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, 2004

or

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

For the transition
period from _______ to _______

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

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

As of May 3, 2004 the number of
shares outstanding of (i) Great Plains Energys common stock was 69,258,755 and (ii)
Kansas City Power & Light Companys common stock was one, which was held by Great
Plains Energy Incorporated.

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

The terms Great Plains
Energy, Company, KCP&L, and consolidated
KCP&L are used throughout this report. Great Plains Energy and the
Company refer to Great Plains Energy Incorporated and its consolidated
subsidiaries, unless otherwise indicated. KCP&L refers to Kansas City
Power & Light Company, and consolidated KCP&L refers to KCP&L and
its consolidated subsidiaries.

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

# CAUTIONARY STATEMENTS
REGARDING CERTAIN FORWARD-LOOKING INFORMATION

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

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

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

2

# GLOSSARY OF TERMS

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

|Abbreviation or Acronym | Definition
|----------------------- | ----------
|
|2003 Form 10-K          |           
|35 Act                  |           
|ARO                     |           
|CO2                     |           
|Clean Air Act           |           
|Compact                 |           
|Company                 |           
|Consolidated KCP&L      |           
|Custom Energy Holdings  |           
|DOE                     |           
|EBITDA                  |           
|EEI                     |           
|EIRR                    |           
|EPA                     |           
|EPS                     |           
|ERISA                   |           
|FERC                    |           
|GDP                     |           
|GPP                     |           
|                        |           
|Great Plains Energy     |           
|HSS                     |           
|IEC                     |           
|                        |           
|IAQR                    |           
|KCC                     |           
|KCP&L                   |           
|                        |           
|KLT Energy Services     |           
|KLT Gas                 |           
|KLT Gas portfolio       |           
|KLT Inc.                |           
|KLT Investments         |           
|kWh                     |           
|MAC                     |           
|MACT                    |           
|MPSC                    |           
|MWh                     |           
|NEIL                    |           
|NOx                     |           

3

|Abbreviation or Acronym | Definition
|----------------------- | ----------
|
|NRC                     |           
|OCI                     |           
|RSAE                    |           
|RTO                     |           
|Receivables Company     |           
|                        |           
|SE Holdings             |           
|SEC                     |           
|Securities Trust        |           
|Services                |           
|SFAS                    |           
|SIP                     |           
|SO2                     |           
|SPP                     |           
|Strategic Energy        |           
|WCNOC                   |           
|Wolf Creek              |           
|Worry Free              |           

4

PART I - FINANCIAL
INFORMATION  Item 1. Consolidated Financial Statements

GREAT PLAINS ENERGY
                                         Consolidated Balance Sheets
                               (Unaudited)

|                                                           | March 31
|---------------------------------------------------------- | --------
|2003                                                      
|
|(thousands)                                               
|ASSETS                                                     |         
|Current Assets                                             |         
|Cash and cash equivalents                                  |         
|Restricted cash                                            |         
|Receivables                                                |         
|Fuel inventories, at average cost                          |         
|Materials and supplies, at average cost                    |         
|Deferred income taxes                                      |         
|Assets of discontinued operations                          |         
|Other                                                      |         
|                                                          
|Total                                                      |         
|
|Nonutility Property and Investments                        |         
|Affordable housing limited partnerships                    |         
|Nuclear decommissioning trust fund                         |         
|Other                                                      |         
|                                                          
|Total                                                      |         
|
|Utility Plant, at Original Cost                            |         
|Electric                                                   |         
|Less-accumulated depreciation                              |         
|                                                          
|Net utility plant in service                               |         
|Construction work in progress                              |         
|Nuclear fuel, net of amortization of $116,950 and $113,472 |         
|                                                          
|Total                                                      |         
|
|Deferred Charges                                           |         
|Regulatory assets                                          |         
|Prepaid pension costs                                      |         
|Goodwill                                                   |         
|Other deferred charges                                     |         
|                                                          
|Total                                                      |         
|
|Total                                                      |         
|

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

5

GREAT PLAINS ENERGY
                                         Consolidated Balance Sheets
                               (Unaudited)

|                                                             | March 31
|------------------------------------------------------------ | --------
|2003                                                        
|
|(thousands)                                                 
|LIABILITIES AND CAPITALIZATION                               |         
|Current Liabilities                                          |         
|Notes payable                                                |         
|Current maturities of long-term debt                         |         
|EIRR bonds classified as current                             |         
|Accounts payable                                             |         
|Accrued taxes                                                |         
|Accrued interest                                             |         
|Accrued payroll and vacations                                |         
|Accrued refueling outage costs                               |         
|Supplier collateral                                          |         
|Liabilities of discontinued operations                       |         
|Other                                                        |         
|                                                            
|Total                                                        |         
|
|Deferred Credits and Other Liabilities                       |         
|Deferred income taxes                                        |         
|Deferred investment tax credits                              |         
|Asset retirement obligations                                 |         
|Pension liability                                            |         
|Other                                                        |         
|                                                            
|Total                                                        |         
|
|Capitalization                                               |         
|Common stock equity                                          |         
|Common stock-150,000,000 shares authorized without par value |         
|69,259,203 shares issued, stated value                       |         
|Unearned compensation                                        |         
|Capital stock premium and expense                            |         
|Retained earnings                                            |         
|Treasury stock-448 and 3,265 shares, at cost                 |         
|Accumulated other comprehensive loss                         |         
|                                                            
|Total                                                        |         
|Cumulative preferred stock $100 par value                    |         
|3.80% - 100,000 shares issued                                |         
|4.50% - 100,000 shares issued                                |         
|4.20% - 70,000 shares issued                                 |         
|4.35% - 120,000 shares issued                                |         
|                                                            
|Total                                                        |         
|Long-term debt (Note 6)                                      |         
|                                                            
|Total                                                        |         
|
|Commitments and Contingencies (Note 11)                      |         
|
|Total                                                        |         
|

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

6

GREAT PLAINS ENERGY
                Consolidated Statements of Income                           (Unaudited)

|Three Months Ended March 31                            | 2004
|------------------------------------------------------ | ----
|
|(thousands)                                           
|Operating Revenues                                     |     
|Electric revenues - KCP&L                              |     
|Electric revenues - Strategic Energy                   |     
|Other revenues                                         |     
|                                                      
|Total                                                  |     
|
|Operating Expenses                                     |     
|Fuel                                                   |     
|Purchased power - KCP&L                                |     
|Purchased power - Strategic Energy                     |     
|Other                                                  |     
|Maintenance                                            |     
|Depreciation and depletion                             |     
|General taxes                                          |     
|Gain on property                                       |     
|                                                      
|Total                                                  |     
|
|Operating income                                       |     
|Non-operating income                                   |     
|Non-operating expenses                                 |     
|Interest charges                                       |     
|
|Income from continuing operations before income taxes, |     
|loss from equity investments and minority interest in  |     
|subsidiaries                                           |     
|Income taxes                                           |     
|Loss from equity investments                           |     
|Minority interest in subsidiaries                      |     
|
|Income from continuing operations                      |     
|Loss from discontinued operations, net of income       |     
|taxes (Notes 7 and 8)                                  |     
|
|Net income                                             |     
|Preferred stock dividend requirements                  |     
|
|Earnings available for common stock                    |     
|
|                                                       |     
|Average number of common shares outstanding            |     
|                                                       |     
|Basic and diluted earnings per common share            |     
|Continuing operations                                  |     
|Discontinued operations                                |     
|
|Basic and diluted earnings per common share            |     
|
|                                                       |     
|Cash dividends per common share                        |     
|

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

7

GREAT PLAINS ENERGY
                Consolidated Statements of Cash Flows
                             (Unaudited)

|Three Months Ended March 31                                  | 2004
|------------------------------------------------------------ | ----
|
|(thousands)                                                 
|Cash Flows from Operating Activities                         |     
|Net income                                                   |     
|Less: Loss from discontinued operations, net of income taxes |     
|                                                            
|Net income from continuing operations                        |     
|Adjustments to reconcile income to net cash                  |     
|from operating activities:                                   |     
|Depreciation and depletion                                   |     
|Amortization of:                                             |     
|Nuclear fuel                                                 |     
|Other                                                        |     
|Deferred income taxes (net)                                  |     
|Investment tax credit amortization                           |     
|Loss from equity investments                                 |     
|Gain on property                                             |     
|Minority interest                                            |     
|Other operating activities (Note 4)                          |     
|                                                            
|Net cash from operating activities                           |     
|
|Cash Flows from Investing Activities                         |     
|Utility capital expenditures                                 |     
|Allowance for borrowed funds used during construction        |     
|Purchases of investments                                     |     
|Purchases of nonutility property                             |     
|Proceeds from disposition of property                        |     
|Hawthorn No. 5 partial insurance recovery                    |     
|Hawthorn No. 5 partial litigation settlements                |     
|Other investing activities                                   |     
|                                                            
|Net cash from investing activities                           |     
|
|Cash Flows from Financing Activities                         |     
|Repayment of long-term debt                                  |     
|Net change in short-term borrowings                          |     
|Dividends paid                                               |     
|Other financing activities                                   |     
|                                                            
|Net cash from financing activities                           |     
|
|Net Change in Cash and Cash Equivalents                      |     
|Cash and Cash Equivalents from Continuing                    |     
|Operations at Beginning of Year                              |     
|                                                            
|Cash and Cash Equivalents from Continuing                    |     
|Operations at End of Period                                  |     
|
|                                                             |     
|
|Net Change in Cash and Cash Equivalents from                 |     
|Discontinued Operations                                      |     
|Cash and Cash Equivalents from Discontinued                  |     
|Operations at Beginning of Year                              |     
|                                                            
|Cash and Cash Equivalents from Discontinued                  |     
|Operations at End of Period                                  |     
|

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

8

GREAT PLAINS ENERGY
          Consolidated Statements of Common Stock Equity                  (Unaudited)

|Three Months Ended March 31          | 2004 | 2003
|------------------------------------ | ---- | ----
|
|
|(thousands, except share data)      
|
|Common Stock                         |      |     
|
|Unearned Compensation                |      |     
|Beginning balance                    |      |     
|Compensation expense recognized      |      |     
|                                    
|Ending balance                       |      |     
|
|Capital Stock Premium and Expense    |      |     
|Beginning balance                    |      |     
|Other                                |      |     
|                                    
|Ending balance                       |      |     
|
|Retained Earnings                    |      |     
|Beginning balance                    |      |     
|Net income                           |      |     
|Loss on reissuance of treasury stock |      |     
|Dividends:                           |      |     
|Common stock                         |      |     
|Preferred stock - at required rates  |      |     
|                                    
|Ending balance                       |      |     
|
|Treasury Stock                       |      |     
|Beginning balance                    |      |     
|Treasury shares acquired             |      |     
|Treasury shares reissued             |      |     
|                                    
|Ending balance                       |      |     
|
|Accumulated Other Comprehensive Loss |      |     
|Beginning balance                    |      |     
|Derivative hedging activity          |      |     
|Minimum pension obligation           |      |     
|                                    
|Ending balance                       |      |     
|
|Total Common Stock Equity            |      |     
|

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

9

GREAT PLAINS ENERGY
            Consolidated Statements of Comprehensive Income
                              (Unaudited)

|Three Months Ended March 31                           | 2004
|----------------------------------------------------- | ----
|
|(thousands)                                          
|Net income                                            |     
|
|Other comprehensive income                            |     
|Gain on derivative hedging instruments                |     
|Income tax expense                                    |     
|                                                     
|Net gain on derivative hedging instruments            |     
|                                                     
|Change in minimum pension obligation                  |     
|Income tax expense                                    |     
|                                                     
|Net change in minimum pension obligation              |     
|                                                     
|Reclassification to revenues and expenses, net of tax |     
|
|Comprehensive income                                  |     
|

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

10

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

|                                                           | March 31
|---------------------------------------------------------- | --------
|2003                                                      
|
|(thousands)                                               
|ASSETS                                                     |         
|Current Assets                                             |         
|Cash and cash equivalents                                  |         
|Receivables                                                |         
|Fuel inventories, at average cost                          |         
|Materials and supplies, at average cost                    |         
|Deferred income taxes                                      |         
|Other                                                      |         
|                                                          
|Total                                                      |         
|
|Nonutility Property and Investments                        |         
|Nuclear decommissioning trust fund                         |         
|Other                                                      |         
|                                                          
|Total                                                      |         
|
|Utility Plant, at Original Cost                            |         
|Electric                                                   |         
|Less-accumulated depreciation                              |         
|                                                          
|Net utility plant in service                               |         
|Construction work in progress                              |         
|Nuclear fuel, net of amortization of $116,950 and $113,472 |         
|                                                          
|Total                                                      |         
|
|Deferred Charges                                           |         
|Regulatory assets                                          |         
|Prepaid pension costs                                      |         
|Other deferred charges                                     |         
|                                                          
|Total                                                      |         
|
|Total                                                      |         
|

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

11

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

|                                                       | March 31
|------------------------------------------------------ | --------
|2003                                                  
|
|(thousands)                                           
|LIABILITIES AND CAPITALIZATION                         |         
|Current Liabilities                                    |         
|Notes payable                                          |         
|Notes payable to Great Plains Energy                   |         
|Current maturities of long-term debt                   |         
|EIRR bonds classified as current                       |         
|Accounts payable                                       |         
|Accrued taxes                                          |         
|Accrued interest                                       |         
|Accrued payroll and vacations                          |         
|Accrued refueling outage costs                         |         
|Other                                                  |         
|                                                      
|Total                                                  |         
|
|Deferred Credits and Other Liabilities                 |         
|Deferred income taxes                                  |         
|Deferred investment tax credits                        |         
|Asset retirement obligations                           |         
|Pension liability                                      |         
|Other                                                  |         
|                                                      
|Total                                                  |         
|
|Capitalization                                         |         
|Common stock equity                                    |         
|Common stock-1,000 shares authorized without par value |         
|1 share issued, stated value                           |         
|Retained earnings                                      |         
|Accumulated other comprehensive loss                   |         
|                                                      
|Total                                                  |         
|Long-term debt (Note 6)                                |         
|                                                      
|Total                                                  |         
|
|Commitments and Contingencies (Note 11)                |         
|
|Total                                                  |         
|

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

12

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

|Three Months Ended March 31                           | 2004
|----------------------------------------------------- | ----
|
|(thousands)                                          
|Operating Revenues                                    |     
|Electric revenues                                     |     
|Other revenues                                        |     
|                                                     
|Total                                                 |     
|
|Operating Expenses                                    |     
|Fuel                                                  |     
|Purchased power                                       |     
|Other                                                 |     
|Maintenance                                           |     
|Depreciation and depletion                            |     
|General taxes                                         |     
|Gain on property                                      |     
|                                                     
|Total                                                 |     
|
|Operating income                                      |     
|Non-operating income                                  |     
|Non-operating expenses                                |     
|Interest charges                                      |     
|
|Income from continuing operations before income taxes |     
|and minority interest in subsidiaries                 |     
|Income taxes                                          |     
|Minority interest in subsidiaries                     |     
|
|Income from continuing operations                     |     
|Loss from discontinued operations, net                |     
|of income taxes (Note 8)                              |     
|
|Net income                                            |     
|

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

13

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

|Three Months Ended March 31                                   | 2004
|------------------------------------------------------------- | ----
|
|(thousands)                                                  
|Cash Flows from Operating Activities                          |     
|Net income                                                    |     
|Less:  Loss from discontinued operations, net of income taxes |     
|                                                             
|Net income from continuing operations                         |     
|Adjustments to reconcile income to net cash                   |     
|from operating activities:                                    |     
|Depreciation and depletion                                    |     
|Amortization of:                                              |     
|Nuclear fuel                                                  |     
|Other                                                         |     
|Deferred income taxes (net)                                   |     
|Investment tax credit amortization                            |     
|Gain on property                                              |     
|Minority interest                                             |     
|Other operating activities (Note 4)                           |     
|                                                             
|Net cash from operating activities                            |     
|
|Cash Flows from Investing Activities                          |     
|Utility capital expenditures                                  |     
|Allowance for borrowed funds used during construction         |     
|Purchases of investments                                      |     
|Purchases of nonutility property                              |     
|Proceeds from sale of assets                                  |     
|Hawthorn No. 5 partial insurance recovery                     |     
|Hawthorn No. 5 partial litigation settlements                 |     
|Other investing activities                                    |     
|                                                             
|Net cash from investing activities                            |     
|
|Cash Flows from Financing Activities                          |     
|Repayment of long-term debt                                   |     
|Net change in short-term borrowings                           |     
|Dividends paid to Great Plains Energy                         |     
|Equity contribution from Great Plains Energy                  |     
|Other financing activities                                    |     
|                                                             
|Net cash from financing activities                            |     
|
|Net Change in Cash and Cash Equivalents                       |     
|Cash and Cash Equivalents from Continuing                     |     
|Operations at Beginning of Year                               |     
|                                                             
|Cash and Cash Equivalents from Continuing                     |     
|Operations at End of Period                                   |     
|
|                                                              |     
|
|Net Change in Cash and Cash Equivalents from                  |     
|Discontinued Operations                                       |     
|Cash and Cash Equivalents from Discontinued                   |     
|Operations at Beginning of Year                               |     
|                                                             
|Cash and Cash Equivalents from Discontinued                   |     
|Operations at End of Period                                   |     
|

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

14

KANSAS CITY POWER & LIGHT
COMPANY     Consolidated Statements of Common Stock Equity
                      (Unaudited)

|Three Months Ended March 31                  | 2004 | 2003
|-------------------------------------------- | ---- | ----
|
|
|(thousands, except share data)              
|Common Stock                                 |      |     
|Beginning balance                            |      |     
|Equity contribution from Great Plains Energy |      |     
|                                            
|Ending balance                               |      |     
|
|Retained Earnings                            |      |     
|Beginning balance                            |      |     
|Net income                                   |      |     
|Dividends:                                   |      |     
|Common stock held by Great Plains Energy     |      |     
|                                            
|Ending balance                               |      |     
|
|Accumulated Other Comprehensive Loss         |      |     
|Beginning balance                            |      |     
|Derivative hedging activity                  |      |     
|Minimum pension obligation                   |      |     
|                                            
|Ending balance                               |      |     
|
|Total Common Stock Equity                    |      |     
|

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

15

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

|Three Months Ended March 31                           | 2004
|----------------------------------------------------- | ----
|
|(thousands)                                          
|Net income                                            |     
|
|Other comprehensive income                            |     
|Gain on derivative hedging instruments                |     
|Income tax expense                                    |     
|                                                     
|Net gain on derivative hedging instruments            |     
|                                                     
|Change in minimum pension obligation                  |     
|Income tax expense                                    |     
|                                                     
|Net change in minimum pension obligation              |     
|                                                     
|Reclassification to revenues and expenses, net of tax |     
|
|Comprehensive income                                  |     
|

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

16

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

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

In managements opinion, the
consolidated interim financial statements reflect all adjustments (which, unless otherwise
noted, include only normal recurring adjustments) necessary to present fairly the results
of operations for the interim periods presented. These statements and notes should be read
in connection with the applicable financial statements and related notes included in the
combined 2003 annual report on Form 10-K, as amended by Amendment No. 1 on Form 10-K/A
(2003 Form 10-K) of Great Plains Energy and consolidated KCP&L.

# 1. ORGANIZATION

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

Great Plains Energy has five direct
subsidiaries:

| | o |  | KCP&L, an integrated, regulated electric utility, which provides reliable, affordable
electricity to customers in the states of Missouri and Kansas. KCP&L is one of Great
Plains Energys two reportable segments. KCP&Ls wholly-owned subsidiary,
Home Service Solutions Inc. (HSS) has invested in Worry Free Service, Inc. (Worry Free).
Worry Free is no longer actively pursuing new customers, and management does not
anticipate significant additional capital investments in Worry Free. Prior to the June
2003 disposition of R.S. Andrews Enterprises, Inc. (RSAE), HSS held an investment in RSAE.
See Note 8 for additional information concerning the June 2003 disposition of RSAE.
KCP&L and its subsidiaries are referred to as consolidated KCP&L.
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | o |  | KLT Inc. is an intermediate holding company that primarily holds interests in Strategic
Energy, L.L.C. (Strategic Energy), KLT Gas Inc. (KLT Gas) and affordable housing limited
partnerships. Strategic Energy is the other reportable segment of Great Plains Energy. In
February 2004, the Company announced its decision to sell the KLT Gas natural gas
properties (KLT Gas portfolio) and exit the gas business. See Note 7 for additional
information.
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | o |  | Great Plain Power Incorporated (GPP) focuses on the development of wholesale generation.
Management decided during 2002 to limit the operations of GPP to the siting and permitting
process that began in 2001 for potential new generation until market conditions improve or
the Company makes further changes in its business strategy. The siting and permitting
process is currently focused on two potential new generation sites. GPP has made no
significant investments to date.
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

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

17

| | o |  | Great Plains Energy Services Incorporated (Services) was formed in 2003 as a service
company under the 35 Act to provide support and administrative services to Great Plains
Energy and certain of its subsidiaries.
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

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

# 2. CASH

Cash and Cash EquivalentsCash and cash equivalents consist of
highly liquid investments with original maturities of three months or less. For Great
Plains Energy this includes Strategic Energys cash held in trust of $15.9 million
and $16.1 million at March 31, 2004, and December 31, 2003, 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 for
electricity purchased by Strategic Energy. On a monthly basis, any remittances into the
lockboxes in excess of disbursements to the supplier are remitted back to Strategic
Energy.

Restricted CashStrategic Energy has entered into
Master Power Purchase and Sale Agreements with its power suppliers. Certain of these
agreements contain provisions whereby, to the extent Strategic Energy has a net exposure
to the purchased power supplier, collateral requirements are to be maintained. Collateral
posted in the form of cash to Strategic Energy is restricted by agreement, but would
become unrestricted in the event of a default by the purchased power supplier. Restricted
cash collateral at March 31, 2004, and December 31, 2003, was $19.6 million and $20.9
million, respectively.

# 3. BASIC AND DILUTED
EARNINGS PER COMMON SHARE CALCULATION

There was no significant dilutive
effect on Great Plains Energys earnings per common share (EPS) from other securities
for the three months ended March 31, 2004 and 2003. To determine EPS, preferred stock
dividend requirements are deducted from income from continuing operations and net income
before dividing by average number of common shares outstanding. The loss per share impact
of discontinued operations, net of income taxes, is determined by dividing the loss from
discontinued operations, net of income taxes, by the average number of common shares
outstanding.

The following tables reconcile Great
Plains Energys basic and diluted EPS calculation:

|                                          
|------------------------------------------
|
|
|(thousands except per share amounts)      
|Income from continuing operations         
|                                          
|Less: Preferred stock dividend requirement
|Basic EPS                                 
|Income available to common stockholders   
|Add: effect of dilutive securities        
|                                          
|Diluted EPS                               
|

18

|                                          
|------------------------------------------
|
|
|(thousands except per share amounts)      
|Income from continuing operations         
|                                          
|Less: Preferred stock dividend requirement
|Basic EPS                                 
|Income available to common stockholders   
|Add: effect of dilutive securities        
|                                          
|Diluted EPS                               
|

As of March 31, 2004, there were no
anti-dilutive shares. Options to purchase 341,572 shares of common stock as of March 31,
2003, were excluded from the computation of diluted EPS because the option exercise prices
were greater than the average market price of the common shares at the end of the period.

# 4. SUPPLEMENTAL CASH
FLOW INFORMATION

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

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

19

KCP&L adopted Statement of
Financial Accounting Standards (SFAS) No. 143, Accounting for Asset Retirement
Obligations, on January 1, 2003, and recorded a liability for asset retirement
obligations (ARO) of $99.2 million and increased property and equipment, net of
accumulated depreciation, by $18.3 million. KCP&L is a regulated utility subject to
the provisions of SFAS No. 71, Accounting for the Effects of Certain Types of
Regulation, and management believes it is probable that any differences between
expenses under SFAS No. 143 and expenses recovered currently in rates will be recoverable
in future rates. As a result, the $16.3 million net cumulative effect of the adoption of
SFAS No. 143 was recorded as a regulatory asset and therefore, had no impact on net
income. The adoption of SFAS No. 143 had no effect on Great Plains Energy and consolidated
KCP&Ls cash flows.

# 5. RECEIVABLES

The Companys receivables are
comprised of the following:

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

KCP&L has entered into a
revolving agreement, which expires in October 2004, to sell all of its right, title and
interest in the majority of its customer accounts receivable to Kansas City Power &
Light Receivables Company (Receivables Company), which in turn sells most of the
receivables to outside investors. KCP&L expects the agreement to be renewed annually.
Accounts receivable sold under this revolving agreement totaled $78.4 million and $87.9
million at March 31, 2004, and December 31, 2003, respectively. These sales included
unbilled receivables of $26.7 million and $28.4 million at March 31, 2004, and December
31, 2003, respectively. As a result of the sales to outside investors, Receivables Company
received $70 million in cash, which was forwarded to KCP&L as consideration for its
sale. The agreement is structured as a true sale under which the creditors of Receivables
Company are entitled to be satisfied out of the assets of Receivables Company prior to any
value being returned to KCP&L or its creditors.

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

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

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

Consolidated KCP&Ls other
receivables at March 31, 2004, and December 31, 2003, consist primarily of receivables
from partners in jointly-owned electric utility plants, wholesale sales receivables,

20

insurance recoveries and accounts receivable held by Worry Free. Great Plains
Energys other receivables at March 31, 2004, and December 31, 2003, are primarily
the accounts receivable held by Strategic Energy including unbilled receivables of $77.6
million and $81.2 million at March 31, 2004, and December 31, 2003, respectively.

# 6. DEBT

|                                                      
|------------------------------------------------------
|
|
|
|(thousands)                                           
|Consolidated KCP&L                                    
|General Mortgage Bonds                                
|7.55%*** Medium-Term Notes                            
|2.16%* and 2.36%** EIRR Bonds                         
|Senior Notes                                          
|7.125%                                                
|6.500%                                                
|6.000%                                                
|Unamortized discount                                  
|EIRR Bonds                                            
|2.10%* and  2.16%** Series A & B                      
|2.25%*** Series C                                     
|2.10%* and  2.16%** Series D                          
|8.30% Junior Subordinated Deferred Interest Bonds     
|1.19%* and 1.25%** Combustion Turbine Synthetic Lease 
|                                                      
|Current liabilities                                   
|EIRR bonds classified as current                      
|Current maturities                                    
|                                                      
|Total consolidated KCP&L excluding current liabilities
|                                                      
|Other Great Plains Energy                             
|7.84%*** Affordable Housing Notes                     
|                                                      
|Current maturities                                    
|
|                                                      
|Total Great Plains Energy excluding current maturities
|

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

During the first quarter of 2004,
Great Plains Energy syndicated a $150.0 million 364-day revolving credit facility and a
$150.0 million three-year revolving credit facility with a group of banks. These
facilities replaced a $225.0 million revolving credit facility with a group of banks. A
default by Great Plains Energy or any of its significant subsidiaries of other
indebtedness totaling more than $25.0 million is a default under these bank lines. Under
the terms of these agreements, Great Plains Energy is required to maintain a consolidated
indebtedness to consolidated capitalization ratio not greater than 0.65 to 1.0 at all
times and an interest coverage ratio greater than 2.25 to 1.0, as those ratios are defined
in the agreement. At March 31, 2004, the Company was in compliance with these covenants.
At March 31, 2004, Great Plains Energy had $95.0 million of outstanding borrowings under
the 364-day revolving credit facility with a weighted-average interest rate of 2.04%.

21

Strategic Energy maintains a secured
revolving credit facility for up to $95 million with a group of banks. The maximum amount
available for loans and letters of credit under the facility is the lesser of $95 million
or the borrowing base, as defined in the agreement. The borrowing base generally is the
sum of certain Strategic Energy accounts receivable and the amount of the Great Plains
Energy guarantee which was $40.0 million at March 31, 2004. At March 31, 2004, Strategic
Energy had a minimum fixed charge ratio, as defined in the agreement, of at least 1.05 to
1.0; however, if the ratio drops below 1.05 to 1.0, Great Plains Energys guarantee
amount is required to be increased based on quarterly calculations. At March 31, 2004,
$53.1 million in letters of credit had been issued and there were no borrowings under the agreement,
leaving $32.2 million of capacity available for loans and additional letters of credit.
The termination date of the facility has been extended from June 2004 to August 2004.
Under the terms of this agreement, Strategic Energy is required to maintain a minimum net
worth of $30 million and a maximum debt to EBITDA ratio of 2.0 to 1.0, as those are
defined in the agreement. At March 31, 2004, Strategic Energy was in compliance with these
covenants.

# 7. KLT GAS DISCONTINUED OPERATIONS

At its February 2004 meeting, the
Board of Directors approved managements recommendation to sell the KLT Gas portfolio
and exit the gas business. Consequently, in the first quarter of 2004, the KLT Gas
portfolio is reported as discontinued operations and KLT Gas historical activities
have been reclassified in accordance with SFAS No. 144 Accounting for the Impairment
or Disposal of Long-lived Assets. In the first quarter of 2004, the Company wrote
down the KLT Gas portfolio to its estimated net realizable value, which reduced first
quarter 2004 earnings by $1.2 million, or $0.02 per share. The first quarter 2004 loss
from discontinued operations also reflects a loss of $1.0 million, or $0.01 per share,
from the wind down operations. The first quarter of 2003 reflects a loss from discontinued
operations of $6.3 million, or $0.09 per share, and includes a loss of $5.5 million, or
$0.08 per share, related to an impairment on a Rocky Mountain project. To the extent
actual proceeds from the sale of the KLT Gas portfolio differ from the estimated
realizable value used to determine the write down, any difference will be reflected by
Great Plains Energy on its consolidated statement of income at the conclusion of the sale
process. The following table summarizes the discontinued operations.

|                                                    
|----------------------------------------------------
|
|
|(millions)                                          
|Revenues                                            
|
|                                                    
|Loss on discontinued operations before income taxes 
|Income tax benefit                                  
|                                                    
|                                                    
|Loss on discontinued operations, net of income taxes
|

22

Assets and liabilities of the
discontinued operations are summarized in the following table.

|                                            
|--------------------------------------------
|
|
|
|(millions)                                  
|Current assets                              
|Gas property and investments                
|Other nonutility property and investments   
|Accrued taxes                               
|Deferred income taxes                       
|                                            
|Total assets of discontinued operations     
|
|                                            
|Current liabilities                         
|Asset retirement obligations                
|                                            
|Total liabilities of discontinued operations
|

# 8. DISPOSITION OF
OWNERSHIP INTEREST IN R.S. ANDREWS ENTERPRISES, INC.

On June 13, 2003, HSS board of
directors approved a plan to dispose of its interest in residential services provider
RSAE. On June 30, 2003, HSS completed the disposition of its interest in RSAE. The
financial statements reflect RSAE as discontinued operations for all periods presented as
prescribed under SFAS No. 144. The following table summarizes the discontinued operations.

|                                                    
|----------------------------------------------------
|
|
|(millions)                                          
|Revenues                                            
|
|                                                    
|Loss on discontinued operations before income taxes 
|Income tax benefit (a)                              
|                                                    
|                                                    
|Loss on discontinued operations, net of income taxes
|

|    |  | 
|--- |  | 
|(a) |  | 
|    |  | 
|    |  | 
|    |  | 

# 9. PENSION PLANS AND
OTHER EMPLOYEE BENEFITS

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

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

23

The following table provides the net
periodic benefit costs by component. These costs reflect total plan benefit costs prior to
the effects of capitalization and sharing with joint-owners of power plants.

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

# 10. RELATED PARTY
TRANSACTIONS AND RELATIONSHIPS

Custom Energy Holdings,
L.L.C. (Custom Energy Holdings) holds 100% of the direct ownership interests in Strategic
Energy.  Through March 31, 2004, Great Plains Energy held an 89% indirect ownership
position in Strategic Energy.  SE Holdings, L.L.C. (SE Holdings) held the remaining
indirect ownership position in Strategic Energy.  Richard Zomnir, currently Chief
Executive Officer of Strategic Energy and certain other employees of Strategic Energy
held direct or indirect interests in SE Holdings.  Mr. Zomnir has disclosed that he held
an approximate 25% interest in SE Holdings.  SE Holdings had a put option to sell all or
part of its indirect interest in Strategic Energy (Put Interest) to Custom Energy
Holdings at any time within the 90 days following January 31, 2004, at fair market value.
 On February 9, 2004, a letter agreement was entered into between SE Holdings and IEC on
behalf of certain of its affiliates, including Great Plains Energy, agreeing to a
procedure for determining the fair market value of the Put Interest.  In April 2004,
Great Plains Energy announced the purchase through IEC of the Put Interest.  The
acquisition of the Put Interest will increase Great Plains Energys indirect ownership of
Strategic Energy to approximately 99%.  The fair market value of the Put Interest was
determined to be $88.8 million, excluding transaction costs.  In early May 2004, IEC paid $80.7 million to
close the majority of the transaction.  The remainder is anticipated to close by the end
of the second quarter pending agreement of certain issues between Strategic Energy and SE Holdings regarding legal proceedings as
outlined in Note 12.  Upon closing the remainder of the transaction, SE Holdings will
continue to be a member of Custom Energy Holdings and be represented on the Management
Committee of Custom Energy Holdings and Strategic Energy.

Custom Energy Holdings'
business and affairs are controlled and managed by a three member Management Committee
composed of one representative designated by KLT Energy Services Inc. (KLT Energy
Services), one representative designated by IEC, and one representative designated by SE
Holdings.  Certain actions (including amendment of Custom Energy Holdings operating
agreement, approval of actions in contravention of the operating agreement, approval of a
dissolution of Custom Energy Holdings, additional capital contributions and assumption of
recourse indebtedness) require the unanimous consent of all the members of Custom Energy
Holdings.

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

24

# 11. COMMITMENTS AND
CONTINGENCIES

# Nuclear Liability and
Insurance

Liability InsuranceThe Price-Anderson Act currently
limits the combined public liability of nuclear reactor owners to $10.9 billion for claims
that could arise from a single nuclear incident. The owners of Wolf Creek, a nuclear
generating station, (Owners) carry the maximum available commercial insurance of $0.3
billion. Secondary Financial Protection, an assessment plan mandated by the Nuclear
Regulatory Commission (NRC), provides insurance for the $10.6 billion balance.

Under Secondary Financial Protection,
if there were a catastrophic nuclear incident involving any of the nations licensed
reactors, the Owners would be subject to a maximum retrospective assessment per incident
of up to $95.8 million plus up to an additional 5% surcharge for a total of $100.6 million
($47.3 million, KCP&Ls 47% share). The Owners are jointly and severally liable
for these charges, payable at a rate not to exceed $10 million ($5 million,
KCP&Ls 47% share) per incident per year, excluding applicable premium taxes. The
assessment, most recently revised in 2003, is subject to an inflation adjustment based on
the Consumer Price Index and renewal of the Price-Anderson Act by Congress.

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

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

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

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

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

Low-Level WasteThe Low-Level Radioactive Waste
Policy Amendments Act of 1985 mandated that the various states, individually or through
interstate compacts, develop alternative low-level radioactive waste disposal facilities.
The states of Kansas, Nebraska, Arkansas, Louisiana and Oklahoma formed the Central
Interstate Low-Level Radioactive Waste Compact (Compact) and selected a site in northern
Nebraska to locate a disposal facility. WCNOC and the owners of the other five nuclear
units in the Compact provided most of the pre-construction financing for this project.
KCP&Ls net investment in the Compact was $7.4 million at March 31, 2004 and
December 31, 2003.

25

Significant opposition to the project
has been raised by Nebraska officials and residents in the area of the proposed facility
and attempts have been made through litigation and proposed legislation in Nebraska to
slow down or stop development of the facility. On December 18, 1998, the application for a
license to construct this project was denied. After the license denial, WCNOC and others
filed a lawsuit in federal court contending Nebraska officials acted in bad faith while
handling the license application. In September 2002, the U.S. District Court Judge
presiding over the Central Interstate Compact Commissions federal bad
faith lawsuit against the State of Nebraska issued his decision in the case finding
clear evidence that the State of Nebraska acted in bad faith in processing the license
application for a low-level radioactive waste disposal site in Nebraska and rendered a
judgment on behalf of the Compact in the amount of $151.4 million against the state. The
state appealed this decision to the U.S. Court of Appeals for the Eighth Circuit. On
February 18, 2004, a three-judge panel of the appellate court unanimously affirmed the
trial courts decision in its entirety. On March 2, 2004, Nebraska filed a Petition
for Rehearing En Banc with the U.S. Court of Appeals for the Eighth Circuit.
Nebraskas petition was denied by the court on April 21, 2004. Based on the favorable
outcome of the trial and appeal, in KCP&Ls opinion, there is a greater
possibility of reversing the states license denial once the decision in this case is
final.

In May 1999, the Nebraska legislature
passed a bill withdrawing Nebraska from the Compact. In August 1999, the Nebraska Governor
gave official notice of the withdrawal to the other member states effective in August
2004. In June 2003, the Compact revoked Nebraskas membership in the Compact
effective July 17, 2004. As a result, Nebraskas legal rights under the Compact will
be extinguished on the effective date of either the Compacts revocation of
Nebraskas membership or Nebraskas withdrawal from the Compact. If membership
is severed by virtue of revocation by the Compact, any legal obligations Nebraska incurred
prior to revocation shall not cease until Nebraska fulfills them. The Compact has taken
the position that Nebraskas legal obligations include the obligation to be the host
state for a disposal site. Nebraskas legal obligations, under the Compacts
position, are more extensive than would exist if Nebraskas withdrawal preceded the
revocation of its membership. On August 22, 2003, Nebraska filed a new lawsuit in U.S.
District Court in Nebraska seeking to have the Compacts action deemed void; it does
not seek damages.

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

KCP&L operates in an
environmentally responsible manner and seeks to use current technology to avoid and treat
contamination. KCP&L regularly conducts environmental audits designed to ensure
compliance with governmental regulations and to detect contamination. Governmental bodies,
however, may impose additional or more restrictive environmental regulations that could
require substantial changes to operations or facilities at a significant cost. At March
31, 2004, and December 31, 2003, KCP&L had $1.8 million accrued for environmental
remediation expenses covering water monitoring at one site and unasserted claims for
remediation at a second site. The amounts accrued were established on an undiscounted
basis and KCP&L does not currently have an estimated time frame over which the accrued
amounts may be paid out.

Discussed below are issues that may
require material expenditures to comply with environmental laws and regulations.
KCP&Ls expectation is that any such expenditures will be recovered through
rates.

26

Clean Air LegislationCongress is currently debating
numerous bills that could make significant changes to the Clean Air Act Amendments of 1990
(Clean Air Act) including potential establishment of nationwide limits on power plant
emissions for several specific pollutants. Some of these legislative bills address oxides
of sulfur and nitrogen (SOxand NOx), mercury and carbon dioxide
(CO2), while other legislative bills address SOx, NOx and
mercury, and some legislative bills address CO2 by itself. There are various
compliance dates and compliance limits stipulated in the numerous legislative bills being
debated. These bills have the potential for a significant financial impact on KCP&L
through the installation of new pollution control equipment to achieve compliance if new
nationwide limits are enacted. The financial consequences to KCP&L cannot be
accurately determined until the final legislation is passed. However, KCP&L would seek
recovery of capital costs and expenses for such compliance through rates. KCP&L will
continue to monitor the progress of these bills.

EPA Phase II
NOx SIP CallOn April 1, 2004 the Environmental
Protection Agency (EPA) issued final Phase II NOx State Implementation Plan
(SIP) Call regulation, which specifically excludes coal-fired power plants in the western
part of Missouri, including all of KCP&Ls Missouri coal-fired plants, from the
NOx SIP Call.

NOx and
SO2 Regulations-Proposed Interstate Air Quality RuleIn the January 30, 2004, Federal
Register, the EPA published a proposed regulation titled the Interstate Air Quality Rule
(IAQR), which addresses SO2 and NOx emissions. The proposed IAQR is
designed to reduce NOx and SO2emissions 65% and 70%, respectively,
below current levels in a two-phased program between 2010 and 2015.

If coal-fired plants in Missouri and
Kansas are required to implement reductions under the proposed IAQR, KCP&L would need
to incur significant capital costs, purchase power or purchase emission allowances.
Preliminary analysis of the proposed regulation indicates that selective catalytic
reduction technology for NOx control and scrubbers for SO2 control
may be required for some of the KCP&L units. Currently, KCP&L estimates that
additional capital expenditures could range from $385 million to $585 million. The timing
of the installation of such control equipment is uncertain pending the final regulation
being issued. The final regulation is expected to contain specific compliance dates and
compliance levels, final determination of whether Kansas and/or Missouri are included, as
well as the applicability of accumulated SO2 allowances for future compliance.
KCP&L continues to refine these preliminary estimates and explore alternatives. The
ultimate cost of these regulations, if any, could be significantly different from the
amounts estimated above. The IAQR is scheduled to be finalized in December 2004. As
discussed below, certain of the control technology for SO2and NOxwill also aid in the control of mercury. If mercury controls are required to be
implemented prior to the IAQR, the above estimates should be reduced by $130 million.

Mercury EmissionsIn July 2000, the National Research
Council published its findings of a study under the Clean Air Act, which stated that power
plants that burn fossil fuels, particularly coal, generate the greatest amount of mercury
emissions. As a result, in the January 30, 2004, and March 16, 2004, Federal Registers,
the EPA published proposed regulations for controlling mercury emissions from coal-fired
power plants that contained three options. Two of the options, the EPAs preferred
approaches, call for regulating mercury via emission trading regimes under section 111 or
section 112 of the Clean Air Act (cap and trade options), and the third option would
require utilities to install controls known as maximum achievable control technology
(MACT). Comments on the three proposed options are due June 29, 2004. The EPA is scheduled
to issue final rules by March 2005.

Under either of the cap and trade
options, both of which would become applicable in 2010, the EPA would establish a
mechanism by which mercury emissions from new and existing coal-fired plants

27

would be
capped at specified, nationwide levels. A first phase cap of 34 tons would become
effective on January 1, 2010, and a second phase cap of 15 tons would become effective on
January 1, 2018. Facilities would demonstrate compliance with the standard by holding one
allowance for each ounce of mercury emitted in any given year and allowances would be
readily transferable among all regulated facilities nationwide. Under this option
KCP&L would have the option of purchasing mercury allowances that would be available
nationwide or installing pollution control equipment to achieve compliance. While it is
expected that mercury allowances would be available for purchase at a reasonable price in
the 2010-2018 timeframe, the significant reduction in the nationwide cap in 2018 may
hamper KCP&Ls ability to obtain reasonably priced allowances beyond 2018.
Therefore, capital expenditures may be required in the 2016-2018 timeframe to install
mercury pollution control equipment.

Under the MACT option, KCP&L
could incur capital expenses prior to the 2007-2008 timeframe when the regulation would be
applicable. This option would require compliance on a facility basis and therefore the
option of trading nationwide mercury allowances would not be available. The EPA stated in
the preamble that there are no adequately demonstrated control technologies specifically
designed to reduce mercury emissions from coal-fired plants. However, the EPA also stated
it is confident such technologies will be commercially available by 2007. There is
currently considerable debate at the EPA and within the utility industry whether the
installation of pollution control equipment for the control of NOxand
SO2 under the IAQR might simultaneously remove mercury to the specified MACT
regulatory levels, which is referred to as the co-benefit approach. If this assumption is
correct, and if the IAQR became final and all of KCP&Ls units were subject to
the final regulation, KCP&L would not be required to install additional mercury
control equipment to achieve compliance with this regulation. However, if the co-benefit
assumption is not correct, or if KCP&L units located in Missouri and/or Kansas were
not included in the final regulation, KCP&L would be required to install mercury
control equipment prior to 2007. If KCP&L were required to install mercury control
equipment on all of its coal-fired plants, it is anticipated that activated carbon
injection in conjunction with a baghouse would be the mercury control equipment that would
need to be installed at a projected cost to KCP&L of approximately $151 million.

KCP&L is a participant in the
Department of Energy (DOE) project at the Sunflower Electric Holcomb plant to investigate
control technology options for mercury removal from coal-fired plants burning sub
bituminous coal.

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

There are several legislative bills
being debated in the U.S. congress that address the CO2 issue, including
establishing a nationwide cap on CO2 levels. There are various compliance dates
and nationwide caps stipulated in the numerous legislative bills being debated. These
bills have the potential for a significant financial impact on KCP&L in conjunction
with achieving compliance with the proposed new nationwide limits. However, the financial
consequences to KCP&L cannot be determined until final legislation is passed.
KCP&L will continue to monitor the progress of these bills.

On February 14, 2002, President Bush
unveiled his Clear Skies Initiative, which included a climate change policy. The climate
change policy is a voluntary program that relies heavily on incentives to encourage
industry to voluntarily limit emissions. The strategy includes tax credits, energy
conservation programs, funding for research into new technologies, and a plan to encourage

28

companies to track and report their emissions so that
companies could gain credits for use
in any future emissions trading program. The greenhouse strategy links growth in emissions
of greenhouse gases to economic output. The administrations strategy is intended to
reduce the greenhouse gas intensity of the U.S. economy by 18% over the next 10 years.
Greenhouse gas intensity measures the ratio of greenhouse gas emissions to economic output
as measured by Gross Domestic Product (GDP). Under this plan, as the economy grows,
greenhouse gases also would continue to grow, although at a slower rate than they would
have without these policies in place. When viewed per unit of economic output, the rate of
emissions would drop. The plan projects that the U.S. will lower its rate of greenhouse
gas emissions from an estimated 183 metric tons per $1 million of GDP in 2002 to 151
metric tons per $1 million of GDP by 2012.

On December 19, 2002, Great Plains
Energy joined the Power Partners through Edison Electric Institute (EEI). Power Partners
is a voluntary program with the DOE under which utilities voluntarily commit to undertake
measures to reduce, avoid or sequester CO2 emissions. Eventually, industry
sectors and individual companies are expected to enter into an umbrella memorandum of
understanding that set forth programs for industries and individual companies to reduce
greenhouse gas emissions.

On January 17, 2003, the EEI sent a
letter to numerous Administration officials, in which the EEI committed to work with the
government over the next decade to reduce the power sectors CO2 emissions
per kWh generation (carbon intensity) by the equivalent of 3 to 5% of the current level.

In the near future, Power Partners
plans to enter into a cooperative umbrella agreement or memorandum of understanding (MOU)
with the DOE. This will contain supply and demand-side actions as well as offset projects
that will be undertaken to reduce the power sectors CO2 emissions per kWh
generation over the next decade consistent with the EEI commitment.

Once the MOU is completed, individual
companies, including KCP&L, will enter into agreements with the DOE that set forth
quantitative, concrete and specific activities to reduce, avoid or sequester greenhouse
gases.

EPA New Source ReviewThe EPA is conducting an enforcement
initiative under Section 114(a) of the Clean Air Act to determine whether modifications at
selected coal-fired plants across the U.S. may have been subject to New Source Performance
Standards (NSPS) or New Source Review (NSR) requirements. After an operator has received a
Section 114 letter, the EPA requests data and reviews all expenditures at the plants to
determine if they were routine maintenance or whether the expenditures were for
substantial modifications or resulted in improved operations. If a plant, subject to a
Section 114 letter, is determined to have been subject to NSPS or NSR, the plant could be
required to install best available control technology or lowest achievable emission rate
technology. KCP&L has not received a Section 114 letter to date.

Air Particulate Matter
and OzoneIn July 1997, the EPA revised ozone
and particulate matter air quality standards creating a new eight-hour ozone standard and
establishing a new standard for particulate matter less than 2.5 microns (PM-2.5) in
diameter. These standards were challenged in Federal court. However, the courts ultimately
denied all state, industry and environmental groups petitions for review and thus upheld
as valid the EPAs new eight-hour ozone and PM-2.5 National Ambient Air Quality
Standards (NAAQS). In so doing, the court held that the EPA acted consistently with the
Clean Air Act in setting the standards at the levels it chose and the EPAs actions
were reasonable and not arbitrary and capricious, and cited the deference given the
EPAs decision-making authority. The court stated that the extensive records
established for each rule supported the EPAs actions in both rulemakings. This
removed the last

29

major hurdle to the EPAs implementation of stricter ambient air
quality standards for ozone and fine particles. On April 15, 2004, the EPA designated the
Kansas City area as unclassifiable with respect to the eight-hour, ozone NAAQS. On March
8, 2004, Missouri recommended that the EPA designate western Missouri as in
attainment/unclassifiable with respect to the PM-2.5 NAAQS. On April 15, 2004, Kansas
recommended that the EPA designate all of Kansas as in attainment/unclassifiable with
respect to the PM-2.5 NAAQS. The EPA anticipates designating the Kansas City area as in
attainment or non-attainment with the standard by the end of 2004 pending review of data.

Proposed Water Use
RegulationsOn February 16, 2004, the EPA
finalized the Phase II rule implementing Section 316(b) of the Clean Water Act
establishing standards for cooling water intake structures at existing facilities. This
final regulation is applicable to certain existing power producing facilities that employ
cooling water intake structures that withdraw 50 million gallons or more per day and use
25% or more of that water for cooling purposes. KCP&L will be required to complete a
Section 316(b) comprehensive demonstration study on each of its generating
facilities intake structures within the next three and one half years. Depending on
the outcome of the comprehensive demonstration study, facilities may be required to
implement technological, operational, or restoration measures to achieve compliance.
Overall, compliance is scheduled to be achieved between 2011 and 2014. Costs of the
required comprehensive demonstration study are expected to be $0.3 million to $0.5 million
per facility and occur between 2004 and 2006. Until the Section 316(b) comprehensive
demonstration studies are completed, the impact of this final rule cannot be quantified.

# 12. LEGAL PROCEEDINGS

On March 23, 2004, Robert
C. Haberstroh filed suit for breach of employment contract and violation of the
Pennsylvania Wage Payment Collection Act against Strategic Energy Partners, Ltd.
(Partners), SE Holdings and Strategic Energy in the Court of Common Pleas of Allegheny
County, Pennsylvania.  Mr. Haberstroh claims that he acquired an equity interest in
Partners under the terms of his employment agreement and that through a series of
transactions, Mr. Haberstrohs equity interest became an equity interest in SE Holdings.

In 2001, Mr. Haberstrohs
employment was terminated.  Mr. Haberstrohs equity interest was redeemed by SE Holdings.
 Mr. Haberstroh is seeking the loss of his non-equity compensation (including salary,
bonus and benefits) and equity compensation (his equity interest in SE Holdings).

See Note 10 for further information regarding
related party transactions.

# 13. ASSET RETIREMENT
OBLIGATIONS

The Company accounts for ARO under
SFAS No. 143, which provides accounting requirements for the recognition and measurement
of liabilities associated with the retirement of tangible long-lived assets. Under the
standard, these liabilities are recognized at fair value as incurred and capitalized as
part of the cost of the related long-lived asset.

It is anticipated the Companys
February 2004 decision to exit the gas business will be accomplished by the sale of KLT
Gas assets. Management expects the ARO related to the KLT Gas portfolio of $1.8
million at March 31, 2004, to be assumed by the new owners at the time of the sale.
Accordingly, the ARO related to the KLT Gas portfolio is included in the table below, but
is classified as liabilities of discontinued operations in the consolidated balance
sheets.

30

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

The following table provides ARO
activity for the three months ended March 31, 2004 and 2003.

|                                               
|-----------------------------------------------
|
|
|(millions)                                     
|Asset retirement obligation beginning of period
|Accretion                                      
|                                               
|Asset retirement obligation end of period      
|
|Great Plains Energy                            
|Asset retirement obligation beginning of period
|Accretion                                      
|                                               
|Asset retirement obligation end of period      
|

# 14. SEGMENT AND RELATED
INFORMATION

Great Plains EnergyGreat Plains Energy has two
reportable segments based on its method of internal reporting, which generally segregates
the reportable segments based on products and services, management responsibility and
regulation. In February 2004, the Company announced its plan to sell the KLT Gas portfolio
and exit the gas business. As a result, KLT Gas financial results are reported as
discontinued operations and KLT Gas is no longer considered a reportable segment. The two
reportable business segments are: (1) KCP&L, an integrated, regulated electric
utility, which generates, transmits and distributes electricity; and (2) Strategic Energy,
which provides competitive electricity supply services by entering into contracts with its
customers to supply electricity, operates in several electricity markets offering retail
choice. Other includes the operations of HSS, GPP, Services, all KLT Inc.
operations other than Strategic Energy, unallocated corporate charges and intercompany
eliminations. The summary of significant accounting policies applies to all of the
reportable segments. Segment performance is evaluated based on net income.

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

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

31

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

|                                                                                          
|------------------------------------------------------------------------------------------
|
|
|
|(millions)                                                                                
|Assets                                                                                    
|Capital and investment expenditures(a)                                                    
|
|December 31, 2003                                                                         
|Assets                                                                                    
|Capital and investment expenditures(a) (b)                                                
|
|(a) Capital and investment expenditures reflect annual amounts for the periods presented. 
|(b) At December 31, 2003, KLT Gas discontinued operations had $19.4 million in capital and
|investment expenditures not included in the table above.                                  

Consolidated KCP<he following tables reflect
summarized financial information concerning consolidated KCP&Ls reportable
segment. Other includes the operations of HSS and intercompany eliminations, which are
immaterial.

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

|                                 
|---------------------------------
|
|
|
|(millions)                       
|Operating revenues               
|Depreciation and depletion       
|Interest charges                 
|Income taxes                     
|Loss from discontinued operations
|Net income (loss)                
|

32

|                                                                                         
|-----------------------------------------------------------------------------------------
|
|
|
|(millions)                                                                               
|Assets                                                                                   
|Capital and investment expenditures (a)                                                  
|December 31, 2003                                                                        
|Assets                                                                                   
|Capital and investment expenditures (a)                                                  
|
|(a) Capital and investment expenditures reflect annual amounts for the periods presented.

# 15. DERIVATIVE FINANCIAL
INSTRUMENTS

The Companys activities expose
it to a variety of market risks including interest rates and commodity prices. Management
has established risk management policies and strategies to reduce the potentially adverse
effects that the volatility of the markets may have on its operating results. The
Companys risk management activities, including the use of derivatives, are subject
to the management, direction and control of internal risk management committees. The
Companys interest rate risk management strategy uses derivative instruments to
adjust the Companys liability portfolio to optimize the mix of fixed and floating
rate debt within an established range. The Company maintains commodity-price risk
management strategies that use derivative instruments to minimize significant,
unanticipated earnings fluctuations caused by commodity price volatility. Derivative
instruments measured at fair value are recorded on the balance sheet as an asset or
liability. Changes in fair value are recognized currently in earnings unless specific
hedge accounting criteria are met.

Interest Rate Risk
ManagementIn 2002, KCP&L remarketed its
1998 Series A, B, and D Environmental Improvement Revenue Refunding bonds totaling $146.5
million to a 5-year fixed interest rate of 4.75% ending October 1, 2007. Simultaneously
with the remarketing, KCP&L entered into an interest rate swap for the $146.5 million
based on 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
with an offset to the respective debt balances with no impact on earnings. The fair value
of the swap was an asset of $5.7 million and $3.3 million at March 31, 2004, and December
31, 2003, respectively.

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

Strategic Energy maintains a
commodity-price risk management strategy that uses forward physical energy purchases and
derivative instruments to minimize significant, unanticipated earnings fluctuations caused
by commodity-price volatility. Supplying electricity to retail customers requires
Strategic Energy to match customers projected demand with fixed price purchases.
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. Certain forward fixed price purchases and swap agreements are designated as
cash flow hedges resulting in changes in the hedge value being recorded as OCI. To the
extent that the hedges are not effective, the ineffective portion of the

33

changes in fair
market value is recorded currently in purchased power. Strategic Energy also enters into
economic hedges that do not qualify as accounting hedges. The changes in the fair value of
these derivative instruments are recorded into earnings as a component of purchased power.

The amounts recorded in OCI related
to the cash flow hedges are summarized in the following tables:

|                          |  |  |  
|------------------------- |  |  | -
|
|
|
|
|
|(millions)               
|Great Plains Energy       |  |  |  
|Current assets            |  |  | $
|Other deferred charges    |  |  |  
|Other current liabilities |  |  |  
|Deferred income taxes     |  |  |  
|Other deferred credits    |  |  |  
|
|OCI                       |  |  | $
|
|Consolidated KCP&L        |  | 
|Other current assets      |  |  | $
|Deferred income taxes     |  |  |  
|
|OCI                       |  |  | $
|

|                          |  |  |  
|------------------------- |  |  | -
|
|
|
|
|
|(millions)               
|Great Plains Energy       |  |  |  
|Other current assets      |  |  | $
|Other current liabilities |  |  |  
|Deferred income taxes     |  |  |  
|Other deferred credits    |  |  |  
|
|OCI                       |  |  | $
|
|Consolidated KCP&L        |  | 
|Other current assets      |  |  | $
|Deferred income taxes     |  |  |  
|
|OCI                       |  |  | $
|

|Reclassified to earnings for the three months ended March 31
|------------------------------------------------------------
|
|
|
|
|(millions)                                                  
|Purchased power expense                                     
|Minority interest                                           
|Income taxes                                                
|
|OCI                                                         
|

34

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

The Managements Discussion and
Analysis of Financial Condition and Results of Operations that follow are a combined
presentation for Great Plains Energy and 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. It should be read in conjunction with the accompanying
consolidated financial statements and related notes and with the managements
discussion and analysis included in the companies 2003 Form 10-K.

Losses in the prior period related to
the operations of KLT Gas have been reclassified and are presented as discontinued
operations due to the February 2004 decision to sell the KLT Gas portfolio and exit the
gas business. Losses in the prior period related to the operations of RSAE have been
reclassified and are presented as discontinued operations due to the June 2003 disposition
of RSAE.



Great Plains EnergyGreat Plains Energy does not own or
operate any significant assets other than the stock of its subsidiaries. Great Plains
Energys direct subsidiaries are KCP&L, KLT Inc., GPP, IEC and Services.

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

|o |  | KCP&L, an integrated, regulated electric utility, which provides reliable, affordable
electricity to customers in the states of Missouri and Kansas and
|- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------

|o |  | Strategic Energy, which provides competitive electricity supply services by entering into
contracts with its customers to supply electricity, operates in several electricity
markets offering retail choice, including California, Massachusetts, Michigan, New Jersey,
New York, Ohio, Pennsylvania and Texas.
|- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Over the first six months of 2004,
the Company is engaging in a comprehensive strategic planning process to map its view of
the future of the electric industry, and ultimately the Company, over the next five to ten
years. This inclusive process draws on the creativity and skills of employees, outside
experts and community leaders.

The strategic planning process seeks
to enhance the disciplined growth of the Company and build upon the strong foundation of
KCP&L and Strategic Energy. This platform for growth provides a balanced mix of
regulated earnings from the utility operations of KCP&L and the potential continued
growth of Strategic Energy as it expands its presence in competitive retail markets.

In early May 2004, as
part of this strategic planning process, KCP&L filed an application with the MPSC seeking
to establish workshop processes to help develop a regulatory plan addressing KCP&Ls future
supply, delivery and pricing of electric service.  Through the workshop and informal
discussions with the MPSC and their staff, interested stakeholders and others, KCP&L is
exploring options to meet the growing capacity requirements in the region, including
purchased power, coal or gas units, wind or other renewables, and distributed generation.
 KCP&L is planning to file a similar application with The State Corporation Commission of
the State of Kansas (KCC) in May 2004.

35

Critical Accounting
PoliciesThe preparation of financial
statements in conformity with Generally Accepted Accounting Principles requires management
to make estimates and assumptions that affect reported amounts and related disclosures.
Management considers an accounting estimate to be critical if it requires assumptions to
be made when the ultimate outcome was highly uncertain at the time the estimate was made
and changes in the estimate or different reasonable estimates could have a material impact
on the results of operations and financial condition. The discussion below is intended to
update the discussion of critical accounting policies included in the companies 2003
Form 10-K.

SFAS No. 144  Write
Down of KLT Gas PortfolioLong-lived assets are periodically
reviewed for impairment whenever events or changes in circumstances indicate that the
carrying amount of an asset may not be recoverable as prescribed under SFAS No. 144.

In February 2004, the Great Plains
Energy Board of Directors approved managements recommendation to sell the KLT Gas
portfolio and exit the gas business. The Company evaluated this business and determined
the amount of capital and the length of time required for development of reserves and
production combined with the earnings volatility of the exploration process are no longer
compatible with the Companys strategic vision. As a result of this decision, the
Company wrote down the KLT Gas portfolio to its estimated net realizable value in the
first quarter of 2004. The $1.9 million write down reduced earnings for the three months
ended March 31, 2004, by $1.2 million and is included in Loss from discontinued
operations, net of income taxes in Great Plains Energys consolidated statement of
income.

To the extent estimated net
realizable value changes prior to sale, or the actual proceeds from the sale of the KLT
Gas portfolio differ from the estimated net realizable value used to determine the write
down, any difference will be reflected by Great Plains Energy on its consolidated
statement of income at that time.

Related Party
TransactionsCustom Energy Holdings holds 100% of the direct ownership interests in Strategic Energy.  Through March 31, 2004,
Great Plains Energy
held an 89% indirect ownership position in Strategic Energy.  SE Holdings held the remaining indirect ownership position in Strategic
Energy.  Richard Zomnir, currently Chief Executive Officer of Strategic Energy and certain other employees of Strategic Energy held
direct or indirect interests in SE Holdings.  Mr. Zomnir has disclosed that he held an approximate 25% interest in SE Holdings.  SE
Holdings had a put option to sell all or part of its indirect interest in Strategic Energy (Put Interest) to Custom Energy Holdings
at any time within the 90 days following January 31, 2004, at fair market value.  On February 9, 2004, a letter agreement was entered
into between SE Holdings and IEC on behalf of certain of its affiliates, including Great Plains Energy, agreeing to a procedure for
determining the fair market value of the Put Interest.  In April 2004, Great Plains Energy announced the purchase through IEC of the
Put Interest.  The acquisition of the Put Interest will increase Great Plains Energys indirect ownership of Strategic Energy to
approximately 99%.  The fair market value of the Put Interest was determined to be $88.8 million, excluding transaction costs.  In early
May 2004, IEC paid $80.7 million to close the majority of the transaction.  The remainder is anticipated to close by the end
of the second quarter pending agreement of certain issues between Strategic Energy and SE Holdings regarding legal proceedings as
outlined in Note 12.  Upon
closing the remainder of the transaction, SE Holdings will continue to be a member of Custom Energy Holdings and be represented on
the Management Committee of Custom Energy Holdings and Strategic Energy.

36

# Great Plains Energy
Results of Operations

|                                   
|-----------------------------------
|
|
|(millions)                         
|Operating revenues                 
|Fuel                               
|Purchased power - KCP&L            
|Purchased power - Strategic Energy 
|Other operating expenses           
|Depreciation and depletion         
|                                   
|Operating income                   
|Loss from equity investments       
|Non-operating income (expenses)    
|Interest charges                   
|Income taxes                       
|Discontinued operations            
|                                   
|Net income                         
|Preferred dividends                
|
|Earnings available for common stock
|

Three months ended March
31, 2004, compared to March 31, 2003Great Plains Energys three
months ended March 31, 2004, earnings detailed in the table below increased to $26.9
million, or $0.39 per share, from $14.1 million, or $0.20 per share, compared to the same
period of 2003.

|                                 
|---------------------------------
|
|
|
|
|
|(millions)                       
|KCP&L                            
|Subsidiary operations            
|Discontinued operations (RSAE)   
|
|Consolidated KCP&L               
|Strategic Energy                 
|Other non-regulated operations   
|Discontinued operations (KLT Gas)
|
|Total                            
|

KCP&Ls earnings increased
$8.2 million for the three months ended March 31, 2004, compared to the same period in
2003. Earnings for the three months ended March 31, 2004, include $0.9 million related to
the partial settlements of Hawthorn No. 5 litigation. See Consolidated KCP&L Results
of Operations for additional information. KCP&Ls revenue increased $12.1 million
primarily due to a significant increase in wholesale MWhs sold. This increase combined
with a decrease in purchased power expense more than offset increases in fuel expense,
pension expense and transmission expenses.

Discontinued operations (RSAE)
includes losses from RSAE for the three months ended March 31, 2003, that have been
reclassified and presented as discontinued operations.

Strategic Energys earnings
decreased $0.5 million for the three months ended March 31, 2004, compared to the same
period in 2003. MWhs delivered increased 16%, but the effect on earnings was mostly offset
by the gross margin per MWh (revenues less purchased power divided by MWhs

37

delivered)
decreasing to $6.86 for the three months ended March 31, 2004, compared to $7.70 for the
same period of 2003. Also contributing to the earnings decrease was an increase in
administrative and general expenses including employee related expenses.

The loss from discontinued operations
(KLT Gas) of $2.2 million for the three months ended March 31, 2004, includes a write down
of the KLT Gas portfolio to its estimated net realizable value, which reduced earnings by
$1.2 million, and a loss of $1.0 million from the wind down operations. The three months
ended March 31, 2003, loss of $6.3 million includes a loss of $5.5 million related to an
impairment on a Rocky Mountain project. The $6.3 million loss has been reclassified and
presented as discontinued operations.

# 

Consolidated KCP<he following discussion of
consolidated KCP&Ls results of operations includes KCP&L, an integrated
electric utility and HSS, an unregulated subsidiary of KCP&L. References to KCP&L,
in the discussion that follows, reflect only the operations of the integrated electric
utility.

Consolidated KCP&L
Business OverviewAs an integrated, regulated electric
utility, KCP&L engages in the generation, transmission, distribution and sale of
electricity. KCP&L has over 4,000 MW of generating capacity and has transmission and
distribution facilities that served over 490,000 customers as of March 31, 2004. KCP&L
has continued to experience load growth approximating the historical average of 2.0% to
2.5% annually through increased customer usage and additional customers. Rates charged for
electricity are below the national average.

Under the FERC Order 2000, KCP&L,
as an investor-owned utility, is strongly encouraged to join a FERC approved Regional
Transmission Organization (RTO). RTOs combine transmission operations of utility
businesses into regional organizations that schedule transmission services and monitor the
energy market to ensure regional transmission reliability and non-discriminatory access.
During February 2004, the Southwest Power Pool (SPP), of which KCP&L is a member,
obtained conditional approval from FERC as an RTO. Some of the more significant conditions
placed on SPP for obtaining final FERC approval include implementing SPPs proposed
independent Board of Directors, placing all transmission service within the SPP footprint
under the non-rate terms and conditions of the SPP regional transmission tariff, having an
Independent Market Monitor in place, and providing SPP clear and precise authority to
independently and solely determine which transmission projects to include in the regional
transmission plans. SPP made a compliance filing with FERC in early May 2004,
demonstrating how it will comply with all of the conditions required to obtain final RTO
approval. KCP&L intends on participating in SPPs RTO, however state regulatory
approval will be required.

KCP&L has a wholly-owned
subsidiary, HSS, which holds a residential services investment, Worry Free. Worry Free is
no longer actively pursuing new customers and management does not anticipate any
significant additional capital investments in Worry Free.

38

Consolidated KCP&L
Results of OperationsThe following table summarizes
consolidated KCP&Ls comparative results of operations, which includes KCP&L,
an integrated electric utility, and HSS.

|                               
|-------------------------------
|
|
|(millions)                     
|Operating revenues             
|Fuel                           
|Purchased power                
|Other operating expenses       
|Depreciation and depletion     
|                               
|Operating income               
|Non-operating income (expenses)
|Interest charges               
|Income taxes                   
|Discontinued operations        
|
|Net income                     
|

Consolidated KCP&Ls
earnings from continuing operations for the three months ended March 31, 2004, compared to
the same period of 2003, increased $8.1 million. KCP&Ls operating revenues
increased $12.1 million primarily due to a 15% increase in wholesale MWh sales and
increased retail revenues despite milder weather in the first quarter of 2004 compared to
the same period of 2003. These increases, combined with a decrease in purchased power
expense, were partially offset by increased fuel expense and other operating expenses
including pension, transmission and employee-related expenses.

As described in the 2003 Form 10-K,
KCP&L filed suit against multiple defendants who are alleged to have responsibility
for the 1999 Hawthorn No. 5 boiler explosion. KCP&L and its primary insurance company
have entered into a subrogation allocation agreement under which recoveries in this suit
are generally allocated 55% to the primary insurance company and 45% to KCP&L. In the
first quarter of 2004, an additional defendant settled with KCP&L in this litigation,
resulting in KCP&L recording $1.7 million under the terms of the subrogation
allocation agreement. The amount recorded in earnings related to the loss of use of the
plant was approximately $0.9 million ($0.6 million net of income taxes). The effect was to
increase wholesale revenues $0.1 million, decrease fuel expense $0.2 million and decrease
purchased power expense $0.6 million. The remaining $0.8 million was recorded as a
recovery of capital expenditures.

Discontinued operations in the first
quarter of 2003 includes a $1.2 million loss from RSAE. The loss has been reclassified and
is presented as discontinued operations as a result of the June 2003 disposition of
HSS interest in RSAE.

39

# Consolidated KCP&L
Sales Revenues and MWh Sales

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

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

Retail revenues increased by $4.0
million for the three months ended March 31, 2004, compared to the same period of 2003 due
to continued load growth. Load growth consists of higher usage-per-customer and the
addition of new customers. Milder weather in the first quarter of 2004 compared to the
same period of 2003 partially offset the increased revenues from continued load growth.
Less than 1% of revenues include an automatic fuel adjustment provision.

Wholesale revenues increased by $7.3
million for the three months ended March 31, 2004, compared to the same period of 2003.
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. KCP&Ls coal fleet equivalent availability factor increased to
82.5% for the first quarter of 2004 from 75.7% for the same period of 2003. The increased
availability combined with successful sales efforts helped increase wholesale MWh sales by
15%. The effect on revenues of the increased MWh sales was slightly offset by a 5% decline
in the average market price per MWh of power sold.

KCP&L Fuel and
Purchased PowerThe fuel cost per MWh generated and
the purchased power cost per MWh has a significant impact on the results of operations for
KCP&L. Generation fuel mix can change the fuel cost per MWh generated substantially.
Nuclear fuel costs per MWh generated remain substantially less than the cost of coal per
MWh generated. Replacement power costs for planned Wolf Creek outages are accrued evenly
over the units operating cycle. KCP&L expects its cost of nuclear fuel to remain
fairly constant through the year 2008. Coal has a significantly lower cost per MWh
generated than natural gas and oil. KCP&Ls procurement strategies continue to
provide delivered coal costs below the regional average. Fossil plants averaged over 75%
of total generation and the nuclear plant the remainder over the last three years. The
cost per MWh for purchased power is still significantly higher than the fuel cost per MWh
of coal and nuclear generation. KCP&L continually evaluates its system requirements,
the availability of

40

generating units, availability and cost of fuel supply, availability
and cost of purchased power and the requirements of other electric systems to provide
reliable power economically.

Fuel expense increased $3.2 million
for the three months ended March 31, 2004, compared to the same period of 2003, primarily
due to a 9% increase in MWhs generated.

Purchased power expense decreased
$3.6 million for the three months ended March 31, 2004, compared to the same period of
2003. This decrease was primarily due to a 25% decrease in MWhs purchased, which was
mostly the result of a 9% increase in MWhs generated. The partial settlement of Hawthorn
No. 5 litigation also reduced purchased power expense by $0.6 million in the first quarter
of 2004.

Consolidated KCP&L
Other Operating Expenses(including operating, maintenance and general taxes)Consolidated KCP&Ls other
operating expenses increased $4.6 million for the three months ended March 31, 2004,
compared to the same period of 2003 primarily due to the following:

| | o |  | increased pension expense of $0.6 million primarily due to lower discount rates and the
amortization of investment losses from prior years,
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------

| | o |  | increased employee incentive compensation expense of $1.2 million, which is tied to Company and employee
         performance objectives, and
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------

| | o |  | increased transmission expenses of $1.5 million primarily due to increased usage charges
as a result of the increased wholesale MWh sales.
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------

Wolf CreekWolf Creek, a nuclear unit, is 20% of
KCP&Ls base load generating capacity and 14% of KCP&Ls total
generating capacity. Wolf Creeks operating performance has remained strong over the
last three years, contributing an average of approximately 25% of KCP&Ls annual
MWh generation while operating at an average capacity of 92%. Wolf Creek has the lowest
fuel cost per MWh generated of any of KCP&Ls generating units.

KCP&L accrues the incremental
operating, maintenance and replacement power costs for planned outages evenly over the
units operating cycle, normally 18 months. As actual outage expenses are incurred,
the refueling liability and related deferred tax asset are reduced. The next outage is
scheduled for the spring of 2005 and is estimated to be a 28-day outage.

There has been significant opposition
and delays to, development of a low-level radioactive waste disposal facility. See Note 11
to the consolidated financial statements for additional information. An inability to
complete this project would require KCP&L to write-off its net investment in the
project, which was $7.4 million at March 31, 2004. KCP&L, and the other owners of Wolf
Creek, could also still be required to participate in development of an alternate site.

Ownership and operation of a nuclear
generating unit exposes KCP&L to risks regarding decommissioning costs at the end of
the units life and to potential retrospective assessments and property losses in
excess of insurance coverage. These risks are more fully discussed in the related sections
of Note 11 to the consolidated financial statements.

41

# Strategic Energy

Strategic Energy
Business OverviewStrategic Energy provides competitive
electricity supply services by entering into contracts with its customers to supply
electricity. In return, Strategic Energy receives an ongoing management fee, which is
included in the contracted sales price for the electricity. Of the states that offer
retail choice, Strategic Energy operates in California, Massachusetts, Michigan, New
Jersey, New York, Ohio, Pennsylvania and Texas. Strategic Energy is progressing as
scheduled with its plans for expansion into Connecticut and Maryland by the end of 2004,
as well as expansion into additional utility territories in Ohio and Texas. Strategic
Energy also provides strategic planning and consulting services in the natural gas and
electricity markets.

Great Plains Energys indirect
ownership in Strategic Energy totaled 89% at March 31, 2004. Great Plains Energy announced
the purchase of an additional indirect interest in Strategic Energy for $88.8 million plus
transaction costs, which will increase its indirect ownership to approximately 99%. This
transaction is expected to close by the end of the second quarter, subject to FERC
approval.

In the normal course of business,
Great Plains Energy and KLT Inc. provide financial or performance assurance to third
parties on behalf of Strategic Energy in the form of guarantees to those third parties.
Additionally, Great Plains Energy provides guarantees and indemnities supporting letters
of credit and surety bonds obtained by Strategic Energy. These agreements are entered into
primarily to support or enhance the creditworthiness otherwise attributed to Strategic
Energy on a stand-alone basis, thereby facilitating the extension of sufficient credit to
accomplish Strategic Energys intended business purposes.

At March 31, 2004, Strategic Energy
provided competitive electricity supply to approximately 50,000 commercial, institutional
and small manufacturing accounts. Strategic Energys customer base is very diverse.
Strategic Energy served over 7,100 customers, including numerous Fortune 500 companies,
smaller companies and governmental entities. Based solely on current signed contracts and
expected usage, Strategic Energy has forecasted future MWh commitments of 13.7 million for
the remainder of 2004, 12.0 million for 2005 and 3.6 million for 2006. Strategic Energy
expects to deliver additional MWhs in these years through growth in existing markets, by
re-signing existing customers and by signing new customers as well as through expansion
into new markets. Strategic Energys projected MWh deliveries for 2004 based on
signed contracts, MWhs delivered through the first quarter and expected additional MWh
sales continue to be in the range of 19 to 21 million MWhs.

Strategic Energy maintains a
commodity-price risk management strategy that uses forward physical energy purchases and
derivative instruments to minimize significant, unanticipated earnings fluctuations caused
by commodity-price volatility. As a result of supplying electricity to retail customers
under fixed rate contracts, Strategic Energys policy is to match customers
demand with fixed price purchases. Strategic Energy uses derivative instruments to limit
the unfavorable effect that price increases will have on electricity purchases. These
instruments effectively fix the future purchase price of electricity, protecting Strategic
Energy from price volatility.

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

42

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

Strategic Energy enters into forward
contracts with multiple suppliers. At March 31, 2004, Strategic Energys five largest
suppliers under forward supply contracts represented 63% of the total future committed
purchases. Strategic Energys 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. Strategic Energys results of operations could also be affected, in a given
period, if it was required to make a payment upon termination of a supplier contract to
the extent that the contracted price with the supplier exceeded the market value of the
contract at the time of termination.

The following table provides
information on Strategic Energys credit exposure, net of collateral, as of March 31,
2004. It further delineates the exposure by the credit rating of counterparties and
provides guidance on the concentration of credit risk and an indication of the maturity of
the credit risk by credit rating of the counterparties.

|                    
|--------------------
|
|
|
|
|
|
|(millions)          
|External rating     
|Investment Grade    
|Non-Investment Grade
|Internal rating     
|Investment Grade    
|Non-Investment Grade
|
|Total               
|

|                    
|--------------------
|
|
|
|
|
|
|(millions)          
|External rating     
|Investment Grade    
|Non-Investment Grade
|Internal rating     
|Investment Grade    
|Non-Investment Grade
|
|Total               
|

External ratings are determined by
using publicly available credit ratings of the counterparty. If a counterparty has
provided a guarantee by a higher rated entity, the determination has been based on the
rating of its guarantor. Internal ratings are determined by, among other things, an
analysis of the

43

counterpartys financial statements and consideration of publicly
available credit ratings of the counterpartys parent. Investment grade
counterparties are those with a minimum senior unsecured debt Standard & Poors
rating of BBB- or a Moodys rating of Baa3. Exposure before credit collateral has
been calculated considering all netting agreements in place, netting accounts payable and
receivable exposure with net mark-to-market exposure. Exposure before credit collateral is
impacted primarily 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, guarantees 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, 2004, increased $87.8 million from December
31, 2003, primarily due to the increase in wholesale electricity prices. At March 31,
2004, Strategic Energy had exposure before collateral to non-investment grade
counterparties totaling $52.0 million, of which 73% is scheduled to mature in less than
two years. In addition, Strategic Energy held collateral totaling $38.6 million limiting
its exposure to these non-investment grade counterparties to $13.4 million.

Strategic Energy is continuing to
pursue a strategy of contracting with national and regional counterparties that have
direct supplies and assets in the region of demand. Strategic Energy is also continuing to
address counterparty issues with strict margining and collateral requirements, netting of
credit exposures against payable balances, preferences for higher credit quality
counterparties and, in some cases, replacement of lower quality counterparty contracts.

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

|                               
|-------------------------------
|
|
|(millions)                     
|Operating revenues             
|Purchased power                
|Other operating expenses       
|Depreciation                   
|
|Operating income               
|Non-operating income (expenses)
|Interest charges               
|Income taxes                   
|
|Net income                     
|

Strategic Energys net income
decreased $0.5 million for the three months ended March 31, 2004, compared to the same
period of 2003. MWhs delivered increased 16% to 4.4 million for the first quarter of 2004,
from 3.8 million in the same period of 2003. The effect on earnings of this increase was
mostly offset by the gross margin per MWh (revenues less purchased power divided by MWhs
sold) decreasing as a result of the roll-off of higher margin contracts that were obtained
during periods of high market price volatility and to a lesser extent market conditions,
including increased competition. Gross margin per MWh decreased to $6.86 for the three
months ended in 2004 compared to $7.70 for the three months ended 2003. Margins on new
business continue to remain in the $5.00 to $6.00 per MWh range. Also contributing to the
earnings decrease was an increase in administrative and general expenses, including
employee related expenses.

44

Strategic Energy
Operating RevenuesOperating revenues from Strategic
Energy increased $65.3 million for the three months ended March 31, 2004, compared to the
same period in 2003, as shown in the following table.

|                        
|------------------------
|
|
|
|(millions)              
|Electric - Retail       
|Electric - Wholesale    
|Other                   
|
|Total Operating Revenues
|

At March 31, 2004, Strategic Energy
served over 7,100 customers, compared to approximately 5,200 customers at March 31, 2003.
These customers represented almost 50,000 accounts at March 31, 2004, a 48% increase from
March 31, 2003. Strategic Energy may provide periodic billing credits to its customers
resulting from its competitive electricity supply efforts. The amounts credited back to
the customer are treated as a reduction of retail electric revenues when determined to be
payable.

Retail electric revenues increased
$68.2 million for the three months ended March 31, 2004, compared to the same period in
2003, due to both increased retail MWh deliveries and a 13% increase in average retail
revenues per MWh. Retail MWhs delivered increased approximately 16% to 4.4 million for the
three months ended March 31, 2004, from 3.8 million for the same period in 2003. The
increase in MWh deliveries resulted primarily from strong sales efforts in re-signing
customers as well as signing new customers in markets in which Strategic Energy continued
to experience favorable conditions for growth. The increase in average retail price per
MWh was primarily due to a higher underlying electricity price that was significantly
impacted by higher natural gas prices. However, several factors can contribute to changes
in the average retail price per MWh, including the underlying electricity price, the
nature and type of products offered and the mix of sales by geographic market.

Strategic Energy
Purchased PowerTo supply its retail contracts,
Strategic Energy purchases long-term blocks of electricity under forward contracts in
fixed quantities at fixed prices from power suppliers based on projected usage. Strategic
Energy sells any excess retail supply of electricity back into the wholesale market. The
proceeds from the sale of excess supply of electricity are recorded as a reduction of
purchased power. The amount of excess retail supply sales that reduced purchased power was
$57.9 million for the three months ended March 31, 2004, compared to $33.4 million for the
same period in 2003.

Strategic Energy utilizes derivatives
in the procurement of electricity that, in some cases, are economic hedges, but do not
qualify as accounting hedges. Accordingly, changes in the fair value of these derivative
instruments are recorded as a component of purchased power. The amounts were insignificant
for both periods presented.

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

45

Purchased power expense increased
$64.4 million for the three months ended March 31, 2004, compared to the same period in
2003, primarily due to a 17% increase in the average price per retail MWh purchased and
increased MWh purchased to support the 16% increase in MWh delivered discussed above. The
primary reason for the higher average price per retail MWh is the effect of higher natural
gas prices on the wholesale electricity market.

Strategic Energy Other
Operating ExpensesStrategic Energys other
operating expenses increased $2.3 million for the first quarter 2004, compared to the same
period of 2003, but other operating expenses as a percent of operating revenues decreased
to 4.0% from 4.1% over the same period due to Strategic Energys continued efforts in
leveraging its infrastructure and the effects of achieving economies of scale. Strategic
Energy experienced increased labor and benefits expenses as well as other general and
administrative expenses for the three months ended March 31, 2004, compared to the same
period in 2003. The increase is primarily due to higher labor and benefit costs from the
addition of employees and higher other general and administrative expenses associated with
higher sales volumes, geographic market expansion, and regulatory and market development
initiatives.

# Other Non Regulated
Activities

Investment in Affordable
Housing Limited Partnerships  KLT InvestmentsKLT Investments Inc.s (KLT
Investments) earnings for the three months ended March 31, 2004, totaled $3.2 million
(including an after tax reduction of $0.8 million in its affordable housing investment)
compared to earnings of $2.3 million for the three months ended March 31, 2003 (including
an after tax reduction of $1.5 million in its affordable housing investment). KLT
Investments earnings include accrued tax credits of $4.6 million and $4.8 million
for the three months ended March 31, 2004 and 2003, respectively.

At March 31, 2004, KLT Investments
had $50.5 million in affordable housing limited partnerships. Approximately 65% of these
investments were recorded at cost; the equity method was used for the remainder. Tax
expense is reduced in the year tax credits are generated. The investments generate future
cash flows from tax credits and tax losses of the partnerships. The investments also
generate cash flows from the sales of the properties. For most investments, tax credits
are received over ten years. KLT Investments projects tax credits to run through 2009. A
change in accounting principle relating to investments made after May 19, 1995, requires
the use of the equity method when a company owns more than 5% in a limited partnership
investment. Of the investments recorded at cost, $31.7 million exceed this 5% level but
were made before May 19, 1995. KLT Investments management does not anticipate making
additional investments in affordable housing limited partnerships at this time.

On a quarterly basis, KLT Investments
compares the cost of properties accounted for by the cost method to the total of projected
residual value of the properties and remaining tax credits to be received. Estimated
residual values are based on studies performed by an independent firm. Based on the latest
comparison, KLT Investments reduced its investments in affordable housing limited
partnerships by $1.3 million and $2.3 million for the three months ended March 31, 2004
and 2003, respectively. Pretax reductions in affordable housing investments are estimated
to be $6 million, $10 million and $3 million for the remainder of 2004 through 2006,
respectively. These projections are based on the latest information available but the
ultimate amount and timing of actual reductions could be significantly different from the
above estimates. The properties underlying the partnership investment are subject to
certain risks inherent in real estate ownership and management. Even after these estimated
reductions, earnings from the investments in affordable housing are expected to be
positive for the years 2004 through 2006.

46

# Discontinued Operations
(KLT Gas)

KLT Gas Business Overview, Plan to
Exit the Gas Exploration and Development Business and Results of OperationsIn
February 2004, the Great Plains Energy Board of Directors approved managements
recommendation to sell the KLT Gas portfolio and exit the gas business. The Company
evaluated this business and determined the amount of capital and the length of time
required for development of reserves and production, combined with the earnings volatility
of the exploration process, are no longer compatible with the Companys strategic
vision. Management will continue to operate the KLT Gas portfolio during the sale process,
which it expects to complete during 2004.

Discontinued operations (KLT Gas) for
the three months ended March 31, 2004, reflects a loss of $2.2 million. This loss includes
a $1.9 million write down of the KLT Gas portfolio to its estimated net realizable value,
which reduced earnings by $1.2 million, and a loss of $1.8 million from the wind down
operations, which reduced earnings by $1.0 million. The three months ended March 31, 2003,
loss of $6.3 million includes an impairment of $9.0 million on a Rocky Mountain project,
which reduced earnings by $5.5 million. The first quarter 2003 impairment was in response
to lower revised estimates of future gas production from that property.

Management expects to incur losses
during the remainder of 2004 to operate KLT Gas while it markets the KLT Gas portfolio for
sale. Management estimates the remaining losses to operate KLT Gas will approximate $5
million before taxes, which after taxes would reduce 2004 earnings by approximately $3
million. The after tax losses will be reflected as a loss from discontinued operations in
Great Plains Energys consolidated statements of income in the periods incurred. The
estimated losses to operate KLT Gas were calculated anticipating completion of a sale of
the KLT Gas portfolio at December 31, 2004. The ultimate impact to Great Plains
Energys consolidated statements of income for 2004 will be different than the
estimates to the extent costs to operate deviate from the budget and/or the timing of the
KLT Gas portfolio sale deviates from December 31, 2004.

# Great Plains Energy and
Consolidated KCP&L

Significant Balance
Sheet Changes      (March
31, 2004 compared to December 31, 2003)

| | o |  | Great Plains Energys cash and cash equivalents decreased $22.9 million primarily due
to a $26.2 million decrease in consolidated KCP&Ls cash and cash equivalents
primarily due to the purchase of KCP&Ls leased fleet vehicles for $28.4 million
in February 2004.
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | o |  | Great Plains Energys assets and liabilities of discontinued operations are the
result of the decision to sell the assets of KLT Gas. KLT Gas assets and liabilities
were reclassified and are presented separately as prescribed under SFAS No. 144 for March
31, 2004, and for December 31, 2003.
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | o |  | Great Plains Energys accrued payroll and vacations decreased $11.8 million primarily
due to the 2004 payout of employee related expenses accrued at December 31, 2003.
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------

47

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

Great Plains Energys capital
requirements are principally comprised of KCP&Ls utility capital expenditures,
KCP&Ls pension benefit plan funding requirements discussed below and credit
support provided to Strategic Energy. Additional cash and capital requirements for the
companies are discussed below.

Great Plains Energys liquid
resources at March 31, 2004, included cash flows from operations of subsidiaries, $91.3
million of cash and cash equivalents on hand and $361.3 million of unused bank lines of
credit. The unused lines consisted of $149.1 million from KCP&Ls short-term bank
lines of credit, $32.2 million from Strategic Energys revolving credit facility, and
$180.0 million from Great Plains Energys revolving credit facilities. See the Debt
Agreements section below for more information on these agreements. In April 2004, Great
Plains Energy borrowed an additional $49.0 million and issued $6.0 million in letters of
credit under its 364-day revolving credit facility and borrowed $20.0 million under its
three-year revolving credit facility. The net effect of this April 2004 activity decreased
Great Plains Energys liquid resources $75.0 million.

Cash Flows From
OperationsGreat Plains Energy and consolidated
KCP&L generated positive cash flows from operating activities for the periods
presented. The decrease in cash flows from operating activities for Great Plains Energy
for the three months ended March 31, 2004, compared to the same period in 2003 is
primarily due to the changes in working capital detailed in Note 4 to the consolidated
financial statements partially offset by a $7.4 million increase in income from continuing
operations before non-cash expenses. The individual components of working capital vary
with normal business cycles and operations. Consolidated KCP&Ls cash flow from
operations increased for the three months ended March 31, 2004, compared to the same
period in 2003 due to an $8.1 million increase in income from continuing operations before
non-cash expenses and the changes in working capital detailed in Note 4 to the
consolidated financial statements. Also, the timing of the Wolf Creek outage affects the
refueling outage accrual, deferred income taxes and amortization of nuclear fuel.

Investing ActivitiesGreat Plains Energys and
consolidated KCP&Ls cash used for investing activities varies with the timing of
utility capital expenditures and purchases of investments and nonutility property.
Investing activities are offset by the proceeds from the sale of properties and insurance
recoveries. Great Plains Energys and consolidated KCP&Ls utility capital
expenditures increased $38.4 million for the three months ended March 31, 2004, compared
to the same period in 2003 primarily due to the buyout of KCP&Ls operating lease
for vehicles and heavy equipment in the first quarter of 2004 for $28.4 million.

Financing ActivitiesThe change in Great Plains
Energys and consolidated KCP&Ls cash flows from financing activities for
the three months ended March 31, 2004, compared to the same period in 2003 reflects the
first quarter 2003 equity infusion of $100.0 million from Great Plains Energy to KCP&L
and KCP&Ls subsequent redemption of $104.0 million of medium-term notes. Great
Plains Energy essentially funded the infusion with proceeds from its $151.8 million common
stock offering in late 2002; however, prior to the infusion, Great Plains Energy used the
offering proceeds to repay short-term borrowings in late 2002 and then re-borrowed in
early 2003 to make the equity infusion into KCP&L at the time of redemption.

48

KCP&L expects to meet day-to-day
operating requirements including interest payments, construction requirements (excluding
new generating capacity and environmental compliance on existing generating units) and
dividends to Great Plains Energy with internally-generated funds. However, it might not be
able to meet these requirements with internally-generated funds because of the effect of
inflation on operating expenses, the level of MWh sales, regulatory actions, compliance
with future environmental regulations and the availability of generating units. The funds
Great Plains Energy and consolidated KCP&L need to retire maturing debt will be
provided from operations, the issuance of long and short-term debt and/or the issuance of
equity or equity-linked instruments. In addition, the Company may issue debt, equity
and/or equity-linked instruments to finance growth or take advantage of new opportunities.

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

Great Plains Energy filed a
registration statement, which became effective in April 2004, for the issuance of an
aggregate amount up to $500.0 million of any combination of senior debt securities,
subordinated debt securities, trust preferred securities and related guarantees, common
stock, warrants, stock purchase contracts or stock purchase units. The prospectus filed
with this registration statement also included $148.2 million of securities remaining
available to be offered under a prior registration statement providing for an aggregate
amount of availability of $648.2 million.

As a registered public utility
holding company, Great Plains Energy must receive authorization from the SEC under the 35
Act to issue securities. Great Plains Energy is currently authorized to issue up to $1.2
billion of debt and equity through December 31, 2005. Great Plains Energy has utilized
$500.7 million of this amount.

Under its current SEC authorization,
Great Plains Energy cannot issue securities other than common stock unless (i) the
security to be issued, if rated, is rated investment grade by one nationally recognized
statistical rating organization, (ii) all of its outstanding securities that are rated
(except for its preferred stock) are rated investment grade, and (iii) it has maintained
common equity as a percentage of consolidated capitalization (as reflected on its
consolidated balance sheets as of the end of each quarter) of at least 30%. Great Plains
Energy was in compliance with these conditions as of March 31, 2004.

KCP&L may issue equity and
long-term debt only with the authorization of the MPSC. KCP&Ls previous
authorization expired at the end of 2003. KCP&L has filed an application with the MPSC
for authority to issue up to $600 million of long-term debt through March 31, 2006. The
MPSC Staff has recommended approval of the application on the following conditions, among
others: (i) no more than $150.0 million of the authorized debt can be used for purposes
other than refinancing existing securities and (ii) the proceeds of the authorized debt
must be used exclusively for the benefit of KCP&Ls regulated operations.
KCP&L expects the MPSC to issue an order approving the application with the MPSC Staff
conditions in May 2004.

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

49

Plains Energy
(except preferred stock) are rated investment grade, and (iv) Great Plains Energy and
KCP&L have maintained common equity as a percentage of consolidated capitalization (as
reflected on their consolidated balance sheets as of the end of each quarter) of at least
30%. KCP&L was in compliance with these conditions as of March 31, 2004.

KCP&L has entered into a
revolving agreement, which expires in October 2004, to sell all of its right, title and
interest in the majority of its customer accounts receivable to Receivables Company, which
in turn sells most of the receivables to outside investors. KCP&L expects the
agreement to be renewed annually. See Note 5 to the consolidated financial statements.

Debt AgreementsDuring the first quarter of 2004,
Great Plains Energy syndicated a $150.0 million 364-day revolving credit facility and a
$150.0 million three-year revolving credit facility with a group of banks. These
facilities replaced a $225.0 million revolving credit facility with a group of banks. The
existing facilities contain a Material Adverse Change (MAC) clause that requires Great
Plains Energy to represent, prior to receiving funding, that no MAC has occurred. The
clause does, however, permit the Company to access the facility even in the event of a MAC
in order to repay maturing commercial paper. Available liquidity under this facility is
not impacted by a decline in credit ratings unless the downgrade occurs in the context of
a merger, consolidation or sale. A default by Great Plains Energy or any of its
significant subsidiaries of other indebtedness totaling more than $25.0 million is a
default under these bank lines. Under the terms of these agreements, Great Plains Energy
is required to maintain a consolidated indebtedness to consolidated capitalization ratio
not greater than 0.65 to 1.0 at all times and an interest coverage ratio greater than 2.25
to 1.0, as those ratios are defined in the agreement. At March 31, 2004, the Company was
in compliance with these covenants. At March 31, 2004, Great Plains Energy had $95.0
million of outstanding borrowings under the 364-day revolving credit facility with a
weighted-average interest rate of 2.04%.

Strategic Energy maintains a secured
revolving credit facility for up to $95 million with a group of banks. This facility is
partially guaranteed by Great Plains Energy. The facility enhances Strategic Energys
liquidity including its ability to provide credit support through letters of credit for
purchased power and regulatory requirements. The maximum amount available for loans and
letters of credit under the facility is the lesser of $95 million or the borrowing base,
as defined in the agreement. The borrowing base generally is the sum of certain Strategic
Energy accounts receivable and the amount of the Great Plains Energy guarantee which was
$40.0 million at March 31, 2004. At March 31, 2004, Strategic Energy had a minimum fixed
charge ratio, as defined in the agreement, of at least 1.05 to 1.0; however, if the ratio
drops below 1.05 to 1.0, Great Plains Energys guarantee amount is required to be
increased based on quarterly calculations. At March 31, 2004, $53.1 million in letters of
credit had been issued and there were no borrowings under the agreement, leaving $32.2 million of
capacity available for loans and additional letters of credit. The termination date of the
facility has been extended from June 2004 to August 2004. The facility contains a MAC
clause that requires Strategic Energy to represent, prior to receiving funding, that no
MAC has occurred. A default by Strategic Energy of other indebtedness, as defined in the
facility, totaling more than $5.0 million is a default under the facility. Under the terms
of this agreement, Strategic Energy is required to maintain a minimum net worth of $30
million and a maximum debt to EBITDA ratio of 2.0 to 1.0, as those are defined in the
agreement. At March 31, 2004, Strategic Energy was in compliance with these covenants.

KCP&Ls primary sources of
liquidity are cash flows from operations and bilateral credit lines totaling $150.0
million with seven banks (as of March 31, 2004). KCP&L uses these lines to provide
support for its issuance of commercial paper. These bank facilities are each for a 364-day
term and mature at various times throughout the year. The facilities can be extended for
one year under their term out provisions. KCP&L has MAC clauses in three agreements
covering $70.0 million of available bilateral credit lines. These three facilities require
KCP&L to represent, prior to receiving funding, that no MAC

50

has occurred. Under these
agreements, KCP&L is able to access the facilities even in the event of a MAC in order
to redeem maturing commercial paper. KCP&Ls available liquidity under these
facilities is not impacted by a decline in credit ratings unless the downgrade occurs in
the context of a merger, consolidation or sale. A default by KCP&L on other
indebtedness is a default under these bank line agreements. Under the terms of certain
bank line agreements, KCP&L is required to maintain a consolidated indebtedness to
consolidated capitalization ratio, as defined in the agreements, not greater than 0.65 to
1.0 at all times. At March 31, 2004, KCP&L was in compliance with these covenants. As
of March 31, 2004, KCP&L had $0.9 million outstanding of funds borrowed from banks
with a weighted-average interest rate of 1.69%.

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

Great Plains Energy has agreements
with KLT Investments associated with notes KLT Investments issued to acquire its
affordable housing investments. Great Plains Energy has agreed not to take certain actions
including, but not limited to, merging, dissolving or causing the dissolution of KLT
Investments, or withdrawing amounts from KLT Investments if the withdrawals would result
in KLT Investments not being in compliance with minimum net worth and cash balance
requirements. The agreements also give KLT Investments lenders the right to have KLT
Investments repurchase the notes if Great Plains Energys senior debt rating falls
below investment grade, or if Great Plains Energy ceases to own at least 80% of
KCP&Ls stock. At March 31, 2004, KLT Investments had $10.6 million in
outstanding notes, including current maturities.

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

PensionsThe Company maintains defined benefit
pension 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. Plans
are funded at a minimum on an actuarial basis to provide assets sufficient to meet
benefits to be paid to plan participants consistent with the funding requirements of the
Employment Retirement Income Security Act of 1974 (ERISA) and further contributions may be
made when deemed financially advantageous.

After consideration of additional
funding made in 2003, the 2004 required contribution to meet the minimum funding
requirements of ERISA is expected to be $4.2 million and will be funded by KCP&L.
Management believes the Company has adequate access to capital resources through cash
flows from operations or through existing lines of credit to support the remaining
required funding.

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.

51

Supplemental Capital
Requirements and Liquidity InformationGreat Plains Energys and
consolidated KCP&Ls contractual obligations were relatively unchanged at March
31, 2004, compared to December 31, 2003.

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

As a registered public utility
holding company system, Great Plains Energy must receive authorization from the SEC under
the 35 Act to issue guarantees on behalf of its subsidiaries. Under its current SEC
authorization, guarantees cannot be issued unless (i) all of its outstanding securities
that are rated (except for its preferred stock) are rated investment grade and (ii) it has
maintained common equity as a percentage of consolidated capitalization (as reflected on
its consolidated balance sheets as of the end of each quarter) of at least 30%. Great
Plains Energy was in compliance with these conditions as of March 31, 2004. Great Plains
Energy is currently authorized to issue up to $600 million for guarantees on behalf of its
subsidiaries and the nonutility subsidiaries have $300 million of authorization for
guarantees they can issue on behalf of other nonutility subsidiaries. The nonutility
subsidiaries cannot issue guarantees unless Great Plains Energy is in compliance with its
conditions to issue guarantees.

Great Plains Energys and
consolidated KCP&Ls guarantees were relatively unchanged at March 31, 2004,
compared to December 31, 2003.

Environmental MattersThe Company is subject to regulation
by federal, state and local authorities with regard to air and other environmental matters
primarily through KCP&Ls operations. The generation, transmission and
distribution of electricity produces and requires disposal of certain hazardous products,
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 and consolidated KCP&L.

KCP&L operates in an
environmentally responsible manner and seeks to use current technology to avoid and treat
contamination. KCP&L regularly conducts environmental audits designed to ensure
compliance with governmental regulations and to detect contamination. Governmental bodies,
however, may impose additional or more restrictive environmental regulations that could
require substantial changes to operations or facilities at a significant cost. See Note 11
to the consolidated financial statements.

52

# ITEM 3. QUANTITATIVE AND
QUALITATIVE DISCLOSURES ABOUT MARKET RISK

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

Great Plains Energy and consolidated
KCP&L interim period disclosures about market risk included in quarterly reports on
Form 10-Q address material changes, if any from the most recently filed annual report on
Form 10-K. Therefore, these interim period disclosures should be read in connection with
Item 7A. Quantitative and Qualitative Disclosures About Market Risk, included in our 2003
Form 10-K, 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, 2003.

# ITEM 4. CONTROLS AND
PROCEDURES

Great Plains Energy and KCP&L
carried out evaluations of their disclosure controls and procedures (as defined in Rules
13a-15(e) or 15d-15(e) under the Securities Exchange Act of 1934, as amended). These
evaluations were conducted under the supervision, and with the participation, of each
companys management, including the chief executive officer and chief financial
officer of each company and the companies disclosure committee.

Based upon these evaluations, the
chief executive officer and chief financial officer of Great Plains Energy and KCP&L,
respectively, have concluded as of the end of the period covered by this report that the
disclosure controls and procedures of Great Plains Energy and KCP&L are functioning
effectively to provide reasonable assurance that the information required to be disclosed
by the respective companies in the reports that they file or submit under the Securities
Exchange Act of 1934, as amended, is recorded, processed, summarized and reported within
the time periods specified in the SECs rules and forms.

There has been no change in Great
Plains Energys or KCP&Ls internal control over financial reporting that
occurred during the quarterly period ended March 31, 2004, that has materially affected,
or is reasonably likely to materially affect, Great Plains Energys and
KCP&Ls internal control over financial reporting.

53

# Part II  Other
Information

ITEM 1. LEGAL PROCEEDINGSThere are no matters reportable under
this Item 1 for the quarter.

# ITEM 2. CHANGES IN
SECURITIES AND USE OF PROCEEDS

Purchases of Great Plains Energy
common stock were made during the quarter by or for the following plans (Plans):

| | o |  | The Great Plains Energy Incorporated Long-Term Incentive Plan, which is an equity
compensation plan approved by the shareholders providing for grants by the Compensation
Committee of the Board of Directors of stock options, restricted stock, performance shares
and other stock-based awards.
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | o |  | The Great Plains Energy Incorporated Cash or Deferred Arrangement (Employee Savings
Plus) Plan, which is a defined contribution plan where part or all of employee
contributions and employer matching contributions can be invested in Great Plains Energy
common stock; and
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | o |  | The Great Plains Energy Incorporated Dividend Reinvestment and Direct Stock Purchase Plan,
through which investors can purchase common stock and reinvest cash dividends in
additional shares of common stock.
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

There were no other purchases of
Great Plains Energy common stock made by the Company during the quarter.

The following table provides
information regarding purchases of Great Plains Energy common stock during the quarter by
or on behalf of Great Plains Energy or any affiliated purchaser as defined in
Rule 10b-18(a)(3) under the Securities Exchange Act of 1934, as amended.

|               
|---------------
|
|
|               
|               
|               
|               
|               
|               
|               
|Month          
|
|
|January 1 - 31 
|February 1 - 29
|March 1 - 31   
|
|               
|Total          
|

|(1) | The Great Plains Energy Long-Term Incentive Plan became effective on May 5,
          1992. The aggregate number of shares of common stock available for awards under
          this plan is not more than three million. Awards may be granted under this plan
          until May 5, 2012.
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | The
Great Plains Energy Incorporated Cash or Deferred Arrangement (Employee Savings
Plus) Plan became effective on January 1, 1988. The plan has no aggregate limitation
regarding the number of shares of common stock that can be purchased by, for or through
the plan. The most recent registration statement filed for the plan under the Securities
Act of 1933, as amended, registered 1,300,000 shares of common stock for the plan.
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

54

| | The
Great Plains Energy Incorporated Dividend Reinvestment and Direct Stock Purchase Plan
became effective on January 5, 1994, and was amended on February 11, 2000, to include
direct stock purchases. The plan has no aggregate limitation regarding the number of
shares of common stock that can be purchased by, for or through the plan. The most recent
registration statement filed for the plan under the Securities Act of 1933, as amended,
registered 1,000,000 shares of common stock for the plan.
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(2) | Represents the aggregate number of securities remaining available for future
          issuance under the Great Plains Energy Long-Term Incentive Plan and under the
          currently effective registration statements of the Great Plains Energy
          Incorporated Cash or Deferred Arrangement (Employee Savings Plus)
          Plan and the Great Plains Energy Incorporated Dividend Reinvestment and Direct
          Stock Purchase Plan.
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

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

# EXHIBITS

# Great Plains Energy
Documents

| |  | Exhibit |  | 
| |  | ------- |  | 

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

| |  | 10.1.a |  | 364-Day Credit Agreement, dated as of March 5, 2004, by and among Great Plains Energy
Incorporated, Bank One, NA, BNP Paribas, Commerzbank AG, Keybank National Association,
Wachovia Bank, National Association, CoBank, ACB, The Bank of New York, The Bank of Nova
Scotia, PNC Bank, National Association, U.S. Bank, National Association, Bank Hapoalim,
LaSalle Bank National Association, Bank of America, N.A., The Bank of Tokyo-Mitsubishi,
Ltd., Mizuho Corporate Bank, Ltd., Fleet National Bank, Fifth Third Bank, and Merrill
Lynch Bank USA.
| |  | ------ |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  | 10.1.b |  | Three-Year Credit Agreement, dated as of March 5, 2004, by and among Great Plains Energy
Incorporated, Bank One, NA, BNP Paribas, Commerzbank AG, Keybank National Association,
Wachovia Bank, National Association, CoBank, ACB, The Bank of New York, The Bank of Nova
Scotia, PNC Bank, National Association, U.S. Bank, National Association, Bank Hapoalim,
LaSalle Bank National Association, Bank of America, N.A., The Bank of Tokyo-Mitsubishi,
Ltd., Mizuho Corporate Bank, Ltd., Fleet National Bank, Fifth Third Bank, and Merrill
Lynch Bank USA.
| |  | ------ |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  | 10.1.c | * | Guaranty issued by Great Plains Energy Incorporated, dated as of March 1, 2004, in favorof The Cincinnati Gas & Electric Company (Exhibit 10.1.dd to Form 10-K for the yearended December 31, 2003).
| |  | ------ | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  | 10.1.d |  | Guaranty Extension by and between Great Plains Energy Incorporated and The Cincinnati Gas
& Electric Company, dated as of March 29, 2004.
| |  | ------ |  | -----------------------------------------------------------------------------------------------------------------------------------------

| |  | 10.1.e | *+ | Annual Incentive Compensation Plan dated February 2004 (Exhibit 10.1.b to Form 10-K for
the year ended December 31, 2003).
| |  | ------ | -- | --------------------------------------------------------------------------------------------------------------------------

| |  | 12.1 |  | Ratio of Earnings to Fixed Charges
| |  | ---- |  | ----------------------------------

| |  | 31.1.a |  | Rule 13a-14(a)/15d-14(a) Certifications of Michael J. Chesser.
| |  | ------ |  | --------------------------------------------------------------

| |  | 31.1.b |  | Rule 13a-14(a)/15d-14(a) Certifications of Andrea F. Bielsker.
| |  | ------ |  | --------------------------------------------------------------

55

| |  | 32.1 |  | Section 1350 Certifications.
| |  | ---- |  | ----------------------------

+ Indicates management contract or
compensatory plan or arrangement.

* Filed as exhibits to prior Annual
Reports on Form 10-K and incorporated by reference and made a part hereof. The exhibit
number and report reference of the documents so filed, and incorporated herein by
reference, are stated in parentheses in the description of such exhibit.

# KCP&L Documents

| |  | Exhibit |  | 
| |  | ------- |  | 

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

| |  | 12.2 |  | Ratio of Earnings to Fixed Charges
| |  | ---- |  | ----------------------------------

| |  | 31.2.a |  | Rule 13a-14(a)/15d-14(a) Certifications of William H. Downey.
| |  | ------ |  | -------------------------------------------------------------

| |  | 31.2.b |  | Rule 13a-14(a)/15d-14(a) Certifications of Andrea F. Bielsker.
| |  | ------ |  | --------------------------------------------------------------

| |  | 32.2 |  | Section 1350 Certifications.
| |  | ---- |  | ----------------------------

# REPORTS ON FORM 8-K

# Great Plains Energy

Great Plains Energy furnished on
February 5, 2004, a report on Form 8-K dated February 4, 2004, furnishing a press release
regarding fourth quarter 2003 and full year 2003 earnings.

Great Plains Energy filed on February
11, 2004, a report on Form 8-K dated February 9, 2004, regarding a letter agreement
between SE Holdings, L.L.C. (SE Holdings), and Innovative Energy Consultants Inc. on
behalf of certain of its affiliates agreeing to a procedure for determining the fair
market value of its ownership interest in Custom Energy Holdings, L.L.C. (Custom Energy)
subject to a put option, providing for SE Holdings to exercise its put option with respect
to all but one unit of each of its respective series of ownership interest in Custom
Energy, and further providing that Richard M. Zomnir, President and Chief Executive
Officer of Strategic Energy, L.L.C, will resign such positions upon consummation of the
transaction.

Great Plains Energy filed on April
22, 2004, a report on Form 8-K dated April 21, 2004, furnishing pursuant to Item 12
thereof a press release regarding first quarter 2004 earnings, and reporting pursuant to
Item 5 thereof an agreement to purchase an additional 11.45% interest in Strategic Energy
L.L.C.

# KCP&L

KCP&L furnished on February 5,
2004, a report on Form 8-K dated February 4, 2004, furnishing a press release regarding
fourth quarter 2003 and full year 2003 earnings.

KCP&L furnished on April 22,
2004, a report on Form 8-K dated April 21, 2004, furnishing a press release regarding
first quarter 2003 earnings.

56

# 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 7, 2004 |  | 
|                    |  | 
|                    |  | 
|                    | 
|Dated:  May 7, 2004 |  | 
|                    |  | 
|                    |  | 

# KANSAS CITY POWER & LIGHT COMPANY

|                    |  | 
|------------------- |  | 
|Dated:  May 7, 2004 |  | 
|                    |  | 
|                    |  | 
|                    | 
|Dated:  May 7, 2004 |  | 
|                    |  | 
|                    |  | 

57