
                
                (7.3
                )
                
                (8.2
                )
                
                (0.2
                )
                
                (0.1
                )Prior
                    service cost
                
                
                1.1
                
                
                1.1
                
                
                -
                
                
                0.1Recognized
                    net actuarial loss
                
                
                8.8
                
                
                8.0
                
                
                0.2
                
                
                0.2Transition
                    obligation
                
                
                -
                
                
                -
                
                
                0.3
                
                
                0.3Termination
                    charge
                
                
                -
                
                
                -
                
                
                0.3
                
                
                -Net
                    periodic benefit cost beforeregulatory
                    adjustment
                
                
                14.5
                
                
                13.3
                
                
                1.6
                
                
                1.4Regulatory
                    adjustment
                
                
                (2.0
                )
                
                (7.6
                )
                
                -
                
                
                -Net
                    periodic benefit cost
                
                $
                12.5
                
                $
                5.7
                
                $
                1.6
                
                $
                1.4
 **9.**
              **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. The following table summarizes Great Plains Energy’s and
          KCP&L’s equity compensation expense and associated income tax
          benefits.
 **Three
                    Months Ended March 31**
                
                **2007**
                
                **2006****Compensation
                    expense**
                
                (millions)Great
                    Plains Energy
                
                $
                1.1
                
                $
                0.8KCP&L
                
                
                0.8
                
                
                0.4**Income
                    tax benefits**Great
                    Plains Energy
                
                
                0.4
                
                
                0.1KCP&L
                
                
                0.3
                
                
                -
  28
 **Performance
        Shares**
 Performance
          share activity for the three months ended March 31, 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
                  
                  
                  118,511
                  
                  
                  31.96Issued
                  
                  
                  (42,169
                  )
                  
                  30.27Forfeited
                  
                  
                  (2,503
                  )
                  
                  31.96Ending
                      balance
                  
                  
                  306,540
                  
                  
                  30.32*
                      weighted-average
  At
        March
        31, 2007, the remaining weighted-average contractual term was 1.9
        years .
        The
        weighted-average grant-date fair value of shares granted for the three months
        ended March 31, 2007 and 2006, was $31.96 and $28.20, respectively. At March
        31,
        2007, there was $4.9 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.  The total
        fair value of shares issued was $1.3 million during the three months ended
        March
        31, 2007, was $0.3 million for the same period in 2006.
 **Restricted
          Stock**
 Restricted
          stock activity for the three months ended March 31, 2007, is summarized
          in the
          following table.
 **Nonvested**
                
                
                
                **Grant
                    Date****Restricted
                    stock**
                
                **Shares**
                
                **Fair
                    Value***Beginning
                    balance
                
                
                140,603
                
                $
                29.75Issued
                
                
                339,352
                
                
                31.96Vested
                
                
                (8,965
                )
                
                30.27Forfeited
                
                
                (1,215
                )
                
                28.81Ending
                    balance
                
                
                469,775
                
                
                31.34*
                    weighted-average
 At
          March
          31, 2007, the remaining weighted-average contractual term was 2.1
          years .
          The
          weighted-average grant-date fair value of shares granted for the three
          months
          ended March 31, 2007 and 2006 was $31.96 and $28.20, respectively. As of
          March
          31, 2007, there was $9.7 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 March 31, 2007,
          was $0.3
          million and no shares vested for the same period in 2006.
 29
 **10.**
                **TAXES**  Components
            of income tax expense (benefit) are detailed in the following tables .
 **Great
                    Plains Energy**
                
                
                **As
                    Adjusted****Three
                    Months Ended March 31**
                
                **2007**
                **2006**Current
                    income taxes
                
                (millions)Federal
                
                $
                (10.4
                )
                $
                10.5State
                
                
                (2.6
                )
                
                (0.2
                )Total
                
                
                (13.0
                )
                
                10.3Deferred
                    income taxesFederal
                
                
                19.3
                
                
                (13.5
                )State
                
                
                5.1
                
                
                (4.1
                )Total
                
                
                24.4
                
                
                (17.6
                )Investment
                    tax credit amortization
                
                
                (0.4
                )
                
                (0.8
                )Total
                
                $
                11.0
                
                $
                (8.1
                )
 **Consolidated
                    KCP&L**
                
                
                **As
                    Adjusted****Three
                    Months Ended March 31**
                
                **2007**
                **2006**Current
                    income taxes
                
                (millions)Federal
                
                $
                (5.5
                )
                $
                6.6State
                
                
                (0.3
                )
                
                0.7Total
                
                
                (5.8
                )
                
                7.3Deferred
                    income taxesFederal
                
                
                1.2
                
                
                (1.7
                )State
                
                
                0.1
                
                
                (0.3
                )Total
                
                
                1.3
                
                
                (2.0
                )Investment
                    tax credit amortization
                
                
                (0.4
                )
                
                (0.8
                )Total
                
                $
                (4.9
                )
                $
                4.5
 **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 March 31**
                
                **2007**
                
                **2006**
                
                **2007**
                
                **2006**Federal
                    statutory income tax
                
                $
                12.0
                $
                (3.2)
                
                35.0
                %
                
                35.0
                %Differences
                    between book and taxdepreciation
                    not normalized
                
                
                0.9
                
                0.2
                
                2.5
                
                
                (2.6
                )Amortization
                    of investment tax credits
                
                
                (0.4)
                
                (0.8)
                
                (1.0
                )
                
                8.4Federal
                    income tax credits
                
                
                (2.1)
                
                (1.2)
                
                (6.2
                )
                
                13.1State
                    income taxes
                
                
                1.7
                
                (1.8)
                
                4.9
                
                
                20.1Changes
                    in uncertain tax positions, net
                
                
                (0.2)
                
                (0.8)
                
                (0.7
                )
                
                8.6Other
                
                
                (0.9)
                
                (0.5)
                
                (2.4
                )
                
                5.3Total
                
                $
                11.0
                $
                (8.1)
                
                32.1
                %
                
                87.9
                %
  30
 **Income
                    Tax Expense**
                
                **Income
                    Tax Rate****Consolidated
                    KCP&L**
                
                
                **As
                    Adjusted**
                
                **As
                    Adjusted****Three
                    Months Ended March 31**
                
                **2007**
                
                **2006**
                
                **2007**
                
                **2006**Federal
                    statutory income tax
                
                $
                (1.0)
                $
                6.1
                
                35.0
                %
                
                35.0
                %Differences
                    between book and taxdepreciation
                    not normalized
                
                
                0.9
                
                0.2
                
                (29.9
                )
                
                1.4Federal
                    income tax credits
                
                
                (1.8)
                
                -
                
                61.7
                
                
                -Amortization
                    of investment tax credits
                
                
                (0.4)
                
                (0.8)
                
                12.1
                
                
                (4.4
                )State
                    income taxes
                
                
                (0.1)
                
                0.4
                
                2.2
                
                
                2.2Changes
                    in uncertain tax positions, net
                
                
                (0.2)
                
                0.1
                
                7.2
                
                
                0.7Parent
                    company tax benefits
                
                
                (1.7)
                
                (1.1)
                
                56.7
                
                
                (6.4
                )Other
                
                
                (0.6)
                
                (0.4)
                
                23.1
                
                
                (2.8
                )Total
                
                $
                (4.9)
                $
                4.5
                
                168.1
                %
                
                25.7
                %
 **Deferred
        Income Taxes**
 Great
          Plains Energy’s combined deferred income taxes - current assets and deferred
          income taxes - current liabilities changed from an asset of $39.6 million
          at
          December 31, 2006, to a liability of $1.5 million. The temporary differences
          due
          to the change in the fair value of Strategic Energy’s energy-related derivative
          instruments increased the liability $41.5 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 $15.8 million decrease in deferred taxes and a
          $3.9
          million decrease in accrued taxes. 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 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 March 31, 2007, Great Plains Energy and
          consolidated KCP&L had $6.6 million and $2.3 million, respectively, accrued
          for the payment of interest.
  31
 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 $0.6 million in the
          liability for unrecognized tax benefits for the three months ended March
          31,
          2007. At March 31, 2007, the total amount of uncertain tax benefits for
          Great
          Plains Energy and consolidated KCP&L was $21.9 million and $20.0 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 March
          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.
          An estimate of the range of the reasonably possible recognition of unrecognized
          tax benefits, net of reversal of accrued interest, is $5 million to $7
          million
          for Great Plains Energy and $7 million to $9 million for consolidated
          KCP&L.
  **11.**
              **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 $4.6 million and $4.4
          million for the
          three months ended March 31, 2007 and 2006, respectively. These costs consisted
          primarily of employee compensation, benefits and fees associated with various
          professional services. At March 31, 2007, and December 31, 2006, consolidated
          KCP&L had a short-term intercompany payable to Services of $2.2
          million and $2.5
          million ,
          respectively. Also at March 31, 2007, and December 31, 2006, consolidated
          KCP&L had a long-term intercompany payable to Services of $5.4 million and
          $5.7 million ,
          respectively, related to unrecognized pension expense. At March 31, 2007,
          consolidated KCP&L’s balance sheet reflects a $225.0 million intercompany
          payable from KCP&L to Great Plains Energy. At March 31, 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 .
  **12.**
              **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.
  32
 KCP&L
          seeks to use current technology to avoid and treat contamination. KCP&L
          conducts environmental audits designed to ensure compliance with governmental
          regulations. At March 31, 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 is difficult to quantify 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 between 1996
          and
          2006. 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. KCP&L continues to
          refine its cost estimates detailed in the table below 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 CO 2 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 CO 2 emissions cannot be reasonably estimated at this time. 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 its rates.
 33
 **Clean
                    Air Estimated Required**
                
                
                
                
                
                
                
                
                
                
                **Estimated****Environmental
                    Expenditures**
                
                **Missouri**
                **Kansas**
                **Total**
                **Timetable**(millions)CAIR
                
                $375
                -
                993
                $
                -
                
                $375
                -
                993
                2006
                    - 2015Incremental
                    BART
                
                
                -
                
                272
                -
                527
                272
                -
                527
                2006
                    - 2017Incremental
                    CAMR
                
                11
                -
                15
                5
                -
                6
                16
                -
                21
                2010
                    - 2018Estimated
                    required environmental expenditures
                
                $386
                -
                1,008
                $277
                -
                533
                $663
                -
                1,541
 **Comprehensive
                    Energy Plan Retrofits**
                
                **Missouri**
                
                
                **Kansas**
                
                
                **Total**(millions)Total
                    estimated environmental expenditures
                $255
                -
                264
                $168
                -
                179
                $423
                -
                443Less:
                    expenditures through March 31, 2007
                
                26
                
                
                34
                
                
                60Remaining
                    balance
                $229
                -
                238
                $134
                -
                145
                $363
                -
                383
 Expenditure
        estimates provided in the first table above include, but are not limited
        to, the
        accelerated environmental upgrade expenditures included in KCP&L’s
        Comprehensive Energy Plan. These expenditures are expected to reduce
        SO 2 ,
        NO x ,
        mercury
        and air particulate matter emissions.
 ***Clean
          Air Interstate Rule***
 The
          Environmental Protection Agency (EPA) Clean Air Interstate Rule (CAIR)
          requires
          reductions in SO 2 and
          NO x emissions in 28 states, including Missouri. The reduction in both SO 2 and
          NO x emissions will be accomplished through establishment of permanent statewide
          caps
          for NO x effective January 1, 2009, and SO 2 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 developed
          a State
          Implementation Plan (SIP) rule, which includes an emission allowance allocation
          mechanism, and has published, held a hearing, received comments and approved
          the
          proposed rule. Facilities will demonstrate compliance with CAIR by holding
          sufficient allowances for each ton of SO 2 and
          NO x emitted
          in any given year, with SO 2 emission
          allowances transferable among all regulated facilities nationwide and
          NO x emission
          allowances transferable among all regulated facilities within the 28 CAIR
          states. KCP&L will also be allowed to utilize unused SO 2 emission
          allowances that it has accumulated during previous years of the Acid Rain
          Program to meet the more stringent CAIR requirements. At March 31, 2007,
          KCP&L had accumulated unused SO 2 emission
          allowances sufficient to support just under 120,000 tons
          of
          SO 2 emission
          under the provisions of the Acid Rain program, which are recorded in inventory
          at zero cost. KCP&L is permitted to sell excess SO 2 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 NO x and
          SO 2 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 performed
          in the next year to assess potential future use, including without limitation,
          retiring, re-powering and upgrading the units of Montrose Station. As discussed
          below, some of the control technology for SO 2 and
          NO x will
          also aid in the control of mercury.
  34
 ***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
          may also
          meet BART requirements for individual sources. Missouri has included this
          understanding as part of the proposed CAIR SIP. 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. Kansas is in the
          process
          of reviewing BART analysis and modeling completed by the utilities with
          impacted
          facilities in the state. 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 NO x and
          SO 2 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. In Missouri,
          the CAMR SIP is following the same process and schedule as the CAIR SIP
          previously described above. In Kansas, the CAMR SIP has been published
          for
          public review and comment, and a hearing completed.
  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 all regulated facilities nationwide. Under the cap-and-trade
          program, KCP&L will be able to purchase mercury allowances or elect to
          install pollution control equipment to achieve compliance. While it is
          expected
          that mercury allowances will be available in sufficient quantities for
          purchase
          in the 2010-2018 timeframe, the significant reduction in the nationwide
          cap in
          2018 may hamper KCP&L’s ability to obtain reasonably priced allowances
          beyond 2018. 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.
  ***Carbon
          Dioxide***
 Many
          legislative bills concerning CO 2 are
          being
          debated in the U.S. Congress. There are various compliance dates and nationwide
          caps stipulated in the numerous legislative bills being debated.
 35
 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 CO 2 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 CO 2 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 CO 2 emission
          offsets.
  ***Ozone***
 The
          Missouri Department of Natural Resources and KDHE continue to develop Missouri
          and Kansas Maintenance Plans for the Control of Ozone for the Kansas City
          area.
          The EPA will require Missouri and Kansas to submit these SIPs by June 2007.
          As
          part of the SIP requirements, contingency control measures must be included.
          These measures would go into effect only if associated triggers (such as
          a
          violation of the eight-hour ozone standard) occur. Although it is anticipated
          the proposed controls for CAIR and BART will provide the required contingency
          control measures at KCP&L generation facilities, management will continue to
          be involved and monitor the SIP development.
  ***Water
          Use Regulations***
 The
          EPA
          Clean Water Act establishes standards for cooling water intake structures.
          This
          regulation 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.
          The regulation is designed to protect aquatic life from being killed or
          injured
          by cooling water intake structures. KCP&L is required to complete a
          comprehensive demonstration study on each of its generating facilities’ intake
          structures by the end of 2007. The studies are expected to cost a total
          of $1.2
          million to $2.0 million. Depending on the outcome of the comprehensive
          demonstration studies, facilities may be required to implement technological
          or
          operational measures to achieve compliance. Compliance with this regulation
          is
          expected to be achieved between 2011 and 2014. Until the comprehensive
          demonstration studies are completed, the impact of this regulation cannot
          be
          quantified.
  A
          recent
          Federal appeals court decision may ultimately impact this regulation. The
          court
          remanded much of the regulation to the EPA for further rulemaking. At this
          time,
          the EPA has not acted on the court’s decision. Management will continue to
          monitor the litigation and any subsequent rulemaking associated with this
          regulation.
  36
 KCP&L
          holds a permit from the Missouri Department of Natural Resources 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.
  **13.**
              **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. KCP&L charged that Union Pacific possesses
          market dominance over the traffic and requested the STB prescribe maximum
          reasonable rates. In July 2006, the STB directed KCP&L and Union Pacific to
          file comments in September 2006 on whether KCP&L’s complaint is within the
          STB’s jurisdiction. In March 2007, the STB issued a finding that it would have
          jurisdiction over this complaint. KCP&L and Union Pacific presented a new
          procedural schedule to the STB and a ruling on the case is anticipated
          in late
          2008 or early 2009. Until the STB 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 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 the Travelers litigation.
  **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.” 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 litigation 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
 37
 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 Wolf Creek
          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 into  Power
          Supply Coordination Service Agreements (Agreements) for a certain product
          in
          Pennsylvania. The complaint seeks monetary damages, 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 that management is evaluating. The
          plaintiffs have granted Strategic Energy an indefinite extension of time
          to
          answer the complaint. Management is unable to predict the outcome of this
          litigation.
  **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. Management is evaluating the merits of the customer’s
          alleged damages. Management believes the ultimate outcome of this matter
          will
          not have a significant 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 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. The $15 million reserve has not been reversed pending the
          outcome
          of the appeal process.
  **14.**
              **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
 38
 responsibility
          and regulation. The two reportable business segments are KCP&L, an
          integrated, regulated electric utility, and Strategic Energy, a competitive
          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****March
                    31, 2007**
                
                **KCP&L**
                
                **Energy**
                
                **Other**
                
                **Energy**(millions)Operating
                    revenues
                
                $
                255.7
                
                $
                408.6
                
                $
                -
                $
                $664.3Depreciation
                    and amortization
                
                
                (43.0
                )
                
                (2.0
                )
                
                -
                
                (45.0)Interest
                    charges
                
                
                (18.2
                )
                
                (0.8
                )
                
                (2.7)
                
                (21.7)Income
                    taxes
                
                
                4.9
                
                
                (17.9
                )
                
                2.0
                
                (11.0)Loss
                    from equity investments
                
                
                -
                
                
                -
                
                
                (0.4)
                
                (0.4)Net
                    income (loss)
                
                
                2.1
                
                
                27.1
                
                
                (5.8)
                
                23.4
 As
                  Adjusted**Three
                  Months Ended**
              
              
              
              **Strategic**
              
              
              
              **Great
                  Plains****March
                  31, 2006**
              
              **KCP&L**
              
              **Energy**
              
              **Other**
              
              **Energy**(millions)Operating
                  revenues
              
              $
              240.4
              
              $
              318.8
              
              $
              -
              $
              559.2Depreciation
                  and amortization
              
              
              (37.0
              )
              
              (1.9
              )
              
              -
              
              (38.9)Interest
                  charges
              
              
              (14.9
              )
              
              (0.3
              )
              
              (2.1)
              
              (17.3)Income
                  taxes
              
              
              (4.5
              )
              
              9.9
              
              
              2.7
              
              8.1Loss
                  from equity investments
              
              
              -
              
              
              -
              
              
              (0.3)
              
              (0.3)Net
                  income (loss)
              
              
              13.0
              
              
              (10.9
              )
              
              (3.2)
              
              (1.1)
 **Strategic**
                
                
                
                **Great
                    Plains****KCP&L**
                
                **Energy**
                
                **Other**
                
                **Energy****March
                    31, 2007**
                
                (millions)Assets
                
                $
                3,865.9
                
                $
                455.3
                $
                34.5
                $
                4355.7Capital
                    expenditures(a)
                
                
                67.6
                
                
                0.8
                
                -
                
                68.4**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.
  39
 **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****March
                    31, 2007**
                
                **KCP&L**
                
                **Other**
                
                **KCP&L**(millions)Operating
                    revenues
                
                $
                255.7
                
                $
                -
                
                $
                255.7Depreciation
                    and amortization
                
                
                (43.0
                )
                
                -
                
                
                (43.0
                )Interest
                    charges
                
                
                (18.2
                )
                
                -
                
                
                (18.2
                )Income
                    taxes
                
                
                4.9
                
                
                -
                
                
                4.9Net
                    income (loss)
                
                
                2.1
                
                
                (0.1
                )
                
                2.0
 **As
                Adjusted****Three
                  Months Ended**
              
              
              
              
              
              **Consolidated****March
                  31, 2006**
              
              **KCP&L**
              
              **Other**
              
              **KCP&L**(millions)Operating
                  revenues
              
              $
              240.4
              
              $
              -
              
              $
              240.4Depreciation
                  and amortization
              
              
              (37.0
              )
              
              -
              
              
              (37.0
              )Interest
                  charges
              
              
              (14.9
              )
              
              -
              
              
              (14.9
              )Income
                  taxes
              
              
              (4.5
              )
              
              -
              
              
              (4.5
              )Net
                  income (loss)
              
              
              13.0
              
              
              -
              
              
              13.0
 **Consolidated****KCP&L**
                  
                  **Other**
                  
                  **KCP&L****March
                      31, 2007**
                  
                  (millions)Assets
                  
                  $
                  3,865.9
                  
                  $
                  1.6
                  
                  $
                  3,867.5Capital
                      expenditures(a)
                  
                  
                  67.6
                  
                  
                  -
                  
                  
                  67.6**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.
 **15.**
              **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
 40
 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 future issuances of long-term debt. The FSS
          will
          be settled simultaneously with the issuance of long-term fixed rate debt.
          The
          FSS effectively remove 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 will be.
          The FSS
          are accounted for as a cash flow hedge and the fair value is recorded as
          a
          current asset or liability with an offsetting entry to OCI, to the extent
          the
          hedge is effective, until the forecasted transaction occurs. No ineffectiveness
          has been recorded on the FSS. The pre-tax gain or loss on the FSS recorded
          to
          OCI will be reclassified to interest expense over the life of the future
          debt
          issuance.
  **Cash
          Flow Hedges - Treasury Locks**
 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 gain
          recorded
          in OCI at December 31, 2006, and the first quarter fair value loss 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 March 31, 2007, KCP&L had $11.4
          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 March
          31, 2007, KCP&L had hedged 65% 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 March 31, 2007 and
          2006,
          respectively.
  41
 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
          5.25 years and 5.5 years
          at
          March 31, 2007, and December 31, 2006, respectively.
  Certain
          forward fixed price purchases and swap agreements are designated as cash
          flow
          hedges. The fair values of these instruments are recorded as assets or
          liabilities with an offsetting entry to OCI for the effective portion of
          the
          hedge. To the extent the hedges are not effective, the ineffective portion
          of
          the change in fair market value is recorded currently in purchased power.
          When
          the forecasted purchase is completed, the amounts in OCI are reclassified
          to
          purchased power expense. Purchased power expense for the three months ended
          March 31, 2007 and 2006, includes a gain of $29.3 million and a loss of
          $10.6
          million, respectively, due to
          ineffectiveness of the cash flow hedges.
  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 was a gain of $28.0
          million
          and a loss of $25.3 million for the three months ended March 31, 2007 and
          2006,
          respectively.
  The
          fair
          value of non-hedging derivatives at March 31, 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 March 31, 2007 and 2006, Strategic
          Energy amortized $0.3 million and $3.7 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.
  42
 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.
 **March
                      31**
                  
                  **December
                      31****2007**
                  
                  **2006****Notional**
                  
                  
                  
                  **Notional****Contract**
                  
                  **Fair**
                  
                  **Contract**
                  
                  **Fair****Amount**
                  
                  **Value**
                  
                  **Amount**
                  
                  **Value****Great
                      Plains Energy**
                  
                  (millions)Swap
                      contractsCash
                      flow hedges
                  
                  $
                  307.7
                  
                  $
                  (6.2
                  )
                  $
                  477.5
                  
                  $
                  (38.9
                  )Non-hedging
                      derivatives
                  
                  
                  100.6
                  
                  
                  (6.1
                  )
                  
                  37.1
                  
                  
                  (6.8
                  )Forward
                      contractsCash
                      flow hedges
                  
                  
                  977.2
                  
                  
                  43.7
                  
                  
                  871.5
                  
                  
                  (69.7
                  )Non-hedging
                      derivatives
                  
                  
                  281.6
                  
                  
                  2.3
                  
                  
                  250.7
                  
                  
                  (24.8
                  )Anticipated
                      debt issuanceForward
                      starting swap
                  
                  
                  225.0
                  
                  
                  (0.6
                  )
                  
                  225.0
                  
                  
                  (0.4
                  )Treasury
                      lock
                  
                  
                  -
                  
                  
                  -
                  
                  
                  77.6
                  
                  
                  0.2Interest
                      rate swapsFair
                      value hedges
                  
                  
                  146.5
                  
                  
                  (1.2
                  )
                  
                  146.5
                  
                  
                  (1.8
                  )**Consolidated
                      KCP&L**Swap
                      contractsCash
                      flow hedges
                  
                  
                  5.8
                  
                  
                  0.7
                  
                  
                  -
                  
                  
                  -Forward
                      contractsCash
                      flow hedges
                  
                  
                  6.1
                  
                  
                  0.3
                  
                  
                  6.1
                  
                  
                  (0.5
                  )Anticipated
                      debt issuanceForward
                      starting swap
                  
                  
                  225.0
                  
                  
                  (0.6
                  )
                  
                  225.0
                  
                  
                  (0.4
                  )Interest
                      rate swapsFair
                      value hedges
                  
                  
                  146.5
                  
                  
                  (1.2
                  )
                  
                  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****March
                        31**
                    **December
                        31**
                    **March
                        31**
                    **December
                        31****2007**
                    **2006**
                    **2007**
                    **2006**(millions)Current
                        assets
                    
                    $
                    25.6
                    
                    $
                    12.7
                    
                    $
                    11.8
                    
                    $
                    12.0Other
                        deferred charges
                    
                    
                    21.1
                    
                    
                    1.7
                    
                    
                    -
                    
                    
                    -Other
                        current liabilities
                    
                    
                    (5.0
                    )
                    
                    (56.3
                    )
                    
                    (0.6)
                    
                    
                    (1.3)Deferred
                        income taxes
                    
                    
                    (15.4
                    )
                    
                    32.1
                    
                    
                    (4.2)
                    
                    
                    (4.0)Other
                        deferred credits
                    
                    
                    (3.0
                    )
                    
                    (35.3
                    )
                    
                    -
                    
                    
                    -Total
                    
                    $
                    23.3
                    
                    $
                    (45.1
                    )
                    $
                    7.0
                    
                    $
                    6.7
 Great
          Plains Energy’s accumulated OCI in the table above at March 31, 2007, includes
          $10.2 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.
  43
 The
          amounts reclassified to expenses are summarized in the following
          table.
 **Three
                    Months Ended March 31**
                
                **2007**
                
                **2006****Great
                    Plains Energy**
                
                (millions)Purchased
                    power expense
                
                $
                21.9
                
                $
                9.1Interest
                    expense
                
                
                (0.1
                )
                
                -Income
                    taxes
                
                
                (8.9
                )
                
                (3.9
                )OCI
                
                $
                12.9
                
                $
                5.2**Consolidated
                    KCP&L**Interest
                    expense
                
                $
                (0.1
                )
                $
                -Income
                    taxes
                
                
                0.1
                
                
                -OCI
                
                $
                -
                
                $
                -
 **16.**
              **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.
  44
 **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, a scheduled maintenance outage which was extended by several days at
          Iatan No. 1 and an unplanned maintenance outage at Hawthorn No. 5 during
          a
          period of cold weather and constrained transmission led to lower wholesale
          revenues, increased use of natural gas and increased purchased power for
          the
          three months ended March 31, 2007. Operating expenses also increase due
          to
          increased maintenance expense and the anticipated increase in pension costs
          due
          to the reset of the level of pension costs in KCP&L’s rates effective
          January 1, 2007. These items were offset somewhat by higher retail revenues
          that
          resulted from favorable weather, higher retail rates and customer growth.
  At
          Strategic Energy, the average retail gross margin per MWh increased due
          to an
          increase in the changes in fair value related to non-hedging energy contracts
          and from hedge ineffectiveness. Average retail gross margin per MWh without
          the
          impact of unrealized fair value gains and losses on energy contracts decreased
          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
          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.
  **Anticipated
          Acquisition of Aquila, Inc.**
 In
          February 2007, Great Plains Energy entered into an agreement to acquire
          all
          outstanding shares of Aquila. Immediately prior to Great Plains Energy’s
          acquisition of Aquila, Black Hills Corporation will acquire Aquila’s electric
          utility in Colorado and its gas utilities in Colorado, Kansas, Nebraska
          and Iowa
          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. The MPSC and KCC regulatory approvals are
          expected to be completed in the first quarter of 2008. In May 2007, Great
          Plains
          Energy filed a registration statement with the SEC including a joint proxy
          with
          Aquila for the Great Plains Energy and Aquila special shareholder meetings
          expected to occur in the third quarter of 2007. FERC and Hart-Scott-Rodino
          antitrust review filings are expected to occur during the second quarter
          of 2007
          and 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**
 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
 45
 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. See Notes 6 and
          12 to
          the consolidated financial statements for additional information.
  KCP&L
          continues to execute on its Comprehensive Energy Plan. Construction of
          Iatan No.
          2 is underway and on schedule for completion in 2010. The first phase of
          environmental upgrades at LaCygne No. 1, installation of selective catalytic
          reduction equipment, is expected to be in service mid-year 2007. The
          environmental work at Iatan No. 1 is also continuing. Under the Collaboration
          Agreement with Sierra Club and Concerned Citizens of Platte County, 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.
  **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 the
          first two
          weeks of 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 not yet been scheduled, but are expected to occur in the fall of 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.
  **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 approximately 505,000 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 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’s18 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.
  46
 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 102,400 commercial, institutional and small manufacturing accounts (for approximately
          26,500 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-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 64% for the three months ended March 31, 2007. The
          corresponding volume-based customer retention rates including month-to-month
          customers on market-based rates was 75%.
  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 strong forecasted future MWh commitments (backlog)
          growth
          and longer contract durations. Total backlog grew to 33.9 million MWh at
          March
          31, 2007, compared to 22.5 million MWh at March 31, 2006. Based
          solely on expected MWh usage under current signed contracts, Strategic
          Energy
          has backlog of 13.0 million MWh for the remainder of 2007, 10.6 million
          MWh and
          4.8 million MWh for the years 2008 and 2009, respectively, and 5.5 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 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.
  47
 **RELATED
          PARTY TRANSACTIONS**
  See
          Note
          11 to the consolidated financial statements for information regarding related
          party transactions.
  **GREAT
          PLAINS ENERGY RESULTS OF OPERATIONS**
  The
          following table summarizes
          Great Plains Energy’s comparative results of operations.
 **As
                    Adjusted****Three
                    Months Ended March 31**
                
                **2007**
                
                **2006**(millions)Operating
                    revenues
                
                $
                664.3
                
                $
                559.2Fuel
                
                
                (52.7
                )
                
                (46.5
                )Purchased
                    power
                
                
                (357.9
                )
                
                (330.9
                )Other
                    operating expenses
                
                
                (154.3
                )
                
                (125.8
                )Skill
                    set realignment costs
                
                
                -
                
                
                (9.4
                )Depreciation
                    and amortization
                
                
                (45.0
                )
                
                (38.9
                )Loss
                    on property
                
                
                -
                
                
                (0.1
                )Operating
                    income
                
                
                54.4
                
                
                7.6Non-operating
                    income (expenses)
                
                
                2.1
                
                
                0.8Interest
                    charges
                
                
                (21.7
                )
                
                (17.3
                )Income
                    taxes
                
                
                (11.0
                )
                
                8.1Loss
                    from equity investments
                
                
                (0.4
                )
                
                (0.3
                )Net
                    income (loss)
                
                
                23.4
                
                
                (1.1
                )Preferred
                    dividends
                
                
                (0.4
                )
                
                (0.4
                )Earnings
                    (loss) available for common shareholders
                
                $
                23.0
                
                $
                (1.5
                )
 Great
            Plains Energy’s earnings for the three months ended March 31, 2007, increased to
            earnings of $23.0 million, or $0.28 per share ,
            from a
            loss of $1.5 million, or $0.02 loss per share ,
            in the
            same period of 2006.
  Consolidated
            KCP&L’s net income decreased $11.0 million for the three months ended March
            31, 2007, compared to the same period in 2006 primarily due to a scheduled
            maintenance outage which was extended by several days at Iatan No. 1
            and an
            unplanned maintenance outage at Hawthorn No. 5 during a period of cold
            weather
            and constrained transmission that led to lower wholesale revenues and
            increased
            fuel and purchased power expense. Additionally, other operating expenses
            increased due to higher pension expense and higher maintenance costs.
            These
            decreases to net income were partially offset by an increase in retail
            revenues
            and the absence of skill set realignment costs.
  Strategic
            Energy had net income of $27.1 million for the three months ended March
            31,
            2007, an increase of $38.0 million over the same period in 2006 due to
            the after
            tax impact of a $55.1 million increase
            in the changes in fair value related to non-hedging energy contracts
            and from
            hedge ineffectiveness, a 15% increase
            in retail MWhs delivered and
            SECA
            recoveries in 2007 compared to net SECA charges in 2006. These increases
            were
            partially offset by increased purchased power expense associated with
            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.
  48
 Other
            non-regulated activities for the three months ended March 31, 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.
  **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.
 **As
                        Adjusted****Three
                        Months Ended March 31**
                    
                    **2007**
                    
                    **2006**(millions)Operating
                        revenues
                    
                    $
                    255.7
                    
                    $
                    240.4Fuel
                    
                    
                    (52.7
                    )
                    
                    (46.5
                    )Purchased
                        power
                    
                    
                    (16.4
                    )
                    
                    (5.1
                    )Other
                        operating expenses
                    
                    
                    (130.5
                    )
                    
                    (110.7
                    )Skill
                        set realignment costs
                    
                    
                    -
                    
                    
                    (9.3
                    )Depreciation
                        and amortization
                    
                    
                    (43.0
                    )
                    
                    (37.0
                    )Loss
                        on property
                    
                    
                    -
                    
                    
                    (0.1
                    )Operating
                        income
                    
                    
                    13.1
                    
                    
                    31.7Non-operating
                        income (expenses)
                    
                    
                    2.2
                    
                    
                    0.7Interest
                        charges
                    
                    
                    (18.2
                    )
                    
                    (14.9
                    )Income
                        taxes
                    
                    
                    4.9
                    
                    
                    (4.5
                    )Net
                        income
                    
                    $
                    2.0
                    
                    $
                    13.0
 **Consolidated
            KCP&L Sales Revenues and MWh Sales**
 %**Three
                        Months Ended March 31**
                    
                    **2007**
                    
                    **2006**
                    
                    **Change**Retail
                        revenues
                    
                    (millions)Residential
                    
                    $
                    86.7
                    
                    $
                    72.3
                    
                    20Commercial
                    
                    
                    104.0
                    
                    
                    92.5
                    
                    12Industrial
                    
                    
                    23.7
                    
                    
                    22.2
                    
                    7Other
                        retail revenues
                    
                    
                    2.5
                    
                    
                    2.2
                    
                    10Total
                        retail
                    
                    
                    216.9
                    
                    
                    189.2
                    
                    15Wholesale
                        revenues
                    
                    
                    34.2
                    
                    
                    47.5
                    
                    (28)Other
                        revenues
                    
                    
                    4.6
                    
                    
                    3.7
                    
                    27Consolidated
                        KCP&L revenues
                    
                    $
                    255.7
                    
                    $
                    240.4
                    
                    6
  49
 %**Three
                    Months Ended March 31**
                
                **2007**
                
                **2006**
                
                **Change**Retail
                    MWh sales
                
                (thousands)Residential
                
                
                1,292
                
                
                1,158
                
                12Commercial
                
                
                1,798
                
                
                1,702
                
                6Industrial
                
                
                506
                
                
                509
                
                (1)Other
                    retail MWh sales
                
                
                23
                
                
                22
                
                9Total
                    retail
                
                
                3,619
                
                
                3,391
                
                7Wholesale
                    MWh sales
                
                
                886
                
                
                1,104
                
                (20)KCP&L
                    electric MWh sales
                
                
                4,505
                
                
                4,495
                
                -
 Retail
            revenues increased $27.7 million for the three months ended March 31,
            2007,
            compared to the same period in 2006 primarily due to new retail rates
            effective
            January 1, 2007, growth in the number of customers and higher usage per
            customer
            driven by favorable weather in 2007, with a 23% increase
            in heating
            degree days.
  Wholesale
            revenues decreased $13.3 million for the three months ended March 31, 2007,
            compared to the same period in 2006 due to a 20% decrease
            in wholesale MWh sales 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.
            Wholesale revenues were also impacted by a 22% decrease
            in the average market price per MWh to $39.59 primarily due to lower gas prices.
  **Consolidated
            KCP&L Fuel and Purchased Power**
 **%****Three
                      Months Ended March 31**
                  
                  **2007**
                  
                  **2006**
                  
                  **Change**Net
                      MWhs Generated by Fuel Type
                  
                  (thousands)Coal
                  
                  3,157
                  
                  3,407
                  
                  (7)Nuclear
                  
                  1,208
                  
                  1,210
                  
                  -Natural
                      gas and oil
                  
                  54
                  
                  1
                  
                  NMWind
                  
                  73
                  
                  -
                  
                  N/ATotal
                      Generation
                  
                  4,492
                  
                  4,618
                  
                  (3)
 KCP&L’s
            coal base load equivalent availability factor decreased to 70 %
            for the
            three months ended March 31, 2007, from 80% for the same period in 2006
            due to a
            scheduled outage which was extended by several days at Iatan No. 1 and
            an
            unplanned maintenance outage at Hawthorn No. 5 .
  Fuel
            expense increased $6.2 million for the three months ended March 31, 2007, compared
            to the same period in 2006 despite a 3% decrease in net MWhs generated.
            The
            increased 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 during a period
            of
            transmission constraint which limited KCP&L’s ability to utilize purchased
            power. Higher coal and coal transportation costs also contributed to
            the
            increased fuel expense.
  Purchased
            power expense increased $11.3 million for the
            three months ended March 31, 2007, compared to the same period in 2006
            primarily
            due to a 231% increase
            in MWh purchases to support increased retail load due to colder weather
            in 2007
            and the impact of planned and unplanned plant outages on net MWhs
            generated.
  50
 **Consolidated
            KCP&L Other Operating Expenses** ***(including
            other operating, maintenance and general taxes)***
 Consolidated
            KCP&L's other operating expenses increased $19.8 million for the three
            months ended March 31, 2007, compared to the same period in 2006, primarily
            due
            to increased pension expense of $4.9 million due to
            the reset of the level of pension costs in KCP&L’s rates effective January
            1, 2007, and increased plant maintenance expense of $6.6 million due to
            planned outages and unplanned outages and the addition of the Spearville
            Wind
            Energy Facility in the third quarter of 2006.
  **Consolidated
            KCP&L Depreciation and Amortization**
 Consolidated
            KCP&L’s depreciation and amortization costs increased $6.0 million for the
            three months ended March 31, 2007, compared
            to the same period in 2006 primarily due to $3.0 million of
            additional amortization pursuant to rate case orders and $1.8
            million of
            increased depreciation due to wind generation assets placed in service
            in the
            third quarter of 2006.
  **Consolidated
            KCP&L Income Taxes**
 Consolidated
            KCP&L had a tax benefit of $4.9 million for the three months ended March
            31,
            2007, compared to tax expense of $4.5 million for the same period in
            2006 due to
            a pre-tax loss in 2007 compared to pre-tax income in 2006. See Note 10
            to the
            consolidated financial statements for a reconciliation of effective income
            taxes
            rates for the comparative periods.
  **Strategic
            Energy Results of Operations**
  The
            following table summarizes
            Strategic Energy's comparative results of operations.
 **Three
                      Months Ended March 31**
                  
                  **2007**
                  
                  **2006**(millions)Operating
                      revenues
                  
                  $
                  408.6
                  
                  $
                  318.8Purchased
                      power
                  
                  
                  (341.5
                  )
                  
                  (325.8
                  )Other
                      operating expenses
                  
                  
                  (20.5
                  )
                  
                  (12.5
                  )Depreciation
                      and amortization
                  
                  
                  (2.0
                  )
                  
                  (1.9
                  )Operating
                      income (loss)
                  
                  
                  44.6
                  
                  
                  (21.4
                  )Non-operating
                      income (expenses)
                  
                  
                  1.2
                  
                  
                  0.9Interest
                      charges
                  
                  
                  (0.8
                  )
                  
                  (0.3
                  )Income
                      taxes
                  
                  
                  (17.9
                  )
                  
                  9.9Net
                      income (loss)
                  
                  $
                  27.1
                  
                  $
                  (10.9
                  )
 Strategic
            Energy had net income of $27.1 million for the three months ended March
            31,
            2007, an increase of $38.0 million over the same period in 2006 due to
            the after
            tax impact of a $55.1 million increase
            in the changes in fair value related to non-hedging energy contracts
            and from
            hedge ineffectiveness, a 15% increase
            in retail MWhs delivered to 4.2 million and SECA
            recoveries in 2007 compared to net SECA charges in 2006. These increases
            were
            partially offset by increased purchased power expense associated with
            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.
  51
 **Three
                      Months Ended March 31**
                  
                  **2007**
                  
                  **2006**Average
                      retail gross margin per MWh
                  
                  $
                  15.79
                  
                  $
                  (2.12
                  )Change
                      in fair value related to non-hedging energycontracts
                      and from cash flow hedge ineffectiveness
                  
                  
                  (13.63
                  )
                  
                  9.79Average
                      retail gross margin per MWh withoutfair
                      value impacts
                  
                  $
                  2.16
                  
                  $
                  7.67
 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. 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 upon delivery at contracted prices. 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.
            Due
            to their non-cash nature and volatility during periods prior to delivery,
            management believes excluding these fair value impacts results in a measure
            of
            retail gross margin per MWh that is more representative of contracted
            prices.
  As
            detailed in the table above, average retail gross margin per MWh without
            the
            impact of unrealized fair value gains and losses decreased to $2.16 for
            the
            three months ended March 31, 2007, compared to $7.67 for the same period
            in
            2006. The decrease was primarily due to increased purchased power expense
            associated with 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. These decreases
            were
            partially offset by a $0.9 million SECA recovery for the three months
            ended
            March 31, 2007, compared to $2.3 million of SECA charges in excess of
            recoveries
            for the same period in 2006.
  **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 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 $14.4 million
            and
            $31.2 million for the three months ended March 31, 2007 and 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 decreased
            purchased
            power expenses by $57.3 million for the three months ended March 31,
            2007
            compared to an increase of $35.9 million for the same period in 2006. The
            change is a result of increases in the forward market prices for power
            combined
            with Strategic Energy designating more
 52
 derivative
            instruments as cash flow hedges that no longer qualify for the NPNS election.
            See Note 15 to the consolidated financial statements for more
            information.
  **Strategic
            Energy Other Operating Expenses**
 Strategic
            Energy’s other operating expenses increased $8.0 million for the three months
            ended March 31, 2007, compared to the same period in 2006 primarily due
            to an
            increase of $5.6 million in bad
            debt expense attributable to the small business segment, which have a
            higher
            default rate than Strategic Energy’s larger customers, combined with potential
            penalty expense related to the purchased power adjustment. Strategic
            Energy
            expects bad debt expense to trend downward for the remainder of
            2007.
  **Strategic
            Energy Income Taxes**
 Strategic
            Energy had tax expense of $17.9 million for the three months ended March
            31,
            2007, compared to a tax benefit of $9.9 million for the same period in
            2006 due
            to pre-tax income for the three months ended March 31, 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 $23.3 million for the
            three months ended March 31, 2007, compared to a $14.7 million deferred
            tax benefit for the same period in 2006.
  **GREAT
            PLAINS ENERGY AND CONSOLIDATED KCP&L SIGNIFICANT BALANCE SHEET
            CHANGES** **(March
            31, 2007 compared to December 31, 2006)**
  ·
                Great
                    Plains Energy’s and consolidated KCP&L’s receivables decreased $12.6
                    million and $26.2 million, respectively. KCP&L’s joint owner
                    receivables decreased $18.3 million primarily due to lower receivables
                    related to Comprehensive Energy Plan projects and a $6.4 million
                    decrease
                    in wholesale sales receivables due to lower wholesale sales.
                    Strategic
                    Energy’s receivables increased $13.6 million primarily due to increased
                    revenues 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 combined refundable income taxes and accrued taxes of a
                    net current liability of $18.5 million increased $4.2 million
                    primarily
                    due to an increase at consolidated KCP&L partially offset by lower
                    income tax accruals. Consolidated KCP&L’s combined refundable income
                    taxes and accrued taxes of a net current liability of $28.7 million
                    increased $17.8 million from December 31, 2006, primarily due
                    to a $4.9
                    million impact of the adoption of FIN No. 48, which was mostly
                    a
                    reclassification from deferred income taxes, as well as a $15.0
                    million
                    increase in property tax accruals due to the timing of tax payments.  ·
                Great
                    Plains Energy’s combined deferred income taxes - current assets and
                    deferred income taxes - current liabilities changed from an asset
                    of $39.6
                    million at December 31, 2006, to a liability of $1.5 million.
                    The
                    temporary differences due to changes in the fair value of Strategic
                    Energy’s energy-related derivative instruments increased the liability
                    by
                    $41.5 million.  ·
                Great
                    Plains Energy’s derivative instruments, including current and deferred
                    assets and liabilities, increased $174.1million from a net liability at December 31, 2006, to a $31.9
                    million net
                    asset primarily due to a $172.4 millionincrease in the fair value of Strategic Energy’s energy-related derivative
                    instruments as a result of an increase in the forward market
                    prices for
                    power.  ·
                Great
                    Plains Energy’s and consolidated KCP&L’s construction work in progress
                    increased $43.0 million primarily due to $37.7 million related to
                    KCP&L’s comprehensive energy plan, including $9.5 million for
                    environmental upgrades and $28.2 million related to Iatan No.
                    2.  ·
                Great
                    Plains Energy’s other deferred charges and other assets increased $9.1
                    million primarily due to deferred costs associated with Great
                    Plains
                    Energy’s anticipated acquisition of
                    Aquila.  53
 ·
                Great
                    Plains Energy’s notes payable increased $241.0 million primarily due to
                    borrowings to make an intercompany loan to KCP&L.  ·
                Consolidated
                    KCP&L’s intercompany payables to Great Plains Energy increased $225.0
                    million due to an intercompany loan from Great Plains
                    Energy.  ·
                Great
                    Plains Energy’s and consolidated KCP&L’s commercial paper increased
                    $67.7 million primarily to support expenditures related to the
                    comprehensive energy plan.  ·
                Great
                    Plains Energy’s and consolidated KCP&L’s current maturities of
                    long-term debt decreased $388.6 million and $225.0 million, respectively,
                    due to Great Plains Energy’s 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 with proceeds from
                    an
                    intercompany loan from Great Plains
                    Energy.  ·
                Consolidated
                    KCP&L’s accounts payable decreased $37.9 million primarily due to the
                    payment of expenditures related to the comprehensive energy
                    plan.  ·
                Great
                    Plains Energy and consolidated KCP&L’s accrued payroll and vacations
                    decreased $10.6 million and $3.5 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 $10.6 million and $10.0 million,
                    respectively,
                    primarily due to a $9.6 million impact of the adoption of FIN
                    No. 48,
                    which was mostly a reclassification from deferred income taxes.  ·
                Great
                    Plains Energy’s accumulated other comprehensive loss increased $68.5
                    million primarily due to a $68.1 million increase due to changes
                    in the
                    fair value of Strategic Energy’s energy related derivative
                    instruments.  **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 March 31, 2007, consisted of $37.3
            million of
            cash
            and cash equivalents on hand, including $2.3 million at
            consolidated KCP&L, and $509.8 million of
            unused
            bank lines of credit. The unused lines consisted
            of $169.1 million from KCP&L's revolving credit facility, $92.5 million from
            Strategic Energy’s revolving credit facility and $248.2 million from Great
            Plains Energy's revolving credit facility. See the Debt Agreements section
            below
            for more information on these agreements.
  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
 54
 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-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
            for the three months ended March 31, 2007, decreased primarily due to
            lower net
            income at Strategic Energy after considering non-cash after-tax fair
            value
            impacts from energy contracts, $7.1 million of costs associated with
            the
            anticipated acquisition of Aquila and a $10.6 million decrease in accrued
            payroll primarily due to the payments of employee incentive compensation.
            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 for the three months ended March 31,
            2007,
            decreased primarily due to a $3.5 million decrease in accrued payroll
            primarily
            due to the payments of employee incentive compensation and 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 Financing Activities**
 Great
            Plains Energy’s cash flows from financing activities for the three months ended
            March 31, 2007, reflect consolidated KCP&L’s repayment of Senior Notes and
            an increase in Great Plains Energy’s short-term borrowings primarily due to
            borrowing on its revolving credit facility to make an intercompany loan
            to
            KCP&L. Consolidated KCP&L’s financing activities for the three months
            ended March 31, 2007, reflect KCP&L’s repayment of its $225.0 million 6.00%
            Senior Notes at maturity and an increase in short-term borrowings primarily
            due
            to a $225.0 million loan from Great Plains Energy, which was used to
            repay the
            Senior Notes.
  **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
            with such debt through December 31, 2009. KCP&L has $385.0 million of
            authorization remaining.
  During
            2006, FERC authorized KCP&L to issue up to a total of $600.0 million in
            outstanding short-term debt 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
 55
 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. In
            January 2007, KCP&L received authorization from FERC, as part of its $600.0
            million short-term debt FERC 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 is an internal
            financing
            arrangement in which up to $150 million of funds deposited into the money
            pool
            by Great Plains Energy and Strategic Energy may be lent on a short-term
            basis to
            KCP&L. The money pool commenced operations in April 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.
  **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.
  During
            the first quarter, KCP&L contributed $7.1 million to the plan. For the
            remainder of 2007, the Company expects to contribute $26.5 million to
            the plans,
            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.
  **Strategic
            Energy Supplier Concentration and Credit**
 Strategic
            Energy enters into forward physical contracts with multiple suppliers.
            At March
            31, 2007, Strategic
            Energy’s five largest suppliers under forward supply contracts represented
            73 %
            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.
  56
 The
            following tables provide
            information on Strategic Energy’s credit exposure to suppliers, net of
            collateral, at March 31, 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
                  
                  $
                  70.8
                  
                  $
                  -
                  
                  $
                  70.8
                  
                  3
                  
                  $50.3Non-Investment
                      Grade
                  
                  
                  12.9
                  
                  
                  6.3
                  
                  
                  6.6
                  
                  -
                  
                  -Internal
                      ratingNon-Investment
                      Grade
                  
                  
                  2.9
                  
                  
                  2.7
                  
                  
                  0.2
                  
                  -
                  
                  -Total
                  
                  $
                  86.6
                  
                  $
                  9.0
                  
                  $
                  77.6
                  
                  3
                  
                  $50.3
 **Maturity
                      Of Credit Risk Exposure Before Credit Collateral****Less
                      Than**
                  
                  
                  
                  **Total****Rating**
                  
                  **2
                      Years**
                  
                  **2
                      - 5 Years**
                  
                  **Exposure**External
                      rating
                  
                  (millions)Investment
                      Grade
                  
                  $
                  59.4
                  
                  $
                  11.4
                  
                  $
                  70.8Non-Investment
                      Grade
                  
                  
                  7.5
                  
                  
                  5.4
                  
                  
                  12.9Internal
                      ratingNon-Investment
                      Grade
                  
                  
                  1.7
                  
                  
                  1.2
                  
                  
                  2.9Total
                  
                  $
                  68.6
                  
                  $
                  18.0
                  
                  $
                  86.6
 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.
  Strategic
            Energy’s total exposure before credit collateral at March 31, 2007, increased
            $73.6 million from December 31, 2006, primarily due an increase in
            wholesale electricity prices. At March 31, 2007, Strategic Energy had
            exposure
            before collateral to non-investment grade counterparties totaling
            $15.8 million,
            of which 58% is scheduled to mature in less than two years. In addition,
            Strategic Energy held collateral totaling $9.0 million
            limiting its exposure to these non-investment grade counterparties to
            $6.8 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.
  57
 **Supplemental
            Capital Requirements and Liquidity Information**
 Great
            Plains Energy’s and consolidated KCP&L’s contractual obligations have not
            significantly changed outside of the ordinary course of business at March
            31,
            2007 ,
            compared to December 31, 2006.
  **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 March 31, 2007, compared to December
            31,
            2006.
  **New
            Accounting Standards**
 See
            Note
            16 of the consolidated financial statements for information regarding
            new
            accounting standards.
  **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. There have been no material changes in Great Plains Energy’s or
            consolidated KCP&L’s market risk since December 31, 2006.
  **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 March 31,
            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
 58
 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 March 31, 2007,
            that
            has materially affected, or is reasonably likely to materially affect,
            the
            company’s internal control over financial reporting.
  **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 March 31, 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 March 31, 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 Rate Cases**
 On
              February 1, 2006, KCP&L filed a request with the MPSC to increase annual
              rates $55.8 million for customers served in Missouri. On December 21,
              2006, the
              MPSC issued its order with an effective date of December 31, 2006,
              approving an
              approximate $51 million increase in annual revenues. Appeals of this
              order were
              filed in February 2007 with the Circuit Court of Cole County, Missouri,
              by the
              Office of Public Counsel, Praxair, Inc. and Trigen-Kansas City Energy
              Corporation. The appeals seek to set aside or remand the order to the
              MPSC.
              Although subject to the appeals, the MSPC order remains in effect pending
              the
              court's decision.
  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. Evidentiary hearings on this case have been scheduled
              for
              the first two weeks of October 2007, with a decision expected in December
              2007.
  59
 **KCP&L
              Kansas Rate Case**
 On
              March
              1, 2007, KCP&L filed a retail rate case with the KCC, requesting an annual
              rate increase effective January 1, 2008, of approximately $47 million
              over
              current levels. Evidentiary hearings on this case have not yet been
              scheduled,
              but are expected to occur in the fall of 2007, with a decision expected
              in
              December 2007.
  **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 February 27, 2007,
              the Court of
              Appeals reversed the MPSC’s decision on procedural grounds. On March 19, 2007,
              KCP&L, the Sierra Club and the Concerned Citizens of Platte County entered
              into a Collaboration Agreement. Pursuant to the terms of that
              agreement, KCP&L, the Sierra Club and Concerned Citizens of Platte County
              submitted a joint motion to dismiss the appeal, which was denied. KCP&L’s
              management is evaluating various possible responses to the Court’s action,
              including seeking a second MPSC approval of the Stipulation and Agreement.
              The
              Sierra Club also withdrew its appeal with the Kansas Court of Appeals.
  **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 r ates
              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. KCP&L charged that Union Pacific possesses
              market dominance over the traffic and requested the STB prescribe maximum
              reasonable rates. In July 2006, the STB directed KCP&L and Union Pacific to
              file comments in September 2006 on whether KCP&L’s complaint is within the
              STB’s jurisdiction. On March 26, 2007, the STB issued a finding that it
              would
              have jurisdiction over this complaint. KCP&L and Union Pacific presented a
              new procedural schedule to the STB and a ruling on the case is anticipated
              in
              late 2008 or early 2009. Until the STB case is decided, KCP&L is paying the
              higher tariff rates subject to refund.
  **Iatan
              Station Air Permit**
 On
              January 31, 2006, the Missouri Department of Natural Resources issued
              an air
              permit to KCP&L for the construction of Iatan No. 2 and modifications to
              Iatan No. 1. The Sierra Club and the Concerned Citizens of Platte County
              appealed the issuance of this permit to the Missouri Air Conservation
              Commission. On March 19, 2007, the parties entered into a Collaboration
              Agreement that, among other things, resolved the issues relating to
              the permit.
              On March 28, 2007, the parties filed a joint stipulation of dismissal
              with
              prejudice of the appeal of the air permit.
  **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, 12 and 13 to the consolidated
              financial statements. Such descriptions are incorporated herein by
              reference.
  60
 **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 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.
  61
 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 parities 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 between
            1996 and
            2006. 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.
  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 12 to the
            consolidated financial statements for additional information regarding
            environmental matters.
  62
 ***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 exceed 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 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 Corporation 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
 63
 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. C redit
            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.
  Additionally,
            Aquila’s utility operations are subject to regulation by numerous government
            entities, including the MPSC and FERC, and have pending MPSC rate cases,
            the
            outcome of which are subject to uncertainty. As such, a successful acquisition
            of Aquila will subject Great Plains Energy to additional regulatory
            risk.
 **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.
  64
 **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 first 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**January
                      1 - 31
                  -
                  $-
                  
                  -
                  
                  N/AFebruary
                      1 - 28
                  17,151(1)
                  31.88
                  
                  -
                  
                  N/AMarch
                      1 - 31
                  -
                  -
                  
                  -
                  
                  N/ATotal
                  17,151
                  $31.88
                  
                  -
                  
                  N/A(1)Represents
                      shares of common stock surrendered to Great Plains Energy by
                      certain
                      officers to paytaxes
                      related to the issuance of restricted stock and performance
                      shares.
  **ITEM
          3. DEFAULTS UPON SENIOR SECURITIES**
 None.
  **ITEM
            4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS**
  None.
  **ITEM
            5. OTHER INFORMATION**
  None.
  **ITEM
              6. EXHIBITS**
  **Great
            Plains Energy Documents**
 Exhibit
                    Number
                  
                  Description
                      of Document2.1
                  *
                  Agreement
                      and Plan of Merger among Aquila, Inc., Great Plains EnergyIncorporated,
                      Gregory Acquisition Corp., and Black Hills Corporation dated
                      as ofFebruary
                      6, 2007 (Exhibit 2.1 to Form 8-K dated February 7, 2007).3.1
                  *
                  Bylaws
                      of Great Plains Energy Incorporated as amended May 1, 2007
                      (Exhibit 3.1 to
                      From 8-K dated May 1, 2007).10.1.1
                  *+
                  Form
                      of Restricted Stock Agreement Pursuant to the Great Plains
                      EnergyIncorporated
                      Long-Term Incentive Plan Effective May 7, 2002 (Exhibit 10.1.6
                      toForm
                      10-K for the year ended December 31, 2006).
  65
 10.1.2
                  *+
                  Form
                      of Performance Share Agreement Pursuant to the Great Plains
                      EnergyIncorporated
                      Long-Term Incentive Plan Effective May 7, 2002 (Exhibit 10.1.10
                      toForm
                      10-K for the year ended December 31, 2006).10.1.3
                  *+
                  Form
                      of Performance Share Agreement Pursuant to the Great Plains
                      EnergyIncorporated
                      Long-Term Incentive Plan Effective May 7, 2002 (Exhibit 10.1.11
                      toForm
                      10-K for the year ended December 31, 2006).10.1.4
                  *+
                  Great
                      Plains Energy Incorporated Kansas City Power & Light Company AnnualIncentive
                      Plan amended effective as of January 1, 2007 (Exhibit 10.1.2
                      to Form
                      8-K
                      filed May 4, 2007).10.1.5
                  *+
                  Strategic
                      Energy, L.L.C. Executive Committee Annual Incentive Plan dated
                      as ofJanuary
                      1, 2007 (Exhibit 10.1.3 to Form 8-K filed May 4, 2007).10.1.6
                  *+
                  Strategic
                      Energy, L.L.C. Executive Committee Long-Term Incentive Plan
                      dated asof
                      January 1, 2007 (Exhibit 10.1.21 to Form 10-K for the year
                      ended December
                      31, 2006).10.1.7
                  *+
                  Great
                      Plains Energy Incorporated Long-Term Incentive Plan as amended
                      May 1, 2007
                      (Exhibit 10.1 to Form 8-K filed May 4, 2007).10.1.8
                  *
                  Asset
                      Purchase Agreement by and among Aquila, Inc., Black Hills Corporation,Great
                      Plains Energy Incorporated, and Gregory Acquisition Corp.,
                      filed February6,
                      2007 (Exhibit 10.1 to Form 8-K dated February 7, 2007).10.1.9
                  *
                  Partnership
                      Interests Purchase Agreement by and among Aquila, Inc., AquilaColorado,
                      LLC, Black Hills Corporation, Great Plains Energy Incorporated,
                      andGregory
                      Acquisition Corp., dated February 6, 2007 (Exhibit 10.2 to
                      Form 8-K datedFebruary
                      7, 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.
  66
 **KCP&L
            Documents**
 Exhibit
                    Number
                  
                  Description
                      of Document10.2.1
                  *
                  Collaboration
                      Agreement dated as of March 19, 2007, among Kansas City Power
& Light
                      Company, Sierra Club and Concerned Citizens of Platte County,
                      Inc (Exhibit
                      10.1 to Form 8-K filed on March 20, 2007).10.2.2
                  
                  Amendment
                      No. 1 dated as of April 2, 2007, among Kansas City Power & Light
                      Receivables Company, Kansas City Power & Light Company, The Bank of
                      Tokyo-Mitsubishi UFJ, Ltd., New York Branch and Victory Receivables
                      Corporation to the Receivables Sale Agreement date as of July
                      1,
                      2005.12.2
                  
                  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.
  67
 **SIGNATURES**
  Pursuant
            to the requirements of the Securities Exchange Act of 1934, Great Plains
            Energy
            Incorporated and Kansas City Power & Light Company have duly caused
            this report to be signed on its behalf by the undersigned thereunto duly
            authorized.
 **GREAT
                      PLAINS ENERGY INCORPORATED**Dated:
                      May 9, 2007
                  
                  By:/s/Michael
                      J. Chesser(Michael
                      J. Chesser)(Chief
                      Executive Officer)Dated:
                      May 9, 2007
                  
                  By:/s/Lori
                      A. Wright(Lori
                      A. Wright)(Principal
                      Accounting Officer)
    **KANSAS
                      CITY POWER & LIGHT COMPANY**Dated:
                      May 9, 2007
                  
                  By:/s/William
                      H. Downey(William
                      H. Downey)(Chief
                      Executive Officer)Dated:
                      May 9, 2007
                  
                  By:/s/Lori
                      A. Wright(Lori
                      A. Wright)(Principal
                      Accounting Officer)




68