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 **September
              30, 2006**
 
 or
 
 [
              ]
              TRANSITION REPORT PURSUANT SECTION 13 OR 15(d) OF THE SECURITIES
 EXCHANGE
              ACT OF 1934
 
 For
              the
              transition period from _______ to _______
 
 **Exact
                        name of registrant as specified in its charter,****Commission**
                    
                    **state
                        of incorporation, address of principal**
                    
                    **I.R.S.
                        Employer****File
                        Number**
                    
                    **executive
                        offices and telephone number**
                    
                    **Identification
                        Number**001-32206
                    
                    **GREAT
                        PLAINS ENERGY INCORPORATED**
                    
                    43-1916803(A
                        Missouri Corporation)1201
                        Walnut StreetKansas
                        City, Missouri 64106(816)
                        556-2200www.greatplainsenergy.com000-51873
                    
                    **KANSAS
                        CITY POWER & LIGHT COMPANY**
                    
                    44-0308720(A
                        Missouri Corporation)1201
                        Walnut StreetKansas
                        City, Missouri 64106(816)
                        556-2200www.kcpl.com
 
 Indicate
                        by check mark whether the registrant (1) has filed all reports
                        required to
                        be filed by Section 13 or 15(d) of theSecurities
                        Exchange Act of 1934 during the preceding 12 months (or for
                        such shorter
                        period that the registrant was required tofile
                        such reports), and (2) has been subject to such filing requirements
                        for
                        the past 90 days.Great
                        Plains Energy Incorporated
                    Yes
                    
                    No
                    X
                    
                    Kansas
                        City Power & Light Company
                    Yes
                    
                    No
                    XIndicate
                        by check mark whether the registrant is a large accelerated
                        filer, an
                        accelerated filer, or a non-accelerated filer. Seedefinition
                        of “accelerated filer and large accelerated filer” in Rule 12b-2 of the
                        Exchange Act.Great
                        Plains Energy Incorporated
                    Large
                        accelerated filer
                    X
                    Accelerated
                        filer
                    _
                    Non-accelerated
                        filer
                    _Kansas
                        City Power & Light Company
                    Large
                        accelerated filer
                    _
                    Accelerated
                        filer
                    _
                    Non-accelerated
                        filer
                    XIndicate
                        by check mark whether the registrant is a shell company (as
                        defined in
                        Rule 12b-2 of the Exchange Act).Great
                        Plains Energy Incorporated
                    Yes
                    _
                    No
                    X
                    
                    Kansas
                        City Power & Light Company
                    Yes
                    _
                    No
                    XOn November
                        1, 2006, Great Plains Energy Incorporated had 80,303,446
                        shares of common
                        stock outstanding.On November
                        1, 2006, Kansas City Power & Light Company had one share of common
                        stock outstanding, which was held byGreat
                        Plains Energy Incorporated.
 
 Great
              Plains Energy Incorporated and Kansas City Power & Light Company (KCP&L)
              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.
 
 In
              March
              2006, KCP&L filed a registration statement to register its common stock
              under Section 12(g) of the Securities Exchange Act of 1934, as amended
              (Exchange
              Act). This registration statement became effective in April 2006 and
              KCP&L
              is now required to file reports, including quarterly reports on Form
              10-Q, under
              Section 13(a) of the Exchange Act.
 
 This
              report should be read in its entirety. No one section of the report
              deals with
              all aspects of the subject matter. It should be read in conjunction
              with the
              consolidated financial statements and related notes and with the management’s
              discussion and analysis included in the companies’ 2005 Form 10-K.
 
 **CAUTIONARY
              STATEMENTS REGARDING CERTAIN FORWARD-LOOKING INFORMATION**
 Statements
              made in this report that are not based on historical facts are forward-looking,
              may involve risks and uncertainties, and are intended to be as of the
              date when
              made. Forward-looking statements include, but are not limited to, statements
              regarding projected delivered volumes and margins, the outcome of regulatory
              proceedings, cost estimates of the comprehensive energy plan and other
              matters
              affecting future operations. In connection with the safe harbor provisions
              of
              the Private Securities Litigation Reform Act of 1995, the registrants
              are
              providing a number of important factors that could cause actual results
              to
              differ materially from the provided forward-looking information. These
              important
              factors include: future economic conditions in the regional, national
              and
              international markets, including but not limited to regional and national
              wholesale electricity markets; market perception of the energy industry
              and
              Great Plains Energy; changes in business strategy, operations or development
              plans; effects of current or proposed state and federal legislative
              and
              regulatory actions or developments, including, but not limited to,
              deregulation,
              re-regulation and restructuring of the electric utility industry; decisions
              of
              regulators regarding rates KCP&L can charge for electricity; adverse changes
              in applicable laws, regulations, rules, principles or practices governing
              tax,
              accounting and environmental matters including, but not limited to,
              air and
              water quality; financial market conditions and performance including,
              but not
              limited to, changes in interest rates and in availability and cost
              of capital
              and the effects on pension plan assets and costs; credit ratings; inflation
              rates; effectiveness of risk management policies and procedures and
              the ability
              of counterparties to satisfy their contractual commitments; impact
              of terrorist
              acts; increased competition including, but not limited to, retail choice
              in the
              electric utility industry and the entry of new competitors; ability
              to carry out
              marketing and sales plans; weather conditions including weather-related
              damage;
              cost, availability, quality and deliverability of fuel; ability to
              achieve
              generation planning goals and the occurrence and duration of unplanned
              generation outages; delays in the anticipated in-service dates and
              cost
              increases of additional generating capacity; nuclear operations; ability
              to
              enter new markets successfully and capitalize on growth opportunities
              in
              non-regulated businesses and the effects of competition; application
              of critical
              accounting policies, including, but not limited to, those related to
              derivatives
              and pension liabilities; workforce risks including compensation and
              benefits
              costs; performance of projects undertaken by non-regulated businesses
              and the
              success of efforts to invest in and develop new opportunities and other
              risks
              and uncertainties.
  This
              list
              of factors is not all-inclusive because it is not possible to predict
              all
              factors. Part II Item 1A. Risk Factors included in this report together
              with the
              risk factors included in the companies’ 2005 Form 10-K under Part I Item 1A,
              should be carefully read for further understanding of potential risks
              to the
              companies. Other sections of this report and other periodic reports
              filed by the
              companies with the Securities and Exchange Commission (SEC) should
              also be read
              for more information regarding risk 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****BART**
                    
                    Best
                        available retrofit technology**CAIR**
                    
                    Clean
                        Air Interstate Rule**CAMR**
                    
                    Clean
                        Air Mercury Rule**CO****2**
                    
                    Carbon
                        Dioxide**Company**
                    
                    Great
                        Plains Energy Incorporated and its subsidiaries**Consolidated
                        KCP&L**
                    
                    KCP&L
                        and its wholly owned subsidiaries**DOE**
                    
                    Department
                        of Energy**DTI**
                    
                    DTI
                        Holdings, Inc. and its subsidiaries, Digital Teleport, Inc.
                      and
                        Digital Teleport of Virginia, Inc.**EBITDA**
                    
                    Earnings
                        before interest, income taxes, depreciation and
                        amortization**EEI**
                    
                    Edison
                        Electric Institute**EIRR**
                    
                    Environmental
                        Improvement Revenue Refunding**EPA**
                    
                    Environmental
                        Protection Agency**EPS**
                    
                    Earnings
                        per common share**FASB**
                    
                    Financial
                        Accounting Standards Board**FELINE
                        PRIDES****SM**
                    
                    Flexible
                        Equity Linked Preferred Increased Dividend Equity Securities,a
                        service mark of Merrill Lynch & Co., Inc.**FERC**
                    
                    The
                        Federal Energy Regulatory Commission**FIN**
                    
                    Financial
                        Accounting Standards Board Interpretation**FSS**
                    
                    Forward
                        Starting Swaps**GAAP**
                    
                    Generally
                        Accepted Accounting Principles**Great
                        Plains Energy**
                    
                    Great
                        Plains Energy Incorporated and its subsidiaries**HSS**
                    
                    Home
                        Service Solutions Inc., a wholly owned subsidiary of KCP&L**IEC**
                    
                    Innovative
                        Energy Consultants Inc., a wholly owned subsidiary
                      of
                        Great Plains Energy**ISO**
                    
                    Independent
                        System Operator**KCC**
                    
                    The
                        State Corporation Commission of the State of Kansas**KCP&L**
                    
                    Kansas
                        City Power & Light Company, a wholly owned subsidiary
                      of
                        Great Plains Energy**KLT
                        Gas**
                    
                    KLT
                        Gas Inc., a wholly owned subsidiary of KLT Inc.**KLT
                        Inc.**
                    
                    KLT
                        Inc., a wholly owned subsidiary of Great Plains Energy**KLT
                        Investments**
                    
                    KLT
                        Investments Inc., a wholly owned subsidiary of KLT Inc.**KLT
                        Telecom**
                    
                    KLT
                        Telecom Inc., a wholly owned subsidiary of KLT Inc.**KW**
                    
                    Kilowatt**kWh**
                    
                    Kilowatt
                        hour**MAC**
                    
                    Material
                        Adverse Change**MD&A**
                    
                    Management’s
                        Discussion and Analysis of Financial Condition andResults
                        of Operations**MISO**
                    
                    Midwest
                        Independent Transmission System Operator, Inc.**MPSC**
                    
                    Public
                        Service Commission of the State of Missouri**MW**
                    
                    Megawatt
 3
 **Abbreviation
                      or Acronym**
                  
                  **Definition****MWh**
                  
                  Megawatt
                      hour**NEIL**
                  
                  Nuclear
                      Electric Insurance Limited**NO****x**
                  
                  Nitrogen
                      Oxide**NPNS**
                  
                  Normal
                      Purchases and Normal Sales**NRC**
                  
                  Nuclear
                      Regulatory Commission**OCI**
                  
                  Other
                      Comprehensive Income**PJM**
                  
                  PJM
                      Interconnection**PRB**
                  
                  Powder
                      River Basin**Receivables
                      Company**
                  
                  Kansas
                      City Power & Light Receivables Company, a wholly owned
                    subsidiary
                      of KCP&L**RTO**
                  
                  Regional
                      Transmission Organization**SEC**
                  
                  Securities
                      and Exchange Commission**SECA**
                  
                  Seams
                      Elimination Charge Adjustment**SE
                      Holdings**
                  
                  SE
                      Holdings, L.L.C.**Services**
                  
                  Great
                      Plains Energy Services Incorporated**SFAS**
                  
                  Statement
                      of Financial Accounting Standards**SIP**
                  
                  State
                      Implementation Plan**SO****2**
                  
                  Sulfur
                      Dioxide**SPP**
                  
                  Southwest
                      Power Pool, Inc.**STB**
                  
                  Surface
                      Transportation Board**Strategic
                      Energy**
                  
                  Strategic
                      Energy, L.L.C., a subsidiary of KLT Energy Services**T
                      - Locks**
                  
                  Treasury
                      Locks**Union
                      Pacific**
                  
                  Union
                      Pacific Railroad Company**WCNOC**
                  
                  Wolf
                      Creek Nuclear Operating Corporation**Wolf
                      Creek**
                  
                  Wolf
                      Creek Generating Station**Worry
                      Free**
                  
                  Worry
                      Free Service, Inc., a wholly owned subsidiary of
                      HSS
 4
 **PART
              I - FINANCIAL INFORMATION**
 **ITEM
              1.  CONSOLIDATED FINANCIAL STATEMENTS**
 **GREAT
                        PLAINS ENERGY****Consolidated
                        Balance Sheets**(Unaudited)**September
                        30**
                    
                    December
                        31**2006**
                    
                    2005**ASSETS**
                    
                    (thousands)**Current
                        Assets**Cash
                        and cash equivalents
                    
                    **$**
                    **59,259**
                    
                    $
                    103,068Restricted
                        cash
                    
                    
                    **-**
                    
                    
                    1,900Receivables,
                        net
                    
                    
                    **355,508**
                    
                    
                    259,043Fuel
                        inventories, at average cost
                    
                    
                    **25,269**
                    
                    
                    17,073Materials
                        and supplies, at average cost
                    
                    
                    **59,414**
                    
                    
                    57,017Deferred
                        income taxes
                    
                    
                    **46,329**
                    
                    
                    -Assets
                        of discontinued operations
                    
                    
                    **-**
                    
                    
                    627Derivative
                        instruments
                    
                    
                    **5,485**
                    
                    
                    39,189Other
                    
                    
                    **14,189**
                    
                    
                    13,001Total
                    
                    
                    **565,453**
                    
                    
                    490,918**Nonutility
                        Property and Investments**Affordable
                        housing limited partnerships
                    
                    
                    **24,475**
                    
                    
                    28,214Nuclear
                        decommissioning trust fund
                    
                    
                    **98,975**
                    
                    
                    91,802Other
                    
                    
                    **14,718**
                    
                    
                    17,291Total
                    
                    
                    **138,168**
                    
                    
                    137,307**Utility
                        Plant, at Original Cost**Electric
                    
                    
                    **5,224,095**
                    
                    
                    4,959,539Less-accumulated
                        depreciation
                    
                    
                    **2,423,708**
                    
                    
                    2,322,813Net
                        utility plant in service
                    
                    
                    **2,800,387**
                    
                    
                    2,636,726Construction
                        work in progress
                    
                    
                    **160,058**
                    
                    
                    100,952Nuclear
                        fuel, net of amortization of $127,029 and $115,240
                    
                    
                    **37,703**
                    
                    
                    27,966Total
                    
                    
                    **2,998,148**
                    
                    
                    2,765,644**Deferred
                        Charges and Other Assets**Regulatory
                        assets
                    
                    
                    **207,453**
                    
                    
                    179,922Prepaid
                        pension costs
                    
                    
                    **70,806**
                    
                    
                    98,295Goodwill
                    
                    
                    **88,139**
                    
                    
                    87,624Derivative
                        instruments
                    
                    
                    **2,507**
                    
                    
                    21,812Other
                    
                    
                    **43,973**
                    
                    
                    52,204Total
                    
                    
                    **412,878**
                    
                    
                    439,857Total
                    
                    **$**
                    **4,114,647**
                    
                    $
                    3,833,726The
                        accompanying Notes to Consolidated Financial Statements are
                        an integral
                        part of these statements.
 5
 
 **GREAT
                          PLAINS ENERGY****Consolidated
                          Balance Sheets**(Unaudited)**September
                          30**
                      
                      December
                          31**2006**
                      
                      2005**LIABILITIES
                          AND CAPITALIZATION**
                      
                      (thousands)**Current
                          Liabilities**Notes
                          payable
                      
                      **$**
                      **-**
                      
                      $
                      6,000Commercial
                          paper
                      
                      
                      **80,600**
                      
                      
                      31,900Current
                          maturities of long-term debt
                      
                      
                      **389,902**
                      
                      
                      1,675Accounts
                          payable
                      
                      
                      **260,663**
                      
                      
                      231,496Accrued
                          taxes
                      
                      
                      **97,403**
                      
                      
                      37,140Accrued
                          interest
                      
                      
                      **13,515**
                      
                      
                      13,329Accrued
                          payroll and vacations
                      
                      
                      **32,356**
                      
                      
                      36,024Accrued
                          refueling outage costs
                      
                      
                      **15,707**
                      
                      
                      8,974Deferred
                          income taxes
                      
                      
                      **-**
                      
                      
                      1,351Supplier
                          collateral
                      
                      
                      **-**
                      
                      
                      1,900Liabilities
                          of discontinued operations
                      
                      
                      **-**
                      
                      
                      64Derivative
                          instruments
                      
                      
                      **81,641**
                      
                      
                      7,411Other
                      
                      
                      **24,459**
                      
                      
                      25,658Total
                      
                      
                      **996,246**
                      
                      
                      402,922**Deferred
                          Credits and Other Liabilities**Deferred
                          income taxes
                      
                      
                      **582,904**
                      
                      
                      621,359Deferred
                          investment tax credits
                      
                      
                      **27,413**
                      
                      
                      29,698Asset
                          retirement obligations
                      
                      
                      **91,072**
                      
                      
                      145,907Pension
                          liability
                      
                      
                      **89,812**
                      
                      
                      87,355Regulatory
                          liabilities
                      
                      
                      **107,500**
                      
                      
                      69,641Derivative
                          instruments
                      
                      
                      **72,318**
                      
                      
                      7,750Other
                      
                      
                      **63,846**
                      
                      
                      65,787Total
                      
                      
                      **1,034,865**
                      
                      
                      1,027,497**Capitalization**Common
                          shareholders' equityCommon
                          stock-150,000,000 shares authorized without par value80,341,419
                          and 74,783,824 shares issued, stated value
                      
                      
                      **893,850**
                      
                      
                      744,457Retained
                          earnings
                      
                      
                      **479,609**
                      
                      
                      488,001Treasury
                          stock-45,680 and 43,376 shares, at cost
                      
                      
                      **(1,367**
                      **)**
                      
                      (1,304
                      )Accumulated
                          other comprehensive loss
                      
                      
                      **(79,863**
                      **)**
                      
                      (7,727
                      )Total
                      
                      
                      **1,292,229**
                      
                      
                      1,223,427Cumulative
                          preferred stock $100 par value3.80%
                          - 100,000 shares issued
                      
                      
                      **10,000**
                      
                      
                      10,0004.50%
                          - 100,000 shares issued
                      
                      
                      **10,000**
                      
                      
                      10,0004.20%
                          - 70,000 shares issued
                      
                      
                      **7,000**
                      
                      
                      7,0004.35%
                          - 120,000 shares issued
                      
                      
                      **12,000**
                      
                      
                      12,000Total
                      
                      
                      **39,000**
                      
                      
                      39,000Long-term
                          debt (Note 8)
                      
                      
                      **752,307**
                      
                      
                      1,140,880Total
                      
                      
                      **2,083,536**
                      
                      
                      2,403,307**Commitments
                          and Contingencies (Note 14)**Total
                      
                      **$**
                      **4,114,647**
                      
                      $
                      3,833,726The
                          accompanying Notes to Consolidated Financial Statements
                          are an integral
                          part of these statements.
 6
 **GREAT
                              PLAINS ENERGY****Consolidated
                              Statements of Income**(Unaudited)**Three
                              Months Ended**
                          
                          **Year
                              to Date****September
                              30**
                          
                          **September
                              30****2006**
                          
                          2005
                          
                          **2006**
                          
                          2005**Operating
                              Revenues**
                          
                          
                          (thousands,
                              except per share amounts)Electric
                              revenues - KCP&L
                          
                          **$**
                          **359,270**
                          
                          $
                          352,974
                          
                          **$**
                          **890,551**
                          
                          $
                          858,272Electric
                              revenues - Strategic Energy
                          
                          
                          **458,538**
                          
                          
                          429,407
                          
                          
                          **1,127,056**
                          
                          
                          1,099,895Other
                              revenues
                          
                          
                          **730**
                          
                          
                          446
                          
                          
                          **2,220**
                          
                          
                          1,495Total
                          
                          
                          **818,538**
                          
                          
                          782,827
                          
                          
                          **2,019,827**
                          
                          
                          1,959,662**Operating
                              Expenses**Fuel
                          
                          
                          **77,154**
                          
                          
                          73,935
                          
                          
                          **180,751**
                          
                          
                          160,228Purchased
                              power - KCP&L
                          
                          
                          **5,157**
                          
                          
                          28,303
                          
                          
                          **18,844**
                          
                          
                          56,590Purchased
                              power - Strategic Energy
                          
                          
                          **462,299**
                          
                          
                          386,499
                          
                          
                          **1,117,404**
                          
                          
                          1,003,201Skill
                              set realignment costs (Note 9)
                          
                          
                          **1,389**
                          
                          
                          -
                          
                          
                          **15,905**
                          
                          
                          -Other
                          
                          
                          **88,145**
                          
                          
                          76,358
                          
                          
                          **244,030**
                          
                          
                          240,628Maintenance
                          
                          
                          **19,746**
                          
                          
                          19,230
                          
                          
                          **67,235**
                          
                          
                          69,140Depreciation
                              and amortization
                          
                          
                          **40,422**
                          
                          
                          38,382
                          
                          
                          **118,618**
                          
                          
                          114,485General
                              taxes
                          
                          
                          **31,826**
                          
                          
                          31,197
                          
                          
                          **87,234**
                          
                          
                          83,619(Gain)
                              loss on property
                          
                          
                          **28**
                          
                          
                          3,419
                          
                          
                          **(569**
                          **)**
                          
                          1,906Total
                          
                          
                          **726,166**
                          
                          
                          657,323
                          
                          
                          **1,849,452**
                          
                          
                          1,729,797Operating
                              income
                          
                          
                          **92,372**
                          
                          
                          125,504
                          
                          
                          **170,375**
                          
                          
                          229,865Non-operating
                              income
                          
                          
                          **9,852**
                          
                          
                          3,563
                          
                          
                          **16,741**
                          
                          
                          15,334Non-operating
                              expenses
                          
                          
                          **(2,141**
                          **)**
                          
                          (4,699
                          )
                          
                          **(5,593**
                          **)**
                          
                          (15,671
                          )Interest
                              charges
                          
                          
                          **(17,974**
                          **)**
                          
                          (17,904
                          )
                          
                          **(53,113**
                          **)**
                          
                          (53,777
                          )Income
                              from continuing operations before income taxes,minority
                              interest in subsidiaries and loss from equityinvestments
                          
                          
                          **82,109**
                          
                          
                          106,464
                          
                          
                          **128,410**
                          
                          
                          175,751Income
                              taxes
                          
                          
                          **(26,482**
                          **)**
                          
                          (17,300
                          )
                          
                          **(36,683**
                          **)**
                          
                          (32,396
                          )Minority
                              interest in subsidiaries
                          
                          
                          **-**
                          
                          
                          -
                          
                          
                          **-**
                          
                          
                          (7,805
                          )Loss
                              from equity investments, net of income taxes
                          
                          
                          **(468**
                          **)**
                          
                          (69
                          )
                          
                          **(1,047**
                          **)**
                          
                          (758
                          )Income
                              from continuing operations
                          
                          
                          **55,159**
                          
                          
                          89,095
                          
                          
                          **90,680**
                          
                          
                          134,792Discontinued
                              operations, net of income taxes (Note 12)
                          
                          
                          **-**
                          
                          
                          1,780
                          
                          
                          **-**
                          
                          
                          (1,826
                          )Net
                              income
                          
                          
                          **55,159**
                          
                          
                          90,875
                          
                          
                          **90,680**
                          
                          
                          132,966Preferred
                              stock dividend requirements
                          
                          
                          **411**
                          
                          
                          412
                          
                          
                          **1,234**
                          
                          
                          1,235Earnings
                              available for common shareholders
                          
                          **$**
                          **54,748**
                          
                          $
                          90,463
                          
                          **$**
                          **89,446**
                          
                          $
                          131,731Average
                              number of common shares outstanding
                          
                          
                          **80,081**
                          
                          
                          74,653
                          
                          
                          **77,266**
                          
                          
                          74,561Basic
                              and diluted earnings (loss) per common shareContinuing
                              operations
                          
                          **$**
                          **0.68**
                          
                          $
                          1.19
                          
                          **$**
                          **1.16**
                          
                          $
                          1.79Discontinued
                              operations
                          
                          
                          **-**
                          
                          
                          0.02
                          
                          
                          **-**
                          
                          
                          (0.02
                          )Basic
                              and diluted earnings per common share
                          
                          **$**
                          **0.68**
                          
                          $
                          1.21
                          
                          **$**
                          **1.16**
                          
                          $
                          1.77Cash
                              dividends per common share
                          
                          **$**
                          **0.415**
                          
                          $
                          0.415
                          
                          **$**
                          **1.245**
                          
                          $
                          1.245The
                              accompanying Notes to Consolidated Financial Statements
                              are an integral
                              part of these statements.
 7
  **GREAT
                              PLAINS ENERGY****Consolidated
                              Statements of Cash Flows**(Unaudited)Revised**Year
                              to Date September 30**
                          
                          **2006**
                          
                          2005**Cash
                              Flows from Operating Activities**
                          
                          
                          (thousands)Net
                              income
                          
                          **$**
                          **90,680**
                          
                          $
                          132,966Adjustments
                              to reconcile income to net cash from operating
                              activities:Depreciation
                              and amortization
                          
                          
                          **118,618**
                          
                          
                          114,485Amortization
                              of:Nuclear
                              fuel
                          
                          
                          **11,789**
                          
                          
                          9,396Other
                          
                          
                          **6,965**
                          
                          
                          8,035Deferred
                              income taxes, net
                          
                          
                          **(32,930**
                          **)**
                          
                          (15,736
                          )Investment
                              tax credit amortization
                          
                          
                          **(2,285**
                          **)**
                          
                          (2,917
                          )Loss
                              from equity investments, net of income taxes
                          
                          
                          **1,047**
                          
                          
                          758(Gain)
                              loss on property
                          
                          
                          **(569**
                          **)**
                          
                          1,658Minority
                              interest in subsidiaries
                          
                          
                          **-**
                          
                          
                          7,805Fair
                              value impacts from energy contracts
                          
                          
                          **64,507**
                          
                          
                          (26,032
                          )Other
                              operating activities (Note 4)
                          
                          
                          **(18,829**
                          **)**
                          
                          59,867Net
                              cash from operating activities
                          
                          
                          **238,993**
                          
                          
                          290,285**Cash
                              Flows from Investing Activities**Utility
                              capital expenditures
                          
                          
                          **(371,056**
                          **)**
                          
                          (260,589
                          )Allowance
                              for borrowed funds used during construction
                          
                          
                          **(4,060**
                          **)**
                          
                          (1,174
                          )Purchases
                              of investments
                          
                          
                          **(700**
                          **)**
                          
                          (14,976
                          )Purchases
                              of nonutility property
                          
                          
                          **(3,518**
                          **)**
                          
                          (4,822
                          )Proceeds
                              from sale of assets and investments
                          
                          
                          **319**
                          
                          
                          17,123Purchases
                              of nuclear decommissioning trust investments
                          
                          
                          **(37,333**
                          **)**
                          
                          (22,811
                          )Proceeds
                              from nuclear decommissioning trust investments
                          
                          
                          **34,596**
                          
                          
                          20,147Hawthorn
                              No. 5 partial insurance recovery
                          
                          
                          **-**
                          
                          
                          10,000Hawthorn
                              No. 5 partial litigation recoveries
                          
                          
                          **15,829**
                          
                          
                          -Other
                              investing activities
                          
                          
                          **(852**
                          **)**
                          
                          (679
                          )Net
                              cash from investing activities
                          
                          
                          **(366,775**
                          **)**
                          
                          (257,781
                          )**Cash
                              Flows from Financing Activities**Issuance
                              of common stock
                          
                          
                          **151,624**
                          
                          
                          7,462Issuance
                              fees
                          
                          
                          **(6,144**
                          **)**
                          
                          (2,031
                          )Issuance
                              of long-term debt
                          
                          
                          **-**
                          
                          
                          85,922Repayment
                              of long-term debt
                          
                          
                          **(872**
                          **)**
                          
                          (88,417
                          )Net
                              change in short-term borrowings
                          
                          
                          **42,700**
                          
                          
                          (6,400
                          )Dividends
                              paid
                          
                          
                          **(98,913**
                          **)**
                          
                          (94,071
                          )Other
                              financing activities
                          
                          
                          **(4,422**
                          **)**
                          
                          (4,244
                          )Net
                              cash from financing activities
                          
                          
                          **83,973**
                          
                          
                          (101,779
                          )**Net
                              Change in Cash and Cash Equivalents**
                          
                          
                          **(43,809**
                          **)**
                          
                          (69,275
                          )**Less:
                              Net Change in Cash and Cash Equivalents from****Discontinued
                              Operations**
                          
                          
                          **-**
                          
                          
                          (560
                          )**Cash
                              and Cash Equivalents at Beginning of Year**
                          
                          
                          **103,068**
                          
                          
                          127,129**Cash
                              and Cash Equivalents at End of Period**
                          
                          **$**
                          **59,259**
                          
                          $
                          58,414The
                              accompanying Notes to Consolidated Financial Statements
                              are an integral
                              part of these statements.
 8
  **GREAT
                              PLAINS ENERGY****Consolidated
                              Statements of Common Shareholders' Equity**(Unaudited)**Year
                              to Date September 30**
                          
                          **2006**
                          
                          2005**Shares**
                          
                          
                          **Amount**
                          
                          
                          Shares
                          
                          
                          Amount**Common
                              Stock**
                          
                          
                          (thousands,
                              except share amounts)Beginning
                              balance
                          
                          
                          **74,783,824**
                          
                          **$**
                          **744,457**
                          
                          
                          74,394,423
                          
                          $
                          731,977Issuance
                              of common stock
                          
                          
                          **5,510,769**
                          
                          
                          **151,624**
                          
                          
                          257,222
                          
                          
                          7,745Issuance
                              of restricted common stock
                          
                          
                          **46,826**
                          
                          
                          **1,320**
                          
                          
                          76,375
                          
                          
                          2,334Common
                              stock issuance fees
                          
                          
                          
                          
                          
                          **(5,194**
                          **)**
                          
                          
                          
                          
                          -Equity
                              compensation expense
                          
                          
                          
                          
                          
                          **1,929**
                          
                          
                          
                          
                          
                          1,360Unearned
                              CompensationIssuance
                              of restricted common stock
                          
                          
                          
                          
                          
                          **(1,355**
                          **)**
                          
                          
                          
                          
                          (2,334
                          )Forfeiture
                              of restricted common stock
                          
                          **56**
                          
                          
                          
                          
                          
                          188Compensation
                              expense recognized
                          
                          
                          
                          
                          
                          **982**
                          
                          
                          
                          
                          
                          1,143Other
                          
                          
                          
                          
                          **31**
                          
                          
                          
                          
                          
                          (99
                          )Ending
                              balance
                          
                          
                          **80,341,419**
                          
                          
                          **893,850**
                          
                          
                          74,728,020
                          
                          
                          742,314**Retained
                              Earnings**Beginning
                              balance
                          
                          
                          
                          
                          
                          **488,001**
                          
                          
                          
                          
                          
                          451,491Net
                              income
                          
                          
                          
                          
                          
                          **90,680**
                          
                          
                          
                          
                          
                          132,966Dividends:Common
                              stock
                          
                          
                          
                          
                          
                          **(97,631**
                          **)**
                          
                          
                          
                          
                          (92,836
                          )Preferred
                              stock - at required rates
                          
                          
                          
                          
                          
                          **(1,234**
                          **)**
                          
                          
                          
                          
                          (1,235
                          )Performance
                              shares
                          
                          
                          
                          
                          
                          **(207**
                          **)**
                          
                          
                          
                          
                          -Ending
                              balance
                          
                          
                          
                          
                          **479,609**
                          
                          
                          
                          
                          490,386**Treasury
                              Stock**Beginning
                              balance
                          
                          
                          **(43,376**
                          **)**
                          
                          **(1,304**
                          **)**
                          
                          (28,488
                          )
                          
                          (856
                          )Treasury
                              shares acquired
                          
                          
                          **(3,519**
                          **)**
                          
                          **(99**
                          **)**
                          
                          (6,380
                          )
                          
                          (193
                          )Treasury
                              shares reissued
                          
                          
                          **1,215**
                          
                          
                          **36**
                          
                          
                          -
                          
                          
                          -Ending
                              balance
                          
                          
                          **(45,680**
                          **)**
                          
                          **(1,367**
                          **)**
                          
                          (34,868
                          )
                          
                          (1,049
                          )**Accumulated
                              Other Comprehensive Income (Loss)**Beginning
                              balance
                          
                          
                          
                          
                          
                          **(7,727**
                          **)**
                          
                          
                          
                          
                          (41,018
                          )Derivative
                              hedging activity, net of tax
                          
                          
                          
                          
                          
                          **(72,136**
                          **)**
                          
                          
                          
                          
                          41,996Minimum
                              pension obligation, net of tax
                          
                          **-**
                          
                          
                          
                          
                          
                          (585
                          )Ending
                              balance
                          
                          
                          
                          
                          **(79,863**
                          **)**
                          
                          
                          
                          393**Total
                              Common Shareholders' Equity**
                          **$**
                          **1,292,229**
                          
                          
                          
                          $
                          1,232,044The
                              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**
                          
                          **Year
                              to Date****September
                              30**
                          
                          **September
                              30****2006**
                          
                          2005
                          
                          **2006**
                          
                          2005(thousands)Net
                              income
                          
                          **$**
                          **55,159**
                          
                          $
                          90,875
                          
                          **$**
                          **90,680**
                          
                          $
                          132,966Other
                              comprehensive incomeGain
                              (loss) on derivative hedging instruments
                          
                          
                          **(75,050**
                          **)**
                          
                          80,317
                          
                          
                          **(152,214**
                          **)**
                          
                          99,540Income
                              taxes
                          
                          
                          **30,631**
                          
                          
                          (33,097
                          )
                          
                          **62,966**
                          
                          
                          (41,468
                          )Net
                              gain on derivative hedging instruments
                          
                          
                          **(44,419**
                          **)**
                          
                          47,220
                          
                          
                          **(89,248**
                          **)**
                          
                          58,072Reclassification
                              to expenses, net of tax
                          
                          
                          **7,576**
                          
                          
                          (12,571
                          )
                          
                          **17,112**
                          
                          
                          (16,076
                          )Derivative
                              hedging activity, net of tax
                          
                          
                          **(36,843**
                          **)**
                          
                          34,649
                          
                          
                          **(72,136**
                          **)**
                          
                          41,996Change
                              in minimum pension obligation
                          
                          
                          **-**
                          
                          
                          -
                          
                          
                          **-**
                          
                          
                          (60
                          )Income
                              taxes
                          
                          
                          **-**
                          
                          
                          (548
                          )
                          
                          **-**
                          
                          
                          (525
                          )Net
                              change in minimum pension obligation
                          
                          
                          **-**
                          
                          
                          (548
                          )
                          
                          **-**
                          
                          
                          (585
                          )Comprehensive
                              income
                          
                          **$**
                          **18,316**
                          
                          $
                          124,976
                          
                          **$**
                          **18,544**
                          
                          $
                          174,377The
                              accompanying Notes to Consolidated Financial Statements
                              are an integral
                              part of these statements.
 10
  **KANSAS
                          CITY POWER & LIGHT COMPANY****Consolidated
                          Balance Sheets**(Unaudited)**September
                          30**
                      
                      December
                          31**2006**
                      
                      2005**ASSETS**
                      
                      
                      (thousands)**Current
                          Assets**Cash
                          and cash equivalents
                      
                      **$**
                      **400**
                      
                      $
                      2,961Receivables,
                          net
                      
                      
                      **122,293**
                      
                      
                      70,264Fuel
                          inventories, at average cost
                      
                      
                      **25,269**
                      
                      
                      17,073Materials
                          and supplies, at average cost
                      
                      
                      **59,414**
                      
                      
                      57,017Deferred
                          income taxes
                      
                      
                      **11,282**
                      
                      
                      8,944Prepaid
                          expenses
                      
                      
                      **8,072**
                      
                      
                      11,292Total
                      
                      
                      **226,730**
                      
                      
                      167,551**Nonutility
                          Property and Investments**Nuclear
                          decommissioning trust fund
                      
                      
                      **98,975**
                      
                      
                      91,802Other
                      
                      
                      **5,351**
                      
                      
                      7,694Total
                      
                      
                      **104,326**
                      
                      
                      99,496**Utility
                          Plant, at Original Cost**Electric
                      
                      
                      **5,224,095**
                      
                      
                      4,959,539Less-accumulated
                          depreciation
                      
                      
                      **2,423,708**
                      
                      
                      2,322,813Net
                          utility plant in service
                      
                      
                      **2,800,387**
                      
                      
                      2,636,726Construction
                          work in progress
                      
                      
                      **160,058**
                      
                      
                      100,952Nuclear
                          fuel, net of amortization of $127,029 and $115,240
                      
                      
                      **37,703**
                      
                      
                      27,966Total
                      
                      
                      **2,998,148**
                      
                      
                      2,765,644**Deferred
                          Charges and Other Assets**Regulatory
                          assets
                      
                      
                      **207,453**
                      
                      
                      179,922Prepaid
                          pension costs
                      
                      
                      **70,806**
                      
                      
                      98,002Other
                      
                      
                      **29,752**
                      
                      
                      27,905Total
                      
                      
                      **308,011**
                      
                      
                      305,829Total
                      
                      **$**
                      **3,637,215**
                      
                      $
                      3,338,520The
                          disclosures regarding consolidated KCP&L included in the accompanying
                          Notes to Consolidated FinancialStatements
                          are an integral part of these
                          statements.
 11
 
 **KANSAS
                          CITY POWER & LIGHT COMPANY****Consolidated
                          Balance Sheets**(Unaudited)**September
                          30**
                      
                      December
                          31**2006**
                      
                      2005**LIABILITIES
                          AND CAPITALIZATION**
                      
                      (thousands)**Current
                          Liabilities**Notes
                          payable to Great Plains Energy
                      
                      **$**
                      **550**
                      
                      $
                      500Commercial
                          paper
                      
                      
                      **80,600**
                      
                      
                      31,900Current
                          maturities of long-term debt
                      
                      
                      **225,500**
                      
                      
                      -Accounts
                          payable
                      
                      
                      **119,616**
                      
                      
                      106,040Accrued
                          taxes
                      
                      
                      **99,342**
                      
                      
                      27,448Accrued
                          interest
                      
                      
                      **11,783**
                      
                      
                      11,549Accrued
                          payroll and vacations
                      
                      
                      **25,158**
                      
                      
                      27,520Accrued
                          refueling outage costs
                      
                      
                      **15,707**
                      
                      
                      8,974Derivative
                          instruments
                      
                      
                      **812**
                      
                      
                      -Other
                      
                      
                      **8,694**
                      
                      
                      8,600Total
                      
                      
                      **587,762**
                      
                      
                      222,531**Deferred
                          Credits and Other Liabilities**Deferred
                          income taxes
                      
                      
                      **623,531**
                      
                      
                      627,048Deferred
                          investment tax credits
                      
                      
                      **27,413**
                      
                      
                      29,698Asset
                          retirement obligations
                      
                      
                      **91,072**
                      
                      
                      145,907Pension
                          liability
                      
                      
                      **85,848**
                      
                      
                      85,301Regulatory
                          liabilities
                      
                      
                      **107,500**
                      
                      
                      69,641Derivative
                          instruments
                      
                      
                      **2,196**
                      
                      
                      2,601Other
                      
                      
                      **42,981**
                      
                      
                      38,387Total
                      
                      
                      **980,541**
                      
                      
                      998,583**Capitalization**Common
                          shareholder's equityCommon
                          stock-1,000 shares authorized without par value1
                          share issued, stated value
                      
                      
                      **1,021,656**
                      
                      
                      887,041Retained
                          earnings
                      
                      
                      **326,408**
                      
                      
                      283,850Accumulated
                          other comprehensive loss
                      
                      
                      **(30,602**
                      **)**
                      
                      (29,909
                      )Total
                      
                      
                      **1,317,462**
                      
                      
                      1,140,982Long-term
                          debt (Note 8)
                      
                      
                      **751,450**
                      
                      
                      976,424Total
                      
                      
                      **2,068,912**
                      
                      
                      2,117,406**Commitments
                          and Contingencies (Note 14)**Total
                      
                      **$**
                      **3,637,215**
                      
                      $
                      3,338,520The
                          disclosures regarding consolidated KCP&L included in the accompanying
                          Notes to Consolidated FinancialStatements
                          are an integral part of these
                          statements.
 12
 
 **KANSAS
                          CITY POWER & LIGHT COMPANY****Consolidated
                          Statements of Income**(Unaudited)**Three
                          Months Ended**
                      
                      **Year
                          to Date****September
                          30**
                      
                      **September
                          30****2006**
                      
                      2005
                      
                      **2006**
                      
                      2005**Operating
                          Revenues**
                      
                      
                      (thousands)Electric
                          revenues
                      
                      **$**
                      **359,270**
                      
                      $
                      352,974
                      
                      **$**
                      **890,551**
                      
                      $
                      858,272Other
                          revenues
                      
                      
                      **-**
                      
                      
                      -
                      
                      
                      **-**
                      
                      
                      113Total
                      
                      
                      **359,270**
                      
                      
                      352,974
                      
                      
                      **890,551**
                      
                      
                      858,385**Operating
                          Expenses**Fuel
                      
                      
                      **77,154**
                      
                      
                      73,935
                      
                      
                      **180,751**
                      
                      
                      160,228Purchased
                          power
                      
                      
                      **5,157**
                      
                      
                      28,303
                      
                      
                      **18,844**
                      
                      
                      56,590Skill
                          set realignment costs (Note 9)
                      
                      
                      **1,330**
                      
                      
                      -
                      
                      
                      **15,560**
                      
                      
                      -Other
                      
                      
                      **69,326**
                      
                      
                      60,912
                      
                      
                      **196,692**
                      
                      
                      195,738Maintenance
                      
                      
                      **19,745**
                      
                      
                      19,225
                      
                      
                      **67,223**
                      
                      
                      69,111Depreciation
                          and amortization
                      
                      
                      **38,451**
                      
                      
                      36,776
                      
                      
                      **112,797**
                      
                      
                      109,836General
                          taxes
                      
                      
                      **30,894**
                      
                      
                      30,091
                      
                      
                      **84,058**
                      
                      
                      80,100(Gain)
                          loss on property
                      
                      
                      **26**
                      
                      
                      3,602
                      
                      
                      **(572**
                      **)**
                      
                      3,089Total
                      
                      
                      **242,083**
                      
                      
                      252,844
                      
                      
                      **675,353**
                      
                      
                      674,692Operating
                          income
                      
                      
                      **117,187**
                      
                      
                      100,130
                      
                      
                      **215,198**
                      
                      
                      183,693Non-operating
                          income
                      
                      
                      **8,586**
                      
                      
                      2,822
                      
                      
                      **13,121**
                      
                      
                      13,665Non-operating
                          expenses
                      
                      
                      **(2,049**
                      **)**
                      
                      (2,477
                      )
                      
                      **(4,341**
                      **)**
                      
                      (4,257
                      )Interest
                          charges
                      
                      
                      **(15,569**
                      **)**
                      
                      (15,015
                      )
                      
                      **(45,473**
                      **)**
                      
                      (45,116
                      )Income
                          before income taxes and minorityinterest
                          in subsidiaries
                      
                      
                      **108,155**
                      
                      
                      85,460
                      
                      
                      **178,505**
                      
                      
                      147,985Income
                          taxes
                      
                      
                      **(39,393**
                      **)**
                      
                      (16,512
                      )
                      
                      **(61,946**
                      **)**
                      
                      (31,943
                      )Minority
                          interest in subsidiaries
                      
                      
                      **-**
                      
                      
                      -
                      
                      
                      **-**
                      
                      
                      (7,805
                      )Net
                          income
                      
                      **$**
                      **68,762**
                      
                      $
                      68,948
                      
                      **$**
                      **116,559**
                      
                      $
                      108,237The
                          disclosures regarding consolidated KCP&L included in the accompanying
                          Notes to Consolidated FinancialStatements
                          are an integral part of these
                          statements.
 13
 
 **KANSAS
                          CITY POWER & LIGHT COMPANY****Consolidated
                          Statements of Cash Flows**(Unaudited)**Year
                          to Date September 30**
                      
                      **2006**
                      
                      2005**Cash
                          Flows from Operating Activities**
                      
                      (thousands)Net
                          income
                      
                      **$**
                      **116,559**
                      
                      $
                      108,237Adjustments
                          to reconcile income to net cash from operating
                          activities:Depreciation
                          and amortization
                      
                      
                      **112,797**
                      
                      
                      109,836Amortization
                          of:Nuclear
                          fuel
                      
                      
                      **11,789**
                      
                      
                      9,396Other
                      
                      
                      **4,955**
                      
                      
                      5,850Deferred
                          income taxes, net
                      
                      
                      **(3,089**
                      **)**
                      
                      (32,575
                      )Investment
                          tax credit amortization
                      
                      
                      **(2,285**
                      **)**
                      
                      (2,917
                      )(Gain)
                          loss on property
                      
                      
                      **(572**
                      **)**
                      
                      3,089Minority
                          interest in subsidiaries
                      
                      
                      **-**
                      
                      
                      7,805Other
                          operating activities (Note 4)
                      
                      
                      **11,015**
                      
                      
                      81,378Net
                          cash from operating activities
                      
                      
                      **251,169**
                      
                      
                      290,099**Cash
                          Flows from Investing Activities**Utility
                          capital expenditures
                      
                      
                      **(371,056**
                      **)**
                      
                      (265,361
                      )Allowance
                          for borrowed funds used during construction
                      
                      
                      **(4,060**
                      **)**
                      
                      (1,174
                      )Purchases
                          of nonutility property
                      
                      
                      **(51**
                      **)**
                      
                      (113
                      )Proceeds
                          from sale of assets
                      
                      
                      **319**
                      
                      
                      224Purchases
                          of nuclear decommissioning trust investments
                      
                      
                      **(37,333**
                      **)**
                      
                      (22,811
                      )Proceeds
                          from nuclear decommissioning trust investments
                      
                      
                      **34,596**
                      
                      
                      20,147Hawthorn
                          No. 5 partial insurance recovery
                      
                      
                      -
                      
                      
                      10,000Hawthorn
                          No. 5 partial litigation recoveries
                      
                      
                      **15,829**
                      
                      
                      -Other
                          investing activities
                      
                      
                      **(852**
                      **)**
                      
                      (679
                      )Net
                          cash from investing activities
                      
                      
                      **(362,608**
                      **)**
                      
                      (259,767
                      )**Cash
                          Flows from Financing Activities**Issuance
                          of long-term debt
                      
                      
                      **-**
                      
                      
                      85,922Repayment
                          of long-term debt
                      
                      
                      **-**
                      
                      
                      (85,922
                      )Net
                          change in short-term borrowings
                      
                      
                      **48,750**
                      
                      
                      13,576Dividends
                          paid to Great Plains Energy
                      
                      
                      **(74,001**
                      **)**
                      
                      (92,700
                      )Equity
                          contribution from Great Plains Energy
                      
                      
                      **134,615**
                      
                      
                      -Issuance
                          fees
                      
                      
                      **(486**
                      **)**
                      
                      (2,031
                      )Net
                          cash from financing activities
                      
                      
                      **108,878**
                      
                      
                      (81,155
                      )**Net
                          Change in Cash and Cash Equivalents**
                      
                      
                      **(2,561**
                      **)**
                      
                      (50,823
                      )**Cash
                          and Cash Equivalents at Beginning of Year**
                      
                      
                      **2,961**
                      
                      
                      51,619**Cash
                          and Cash Equivalents at End of Period**
                      
                      **$**
                      **400**
                      
                      $
                      796The
                          disclosures regarding consolidated KCP&L included in the accompanying
                          Notes to Consolidated FinancialStatements
                          are an integral part of these
                          statements.
 14
 
 **KANSAS
                          CITY POWER & LIGHT COMPANY****Consolidated
                          Statements of Common Shareholder's Equity**(Unaudited)**Year
                          to Date September 30**
                      
                      **2006**
                      
                      2005**Shares**
                      
                      
                      **Amount**
                      
                      
                      Shares
                      
                      
                      Amount**Common
                          Stock**
                      
                      (thousands,
                          except share amounts)Beginning
                          balance
                      
                      
                      **1**
                      
                      **$**
                      **887,041**
                      
                      
                      1
                      
                      $
                      887,041Equity
                          contribution from Great Plains Energy
                      
                      
                      **-**
                      
                      
                      **134,615**
                      
                      
                      -
                      
                      
                      -Ending
                          balance
                      
                      
                      **1**
                      
                      
                      **1,021,656**
                      
                      
                      1
                      
                      
                      887,041**Retained
                          Earnings**Beginning
                          balance
                      
                      
                      
                      
                      
                      **283,850**
                      
                      
                      
                      
                      
                      252,893Net
                          income
                      
                      
                      
                      
                      
                      **116,559**
                      
                      
                      
                      
                      
                      108,237Dividends:Common
                          stock held by Great Plains Energy
                      
                      
                      
                      
                      
                      **(74,001**
                      **)**
                      
                      
                      
                      
                      (92,700
                      )Ending
                          balance
                      
                      
                      
                      
                      **326,408**
                      
                      
                      
                      
                      268,430**Accumulated
                          Other Comprehensive Loss**Beginning
                          balance
                      
                      
                      
                      
                      
                      **(29,909**
                      **)**
                      
                      
                      
                      
                      (40,334
                      )Derivative
                          hedging activity, net of tax
                      
                      
                      
                      
                      
                      **(693**
                      **)**
                      
                      
                      
                      
                      4,015Minimum
                          pension obligation, net of tax
                      
                      
                      
                      
                      
                      **-**
                      
                      
                      
                      
                      
                      (2,538
                      )Ending
                          balance
                      
                      
                      
                      
                      **(30,602**
                      **)**
                      
                      
                      
                      (38,857
                      )**Total
                          Common Shareholder's Equity**
                      
                      
                      
                      **$**
                      **1,317,462**
                      
                      
                      
                      $
                      1,116,614The
                          disclosures regarding consolidated KCP&L included in the accompanying
                          Notes to Consolidated FinancialStatements
                          are an integral part of these
                          statements.
 15
 **KANSAS
                            CITY POWER & LIGHT COMPANY****Consolidated
                            Statements of Comprehensive Income**(Unaudited)**Three
                            Months Ended**
                        
                        **Year
                            to Date****September
                            30**
                        
                        **September
                            30****2006**
                        
                        2005
                        
                        **2006**
                        
                        2005(thousands)Net
                            income
                        
                        **$**
                        **68,762**
                        
                        $
                        68,948
                        
                        **$**
                        **116,559**
                        
                        $
                        108,237Other
                            comprehensive incomeGain
                            (loss) on derivative hedging instruments
                        
                        
                        **(6,105**
                        **)**
                        
                        9,193
                        
                        
                        **(812**
                        **)**
                        
                        6,902Income
                            taxes
                        
                        
                        **2,295**
                        
                        
                        (3,478
                        )
                        
                        **305**
                        
                        
                        (2,598
                        )Net
                            gain on derivative hedging instruments
                        
                        
                        **(3,810**
                        **)**
                        
                        5,715
                        
                        
                        **(507**
                        **)**
                        
                        4,304Reclassification
                            to expenses, net of tax
                        
                        
                        **(61**
                        **)**
                        
                        (286
                        )
                        
                        **(186**
                        **)**
                        
                        (289
                        )Derivative
                            hedging activity, net of tax
                        
                        
                        **(3,871**
                        **)**
                        
                        5,429
                        
                        
                        **(693**
                        **)**
                        
                        4,015Change
                            in minimum pension obligation
                        
                        
                        **-**
                        
                        
                        (3,170
                        )
                        
                        **-**
                        
                        
                        (3,230
                        )Income
                            taxes
                        
                        
                        **-**
                        
                        
                        669
                        
                        
                        **-**
                        
                        
                        692Net
                            change in minimum pension obligation
                        
                        
                        **-**
                        
                        
                        (2,501
                        )
                        
                        **-**
                        
                        
                        (2,538
                        )Comprehensive
                            income
                        
                        **$**
                        **64,891**
                        
                        $
                        71,876
                        
                        **$**
                        **115,866**
                        
                        $
                        109,714The
                            disclosures regarding consolidated KCP&L included in the accompanying
                            Notes to Consolidated Financial Statementsare
                            an integral part of these
                            statements.
 16
 **GREAT
              PLAINS ENERGY INCORPORATED**
 **KANSAS
              CITY POWER & LIGHT COMPANY**
 **Notes
              to Unaudited Consolidated Financial Statements**
  The
              notes
              to unaudited consolidated financial statements that follow are a combined
              presentation for Great Plains Energy Incorporated and Kansas City Power
&
Light Company, both registrants under this filing. The terms “Great Plains
              Energy,” “Company,” “KCP&L” and “consolidated KCP&L” are used throughout
              this report. “Great Plains Energy” and the “Company” refer to Great Plains
              Energy Incorporated and its consolidated subsidiaries, unless otherwise
              indicated. “KCP&L” refers to Kansas City Power & Light Company, and
“consolidated KCP&L” refers to KCP&L and its consolidated
              subsidiaries.
  **1.**
                  **SUMMARY
                      OF SIGNIFICANT ACCOUNTING
                      POLICIES**  **Organization**
 Great
              Plains Energy, a Missouri corporation incorporated in 2001, is a public
              utility
              holding company and does not own or operate any significant assets
              other than
              the stock of its subsidiaries. Great Plains Energy has four direct
              subsidiaries
              with operations or active subsidiaries:
  ·
                  KCP&L
                      is an integrated, regulated electric utility that provides
                      electricity to
                      customers primarily in the states of Missouri and Kansas. KCP&L has
                      two wholly owned subsidiaries, Kansas City Power & Light Receivables
                      Company (Receivables Company) and Home Service Solutions Inc.
                      (HSS). HSS
                      has no active operations.  ·
                  KLT
                      Inc. is an intermediate holding company that primarily holds
                      indirect
                      interests in Strategic Energy, L.L.C. (Strategic Energy), which
                      provides
                      competitive retail electricity supply services in several electricity
                      markets offering retail choice, and investments in affordable
                      housing
                      limited partnerships. KLT Inc. also wholly owns KLT Gas Inc.
                      (KLT Gas),
                      which has no active operations in 2006.  ·
                  Innovative
                      Energy Consultants Inc. (IEC) is an intermediate holding company
                      that
                      holds an indirect interest in Strategic Energy. IEC does not
                      own or
                      operate any assets other than its indirect interest in Strategic
                      Energy.
                      When combined with KLT Inc.’s indirect interest in Strategic Energy, the
                      Company indirectly owns 100% of Strategic
                      Energy.  ·
                  Great
                      Plains Energy Services Incorporated (Services) provides services
                      at cost
                      to Great Plains Energy and its subsidiaries, including consolidated
                      KCP&L.  The
              operations of Great Plains Energy and its subsidiaries are divided
              into two
              reportable segments, KCP&L and Strategic Energy. Great Plains Energy’s legal
              structure differs from the functional management and financial reporting
              of its
              reportable segments. Other activities not considered a reportable segment
              include HSS, Services, all KLT Inc. activity other than Strategic Energy,
              and
              holding company operations.
  **2.**
                  **BASIC
                      AND DILUTED EARNINGS PER COMMON SHARE
                      CALCULATION**  There
              was
              no significant dilutive effect on Great Plains Energy’s EPS from other
              securities for the three months ended and year to date September 30,
              2006 and
              2005. To determine basic EPS, preferred stock dividend requirements
              are deducted
              from income from continuing operations and net income before dividing
              by the
              average number of common shares outstanding. The earnings (loss) per
              share
              impact of discontinued operations, net of income taxes, is determined
              by
              dividing discontinued operations, net of income taxes, by the average
              number of
              common shares outstanding. The effect of dilutive securities, calculated
              using
              the treasury stock method, assumes the issuance of common shares applicable
              to
              stock options, performance shares, restricted stock, a forward sale
              agreement
              and FELINE PRIDES SM .
 17
 The
              following table reconciles
              Great Plains Energy’s basic and diluted EPS.
 **Three
                      Months Ended**
                  
                  
                  **Year
                      to Date****September
                      30**
                  
                  
                  **September
                      30****2006**
                  
                  
                  **2005**
                  
                  
                  
                  
                  **2006**
                  
                  
                  **2005****Income**
                  
                  
                  (millions,
                      except per share amounts)Income
                      from continuing operations
                  
                  $
                  55.2
                  
                  $
                  89.1
                  
                  
                  
                  $
                  90.7
                  
                  $
                  134.8Less:
                      preferred stock dividend requirements
                  
                  
                  0.5
                  
                  
                  0.5
                  
                  
                  
                  
                  1.3
                  
                  
                  1.3Income
                      available to common shareholders
                  
                  $
                  54.7
                  
                  $
                  88.6
                  
                  
                  
                  $
                  89.4
                  
                  $
                  133.5**Common
                      Shares Outstanding**Average
                      number of common shares outstanding
                  
                  
                  80.1
                  
                  
                  74.7
                  
                  
                  
                  
                  77.3
                  
                  
                  74.6Add:
                      effect of dilutive securities
                  
                  
                  0.2
                  
                  
                  -
                  
                  
                  
                  
                  0.1
                  
                  
                  -Diluted
                      average number of common shares outstanding
                  
                  
                  80.3
                  
                  
                  74.7
                  
                  
                  
                  
                  77.4
                  
                  
                  74.6**Basic
                      and diluted EPS from continuing operations**
                  
                  $
                  0.68
                  
                  $
                  1.19
                  
                  
                  
                  $
                  1.16
                  
                  $
                  1.79
 The
              computation of diluted EPS excludes anti-dilutive shares for the three
              months
              ended and year to date September 30, 2006, of 105,198 and 106,706 performance shares and 99,838 and 116,468 restricted stock shares,
              respectively.
              Additionally, for the three months ended and year to date September
              30, 2006,
              6.5 million of anti-dilutive FELINE PRIDES were excluded from the computation
              of
              diluted EPS and there were no anti-dilutive shares applicable to stock
              options
              or a forward sale agreement. For the three months ended and year to
              date
              September 30, 2005, there were no significant anti-dilutive shares
              applicable to
              stock options, performance shares, restricted stock or FELINE PRIDES.
  In
              October 2006, the Board of Directors declared
              a quarterly dividend of $0.415 per share on Great Plains Energy’s common stock.
              The common dividend is payable December 20, 2006, to shareholders of
              record as
              of November 29, 2006. The Board of Directors also declared regular
              dividends on
              Great Plains Energy’s preferred stock, payable March 1, 2007, to shareholders of
              record as of February 7, 2007.
  **3.**
                  **CASH**  **Cash
              and Cash Equivalents**
 Cash
              equivalents consist of highly liquid investments with maturities of
              three months
              or less at acquisition. For Great Plains Energy, this includes Strategic
              Energy’s cash held in trust of $11.2 million and
              $21.9 million at
              September 30, 2006 and December 31, 2005, respectively.
  Strategic
              Energy has entered into collateral arrangements with selected electricity
              power
              suppliers that require selected customers to remit payment to lockboxes that
              are
              held in trust and managed by a Trustee. As part of the trust administration,
              the
              Trustee remits payment to the supplier of electricity purchased by
              Strategic
              Energy. On a monthly basis, any remittances into the lockboxes in excess
              of
              disbursements to the supplier are remitted back to Strategic Energy.
  **Restricted
              Cash**
 Strategic
              Energy has entered into Master Power Purchase and Sale Agreements with
              its power
              suppliers. Certain of these agreements contain provisions whereby,
              to the extent
              Strategic Energy has a net exposure to the purchased power supplier,
              collateral
              requirements are to be maintained. Collateral posted in the form of
              cash to
              Strategic Energy is restricted by agreement, but would become unrestricted
              in
              the event of a default by the purchased power supplier. Strategic Energy
              held no
              restricted cash
              collateral at September 30, 2006, and $1.9 million at
              December 31, 2005.
 18
 **4. 
              SUPPLEMENTAL CASH FLOW INFORMATION**
  ***Great
                          Plains Energy Other Operating Activities*****Revised****Year
                          to Date September 30**
                      
                      **2006**
                      
                      **2005**Cash
                          flows affected by changes in:
                      
                      (millions)Receivables
                      
                      $
                      (96.2
                      )
                      $
                      (43.9
                      )Fuel
                          inventories
                      
                      
                      (8.2
                      )
                      
                      2.3Materials
                          and supplies
                      
                      
                      (2.4
                      )
                      
                      (2.5
                      )Accounts
                          payable
                      
                      
                      6.9
                      
                      
                      12.3Accrued
                          taxes
                      
                      
                      60.6
                      
                      
                      51.1Accrued
                          interest
                      
                      
                      0.2
                      
                      
                      1.2Deposits
                          with suppliers
                      
                      
                      (4.4
                      )
                      
                      0.1Accrued
                          refueling outage costs
                      
                      
                      6.7
                      
                      
                      (7.7
                      )Pension
                          and postretirement benefit assets and obligations
                      
                      
                      10.8
                      
                      
                      6.0Allowance
                          for equity funds used during construction
                      
                      
                      (3.7
                      )
                      
                      (1.1
                      )Proceeds
                          from the sale of SO2emission allowances
                      
                      
                      0.8
                      
                      
                      31.0Other
                      
                      
                      10.1
                      
                      
                      11.1Total
                          other operating activities
                      
                      $
                      (18.8
                      )
                      $
                      59.9Cash
                          paid during the period:Interest
                      
                      $
                      50.9
                      
                      $
                      54.3Income
                          taxes
                      
                      $
                      39.9
                      
                      $
                      24.1Non-cash
                          investing activities:Liabilities
                          assumed for capital expenditures
                      
                      $
                      34.7
                      
                      $
                      4.1
 ***Consolidated
                              KCP&L Other Operating Activities*****Year
                              to Date September 30**
                          
                          **2006**
                          
                          **2005**Cash
                              flows affected by changes in:
                          
                          (millions)Receivables
                          
                          $
                          (52.1
                          )
                          $
                          (20.4
                          )Fuel
                              inventories
                          
                          
                          (8.2
                          )
                          
                          2.3Materials
                              and supplies
                          
                          
                          (2.4
                          )
                          
                          (2.5
                          )Accounts
                              payable
                          
                          
                          (9.2
                          )
                          
                          (2.7
                          )Accrued
                              taxes
                          
                          
                          71.9
                          
                          
                          66.9Accrued
                              interest
                          
                          
                          0.2
                          
                          
                          1.2Accrued
                              refueling outage costs
                          
                          
                          6.7
                          
                          
                          (7.7
                          )Pension
                              and postretirement benefit assets and obligations
                          
                          
                          8.3
                          
                          
                          2.3Allowance
                              for equity funds used during construction
                          
                          
                          (3.7
                          )
                          
                          (1.1
                          )Proceeds
                              from the sale of SO2emission allowances
                          
                          
                          0.8
                          
                          
                          31.0Other
                          
                          
                          (1.3
                          )
                          
                          12.1Total
                              other operating activities
                          
                          $
                          11.0
                          
                          $
                          81.4Cash
                              paid during the period:Interest
                          
                          $
                          43.6
                          
                          $
                          42.1Income
                              taxes
                          
                          $
                          29.1
                          
                          $
                          32.4Non-cash
                              investing activities:Liabilities
                              assumed for capital expenditures
                          
                          $
                          34.4
                          
                          $
                          3.5
 **Discontinued
                    Operations and Proceeds From Sale of SO** **2** **Emission Allowances Presentation**
 In
              the
              fourth quarter of 2005, the Company changed the presentation of its
              consolidated
              statements of cash flows to include the cash flows from operating,
              investing and
              financing activities of discontinued operations within the respective
              categories
              of operating, investing and financing activities as well as to reflect
              proceeds
              from the sale of SO 2 emission
              allowances by consolidated KCP&L as operating
 19
 activities
              rather than investing activities and
              retroactively revised the consolidated statement of cash flows year
              to date
              September 30, 2005, to be consistent with this presentation. Great
              Plains
              Energy’s net cash flows from operating activities year to date September 30,
              2005, increased $30.2 million due to a $31.0 million increase for KCP&L’s
              proceeds from the sale of SO 2 emission
              allowances and a $0.8 million decrease for discontinued operations
              operating activities from amounts previously reported. Net cash flows
              from
              investing activities decreased $30.7 million due to a $31.0 million
              decrease for
              KCP&L’s proceeds from the sale of SO 2 emission
              allowances and a $0.3 million increase from discontinued operations
              from amounts
              previously reported.
  **Significant
              Non-Cash Items**
 In
              the
              third quarter of 2006, Wolf Creek Nuclear Operating Corporation (WCNOC)
              submitted an application to the Nuclear Regulatory Commission (NRC)
              for a new
              operating license for Wolf Creek Generating Station (Wolf Creek), which
              would
              extend Wolf Creek’s operating period to 2045. KCP&L recorded a $65.0 million
              decrease in the asset retirement obligation (ARO) to decommission Wolf
              Creek
              with a $25.8 million net decrease in property and equipment. The regulatory
              asset for ARO decreased $8.2 million and a $31.0 million regulatory
              liability
              was established to recognize current funding of the related decommissioning
              trust at September 30, 2006, in excess of the ARO due to the extended
              operating
              period. This activity had no impact to Great Plains Energy’s or consolidated
              KCP&L’s cash flows year to date September 30, 2006. See Note 17 for
              additional information.
 
 **5.**
                  **RECEIVABLES**  The
              Company’s receivables are detailed in the following table .
 **September
                          30**
                      **December
                          31****2006**
                      **2005****Consolidated
                          KCP&L**
                      
                      (millions)Customer
                          accounts receivable(a)
                      
                      
                      
                      
                      $
                      58.4
                      
                      $
                      34.0Allowance
                          for doubtful accounts
                      
                      
                      
                      
                      
                      (1.8
                      )
                      
                      (1.0
                      )Other
                          receivables
                      
                      
                      
                      
                      
                      65.7
                      
                      
                      37.3Consolidated
                          KCP&L receivables
                      
                      
                      
                      
                      
                      122.3
                      
                      
                      70.3**Other
                          Great Plains Energy**Other
                          receivables
                      
                      
                      
                      
                      
                      237.7
                      
                      
                      193.0Allowance
                          for doubtful accounts
                      
                      
                      
                      
                      
                      (4.5
                      )
                      
                      (4.3
                      )Great
                          Plains Energy receivables
                      
                      
                      
                      
                      $
                      355.5
                      
                      $
                      259.0(a)Customer
                          accounts receivable included unbilled receivables of $36.4
                          millionand
                          $31.4 million at September 30, 2006 and December 31, 2005,
                          respectively.
 Consolidated
              KCP&L’s other receivables at
              September 30, 2006 and December 31, 2005, consisted primarily of receivables
              from partners in jointly owned electric utility plants and wholesale
              sales
              receivables. Great Plains Energy’s other receivables at September 30, 2006 and
              December 31, 2005, consisted primarily of accounts receivable held
              by Strategic
              Energy, including unbilled receivables of $112.0 million and
              $99.9 million ,
              respectively.
  KCP&L
              sells all of its retail electric accounts receivable to its wholly
              owned
              subsidiary, Receivables Company, which in turn sells an undivided percentage
              ownership interest in the accounts receivable to Victory Receivables
              Corporation, an independent outside investor. KCP&L sells its receivables at
              a fixed price based upon the expected cost of funds and charge-offs.
              These costs
              comprise KCP&L’s loss on the sale of accounts receivable. KCP&L services
              the receivables and receives an annual servicing fee of 2.5% of the
              outstanding
              principal amount of the receivables sold to Receivables Company. KCP&L does
              not recognize a servicing asset or liability because management determined
              the
              collection agent fee earned by KCP&L approximates market value.  20
 Information
              regarding KCP&L’s sale of accounts receivable to Receivables Company is
              reflected in the following tables .
 **Receivables**
                  
                  **Consolidated****Three
                      Months Ended September 30, 2006**
                  
                  **KCP&L**
                  **Company**
                  
                  **KCP&L**(millions)Receivables
                      (sold) purchased
                  
                  $
                  (325.5
                  )
                  $
                  325.5
                  
                  $
                  -Gain
                      (loss) on sale of accounts receivable(a)
                  
                  
                  (3.3
                  )
                  
                  3.3
                  
                  
                  -Servicing
                      fees
                  
                  
                  1.0
                  
                  
                  (1.0)
                  
                  
                  -Fees
                      to outside investor
                  
                  
                  -
                  
                  
                  (1.0)
                  
                  
                  (1.0
                  )**Cash
                      flows during the period**Cash
                      from customers transferred toReceivables
                      Company
                  
                  
                  (323.0
                  )
                  
                  323.0
                  
                  
                  -Cash
                      paid to KCP&L for receivables purchased
                  
                  
                  323.6
                  
                  
                  (323.6)
                  
                  
                  -Servicing
                      fees
                  
                  
                  1.0
                  
                  
                  (1.0)
                  
                  
                  -Interest
                      on intercompany note
                  
                  
                  1.1
                  
                  
                  (1.1)
                  
                  
                  -
  **Receivables**
                  
                  **Consolidated****Year
                      to Date September 30, 2006**
                  
                  **KCP&L**
                  **Company**
                  
                  **KCP&L**(millions)Receivables
                      (sold) purchased
                  
                  $
                  (774.8
                  )
                  $
                  774.8
                  
                  $
                  -Gain
                      (loss) on sale of accounts receivable(a)
                  
                  
                  (7.8
                  )
                  
                  7.6
                  
                  
                  (0.2
                  )Servicing
                      fees
                  
                  
                  2.2
                  
                  
                  (2.2)
                  
                  
                  -Fees
                      to outside investor
                  
                  
                  -
                  
                  
                  (2.8)
                  
                  
                  (2.8
                  )**Cash
                      flows during the period**Cash
                      from customers transferred toReceivables
                      Company
                  
                  
                  (754.0
                  )
                  
                  754.0
                  
                  
                  -Cash
                      paid to KCP&L for receivables purchased
                  
                  
                  750.3
                  
                  
                  (750.3)
                  
                  
                  -Servicing
                      fees
                  
                  
                  2.2
                  
                  
                  (2.2)
                  
                  
                  -Interest
                      on intercompany note
                  
                  
                  1.9
                  
                  
                  (1.9)
                  
                  
                  -
  **Three
                      Months Ended and**
                  
                  
                  
                  **Receivables**
                  
                  **Consolidated****Year
                      to Date September 30, 2006**
                  
                  **KCP&L**
                  **Company**
                  
                  **KCP&L**(millions)Receivables
                      (sold) purchased
                  
                  $
                  (396.7
                  )
                  $
                  396.7
                  
                  $
                  -Gain
                      (loss) on sale of accounts receivable(a)
                  
                  
                  (4.0
                  )
                  
                  2.7
                  
                  
                  (1.3
                  )Servicing
                      fees
                  
                  
                  0.7
                  
                  
                  (0.7)
                  
                  
                  -Fees
                      to outside investor
                  
                  
                  -
                  
                  
                  (0.7)
                  
                  
                  (0.7
                  )**Cash
                      flows during the period**Cash
                      from customers transferred toReceivables
                      Company
                  
                  
                  (273.7
                  )
                  
                  273.7
                  
                  
                  -Cash
                      paid to KCP&L for receivables purchased
                  
                  
                  (271.0
                  )
                  
                  271.0
                  
                  
                  -Servicing
                      fees
                  
                  
                  0.7
                  
                  
                  (0.7)
                  
                  
                  -Funds
                    from outside investors (b)
                  
                  
                  70.0
                  
                  
                  -
                  
                  
                  70.0Interest
                      on intercompany note
                  
                  
                  0.6
                  
                  
                  (0.6)
                  
                  
                  -
 (a)
                    Any
                        net gain (loss) is the result of the timing difference inherent
                        in
                        collecting receivables andover
                        the life of the agreement will net to zero.(b)
                    During
                        the third quarter of 2005, Receivables Company received $70
                        million cash
                        from theoutside
                        investor for the sale of accounts receivable, which was then
                        forwarded to
                        KCP&L forconsideration
                        of its sale.
 21
 **6.**
                      **NUCLEAR
                          PLANT**
 KCP&L
                owns 47% of WCNOC, the operating company for Wolf Creek, its only
                nuclear
                generating unit. Wolf Creek is regulated by the NRC, with respect
                to licensing,
                operations and safety-related requirements.
  **Spent
                Nuclear Fuel and Radioactive Waste**
 Under
                the
                Nuclear Waste Policy Act of 1982, the Department of Energy (DOE)
                is responsible
                for the permanent disposal of spent nuclear fuel. KCP&L pays the DOE a
                quarterly fee of one-tenth of a cent for each kilowatt-hour of net
                nuclear
                generation delivered and sold for the future disposal of spent nuclear
                fuel.
                These disposal costs are charged to fuel expense. In 2002, the U.S.
                Senate
                approved Yucca Mountain, Nevada as a long-term geologic repository.
                In July
                2006, the DOE announced plans to submit a license application to
                the NRC for a
                nuclear waste repository at Yucca Mountain, Nevada, not later that
                June 30,
                2008. The DOE also announced if requested legislative changes are
                enacted, the
                repository would be able to accept spent nuclear fuel and high-level
                waste
                starting in early 2017. Management cannot predict when this site
                may be
                available for Wolf Creek. Under current DOE policy, once a permanent
                site is
                available, the DOE will accept spent nuclear fuel first from the
                owners with the
                older spent fuel. Wolf Creek has completed an on-site storage facility
                designed
                to hold all spent fuel generated at the plant through the end of
                its current
                40-year licensed life in 2025. If the DOE meets its revised timetable
                for
                accepting spent fuel for disposal by 2017, management expects that
                the DOE would
                begin accepting some of Wolf Creek’s spent fuel by 2025. Management will
                continue to monitor this activity. See Note 15 for a related legal
                proceeding.
  **Nuclear
                Liability and Insurance**
 The
                owners of Wolf Creek (Owners) maintain nuclear insurance for Wolf
                Creek in four
                areas: liability, worker radiation, property and accidental outage.
                These
                policies contain certain industry standard exclusions, including,
                but not
                limited to, ordinary wear and tear, and war. Both the nuclear liability
                and
                property insurance programs subscribed to by members of the nuclear
                power
                generating industry include industry aggregate limits for non-certified
                acts of
                terrorism and related losses, as defined by the Terrorism Risk Insurance
                Act,
                including replacement power costs. An industry aggregate limit of
                $0.3 billion
                exists for liability claims, regardless of the number of non-certified
                acts
                affecting Wolf Creek or any other nuclear energy liability policy
                or the number
                of policies in place. An industry aggregate limit of $3.2 billion
                plus any
                reinsurance recoverable by Nuclear Electric Insurance Limited (NEIL),
                the
                Owners’ insurance provider, exists for property claims, including accidental
                outage power costs for acts of terrorism affecting Wolf Creek or
                any other
                nuclear energy facility property policy within twelve months from
                the date of
                the first act. These limits are the maximum amount to be paid to
                members who
                sustain losses or damages from these types of terrorist acts. For
                certified acts
                of terrorism, the individual policy limits apply. In addition, industry-wide
                retrospective assessment programs (discussed below) can apply once
                these
                insurance programs have been exhausted.
  ***Liability
                Insurance***
 Pursuant
                to the Price-Anderson Act, which was reauthorized through December
                31, 2025, by
                the Energy Policy Act of 2005, the Owners are required to insure
                against public
                liability claims resulting from nuclear incidents to the full limit
                of public
                liability, which is currently $10.8 billion. This limit of liability
                consists of
                the maximum available commercial insurance of $0.3 billion, and the
                remaining
                $10.5 billion is provided through an industry-wide retrospective
                assessment
                program mandated by law, known as the Secondary Financial Protection
                (SFP)
                program. Under the SFP program, the Owners can be assessed up to
                $100.6 million
                ($47.3 million, KCP&L’s 47% share) per incident at any commercial reactor in
                the country, payable at no more than $15 million ($7.1 million, KCP&L’s 47%
                share) per incident per year. This assessment is subject to an inflation
                adjustment based on the Consumer Price Index and applicable premium
                taxes. This
                assessment also applies to worker
 22
 radiation
                claims insurance. In addition, the U.S. Congress could impose additional
                revenue-raising measures to pay claims.
  ***Property,
                Decontamination, Premature Decommissioning and Extra Expense Insurance***
 The
                Owners carry decontamination liability, premature decommissioning
                liability and
                property damage insurance for Wolf Creek totaling approximately $2.8
                billion
                ($1.3 billion, KCP&L's 47% share). NEIL provides this insurance.
  In
                the
                event of an accident, insurance proceeds must first be used for reactor
                stabilization and site decontamination in accordance with a plan
                mandated by the
                NRC. KCP&L’s share of any remaining proceeds can be used for further
                decontamination, property damage restoration and premature decommissioning
                costs. Premature decommissioning coverage applies only if an accident
                at Wolf
                Creek exceeds $500 million in property damage and decontamination
                expenses, and
                only after trust funds have been exhausted.
  ***Accidental
                Nuclear Outage Insurance***
 The
                Owners also carry additional insurance from NEIL to cover costs of
                replacement
                power and other extra expenses incurred in the event of a prolonged
                outage
                resulting from accidental property damage at Wolf Creek.
  Under
                all
                NEIL policies, the Owners are subject to retrospective assessments
                if NEIL
                losses, for each policy year, exceed the accumulated funds available
                to the
                insurer under that policy. The estimated maximum amount of retrospective
                assessments under the current policies could total approximately
                $26.1 million ($12.3 million, KCP&L’s 47% share) per policy
                year.
  In
                the
                event of a catastrophic loss at Wolf Creek, the insurance coverage
                may not be
                adequate to cover property damage and extra expenses incurred. Uninsured
                losses,
                to the extent not recovered through rates, would be assumed by KCP&L and the
                other owners and could have a material adverse effect on KCP&L’s results of
                operations, financial position and cash flows.
  ***Low-Level
                Waste***
 The
                Low-Level Radioactive Waste Policy Amendments Act of 1985 mandated
                that the
                various states, individually or through interstate compacts, develop
                alternative
                low-level radioactive waste disposal facilities. The states of Kansas,
                Nebraska,
                Arkansas, Louisiana and Oklahoma formed the Central Interstate Low-Level
                Radioactive Waste Compact (Compact) and selected a site in northern
                Nebraska to
                locate a disposal facility. WCNOC and the owners of the other five
                nuclear units
                in the Compact provided most of the pre-construction financing for
                this project.
  After
                many years of effort, Nebraska regulators denied the facility developer’s
                license application in December 1998, a prolonged lawsuit ensued,
                and Nebraska
                eventually settled the case by paying the Compact Commission $145.8
                million in
                damages. The Compact Commission then paid out pro rata portions of
                the
                settlement money to the various parties who originally funded the
                project. To
                date, WCNOC has received refunds totaling $21.3 million (KCP&L’s 47% share
                being $10 million), including $1.7 million ($0.8 million, KCP&L’s 47% share)
                received in 2006. The Commission continues to explore alternative
                long-term
                waste disposal capability and has retained an insignificant portion
                of the
                settlement money. In April 2006, WCNOC and other affected generators
                filed a
                lawsuit in Federal District Court in Nebraska seeking to preserve
                their ability
                to continue to pursue their claim for their share of the retained
                amount plus
                interest. The parties took the case to mediation in October 2006.
  ***Accrued
                Refueling Outage Costs***
 KCP&L
                accrues anticipated incremental costs to be incurred during scheduled
                Wolf Creek
                refueling outages monthly over the unit's operating cycle, normally
                the 18
                months preceding the outage.
 23
 Estimated
                incremental costs, which include operating, maintenance and replacement
                power
                expenses, are based on anticipated outage costs and the estimated
                outage
                duration. Changes to or variances from those estimates are recorded
                when known
                or are probable. In September 2006, the Financial Accounting Standards
                Board
                (FASB) issued FASB Staff Position (FSP) No. AUG AIR-1, “Accounting for Planned
                Major Maintenance Activities.” FSP No. AUG AIR-1 prohibits the use of the
                accrue-in-advance method of accounting for planned major maintenance
                activities.
                Great Plains Energy and consolidated KCP&L are required to adopt the
                provisions of FSP No. AUG AIR-1 for periods beginning after December
                15, 2006.
                The guidance in FSP No. AUG AIR-1 will be applied retrospectively.
                Management
                has determined that KCP&L will adopt the deferral method allowed under the
                FSP and has not yet determined the impact on Great Plains Energy
                and
                consolidated KCP&L’s consolidated financial statements.
  **7.**
                    **REGULATORY
                        MATTERS**  **KCP&L’s
                Comprehensive Energy Plan**
 KCP&L
                continues to make progress in implementing its comprehensive energy
                plan under
                orders received from the MPSC and KCC in 2005. The Sierra Club and
                Concerned
                Citizens of Platte County have appealed the MPSC order, and the Sierra
                Club has
                appealed the KCC order. In March 2006, the Circuit Court of Cole
                County,
                Missouri, affirmed the MPSC Order and the Sierra Club has appealed
                the decision
                to the Missouri Court of Appeals. The Kansas District Court denied
                the Sierra
                Club’s appeal in May 2006 and the Sierra Club has appealed to the Kansas
                Court
                of Appeals. Although subject to the appeals, the MPSC and KCC orders
                remain in
                effect pending the applicable court’s decision.
  Although
                control budgets and workflow scheduling are not complete, developing
                market
                conditions indicate overall cost estimates of the comprehensive energy
                plan are
                currently expected to be about 20% above the estimate in the 2005
                Form 10-K. The
                primary driver of the increased cost of the comprehensive energy
                plan is the
                environmental retrofit of selected existing coal-fired plants. The
                demand for
                environmental projects has increased substantially with many utilities
                in the
                United States starting similar projects to address changing environmental
                regulations. This demand has constrained labor and material resources
                resulting
                in a significant escalation in the cost and completion times for
                environmental
                retrofits. The first phase of environmental upgrades at LaCygne No.
                1,
                installation of SCR equipment, began in late 2005 and is expected
                to be
                in-service for the summer of 2007. KCP&L has approximately 88% of the total
                estimated cost for the first phase under firm contract as of September
                30, 2006.
                The second phase of environmental upgrades at LaCygne No. 1 is currently
                in the
                planning stage, and the market conditions noted above could impact
                the scope and
                timing. Iatan No. 1 environmental upgrades are on schedule with approximately
                80% of the total estimated costs under firm contract as of September
                30,
                2006.
  The
                construction projects contemplated in the comprehensive energy plan
                rely upon
                the supply of a significant percentage of materials from overseas
                sources. This
                global procurement subjects the delivery of procured material to
                issues beyond
                what would be expected if such material were supplied from sources
                within the
                United States. These risks include, but are not limited to, delays
                in clearing
                customs, ocean transportation and potential civil unrest in sourcing
                countries,
                among others. Additionally, as with any major construction program,
                inadequate
                availability of qualified craft labor may have an adverse impact
                on both the
                estimated cost and completion date of the projects.
  Over
                the
                last several months, KCP&L has finalized contracts and received bids for the
                largest cost components of the construction of Iatan No. 2. The estimated
                costs
                for Iatan No. 2 have also increased due to the constrained labor
                and material
                resources discussed above; however, the Iatan No. 2 estimated costs
                have not
                been as impacted as the estimated costs of the environmental retrofits.
                KCP&L has approximately 60% of the total estimated cost of Iatan No.
                2 under
                firm contract as of September 30, 2006, and has started construction
                activities
                at the site. An owners’ engineer has been
 24
 hired
                and
                the engineering design for Iatan Station is approximately 25% complete,
                which is
                on schedule with the targeted project completion in summer 2010.
                During the
                second quarter of 2006, KCP&L finalized Iatan No. 2 co-ownership agreements
                with Aquila Inc., The Empire District Electric Company, Kansas Electric
                Power
                Cooperative and Missouri Joint Municipal Electric Utility Commission.
                KCP&L
                will own 54.71% or approximately 465 MW of the new unit. In the first
                quarter of
                2006, KCP&L received the air permit and a water quality certification from
                the Missouri Department of Natural Resources relating to Iatan Station.
                The
                Sierra Club is appealing the air permit. In the third quarter of
                2006, the
                Sierra Club filed a motion requesting that construction on Iatan
                No. 2 be stayed
                pending the outcome of its appeal. This motion was denied. KCP&L has
                received the remaining permits necessary to begin construction at
                Iatan Station,
                which included the wetlands permit and a permit for the construction
                of a
                temporary barge slip and collector wells from the U.S. Army Corps
                of Engineers
                (Corps). The Corps also executed an Environmental Assessment with
                a Finding of
                No Significant Impact.
  Construction
                and commissioning of the 67 turbines at KCP&L’s Spearville Wind Energy
                Facility, a 100.5 MW wind
                project in western Kansas, was completed during the third quarter
                of 2006
                in-line with cost estimates reported in the 2005 Form 10-K. Additional
                transmission construction to enhance KCP&L’s ability to carry power from the
                facility to its service territory is expected to be completed in
                the first half
                of 2007, and is reflected in the current cost estimates provided
                above.
  KCP&L
                has implemented nine pilot affordability, energy efficiency and demand
                response
                programs in Missouri and four in Kansas. Initial results from the
                implemented
                pilot programs are beginning to demonstrate an ability to manage
                KCP&L’s
                customers’ retail load requirements and are on target with management's goal
                to
                achieve a potential 40MW reduction in retail load requirements by
                the end of
                2006. These early results are evidenced by the success of KCP&L’s
                residential air conditioning cycling program, Energy Optimizer, which
                has
                experienced strong early participation with over 8,200 installations
                year to
                date September 30, 2006. Additionally, in September 2006, KCC initiated
                a
                generic investigation into energy efficiency. The general issues
                that KCC is
                investigating relate to when and how utilities should promote energy
                efficiency
                by their customers and what ratemaking treatment, including special
                mechanisms,
                is appropriate or desirable. This investigation provides a significant
                opportunity for the continued development of energy efficiency policy
                regulation
                in Kansas.
  **KCP&L
                Regulatory Proceedings**
 In
                February 2006 ,
                KCP&L filed requests with the MPSC and KCC for annual rate increases
                of
                $55.8 million or 11.5% and $42.3 million or 10.5%, respectively. The
                requested rate increases reflect recovery of increasing operating
                costs
                including fuel, transportation and pensions as well as investments
                in wind
                generation and customer programs and compensation for wholesale sales
                volatility
                and construction risks. The request is based on a return on equity
                of 11.5% and
                an adjusted equity ratio of 53.8%.
  KCP&L
                reached a negotiated settlement with certain parties to the Kansas
                rate
                proceeding and filed an unopposed Stipulation and Agreement (Agreement)
                with KCC
                in the third quarter of 2006. The Agreement stipulates a $29 million
                increase in
                annual revenues effective January 1, 2007, including $4 million of
                accelerated
                depreciation to maintain cash flow levels as contemplated in the
                stipulation and
                agreement approved by KCC in 2005. The Agreement does not propose
                an energy cost
                adjustment (ECA) clause; however, KCP&L agreed to propose an ECA clause in
                its next rate case to be filed no later than March 1, 2007. The Agreement
                recommends various accounting and other provisions, including but
                not limited
                to, establishing annual pension costs beginning January 1, 2007,
                at
                approximately $43 million through the creation of a regulatory asset
                or
                liability, and establishing a regulatory asset or liability, effective
                January
                1, 2006, for costs arising from defined benefit plan settlements
                and
                curtailments to be amortized over a five-year period beginning with
                the
                effective date of rates approved in KCP&L’s next rate case. The Agreement is
                subject to KCC approval, and is voidable
 25
 if
                not
                approved in its entirety. KCP&L expects KCC to act on the Agreement before
                the end of the year with any rate changes being effective on January
                1,
                2007.
  In
                August
                2006, the MPSC Staff filed its case regarding KCP&L’s rate request. In its
                filing, the Staff asserted that KCP&L’s annual revenues should be decreased
                by between $4.3 million and $5.1 million, before adjustments resulting
                from the
                September 30, 2006, true-up of test year information. The Staff’s filing assumed
                adjustments resulting from this true-up would increase revenue requirements
                by
                approximately $20 million, resulting in a net required increase in
                annual
                revenues of between $14.9 million and $15.7 million, which reflected
                approximately $75 million in accelerated depreciation, which the
                Staff asserted
                will maintain certain KCP&L credit ratios at investment-grade levels as
                provided for in the stipulation and agreement approved by the MPSC
                in 2005. The
                Staff’s position was revised in the hearings that were held in October
                2006. The
                Staff’s current position is that KCP&L’s annual revenues should be increased
                by approximately $52 million (reflecting approximately $86 million
                in
                accelerated depreciation), before adjustments resulting from the
                September 30,
                2006, true-up. A decision by the MPSC is expected before the end
                of the year
                with any rate changes being effective on January 1, 2007.
  **Regulatory
                Assets and Liabilities**
 KCP&L
                is subject to the provisions of Statement of Financial Accounting
                Standards
                (SFAS) No. 71, “Accounting for the Effects of Certain Types of Regulation” and
                has recorded assets and liabilities on its balance sheet resulting
                from the
                effects of the ratemaking process, which would not be recorded under
                GAAP for
                non-regulated entities.
 Amortization
                              
                              
                              **September 30**
                              
                              **December
                                  31****ending
                                  period**
                              
                              
                              **2006**
                              
                              **2005****Regulatory
                                  Assets**Taxes
                                  recoverable through future rates
                              
                              
                              
                              
                              
                              
                              $
                              83.3
                              $
                              85.7Decommission
                                  and decontaminate federal uraniumenrichment
                                  facilities
                              
                              
                              
                              
                              2007
                              
                              
                              0.8
                              
                              1.3Loss
                                  on reacquired debt
                              
                              
                              
                              
                              2037
                              
                              
                              6.6
                              
                              7.1January
                                  2002 incremental ice storm costs (Missouri)
                              
                              
                              
                              
                              2007
                              
                              
                              1.5
                              
                              4.9Change
                                  in depreciable life of Wolf Creek
                              
                              
                              
                              
                              2045
                              
                              
                              40.9
                              
                              27.4Cost
                                  of removal
                              
                              
                              
                              
                              
                              
                              
                              9.4
                              
                              9.3Asset
                                  retirement obligations
                              
                              
                              
                              
                              
                              
                              
                              16.6
                              
                              23.6Pension
                                  accounting method difference
                              
                              
                              
                              
                              (a)
                              
                              
                              6.5
                              
                              -Future
                                  recovery of pension costs
                              
                              
                              
                              
                              (a)
                              
                              
                              31.0
                              
                              15.6Other
                              
                              
                              
                              
                              Various
                              
                              
                              10.9
                              
                              5.0Total
                                  Regulatory Assets
                              
                              
                              
                              
                              $
                              207.5
                              $
                              179.9**Regulatory
                                  Liabilities**Emission
                                  allowances
                              
                              
                              
                              
                              (a)
                              
                              $
                              64.5
                              $
                              64.3Pension
                                  accounting method difference
                              
                              
                              
                              
                              (a)
                              
                              
                              -
                              
                              1.0Asset
                                  retirement obligations
                              
                              
                              
                              
                              
                              
                              
                              31.0
                              
                              -Additional
                                  Wolf Creek amortization (Missouri)
                              
                              
                              
                              
                              (a)
                              
                              
                              12.0
                              
                              4.3Total
                                  Regulatory Liabilities
                              
                              
                              
                              
                              $
                              107.5
                              $
                              69.6(a) Will
                                    be amortized in accordance with future rate cases.
  Except
                          as
                          noted below, regulatory assets for which costs have been
                          incurred have been
                          included (or are expected to be included, for costs incurred
                          subsequent to the
                          most recently approved rate case) in KCP&L’s rate base, thereby providing a
                          return on invested costs when included in rate base. Certain
                          regulatory assets
                          do not result from cash expenditures and therefore do not
                          represent investments
                          included in rate base or have offsetting liabilities that
                          reduce rate base. The
                          pension accounting
 26
 method
                          difference (which may be either a regulatory asset or liability)
                          and certain
                          insignificant items in other regulatory assets are not
                          included in rate
                          base.
  **Southwest
                          Power Pool** **Regional
                          Transmission Organization**
 KCP&L
                          is a member of the Southwest Power Pool (SPP), which is
                          a Federal Energy
                          Regulatory Commission (FERC) approved Regional Transmission
                          Organization (RTO).
                          In July 2006, KCC granted interim approval for KCP&L to take SPP network
                          integration transmission service for its retail customers.
                          During 2006, KCC and
                          MPSC both issued orders approving KCP&L’s participation in the SPP RTO,
                          which also made final the previously granted KCC interim
                          approval. In May 2006,
                          SPP made a compliance filing in response to a previously
                          issued FERC order on
                          the SPP energy imbalance service market. In July 2006,
                          FERC issued an order on
                          the compliance filing accepting in part, as modified, and
                          rejecting in part the
                          filing, permitting the start of the SPP energy imbalance
                          service market no
                          earlier than October 1, 2006, and required SPP to make
                          additional filings. The
                          SPP Board met in October 2006 and delayed SPP’s readiness filing to FERC and
                          plans to meet again in December 2006 to reassess SPP’s readiness for a February
                          1, 2007, energy imbalance service market start. KCP&L is continuing
                          preparation for this new start-up date.
  **Revenue
                          Sufficiency Guarantee**
 Since
                          the
                          April 2005 implementation of Midwest Independent Transmission
                          System Operator
                          Inc. (MISO) market operations, MISO’s business practice manuals and other
                          instructions to market participants have stated that Revenue
                          Sufficiency
                          Guarantee (RSG) charges will not be imposed on day-ahead
                          virtual offers to
                          supply power not supported by actual generation. RSG charges
                          are collected by
                          MISO in order to compensate generators that are standing
                          by to supply
                          electricity when called upon by MISO. In April 2006, FERC
                          issued an order
                          regarding MISO RSG charges. In its order, FERC interpreted
                          MISO's tariff to
                          require that virtual supply offers be included in the calculation
                          of RSG charges
                          and that to the extent that MISO did not charge market
                          participants RSG charges
                          on virtual supply offers, MISO violated its tariff. The
                          FERC order required MISO
                          to recalculate RSG rates back to April 1, 2005, and make
                          refunds to customers
                          who paid RSG charges on imbalances, with interest, reflecting
                          the recalculated
                          charges. In order to make such refunds, RSG charges could
                          have been
                          retroactively imposed on market participants who submitted
                          virtual supply offers
                          during the recalculation period.
  Strategic
                          Energy is among the MISO participants that paid RSG charges
                          on imbalances and
                          could have received a refund as a result of the order.
                          Strategic Energy could
                          also have been subject to a retroactive assessment from
                          MISO for RSG charges on
                          virtual supply offers it submitted during the recalculation
                          period. Consistent
                          with MISO’s business practice manuals, management does not believe
                          Strategic
                          Energy should be assessed RSG charges retroactively or
                          prospectively on its
                          virtual supply offers.
  Numerous
                          requests for rehearing were filed and in October 2006,
                          FERC entered an order
                          granting requests for rehearing of the FERC’s decision to require MISO to
                          retroactively recalculate RSG charges and provide refunds
                          to customers that paid
                          RSG charges on imbalances. As a result, MISO will not assess
                          RSG charges
                          retroactively on virtual supply offers, but RSG charges
                          will apply prospectively
                          on certain virtual supply offers. Parties may appeal the
                          FERC Order. Management
                          is unable to predict the outcome of any appeals.
  **Seams
                          Elimination Charge Adjustment**
 Seams
                          Elimination Charge Adjustment (SECA) is a transitional
                          pricing mechanism
                          authorized by FERC and intended to compensate transmission
                          owners for the
                          revenue lost as a result of FERC’s elimination of regional through and out rates
                          between PJM Interconnection (PJM) and MISO during a 16-month
                          transition period
                          from December 1, 2004 through March 31, 2006. Each relevant PJM and MISO
                          zone and the load-serving entities within that zone were
                          allocated a portion of
                          SECA based on transmission
 27
 services
                          provided to that zone during 2002 and 2003. Strategic Energy
                          did not record any
                          significant SECA activity for the three months ended September
                          30, 2006. Year to
                          date September 30, 2006, Strategic Energy recorded a reduction
                          of purchased
                          power expense of $2.4 million for SECA recoveries from
                          suppliers, which offset
                          $2.7 million of expense recorded in the first quarter.
                          Strategic Energy recorded
                          purchased power expenses totaling $3.3 million and $10.5 million
                          for the three months ended and year to date September 30,
                          2005, for SECA
                          transition charges. Strategic Energy recovered $1.3 million
                          year to date
                          September 30, 2006, of its SECA costs through billings
                          to its retail customers.
                          No further billings are anticipated pending the outcome
                          of proceedings discussed
                          below.
  There
                          are
                          several unresolved matters and legal challenges related
                          to SECA that are pending
                          before FERC on rehearing. FERC established a schedule for
                          resolution of certain
                          SECA issues, including the issue of shifting SECA allocations
                          to the shipper.
                          The shipper in Strategic Energy’s situation is the wholesale supplier, which,
                          through a contract with Strategic Energy, delivered power
                          to various zones in
                          which Strategic Energy was supplying retail customers.
                          In most instances, the
                          shipper was the purchaser of through and out transmission
                          service and therefore
                          included the cost of the through and out rate in its energy
                          price.
  In
                            mid-2006, FERC held hearings on the justness and reasonableness
                            of the SECA rate
                            and on attempts by suppliers to shift SECA to wholesale
                            counterparties. In
                            August 2006, a favorable initial decision was extended
                            by an administrative law
                            judge, which could potentially result in a refund of
                            prior SECA payments.
                            Management is awaiting FERC action and is unable to predict
                            the outcome of legal
                            and regulatory challenges to the SECA mechanism.
 28
  **8.**
                                **CAPITALIZATION**  Great
                            Plains Energy and consolidated KCP&L’s long-term debt is detailed in the
                            following table .
 **September
                        30**
                    **December
                        31****Year
                        Due**
                    
                    
                    **2006**
                    
                    **2005****Consolidated
                        KCP&L**
                    
                    
                    
                    
                    (millions)General
                        Mortgage Bonds7.95%
                        Medium-Term Notes
                    
                    
                    2007
                    
                    $
                    0.5
                    
                    $
                    0.53.73%*
                        EIRR bonds
                    
                    
                    2012-2035
                    
                    
                    158.8
                    
                    
                    158.8Senior
                        Notes6.00%
                    
                    
                    2007
                    
                    
                    225.0
                    
                    
                    225.06.50%
                    
                    
                    2011
                    
                    
                    150.0
                    
                    
                    150.06.05%
                    
                    
                    2035
                    
                    
                    250.0
                    
                    
                    250.0Unamortized
                        discount
                    
                    
                    
                    
                    
                    (1.7
                    )
                    
                    (1.8
                    )EIRR
                        bonds4.75%
                        Series A & B
                    
                    
                    2015
                    
                    
                    104.9
                    
                    
                    104.64.75%
                        Series D
                    
                    
                    2017
                    
                    
                    39.4
                    
                    
                    39.34.65%
                        Series 2005
                    
                    
                    2035
                    
                    
                    50.0
                    
                    
                    50.0Current
                        maturities
                    
                    
                    
                    
                    
                    (225.5
                    )
                    
                    -Total
                        consolidated KCP&L excluding current maturities
                    
                    
                    
                    
                    
                    751.4
                    
                    
                    976.4**Other
                        Great Plains Energy**7.74%
                        Affordable Housing Notes
                    
                    
                    2006-2008
                    
                    
                    1.7
                    
                    
                    2.64.25%
                        FELINE PRIDES Senior Notes
                    
                    
                    2009
                    
                    
                    163.6
                    
                    
                    163.6Current
                        maturities **
                    
                    (164.4
                    )
                    
                    (1.7
                    )Total
                        consolidated Great Plains Energy excluding current
                        maturities
                    $
                    752.3
                    
                    $
                    1,140.9*     
                        Weighted-average interest rates at September 30, 2006.**    
                        Includes $163.6 million of FELINE PRIDES Senior Notes scheduled
                        to mature
                        in 2009 that must beremarketed between August 16, 2006 and February 16, 2007.
 **Effective
              Interest Rates on KCP&L’s Unsecured Notes at September 30,
              2006**
 Interest
              rate swaps on KCP&L’s Series A, B and D EIRR bonds resulted in an effective
              interest rate of 6.27%. As
              a
              result of amortizing the gain recognized in other comprehensive income
              (OCI) on
              KCP&L’s 2005 Treasury Locks (T-Locks), the effective interest rate on
              KCP&L’s $250.0 million of 6.05% Senior Notes that were issued via a private
              placement during 2005 is 5.78 %.
              In the
              second quarter of 2006, KCP&L completed an exchange of these privately
              placed notes for $250.0 million of registered 6.05% unsecured senior
              notes
              maturing in 2035 to fulfill its obligations under a 2005 registration
              rights
              agreement.
  **Amortization
              of Debt Expense**
 Great
              Plains Energy’s and consolidated KCP&L’s amortization of debt expense is
              detailed in the following table.
 **Three
                        Months Ended**
                    **Year
                          to Date****September
                        30**
                    **September
                        30****2006**
                    **2005**
                    **2006**
                    **2005**(millions)Consolidated
                        KCP&L
                    
                    $
                    0.5
                    
                    $
                    0.6
                    
                    $
                    1.5
                    
                    $
                    1.7Other
                        Great Plains Energy
                    
                    
                    0.2
                    
                    
                    0.1
                    
                    
                    0.5
                    
                    
                    0.5Total
                        Great Plains Energy
                    
                    $
                    0.7
                    
                    $
                    0.7
                    
                    $
                    2.0
                    
                    $
                    2.2
 29
 **Forward
              Starting Swaps**
 During
              2006, KCP&L entered into two Forward Starting Swaps (FSS) with a combined
              notional principal amount of $225.0 million to
              hedge
              interest rate volatility on the anticipated refinancing of KCP&L’s $225.0
              million senior notes that mature in March 2007. See Note 18 for additional
              information.
  **Short-Term
              Borrowings and Short-Term Bank Lines of Credit**
 During
              May 2006, Great Plains Energy entered into a five-year $600 million
              revolving
              credit facility with a group of banks. The facility replaced a $550
              million
              revolving credit facility with a group of banks. A default by Great
              Plains
              Energy or any of its significant subsidiaries on other indebtedness
              totaling
              more than $25.0 million is a default under the facility. Under the
              terms of this
              agreement, Great Plains Energy is required to maintain a consolidated
              indebtedness to consolidated capitalization ratio, as defined in the
              agreement,
              not greater than 0.65 to 1.00 at all times. At September 30, 2006,
              the Company
              was in compliance with this covenant. At September 30, 2006, Great
              Plains Energy
              had no cash borrowings and had issued letters of credit totaling
              $125.5 million under
              the
              credit facility as credit support for Strategic Energy. At December
              31,
              2005 ,
              Great
              Plains Energy had $6.0 million of outstanding borrowings with an interest
              rate
              of 4.98% and had issued letters of credit totaling $38.5 million under the
              credit facility as credit support for Strategic Energy.
  During
              May 2006, KCP&L entered into a five-year $400 million revolving credit
              facility with a group of banks to provide support for its issuance
              of commercial
              paper and other general corporate purposes. Great Plains Energy and
              KCP&L
              may transfer and re-transfer up to $200 million of unused lender commitments
              between Great Plains Energy’s and KCP&L’s facilities, so long as the
              aggregate lender commitments under either facility does not exceed
              $600 million
              and the aggregate lender commitments under both facilities does not
              exceed $1
              billion. The facility replaced a $250 million revolving credit facility
              with a
              group of banks. A default by KCP&L on other indebtedness totaling more than
              $25.0 million is a default under the facility. Under the terms of the
              agreement,
              KCP&L is required to maintain a consolidated indebtedness to consolidated
              capitalization ratio, as defined in the agreement, not greater than
              0.65 to 1.00
              at all times. At September 30, 2006, KCP&L was in compliance with this
              covenant. At September 30, 2006, KCP&L had $80.6 million of
              commercial paper outstanding, at a weighted-average interest rate of
              5.48% and
              no
              cash borrowings under the facility. At December 31, 2005, KCP&L
              had $31.9 million of commercial paper outstanding, at a weighted-average
              interest rate of 4.35% and no cash borrowings under the facility.
  Strategic
              Energy has a $135 million revolving credit facility with a group of
              banks that
              expires in June 2009. So long as Strategic Energy is in compliance
              with the
              agreement, it may increase this amount by up to $15 million by increasing
              the
              commitment of one or more lenders that have agreed to such increase,
              or by
              adding one or more lenders with the consent of the administrative agent.
              In
              October 2006, Great Plains Energy, as permitted by the terms of the
              agreement,
              requested and received a reduction in its guarantee of this facility
              to a
              maximum amount of $12.5 million and has guaranteed the $12.5 million.
              A default
              by Strategic Energy on other indebtedness, as defined in the facility,
              totaling
              more than $7.5 million is a default under the facility. Under the terms
              of this
              agreement, Strategic Energy is required to maintain a minimum net worth
              of $75.0
              million, a minimum fixed charge coverage ratio of at least 1.05 to
              1.00 and a
              minimum debt service coverage ratio of at least 4.00 to 1.00, as those
              terms are
              defined in the agreement. In addition, under the terms of this agreement,
              Strategic Energy is required to maintain a maximum funded indebtedness
              to EBITDA
              ratio, as defined in the agreement, of 3.00 to 1.00, on a quarterly
              basis
              through June 30, 2007, and 2.75 to 1.00 thereafter. In the event of a
              breach of one or more of these four covenants, so long as no other
              default has
              occurred, Great Plains Energy may cure the breach through a cash infusion,
              a
              guarantee increase or a combination of the two. At September 30, 2006,
              Strategic
              Energy was in compliance with these covenants. At September 30, 2006,
              $70.9 million in
              letters of credit had been issued and there were no cash borrowings
              under the
              agreement. At December 31, 2005 ,
              $75.2
              million in letters of credit had been issued and there were no cash
              borrowings
              under the agreement.
 30
 **Common
              Shareholders’ Equity**
 Great
              Plains Energy filed a shelf registration statement with the Securities
              and
              Exchange Commission (SEC) in May 2006 relating to Senior
              Debt Securities, Subordinated Debt Securities, shares of Common Stock,
              Warrants,
              Stock Purchase Contracts and Stock Purchase Units. In May 2006, Great
              Plains
              Energy issued 5.2 million
              shares of common stock at $27.50 per share under this registration
              statement
              with $144.3 million in gross proceeds and issuance costs of $5.2 million.
  In
              May
              2006, Great Plains Energy also entered into a forward sale agreement
              with
              Merrill Lynch Financial Markets, Inc. (forward purchaser) for 1.8 million
              shares
              of Great Plains Energy common stock. The forward purchaser borrowed
              and sold the
              same number of shares of Great Plains Energy’s common stock to hedge its
              obligations under the forward sale agreement. Great Plains Energy did
              not
              initially receive any proceeds from the sale of common stock shares
              by the
              forward purchaser. The forward sale agreement provides for a settlement
              date or
              dates to be specified at Great Plains Energy’s discretion, subject to certain
              exceptions, no later than May 23, 2007. Subject to the provisions of
              the forward
              sale agreement, Great Plains Energy will receive an amount equal to
              $26.6062 per
              share, plus interest based on the federal funds rate less a spread
              and less
              certain scheduled decreases if Great Plains Energy elects to physically
              settle
              the forward sale agreement by delivering solely shares of common stock.
              In most
              circumstances, Great Plains Energy also has the right, in lieu of physical
              settlement, to elect cash or net physical settlement.
  In
              May
              2006, Great Plains Energy registered an additional 1.0 million shares
              of common
              stock with the SEC for its Dividend Reinvestment and Direct Stock Purchase
              Plan,
              bringing the total number of shares registered under this plan to 4.0
              million.
              The plan allows for the purchase of common shares by reinvesting dividends
              or
              making optional cash payments.
  In
              March
              2006, Great Plains Energy registered an additional 1.0 million shares
              of common
              stock with the SEC for a defined contribution savings plan, bringing
              the total
              number of shares registered under this plan to 10.3 million. Shares
              issued under
              the plans may be either newly issued shares or shares purchased in
              the open
              market.
  **9.**
                  **PENSION****PLANS AND OTHER EMPLOYEE BENEFITS**  The
              Company maintains defined benefit pension plans for substantially all
              employees,
              including officers, of KCP&L, Services and WCNOC. Pension benefits under
              these plans reflect the employees’ compensation, years of service and age at
              retirement.
  The
              MPSC
              and KCC issued orders in 2005 establishing KCP&L’s annual pension costs at
              $22 million for the years 2005 and 2006 through the creation of regulatory
              assets and liabilities for future recovery from or refund to customers,
              as
              appropriate. During the third quarter of 2005, KCP&L implemented these
              orders retroactive to January 1, 2005.
  In
              addition to providing pension benefits, the Company provides certain
              postretirement health care and life insurance benefits for substantially
              all
              retired employees of KCP&L, Services and WCNOC. The cost of postretirement
              benefits charged to KCP&L are accrued during an employee's years of service
              and recovered through rates.  31
 The
              following tables provide the components of net periodic benefit costs
              prior to
              the effects of capitalization and sharing with joint-owners of power
              plants.
              Included in net periodic benefit costs are settlement charges related
              to the
              workforce realignment, discussed below. The total amount of 2006 pension
              settlement charges related to the workforce realignments and other
              retirements
              will be determined in the fourth quarter after the year-end of the
              pension
              plans.
 **Pension
                      Benefits**
                  
                  **Other
                      Benefits****Three
                      Months Ended September 30**
                  
                  **2006**
                  
                  **2005**
                  
                  **2006**
                  
                  **2005****Components
                      of net periodic benefit cost**
                  
                  (millions)Service
                      cost
                  
                  $
                  4.7
                  
                  $
                  4.4
                  
                  $
                  0.3
                  
                  $
                  0.2Interest
                      cost
                  
                  
                  7.8
                  
                  
                  7.5
                  
                  
                  0.7
                  
                  
                  0.7Expected
                      return on plan assets
                  
                  
                  (8.1
                  )
                  
                  (8.2
                  )
                  
                  (0.1
                  )
                  
                  (0.2
                  )Amortization
                      of prior service cost
                  
                  
                  1.0
                  
                  
                  1.1
                  
                  
                  -
                  
                  
                  0.1Recognized
                      net actuarial loss
                  
                  
                  7.9
                  
                  
                  4.7
                  
                  
                  0.2
                  
                  
                  0.2Transition
                      obligation
                  
                  
                  -
                  
                  
                  -
                  
                  
                  0.3
                  
                  
                  0.3Settlement
                      charges
                  
                  
                  2.0
                  
                  
                  -
                  
                  
                  -
                  
                  
                  -Net
                      periodic benefit cost beforeregulatory
                      adjustment
                  
                  
                  15.3
                  
                  
                  9.5
                  
                  
                  1.4
                  
                  
                  1.3Regulatory
                      adjustment
                  
                  
                  (7.6
                  )
                  
                  (10.8
                  )
                  
                  -
                  
                  
                  -Net
                      periodic benefit cost
                  
                  $
                  7.7
                  
                  $
                  (1.3
                  )
                  $
                  1.4
                  
                  $
                  1.3
 **Pension
                        Benefits**
                    
                    **Other
                        Benefits****Year
                        to Date September 30**
                    
                    **2006**
                    
                    **2005**
                    
                    **2006**
                    
                    **2005****Components
                        of net periodic benefit cost**
                    
                    (millions)Service
                        cost
                    
                    $
                    14.1
                    
                    $
                    13.0
                    
                    $
                    0.7
                    
                    $
                    0.7Interest
                        cost
                    
                    
                    23.2
                    
                    
                    22.4
                    
                    
                    2.2
                    
                    
                    2.1Expected
                        return on plan assets
                    
                    
                    (24.5
                    )
                    
                    (24.3
                    )
                    
                    (0.4
                    )
                    
                    (0.5
                    )Amortization
                        of prior service cost
                    
                    
                    3.2
                    
                    
                    3.2
                    
                    
                    0.1
                    
                    
                    0.2Recognized
                        net actuarial loss
                    
                    
                    23.9
                    
                    
                    14.0
                    
                    
                    0.6
                    
                    
                    0.4Transition
                        obligation
                    
                    
                    -
                    
                    
                    -
                    
                    
                    0.9
                    
                    
                    0.9Settlement
                        charges
                    
                    
                    9.5
                    
                    
                    -
                    
                    
                    -
                    
                    
                    -Net
                        periodic benefit cost beforeregulatory
                        adjustment
                    
                    
                    49.4
                    
                    
                    28.3
                    
                    
                    4.1
                    
                    
                    3.8Regulatory
                        adjustment
                    
                    
                    (22.9
                    )
                    
                    (10.8
                    )
                    
                    -
                    
                    
                    -Net
                        periodic benefit cost
                    
                    $
                    26.5
                    
                    $
                    17.5
                    
                    $
                    4.1
                    
                    $
                    3.8
 During
                September 2006, the FASB issued Statement of SFAS No. 158, “Employers’
Accounting for Defined Pension and Other Postretirement Plans.” SFAS No. 158
                addresses balance sheet measurements and reporting requirements and
                will require
                the Company to recognize the funded status of the pension and postretirement
                plans on the balance sheet in the fourth quarter of 2006. SFAS No.
                158 will be
                applied prospectively. Prior to the adoption of SFAS No. 158, the
                funded status
                of the pension and postretirement plans was only disclosed in the
                notes to
                consolidated financial statements. Management is currently evaluating
                the impact
                of SFAS No. 158.
  **Skill
                Set Realignment and Pension Settlement Charges**
 In
                2005
                and early 2006, management undertook a process to assess, improve
                and reposition
                the skill sets of employees for implementation of the comprehensive
                energy plan.
                KCP&L recorded $9.4 million year
                to
                date September 30, 2006, related to this workforce realignment process
                reflecting severance, benefits and related payroll taxes provided
                by KCP&L
                to employees. Management has been filling positions with the specific
                skill sets
                and talent needed to achieve KCP&L’s goals. Management believes that the
                realignment allows for optimization of employee levels and avoids
                future
                additional
 32
 expense.
                F or
                the
                three months ended and year to date September 30, 2006, KCP&L incurred $2.0
                million and $9.3 million of pension settlement charges associated
                with the
                realignment resulting in $1.4 million and $6.2
                million, respectively, of expense recorded after amounts capitalized
                and billed
                to joint owners of power plants. The pension settlement charges were
                a result of
                the number of employees retiring and selecting the lump-sum payment
                option.
  KCP&L
                anticipates recording additional expense related to pension settlement
                charges
                after amounts capitalized and billed to joint owners of power plants
                of
                approximately $8 million during
                the fourth quarter of 2006 associated with its management and union
                pension
                plans as a result of additional employees retiring and selecting
                the lump-sum
                payment option. The total amount of 2006 pension settlement charges
                related to
                the workforce realignments and other retirements will be determined
                in the
                fourth quarter after the year-end of the pension plans. In the second
                quarter of
                2006, KCP&L requested regulatory accounting treatment from MPSC and KCC to
                defer pension settlement charges, effective from January 1, 2006,
                and amortize
                the deferred amount over a five-year period to be established in
                the rate
                proceeding following the current 2006 proceedings. In the third quarter
                of 2006,
                KCP&L reached a negotiated settlement with certain parties in the Kansas
                rate proceeding and filed a Stipulation and Agreement with KCC that
                includes
                this requested regulatory treatment for pension costs. At September
                30, 2006, no
                amounts have been deferred pending the outcome of these requests.
  **10.**
                    **EQUITY
                        COMPENSATION**  As
                of
                January 1, 2006, the Company adopted SFAS No. 123 (revised 2004),
“Share-Based
                Payment” using the modified prospective application method. The adoption of
                SFAS
                No. 123R had an insignificant effect on the companies’ consolidated statements
                of income and cash flows for the three months ended and year to date
                September
                30, 2006.
  The
                Company’s Long-Term Incentive Plan is an equity compensation plan approved
                by
                its shareholders. KCP&L does not have an equity compensation plan; however,
                KCP&L officers participate in Great Plains Energy’s Long-Term Incentive
                Plan. The Long-Term Incentive Plan permits the grant of restricted
                stock, stock
                options, limited stock appreciation rights and performance shares
                to officers of
                the Company and its subsidiaries. The maximum number of shares of
                Great Plains
                Energy common stock that can be issued under the plan is 3.0 million.
                Common
                stock shares delivered by the Company under the Long-Term Incentive
                Plan may be
                authorized but unissued, held in the treasury or purchased on the
                open market
                (including private purchases) in accordance with applicable security
                laws. The
                Company has
                a
                policy of delivering newly issued shares, or shares surrendered by
                Plan
                participants on account of withholding taxes and held in treasury,
                or both, to
                satisfy share option exercises and does not expect to repurchase
                common shares
                during 2006 to satisfy stock option exercises for the period.
 33
 SFAS
                No.
                123R requires forfeitures to be estimated. Forfeiture rates are based
                on
                historical forfeitures and future expectations and will be reevaluated
                annually.
                The following table summarizes Great Plains Energy’s and KCP&L’s equity
                compensation expense and income tax benefits.
 **Three
                          Months Ended**
                    **Year
                        to Date****September
                        30**
                    **September
                        30****2006**
                    
                    **2005**
                    
                    
                    
                    **2006**
                    
                    **2005****Compensation
                        expense**
                    
                    (millions)Great
                        Plains Energy
                    
                    $
                    1.2
                    
                    $
                    0.9
                    
                    
                    
                    
                    $
                    2.9
                    
                    $
                    2.5KCP&L
                    
                    
                    0.7
                    
                    
                    0.6
                    
                    
                    
                    
                    
                    1.8
                    
                    
                    1.4**Income
                        tax benefits**Great
                        Plains Energy
                    
                    
                    0.4
                    
                    
                    0.3
                    
                    
                    
                    
                    
                    0.8
                    
                    
                    0.9KCP&L
                    
                    
                    0.2
                    
                    
                    0.2
                    
                    
                    
                    
                    0.5
                    
                    
                    0.5
 **Stock
              Options Granted 2001 - 2003**
 Stock
              options were granted under the plan at market value of the shares on
              the grant
              date. The options vest three years after the grant date and expire
              in ten years
              if not exercised. The fair value for the stock options granted in 2001
              - 2003
              was estimated at the date of grant using the Black-Scholes option-pricing
              model.
              Compensation expense and accrued dividends related to stock options
              are
              recognized over the stated vesting period. Exercise prices range
              from $24.90 to $27.73 and all stock options are fully vested at September
              30,
              2006. All stock option activity year to date September 30, 2006, is
              summarized
              in the following table.
  **Exercise****Stock
                        Options**
                    
                    **Shares**
                    
                    **Price***Beginning
                        balance
                    
                    
                    111,455
                    
                    $
                    25.56Forfeited
                        or expired
                    
                    
                    (1,983
                    )
                    
                    27.73Exercisable
                        at September 30
                    
                    
                    109,472
                    
                    
                    25.52*
                        weighted-average
  At
              September 30, 2006, the remaining weighted-average contractual term
              was 5.2
              years .
              The
              total fair value of stock options vested was insignificant for the
              three months
              ended and year to date September 30, 2006 and 2005.
  **Performance
              Shares**
 The
              payment of performance shares is contingent upon achievement of specific
              performance goals over a stated period of time as approved by the Compensation
              and Development Committee of the Company’s Board of Directors. The number of
              performance shares ultimately paid can vary from the number of shares
              initially
              granted depending on Company performance, based on internal and external
              measures, over stated performance periods. Performance shares have
              a value equal
              to the market value of the shares on the grant date with accruing dividends.
              Compensation expense, calculated by multiplying shares by the related
              grant-date
              fair value less the present value of dividends, and accrued dividends
              related to
              performance shares are recognized over the stated period.  34
 Performance
              share activity year to date September 30, 2006, is summarized in the
              following
              table.
 **Grant
                        Date****Performance**
                    
                    **Shares**
                    
                    **Fair
                        Value***Beginning
                        balance
                    
                    
                    172,761
                    
                    $
                    30.17Performance
                        adjustment
                    
                    
                    (2,650
                    )Granted
                    
                    
                    94,159
                    
                    
                    28.20Issued
                    
                    
                    (9,499
                    )
                    
                    27.73Ending
                        balance
                    
                    
                    254,771
                    
                    
                    29.56*
                        weighted-average
 At
                September 30, 2006, the remaining weighted-average contractual term
                was 1.4
                years .
                There
                was no activity for performance shares during the three months ended
                and the
                weighted-average grant-date fair value for shares granted was $28.20
                and $30.34 year
                to
                date September 30, 2006 and 2005, respectively. At September 30, 2006,
                there was $3.1 million of
                total
                unrecognized compensation expense, net of forfeiture rates, related
                to
                performance shares granted under the Plan, which will be recognized
                over the
                remaining weighted-average contractual term.  The total fair value of
                shares vested was insignificant during the three months ended and
                year to date
                September 30, 2006 and 2005.
  **Restricted
                Stock**
 Restricted
                stock cannot be sold or otherwise transferred by the recipient prior
                to vesting
                and has a value equal to the fair market value of the shares on the
                issue date.
                Restricted stock shares vest over a stated period of time with accruing
                reinvested dividends. Compensation expense, calculated by multiplying
                shares by
                the related grant-date fair value less the present value of dividends,
                and
                accrued dividends related to restricted stock are recognized over
                the stated
                vesting period. Restricted stock activity year to date September
                30, 2006, is
                summarized in the following table.
 **Nonvested**
                    
                    
                    
                    **Grant
                        Date****Restricted
                        stock**
                    
                    **Shares**
                    
                    **Fair
                        Value***Beginning
                        balance
                    
                    
                    119,966
                    
                    $
                    30.50Issued
                    
                    
                    48,041
                    
                    
                    28.22Forfeited
                    
                    
                    (2,000
                    )
                    
                    28.20Ending
                        balance
                    
                    
                    166,007
                    
                    
                    29.86*
                        weighted-average
 At
              September 30, 2006, the remaining weighted-average contractual term
              was 1.4
              years .
              There
              was no activity for restricted shares during the three months ended
              and the
              weighted-average grant-date fair value of shares granted was $28.22
              and $30.56 year
              to
              date September 30, 2006 and 2005, respectively. At September 30, 2006,
              there was
              $1.7 million of
              total
              unrecognized compensation expense, net of forfeiture rates, related
              to nonvested
              restricted stock granted under the Plan, which will be recognized over
              the
              remaining weighted-average contractual term.  No shares vested during the
              three months ended and year to date September 30, 2006 and 2005.
 35
 **11.**
                  **INCOME
                      TAXES**  Components
              of income taxes are detailed in the following tables.
 **Three
                              Months Ended**
                        **Year
                              to Date****September
                            30**
                        **September
                            30****Great
                            Plains Energy**
                        
                        **2006**
                        **2005**
                        **2006**
                        **2005**Current
                            income taxes
                        
                        (millions)Federal
                        
                        $
                        38.3
                        
                        $
                        39.4
                        
                        $
                        67.6
                        
                        $
                        49.9State
                        
                        
                        2.9
                        
                        
                        0.7
                        
                        
                        4.3
                        
                        
                        0.1Total
                        
                        
                        41.2
                        
                        
                        40.1
                        
                        
                        71.9
                        
                        
                        50.0Deferred
                            income taxesFederal
                        
                        
                        (12.0
                        )
                        
                        (2.4
                        )
                        
                        (26.7
                        )
                        
                        0.1State
                        
                        
                        (1.9
                        )
                        
                        (18.0
                        )
                        
                        (6.2
                        )
                        
                        (15.8
                        )Total
                        
                        
                        (13.9
                        )
                        
                        (20.4
                        )
                        
                        (32.9
                        )
                        
                        (15.7
                        )Investment
                            tax credit amortization
                        
                        
                        (0.8
                        )
                        
                        (1.0
                        )
                        
                        (2.3
                        )
                        
                        (2.9
                        )Total
                            income tax expense
                        
                        
                        26.5
                        
                        
                        18.7
                        
                        
                        36.7
                        
                        
                        31.4Less:
                            taxes on discontinued operationsCurrent
                            tax (benefit) expense
                        
                        
                        -
                        
                        
                        1.4
                        
                        
                        -
                        
                        
                        (1.0
                        )Income
                            taxes on continuing operations
                        
                        $
                        26.5
                        
                        $
                        17.3
                        
                        $
                        36.7
                        
                        $
                        32.4
  **Three
                                Months Ended**
                          
                          **Year
                                to Date****September
                              30**
                          
                          **September
                              30****Consolidated
                              KCP&L**
                          
                          **2006**
                          **2005**
                          **2006**
                          **2005**Current
                              income taxes
                          
                          
                          (millions)Federal
                          
                          $
                          36.5
                          
                          $
                          45.1
                          
                          $
                          60.0
                          
                          $
                          63.2State
                          
                          
                          4.6
                          
                          
                          1.6
                          
                          
                          7.3
                          
                          
                          4.2Total
                          
                          
                          41.1
                          
                          
                          46.7
                          
                          
                          67.3
                          
                          
                          67.4Deferred
                              income taxesFederal
                          
                          
                          (0.9
                          )
                          
                          (10.6
                          )
                          
                          (2.8
                          )
                          
                          (13.7
                          )State
                          
                          
                          (0.1
                          )
                          
                          (18.5
                          )
                          
                          (0.3
                          )
                          
                          (18.8
                          )Total
                          
                          
                          (1.0
                          )
                          
                          (29.1
                          )
                          
                          (3.1
                          )
                          
                          (32.5
                          )Investment
                              tax credit amortization
                          
                          
                          (0.8
                          )
                          
                          (1.0
                          )
                          
                          (2.3
                          )
                          
                          (2.9
                          )Total
                          
                          $
                          39.3
                          
                          $
                          16.6
                          
                          $
                          61.9
                          
                          $
                          32.0
 36
 **Income
                Tax Expense and Effective Income Tax Rates**
 Income
                tax expense and the effective income tax rates reflected in continuing
                operations in the financial statements and the reasons for their
                differences
                from the statutory federal rates are detailed in the following
                tables .
  ***Great
                Plains Energy***
 **Income
                        Tax Expense**
                    **Income
                        Tax Rate****Three
                        Month Ended September 30**
                    
                    **2006**
                    **2005**
                    **2006**
                    **2005**Federal
                        statutory income tax
                    
                    $
                    28.6
                    
                    $
                    37.3
                    
                    
                    35.0
                    %
                    
                    35.0
                    %Differences
                        between book and taxdepreciation
                        not normalized
                    
                    
                    0.2
                    
                    
                    1.2
                    
                    
                    0.2
                    
                    
                    1.2Amortization
                        of investment tax credits
                    
                    
                    (0.8
                    )
                    
                    (1.0
                    )
                    
                    (0.9
                    )
                    
                    (0.9
                    )Federal
                        income tax credits
                    
                    
                    (2.1
                    )
                    
                    (2.2
                    )
                    
                    (2.5
                    )
                    
                    (2.1
                    )State
                        income taxes
                    
                    
                    0.9
                    
                    
                    2.5
                    
                    
                    1.0
                    
                    
                    2.4Changes
                        in uncertain tax positions, net
                    
                    
                    0.2
                    
                    
                    (7.8
                    )
                    
                    0.2
                    
                    
                    (7.3
                    )Rate
                        change on deferred taxes
                    
                    
                    -
                    
                    
                    (11.7
                    )
                    
                    -
                    
                    
                    (11.0
                    )Other
                    
                    
                    (0.5
                    )
                    
                    (1.0
                    )
                    
                    (0.6
                    )
                    
                    (1.0
                    )Total
                    
                    $
                    26.5
                    
                    $
                    17.3
                    
                    
                    32.4
                    %
                    
                    16.3
                    %
 **Income
                      Tax Expense**
                  **Income
                      Tax Rate****Year
                      to Date September 30**
                  
                  **2006**
                  **2005**
                  **2006**
                  **2005**Federal
                      statutory income tax
                  
                  $
                  44.6
                  
                  $
                  58.5
                  
                  
                  35.0
                  %
                  
                  35.0
                  %Differences
                      between book and taxdepreciation
                      not normalized
                  
                  
                  0.9
                  
                  
                  2.1
                  
                  
                  0.7
                  
                  
                  1.2Amortization
                      of investment tax credits
                  
                  
                  (2.3
                  )
                  
                  (2.9
                  )
                  
                  (1.8
                  )
                  
                  (1.7
                  )Federal
                      income tax credits
                  
                  
                  (4.5
                  )
                  
                  (7.4
                  )
                  
                  (3.5
                  )
                  
                  (4.4
                  )State
                      income taxes
                  
                  
                  -
                  
                  
                  2.9
                  
                  
                  (0.1
                  )
                  
                  1.8Changes
                      in uncertain tax positions, net
                  
                  
                  0.2
                  
                  
                  (6.8
                  )
                  
                  0.1
                  
                  
                  (4.1
                  )Rate
                      change on deferred taxes
                  
                  
                  -
                  
                  
                  (11.7
                  )
                  
                  -
                  
                  
                  (7.0
                  )Other
                  
                  
                  (2.2
                  )
                  
                  (2.3
                  )
                  
                  (1.6
                  )
                  
                  (1.4
                  )Total
                  
                  $
                  36.7
                  
                  $
                  32.4
                  
                  
                  28.8
                  %
                  
                  19.4
                  %
 ***Consolidated
              KCP&L***
 **Income
                          Tax Expense**
                      **Income
                          Tax Rate****Three
                          Month Ended September 30**
                      
                      **2006**
                      **2005**
                      **2006**
                      **2005**Federal
                          statutory income tax
                      
                      $
                      37.9
                      
                      $
                      29.9
                      
                      
                      35.0
                      %
                      
                      35.0
                      %Differences
                          between book and taxdepreciation
                          not normalized
                      
                      
                      0.2
                      
                      
                      1.2
                      
                      
                      0.2
                      
                      
                      1.4Federal
                          income tax credits
                      
                      
                      (0.9
                      )
                      
                      -
                      
                      
                      (0.8
                      )
                      
                      -Amortization
                          of investment tax credits
                      
                      
                      (0.8
                      )
                      
                      (1.0
                      )
                      
                      (0.7
                      )
                      
                      (1.1
                      )State
                          income taxes
                      
                      
                      3.0
                      
                      
                      2.0
                      
                      
                      2.8
                      
                      
                      2.3Changes
                          in uncertain tax positions, net
                      
                      
                      0.1
                      
                      
                      (1.9
                      )
                      
                      0.1
                      
                      
                      (2.2
                      )Parent
                          company tax benefits
                      
                      
                      (1.1
                      )
                      
                      (1.7
                      )
                      
                      (1.0
                      )
                      
                      (2.0
                      )Rate
                          change on deferred taxes
                      
                      
                      -
                      
                      
                      (11.7
                      )
                      
                      -
                      
                      
                      (13.7
                      )Other
                      
                      
                      0.9
                      
                      
                      (0.2
                      )
                      
                      0.8
                      
                      
                      (0.4
                      )Total
                      
                      $
                      39.3
                      
                      $
                      16.6
                      
                      
                      36.4
                      %
                      
                      19.3
                      %
 37
 **Income
                      Tax Expense**
                  **Income
                      Tax Rate****Year
                      to Date September 30**
                  
                  **2006**
                  **2005**
                  **2006**
                  **2005**Federal
                      statutory income tax
                  
                  $
                  62.5
                  
                  $
                  49.1
                  
                  
                  35.0
                  %
                  
                  35.0
                  %Differences
                      between book and taxdepreciation
                      not normalized
                  
                  
                  0.9
                  
                  
                  2.1
                  
                  
                  0.5
                  
                  
                  1.5Federal
                      income tax credits
                  
                  
                  (0.9
                  )
                  
                  -
                  
                  
                  (0.5
                  )
                  
                  -Amortization
                      of investment tax credits
                  
                  
                  (2.3
                  )
                  
                  (2.9
                  )
                  
                  (1.3
                  )
                  
                  (2.1
                  )State
                      income taxes
                  
                  
                  4.7
                  
                  
                  3.2
                  
                  
                  2.7
                  
                  
                  2.3Changes
                      in uncertain tax positions, net
                  
                  
                  0.6
                  
                  
                  (1.2
                  )
                  
                  0.3
                  
                  
                  (0.8
                  )Parent
                      company tax benefits
                  
                  
                  (3.3
                  )
                  
                  (4.5
                  )
                  
                  (1.9
                  )
                  
                  (3.2
                  )Rate
                      change on deferred taxes
                  
                  
                  -
                  
                  
                  (11.7
                  )
                  
                  -
                  
                  
                  (8.4
                  )Other
                  
                  
                  (0.3
                  )
                  
                  (2.1
                  )
                  
                  (0.1
                  )
                  
                  (1.5
                  )Total
                  
                  $
                  61.9
                  
                  $
                  32.0
                  
                  
                  34.7
                  %
                  
                  22.8
                  %
 For
              the
              three months ended and year to date September 30, 2005, Great Plains
              Energy’s
              and consolidated KCP&L’s income taxes were reduced by $11 .7
              million reflecting a reduction of KCP&L’s deferred tax balances as a result
              of a reduction in the companies’ composite tax rate due to the favorable impact
              of sustained audit positions. SFAS No. 109, “Accounting for Income Taxes”
required the companies to adjust deferred tax balances to reflect tax
              rates that
              are anticipated to be in effect when the differences reverse. Great
              Plains
              Energy’s income tax expense was also reduced in 2005 by $5.7 million
              due to events during the three months ended September 30, 2005, that
              strengthened the probability of sustaining tax deductions taken on
              previously
              filed tax returns.
  **Deferred
              Income Taxes**
 Great
              Plains Energy’s combined deferred income taxes - current assets and deferred
              income taxes - current liabilities changed from a liability of $1.3
              million at
              December 31, 2005, to an asset of $46.3 million. The change in the
              fair value of
              Strategic Energy’s energy-related derivative instruments increased the asset
              $39.0 million.
  **Uncertain
              Tax Positions**
 In
              July
              2006, the FASB issued FASB Interpretation (FIN) No. 48, “Accounting for
              Uncertainty in Income Taxes,” an interpretation of SFAS No. 109, “Accounting for
              Income Taxes”. FIN No. 48 clarifies how companies calculate and disclose
              uncertain tax positions. Great Plains Energy and consolidated KCP&L are
              required to adopt the provisions of FIN No. 48 for periods beginning
              in 2007,
              although earlier adoption is permitted. Management is currently evaluating
              the
              impact of FIN No. 48 and has not yet determined the impact on Great
              Plains
              Energy and consolidated KCP&L’s consolidated financial statements.
              Management evaluates and records tax liabilities for uncertain tax
              positions
              based on the probability of ultimately sustaining the tax deductions
              or income
              positions. Management assesses the probabilities of successfully defending
              the
              tax deductions or income positions based upon statutory, judicial or
              administrative authority.
  At
              September 30, 2006 and December 31, 2005, the Company had $4.8 million and
              $4.6 million ,
              respectively, of liabilities for uncertain tax positions related to
              tax
              deductions or income positions taken on the Company’s tax returns. Consolidated
              KCP&L had liabilities for uncertain tax positions of $1.8 million and
              $1.2 million at
              September 30, 2006 and December 31, 2005, respectively. Management believes
              the tax deductions or income positions are properly treated on such
              tax returns
              but has recorded reserves based upon its assessment of the probabilities
              that
              certain deductions or income positions may not be sustained when the
              returns are
              audited. The tax returns containing these tax deductions or income
              positions are
              currently under audit or will likely be audited. The timing of the
              resolution of
              these audits is uncertain. If the positions are ultimately sustained,
              the
              companies will reverse these tax provisions to net income. If the positions
              are
              not ultimately sustained, the companies
 38
 may
              be
              required to make cash payments plus interest and/or utilize the companies’
federal and state credit carryforwards.
  **12.**
                  **KLT
                      GAS DISCONTINUED OPERATIONS**  The
              KLT
              Gas natural gas properties (KLT Gas portfolio) was reported as discontinued
              operations in accordance with SFAS No. 144, “Accounting for the Impairment or
              Disposal of Long-Lived Assets” after the 2004 Board of Directors approval to
              sell the KLT Gas portfolio and discontinue the gas business. During
              2004 and
              2005, KLT Gas completed sales of the KLT Gas portfolio and in 2006
              KLT Gas has
              no active operations.
  **13.**
                  **RELATED
                      PARTY TRANSACTIONS AND RELATIONSHIPS**  Consolidated
              KCP&L receives various support and administrative services from Services.
              These services are billed to consolidated KCP&L at cost, based on payroll
              and other expenses, incurred by Services for the benefit of consolidated
              KCP&L. These costs totaled $4.6 million and
              $14.1
              million for the
              three months ended and year to date September 30, 2006, respectively,
              and $7.0
              million and
              $37.9 million for the
              same periods in 2005. These costs consisted primarily of employee compensation,
              benefits and fees associated with various professional services. At
              September
              30, 2006, and December 31, 2005, consolidated KCP&L had a net
              intercompany payable to Services of $2.6 million and
              $3.5
              million ,
              respectively. In the third quarter of 2005, approximately
              80% of Services’ employees were transferred to KCP&L to better align
              resources with the operating business. At
              September 30, 2006, and December 31, 2005, consolidated KCP&L’s balance
              sheets reflect a note payable from HSS to Great Plains Energy of $0.6
              million.
  **14.**
                  **COMMITMENTS
                      AND CONTINGENCIES**  **Environmental
              Matters**
 The
              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. At September 30, 2006, and December 31, 2005,
              KCP&L had $0.3 million accrued
              for environmental remediation expenses for water monitoring at one
              site. The
              amounts accrued were established on an undiscounted basis and KCP&L does not
              currently have an estimated time frame over which the accrued amounts
              may be
              paid out.
  Environmental-related
              legislation is regularly introduced. Such legislation typically includes
              various
              compliance dates and compliance limits. Such legislation, including,
              but not
              limited to, potential carbon tax legislation, could have the potential
              for a
              significant financial impact on KCP&L, including the installation of new
              pollution control equipment to achieve compliance. However, KCP&L’s
              expectation is that any required environmental expenditures will be
              recovered
              through rates. KCP&L will continue to monitor proposed
              legislation.
 39
 The
              following table contains
              current estimates of expenditures to comply with environmental laws
              and
              regulations described below. The range of estimated expenditures has
              increased
              significantly from the range reported in the companies’ June 30, 2006, Form
              10-Q. The demand for environmental projects has increased substantially
              with
              many utilities in the United States starting similar projects to address
              changing environmental regulations. This demand has constrained labor
              and
              material resources resulting in a significant escalation in the cost
              and
              completion times for environmental retrofits. KCP&L continues to refine its
              cost estimates detailed in the table below and explore alternatives.
              The
              allocation between states is based on location of the facilities and
              has no
              bearing as to recovery in jurisdictional rates.
 **Clean
                          Air Estimated Required**
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      **Estimated****Environmental
                          Expenditures**
                      
                      **Missouri**
                      **Kansas**
                      **Total**
                      **Timetable**(millions)CAIR
                      
                      $375
                      -
                      993
                      $
                      -
                      
                      $375
                      -
                      993
                      2006
                          - 2015Incremental
                          BART
                      
                      
                      -
                      
                      272
                      -
                      527
                      272
                      -
                      527
                      2006
                          - 2017Incremental
                          CAMR
                      
                      11
                      -
                      15
                      5
                      -
                      6
                      16
                      -
                      21
                      2010
                          - 2018Estimated
                          required environmental expenditures
                      
                      $386
                      -
                      1,008
                      $277
                      -
                      533
                      $633
                      -
                      1,541
 Expenditure
              estimates provided in the table above include, but are not limited
              to, the
              accelerated environmental upgrade expenditures included in KCP&L’s
              comprehensive energy plan. See Note 7 for additional information regarding
              the
              status of environmental upgrade expenditures under KCP&L’s comprehensive
              energy plan. These expenditures are expected to reduce SO 2 ,
              NO x ,
              mercury
              and air particulate matter emissions.
 ***Clean
              Air Interstate Rule***
 The
              Environmental Protection Agency (EPA) Clean Air Interstate Rule (CAIR)
              requires
              reductions in SO 2 and
              NO x emissions in 28 states, including Missouri. The reduction in both SO 2 and
              NO x emissions will be accomplished through establishment of permanent statewide
              caps
              for NO x effective January 1, 2009, and SO 2 effective January 1, 2010. More restrictive caps will be effective
              January 1, 2015. KCP&L’s fossil fuel-fired plants located in Missouri
              are subject to CAIR, while its fossil fuel-fired plants in Kansas are
              not.
  KCP&L
              expects to meet the emissions reductions required by CAIR at its Missouri
              plants
              through a combination of pollution control capital projects and the
              purchase of
              emission allowances in the open market as needed. The final CAIR rule
              establishes a market-based cap-and-trade program. Missouri has developed
              State
              Implementation Plan (SIP) rules, which include an emission allowance
              allocation
              mechanism, and has currently accepted comments on these preliminary
              rules in
              development. The SIP proposed rules will next be published for additional
              comment. Facilities will demonstrate compliance with CAIR by holding
              sufficient
              allowances for each ton of SO 2 and
              NO x emitted
              in any given year with SO 2 emission
              allowances transferable among all regulated facilities nationwide and
              NO x emission
              allowances transferable among all regulated facilities within the 28
              CAIR
              states. KCP&L will also be allowed to utilize unused SO 2 emission
              allowances that it has accumulated during previous years of the Acid
              Rain
              Program to meet the more stringent CAIR requirements. At September
              30, 2006,
              KCP&L had accumulated unused SO 2 emission
              allowances sufficient to support just under 120,000 tons of SO 2 emission
              under the provisions of the Acid Rain program, which are recorded in
              inventory
              at zero cost. KCP&L is permitted to sell excess SO 2 emission
              allowances in accordance with KCP&L’s comprehensive energy plan as approved
              by the MPSC and KCC.
  Analysis
              of the final CAIR rule indicates that selective catalytic reduction
              technology
              for NO x control
              and scrubbers for SO 2 control
              will likely be required for KCP&L’s Montrose Station in Missouri, in
              addition to the environmental upgrades at Iatan No. 1 included in the
              comprehensive energy plan. The timing of
 40
 the
              installation of such control equipment is currently being developed.
              As
              discussed below, certain of the control technology for SO 2 and
              NO x will
              also aid in the control of mercury.
  ***Best
              Available Retrofit Technology Rule***
 The
              EPA
              best available retrofit technology rule (BART) directs state air quality
              agencies to identify whether visibility-reducing emissions from sources
              subject
              to BART are below limits set by the state or whether retrofit measures
              are
              needed to reduce emissions. BART applies to specific eligible facilities
              including LaCygne Nos. 1 and 2 in Kansas and Iatan No. 1 and Montrose
              No. 3 in
              Missouri. The CAIR suggests that states that meet the CAIR requirements
              may also
              meet BART requirements for individual sources. Missouri has included
              this
              understanding as part of the proposed CAIR SIP. Kansas is not a CAIR
              state and
              therefore BART will likely impact LaCygne Nos. 1 and 2. Kansas is in
              the process
              of completing modeling associated with the rule. States must submit
              a BART
              implementation plan in 2007 with required emission controls. The BART
              emission
              control equipment must be compliant within five years after the SIP
              is approved
              by the EPA.  If
              emission controls to comply with BART are required at LaCygne Nos.
              1 and 2,
              additional capital expenditures will be required above comprehensive
              energy plan
              upgrades. The ultimate cost of these regulations could be significantly
              different from the amounts estimated.
  ***Mercury
              Emissions***
 The
              EPA
              Clean Air Mercury Rule (CAMR) regulates mercury emissions from coal-fired
              power
              plants located in 48 states, including Kansas and Missouri, under the
              New Source
              Performance Standards of the Clean Air Act. The rule established a
              market-based
              cap-and-trade program that will reduce nationwide utility emissions
              of mercury
              in two phases. The first phase cap is effective January 1, 2010, and will
              establish a permanent nationwide cap of 38 tons of mercury for coal-fired
              power
              plants. Management anticipates meeting the first phase cap by taking
              advantage
              of KCP&L’s mercury reductions achieved through capital expenditures to
              comply with CAIR and BART. The second phase is effective January 1,
              2018, and
              will establish a permanent nationwide cap of 15 tons of mercury for
              coal-fired
              power plants. When fully implemented, the rule will reduce utility
              emissions of
              mercury by nearly 70% from current emissions of 48 tons per year.
  Facilities
              will demonstrate compliance with the standard by holding allowances
              for each
              ounce of mercury emitted in any given year and allowances will be readily
              transferable among all regulated facilities nationwide. Under the cap-and-trade
              program, KCP&L will be able to purchase mercury allowances or elect to
              install pollution control equipment to achieve compliance. While it
              is expected
              that mercury allowances will be available in sufficient quantities
              for purchase
              in the 2010-2018 timeframe, the significant reduction in the nationwide
              cap in
              2018 may hamper KCP&L’s ability to obtain reasonably priced allowances
              beyond 2018. Management expects capital expenditures will be required
              to install
              additional pollution control equipment to meet the second phase cap.
              During the
              ensuing years, management will closely monitor advances in technology
              for
              removal of mercury from Powder River Basin (PRB) coal and expects to
              make
              decisions regarding second phase removal based on then available technology
              to
              meet the 2018 compliance date. KCP&L participated in the Department of
              Energy (DOE) National Energy Technology Laboratory project to investigate
              control technology options for mercury removal from coal-fired plants
              burning
              sub-bituminous coal.
  ***Carbon
              Dioxide***
 The
              Clear
              Skies Initiative includes a climate change policy, which is a voluntary
              program
              that relies heavily on incentives to encourage industry to voluntarily
              limit
              emissions. The strategy includes tax credits, energy conservation programs,
              funding for research into new technologies, and a plan to encourage
              companies to
              track and report their emissions so that companies could gain credits
              for use in
              any future emissions trading program. The greenhouse strategy links
              growth in
              emissions of greenhouse gases to economic output and is intended to
              reduce the
              greenhouse gas intensity of the U.S. economy 18% by 2012. Greenhouse
              gas
              intensity measures the ratio of greenhouse gas
 41
 emissions
              to economic output as measured by Gross Domestic Product (GDP). Under
              this plan,
              as the economy grows, greenhouse gases also would continue to grow,
              although at
              a slower rate than they would have without these policies in place.
              When viewed
              per unit of economic output, the rate of emissions would drop. The
              plan projects
              that the U.S. would lower its rate of greenhouse gas emissions from
              an estimated
              183 metric tons per $1 million of GDP in 2002 to 151 metric tons per
              $1 million of GDP by 2012.
  KCP&L
              is a member of the Power Partners through Edison Electric Institute
              (EEI). Power
              Partners is a voluntary program with the DOE under which utilities
              commit to
              undertake measures to reduce, avoid or sequester CO 2 emissions. Power Partners entered into a cooperative umbrella memorandum
              of
              understanding (MOU) with the DOE. This MOU contains supply and demand-side
              actions as well as offset projects that will be undertaken to reduce
              the power
              sector’s CO 2 emissions per kWh generated (carbon intensity), consistent with the
              EEI’s 2003
              commitment of a 3% to 5% reduction over the next decade.
  ***Air
              Particulate Matter and Ozone***
 The
              EPA
              standards for ozone and particulate matter air quality include an eight-hour
              ozone standard and a standard for particulate matter less than 2.5
              microns
              (PM-2.5) in diameter. The EPA has designated the Kansas City area as
              attainment
              with respect to the PM-2.5 National Ambient Air Quality Standards (NAAQS).
              Additionally, the EPA designated Jackson, Platte, Clay and Cass counties
              in
              Missouri and Johnson, Linn, Miami and Wyandotte counties in Kansas
              as attainment
              with respect to the eight-hour ozone NAAQS.
  In
              September 2006, the EPA announced the new NAAQS for both fine (PM-2.5)
              and
              coarse (PM-10) particulate matter. The new standards for PM-2.5 are
              35
              micrograms per cubic meter on a 24-hour basis and 15 micrograms per
              cubic meter
              on an annual basis. The EPA retained the 24-hour standard of 150 micrograms
              per
              cubic meter for PM-10 and revoked the annual PM-10 standard as unnecessary.
              The
              new 24-hour standard for PM-2.5 will increase the number of counties
              in
              non-attainment, but the Kansas City metro area will remain in attainment
              based
              on recent emission data.
  In
              September 2006, the Missouri Department of Natural Resources and the
              Kansas
              Department of Health and Environment conducted a stakeholder meeting
              to discuss
              issues related to the development of the Missouri and Kansas Maintenance
              Plans
              for the Control of Ozone for the Kansas City area. The EPA will require
              Missouri
              and Kansas to submit these SIPs by June 2007. As part of the SIP requirements,
              contingency control measures must be included. These measures would
              go into
              effect only if associated triggers (such as a violation of the eight-hour
              ozone
              standard) occur. Although it is anticipated the proposed controls for
              CAIR and
              BART will provide the contingency control measures at KCP&L generation
              facilities, management will continue to be involved and monitor the
              SIP
              development.
  ***Water
              Use Regulations***
 The
              EPA
              Clean Water Act established standards for cooling water intake structures.
              This
              regulation applies to certain existing power producing facilities that
              employ
              cooling water intake structures that withdraw 50 million gallons or
              more per day
              from lakes and rivers and use 25% or more of that water for cooling
              purposes.
              The regulation is designed to protect aquatic life from being killed
              or injured
              by cooling water intake structures. KCP&L is required to complete a
              comprehensive demonstration study on each of its generating facilities’ intake
              structures by the end of 2007. The studies are expected to cost a total
              of $1.2
              million to $2.0 million. Depending on the outcome of the comprehensive
              demonstration studies, facilities may be required to implement technological,
              operational or restoration measures to achieve compliance. Compliance
              with this
              regulation is expected to be achieved between 2011 and 2014. Until
              the
              comprehensive demonstration studies are completed, the impact of this
              regulation
              cannot be quantified.
 42
 KCP&L
              holds a permit from the Missouri Department of Natural Resources covering
              water
              discharge from its Hawthorn Station. The permit authorizes KCP&L, among
              other things, to withdraw water from the Missouri river for cooling
              purposes and
              return the heated water to the Missouri river. KCP&L has applied for a
              renewal of this permit and the EPA has submitted an interim objection
              letter
              regarding the allowable amount of heat that can be contained in the
              returned
              water. Until this matter is resolved, KCP&L continues to operate under its
              current permit. KCP&L cannot predict the outcome of this matter; however,
              while less significant outcomes are possible, this matter may require
              KCP&L
              to reduce its generation at Hawthorn Station, install cooling towers
              or both,
              any of which could adversely affect KCP&L. The outcome could also affect the
              terms of water permit renewals at KCP&L’s Iatan and Montrose
              Stations.
  **Contractual
              Obligations**
 The
              following table is an update to selected items from the contractual
              obligations
              in the 2005 Form
 10-K
              to
              reflect significant changes.
 ***Great
                      Plains Energy Contractual Obligations*****Remainder****Payment
                      due by period**
                  
                  **of
                      2006**
                  
                  **2007**
                  
                  **2008**
                  
                  **2009**
                  
                  **2010**
                  
                  **After
                      2010**
                  
                  **Total**Purchase
                      obligationsFuel
                  
                  $
                  86.6
                  
                  $
                  98.5
                  
                  $
                  107.1
                  
                  $
                  43.3
                  
                  $
                  43.0
                  
                  $
                  84.5
                  
                  $
                  463.0Purchased
                      power
                  
                  
                  184.5
                  
                  
                  526.4
                  
                  
                  195.3
                  
                  
                  113.2
                  
                  
                  94.7
                  
                  
                  48.7
                  
                  
                  1,162.8Comprehensive
                      energy plan
                  
                  
                  118.5
                  
                  
                  281.1
                  
                  
                  321.8
                  
                  
                  139.2
                  
                  
                  12.0
                  
                  
                  -
                  
                  
                  872.6Total
                      contractual obligations
                  
                  $
                  389.6
                  
                  $
                  906.0
                  
                  $
                  624.2
                  
                  $
                  295.7
                  
                  $
                  149.7
                  
                  $
                  133.2
                  
                  $
                  2,498.4  ***Consolidated
                          KCP&L Contractual Obligations*****Remainder****Payment
                          due by period**
                      
                      **of
                          2006**
                      
                      **2007**
                      
                      **2008**
                      
                      **2009**
                      
                      **2010**
                      
                      **After
                          2010**
                      
                      **Total**Purchase
                          obligationsFuel
                      
                      $
                      86.6
                      
                      $
                      98.5
                      
                      $
                      107.1
                      
                      $
                      43.3
                      
                      $
                      43.0
                      
                      $
                      84.5
                      
                      $
                      463.0Comprehensive
                          energy plan
                      
                      
                      118.5
                      
                      
                      281.1
                      
                      
                      321.8
                      
                      
                      139.2
                      
                      
                      12.0
                      
                      
                      -
                      
                      
                      872.6Total
                          contractual obligations
                      
                      $
                      205.1
                      
                      $
                      379.6
                      
                      $
                      428.9
                      
                      $
                      182.5
                      
                      $
                      55.0
                      
                      $
                      84.5
                      
                      $
                      1,335.6
 Fuel
              represents KCP&L’s 47% share of Wolf Creek nuclear fuel commitments,
              KCP&L’s share of coal purchase commitments based on estimated prices to
              supply coal for generating plants and KCP&L’s share of rail transportation
              commitments for moving coal to KCP&L’s generating units. Purchased power
              represents Strategic Energy’s agreements to purchase electricity at various
              fixed prices to meet estimated supply requirements. Comprehensive energy
              plan
              represents KCP&L’s contractual commitments for projects contemplated by its
              comprehensive energy plan.
  **15.**
                  **LEGAL
                      PROCEEDINGS**  **Union
              Pacific**
 In
              2005,
              KCP&L filed a rate complaint case with the Surface Transportation Board
              (STB) charging that Union Pacific Railroad Company’s (Union Pacific) rates for
              transporting coal from the PRB in Wyoming to KCP&L’s Montrose Station are
              unreasonably high. Prior to the end of 2005, the rates were established
              under a
              contract with Union Pacific. Efforts to extend the term of the contract
              were
              unsuccessful and Union Pacific is the only service for coal transportation
              from
              the PRB to Montrose Station. KCP&L charged that Union Pacific possesses
              market dominance over the traffic and requested the STB prescribe maximum
              reasonable rates. In February 2006, the STB announced a rulemaking
              proceeding to
              address certain issues associated with the calculation of stand-alone
              costs in
              rate complaint cases. Proceedings in KCP&L’s rate complaint case have been
              suspended pending the outcome of this rulemaking. In the third quarter
              of 2006,
              the STB raised a question regarding
 43
 jurisdiction
              of the rate complaint. KCP&L and Union Pacific filed comments regarding the
              jurisdictional issue. If STB finds it does have jurisdiction, it will
              issue a
              new procedural schedule. Management currently expects a decision in
              the case in
              2008. Until the STB case is decided, KCP&L is paying the higher tariff rates
              subject to refund.
 
 **Framatome**
 In
              2005,
              WCNOC filed a lawsuit on behalf of itself, KCP&L and the other two Wolf
              Creek owners against Framatome ANP, Inc., and Framatome ANP Richland,
              Inc.
              (Framatome) in the District Court of Coffey County, Kansas. The suit
              alleged
              various claims against Framatome related to the proposed design, licensing
              and
              installation of a digital control system. The suit sought recovery
              of
              approximately $16 million in damages from Framatome. Framatome filed
              a
              counterclaim against the three Wolf Creek owners seeking recovery of
              damages
              alleged to be in excess of $20 million. In May 2006, the parties settled
              this
              case. The settlement had no significant impact on KCP&L’s results of
              operations or financial position.
  **Hawthorn
              No. 5 Subrogation Litigation**
 KCP&L
              filed suit in 2001, in Jackson County, Missouri Circuit Court against
              multiple
              defendants who are alleged to have responsibility for the 1999 Hawthorn
              No. 5
              boiler explosion. KCP&L and National Union Fire Insurance Company of
              Pittsburgh, Pennsylvania (National Union) have entered into a subrogation
              allocation agreement under which recoveries in this suit are generally
              allocated
              55% to National Union and 45% to KCP&L. Certain defendants were dismissed
              from the suit and various defendants settled, with KCP&L receiving a total
              of $38.2 million, of which $18.5 million was
              recorded as a recovery of capital expenditures. Trial of this case
              with the one
              remaining defendant resulted in a March 2004 jury verdict finding KCP&L’s
              damages as a result of the explosion were $452 million. In May 2004,
              the trial
              judge reduced the award against the defendant to $0.2 million. Both
              KCP&L
              and the defendant appealed this case to the Court of Appeals for the
              Western
              District of Missouri, and in May 2006, the Court of Appeals ordered
              the Circuit
              Court to enter judgment in KCP&L’s favor in accordance with the jury
              verdict. The defendant filed a motion for transfer of this case to
              the Missouri
              Supreme Court, which was denied. After deduction of amounts received
              from
              pre-trail settlements with other defendants and an amount for KCP&L’s
              comparative fault (as determined by the jury), KCP&L received proceeds of
              $38.9 million in 2006 pursuant to the subrogation allocation agreement
              after
              payment of attorney’s fees. The proceeds reduced purchased power expense by
              $10.8 million and fuel expense by $3.7 million. The proceeds also increased
              wholesale revenues by $2.5 million and included $6.1 million of interest
              that
              increased non-operating income. The remaining $15.8 million of proceeds
              were
              recorded as a recovery of capital expenditures.
  KCP&L
              previously received reimbursement for Hawthorn No. 5 damages under
              a property
              damage insurance policy with Travelers Property Casualty Company of
              America
              (Travelers). Travelers filed suit in the Federal District Court for
              the Eastern
              District of Missouri in November 2005, against National Union, and
              KCP&L was
              added as a defendant in June 2006. Travelers seeks recovery of $10
              million that
              KCP&L recovered in the April 2001 lawsuit described in the preceding
              paragraph. Management is unable to predict the outcome of this
              litigation.
  **Emergis
              Technologies, Inc.**
 In
              March
              2006, Emergis Technologies, Inc. f/k/a BCE Emergis Technologies, Inc.
              (Emergis)
              filed suit against KCP&L in Federal District Court for the Western District
              of Missouri, alleging infringement of a patent, entitled “Electronic Invoicing
              and Payment System.” This patent relates to automated electronic bill
              presentment and payment systems, particularly those involving Internet
              billing
              and collection. In March 2006, KCP&L filed a response and denied infringing
              the patent. KCP&L counterclaimed for a declaration that the patent is
              invalid and not infringed. Emergis responded to KCP&L’s counterclaims in
              April 2006. Court ordered mediation occurred in July 2006, but the
              case was not
              resolved.
 44
 Management
              does not expect the outcome of this litigation to have a material impact
              on
              Great Plains Energy's or consolidated KCP&L's results of operations and
              financial position.
  **Spent
              Nuclear Fuel and Radioactive Waste**
 In
              2004,
              KCP&L and the other two Wolf Creek owners filed suit against the United
              States in the U.S. Court of Federal Claims seeking an unspecified amount
              of
              monetary damages resulting from the government’s failure to begin accepting
              spent fuel for disposal in January 1998, as the government was required
              to do by
              the Nuclear Waste Policy Act of 1982. Approximately sixty other similar
              cases
              are pending before that court. A handful of the cases have received
              damages
              awards, most of which are on appeal now. The Wolf Creek case, previously
              on a
              court-ordered stay until October 2006 to allow for some of the earlier
              cases to
              be decided first, recently received an extension of the stay to January
              2007.
              Another federal court already has determined that the government breached
              its
              obligation to begin accepting spent fuel for disposal. The questions
              now before
              the court in the pending cases are whether and to what extent the utilities
              are
              entitled to monetary damages for that breach. KCP&L management cannot
              predict the outcome of this Wolf Creek case.
  **Class
              Action Complaint**
 In
              2005,
              a class action complaint for breach of contract was filed against Strategic
              Energy in the Court of Common Pleas of Allegheny County, Pennsylvania.
              The
              plaintiffs purportedly represent the interests of certain customers
              in
              Pennsylvania who entered into  Power
              Supply Coordination Service Agreements (Agreements) for a certain product
              in
              Pennsylvania. The complaint seeks monetary damages, attorney fees and
              costs and
              a declaration that the customers may terminate their Agreements with
              Strategic
              Energy. In response to Strategic Energy’s preliminary objections, plaintiffs
              have filed an amended complaint that management is evaluating. The
              plaintiffs
              have granted Strategic Energy an indefinite extension of time to answer
              the
              complaint. Management is unable to predict the outcome of this
              litigation.
  **Texas
              Customer Dispute**
 In
              February 2006, a customer in Texas that procures electricity for schools
              notified Strategic Energy that it had selected another provider for
              its school
              members during the time it was under contract with Strategic Energy.
              Strategic
              Energy exercised it rights under the agreement for breach. In June
              2006,
              Strategic Energy received a notice of demand for arbitration from the
              customer
              pursuant to the agreement. Management is evaluating the merits of the
              customer’s
              alleged damages and the parties are in the process of selecting an
              arbitrator.
              Management believes the ultimate outcome of this matter will not have
              a material
              impact on the Company’s financial position or results of
              operations.
  **Haberstroh**
 In
              2004,
              Robert C. Haberstroh filed suit for breach of employment contract and
              violation
              of the Pennsylvania Wage Payment Collection Act against Strategic Energy
              Partners, Ltd. (Partners), SE Holdings, L.L.C. (SE Holdings) and Strategic
              Energy in the Court of Common Pleas of Allegheny County, Pennsylvania.
              In the
              first quarter of 2006, the suit was settled and as part of the settlement,
              Great
              Plains Energy acquired the remaining indirect interest in Strategic
              Energy for
              an insignificant amount.
  **Weinstein
              v. KLT Telecom**
 Richard
              D. Weinstein (Weinstein) filed suit against KLT Telecom Inc. (KLT Telecom)
              in
              September 2003 in the St. Louis County, Missouri Circuit Court. KLT
              Telecom
              acquired a controlling interest in DTI Holdings, Inc. (Holdings) in
              February
              2001 through the purchase of approximately two-thirds of the Holdings
              stock held
              by Weinstein. In connection with that purchase, KLT Telecom entered
              into a put
              option in favor of Weinstein, which granted Weinstein an option to
              sell to KLT
              Telecom his remaining shares of Holdings stock. The put option provided
              for an
              aggregate exercise price for the remaining shares equal to their fair
              market
              value with an aggregate floor amount of $15 million and was
 45
 exercisable
              between September 1, 2003, and August 31, 2005. In June 2003, the stock
              of
              Holdings was cancelled and extinguished pursuant to the joint Chapter
              11 plan
              confirmed by the Bankruptcy Court. In September 2003, Weinstein delivered
              a
              notice of exercise of his claimed rights under the put option. KLT
              Telecom
              rejected the notice of exercise, and Weinstein filed suit, alleging
              breach of
              contract. Weinstein sought damages of at least $15 million, plus statutory
              interest. In April 2005, summary judgment was granted in favor of KLT
              Telecom,
              and Weinstein appealed this judgment to the Missouri Court of Appeals
              for the
              Eastern District. In May 2006, the Court of Appeals affirmed the judgment.
              During July 2006, Weinstein filed an application for transfer of this
              case to
              the Missouri Supreme Court, which was granted. Oral arguments are scheduled
              for
              December 2006. The $15 million reserve has not been reversed pending
              the outcome
              of the appeal process.
  **16.**
                  **SEGMENT
                      AND RELATED INFORMATION**  **Great
              Plains Energy**
 Great
              Plains Energy has two reportable segments based on its method of internal
              reporting, which generally segregates the reportable segments based
              on products
              and services, management responsibility and regulation. The two reportable
              business segments are KCP&L, an integrated, regulated electric utility, and
              Strategic Energy, a competitive electricity supplier. Other includes
              the
              operations of HSS, Services, all KLT Inc. operations other than Strategic
              Energy, unallocated corporate charges, consolidating entries and intercompany
              eliminations. Intercompany eliminations include insignificant amounts
              of
              intercompany financing-related activities. The summary of significant
              accounting
              policies applies to all of the reportable segments. For segment reporting,
              each
              segment’s income taxes include the effects of allocating holding company tax
              benefits. Segment performance is evaluated based on net income.
  The
              following tables reflect
              summarized financial information concerning Great Plains Energy’s reportable
              segments.
 **Three
                          Months Ended**
                      
                      
                      
                      **Strategic**
                      
                      
                      **Great
                          Plains****September
                          30, 2006**
                      
                      **KCP&L**
                      **Energy**
                      **Other**
                      **Energy**(millions)Operating
                          revenues
                      
                      $
                      359.3
                      
                      $
                      459.2
                      
                      $
                      -
                      
                      $
                      818.5Depreciation
                          and amortization
                      
                      
                      (38.5
                      )
                      
                      (1.9
                      )
                      
                      -
                      
                      
                      (40.4
                      )Interest
                          charges
                      
                      
                      (15.5
                      )
                      
                      (0.6
                      )
                      
                      (1.9
                      )
                      
                      (18.0
                      )Income
                          taxes
                      
                      
                      (39.5
                      )
                      
                      10.2
                      
                      
                      2.8
                      
                      
                      (26.5
                      )Loss
                          from equity investments
                      
                      
                      -
                      
                      
                      -
                      
                      
                      (0.4
                      )
                      
                      (0.4
                      )Net
                          income (loss)
                      
                      
                      70.0
                      
                      
                      (10.9
                      )
                      
                      (3.9
                      )
                      
                      55.2
  **Three
                        Months Ended**
                    
                    
                    
                    **Strategic**
                    
                    
                    **Great
                        Plains****September
                        30, 2005**
                    
                    **KCP&L**
                    **Energy**
                    **Other**
                    **Energy**(millions)Operating
                        revenues
                    
                    $
                    353.0
                    
                    $
                    429.9
                    
                    $
                    -
                    
                    $
                    782.9Depreciation
                        and amortization
                    
                    
                    (36.7
                    )
                    
                    (1.6
                    )
                    
                    (0.1
                    )
                    
                    (38.4
                    )Interest
                        charges
                    
                    
                    (15.0
                    )
                    
                    (0.7
                    )
                    
                    (2.2
                    )
                    
                    (17.9
                    )Income
                        taxes
                    
                    
                    (16.4
                    )
                    
                    (9.4
                    )
                    
                    8.5
                    
                    
                    (17.3
                    )Loss
                        from equity investments
                    
                    
                    -
                    
                    
                    -
                    
                    
                    (0.1
                    )
                    
                    (0.1
                    )Discontinued
                        operations
                    
                    
                    -
                    
                    
                    -
                    
                    
                    1.8
                    
                    
                    1.8Net
                        income
                    
                    
                    69.1
                    
                    
                    18.1
                    
                    
                    3.7
                    
                    
                    90.9
 46
 **Year
                        to Date**
                    
                    
                    
                    **Strategic**
                    
                    
                    **Great
                        Plains****September
                        30, 2006**
                    
                    **KCP&L**
                    **Energy**
                    **Other**
                    **Energy**(millions)Operating
                        revenues
                    
                    $
                    890.6
                    
                    $
                    1,129.2
                    
                    $
                    -
                    
                    $
                    2,019.8Depreciation
                        and amortization
                    
                    
                    (112.8
                    )
                    
                    (5.8
                    )
                    
                    -
                    
                    
                    (118.6
                    )Interest
                        charges
                    
                    
                    (45.4
                    )
                    
                    (1.5
                    )
                    
                    (6.2
                    )
                    
                    (53.1
                    )Income
                        taxes
                    
                    
                    (62.1
                    )
                    
                    17.4
                    
                    
                    8.0
                    
                    
                    (36.7
                    )Loss
                        from equity investments
                    
                    
                    -
                    
                    
                    -
                    
                    
                    (1.0
                    )
                    
                    (1.0
                    )Net
                        income (loss)
                    
                    
                    117.8
                    
                    
                    (17.6
                    )
                    
                    (9.5
                    )
                    
                    90.7
  **Year
                        to Date**
                    
                    
                    
                    **Strategic**
                    
                    
                    **Great
                        Plains****September
                        30, 2005**
                    
                    **KCP&L**
                    **Energy**
                    **Other**
                    **Energy**(millions)Operating
                        revenues
                    
                    $
                    858.3
                    
                    $
                    1,101.3
                    
                    $
                    0.1
                    
                    $
                    1,959.7Depreciation
                        and amortization
                    
                    
                    (109.7
                    )
                    
                    (4.6
                    )
                    
                    (0.2
                    )
                    
                    (114.5
                    )Interest
                        charges
                    
                    
                    (45.1
                    )
                    
                    (2.2
                    )
                    
                    (6.5
                    )
                    
                    (53.8
                    )Income
                        taxes
                    
                    
                    (32.4
                    )
                    
                    (20.9
                    )
                    
                    20.9
                    
                    
                    (32.4
                    )Loss
                        from equity investments
                    
                    
                    -
                    
                    
                    -
                    
                    
                    (0.8
                    )
                    
                    (0.8
                    )Discontinued
                        operations
                    
                    
                    -
                    
                    
                    -
                    
                    
                    (1.8
                    )
                    
                    (1.8
                    )Net
                        income (loss)
                    
                    
                    109.0
                    
                    
                    34.6
                    
                    
                    (10.6
                    )
                    
                    133.0
  **Strategic**
                        
                        
                        
                        **Great
                            Plains****KCP&L**
                        
                        **Energy**
                        
                        **Other**
                        
                        **Energy****September
                            30, 2006**
                        
                        (millions)Assets
                        
                        $
                        3,633.8
                        
                        $
                        450.9
                        
                        $
                        29.9
                        
                        $
                        4,114.6Capital
                            expenditures(a)
                        
                        
                        371.1
                        
                        
                        3.2
                        
                        
                        0.3
                        
                        
                        374.6**December
                            31, 2005**Assets
                        
                        $
                        3,334.6
                        
                        $
                        441.8
                        
                        $
                        57.3
                        
                        $
                        3,833.7Capital
                            expenditures(a)
                        
                        
                        332.2
                        
                        
                        6.6
                        
                        
                        (4.7
                        )
                        
                        334.1(a)Capital
                            expenditures reflect year to date amounts for the periods
                            presented.
 **Consolidated
              KCP&L**
 The
              following tables reflect
              summarized financial information concerning consolidated KCP&L’s reportable
              segment. Other includes the operations of HSS and intercompany eliminations.
              Intercompany eliminations include insignificant amounts of intercompany
              financing-related activities.
 **Three
                        Months Ended**
                    
                    
                    
                    
                    
                    **Consolidated****September
                        30, 2006**
                    
                    **KCP&L**
                    **Other**
                    **KCP&L**(millions)Operating
                        revenues
                    
                    $
                    359.3
                    
                    $
                    -
                    
                    $
                    359.3Depreciation
                        and amortization
                    
                    
                    (38.5
                    )
                    
                    -
                    
                    
                    (38.5
                    )Interest
                        charges
                    
                    
                    (15.5
                    )
                    
                    (0.1
                    )
                    
                    (15.6
                    )Income
                        taxes
                    
                    
                    (39.5
                    )
                    
                    0.2
                    
                    
                    (39.3
                    )Net
                        income (loss)
                    
                    
                    70.0
                    
                    
                    (1.2
                    )
                    
                    68.8
 47
 **Three
                        Months Ended**
                    
                    
                    
                    
                    
                    **Consolidated****September
                        30, 2005**
                    
                    **KCP&L**
                    **Other**
                    **KCP&L**(millions)Operating
                        revenues
                    
                    $
                    353.0
                    
                    $
                    -
                    
                    $
                    353.0Depreciation
                        and amortization
                    
                    
                    (36.7
                    )
                    
                    -
                    
                    
                    (36.7
                    )Interest
                        charges
                    
                    
                    (15.0
                    )
                    
                    -
                    
                    
                    (15.0
                    )Income
                        taxes
                    
                    
                    (16.4
                    )
                    
                    (0.2
                    )
                    
                    (16.6
                    )Net
                        income (loss)
                    
                    
                    69.1
                    
                    
                    (0.2
                    )
                    
                    68.9
  **Year
                        to Date**
                    
                    
                    
                    
                    
                    **Consolidated****September
                        30, 2006**
                    
                    **KCP&L**
                    **Other**
                    **KCP&L**(millions)Operating
                        revenues
                    
                    $
                    890.6
                    
                    $
                    -
                    
                    $
                    890.6Depreciation
                        and amortization
                    
                    
                    (112.8
                    )
                    
                    -
                    
                    
                    (112.8
                    )Interest
                        charges
                    
                    
                    (45.4
                    )
                    
                    (0.1
                    )
                    
                    (45.5
                    )Income
                        taxes
                    
                    
                    (62.1
                    )
                    
                    0.2
                    
                    
                    (61.9
                    )Net
                        income (loss)
                    
                    
                    117.8
                    
                    
                    (1.2
                    )
                    
                    116.6
  **Year
                          to Date**
                      
                      
                      
                      
                      
                      **Consolidated****September
                          30, 2005**
                      
                      **KCP&L**
                      **Other**
                      **KCP&L**(millions)Operating
                          revenues
                      
                      $
                      858.3
                      
                      $
                      0.1
                      
                      $
                      858.4Depreciation
                          and amortization
                      
                      
                      (109.7
                      )
                      
                      (0.1
                      )
                      
                      (109.8
                      )Interest
                          charges
                      
                      
                      (45.1
                      )
                      
                      -
                      
                      
                      (45.1
                      )Income
                          taxes
                      
                      
                      (32.4
                      )
                      
                      0.4
                      
                      
                      (32.0
                      )Net
                          income (loss)
                      
                      
                      109.0
                      
                      
                      (0.8
                      )
                      
                      108.2
  **Consolidated****KCP&L**
                      **Other**
                      **KCP&L****September
                          30, 2006**
                      
                      (millions)Assets
                      
                      $
                      3,633.8
                      
                      $
                      3.4
                      
                      $
                      3,637.2Capital
                          expenditures(a)
                      
                      
                      371.1
                      
                      
                      -
                      
                      
                      371.1**December
                          31, 2005**Assets
                      
                      $
                      3,334.6
                      
                      $
                      3.9
                      
                      $
                      3,338.5Capital
                          expenditures(a)
                      
                      
                      332.2
                      
                      
                      -
                      
                      
                      332.2(a)Capital
                          expenditures reflect year to date amounts for the periods
                          presented.
 **17.**
                      **ASSET
                          RETIREMENT OBLIGATIONS**  Asset
                  retirement obligations associated with tangible long-lived assets
                  are those for
                  which a legal obligation exists under enacted laws, statutes and
                  written or oral
                  contracts, including obligations arising under the doctrine of
                  promissory
                  estoppel. These liabilities are recognized at estimated fair value
                  as incurred
                  and capitalized as part of the cost of the related long-lived assets
                  and
                  depreciated over their useful lives. Accretion of the liabilities
                  due to the
                  passage of time is recorded as an operating expense. Changes in
                  the estimated
                  fair values of the liabilities are recognized when known.
  In
                  the
                  second quarter of 2006, KCP&L incurred an ARO related to decommissioning and
                  site remediation associated with its Spearville Wind Energy Facility,
                  a 100.5 MW
                  wind project in western Kansas. KCP&L is obligated to remove the wind
                  turbine towers and perform site remediation within 12 months after
                  the end of
                  the associated 30-year land lease agreements. The ARO was derived
                  from a third
                  party estimate of decommissioning and remediation costs. To estimate
                  the ARO,
                  KCP&L used a
 48
 credit-adjusted
                  risk free discount rate of 6.68%. This rate was based on the rate
                  at which
                  KCP&L could issue 30-year bonds. KCP&L recorded a $3.1 million ARO for
                  the decommissioning and site remediation and increased property
                  and equipment by
                  $3.1 million.
  In
                  the
                  third quarter of 2006, WCNOC submitted an application for a new
                  operating
                  license for Wolf Creek with the NRC, which would extend Wolf Creek’s operating
                  period to 2045. Management has determined the fair value of KCP&L’s ARO for
                  nuclear decommissioning should reflect the change in timing in
                  the undiscounted
                  estimated cash flows to decommission Wolf Creek as a result of
                  the extended
                  operating period. Management calculated an ARO revision based on
                  KCP&L’s
                  most recent cost estimates to decommission Wolf Creek. To estimate
                  the ARO layer
                  attributable to the change in timing, KCP&L used a credit-adjusted risk free
                  discount rate of 6.26%. The rate was based on the rate at which
                  KCP&L could
                  issue 40-year bonds. KCP&L recorded a $65.0 million decrease in the ARO to
                  decommission Wolf Creek with a $25.8 million net decrease in property
                  and
                  equipment. The regulatory asset for ARO decreased $8.2 million
                  and a $31.0
                  million regulatory liability for ARO was established to recognize
                  current
                  funding of the related decommissioning trust at September 30, 2006,
                  in excess of
                  the ARO due to the extended operating period.
  KCP&L
                  is a regulated utility subject to the provisions of SFAS No. 71
                  and management
                  believes it is probable that any differences between expenses under
                  FIN No. 47,
“Accounting for Conditional Asset Retirement Obligations” or SFAS No. 143,
“Accounting for Asset Retirement Obligation,” and expense recovered currently in
                  rates will be recoverable in future rates. The following table
                  summarizes the
                  change in Great Plains Energy’s and consolidated KCP&L’s
                  AROs.
 **September
                          30**
                      **December
                          31****2006**
                      **2005**(millions)Beginning
                          balance
                      
                      $
                      145.9
                      
                      $
                      113.7Additions
                      
                      
                      3.1
                      
                      
                      26.7Extension
                          of Wolf Creek life
                      
                      
                      (65.0
                      )
                      
                      -Settlements
                      
                      
                      -
                      
                      
                      (2.0
                      )Accretion
                      
                      
                      7.1
                      
                      
                      7.5Ending
                          balance
                      
                      $
                      91.1
                      
                      $
                      145.9
 **18.**
                  **DERIVATIVE
                      INSTRUMENTS**  The
              companies are exposed to a variety of market risks including interest
              rates and
              commodity prices. Management has established risk management policies
              and
              strategies to reduce the potentially adverse effects that the volatility
              of the
              markets may have on the companies’ operating results. The risk management
              activities, including the use of derivative instruments, are subject
              to the
              management, direction and control of internal risk management committees.
              Management’s interest rate risk management strategy uses derivative instruments
              to adjust the companies’ liability portfolio to optimize the mix of fixed and
              floating rate debt within an established range. In addition, management uses
              derivative instruments to hedge against future interest rate fluctuations
              on
              anticipated debt issuances. Management maintains commodity-price risk
              management
              strategies that use derivative instruments to reduce the effects of
              fluctuations
              in fuel and purchased power expense caused by commodity price volatility.
              Counterparties to commodity derivatives and interest rate swap agreements
              expose
              the companies to credit loss in the event of nonperformance. This credit
              loss is
              limited to the cost of replacing these contracts at current market
              rates less
              the application of counterparty collateral held and contract-based
              netting of
              credit exposures against payable balances. Derivative instruments,
              excluding
              those instruments that qualify for the Normal Purchases and Normal
              Sales (NPNS)
              election, which are accounted for by accrual accounting, are recorded
              on the
              balance sheet at fair value as an asset or
 49
 liability.
              Changes in the fair value are recognized currently in net income unless
              specific
              hedge accounting criteria are met.
  **Fair
              Value Hedges - Interest Rate Risk Management**
 In
              2002,
              KCP&L remarketed its 1998 Series A, B and D EIRR bonds totaling $146.5
              million to a five-year fixed interest rate of 4.75% ending October
              1, 2007.
              Simultaneously with the remarketing, KCP&L entered into an interest rate
              swap for the $146.5 million based on the London Interbank Offered Rate
              (LIBOR)
              to effectively create a floating interest rate obligation. The transaction
              is a
              fair value hedge with no ineffectiveness. Changes in the fair market
              value of
              the swap are recorded on the balance sheet as an asset or liability
              with an
              offsetting entry to the respective debt balances with no net impact
              on net
              income.
  **Cash
              Flow Hedges - Forward Starting Swaps**
 In
              the
              first quarter of 2006, KCP&L entered into two Forward Starting Swaps to
              hedge against interest rate fluctuations on the long-term debt that
              KCP&L
              plans to issue before the end of the first quarter of 2007. The FSS
              will be
              settled simultaneously with the issuance of the long-term fixed rate
              debt. The
              FSS effectively removes most of the interest rate and credit spread
              uncertainty
              with respect to the debt to be issued, thereby enabling KCP&L to predict
              with greater assurance what its future interest costs on that debt
              will be. The
              FSS is accounted for as a cash flow hedge and the fair value is recorded
              as a
              current asset or liability with an offsetting entry to OCI, to the
              extent the
              hedge is effective, until the forecasted transaction occurs. No ineffectiveness
              has been recorded on the FSS. The pre-tax gain or loss on the FSS recorded
              to
              OCI will be reclassified to interest expense over the life of the future
              debt
              issuance.
  **Cash
              Flow Hedges - Commodity Risk Management**
 KCP&L’s
              risk management policy is to use derivative instruments to mitigate
              its exposure
              to market price fluctuations on a portion of its projected natural
              gas purchases
              to meet generation requirements for retail and firm wholesale sales.
              As of
              September 30, 2006, KCP&L had hedged 22% and 7% of its 2007 and 2008
              projected natural gas usage for retail load and firm MWh sales, respectively,
              primarily by utilizing fixed forward physical contracts. The fair values
              of
              these instruments are recorded as current assets or current liabilities
              with an
              offsetting entry to OCI for the effective portion of the hedge. To
              the extent
              the hedges are not effective, the ineffective portion of the change
              in fair
              market value is recorded currently in fuel expense. KCP&L did not record any
              gains or losses due to ineffectiveness during the three months ended
              and year to
              date September 30, 2006 and 2005, respectively.
  Strategic
              Energy maintains a commodity-price risk management strategy that uses
              forward
              physical energy purchases and other derivative instruments to reduce
              the effects
              of fluctuations in purchased power expense caused by commodity-price
              volatility.
              Derivative instruments are used to limit the unfavorable effect that
              price
              increases will have on electricity purchases, effectively fixing the
              future
              purchase price of electricity for the applicable forecasted usage and
              protecting
              Strategic Energy from significant price volatility. The maximum term
              over which
              Strategic Energy hedged its exposure and variability of future cash
              flows was
              approximately five years at September 30, 2006 and December 31,
              2005.
  Certain
              forward fixed price purchases and swap agreements are designated as
              cash flow
              hedges. The fair values of these instruments are recorded as assets
              or
              liabilities with an offsetting entry to OCI for the effective portion
              of the
              hedge. To the extent the hedges are not effective, the ineffective
              portion of
              the change in fair market value is recorded currently in purchased
              power. When
              the forecasted purchase is completed, the amounts in OCI are reclassified
              to
              purchased power. Purchased power expense for the three months ended
              and year to
              date September 30, 2006, includes a $13.1 million and $27.1 million loss,
              respectively, due to ineffectiveness of the cash flow hedges. Strategic
              Energy
 50
 recorded
              an $8.3 million and $10.4 million gain for the three months ended and
              year to
              date September 30, 2005, respectively, due to ineffectiveness of the
              cash flow
              hedges.
  As
              part
              of its commodity-price risk management strategy, Strategic Energy also
              enters
              into economic hedges (non-hedging derivatives) that do not qualify
              for cash flow
              hedge accounting. The changes in the fair value of these derivative
              instruments
              recorded to purchased power expense were a $13.5 million loss and $9.9
              million
              gain for the three months ended September 30, 2006 and 2005, respectively,
              and a
              $37.4 million loss and $15.6 million gain year to date September 30,
              2006 and
              2005, respectively.
  The
              fair
              value of non-hedging derivatives at September 30, 2006, also includes
              certain
              forward contracts at Strategic Energy that were amended during 2005.
              Prior to
              being amended, the contracts were accounted for under the NPNS election
              in
              accordance with SFAS No. 133, “Accounting for Derivative Instruments and Hedging
              Activities.” As a result of being amended, the contracts no longer qualify for
              NPNS exceptions or cash flow hedge accounting and are now accounted
              for as
              non-hedging derivatives with the fair value at amendment being recorded
              as a
              deferred liability that will be reclassified to net income as the contracts
              settle. For the three months ended and year to date September 30, 2006,
              Strategic Energy amortized $0.4 million and $5.0 million, respectively,
              of the
              deferred liability to purchased power expense related to the delivery
              of power
              under the contracts. Strategic Energy will amortize the remaining deferred
              liability over the remaining original contract lengths, which end in
              the first
              quarter of 2008. After the amendment, Strategic Energy is recording
              the change
              in fair value of these contracts to purchased power expense.
  The
              notional and recorded fair values of the companies’ derivative instruments are
              summarized in the following table. The fair values of these derivatives
              are
              recorded on the consolidated balance sheets.
 **September
                      30**
                  
                  **December
                      31****2006**
                  
                  **2005****Notional**
                  
                  
                  **Notional****Contract**
                  **Fair**
                  **Contract**
                  **Fair****Amount**
                  **Value**
                  **Amount**
                  **Value****Great
                      Plains Energy**
                  
                  (millions)Swap
                      contractsCash
                      flow hedges
                  
                  $
                  323.7
                  
                  $
                  (47.6
                  )
                  $
                  164.7
                  
                  $
                  23.8Non-hedging
                      derivatives
                  
                  
                  43.2
                  
                  
                  (8.8
                  )
                  
                  35.5
                  
                  
                  -Forward
                      contractsCash
                      flow hedges
                  
                  
                  577.2
                  
                  
                  (56.6
                  )
                  
                  121.9
                  
                  
                  21.0Non-hedging
                      derivatives
                  
                  
                  214.1
                  
                  
                  (30.1
                  )
                  
                  178.3
                  
                  
                  3.6Forward
                      starting swapCash
                      flow hedges
                  
                  
                  225.0
                  
                  
                  (0.8
                  )
                  
                  -
                  
                  
                  -Interest
                      rate swapsFair
                      value hedges
                  
                  
                  146.5
                  
                  
                  (2.2
                  )
                  
                  146.5
                  
                  
                  (2.6
                  )**Consolidated
                      KCP&L**Forward
                      contractsCash
                      flow hedges
                  
                  
                  5.2
                  
                  
                  (0.1
                  )
                  
                  -
                  
                  
                  -Forward
                      starting swapCash
                      flow hedges
                  
                  
                  225.0
                  
                  
                  (0.8
                  )
                  
                  -
                  
                  
                  -Interest
                      rate swapsFair
                      value hedges
                  
                  
                  146.5
                  
                  
                  (2.2
                  )
                  
                  146.5
                  
                  
                  (2.6
                  )
 51
 The
              amounts recorded in accumulated OCI related to the cash flow hedges
              are
              summarized in the following table.
 **Great
                        Plains Energy**
                    **Consolidated
                        KCP&L****September
                        30**
                    **December
                        31**
                    **September
                        30**
                    **December
                        31****2006**
                    **2005**
                    **2006**
                    **2005**(millions)Current
                        assets
                    
                    $
                    10.4
                    
                    $
                    35.8
                    
                    $
                    11.6
                    
                    $
                    11.9Other
                        deferred charges
                    
                    
                    -
                    
                    
                    11.8
                    
                    
                    (0.8
                    )
                    
                    -Other
                        current liabilities
                    
                    
                    (44.2
                    )
                    
                    1.6
                    
                    
                    -
                    
                    
                    -Deferred
                        income taxes
                    
                    
                    30.3
                    
                    
                    (20.5
                    )
                    
                    (4.1
                    )
                    
                    (4.5
                    )Other
                        deferred credits
                    
                    
                    (39.0
                    )
                    
                    1.0
                    
                    
                    -
                    
                    
                    -Total
                    
                    $
                    (42.5
                    )
                    $
                    29.7
                    
                    $
                    6.7
                    
                    $
                    7.4
 Great
              Plains Energy’s accumulated OCI includes $44.3 million that is expected to be
              reclassified to expense over the next twelve months. Consolidated KCP&L’s
              accumulated OCI includes an insignificant amount that is expected to
              be
              reclassified to expense over the next twelve months.
  The
              amounts reclassified to expenses are summarized in the following
              table.
 Three
                        Months Ended
                    **Year
                        to Date****September
                        30**
                    **September
                        30****2006**
                    **2005**
                    **2006**
                    **2005****Great
                        Plains Energy**
                    
                    (millions)Fuel
                        expense
                    
                    $
                    -
                    
                    $
                    (0.5
                    )
                    $
                    -
                    
                    $
                    (0.5
                    )Purchased
                        power expense
                    
                    
                    13.0
                    
                    
                    (21.1
                    )
                    
                    29.6
                    
                    
                    (27.2
                    )Interest
                        expense
                    
                    
                    (0.1
                    )
                    
                    -
                    
                    
                    (0.3
                    )
                    
                    -Income
                        taxes
                    
                    
                    (5.3
                    )
                    
                    8.9
                    
                    
                    (12.2
                    )
                    
                    11.6OCI
                    
                    $
                    7.6
                    
                    $
                    (12.7
                    )
                    $
                    17.1
                    
                    $
                    (16.1
                    )**Consolidated
                        KCP&L**Fuel
                        expense
                    
                    $
                    -
                    
                    $
                    (0.5
                    )
                    $
                    -
                    
                    $
                    (0.5
                    )Interest
                        expense
                    
                    
                    (0.1
                    )
                    
                    -
                    
                    
                    (0.3
                    )
                    
                    -Income
                        taxes
                    
                    
                    -
                    
                    
                    0.2
                    
                    
                    0.1
                    
                    
                    0.2OCI
                    
                    $
                    (0.1
                    )
                    $
                    (0.3
                    )
                    $
                    (0.2
                    )
                    $
                    (0.3
                    )
 
 
 52
   **ITEM
          2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
          OPERATIONS**
  The
          MD&A that follows is a combined presentation for Great Plains Energy and
          consolidated KCP&L, both registrants under this filing. The discussion and
          analysis by management focuses on those factors that had a material effect
          on
          the financial condition and results of operations of the registrants during
          the
          periods presented.
  Great
          Plains Energy is a public utility holding company and does not own or operate
          any significant assets other than the stock of its subsidiaries. Great
          Plains
          Energy’s direct subsidiaries with operations or active subsidiaries are
          KCP&L, KLT Inc., IEC and Services. As a diversified energy company, Great
          Plains Energy’s reportable business segments include KCP&L and Strategic
          Energy.
  **EXECUTING
          ON STRATEGIC INTENT**
 **KCP&L’s
          Comprehensive Energy Plan**
 KCP&L
          continues to make progress in implementing its comprehensive energy plan
          under
          orders received from the MPSC and KCC in 2005. The Sierra Club and Concerned
          Citizens of Platte County have appealed the MPSC order, and the Sierra
          Club has
          appealed the KCC order. In March 2006, the Circuit Court of Cole County,
          Missouri, affirmed the MPSC Order and the Sierra Club has appealed the
          decision
          to the Missouri Court of Appeals. The Kansas District Court denied the
          Sierra
          Club’s appeal in May 2006 and the Sierra Club has appealed to the Kansas Court
          of Appeals. Although subject to the appeals, the MPSC and KCC orders remain
          in
          effect pending the applicable court’s decision.
  Although
          control budgets and workflow scheduling are not complete, developing market
          conditions indicate overall cost estimates of the comprehensive energy
          plan are
          currently expected to be about 20% above the estimate in the 2005 Form
          10-K. The
          primary driver of the increased cost of the comprehensive energy plan is
          the
          environmental retrofit of selected existing coal-fired plants. The demand
          for
          environmental projects has increased substantially with many utilities
          in the
          United States starting similar projects to address changing environmental
          regulations. This demand has constrained labor and material resources resulting
          in a significant escalation in the cost and completion times for environmental
          retrofits. The first phase of environmental upgrades at LaCygne No. 1,
          installation of SCR equipment, began in late 2005 and is expected to be
          in-service for the summer of 2007. KCP&L has approximately 88% of the total
          estimated cost for the first phase under firm contract as of September
          30, 2006.
          The second phase of environmental upgrades at LaCygne No. 1 is currently
          in the
          planning stage, and the market conditions noted above could impact the
          scope and
          timing. Iatan No. 1 environmental upgrades are on schedule with approximately
          80% of the total estimated costs under firm contract as of September 30,
          2006.
  The
          construction projects contemplated in the comprehensive energy plan rely
          upon
          the supply of a significant percentage of materials from overseas sources.
          This
          global procurement subjects the delivery of procured material to issues
          beyond
          what would be expected if such material were supplied from sources within
          the
          United States. These risks include, but are not limited to, delays in clearing
          customs, ocean transportation and potential civil unrest in sourcing countries,
          among others. Additionally, as with any major construction program, inadequate
          availability of qualified craft labor may have an adverse impact on both
          the
          estimated cost and completion date of the projects.
  Over
          the
          last several months, KCP&L has finalized contracts and received bids for the
          largest cost components of the construction of Iatan No. 2. The estimated
          costs
          for Iatan No. 2 have also increased due to the constrained labor and material
          resources discussed above; however, the Iatan No. 2 estimated costs have
          not
          been as impacted as the estimated costs of the environmental retrofits.
          KCP&L has approximately 60% of the total estimated cost of Iatan No. 2 under
          firm contract as of September 30, 2006, and has started construction activities
          at the site. An owners’ engineer has been
 53
 hired
          and
          the engineering design for Iatan Station is approximately 25% complete,
          which is
          on schedule with the targeted project completion in summer 2010. During
          the
          second quarter of 2006, KCP&L finalized Iatan No. 2 co-ownership agreements
          with Aquila Inc., The Empire District Electric Company, Kansas Electric
          Power
          Cooperative and Missouri Joint Municipal Electric Utility Commission. KCP&L
          will own 54.71% or approximately 465 MW of the new unit. In the first quarter
          of
          2006, KCP&L received the air permit and a water quality certification from
          the Missouri Department of Natural Resources relating to Iatan Station.
          The
          Sierra Club is appealing the air permit. In the third quarter of 2006,
          the
          Sierra Club filed a motion requesting that construction on Iatan No. 2
          be stayed
          pending the outcome of its appeal. This motion was denied. KCP&L has
          received the remaining permits necessary to begin construction at Iatan
          Station,
          which included the wetlands permit and a permit for the construction of
          a
          temporary barge slip and collector wells from the U.S. Army Corps of Engineers
          (Corps). The Corps also executed an Environmental Assessment with a Finding
          of
          No Significant Impact.
  Construction
          and commissioning of the 67 turbines at KCP&L’s Spearville Wind Energy
          Facility, a 100.5 MW wind project in western Kansas, was completed during
          the
          third quarter of 2006 in-line with cost estimates reported in the 2005
          Form
          10-K. Additional transmission construction to enhance KCP&L’s ability to
          carry power from the facility to its service territory is expected to be
          completed in the first half of 2007, and is reflected in the current cost
          estimates provided above.
  KCP&L
          has implemented nine pilot affordability, energy efficiency and demand
          response
          programs in Missouri and four in Kansas. Initial results from the implemented
          pilot programs are beginning to demonstrate an ability to manage KCP&L’s
          customers’ retail load requirements and are on target with management's goal to
          achieve a potential 40MW reduction in retail load requirements by the end
          of
          2006. These early results are evidenced by the success of KCP&L’s
          residential air conditioning cycling program, Energy Optimizer, which has
          experienced strong early participation with over 8,200 installations year
          to
          date September 30, 2006. Additionally, in September 2006, KCC initiated
          a
          generic investigation into energy efficiency. The general issues that KCC
          is
          investigating relate to when and how utilities should promote energy efficiency
          by their customers and what ratemaking treatment, including special mechanisms,
          is appropriate or desirable. This investigation provides a significant
          opportunity for the continued development of energy efficiency policy regulation
          in Kansas.
  **KCP&L
          Regulatory Proceedings**
 In
          February 2006, KCP&L filed requests with the MPSC and KCC for annual rate
          increases of $55.8 million or 11.5% and $42.3 million or 10.5%,
          respectively. The requested rate increases reflect recovery of increasing
          operating costs including fuel, transportation and pensions as well as
          investments in wind generation and customer programs and compensation for
          wholesale sales volatility and construction risks. The request is based
          on a
          return on equity of 11.5% and an adjusted equity ratio of 53.8%.
  KCP&L
          reached a negotiated settlement with certain parties to the Kansas rate
          proceeding and filed an unopposed Stipulation and Agreement (Agreement)
          with KCC
          in the third quarter of 2006. The Agreement stipulates a $29 million increase
          in
          annual revenues effective January 1, 2007, including $4 million of accelerated
          depreciation to maintain cash flow levels as contemplated in the stipulation
          and
          agreement approved by KCC in 2005. The Agreement does not propose an energy
          cost
          adjustment (ECA) clause; however, KCP&L agreed to propose an ECA clause in
          its next rate case to be filed no later than March 1, 2007. The Agreement
          recommends various accounting and other provisions, including but not limited
          to, establishing annual pension costs beginning January 1, 2007, at
          approximately $43 million through the creation of a regulatory asset or
          liability, and establishing a regulatory asset or liability, effective
          January
          1, 2006, for costs arising from defined benefit plan settlements and
          curtailments to be amortized over a five-year period beginning with the
          effective date of rates approved in KCP&L’s next rate case. The Agreement is
          subject to KCC approval, and is voidable
 54
 if
          not
          approved in its entirety. KCP&L expects KCC to act on the Agreement before
          the end of the year with any rate changes being effective on January 1,
          2007.
  In
          August
          2006, the MPSC Staff filed its case regarding KCP&L’s rate request. In its
          filing, the Staff asserted that KCP&L’s annual revenues should be decreased
          by between $4.3 million and $5.1 million, before adjustments resulting
          from the
          September 30, 2006, true-up of test year information. The Staff’s filing assumed
          adjustments resulting from this true-up would increase revenue requirements
          by
          approximately $20 million, resulting in a net required increase in annual
          revenues of between $14.9 million and $15.7 million, which reflected
          approximately $75 million in accelerated depreciation, which the Staff
          asserted
          will maintain certain KCP&L credit ratios at investment-grade levels as
          provided for in the stipulation and agreement approved by the MPSC in 2005.
          The
          Staff’s position was revised in the hearings that were held in October 2006.
          The
          Staff’s current position is that KCP&L’s annual revenues should be increased
          by approximately $52 million (reflecting approximately $86 million in
          accelerated depreciation), before adjustments resulting from the September
          30,
          2006, true-up. A decision by the MPSC is expected before the end of the
          year
          with any rate changes being effective on January 1, 2007.
  **KCP&L
          BUSINESS OVERVIEW**
  KCP&L
          is an integrated, regulated electric utility that engages in the generation,
          transmission, distribution and sale of electricity. KCP&L has over 4,000 MWs
          of generating capacity and has transmission and distribution facilities
          that
          provide electricity to slightly over 500,000 customers in the states of
          Missouri
          and Kansas. KCP&L has continued to experience modest load growth. Load
          growth consists of higher usage per customer and the addition of new customers.
          Retail electricity rates are below the national average.
  KCP&L’s
          residential customers’ usage is significantly affected by weather. Bulk power
          sales, the major component of wholesale sales, vary with system requirements,
          generating unit and purchased power availability, fuel costs and requirements
          of
          other electric systems. Less than 1% of revenues include an automatic fuel
          adjustment provision. KCP&L’s coal base load equivalent availability factor
          was 88% for the three months ended and 82% year to date September 30, 2006,
          compared to 82% and 80% for the same periods in 2005.
  KCP&L’s
          nuclear unit, Wolf Creek, accounts for approximately 20% of its base load
          capacity. In the third quarter of 2006, WCNOC submitted an application
          for a new
          operating license for Wolf Creek with the NRC, which would extend Wolf
          Creek’s
          operating period to 2045. Wolf Creek’s latest refueling outage began in early
          October 2006 and is currently expected to last approximately 30 days. The
          next
          refueling outage is scheduled to begin in March 2008.
  The
          owners of Wolf Creek have on hand or under contract all of the uranium
          and
          conversion services needed to operate Wolf Creek through March 2011 and
          approximately 75% after that date through September 2018. The owners also
          have
          under contract 100% of the uranium enrichment required to operate Wolf
          Creek
          through March 2008. A non-binding letter of intent has been issued with
          a
          supplier for a substantial portion of Wolf Creek’s uranium enrichment
          requirements extending through at least 2024. Fabrication requirements
          are under
          contract through 2024. Management expects its cost of nuclear fuel to remain
          relatively stable through 2009 because of contracts in place. Between 2010
          and
          2018, management anticipates the cost of nuclear fuel to increase approximately
          30% to 50% due to higher contracted prices and market conditions. Even
          with this
          anticipated increase, management expects nuclear fuel cost per MWh generated
          to
          remain less than the cost of other fuel sources.
  The
          fuel
          cost per MWh generated and the purchased power cost per MWh has a significant
          impact on the results of operations for KCP&L. Generation fuel mix can
          substantially change the fuel cost per MWh generated. Nuclear fuel cost
          per MWh
          generated is substantially less than the cost of coal per
 55
 MWh
          generated, which is significantly lower than the cost of natural gas and
          oil per
          MWh generated. The cost per MWh for purchased power is significantly higher
          than
          the cost per MWh of coal and nuclear generation. KCP&L continually evaluates
          its system requirements, the availability of generating units, availability
          and
          cost of fuel supply and purchased power, and the requirements of other
          electric
          systems to provide reliable power economically.
  Rail
          companies have experienced longer cycle times for coal deliveries to utilities
          across the country since 2004. Approximately 98% of KCP&L’s coal
          requirements come from the PRB and originate on the Burlington Northern
          Santa Fe
          and the Union Pacific railroads, both of which have been affected by the
          current
          rail situation. Maintenance to repair significant sections of track on
          this rail
          line began in 2005 and is expected to be completed by the end of 2006.
          These
          repairs must be completed before normal train operations from the PRB can
          resume, which affects all users of PRB coal. Year to date coal shipments
          have
          improved significantly compared to deliveries experienced in 2005 and as
          a
          result, inventory levels have improved. KCP&L has suspended its coal
          conservation measures, implemented in 2005, of reducing coal generation.
          Management is monitoring the situation closely and steps will be taken,
          as
          necessary, to maintain an adequate energy supply for KCP&L’s retail load and
          firm MWh sales. However, an inability to obtain timely delivery of coal
          to meet
          generation requirements in the future could materially impact KCP&L’s
          results of operations by increasing its cost to serve its retail customers
          and/or reducing wholesale MWh sales.
  **STRATEGIC
          ENERGY BUSINESS OVERVIEW**
  Great
          Plains Energy indirectly owns 100% of Strategic Energy. Strategic Energy
          does
          not own any generation, transmission or distribution facilities. Strategic
          Energy provides competitive retail electricity supply services by entering
          into
          power supply contracts to supply electricity to its end-use customers.
          Of the
          states that offer retail choice, Strategic Energy operates in California,
          Maryland, Massachusetts, Michigan, New Jersey, New York, Ohio, Pennsylvania
          and
          Texas. Strategic Energy has begun expansion into Illinois, as well as additional
          utility territories in New York. Deliveries in Illinois are expected to
          begin in
          December 2006.
  In
          addition to competitive retail electricity supply services, Strategic Energy
          also provides strategic planning, consulting and billing and scheduling
          services
          in the natural gas and electricity markets. The cost of supplying electric
          service to retail customers can vary widely by geographic market. This
          variability can be affected by many factors, including, but not limited
          to,
          geographic differences in the cost per MWh of purchased power, renewable
          energy
          requirements and capacity charges due to regional purchased power availability
          and requirements of other electricity providers and differences in transmission
          charges.
  Strategic
          Energy provides services to approximately 70,400 commercial, institutional
          and
          small manufacturing accounts for approximately 20,900 customers including
          numerous Fortune 500 companies, smaller companies and governmental entities.
          Strategic Energy offers an array of products, including fixed price, index-based
          and month-to-month renewal products, designed to meet the various requirements
          of a diverse customer base. Strategic Energy’s volume-based customer retention
          rate, excluding month-to-month customers on market-based rates, was 58%
          for the
          three months ended and 53% year to date September 30, 2006. The corresponding
          volume-based customer retention rates including month-to-month customers
          on
          market-based rates were 80% and 66%, respectively. Retention rates year
          to date
          September 30, 2006, are lower than Strategic Energy has experienced. The
          decline
          is attributable to customer contract expirations in midwestern states where
          the
          savings competitive suppliers can offer to customers are reduced or in
          some
          cases unavailable due to host utility default rates that are not aligned
          with
          market prices for power. In these states, customers can receive lower rates
          from
          the host utility and are choosing to return to host utility service as
          their
          contracts with Strategic Energy expire. Management expects to have continued
          difficulty competing in
 56
 these
          states until more competitive market-driven pricing mechanisms are in place
          or
          market prices for power decrease below host utility rates.
  Management
          has repositioned sales and marketing efforts to focus on states that currently
          provide a more competitive pricing environment in relation to host utility
          default rates. In these states, Strategic Energy continues to experience
          improvement in certain key metrics, including strong forecasted future
          MWh
          commitments (backlog) growth and longer contract durations. As a result,
          total
          backlog grew to 28.4 million at September 30, 2006, compared to 15.2
          million at September 30, 2005, and average contract durations grew to 17
          months from 13 months, respectively. Based solely on expected usage under
          current signed contracts, Strategic Energy has backlog of 4.1 million for
          the
          remainder of 2006, 11.2 million and 6.4 million for the years 2007 and
          2008,
          respectively, and 6.7 million for 2009 through 2012. The combination of
          MWhs
          delivered through September 30, 2006, and backlog for the remainder of
          the year
          is 16.5 million, which is within the previously projected range for 2006
          total
          MWhs delivered of 16 to 18 million. Strategic Energy expects to deliver
          additional MWhs above amounts currently in backlog through new and renewed
          term
          contracts and MWh deliveries to month-to-month customers.
  The
          average retail gross margin per MWh (retail revenues less retail purchased
          power
          divided by retail MWhs delivered) reflected in the 11.2 million MWhs of
          2007
          backlog is projected to be in the range of $4.50 to $5.50. This range excludes
          unrealized changes in fair value of non-hedging energy contracts and from
          hedge
          ineffectiveness because management does not predict the future impact of
          these
          unrealized changes. This range is higher than the retail gross margin per
          MWh
          for new customer contracts discussed below primarily due to more favorable
          customer and product mix.
  Management
          continues to expect Strategic Energy’s retail gross margin per MWh on new
          customer contracts entered into in 2006 to average from $3.00 to $4.00,
          excluding unrealized changes in fair value of non-hedging energy contracts
          and
          from hedge ineffectiveness. Management expects to realize additional retail
          gross margin on fixed price contracts of up to $0.50 per MWh over the life
          of
          the contracts. The additional expected margin is derived from management
          of the
          retail portfolio load requirements. These activities include benefits from
          financial transmission rights and auction revenue rights, short-term load
          balancing activities, short-term arbitrage activities and identifying and
          utilizing favorable transmission paths. Actual retail gross margin per
          MWh may
          differ from these estimates.
 57
 **GREAT
            PLAINS ENERGY RESULTS OF OPERATIONS**
  The
            following table summarizes Great Plains Energy’s comparative results of
            operations.


**Three
                Months Ended**
            
            **Year
                to Date****September
                30**
            
            **September
                30****2006**
            
            **2005**
            
            **2006**
            
            **2005**(millions)Operating
                revenues
            
            $
            818.5
            
            $
            782.9
            
            $
            2,019.8
            
            $
            1,959.7Fuel
            
            
            (77.2
            )
            
            (73.9
            )
            
            (180.8
            )
            
            (160.2
            )Purchased
                power
            
            
            (467.4
            )
            
            (414.8
            )
            
            (1,136.2
            )
            
            (1,059.8
            )Skill
                set realignment costs
            
            
            (1.4
            )
            
            -
            
            
            (15.9
            )
            
            -Other
                operating expenses
            
            
            (139.7
            )
            
            (126.9
            )
            
            (398.5
            )
            
            (393.4
            )Depreciation
                and amortization
            
            
            (40.4
            )
            
            (38.4
            )
            
            (118.6
            )
            
            (114.5
            )Gain
                (loss) on property
            
            
            -
            
            
            (3.4
            )
            
            0.6
            
            
            (1.9
            )Operating
                income
            
            
            92.4
            
            
            125.5
            
            
            170.4
            
            
            229.9Non-operating
                income (expenses)
            
            
            7.7
            
            
            (1.1
            )
            
            11.1
            
            
            (0.3
            )Interest
                charges
            
            
            (18.0
            )
            
            (17.9
            )
            
            (53.1
            )
            
            (53.8
            )Income
                taxes
            
            
            (26.5
            )
            
            (17.3
            )
            
            (36.7
            )
            
            (32.4
            )Minority
                interest in subsidiaries
            
            
            -
            
            
            -
            
            
            -
            
            
            (7.8
            )Loss
                from equity investments
            
            
            (0.4
            )
            
            (0.1
            )
            
            (1.0
            )
            
            (0.8
            )Income
                from continuing operations
            
            
            55.2
            
            
            89.1
            
            
            90.7
            
            
            134.8Discontinued
                operations
            
            
            -
            
            
            1.8
            
            
            -
            
            
            (1.8
            )Net
                income
            
            
            55.2
            
            
            90.9
            
            
            90.7
            
            
            133.0Preferred
                dividends
            
            
            (0.5
            )
            
            (0.5
            )
            
            (1.3
            )
            
            (1.3
            )Earnings
                available for common shareholders
            
            $
            54.7
            
            $
            90.4
            
            $
            89.4
            
            $
            131.7


Great
      Plains Energy’s earnings for the three months ended September 30, 2006,
      decreased to $54.7 million, or $0.68 per share, from $90.4 million, or $1.21
      per
      share, in the same period of 2005. Earnings year to date September 30,
      2006, decreased to $89.4 million, or $1.16 per share, from $131.7 million,
      or
      $1.77 per share, compared to the same period of 2005.


Consolidated
        KCP&L’s net income was consistent for the three months ended and increased
        $8.4 million year to date September 30, 2006, compared to the same periods
        in 2005. Three months ended and year to date September 30, 2006, was
        favorably impacted by lower purchased power expense and year to date was
        favorably impacted by higher wholesale revenues. The year to date increase
        was
        partially offset by costs related to skill set realignments and increased
        fuel
        expense. Both three months ended and year to date September 30, 2006, reflect
        higher income taxes due to higher pre-tax income in 2006 and a decrease in
        2005
        income taxes reflecting a reduction in KCP&L’s deferred tax balances as a
        result of a reduction in KCP&L’s composite tax rate.
  Strategic
        Energy had a net loss of $10.9 million for the three months ended and $17.6
        million year to date September 30, 2006, compared to net income of $18.1
        million
        and $34.6 million for the same periods in 2005, respectively. The net loss
        was
        primarily the result of the impact of $26.6 million and $64.5 million,
        respectively, in changes in fair value related to non-hedging energy contracts
        and from cash flow hedge ineffectiveness.
  **CONSOLIDATED
        KCP&L RESULTS OF OPERATIONS**
  The
        following discussion of consolidated KCP&L results of operations includes
        KCP&L, an integrated, regulated electric utility and HSS, an unregulated
        subsidiary of KCP&L. References to KCP&L, in the
 58
 discussion
        that follows, reflect only the operations of the utility. The following table
        summarizes consolidated KCP&L's comparative results of
        operations.


**Three
                  Months Ended**
              
              **Year
                  to Date****September
                  30**
              
              **September
                  30****2006**
              
              **2005**
              
              **2006**
              
              **2005**(millions)Operating
                  revenues
              
              $
              359.3
              
              $
              353.0
              
              $
              890.6
              
              $
              858.4Fuel
              
              
              (77.2
              )
              
              (73.9
              )
              
              (180.8
              )
              
              (160.2
              )Purchased
                  power
              
              
              (5.1
              )
              
              (28.3
              )
              
              (18.8
              )
              
              (56.6
              )Skill
                  set realignment costs
              
              
              (1.4
              )
              
              -
              
              
              (15.6
              )
              
              -Other
                  operating expenses
              
              
              (119.9
              )
              
              (110.4
              )
              
              (348.0
              )
              
              (345.0
              )Depreciation
                  and amortization
              
              
              (38.5
              )
              
              (36.7
              )
              
              (112.8
              )
              
              (109.8
              )Gain
                  (loss) on property
              
              
              -
              
              
              (3.6
              )
              
              0.6
              
              
              (3.1
              )Operating
                  income
              
              
              117.2
              
              
              100.1
              
              
              215.2
              
              
              183.7Non-operating
                  income (expenses)
              
              
              6.5
              
              
              0.4
              
              
              8.8
              
              
              9.4Interest
                  charges
              
              
              (15.6
              )
              
              (15.0
              )
              
              (45.5
              )
              
              (45.1
              )Income
                  taxes
              
              
              (39.3
              )
              
              (16.6
              )
              
              (61.9
              )
              
              (32.0
              )Minority
                  interest in subsidiaries
              
              
              -
              
              
              -
              
              
              -
              
              
              (7.8
              )Net
                  income
              
              $
              68.8
              
              $
              68.9
              
              $
              116.6
              
              $
              108.2
 **Consolidated
        KCP&L Sales Revenues and MWh Sales**
 **Three
                      Months Ended**
                  
                  
                  
                  **Year
                      to Date****September
                      30**
                  
                  %
                  
                  **September
                      30**
                  
                  %**2006**
                  **2005**
                  
                  **Change**
                  
                  **2006**
                  
                  **2005**
                  
                  **Change**Retail
                      revenues
                  (millions)
                  
                  
                  
                  
                  (millions)Residential
                  
                  $
                  140.2
                  
                  $
                  139.6
                  
                  
                  1
                  
                  $
                  310.4
                  
                  $
                  304.6
                  
                  
                  2Commercial
                  
                  
                  140.2
                  
                  
                  138.3
                  
                  
                  1
                  
                  
                  347.7
                  
                  
                  341.3
                  
                  
                  2Industrial
                  
                  
                  28.7
                  
                  
                  29.6
                  
                  
                  (3)
                  
                  
                  77.6
                  
                  
                  78.7
                  
                  
                  (1)Other
                      retail revenues
                  
                  
                  2.3
                  
                  
                  2.0
                  
                  
                  3
                  
                  
                  6.7
                  
                  
                  6.3
                  
                  
                  3Total
                      retail
                  
                  
                  311.4
                  
                  
                  309.5
                  
                  
                  1
                  
                  
                  742.4
                  
                  
                  730.9
                  
                  
                  2Wholesale
                      revenues
                  
                  
                  43.7
                  
                  
                  39.3
                  
                  
                  11
                  
                  
                  137.4
                  
                  
                  115.7
                  
                  
                  19Other
                      revenues
                  
                  
                  4.2
                  
                  
                  4.2
                  
                  
                  5
                  
                  
                  10.8
                  
                  
                  11.7
                  
                  
                  (7)KCP&L
                      electric revenues
                  
                  
                  359.3
                  
                  
                  353.0
                  
                  
                  2
                  
                  
                  890.6
                  
                  
                  858.3
                  
                  
                  4Subsidiary
                      revenues
                  
                  
                  -
                  
                  
                  -
                  
                  
                  -
                  
                  
                  -
                  
                  
                  0.1
                  
                  
                  NMConsolidated
                      KCP&L revenues
                  
                  $
                  359.3
                  
                  $
                  353.0
                  
                  
                  2
                  
                  $
                  890.6
                  
                  $
                  858.4
                  
                  
                  4


**Three
                  Months Ended**
              
              
              
              **Year
                  to Date****September
                  30**
              
              %
              
              **September
                  30**
              
              %**2006**
              **2005**
              
              **Change**
              
              **2006**
              
              **2005**
              
              **Change**Retail
                  MWh sales
              (thousands)
              
              
              
              
              (thousands)Residential
              
              
              1,769
              
              
              1,770
              
              
              -
              
              
              4,232
              
              
              4,173
              
              
              1Commercial
              
              
              2,117
              
              
              2,116
              
              
              -
              
              
              5,654
              
              
              5,577
              
              
              1Industrial
              
              
              579
              
              
              602
              
              
              (4)
              
              
              1,643
              
              
              1,660
              
              
              (1)Other
                  retail MWh sales
              
              
              21
              
              
              20
              
              
              5
              
              
              63
              
              
              60
              
              
              5Total
                  retail
              
              
              4,486
              
              
              4,508
              
              
              (1)
              
              
              11,592
              
              
              11,470
              
              
              1Wholesale
                  MWh Sales
              
              
              1,058
              
              
              918
              
              
              15
              
              
              3,240
              
              
              3,166
              
              
              2KCP&L
                  electric revenues
              
              
              5,544
              
              
              5,426
              
              
              2
              
              
              14,832
              
              
              14,636
              
              
              1




59


Retail
        revenues increased $1.9 million for the three months ended and $11.5 million
        year to date September 30, 2006, compared to the same periods in 2005. The
        year to date increase was primarily due to load growth, which consists of
        higher
        usage per customer and the addition of new customers.
  Wholesale
        revenues increased $4.4 million for the three months ended September 30,
        2006, compared to the same period in 2005 due to a 15% increase in wholesale
        MWh
        sales primarily due to greater plant availability. KCP&L’s coal base load
        equivalent availability factor increased to 88% for the three months ended
        compared to 82% for the same period in 2005. This increase in wholesale MWh
        sales was partially offset by a 25% decrease in the average market price
        per MWh
        to $37.99. Wholesale revenues increased $21.7 million year to date September
        30,
        2006, compared to the same period in 2005 primarily due to a 12% increase
        in the
        average market price per MWh to $45.09. Additionally, wholesale revenues
        for the
        three months ended and year to date September 30, 2006, include $2.5 million
        in
        litigation recoveries for the loss of use of Hawthorn No. 5 from a 1999 boiler
        explosion.
  **Consolidated
        KCP&L Fuel and Purchased Power**


**Three
                  Months Ended**
              
              
              **Year
                  to Date****September
                  30**
              **%**
              
              **September
                  30**
              
              %**2006**
              
              **2005**
              
              **Change**
              
              **2006**
              
              **2005**
              
              **Change**Net
                  MWhs Generated by Fuel Type
              
              (thousands)
              
              
              
              (thousands)Coal
              
              
              4,067
              
              
              3,760
              
              
              8
              
              
              10,945
              
              
              11,177
              
              
              (2)Nuclear
              
              
              1,216
              
              
              1,216
              
              
              -
              
              
              3,641
              
              
              2,910
              
              
              25Natural
                  gas and oil
              
              
              346
              
              
              356
              
              
              (3)
              
              
              522
              
              
              456
              
              
              15Wind
              
              
              24
              
              
              -
              
              
              -
              
              
              24
              
              
              -
              
              
              -Total
                  Generation
              
              
              5,653
              
              
              5,332
              
              
              6
              
              
              15,132
              
              
              14,543
              
              
              4


Fuel
      expense increased $3.3 million for the three months ended and $20.6 million
      year
      to date September 30, 2006, compared to the same periods in 2005 due to the
      6% and 4% increases, respectively, in MWhs generated and increased coal and
      coal
      transportation costs offset by $3.7 million in Hawthorn No. 5 litigation
      recoveries. KCP&L’s current coal and coal transportation contracts,
      including higher tariff rates being charged by Union Pacific, were entered
      into
      at higher average prices than related contracts in the same periods of 2005.
      KCP&L has filed a rate case complaint against Union Pacific with the STB and
      until the case is finalized, KCP&L is paying the tariff rates subject to
      refund. See Note 15 to the consolidated financial statements for more
      information.


Purchased
        power expense decreased $23.2 million for the three months ended and $37.8
        million year to date September 30, 2006, compared to the same periods in
        2005.
        The decreases were primarily due to recording $10.8 million in Hawthorn No.
        5
        litigation recoveries as a reduction in purchased power expense and a greater
        than 50% reduction in MWhs purchased during both periods. The reduction in
        MWhs
        purchased was due to uneconomical purchased power prices and increased net
        MWhs
        generated. In addition, capacity payments decreased $5.7 million year to
        date
        September 30, 2006, due to the expiration of two large contracts in the second
        quarter of 2005. KCP&L entered into new capacity contracts in June
        2006.
  In
        August
        2005, Hawthorn No. 5’s generator step-up transformer (GSU) failed. A spare GSU
        was installed in September 2005; however, the size of the spare GSU limited
        the
        net capacity of the unit to 500 MW. During June 2006, a new GSU was installed
        at
        Hawthorn No. 5 returning its net capacity to 563 MW. The outage for the
        installation lasted 14 days.
 60
 **Consolidated
        KCP&L Other Operating Expenses*****(including other
        operating, maintenance and general taxes)***
 Consolidated
        KCP&L's other operating expenses increased $9.5 million for the three months
        ended September 30, 2006, compared to the same period in 2005. This increase
        reflects a decrease in other operating expenses in the three months ended
        September 30, 2005, due to the regulatory accounting treatment of pension
        costs
        effective January 1, 2005, which reduced pension expense by $5.6 million
        related
        to the first six months of 2005.
  **Consolidated
        KCP&L Skill Set Realignment and Pension Settlement
        Charges**
 In
        2005
        and early 2006, management undertook a process to assess, improve and reposition
        the skill sets of employees for implementation of the comprehensive energy
        plan.
        KCP&L recorded $9.4 million year to date September 30, 2006, related to
        this workforce realignment process reflecting severance, benefits and related
        payroll taxes provided by KCP&L to employees. Management has been filling
        positions with the specific skill sets and talent needed to achieve KCP&L’s
        goals. Management believes that the realignment allows for optimization of
        employee levels and avoids future additional expense. For
        the
        three months ended and year to date September 30, 2006, KCP&L incurred $2.0
        million and $9.3 million of pension settlement charges associated with the
        realignment resulting in $1.4 million and $6.2 million, respectively, of
        expense
        recorded after amounts capitalized and billed to joint owners of power plants.
        The pension settlement charges were a result of the number of employees retiring
        and selecting the lump-sum payment option.
  KCP&L
        anticipates recording additional expense related to pension settlement charges
        after amounts capitalized and billed to joint owners of power plants of
        approximately $8 million during the fourth quarter of 2006 associated with
        its
        management and union pension plans as a result of additional employees retiring
        and selecting the lump-sum payment option. The total amount of 2006 pension
        settlement charges related to the workforce realignments and other retirements
        will be determined in the fourth quarter after the year-end of the pension
        plans. In the second quarter of 2006, KCP&L requested regulatory accounting
        treatment from MPSC and KCC to defer pension settlement charges, effective
        from
        January 1, 2006, and amortize the deferred amount over a five-year period
        to be
        established in the rate proceeding following the current 2006 proceedings.
        In
        the third quarter of 2006, KCP&L reached a negotiated settlement with
        certain parties in the Kansas rate proceeding and filed a Stipulation and
        Agreement with KCC that includes this requested regulatory treatment for
        pension
        costs. At September 30, 2006, no amounts have been deferred pending the outcome
        of these requests.
  **Potential
        Future Pension Settlement Charges**
 Through
        2010, approximately 21% of KCP&L’s current employees are eligible to retire
        with full pension benefits. The timing and number of employees retiring and
        selecting the lump-sum payment option could result in additional settlement
        charges that could materially affect KCP&L’s results of operations after
        2006. If KCP&L receives its requested regulatory treatment, pension
        settlement charges would be deferred and amortized over five years beginning
        with the effective date of rates approved in KCP&L’s next rate
        case.
  **Consolidated
        KCP&L Income Taxes**
 Consolidated
        KCP&L's income taxes increased $22.7 million for the three months ended and
        $29.9 million year to date September 30, 2006, compared to the same periods
        of 2005 due to an increase in pre-tax income in 2006 and a decrease in 2005
        of
        $11.7 million due to the impact of a lower composite tax rate on KCP&L’s
        deferred tax balances resulting from the favorable impact of sustained audit
        positions.
 61
 **STRATEGIC
        ENERGY RESULTS OF OPERATIONS**
  The
        following table summarizes Strategic Energy's comparative results of
        operations.


**Three
                    Months Ended**
                
                **Year
                    to Date****September
                    30**
                
                **September
                    30****2006**
                
                **2005**
                
                **2006**
                
                **2005**(millions)Operating
                    revenues
                
                $
                459.2
                
                $
                429.9
                
                $
                1,129.2
                
                $
                1,101.3Purchased
                    power
                
                
                (462.3
                )
                
                (386.5
                )
                
                (1,117.4
                )
                
                (1,003.2
                )Other
                    operating expenses
                
                
                (16.6
                )
                
                (14.3
                )
                
                (42.5
                )
                
                (37.6
                )Depreciation
                    and amortization
                
                
                (1.9
                )
                
                (1.6
                )
                
                (5.8
                )
                
                (4.6
                )Operating
                    income (loss)
                
                
                (21.6
                )
                
                27.5
                
                
                (36.5
                )
                
                55.9Non-operating
                    income (expenses)
                
                
                1.1
                
                
                0.7
                
                
                3.0
                
                
                1.8Interest
                    charges
                
                
                (0.6
                )
                
                (0.7
                )
                
                (1.5
                )
                
                (2.2
                )Income
                    taxes
                
                
                10.2
                
                
                (9.4
                )
                
                17.4
                
                
                (20.9
                )Net
                    income (loss)
                
                $
                (10.9
                )
                $
                18.1
                
                $
                (17.6
                )
                $
                34.6
 Retail
          MWhs delivered decreased 12% to 4.8 million for the three months ended
          and 18%
          to 12.4 million year to date September 30, 2006, compared to the same
          periods in 2005 due to the effect of market conditions in midwestern states
          and
          competition in other markets where Strategic Energy serves customers. The
          average retail gross margin per MWh declined to $(0.79) for the three months
          ended and $0.78 year to date September 30, 2006, compared to $7.84 and
          $6.29 for the same periods in 2005. The decline in the average retail gross
          margin per MWh for the three months ended and year to date was primarily
          due to
          the impact of $26.6 million and $64.5 million, respectively, in changes
          in fair
          value related to non-hedging energy contracts and from cash flow hedge
          ineffectiveness.
 **Three
                      Months Ended**
                  
                  **Year
                      to Date****September
                      30**
                  
                  **September
                      30****2006**
                  
                  **2005**
                  
                  **2006**
                  
                  **2005**Average
                      retail gross margin per MWh
                  
                  $
                  (0.79)
                  
                  $
                  7.84
                  
                  $
                  0.78
                  
                  $
                  6.29Change
                      in fair value related to non-hedging energycontracts
                      and from cash flow hedge ineffectiveness
                  
                  
                  5.60
                  
                  
                  (3.36)
                  
                  
                  5.21
                  
                  
                  (1.71)Average
                      retail gross margin per MWh withoutfair
                      value impacts
                  
                  $
                  4.81
                  
                  $
                  4.48
                  
                  $
                  5.99
                  
                  $
                  4.58
 Average
          retail gross margin per MWh without fair value impacts is a non-GAAP financial
          measure that differs from GAAP because it excludes the impact of unrealized
          fair
          value gains or losses. Management and the Board of Directors use this as
          a
          measurement of Strategic Energy’s realized retail gross margin per delivered
          MWh, which are settled upon delivery at contracted prices. Fair value impacts
          result from changes in fair value of non-hedging energy contracts and from
          hedge
          ineffectiveness associated with MWhs under contract but not yet delivered.
          Due
          to their non-cash nature and volatility during periods prior to delivery,
          management believes excluding these fair value impacts results in a measure
          of
          retail gross margin per MWh that is more representative of contracted
          prices.
 As
            detailed in the table above, average retail gross margin per MWh without
            the
            impact of unrealized fair value gains and losses increased to $4.81 for
            the
            three months ended and $5.99 year to date September 30, 2006, compared to
            $4.48 and $4.58 for the same periods in 2005. The increases for the three
            months
            ended and year to date September 30, 2006, were primarily due to the
            net impact
            of SECA recoveries and charges as compared to the same periods of 2005.
            The net
            SECA impact was
 62
 insignificant
            for the three months ended and increased average retail gross margin
            per MWh
            year to date September 30, 2006, by $0.08. During 2005, the net SECA
            impact
            decreased average retail gross margin per MWh by $0.18 and $0.54, respectively.
            Strategic Energy recorded SECA charges in excess of recoveries of $1.0
            million
            for the three months ended and $8.2 million year to date September 30,
            2005. Additional impacts to the average retail gross margin per MWh included
            increases primarily due to the management of retail portfolio load requirements,
            favorable product mix and settlements of supplier contracts. The increases
            were
            partially offset by higher customer acquisition costs in 2006. Additionally,
            the
            year to date increase was partially offset by a $1.2 million reduction
            of a
            gross receipts tax contingency in the first quarter of 2005.
  **Strategic
            Energy Purchased Power**
 Purchased
            power is the cost component of Strategic Energy’s average retail gross margin.
            Strategic Energy purchases electricity from power suppliers based on
            forecasted
            peak demand for its retail customers. Actual customer demand does not
            always
            equate to the volume purchased based on forecasted peak demand. Consequently,
            Strategic Energy makes short-term power purchases in the wholesale market
            when
            necessary to meet actual customer requirements. Strategic Energy also
            sells any
            excess retail electricity supply over actual customer requirements back
            into the
            wholesale market. These sales occur on many contracts, are usually short-term
            power sales (day ahead) and typically settle within the reporting period.
            Excess
            retail electricity supply sales also include long-term and short-term
            forward
            physical sales to wholesale counterparties, which are accounted for on
            a
            mark-to-market basis. Strategic Energy typically executes these transactions
            to
            manage basis and credit risks. The proceeds from excess retail supply
            sales are
            recorded as a reduction of purchased power, as they do not represent
            the
            quantity of electricity consumed by Strategic Energy’s customers. The amount of
            excess retail supply sales that reduced purchased power was $1.6 million
            for the
            three months ended and $67.0 million year to date September 30, 2006,
            compared to $48.1 million and $91.8 million for the same periods of 2005.
            Additionally, in certain markets, load-serving entities are required
            to sell to
            and purchase power from a RTO/ISO rather than directly transact with
            suppliers
            and end use customers. The sale and purchase activity related to these
            certain
            RTO/ISO markets is reflected on a net basis in Strategic Energy’s purchased
            power.
  Strategic
            Energy utilizes derivative instruments, including forward physical delivery
            contracts, in the procurement of electricity. Purchased power is also
            impacted
            by the net change in fair value related to non-hedging energy contracts
            and from
            cash flow hedge ineffectiveness. Net changes in fair value increased
            purchased
            power expenses by $26.6 million for the three months ended and $64.5
            million
            year to date September 30, 2006, compared to reductions of $18.2 million
            and $26.0 million for the same periods in 2005. The increase in purchased
            power
            expense for the three months ended and year to date September 30, 2006,
            is a
            result of decreases in the forward market prices for power combined with
            Strategic Energy designating more derivative instruments as cash flow
            hedges
            that no longer quality for the NPNS election. See Note 18 to the consolidated
            financial statements for more information.
  **OTHER
            NON-REGULATED ACTIVITIES**
  Other
            non-regulated activities include the impact of investments in affordable
            housing
            limited partnerships discussed below. Additionally, other non-regulated
            net loss
            from continuing operations increased $5.1 million for the three months
            ended and
            $1.6 million year to date September 30, 2006, compared to the same periods
            in
            2005. The three months ended and year to date September 30, 2005, net
            loss was
            favorably impacted by a $5.0 million net release of tax contingency reserves.
            This 2005 favorable impact was mostly offset year to date September 30,
            2006,
            due to lower operating expenses as a result of Services transferring
            approximately 80% of its employees to KCP&L in the third quarter of 2005 to
            better align resources with the operating business.
 63
 **Investment
            in Affordable Housing Limited Partnerships - KLT
            Investments**
 KLT
            Investments Inc.’s (KLT Investments) net income for the three months ended
            September 30, 2006, totaled $1.2 million (including no after-tax reduction
            in its affordable housing investment) compared to net income of $1.9
            million for
            the three months ended September 30, 2005 (including an after tax reduction
            of $0.9 million in its affordable housing investment). KLT Investments’ net
            income included accrued tax credits related to its investments in affordable
            housing limited partnerships of $2.2 million and $3.7 million for the
            three
            months ended September 30, 2006 and 2005, respectively. Net income year to
            date September 30, 2006, totaled $3.3 million (including an after tax
            reduction of $0.7 million in its affordable housing investment) compared
            to net
            income of $2.4 million year to date September 30, 2005 (including an after
            tax reduction of $6.2 million in its affordable housing investment).
            KLT
            Investments’ net income included accrued tax credits of $6.8 million and $11.5
            million year to date September 30, 2006 and 2005,
            respectively.
  At
            September 30, 2006, KLT Investments had $24.5 million in affordable housing
            limited partnerships. Approximately 63% 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 sales of the properties. For most investments,
            tax
            credits are received over ten years. A change in accounting principle
            relating
            to investments made after May 19, 1995, requires the use of the equity
            method when a company owns more than 5% in a limited partnership investment.
            Of
            the investments recorded at cost, $15.1 million exceed this 5% level
            but were
            made before May 19, 1995. Management does not anticipate making
            additional investments in affordable housing limited partnerships at
            this
            time.
  On
            a
            quarterly basis, KLT Investments compares the cost of properties accounted
            for
            by the cost method to the total of projected residual value of the properties
            and remaining tax credits to be received. Based on the latest comparison,
            KLT
            Investments did not reduce its investments in affordable housing limited
            partnerships for the three months ended and recorded a $1.2 million reduction
            year to date September 30, 2006, compared to $1.4 million and $10.0 million
            for the three months ended and year to date September 30, 2005. Pre-tax
            reductions in affordable housing investments are estimated to be insignificant
            for the remainder of 2006 and $2 million for 2007. 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.
            Even after
            these estimated reductions, net income from the investments in affordable
            housing is expected to be positive for 2006 through 2008. The properties
            underlying the partnership investment are subject to certain risks inherent
            in
            real estate ownership and management.
  **GREAT
            PLAINS ENERGY AND CONSOLIDATED KCP&L****Significant Balance
            Sheet Changes****(September 30, 2006 compared to December 31,
            2005)**
  ·
                Great
                    Plains Energy’s and consolidated KCP&L’s receivables increased $96.5
                    million and $52.0 million, respectively. KCP&L’s receivables increased
                    $23.6 million due to seasonal increases from higher summer tariff
                    rates
                    and usage and $22.4 million due to additional receivables from
                    joint
                    owners of comprehensive energy plan projects. Strategic Energy’s
                    receivables increased $47.0 million due to seasonal increases
                    in MWh
                    deliveries and more customers billed on higher index-based
                    rates.  ·
                Great
                    Plains Energy’s and consolidated KCP&L’s fuel inventories increased
                    $8.2 million primarily due to a $7.8 million increase in coal
                    inventory as
                    a result of planned plant outages, improved railroad performance
                    in
                    delivering coal and an increase in coal and coal transportation
                    costs.  64
  ·
                Great
                    Plains Energy’s combined deferred income taxes - current assets and
                    deferred income taxes - current liabilities changed from a liability
                    of
                    $1.3 million at December 31, 2005, to an asset of $46.3 million.
                    The
                    temporary differences due to the change in the fair value of
                    Strategic
                    Energy’s energy-related derivative instruments increased the asset $39.0
                    million. Consolidated KCP&L’s deferred income taxes - current assets
                    increased $2.3 million primarily due to the timing of the Wolf
                    Creek
                    refueling outage.  ·
                Great
                    Plains Energy’s derivative instruments, including current and deferred
                    assets and liabilities, decreased $191.8 million from a net asset
                    at
                    December 31, 2005, to a net liability at September 30, 2006,
                    primarily due
                    to a $191.4 million decrease in the fair value of Strategic Energy’s
                    energy-related derivative instruments as a result of decreases
                    in the
                    forward market prices for power combined with Strategic Energy
                    designating
                    more derivative instruments as cash flow hedges that no longer
                    quality for
                    the NPNS election.  ·
                Great
                    Plains Energy’s and consolidated KCP&L’s combined electric utility
                    plant and construction work in progress increased $323.7 million
                    primarily due to $232.2 million related to KCP&L’s comprehensive
                    energy plan, including $161.2 million for wind generation, $41.0
                    million
                    for environmental upgrades and $30.0 million related to Iatan
                    No. 2.
                    Additionally, purchases of automated meter reading equipment
                    for $13.8
                    million and rail cars for $23.4 million as well as $10.2 million
                    in
                    upgrades to a transmission line increased electric utility
                    plant.  ·
                Great
                    Plains Energy’s and consolidated KCP&L’s regulatory assets increased
                    $27.5 million primarily due to the regulatory accounting treatment
                    for pension expense and the change in Wolf Creek depreciable
                    life for
                    regulatory purposes in accordance with MPSC and KCC orders, which
                    combined
                    increased the asset $35.4 million. This increase was partially
                    offset by
                    an $8.2 million reduction in the regulatory asset related to
                    the asset
                    retirement obligation for decommissioning of Wolf Creek as a
                    result of
                    filing for a new 40-year operating
                    license.  ·
                Great
                    Plains Energy’s and consolidated KCP&L’s prepaid pension costs
                    decreased $27.5 million and $27.2 million, respectively, due
                    to 2006
                    pension expense accruals, including pension settlement charges
                    of $8.6
                    million, in excess of contributions.  ·
                Great
                    Plains Energy’s and consolidated KCP&L’s commercial paper increased
                    $48.7 million primarily to support expenditures related to the
                    comprehensive energy plan.  ·
                Great
                    Plains Energy’s and consolidated KCP&L’s accrued taxes increased $60.3
                    million and $71.9 million, respectively, primarily due to the
                    timing of
                    annual property tax payments and income taxes currently payable
                    due to
                    year to date September 30, 2006, taxable income, partially offset
                    by a
                    third quarter 2006 income tax payment.  ·
                Great
                    Plains Energy’s and consolidated KCP&L’s asset retirement obligations
                    decreased $54.8 million due to a $65.0 million decrease for the
                    decommissioning of Wolf Creek as a result of filing for a new
                    operating
                    license. This decrease was partially offset by a $3.1 million
                    addition for
                    the Spearville Wind Energy Facility and $7.1 million for
                    accretion.  ·
                Great
                    Plains Energy’s and consolidated KCP&L’s regulatory liabilities
                    increased $37.9 million due to a $31.0 million increase in KCP&L’s
                    regulatory liability related to the asset retirement obligation
                    for
                    decommissioning of Wolf Creek as a result of filing for a new
                    operating
                    license and amortization of $7.7 million related to the change
                    in Wolf
                    Creek depreciable life for regulatory purposes in accordance
                    with an MPSC
                    order.  65
  ·
                Great
                    Plains Energy’s accumulated other comprehensive loss increased $72.1
                    million primarily due to changes in the fair value of Strategic
                    Energy’s
                    energy related derivative instruments resulting from decreases
                    in the
                    forward market prices for power combined with Strategic Energy
                    designating
                    more derivative instruments as cash flow hedges that no longer
                    quality for
                    the NPNS election.  ·
                Great
                    Plains Energy’s long-term debt decreased $388.6 million primarily to
                    reflect FELINE PRIDES Senior Notes and consolidated KCP&L’s $225.0
                    million 6.00% Senior Notes as current maturities. Current maturities
                    of
                    long-term debt for the respective companies increased as a result
                    of these
                    classifications.  **CAPITAL
            REQUIREMENTS AND LIQUIDITY**
  Great
            Plains Energy operates through its subsidiaries and has no material assets
            other
            than the stock of its subsidiaries. Great Plains Energy’s ability to make
            payments on its debt securities and its ability to pay dividends is dependent
            on
            its receipt of dividends or other distributions from its subsidiaries
            and
            proceeds from the issuance of its securities.
  Great
            Plains Energy’s capital requirements are principally comprised of KCP&L’s
            utility construction and other capital expenditures, debt maturities
            and credit
            support provided to Strategic Energy. These items as well as additional
            cash and
            capital requirements for the companies are discussed below.
  Great
            Plains Energy's liquid resources at September 30, 2006, consisted of
            $59.3
            million of cash and cash equivalents on hand, including $0.4 million
            at
            consolidated KCP&L, and $858.0 million of unused bank lines of credit. The
            unused lines consisted of $319.4 million from KCP&L's revolving credit
            facility, $64.1 million from Strategic Energy’s revolving credit facility and
            $474.5 million from Great Plains Energy's revolving credit facility.
            See the
            Debt Agreements section below for more information on these agreements.
            At
            October 31, 2006, Great Plains Energy's unused bank lines of credit increased
            $35.8 million from the amount at September 30, 2006, due to a $16.2 million
            increase at consolidated KCP&L primarily due to the repayment of commercial
            paper and a $19.6 million increase due to less letters of credit outstanding.
  KCP&L
            currently expects to fund its comprehensive energy plan from a combination
            of
            internal and external sources including, but not limited to, contributions
            from
            rate increases, capital contributions to KCP&L from Great Plains Energy's
            proceeds of equity issuances, including FELINE PRIDES equity to be issued
            in
            2007, new short and long-term debt financing and internally generated
            funds.
  KCP&L
            expects to meet day-to-day cash flow requirements including interest
            payments,
            construction requirements (excluding its comprehensive energy plan),
            dividends
            to Great Plains Energy and pension benefit plan funding requirements,
            discussed
            below, with internally generated funds. KCP&L 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 cash flow requirements including interest
            payments, credit support fees, capital expenditures and dividends to
            Great
            Plains Energy with internally generated funds. Strategic Energy might
            not be
            able to meet these requirements with internally generated funds
 66
 because
            of the effect of inflation on operating expenses, the level of MWh sales,
            seasonal working capital requirements, commodity-price volatility and
            the
            effects of counterparty non-performance.
  **Cash
            Flows from Operating Activities**
 Great
            Plains Energy and consolidated KCP&L generated positive cash flows from
            operating activities for the periods presented. The decrease in cash
            flows from
            operating activities for Great Plains Energy and consolidated KCP&L year to
            date September 30, 2006, compared to the same period in 2005 was primarily
            due
            to KCP&L’s sales of SO2emission allowances during 2005 resulting
            in proceeds of $31.0 million. The timing of the Wolf Creek outage affects
            the
            refueling outage accrual, deferred income taxes and amortization of nuclear
            fuel. Other changes in working capital detailed in Note 4 to the consolidated
            financial statements also impacted operating cash flows. The individual
            components of working capital vary with normal business cycles and operations.
  **Cash
            Flows from Investing Activities**
 Great
            Plains Energy’s and consolidated KCP&L’s cash used for investing activities
            varies with the timing of utility capital expenditures and purchases
            of
            investments and nonutility property. Investing activities are offset
            by the
            proceeds from the sale of properties and insurance recoveries. Great
            Plains
            Energy’s and consolidated KCP&L’s utility capital expenditures increased
            $110.5 million and $105.7 million, respectively, year to date September
            30,
            2006, compared to the same period of 2005 primarily due to KCP&L’s cash
            utility capital expenditures including $175.1 million related to KCP&L’s
            comprehensive energy plan, $10.2 million to upgrade a transmission line,
            $13.8
            million to purchase automated meter reading equipment and $23.4 million
            to
            purchase rail cars. KCP&L’s year to date September 30, 2005, capital
            expenditures included the exercise of its early termination option in
            the
            combustion turbine synthetic lease to purchase the leased property for
            $154.0
            million. Additionally in 2006, KCP&L received $15.8 million of litigation
            recoveries related to Hawthorn No. 5, which were partially offset by
            $10.0
            million of insurance recoveries received in 2005.
  **Cash
            Flows from Financing Activities**
 The
            change in Great Plains Energy’s cash flows from financing activities year to
            date September 30, 2006, compared to the same period in 2005 reflects
            Great Plains Energy’s May 2006 proceeds of $144.3 million from the issuance of
            5.2 million shares of common stock at $27.50 per share. Fees related
            to this
            issuance were $5.2 million. Great Plains Energy used the proceeds to
            make a
            $134.6 million equity contribution to KCP&L. Additionally, Great Plains
            Energy and consolidated KCP&L’s net cash from financing activities in 2006
            increased due to an increase in KCP&L’s commercial paper primarily to
            support expenditures related to the comprehensive energy plan. Consolidated
            KCP&L’s net cash from financing activities also increased due to an $18.7
            million decrease in dividends paid to Great Plains Energy.
  **Significant
            Financing Activities**
 Great
            Plains Energy filed a shelf registration statement with the SEC in May
            2006
            relating to Senior Debt Securities, Subordinated Debt Securities, shares
            of
            Common Stock, Warrants, Stock Purchase Contracts and Stock Purchase Units.
            In
            May 2006, Great Plains Energy issued 5.2 million shares of common stock
            at
            $27.50 per share under this registration statement with $144.3 million in
            gross proceeds and issuance costs of $5.2 million.
  In
            May
            2006, Great Plains Energy also entered into a forward sale agreement
            with
            Merrill Lynch Financial Markets, Inc. (forward purchaser) for 1.8 million
            shares
            of Great Plains Energy common stock. The forward purchaser borrowed and
            sold the
            same number of shares of Great Plains Energy’s common stock to hedge its
            obligations under the forward sale agreement. Great Plains Energy did
            not
            initially receive any proceeds from the sale of common stock shares by
            the
            forward purchaser. The forward sale agreement provides for a settlement
            date or
            dates to be specified at Great Plains Energy’s discretion, subject to certain
            exceptions, no later than May 23, 2007. Subject to the provisions of
            the
 67
 forward
            sale agreement, Great Plains Energy will receive an amount equal to $26.6062
            per
            share, plus interest based on the federal funds rate less a spread and
            less
            certain scheduled decreases if Great Plains Energy elects to physically
            settle
            the forward sale agreement by delivering solely shares of common stock.
            In most
            circumstances, Great Plains Energy also has the right, in lieu of physical
            settlement, to elect cash or net physical settlement.
  Great
            Plains Energy’s FELINE PRIDES senior notes must be remarketed by February 16,
            2007. During October 2006, Great Plains Energy entered into a T-Lock
            to hedge
            against interest rate fluctuations on the U.S. Treasury rate component
            of $77.6
            million of the FELINE PRIDES senior notes. The T-Lock will be settled
            simultaneously with the issuance of the long-term fixed rate debt and
            is
            accounted for as a cash flow hedge.
  KCP&L’s
            long-term financing activities are subject to the authorization of the
            MPSC. In
            November 2005, the MPSC authorized KCP&L to issue up to $635.0 million of
            long-term debt and to enter into interest rate hedging instruments in
            connection
            with such debt through December 31, 2009. KCP&L utilized $250.0 million of
            this amount with the issuance of its 6.05% unsecured senior notes maturing
            in
            2035 leaving $385.0 million of authorization remaining. Under stipulations
            with
            the MPSC and KCC, Great Plains Energy and KCP&L maintain common equity at
            not less than 30% and 35%, respectively, of total capitalization.
  During
            2006, FERC authorized KCP&L to issue up to a total of $600.0 million in
            outstanding short-term debt instruments through February 2008. The
            authorizations are subject to four restrictions: (i) proceeds of debt
            backed by
            utility assets must be used for utility purposes; (ii) if any utility
            assets
            that secure authorized debt are divested or spun off, the debt must follow
            the
            assets and also be divested or spun off; (iii) if any proceeds of the
            authorized
            debt are used for non-utility purposes, the debt must follow the non-utility
            assets (specifically, if the non-utility assets are divested or spun
            off, then a
            proportionate share of the debt must follow the divested or spun off
            non-utility
            assets); and (iv) if utility assets financed by the authorized short-term
            debt
            are divested or spun off to another entity, a proportionate share of
            the debt
            must also be divested or spun off.
  During
            2006, KCP&L entered into two Forward Starting Swaps with a combined notional
            principal amount of $225.0 million to effectively remove most of the
            interest
            rate and credit spread uncertainty with respect to the anticipated refinancing
            of KCP&L’s $225.0 million senior notes that mature in March 2007. See Note
            18 to the consolidated financial statements for more information.
  In
            2006,
            KCP&L completed an exchange of $250.0 million privately placed notes for
            $250.0 million registered 6.05% unsecured senior notes maturing in 2035
            to
            fulfill its obligations under a 2005 registration rights agreement.
  **Debt
            Agreements**
 During
            2006, Great Plains Energy entered into a five-year $600 million revolving
            credit
            facility with a group of banks. The facility replaced a $550 million
            revolving
            credit facility with a group of banks. A default by Great Plains Energy
            or any
            of its significant subsidiaries on other indebtedness totaling more than
            $25.0
            million is a default under the facility. Under the terms of this agreement,
            Great Plains Energy is required to maintain a consolidated indebtedness
            to
            consolidated capitalization ratio, as defined in the agreement, not greater
            than
            0.65 to 1.00 at all times. At September 30, 2006, the Company was in
            compliance
            with this covenant. At September 30, 2006, Great Plains Energy had no
            cash
            borrowings and had issued letters of credit totaling $125.5 million under
            the credit facility as credit support for Strategic Energy.
  During
            2006, KCP&L entered into a five-year $400 million revolving credit facility
            with a group of banks to provide support for its issuance of commercial
            paper
            and other general corporate purposes. Great
 68
 Plains
            Energy and KCP&L may transfer and re-transfer up to $200 million of unused
            lender commitments between Great Plains Energy’s and KCP&L’s facilities, so
            long as the aggregate lender commitments under either facility does not
            exceed
            $600 million and the aggregate lender commitments under both facilities
            does not
            exceed $1 billion. The facility replaced a $250 million revolving credit
            facility with a group of banks. A default by KCP&L on other indebtedness
            totaling more than $25.0 million is a default under the facility. Under
            the
            terms of the agreement, KCP&L is required to maintain a consolidated
            indebtedness to consolidated capitalization ratio, as defined in the
            agreement,
            not greater than 0.65 to 1.00 at all times. At September 30, 2006, KCP&L was
            in compliance with this covenant. At September 30, 2006, KCP&L had $80.6
            million of commercial paper outstanding, at a weighted-average interest
            rate of
            5.48% and no cash borrowings under the facility.
  Strategic
            Energy has a $135 million revolving credit facility with a group of banks
            that
            expires in June 2009. So long as Strategic Energy is in compliance with
            the
            agreement, it may increase this amount by up to $15 million by increasing
            the
            commitment of one or more lenders that have agreed to such increase,
            or by
            adding one or more lenders with the consent of the administrative agent.
            In
            October 2006, Great Plains Energy, as permitted by the terms of the agreement,
            requested and received a reduction in its guarantee of this facility
            to a
            maximum amount of $12.5 million and has guaranteed the $12.5 million.
            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 on other indebtedness, as defined in the facility, totaling more
            than
            $7.5 million is a default under the facility. Under the terms of this
            agreement,
            Strategic Energy is required to maintain a minimum net worth of $75.0
            million, a
            minimum fixed charge coverage ratio of at least 1.05 to 1.00 and a minimum
            debt
            service coverage ratio of at least 4.00 to 1.00, as those terms are defined
            in
            the agreement. In addition, under the terms of this agreement, Strategic
            Energy
            is required to maintain a maximum funded indebtedness to EBITDA ratio,
            as
            defined in the agreement, of 3.00 to 1.00, on a quarterly basis through
            June 30, 2007, and 2.75 to 1.00 thereafter. In the event of a breach of one
            or more of these four covenants, so long as no other default has occurred,
            Great
            Plains Energy may cure the breach through a cash infusion, a guarantee
            increase
            or a combination of the two. At September 30, 2006, Strategic Energy
            was in
            compliance with these covenants. At September 30, 2006, $70.9 million in
            letters of credit had been issued and there were no cash borrowings under
            the
            agreement.
  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 September 30, 2006, KLT Investments had
            $1.7 million in outstanding notes, including current
            maturities.
  **KCP&L
            Projected Utility Capital Expenditures**
 KCP&L's
            utility capital expenditure plan is subject to continual review and change
            and
            includes utility capital expenditures related to KCP&L's comprehensive
            energy plan for environmental investments and new capacity. Although
            control
            budgets and workflow scheduling are not complete, developing market conditions
            indicate overall cost estimates of the comprehensive energy plan are
            currently
            expected to be about 20% above the estimate in the 2005 Form 10-K. The
            primary
            drivers are increases in materials and labor costs due to a substantial
            increase
            in market demand for these materials and services. Actual costs could
            be
            materially different than the current estimates; however, management
            is
            confident that project costs will be competitive with other similar projects
            built in the same timeframe.
 69
 **Pensions**
 The
            Company maintains defined benefit plans for substantially all employees
            of
            KCP&L, Services and WCNOC and incurs significant costs in providing the
            plans, with the majority incurred by KCP&L. At a minimum, plans are funded
            on an actuarial basis to provide assets sufficient to meet benefits to
            be paid
            to plan participants consistent with the funding requirements of the
            Employee
            Retirement Income Security Act of 1974 (ERISA) and further contributions
            may be
            made when deemed financially advantageous.
  Year
            to
            date September 30, 2006, the Company has contributed $18.6 million to
            the plans
            and expects to contribute an additional $1.2 million during the remainder
            of
            2006, all of which will be paid by KCP&L. Management believes the Company
            has adequate access to capital resources through cash flows from operations
            or
            through existing lines of credit to support the funding requirements.
  Participants
            in the plans may request a lump-sum cash payment upon termination of
            their
            employment. A change in payment assumptions, including the amount and
            timing of
            lump-sum distributions, 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.
  The
            Pension Protection Act of 2006, signed into law on August 17, 2006, alters
            the
            manner in which pension plan assets and liabilities are valued for purposes
            of
            calculating required pension contributions and changes the timing in
            which
            required contributions to underfunded plans are made. The funding rules,
            which
            become effective in 2008, could significantly affect the Company’s funding
            requirements.
  **Strategic
            Energy Supplier Concentration and Credit**
 Strategic
            Energy enters into forward physical contracts with multiple suppliers.
            At
            September 30, 2006, Strategic Energy’s five largest suppliers under forward
            supply contracts represented 70% of the total future dollar committed
            purchases.
            Four of Strategic Energy’s five largest suppliers, or their guarantors, are
            rated investment grade; and the non-investment grade rated supplier
            collateralizes its position with Strategic Energy. In the event of supplier
            non-delivery or default, Strategic Energy’s results of operations could be
            affected to the extent the cost of replacement power exceeded the combination
            of
            the contracted price with the supplier and the amount of collateral held
            by
            Strategic Energy to mitigate its credit risk with the supplier. In addition
            to
            the collateral, if any, that the supplier provides, Strategic Energy’s risk may
            be further mitigated by the obligation of the supplier to make a default
            payment
            equal to the shortfall and to pay liquidated damages in the event of
            a failure
            to deliver power. There is no assurance that the supplier in such an
            instance
            would make the default payment and/or pay liquidated damages. Strategic
            Energy’s
            results of operations and financial position could also be affected,
            in a given
            period, if it were required to make a payment upon termination of a supplier
            contract to the extent the contracted price with the supplier exceeded
            the
            market value of the contract at the time of termination.
 70
 The
            following tables provide information on Strategic Energy’s credit exposure to
            suppliers, net of collateral, at September 30, 2006.


**Number
                    Of**
                **Net
                    Exposure Of****Counterparties**
                **Counterparties****Exposure**
                
                
                
                
                **Greater
                    Than**
                **Greater
                    Than****Before
                    Credit**
                **Credit**
                
                **Net**
                
                **10%
                    Of Net**
                **10%
                    of Net****Rating**
                
                **Collateral**
                **Collateral**
                
                **Exposure**
                
                **Exposure**
                **Exposure**External
                    rating
                
                
                (millions)
                
                
                
                
                
                
                (millions)Investment
                    Grade
                
                $
                4.2
                
                $
                -
                
                $
                4.2
                
                
                3
                
                $
                4.2Non-Investment
                    Grade
                
                
                3.8
                
                
                3.8
                
                
                -
                
                
                -
                
                
                -Internal
                    ratingInvestment
                    Grade
                
                
                0.2
                
                
                -
                
                
                0.2
                
                
                -
                
                
                -Non-Investment
                    Grade
                
                
                1.0
                
                
                0.6
                
                
                0.4
                
                
                -
                
                
                -Total
                
                $
                9.2
                
                $
                4.4
                
                $
                4.8
                
                
                3
                
                $
                4.2
 **Maturity
                    Of Credit Risk Exposure Before Credit Collateral****Less
                    Than**
                
                
                
                **Total****Rating**
                
                **2
                    Years**
                
                **2
                    - 5 Years**
                
                **Exposure**External
                    rating
                
                (millions)Investment
                    Grade
                
                $
                4.2
                
                $
                -
                
                $
                4.2Non-Investment
                    Grade
                
                
                (0.3)
                
                
                4.1
                
                
                3.8Internal
                    ratingInvestment
                    Grade
                
                
                0.2
                
                
                -
                
                
                0.2Non-Investment
                    Grade
                
                
                (0.3)
                
                
                1.3
                
                
                1.0Total
                
                $
                3.8
                
                $
                5.4
                
                $
                9.2


External
      ratings are determined by using publicly available credit ratings of the
      counterparty. If a counterparty has provided a guarantee by a higher rated
      entity, the determination has been based on the rating of its guarantor.
      Internal ratings are determined by, among other things, an analysis of the
      counterparty’s financial statements and consideration of publicly available
      credit ratings of the counterparty’s parent. Investment grade counterparties are
      those with a minimum senior unsecured debt rating of BBB- from Standard &
Poor’s or Baa3 from Moody’s Investors Service. Exposure before credit collateral
      has been calculated considering all netting agreements in place, netting
      accounts payable and receivable exposure with net mark-to-market exposure.
      Exposure before credit collateral, after consideration of all netting
      agreements, is impacted significantly by the power supply volume under contract
      with a given counterparty and the relationship between current market prices
      and
      contracted power supply prices. Credit collateral includes the amount of cash
      deposits and letters of credit received from counterparties. Net exposure has
      only been calculated for those counterparties to which Strategic Energy is
      exposed and excludes counterparties exposed to Strategic Energy.


Strategic
        Energy’s total exposure before credit collateral at September 30, 2006,
        decreased $246.1 million from December 31, 2005, primarily due to lower
        wholesale electricity prices. At September 30, 2006, Strategic Energy had
        exposure before collateral to non-investment grade counterparties totaling
        $4.8
        million. In addition, Strategic Energy held collateral totaling $4.4 million
        limiting its exposure to these non-investment grade counterparties to $0.4
        million.
  Strategic
        Energy contracts with national and regional counterparties that have direct
        supplies and assets in the region of demand. Strategic Energy also manages
        its
        counterparty portfolio through
 71
 disciplined
        margining, collateral requirements and contract-based netting of credit
        exposures against payable balances.
  **Supplemental
        Capital Requirements and Liquidity Information**
 The
        following table is an update for significant changes to selected items from
        the
        contractual obligations in the 2005 Form 10-K.


***Great
                  Plains Energy Contractual Obligations*****Remainder****Payment
                  due by period**
              
              **of
                  2006**
              
              **2007**
              
              **2008**
              
              **2009**
              
              **2010**
              
              **After
                  2010**
              
              **Total**Purchase
                  obligationsFuel
              
              $
              86.6
              
              $
              98.5
              
              $
              107.1
              
              $
              43.3
              
              $
              43.0
              
              $
              84.5
              
              $
              463.0Purchased
                  power
              
              
              184.5
              
              
              526.4
              
              
              195.3
              
              
              113.2
              
              
              94.7
              
              
              48.7
              
              
              1,162.8Comprehensive
                  energy plan
              
              
              118.5
              
              
              281.1
              
              
              321.8
              
              
              139.2
              
              
              12.0
              
              
              -
              
              
              872.6Total
                  contractual obligations
              
              $
              389.6
              
              $
              906.0
              
              $
              624.2
              
              $
              295.7
              
              $
              149.7
              
              $
              133.2
              
              $
              2,498.4
  ***Consolidated
                    KCP&L Contractual Obligations*****Remainder****Payment
                    due by period**
                
                **of
                    2006**
                
                **2007**
                
                **2008**
                
                **2009**
                
                **2010**
                
                **After
                    2010**
                
                **Total**Purchase
                    obligationsFuel
                
                $
                86.6
                
                $
                98.5
                
                $
                107.1
                
                $
                43.3
                
                $
                43.0
                
                $
                84.5
                
                $
                463.0Comprehensive
                    energy plan
                
                
                118.5
                
                
                281.1
                
                
                321.8
                
                
                139.2
                
                
                12.0
                
                
                -
                
                
                872.6Total
                    contractual obligations
                
                $
                205.1
                
                $
                379.6
                
                $
                428.9
                
                $
                182.5
                
                $
                55.0
                
                $
                84.5
                
                $
                1,335.6
 Fuel
        represents KCP&L’s 47% share of Wolf Creek nuclear fuel commitments,
        KCP&L’s share of coal purchase commitments based on estimated prices to
        supply coal for generating plants and KCP&L’s share of rail transportation
        commitments for moving coal to KCP&L’s generating units. Purchased power
        represents Strategic Energy’s agreements to purchase electricity at various
        fixed prices to meet estimated supply requirements. Comprehensive energy
        plan
        represents KCP&L’ contractual commitments for projects contemplated by its
        comprehensive energy plan.


**Off-Balance
        Sheet Arrangements**
 In
        the
        normal course of business, Great Plains Energy and certain of its subsidiaries
        enter into various agreements providing financial or performance assurance
        to
        third parties on behalf of certain subsidiaries. Such agreements include,
        for
        example, guarantees, stand-by letters of credit and surety bonds. These
        agreements are entered into primarily to support or enhance the creditworthiness
        otherwise attributed to a subsidiary on a stand-alone basis, thereby
        facilitating the extension of sufficient credit to accomplish the subsidiaries’
intended business purposes. Great Plains Energy’s guarantees provided on behalf
        of Strategic Energy for its power purchases and regulatory requirements
        increased $126.4 million to $248.4 million at September 30, 2006, compared
        to
        $122.0 million at December 31, 2005. This increase is comprised of $39.4
        million in direct guarantees and $87.0 million of letters of credit and is
        due
        to a combination of higher collateral requirements at Strategic Energy and
        more
        emphasis on using Great Plains Energy’s facilities for credit support due to its
        lower cost. Consolidated KCP&L’s guarantees of $3.9 million at September 30,
        2006, were unchanged from December 31, 2005.
  **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
 72
 course
        of
        business, Great Plains Energy and consolidated KCP&L also face risks that
        are either non-financial or non-quantifiable. Such risks principally include
        business, legal, regulatory, operational and credit risks and are discussed
        elsewhere in this document as well as in the 2005 Form 10-K and therefore
        are
        not represented here.
  Great
        Plains Energy and consolidated KCP&L interim period disclosures about market
        risk included in quarterly reports on Form 10-Q address material changes,
        if
        any, from the most recently filed annual report on Form 10-K. Therefore,
        these
        interim period disclosures should be read in connection with Item 7A.
        Quantitative and Qualitative Disclosures About Market Risk, included in the
        companies’ 2005 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, 2005.
  **ITEM
        4. CONTROLS AND PROCEDURES**
  **Disclosure
        Controls and Procedures**
 Great
        Plains Energy and KCP&L carried out evaluations of their disclosure controls
        and procedures (as defined in Rules 13a-15(e) or 15d-15(e) under the Securities
        Exchange Act of 1934, as amended) as of the end of the fiscal quarter ended
        September 30, 2006. 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 the chief executive officer and chief financial
        officer of KCP&L, respectively, have concluded as of the end of the period
        covered by this report that the disclosure controls and procedures of Great
        Plains Energy and KCP&L are functioning effectively to provide reasonable
        assurance that: (i) the information required to be disclosed by the respective
        companies in the reports that they file or submit under the Securities Exchange
        Act of 1934, as amended, is recorded, processed, summarized and reported
        within
        the time periods specified in the SEC’s rules and forms, and (ii) the
        information required to be disclosed by the respective companies in the reports
        that they file or submit under the Securities Exchange Act of 1934, as amended,
        is accumulated and communicated to their respective management, including
        the
        principal executive and principal financial officers, as appropriate to allow
        timely decisions regarding required disclosure.
  **Changes
        in Internal Control Over Financial Reporting**
 There
        has
        been no change in Great Plains Energy’s or KCP&L’s internal control over
        financial reporting that occurred during the quarterly period ended September
        30, 2006, that has materially affected, or is reasonably likely to materially
        affect, those companies’ internal control over financial reporting.
  **PART
        II*****-*****OTHER
        INFORMATION**
  **ITEM
        1.  LEGAL PROCEEDINGS**
  **KCP&L
        Rate Cases**
 On
        February 1, 2006, KCP&L filed retail rates cases with the MPSC and KCC,
        requesting annual rate increases effective January 1, 2007, of approximately
        $55.8 million (11.5%) and $42.3 million (10.5%), respectively, over current
        levels.
 
 On
        September 29, 2006, KCP&L filed a stipulation containing a negotiated
        settlement of its Kansas request with the KCC Staff and certain other parties.
        The stipulation recommends a $29 million increase in annual revenues effective
        January 1, 2007, with $4 million of that amount resulting from accelerated
        depreciation to help maintain cash flow levels as contemplated in the
        stipulation and agreement approved by the KCC (filed as Exhibit 10.2.a to
        Form
        10-Q for the quarter ended June 30, 2005). The Agreement does not propose
        an
        energy cost adjustment (ECA) clause; however, KCP&L
 73
 has
        agreed to propose an ECA clause in its next rate case to be filed no later
        than
        March 1, 2007. The Agreement recommends various accounting and other provisions,
        including but not limited to: (i) establishing for regulatory purposes annual
        pension cost for the period beginning January 1, 2007, of approximately $43
        million ($19 million on a Kansas jurisdictional basis) through the creation
        of a
        regulatory asset or liability, as appropriate; (ii) establishing, effective
        January 1, 2006, a regulatory asset or liability as appropriate for costs
        arising from defined benefit plan settlements and curtailments which will
        be
        amortized over a five-year period beginning with the effective date of rates
        approved in KCP&L’s next rate case; and (iii) setting at 8.5% the equity
        rate for the equity component of the allowance for funds used during
        construction rate calculation for Iatan 2. The stipulation is subject to
        KCC
        approval, and is voidable if not approved in its entirety. KCP&L expects the
        KCC to act on the stipulation before the end of the year.
  In
        August
        2006, MPSC Staff filed its case regarding KCP&L’s rate request. In its
        filing, the Staff asserted that KCP&L’s annual revenues should be decreased
        by between $4.3 million and $5.1 million, before adjustments resulting from
        the
        September 30, 2006, true-up of test year information. The Staff’s filing assumed
        that adjustments resulting from this true-up will increase revenue requirements
        by approximately $20 million, resulting in a net required increase in annual
        revenues of between $14.9 million and $15.7 million, which reflected
        approximately $75 million in accelerated depreciation. Staff’s current position
        is that KCP&L’s annual revenues should be increased by approximately $52
        million (reflecting approximately $86 million in accelerated depreciation)
        before adjustments resulting from the September 30, 2006, true-up. A
        decision by the MPSC is expected before the end of the year with any rate
        changes being effective on January 1, 2007.
 
 **Hawthorn
        No. 5 Litigation**
 KCP&L
        filed suit on April 3, 2001, in Jackson County, Missouri Circuit Court against
        multiple defendants who are alleged to have responsibility for the 1999 boiler
        explosion at KCP&L’s Hawthorn No. 5 generating unit, which was subsequently
        reconstructed and returned to service. KCP&L and National Union entered into
        a subrogation allocation agreement under which recoveries in this suit were
        generally allocated 55% to National Union and 45% to KCP&L. Certain
        defendants were dismissed from the suit and various defendants settled. Trial
        of
        this case with the one remaining defendant resulted in a March 2004 jury
        verdict
        finding KCP&L’s damages as a result of the explosion were $452 million. In
        May 2004, the trial judge reduced the award against the defendant to $0.2
        million. Both KCP&L and the defendant appealed this case to the Court of
        Appeals for the Western District of Missouri and on May 9, 2006, the Court
        of
        Appeals ordered the Circuit Court to enter judgment in KCP&L’s favor in
        accordance with the jury verdict. The defendant filed a motion for transfer
        of
        this case to the Missouri Supreme Court, which was denied. After deduction
        of
        amounts received from pre-trial settlements with other defendants and an
        amount
        for KCP&L’s comparative fault (as determined by the jury), KCP&L
        received proceeds of $38.9 million pursuant to the subrogation allocation
        agreement after payment of attorney’s fees.
  **Weinstein
        v.****KLT Telecom**
 Richard
        D. Weinstein (Weinstein) filed suit against KLT Telecom Inc. (KLT Telecom)
        in
        September 2003 in the St. Louis County, Missouri Circuit Court. KLT Telecom
        acquired a controlling interest in DTI Holdings, Inc. (Holdings) in February
        2001 through the purchase of approximately two-thirds of the Holdings stock
        held
        by Weinstein. In connection with that purchase, KLT Telecom entered into
        a put
        option in favor of Weinstein, which granted Weinstein an option to sell to
        KLT
        Telecom his remaining shares of Holdings stock. The put option provided for
        an
        aggregate exercise price for the remaining shares equal to their fair market
        value with an aggregate floor amount of $15 million and was exercisable between
        September 1, 2003, and August 31, 2005. In June 2003, the stock of Holdings
        was
        cancelled and extinguished pursuant to the joint Chapter 11 plan confirmed
        by
        the Bankruptcy Court. In September 2003, Weinstein delivered a notice of
        exercise of his claimed rights under the put option. KLT Telecom rejected
        the
        notice of exercise, and Weinstein filed suit alleging breach of
 74
 contract.
        Weinstein sought damages of at least $15 million, plus statutory interest.
        In
        April 2005, summary judgment was granted in favor of KLT Telecom, and Weinstein
        appealed this judgment to the Missouri Court of Appeals for the Eastern
        District. On May 16, 2006, the Court of Appeals affirmed the judgment. Weinstein
        filed a motion for transfer of this case to the Missouri Supreme Court, which
        was granted. Oral arguments are scheduled for December 2006. The $15 million
        reserve has not been reversed pending the outcome of the appeal
        process.
  **Other
        Proceedings**
 The
        companies are parties to various other lawsuits and regulatory proceedings
        in
        the ordinary course of their respective businesses. For information regarding
        other lawsuits and proceedings, see Notes 6, 7, 14 and 15 to the consolidated
        financial statements. Such descriptions are incorporated herein by
        reference.
  **ITEM
        1A. RISK FACTORS**
  Actual
        results in future periods for Great Plains Energy and consolidated KCP&L
        could differ materially from historical results and the forward-looking
        statements contained in this report. Factors that might cause or contribute
        to
        such differences include, but are not limited to, those discussed below and
        in
        Item 1A. Risk Factors included in the companies’ 2005 Form 10-K. The companies’
business is influenced by many factors that are difficult to predict, involve
        uncertainties that may materially affect actual results, and are often beyond
        the companies’ control. Additional risks and uncertainties not presently known
        or that the companies’ management currently believes to be immaterial may also
        adversely affect the companies. The information presented below updates the
        risk
        factors described in the companies’ 2005 Form 10-K. This information, as well as
        the other information included in this report and in the other documents
        filed
        with the SEC, should be carefully considered before making an investment
        in the
        securities of Great Plains Energy and KCP&L. Risk factors of consolidated
        KCP&L are also risk factors for Great Plains Energy.
  **The
        outcome of KCP&L’s pending and future retail rate proceedings could have a
        material impact on its business and are largely outside its control.**
 The
        rates
        that KCP&L is allowed to charge its customers are the single most important
        item influencing its results of operations, financial position and liquidity.
        These rates are subject to the determination, in large part, of governmental
        entities outside of KCP&L’s control, including the MPSC, KCC and FERC.
        Decisions made by these entities could have a material impact on KCP&L’s
        business including its results of operations, financial position, or liquidity.
  In
        February 2006, for the first time in 20 years, KCP&L filed with the MPSC and
        KCC requests to increase the rates it is permitted to charge its retail
        customers in Missouri and Kansas, respectively. In these initial filings
        KCP&L sought an increase in annual rates of $55.8 million in Missouri and
        $42.3 million in Kansas. In September 2006, KCP&L, KCC Staff and other
        parties reached a negotiated settlement and submitted a stipulation to the
        KCC
        recommending a $29 million increase in annual rates in Kansas. The stipulation
        does not propose an energy cost adjustment (ECA) clause, but KCP&L has
        agreed to propose an ECA clause in its next rate case to be filed no later
        than
        March 1, 2007. Hearings in the Missouri rate proceedings concluded in October
        2006. The MPSC Staff’s current position is that KCP&L’s annual revenues
        should be increased by approximately $52 million (reflecting approximately
        $86
        million in accelerated depreciation) before adjustments resulting from a
        September 30, 2006, true-up of information. The requested rate increases
        are subject to the approval of the MPSC and KCC, which are expected to rule
        before the end of 2006. It is possible that the MPSC and/or KCC will authorize
        a
        lower rate increase than what KCP&L has requested, or no increase or a rate
        reduction. Management cannot predict or provide any assurances regarding
        the
        outcome of these, or any future, rate proceedings. Any rate changes approved
        by
        the MPSC and KCC in the pending proceedings are expected to take effect on
        January 1, 2007.
 75
 As
        a part
        of the Missouri and Kansas stipulations approved by the MPSC and KCC in 2005,
        KCP&L undertook to implement a Comprehensive Energy Plan (Plan). Under the
        Plan, KCP&L agreed to undertake certain projects, including building and
        owning a portion of Iatan No. 2, installing a new wind-powered generating
        facility, and installing environmental upgrades to certain existing plants.
        A
        reduction or rejection by the MPSC or KCC of rate increase requests may result
        in increased financing requirements for KCP&L. This could have a material
        impact on its results of operations, financial position or liquidity.
  In
        response to competitive, economic, political, legislative and regulatory
        pressures, KCP&L may be subject to rate moratoriums, rate refunds, limits on
        rate increases or rate reductions, including phase-in plans. Any or all of
        these
        could have a significant adverse effect on KCP&L’s results of operations,
        financial position or liquidity.
  **KCP&L
        has Construction-Related Risks**
 KCP&L’s
        comprehensive energy plan includes the construction of an estimated 850 MW
        coal-fired generating plant, 100.5 MW of wind generation and environmental
        retrofits at two existing coal-fired units. KCP&L has not recently managed a
        construction program of this magnitude. There are risks that actual costs
        may
        exceed budget estimates, delays may occur in obtaining permits and materials,
        suppliers and contractors may not perform as required under their contracts,
        and
        other events beyond KCP&L’s control may occur that may materially affect the
        schedule, budget and performance of these projects.
  The
        construction projects contemplated in the comprehensive energy plan rely
        upon
        the supply of a significant percentage of materials from overseas sources.
        This
        global procurement subjects the delivery of procured material to issues beyond
        what would be expected if such material were supplied from sources within
        the
        United States. These risks include, but are not limited to, delays in clearing
        customs, ocean transportation and potential civil unrest in sourcing countries,
        among others. Additionally, as with any major construction program, inadequate
        availability of qualified craft labor may have an adverse impact on both
        the
        estimated cost and completion date of the projects.
  Although
        control budgets and workflow scheduling are not complete, developing market
        conditions indicate overall cost estimates of the comprehensive energy plan
        are
        currently expected to be about 20% above the estimate in the 2005 Form 10-K.
        The
        primary driver of the increased cost of the comprehensive energy plan is
        the
        environmental retrofit of selected existing coal-fired plants. The demand
        for
        environmental projects has increased substantially with many utilities in
        the
        United States starting similar projects to address changing environmental
        regulations. This demand has constrained labor and material resources resulting
        in a significant escalation in the cost and completion times for environmental
        retrofits. The second phase of environmental upgrades at LaCygne No. 1 is
        currently in the planning stage, and the market conditions noted above could
        impact the scope and timing.
  Over
        the
        last several months, KCP&L has finalized contracts and received bids for the
        largest cost components of the construction of Iatan No. 2. The estimated
        costs
        for Iatan No. 2 have also increased due to the constrained labor and material
        resources discussed above; however, the Iatan No. 2 estimated costs have
        not
        been as impacted as the estimated costs of the environmental retrofits.
  These
        and
        other risks may increase the costs of these construction projects, require
        KCP&L to purchase additional electricity to supply its retail customers
        until the projects are completed, or both, and may materially affect KCP&L’s
        results of operations and financial position.
  **KCP&L
        has Retirement-Related Risks**
 Through
        2010, approximately 21% of KCP&L’s current employees will be eligible to
        retire with full pension benefits. Failure to hire and adequately train
        replacement employees, including the transfer of
 76
 significant
        internal historical knowledge and expertise to the new employees, may adversely
        affect KCP&L’s ability to manage and operate its business.
 
 Substantially
        all of KCP&L’s employees participate in defined benefit and postretirement
        plans. If KCP&L employees retire when they become eligible for retirement
        through 2010, or if KCP&L’s plans experience adverse market returns on their
        investments, or if interest rates materially fall, KCP&L’s pension expense
        and contributions to the plans could rise substantially over historical levels.
        KCP&L expects to recognize additional pension settlement charges in 2006
        resulting from employees retiring and electing to receive the pension benefit
        lump-sum payment option. The current estimate of additional expense related
        to
        pension settlement charges, based on retirement-eligible employees who left
        the
        company through September 2006, is approximately $8 million. The actual pension
        settlement charges in 2006 will depend on actual pension plan results during
        the
        pension plan year and the number of employees retiring throughout the year
        who
        select the lump-sum payment option. The amount of expense related to pension
        settlement charges to be recognized in 2006 may be materially greater than
        the
        current estimate. The timing and number of employees retiring after 2006
        and
        selecting the lump-sum payment option could result in further pension settlement
        charges that could materially affect KCP&L’s results of operations.
        KCP&L has requested regulatory accounting treatment from MPSC and KCC to
        defer pension settlement charges, effective from to January 1, 2006, and
        amortize the deferred amount over a five-year period to be established in
        the
        rate proceeding following the current 2006 proceedings. At September 30,
        2006,
        no amounts were deferred pending the outcome of these requests. In addition,
        assumptions related to future costs, returns on investments, interest rates
        and
        other actuarial assumptions, including projected retirements, have a significant
        impact on KCP&L’s results of operations and financial position.
  The
        Pension Protection Act of 2006, signed into law on August 17, 2006, alters
        the
        manner in which pension plan assets and liabilities are valued for purposes
        of
        calculating required pension contributions and changes the timing in which
        required contributions to underfunded plans are made. The funding rules,
        which
        become effective in 2008, could significantly affect the Company’s funding
        requirements. During September 2006, the Financial Accounting Standards Board
        issued Statement of Financial Accounting Standards (SFAS) No. 158, “Employers’
Accounting for Defined Pension and Other Postretirement Plans.” SFAS No. 158
        addresses balance sheet measurements and reporting requirements and will
        require
        the Company to recognize the funded status of the pension and postretirement
        plans on the balance sheet for in the fourth quarter of 2006. The effects
        of
        SFAS No. 158 are currently being evaluated. The FASB has a project to reconsider
        the accounting for pensions and other post-retirement benefits. This project
        may
        result in accelerated expense, liability recognition and
        contributions.
  **ITEM
        2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF
        PROCEEDS**
  None.
  **ITEM
        3. DEFAULTS UPON SENIOR SECURITIES**
  None.
  **ITEM
        4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS**
  None.
  **ITEM
        5. OTHER INFORMATION**
  **Change
        of Control Severance Agreement**
 The
        following information was required to be disclosed under Items 1.01 and 1.02
        of
        Form 8-K but was not reported.
 77
 In
        connection with the offering of new change of control severance agreements
        (new
        agreements) described below, Great Plains Energy sent notice on September
        1,
        2006, to the executive and other officers that their existing change of control
        severance agreements (old agreements) would be terminated 120 days after
        the
        notice was provided to the officers. The forms of the old agreements were
        filed
        as Exhibit 10-e to Form 10-K for the year ended December 31, 2000, Exhibit
        10.1.b to Form 10-Q for the period ended March 31, 2003, and Exhibit 10.1.q
        to
        Form 10-K for the year ended December 31, 2004.
 
 The
        old
        agreements were similar to the new agreements. However, among other things
        the
        old agreements provided for benefits if the officer's employment were terminated
        for good reason or otherwise than for cause during the three-year period
        after
        the first date on which a Change in Control occurs, or if the officer’s
        employment was terminated for any reason within a thirty day period starting
        one
        year after a Change in Control occurred.
 
 Subsequent
        to the September 1, 2006, notice, Great Plains Energy entered into new
        agreements with the executive and other officers of Great Plains Energy and
        its
        wholly owned subsidiaries KCP&L and Strategic Energy, L.L.C. (Strategic
        Energy). The form of the new agreements with Michael J. Chesser, Chairman
        of the
        Board and Chief Executive Officer of Great Plains Energy; William H. Downey,
        President and Chief Operating Officer of Great Plains Energy and President
        and
        Chief Executive Officer of KCP&L; John R. Marshall, Senior Vice President -
        Delivery of KCP&L; Shahid Malik, Executive Vice President of Great Plains
        Energy and President and Chief Executive Officer of Strategic Energy; and
        the
        other executive officers of Great Plains Energy and KCP&L are attached
        hereto as Exhibits 10.1.a, 10.1.b, 10.1.c, 10.1.d and 10.1.e,
        respectively.
  Under
        the
        new agreements, an officer would be entitled to receive a lump-sum cash payment
        and certain insurance benefits if the officer's employment is terminated
        during
        the two-year period after the first date on which a Change in Control occurs
        (i)
        by the Company other than for cause or upon death or disability, or (ii)
        by the
        officer for good reason (as those terms are defined in the new agreements).
        These benefits would also be payable if the officer’s employment is terminated
        as described in the preceding sentence during the period beginning when (i)
        Great Plains Energy enters into an agreement, the consummation of which would
        result in a Change in Control, (ii) Great Plains Energy or any person publicly
        announces an intention to take or consider taking actions which if consummated
        would constitute a Change in Control; (iii) any person (other than Great
        Plains
        Energy, its subsidiaries, their respective employee benefit plans, underwriters
        temporarily holding securities pursuant to an offering, or a corporation
        owned
        directly or indirectly by the stockholders of Great Plains Energy in
        substantially the same proportions as their ownership of stock of Great Plains
        Energy) becomes the beneficial owner of 10% or more of the combined voting
        power
        of Great Plains Energy’s then outstanding voting securities, or (iv) the Board
        or stockholders adopt a resolution approving any of the foregoing or approving
        any Change in Control. Such period ends when the Change in Control transaction
        is either consummated, abandoned or terminated.
  A
        Change
        in Control is defined as: (i) an acquisition by a person or group (other
        than
        Great Plains Energy, its subsidiaries, their respective employee benefit
        plans,
        underwriters temporarily holding securities pursuant to an offering, or a
        corporation owned directly or indirectly by the stockholders of Great Plains
        Energy in substantially the same proportions as their ownership of stock
        of
        Great Plains Energy) of 35% or more of the Great Plains Energy common stock
        (not
        including shares directly acquired from Great Plains Energy or its affiliates
        other than in connection with the acquisition by Great Plains Energy or its
        affiliates of a business); (ii) a change in a majority of the directors of
        the
        Board; (iii) a consummation of a merger, consolidation, reorganization or
        similar transaction (unless shareholders receive 60% or more of the stock
        of the
        surviving entity, or unless the transaction is effected to implement a
        recapitalization in which no person is or becomes the beneficial owner of
        20% or
        more of the then outstanding shares); or (iii) the occurrence, or shareholder
        approval, of liquidation, dissolution or sale of
 78
 substantially
        all of Great Plains Energy’s assets (except to an entity in which Great Plains
        Energy’s shareholders have at least 60% of the combined voting power in
        substantially the same proportions as their ownership of Great Plains Energy
        stock immediately prior to the sale). The definition of Change in Control
        in Mr.
        Malik’s new agreement also includes certain events resulting in changes of 50%
        or more in the beneficial ownership of voting power in Strategic Energy.
  Upon
        a
        termination entitling the officer for benefits under the new agreements,
        a
        lump-sum cash payment will be made to the officer of (i) the officer's base
        salary through the date of termination; (ii) a pro-rated bonus based upon
        the
        average of the bonuses paid to the officer for the last five fiscal years
        (or,
        if shorter, the years during which the officer was employed by the company);
        (iii) any accrued vacation pay; (iv) any compensation previously deferred
        by the
        officer; (v) two or three times the officer's highest base salary during
        the
        prior 12 months; (vi) two or three times the average of the bonuses paid
        to the
        officer for the last five fiscal years (or, if shorter, the years during
        which
        the officer was employed by the company); (vii) the actuarial equivalent
        of the
        excess of the officer's accrued pension benefits at age 65 including
        supplemental retirement benefits computed without reduction for early retirement
        and including two or three additional years of benefit accrual service, over
        the
        officer's vested accrued pension benefits (with the exception of Messrs.
        Chesser
        and Marshall, whose compensatory arrangements provide for two years of credited
        service for pension calculation purposes for every one year of service,
        resulting in additional years of benefit accrual service under their respective
        agreements); and (viii) the value of any unvested Great Plains Energy
        contributions for the benefit of the officer under the Great Plains Energy
        Employee Savings Plus Plan. Mr. Malik’s new agreement also provides, upon a
        termination entitling him to the benefits described in the preceding sentence,
        for the immediate vesting of all restricted stock previously granted to him,
        and
        a cash amount equal to the bonus he would have received under applicable
        long
        term incentive plans with respect to all outstanding grants and assuming
        performance at target levels.
 
 In
        addition, health, disability and life insurance plan coverage must be provided
        to the officer and dependents substantially on the same terms and conditions
        that existed immediately prior to the termination for two or three years,
        or, if
        earlier, until the executive officer is covered by equivalent plan benefits.
        Certain "gross-up" payments regarding tax obligations relating to payments
        under
        the new agreements are required to be made, as well reimbursement of certain
        expenses relating to possible disputes that might arise.
 
 The
        new
        agreements also provide that the officer will not disclose confidential
        information, and will not (without consent) either participate in a business
        that directly competes with the company, or solicit current employees of
        the
        company, during the time the officer is an employee of the company and for
        six
        months thereafter.
 
 The
        term
        of the new agreements is for an initial period of two years, and the term
        will
        be automatically extended on each annual anniversary date for an additional
        year
        unless Great Plains Energy gives at least 60 days prior notice that the term
        will not be extended. However, during any period of time when the Board has
        knowledge that any person has taken steps reasonably calculated to effect
        a
        Change in Control, the term shall automatically be extended (and may not
        terminate) until, in the opinion of the Board, such person has abandoned
        or
        terminated its efforts to effect a Change in Control.
  The
        description of the old agreements and new agreements set forth above is not
        complete and is qualified in its entirety by reference to such agreements.
  **Amendments
        to Strategic Energy Annual and Long Term Incentive Plans**
 The
          following information was required to be disclosed under Item 1.01 of Form
          8-K
          but was not reported.
 79
 reallocated
          the 10% weighting assigned to that metric equally between the expected
          future
          margin and MWhs under management metrics. The amendment to the long-term
          incentive plans for the periods 2005-2006 and 2005-2007 removed the return
          on
          average book equity metric and reallocated the 25% weighting assigned to
          that
          metric equally among the cumulative pre-tax net income, increase in customer
          accounts under contract, cumulative reduction in sales, general and
          administrative expense per MWh and supply cost reduction
          metrics.
  **ITEM
        6. EXHIBITS**
  **Great
        Plains Energy Documents**
 Exhibit
                Number
              
              Description of Document3.1
              
              Articles
                  of Incorporation of Great Plains Energy Incorporated dated as of
                  February
                  26, 2001, and corrected as of October 13, 2006.10.1.a
              +
              Form
                  of Change of Control Severance Agreement with Michael J.
                  Chesser.10.1.b
              +
              Form
                  of Change of Control Severance Agreement with William H.
                  Downey.10.1.c
              +
              Form
                  of Change of Control Severance Agreement with John R.
                  Marshall.10.1.d
              +
              Form
                  of Change of Control Severance Agreement with Shahid
                  Malik.10.1.e
              +
              Form
                  of Change of Control Severance Agreement with certain officers
                  of Great
                  Plains Energy Incorporated, Kansas City Power &
                Light
                  Company and Strategic Energy, L.L.C.10.1.f
              
              Amendment
                  dated as of October 2, 2006, to Amended and Restated Limited Guaranty
                  dated as of July 2, 2004, by Great Plains Energy Incorporated in
                  favor of
                  the lenders under the Amended and Restated Credit Agreement dated
                  as of
                  July 2, 2004, among Strategic Energy, L.L.C. and the financial
                  institutions from time to time parties thereto.10.1.g
              +
              Strategic
                  Energy, L.L.C. Long-Term Incentive Plan Grants 2005, as amended
                  May 2,
                  2005 and October 31, 2006.10.1.h
              +
              Strategic
                  Energy, L.L.C. Annual Incentive Plan 2006 goals as amended October
                  31,
                  2006.12.1
              
              Ratio
                  of Earnings to Fixed Charges.31.1.a
              
              Rule
                  13a-14(a)/15d-14(a) Certifications of Michael J. Chesser.31.1.b
              
              Rule
                  13a-14(a)/15d-14(a) Certifications of Terry Bassham.32.1
              
              Section
                  1350 Certifications.
 +
        Indicates management contract or compensatory plan or arrangement.
  Copies
        of
        any of the exhibits filed with the SEC in connection with this document may
        be
        obtained from Great Plains Energy upon written request.
 80
 **KCP&L
          Documents**
  Exhibit
                Number
              
              Description
                  of Document10.2.a
              
              Contract
                  between Kansas City Power & Light Company and ALSTOM Power Inc. for
                  Engineering, Procurement, and Constructions Services for Air Quality
                  Control
 Systems
                  and Selective Catalytic Reduction Systems at Iatan Generating Station
                  Units 1 and 2 and the Pulverized Coal-Fired Boiler at Iatan Generating
                  Station Unit 2, dated as of August 10, 2006.10.2.b
              
              Stipulation
                  and Agreement dated as of September 29, 2006, among Kansas City
                  Power
                  & Light Company, the Staff of the Kansas Corporation Commission,
                  the
                  Citizens’ Utility Ratepayer Board, Wal-Mart Stores Inc. and the
                  International Brotherhood of Electrical Workers, Local Union Nos.
                  412,
                  1464 and 1613.12.2
              
              Ratio
                  of Earnings to Fixed Charges.31.2.a
              
              Rule
                  13a-14(a)/15d-14(a) Certifications of William H. Downey.31.2.b
              
              Rule
                  13a-14(a)/15d-14(a) Certifications of Terry Bassham.32.2
              
              Section
                  1350 Certifications.
 
 Copies
        of
        any of the exhibits filed with the SEC in connection with this document may
        be
        obtained from KCP&L upon written request.
  81
 **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:
                  November 7, 2006
              By:
                  /s/Michael J. Chesser(Michael
                  J. Chesser)(Chief
                  Executive Officer)Dated:
                  November 7, 2006
              By:
                  /s/Lori A. Wright(Lori
                  A. Wright)(Principal
                  Accounting Officer)
 
 
  **KANSAS
                  CITY POWER & LIGHT COMPANY**Dated:
                  November 7, 2006
              By:
                  /s/William H. Downey(William
                  H. Downey)(Chief
                  Executive Officer)Dated:
                  November 7, 2006
              By:
                  /s/Lori A. Wright(Lori
                  A. Wright)(Principal
                  Accounting Officer)






82