UNITED STATES
SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549

# Form 10-Q

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

For the quarterly period ended June 30, 2004

or

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

|For
the transition period from _______ to _______
|-------------------------------------------------

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

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

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

As of August 2, 2004 the number of
shares outstanding of (i) Great Plains Energys common stock was 74,262,553 and (ii)
Kansas City Power & Light Companys common stock was one, which was held by Great
Plains Energy Incorporated.

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

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

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

# CAUTIONARY STATEMENTS
REGARDING CERTAIN FORWARD-LOOKING INFORMATION

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

|  |                                                                                                                                                                                                                                                                                 
|- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|o | future economic conditions in the regional, national and international markets, including but not limited to regional and national wholesale electricity markets                                                                                                                
|o | market perception of the energy industry and the Company                                                                                                                                                                                                                        
|o | changes in business strategy, operations or development plans                                                                                                                                                                                                                   
|o | 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 and constraints placed on the Company's actions by the Public
|o | adverse changes in applicable laws, regulations, rules, principles or practices governing tax, accounting and environmental matters including, but not limited to, air quality                                                                                                  
|o | 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 the Company's pension plan assets and costs                                                                     
|o | ability to maintain current credit ratings                                                                                                                                                                                                                                      
|o | inflation rates                                                                                                                                                                                                                                                                 
|o | effectiveness of risk management policies and procedures and the ability of counterparties to satisfy their contractual commitments                                                                                                                                             
|o | impact of terrorist acts                                                                                                                                                                                                                                                        
|o | increased competition including, but not limited to, retail choice in the electric utility industry and the entry of new competitors                                                                                                                                            
|o | ability to carry out marketing and sales plans                                                                                                                                                                                                                                  
|o | weather conditions including weather-related damage                                                                                                                                                                                                                             
|o | cost, availability and deliverability of fuel                                                                                                                                                                                                                                   
|o | ability to achieve generation planning goals and the occurrence of unplanned generation outages                                                                                                                                                                                 
|o | delays in the anticipated in-service dates of additional generating capacity                                                                                                                                                                                                    
|o | nuclear operations                                                                                                                                                                                                                                                              
|o | ability to enter new markets successfully and capitalize on growth opportunities in non-regulated businesses                                                                                                                                                                    
|o | performance of projects undertaken by the Company's non-regulated businesses and the success of efforts to invest in and develop new opportunities, and                                                                                                                         
|o | other risks and uncertainties.                                                                                                                                                                                                                                                  

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

2

# GLOSSARY OF TERMS

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

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

3

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

4

PART I - FINANCIAL INFORMATION
Item 1.  Consolidated Financial Statements

GREAT PLAINS ENERGY
Consolidated Balance Sheets
(Unaudited)

|                                                                                                      | June 30 | December 31
|----------------------------------------------------------------------------------------------------- | ------- | -----------
|
|                                                                                                     
|(thousands)                                                                                          
|Current Assets                                                                                        |         |            
|Cash and cash equivalents                                                                             |         |            
|Restricted cash                                                                                       |         |            
|Receivables                                                                                           |         |            
|Fuel inventories, at average cost                                                                     |         |            
|Materials and supplies, at average cost                                                               |         |            
|Deferred income taxes                                                                                 |         |            
|Assets of discontinued operations                                                                     |         |            
|Other                                                                                                 |         |            
|                                                                                                      |        
|Total                                                                                                 |         |            
|                                                                                                     
|Nonutility Property and Investments                                                                   |         |            
|Affordable housing limited partnerships                                                               |         |            
|Nuclear decommissioning trust fund                                                                    |         |            
|Other                                                                                                 |         |            
|                                                                                                      |        
|Total                                                                                                 |         |            
|                                                                                                     
|Utility Plant, at Original Cost                                                                       |         |            
|Electric                                                                                              |         |            
|Less-accumulated depreciation                                                                         |         |            
|                                                                                                      |        
|Net utility plant in service                                                                          |         |            
|Construction work in progress                                                                         |         |            
|Nuclear fuel, net of amortization of $120,547 and $113,472                                            |         |            
|                                                                                                      |        
|Total                                                                                                 |         |            
|                                                                                                     
|Deferred Charges                                                                                      |         |            
|Regulatory assets                                                                                     |         |            
|Prepaid pension costs                                                                                 |         |            
|Goodwill                                                                                              |         |            
|Other deferred charges                                                                                |         |            
|                                                                                                      |        
|Total                                                                                                 |         |            
|                                                                                                     
|Total                                                                                                 |         |            
|                                                                                                     
|The accompanying Notes to
Consolidated Financial Statements are an integral part of these statements.

5

GREAT PLAINS ENERGY
Consolidated Balance Sheets
(Unaudited)

|                                                                                                      | June 30 | December 31
|----------------------------------------------------------------------------------------------------- | ------- | -----------
|
|                                                                                                     
|(thousands)                                                                                          
|Current Liabilities                                                                                   |         |            
|Notes payable                                                                                         |         |            
|Current maturities of long-term debt                                                                  |         |            
|EIRR bonds classified as current                                                                      |         |            
|Accounts payable                                                                                      |         |            
|Accrued taxes                                                                                         |         |            
|Accrued interest                                                                                      |         |            
|Accrued payroll and vacations                                                                         |         |            
|Accrued refueling outage costs                                                                        |         |            
|Supplier collateral                                                                                   |         |            
|Liabilities of discontinued operations                                                                |         |            
|Other                                                                                                 |         |            
|                                                                                                      |        
|Total                                                                                                 |         |            
|                                                                                                     
|Deferred Credits and Other Liabilities                                                                |         |            
|Deferred income taxes                                                                                 |         |            
|Deferred investment tax credits                                                                       |         |            
|Asset retirement obligations                                                                          |         |            
|Pension liability                                                                                     |         |            
|Other                                                                                                 |         |            
|                                                                                                      |        
|Total                                                                                                 |         |            
|                                                                                                     
|Capitalization                                                                                        |         |            
|Common stock equity                                                                                   |         |            
|Common stock-150,000,000 shares authorized without par value                                          |         |            
|74,259,203 and 69,259,203 shares issued, stated value                                                 |         |            
|Unearned compensation                                                                                 |         |            
|Capital stock premium and expense                                                                     |         |            
|Retained earnings                                                                                     |         |            
|Treasury stock-90 and 3,265 shares, at cost                                                           |         |            
|Accumulated other comprehensive loss                                                                  |         |            
|                                                                                                      |        
|Total                                                                                                 |         |            
|Cumulative preferred stock $100 par value                                                             |         |            
|3.80% - 100,000 shares issued                                                                         |         |            
|4.50% - 100,000 shares issued                                                                         |         |            
|4.20% - 70,000 shares issued                                                                          |         |            
|4.35% - 120,000 shares issued                                                                         |         |            
|                                                                                                      |        
|Total                                                                                                 |         |            
|Long-term debt (Note 6)                                                                               |         |            
|                                                                                                      |        
|Total                                                                                                 |         |            
|                                                                                                     
|Commitments and Contingencies (Note 12)                                                               |         |            
|                                                                                                     
|Total                                                                                                 |         |            
|                                                                                                     
|The accompanying Notes to
Consolidated Financial Statements are an integral part of these statements.

6

GREAT PLAINS ENERGY
Consolidated Statements of Income
(Unaudited)

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

7

GREAT PLAINS ENERGY
Consolidated Statements of Cash Flows
(Unaudited)

|Year to date June 30                                                                                  | 2004 | 2003
|----------------------------------------------------------------------------------------------------- | ---- | ----
|                                                                                                     
|(thousands)                                                                                          
|Cash Flows from Operating Activities                                                                  |     
|Net income                                                                                            |      |     
|Less: Loss from discontinued operations, net of income taxes                                          |      |     
|                                                                                                      |     
|Income from continuing operations                                                                     |      |     
|Adjustments to reconcile income to net cash                                                           |      |     
|from operating activities:                                                                            |      |     
|Depreciation and depletion                                                                            |      |     
|Amortization of:                                                                                      |      |     
|Nuclear fuel                                                                                          |      |     
|Other                                                                                                 |      |     
|Deferred income taxes (net)                                                                           |      |     
|Investment tax credit amortization                                                                    |      |     
|Loss from equity investments                                                                          |      |     
|Gain on property                                                                                      |      |     
|Minority interest                                                                                     |      |     
|Other operating activities (Note 4)                                                                   |      |     
|                                                                                                      |     
|Net cash from operating activities                                                                    |      |     
|                                                                                                     
|Cash Flows from Investing Activities                                                                  |      |     
|Utility capital expenditures                                                                          |      |     
|Allowance for borrowed funds used during construction                                                 |      |     
|Purchases of investments                                                                              |      |     
|Purchases of nonutility property                                                                      |      |     
|Proceeds from disposition of property                                                                 |      |     
|Purchase of additional indirect interest in Strategic Energy                                          |      |     
|Hawthorn No. 5 partial insurance recovery                                                             |      |     
|Hawthorn No. 5 partial litigation settlements                                                         |      |     
|Other investing activities                                                                            |      |     
|                                                                                                      |     
|Net cash from investing activities                                                                    |      |     
|                                                                                                     
|Cash Flows from Financing Activities                                                                  |      |     
|Issuance of common stock                                                                              |      |     
|Issuance of long-term debt                                                                            |      |     
|Issuance fees                                                                                         |      |     
|Repayment of long-term debt                                                                           |      |     
|Net change in short-term borrowings                                                                   |      |     
|Dividends paid                                                                                        |      |     
|Other financing activities                                                                            |      |     
|                                                                                                      |     
|Net cash from financing activities                                                                    |      |     
|                                                                                                     
|Net Change in Cash and Cash Equivalents                                                               |      |     
|Cash and Cash Equivalents from Continuing                                                             |      |     
|Operations at Beginning of Year                                                                       |      |     
|                                                                                                      |     
|Cash and Cash Equivalents from Continuing                                                             |      |     
|Operations at End of Period                                                                           |      |     
|                                                                                                     
|                                                                                                     
|Net Change in Cash and Cash Equivalents from                                                          |      |     
|Discontinued Operations                                                                               |      |     
|Cash and Cash Equivalents from Discontinued                                                           |      |     
|Operations at Beginning of Year                                                                       |      |     
|                                                                                                      |     
|Cash and Cash Equivalents from Discontinued                                                           |      |     
|Operations at End of Period                                                                           |      |     
|                                                                                                     
|The accompanying Notes to
Consolidated Financial Statements are an integral part of these statements.

8

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

|Three Months Ended June 30                                                                            | 2004 | 2003
|----------------------------------------------------------------------------------------------------- | ---- | ----
|                                                                                                     
|
|(thousands, except share data)                                                                       
|Common Stock                                                                                          |     
|Beginning balance                                                                                     |      |     
|Issuance of common stock                                                                              |      |     
|                                                                                                      |     
|Ending balance                                                                                        |      |     
|                                                                                                     
|Unearned Compensation                                                                                 |      |     
|Beginning balance                                                                                     |      |     
|Compensation expense recognized                                                                       |      |     
|                                                                                                      |     
|Ending balance                                                                                        |      |     
|                                                                                                     
|Capital Stock Premium and Expense                                                                     |      |     
|Beginning balance                                                                                     |      |     
|Issuance of common stock                                                                              |      |     
|FELINE PRIDESsm purchase contract                                                                     |      |     
|adjustment, allocated fees and expenses                                                               |      |     
|Other                                                                                                 |      |     
|                                                                                                      |     
|Ending balance                                                                                        |      |     
|                                                                                                     
|Retained Earnings                                                                                     |      |     
|Beginning balance                                                                                     |      |     
|Net income                                                                                            |      |     
|Loss on reissuance of treasury stock                                                                  |      |     
|Dividends:                                                                                            |      |     
|Common stock                                                                                          |      |     
|Preferred stock - at required rates                                                                   |      |     
|Options                                                                                               |      |     
|                                                                                                      |     
|Ending balance                                                                                        |      |     
|                                                                                                     
|Treasury Stock                                                                                        |      |     
|Beginning balance                                                                                     |      |     
|Treasury shares acquired                                                                              |      |     
|Treasury shares reissued                                                                              |      |     
|                                                                                                      |     
|Ending balance                                                                                        |      |     
|                                                                                                     
|Accumulated Other Comprehensive Loss                                                                  |      |     
|Beginning balance                                                                                     |      |     
|Derivative hedging activity                                                                           |      |     
|                                                                                                      |     
|Ending balance                                                                                        |      |     
|                                                                                                     
|Total Common Stock Equity                                                                             |      |     
|                                                                                                     
|The accompanying Notes to
Consolidated Financial Statements are an integral part of these statements.

9

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

|Year to Date June 30                                                                                  | 2004 | 2003
|----------------------------------------------------------------------------------------------------- | ---- | ----
|                                                                                                     
|
|(thousands, except share data)                                                                       
|Common Stock                                                                                          |     
|Beginning balance                                                                                     |      |     
|Issuance of common stock                                                                              |      |     
|                                                                                                      |     
|Ending balance                                                                                        |      |     
|                                                                                                     
|Unearned Compensation                                                                                 |      |     
|Beginning balance                                                                                     |      |     
|Compensation expense recognized                                                                       |      |     
|                                                                                                      |     
|Ending balance                                                                                        |      |     
|                                                                                                     
|Capital Stock Premium and Expense                                                                     |      |     
|Beginning balance                                                                                     |      |     
|Issuance of common stock                                                                              |      |     
|FELINE PRIDES purchase contract                                                                       |      |     
|adjustment, allocated fees and expenses                                                               |      |     
|Other                                                                                                 |      |     
|                                                                                                      |     
|Ending balance                                                                                        |      |     
|                                                                                                     
|Retained Earnings                                                                                     |      |     
|Beginning balance                                                                                     |      |     
|Net income                                                                                            |      |     
|Loss on reissuance of treasury stock                                                                  |      |     
|Dividends:                                                                                            |      |     
|Common stock                                                                                          |      |     
|Preferred stock - at required rates                                                                   |      |     
|Options                                                                                               |      |     
|                                                                                                      |     
|Ending balance                                                                                        |      |     
|                                                                                                     
|Treasury Stock                                                                                        |      |     
|Beginning balance                                                                                     |      |     
|Treasury shares acquired                                                                              |      |     
|Treasury shares reissued                                                                              |      |     
|                                                                                                      |     
|Ending balance                                                                                        |      |     
|                                                                                                     
|Accumulated Other Comprehensive Loss                                                                  |      |     
|Beginning balance                                                                                     |      |     
|Derivative hedging activity                                                                           |      |     
|Minimum pension obligation                                                                            |      |     
|                                                                                                      |     
|Ending balance                                                                                        |      |     
|                                                                                                     
|Total Common Stock Equity                                                                             |      |     
|                                                                                                     
|The accompanying Notes to
Consolidated Financial Statements are an integral part of these statements.

10

GREAT PLAINS ENERGY
Consolidated Statements of Comprehensive Income
(Unaudited)

|                                                                                                      | Three Months Ended | Year to Date
|----------------------------------------------------------------------------------------------------- | ------------------ | ------------
|
|
|                                                                                                     
|(thousands)                                                                                          
|Net income                                                                                            |                    |             
|                                                                                                     
|Other comprehensive income                                                                            |                    |             
|Gain (loss) on derivative hedging instruments                                                         |                    |             
|Income tax expense                                                                                    |                    |             
|                                                                                                      |                   
|Net gain (loss) on derivative hedging instruments                                                     |                    |             
|                                                                                                      |                   
|Change in minimum pension obligation                                                                  |                    |             
|Income tax expense                                                                                    |                    |             
|                                                                                                      |                   
|Net change in minimum pension obligation                                                              |                    |             
|                                                                                                      |                   
|Reclassification to revenues and expenses, net of tax                                                 |                    |             
|                                                                                                     
|Comprehensive income                                                                                  |                    |             
|                                                                                                     
|The accompanying Notes to
Consolidated Financial Statements are an integral part of these statements.

11

KANSAS CITY POWER & LIGHT COMPANYConsolidated
Balance Sheets(Unaudited)

|                                                                                                                                                  | June 302004 | December 312003
|------------------------------------------------------------------------------------------------------------------------------------------------- | ----------- | ---------------
|                                                                                                                                                 
|(thousands)                                                                                                                                      
|
|Cash and cash equivalents                                                                                                                         |             |                
|Receivables                                                                                                                                       |             |                
|Fuel inventories, at average cost                                                                                                                 |             |                
|Materials and supplies, at average cost                                                                                                           |             |                
|Deferred income taxes                                                                                                                             |             |                
|Other                                                                                                                                             |             |                
|                                                                                                                                                  |            
|Total                                                                                                                                             |             |                
|                                                                                                                                                 
|Nonutility Property and Investments                                                                                                               |             |                
|Nuclear decommissioning trust fund                                                                                                                |             |                
|Other                                                                                                                                             |             |                
|                                                                                                                                                  |            
|Total                                                                                                                                             |             |                
|                                                                                                                                                 
|Utility Plant, at Original Cost                                                                                                                   |             |                
|Electric                                                                                                                                          |             |                
|Less-accumulated depreciation                                                                                                                     |             |                
|                                                                                                                                                 
|Net utility plant in service                                                                                                                      |             |                
|Construction work in progress                                                                                                                     |             |                
|Nuclear fuel, net of amortization of $120,547 and $113,472                                                                                        |             |                
|                                                                                                                                                  |            
|Total                                                                                                                                             |             |                
|                                                                                                                                                 
|Deferred Charges                                                                                                                                  |             |                
|Regulatory assets                                                                                                                                 |             |                
|Prepaid pension costs                                                                                                                             |             |                
|Other deferred charges                                                                                                                            |             |                
|                                                                                                                                                  |            
|Total                                                                                                                                             |             |                
|                                                                                                                                                 
|Total                                                                                                                                             |             |                
|                                                                                                                                                 
|The disclosures regarding KCP&L included in the accompanying Notes to Consolidated Financial Statements are an
integral part of these statements.

12

KANSAS CITY POWER & LIGHT COMPANYConsolidated
Balance Sheets(Unaudited)

|                                                                                                                                                  | June 302004 | December 312003
|------------------------------------------------------------------------------------------------------------------------------------------------- | ----------- | ---------------
|
|(thousands)                                                                                                                                      
|LIABILITIES AND CAPITALIZATION                                                                                                                    |            
|
|Notes payable to Great Plains Energy                                                                                                              |             |                
|Current maturities of long-term debt                                                                                                              |             |                
|EIRR bonds classified as current                                                                                                                  |             |                
|Accounts payable                                                                                                                                  |             |                
|Accrued taxes                                                                                                                                     |             |                
|Accrued interest                                                                                                                                  |             |                
|Accrued payroll and vacations                                                                                                                     |             |                
|Accrued refueling outage costs                                                                                                                    |             |                
|Other                                                                                                                                             |             |                
|                                                                                                                                                  |            
|Total                                                                                                                                             |             |                
|                                                                                                                                                 
|Deferred Credits and Other Liabilities                                                                                                            |             |                
|Deferred income taxes                                                                                                                             |             |                
|Deferred investment tax credits                                                                                                                   |             |                
|Asset retirement obligations                                                                                                                      |             |                
|Pension liability                                                                                                                                 |             |                
|Other                                                                                                                                             |             |                
|                                                                                                                                                  |            
|Total                                                                                                                                             |             |                
|                                                                                                                                                 
|Capitalization                                                                                                                                    |             |                
|Common stock equity                                                                                                                               |             |                
|Common stock-1,000 shares authorized without par value                                                                                            |             |                
|1 share issued, stated value                                                                                                                      |             |                
|Retained earnings                                                                                                                                 |             |                
|Accumulated other comprehensive loss                                                                                                              |             |                
|                                                                                                                                                 
|Total                                                                                                                                             |             |                
|Long-term debt (Note 6)                                                                                                                           |             |                
|                                                                                                                                                  |            
|Total                                                                                                                                             |             |                
|                                                                                                                                                 
|Commitments and Contingencies (Note 12)                                                                                                           |             |                
|                                                                                                                                                 
|Total                                                                                                                                             |             |                
|                                                                                                                                                 
|The disclosures regarding KCP&L included in the accompanying Notes to Consolidated Financial Statements are an
integral part of these statements.

13

KANSAS CITY POWER &
LIGHT COMPANYConsolidated Statements of Income(Unaudited)

|                                                                                                                                                  | Three Months EndedJune 30 | Year to DateJune 30
|------------------------------------------------------------------------------------------------------------------------------------------------- | ------------------------- | -------------------
|
|
|(thousands)                                                                                                                                      
|Operating Revenues                                                                                                                                |                          
|Electric revenues                                                                                                                                 |                           |                    
|Other revenues                                                                                                                                    |                           |                    
|                                                                                                                                                  |                          
|Total                                                                                                                                             |                           |                    
|                                                                                                                                                 
|Operating Expenses                                                                                                                                |                           |                    
|Fuel                                                                                                                                              |                           |                    
|Purchased power                                                                                                                                   |                           |                    
|Other                                                                                                                                             |                           |                    
|Maintenance                                                                                                                                       |                           |                    
|Depreciation and depletion                                                                                                                        |                           |                    
|General taxes                                                                                                                                     |                           |                    
|(Gain) Loss on property                                                                                                                           |                           |                    
|                                                                                                                                                  |                          
|Total                                                                                                                                             |                           |                    
|                                                                                                                                                 
|Operating income                                                                                                                                  |                           |                    
|Non-operating income                                                                                                                              |                           |                    
|Non-operating expenses                                                                                                                            |                           |                    
|Interest charges                                                                                                                                  |                           |                    
|                                                                                                                                                 
|Income from continuing operations before                                                                                                          |                           |                    
|income taxes and minority interest in subsidiaries                                                                                                |                           |                    
|Income taxes                                                                                                                                      |                           |                    
|Minority interest in subsidiaries                                                                                                                 |                           |                    
|                                                                                                                                                 
|Income from continuing operations                                                                                                                 |                           |                    
|Loss from discontinued operations, net                                                                                                            |                           |                    
|of income taxes (Note 8)                                                                                                                          |                           |                    
|                                                                                                                                                 
|Net income                                                                                                                                        |                           |                    
|                                                                                                                                                 
|The disclosures regarding KCP&L included in the accompanying Notes to Consolidated Financial Statements are an
integral part of these statements.

14

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

|Year to date June 30                                                                                                                              | 2004 | 2003
|------------------------------------------------------------------------------------------------------------------------------------------------- | ---- | ----
|
|(thousands)                                                                                                                                      
|Cash Flows from Operating Activities                                                                                                              |     
|Net income                                                                                                                                        |      |     
|Less:  Loss from discontinued operations, net of income taxes                                                                                     |      |     
|                                                                                                                                                  |     
|Income from continuing operations                                                                                                                 |      |     
|Adjustments to reconcile income to net cash                                                                                                       |      |     
|from operating activities:                                                                                                                        |      |     
|Depreciation and depletion                                                                                                                        |      |     
|Amortization of:                                                                                                                                  |      |     
|Nuclear fuel                                                                                                                                      |      |     
|Other                                                                                                                                             |      |     
|Deferred income taxes (net)                                                                                                                       |      |     
|Investment tax credit amortization                                                                                                                |      |     
|(Gain) loss on property                                                                                                                           |      |     
|Minority interest                                                                                                                                 |      |     
|Other operating activities (Note 4)                                                                                                               |      |     
|                                                                                                                                                  |     
|Net cash from operating activities                                                                                                                |      |     
|                                                                                                                                                 
|Cash Flows from Investing Activities                                                                                                              |      |     
|Utility capital expenditures                                                                                                                      |      |     
|Allowance for borrowed funds used during construction                                                                                             |      |     
|Purchases of investments                                                                                                                          |      |     
|Purchases of nonutility property                                                                                                                  |      |     
|Proceeds from sale of assets                                                                                                                      |      |     
|Hawthorn No. 5 partial insurance recovery                                                                                                         |      |     
|Hawthorn No. 5 partial litigation settlements                                                                                                     |      |     
|Other investing activities                                                                                                                        |      |     
|                                                                                                                                                  |     
|Net cash from investing activities                                                                                                                |      |     
|                                                                                                                                                 
|Cash Flows from Financing Activities                                                                                                              |      |     
|Repayment of long-term debt                                                                                                                       |      |     
|Net change in short-term borrowings                                                                                                               |      |     
|Dividends paid to Great Plains Energy                                                                                                             |      |     
|Equity contribution from Great Plains Energy                                                                                                      |      |     
|Other financing activities                                                                                                                        |      |     
|                                                                                                                                                  |     
|Net cash from financing activities                                                                                                                |      |     
|                                                                                                                                                 
|Net Change in Cash and Cash Equivalents                                                                                                           |      |     
|Cash and Cash Equivalents from Continuing                                                                                                         |      |     
|Operations at Beginning of Year                                                                                                                   |      |     
|                                                                                                                                                  |     
|Cash and Cash Equivalents from Continuing                                                                                                         |      |     
|Operations at End of Period                                                                                                                       |      |     
|                                                                                                                                                 
|                                                                                                                                                 
|Net Change in Cash and Cash Equivalents from                                                                                                      |      |     
|Discontinued Operations                                                                                                                           |      |     
|Cash and Cash Equivalents from Discontinued                                                                                                       |      |     
|Operations at Beginning of Year                                                                                                                   |      |     
|                                                                                                                                                  |     
|Cash and Cash Equivalents from Discontinued                                                                                                       |      |     
|Operations at End of Period                                                                                                                       |      |     
|                                                                                                                                                 
|The disclosures regarding KCP&L included in the accompanying Notes to Consolidated Financial Statements are an
integral part of these statements.

15

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

|Three Months Ended June 30                   | 2004 | 2003
|-------------------------------------------- | ---- | ----
|
|
|(thousands, except share data)              
|Common Stock                                 |     
|Beginning balance                            |      |     
|Equity contribution from Great Plains Energy |      |     
|                                             |     
|Ending balance                               |      |     
|                                            
|Retained Earnings                            |      |     
|Beginning balance                            |      |     
|Net income                                   |      |     
|Dividends:                                   |      |     
|Common stock held by Great Plains Energy     |      |     
|                                            
|Ending balance                               |      |     
|                                             |     
|Accumulated Other Comprehensive Loss         |      |     
|Beginning balance                            |      |     
|Derivative hedging activity                  |      |     
|                                             |     
|Ending balance                               |      |     
|                                            
|Total Common Stock Equity                    |      |     
|                                            

|Year to Date June 30                                                                                                                              | 2004 | 2003
|------------------------------------------------------------------------------------------------------------------------------------------------- | ---- | ----
|
|
|(thousands, except share data)                                                                                                                   
|Common Stock                                                                                                                                      |     
|Beginning balance                                                                                                                                 |      |     
|Equity contribution from Great Plains Energy                                                                                                      |      |     
|                                                                                                                                                  |     
|Ending balance                                                                                                                                    |      |     
|                                                                                                                                                 
|Retained Earnings                                                                                                                                 |      |     
|Beginning balance                                                                                                                                 |      |     
|Net income                                                                                                                                        |      |     
|Dividends:                                                                                                                                        |      |     
|Common stock held by Great Plains Energy                                                                                                          |      |     
|                                                                                                                                                  |     
|Ending balance                                                                                                                                    |      |     
|                                                                                                                                                 
|Accumulated Other Comprehensive Loss                                                                                                              |      |     
|Beginning balance                                                                                                                                 |      |     
|Derivative hedging activity                                                                                                                       |      |     
|Minimum pension obligation                                                                                                                        |      |     
|                                                                                                                                                  |     
|Ending balance                                                                                                                                    |      |     
|                                                                                                                                                 
|Total Common Stock Equity                                                                                                                         |      |     
|                                                                                                                                                 
|The disclosures regarding KCP&L included in the accompanying Notes to Consolidated Financial Statements are an
integral part of these statements.

16

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

|                                                                                                                                                  | Three Months EndedJune 30 | Year to DateJune 30
|------------------------------------------------------------------------------------------------------------------------------------------------- | ------------------------- | -------------------
|
|
|(thousands)                                                                                                                                      
|Net income                                                                                                                                        |                           |                    
|                                                                                                                                                 
|Other comprehensive income                                                                                                                        |                           |                    
|Gain (loss) on derivative hedging instruments                                                                                                     |                           |                    
|Income tax expense                                                                                                                                |                           |                    
|                                                                                                                                                  |                          
|Net gain (loss) on derivative hedging instruments                                                                                                 |                           |                    
|                                                                                                                                                  |                          
|Change in minimum pension obligation                                                                                                              |                           |                    
|Income tax expense                                                                                                                                |                           |                    
|                                                                                                                                                  |                          
|Net change in minimum pension obligation                                                                                                          |                           |                    
|                                                                                                                                                  |                          
|Reclassification to revenues and expenses, net of tax                                                                                             |                           |                    
|                                                                                                                                                 
|Comprehensive income                                                                                                                              |                           |                    
|                                                                                                                                                 
|The disclosures regarding KCP&L included in the accompanying Notes to Consolidated Financial Statements are an
integral part of these statements.

17

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

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

In managements opinion, the
consolidated interim financial statements reflect all adjustments (which, unless otherwise
noted, include only normal recurring adjustments) necessary to present fairly the results
of operations for the interim periods presented. These statements and notes should be read
in connection with the applicable financial statements and related notes included in the
combined 2003 Annual Report on Form 10-K, as amended by Amendment No. 1 on Form 10-K/A and
recast to reflect certain discontinued operations by the Current Report on Form 8-K dated
May 12, 2004 (2003 Form 10-K), of Great Plains Energy and consolidated KCP&L.

# 1. ORGANIZATION

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

Great Plains Energy has five direct
subsidiaries:

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

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

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

18

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

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

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

# 2. CASH

Cash and Cash Equivalents
Cash equivalents consist of highly liquid investments with original maturities of three months or less. For Great Plains
Energy this includes Strategic Energys cash held in trust of $19.4 million and $16.1
million at June 30, 2004, and December 31, 2003, respectively.

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

Restricted CashStrategic Energy has entered into
Master Power Purchase and Sale Agreements with its power suppliers. Certain of these
agreements contain provisions whereby, to the extent Strategic Energy has a net exposure
to the purchased power supplier, collateral requirements are to be maintained. Collateral
posted in the form of cash to Strategic Energy is restricted by agreement, but would
become unrestricted in the event of a default by the purchased power supplier. Restricted
cash collateral at June 30, 2004, and December 31, 2003, was $19.5 million and $20.9
million, respectively.

# 3. BASIC AND DILUTED
EARNINGS PER COMMON SHARE CALCULATION

There was no significant dilutive
effect on Great Plains Energys earnings per common share (EPS) from other securities
for the three months ended and year to date June 30, 2004 and 2003. To determine basic
EPS, preferred stock dividend requirements are deducted from income from continuing
operations and net income before dividing by average number of common shares outstanding.
The loss per share impact of discontinued operations, net of income taxes, is determined
by dividing the loss from discontinued operations, net of income taxes, by the average
number of common shares outstanding. Diluted EPS assumes the issuance of common shares
applicable to stock options, performance shares, restricted stock and FELINE PRIDES
calculated using the treasury stock method.

19

The following tables reconcile Great
Plains Energys basic and diluted EPS from continuing operations:

|                                          
|------------------------------------------
|
|
|
|Income from continuing operations         
|Less: Preferred stock dividend requirement
|                                          
|Basic EPS                                 
|Income available to common stockholders   
|Add: effect of dilutive securities        
|                                          
|Diluted EPS                               
|                                          

|                                          
|------------------------------------------
|
|
|
|Income from continuing operations         
|Less: Preferred stock dividend requirement
|                                          
|Basic EPS                                 
|Income available to common stockholders   
|Add: effect of dilutive securities        
|                                          
|Diluted EPS                               
|                                          

|                                          
|------------------------------------------
|
|
|
|Income from continuing operations         
|Less: Preferred stock dividend requirement
|                                          
|Basic EPS                                 
|Income available to common stockholders   
|Add: effect of dilutive securities        
|                                          
|Diluted EPS                               
|                                          

|                                          
|------------------------------------------
|
|
|
|Income from continuing operations         
|Less: Preferred stock dividend requirement
|                                          
|Basic EPS                                 
|Income available to common stockholders   
|Add: effect of dilutive securities        
|                                          
|Diluted EPS                               
|                                          

For the three months ended June 30,
2004 and 2003, and year to date June 30, 2004, there were no anti-dilutive shares
applicable to stock options, performance shares and restricted stock. For the three months
ended and year to date June 30, 2004, the FELINE PRIDES were anti-dilutive. Options to
purchase 305,000 shares of common stock for year to date June 30, 2003, were excluded from
the computation of diluted EPS because they were anti-dilutive due to the option exercise
prices being greater than the average market price of the common shares during the period.

During the second quarter of 2004,
the Company adopted Emerging Issues Task Force Issue (EITF) No. 03-6, Participating
Securities and the Two-Class Method under SFAS No. 128, Earnings Per Share.
For the three months ended and year to date June 30, 2004 and 2003, Great Plains Energy
did not have any participating securities; therefore, EITF No. 03-6 did not have an effect
on EPS.

20

# 4. SUPPLEMENTAL CASH
FLOW INFORMATION

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

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

KCP&L adopted Statement of
Financial Accounting Standards (SFAS) No. 143, Accounting for Asset Retirement
Obligations, on January 1, 2003, and recorded a liability for asset retirement
obligations (ARO) of $99.2 million and increased property and equipment, net of
accumulated depreciation, by $18.3 million. KCP&L is a regulated utility subject to
the provisions of SFAS No. 71, Accounting for the Effects of Certain Types of
Regulation, and management believes it is probable that any differences between
expenses under SFAS No. 143 and expenses recovered currently in rates will be recoverable
in future rates. As a result, the $16.3 million net cumulative effect ($80.9 million gross
cumulative effect net of $64.6 million decommissioning liability previously accrued) of
the adoption of SFAS No. 143 was recorded as a regulatory asset and therefore, had no
impact on net income. The adoption of SFAS No. 143 had no effect on Great Plains Energy
and consolidated KCP&Ls cash flows.

21

# 5. RECEIVABLES

The Companys receivables are
comprised of the following:

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

KCP&L has entered into a
revolving agreement, which expires in October 2004, to sell all of its right, title and
interest in the majority of its customer accounts receivable to Kansas City Power &
Light Receivables Company (Receivables Company), which in turn sells most of the
receivables to outside investors. KCP&L expects the agreement to be renewed annually.
Accounts receivable sold under this revolving agreement totaled $102.6 million and $87.9
million at June 30, 2004, and December 31, 2003, respectively. These sales included
unbilled receivables of $41.2 million and $28.4 million at June 30, 2004, and December 31,
2003, respectively. As a result of the sale to outside investors, Receivables Company
receives up to $70 million in cash, which is forwarded to KCP&L as consideration for
its sale. At June 30, 2004, and December 31, 2003, Receivables Company
had received $65.0 million and $70.0 million in cash, respectively. The
agreement is structured as a true sale under which the creditors of Receivables Company
are entitled to be satisfied out of the assets of Receivables Company prior to any value
being returned to KCP&L or its creditors.

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

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

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

Consolidated KCP&Ls other
receivables at June 30, 2004, and December 31, 2003, consist primarily of receivables from
partners in jointly-owned electric utility plants, wholesale sales receivables and
accounts receivable held by Worry Free. The December 31, 2003, amounts also included
insurance recoveries. Great Plains Energys other receivables at June 30, 2004, and
December 31, 2003, are primarily the accounts receivable held by Strategic Energy
including unbilled receivables of $88.6 million and $81.2 million at June 30, 2004, and
December 31, 2003, respectively.

22

# 6. CAPITALIZATION

Great Plains Energy and consolidated
KCP&Ls long-term debt is as follows:

|                                                                     
|---------------------------------------------------------------------
|
|
|Consolidated KCP&L                                                   
|General Mortgage Bonds                                               
|7.55%*** Medium-Term Notes                                           
|2.35%* and 2.36%** EIRR Bonds                                        
|Senior Notes                                                         
|7.125%                                                               
|6.500%                                                               
|6.000%                                                               
|Unamortized discount                                                 
|EIRR bonds                                                           
|2.29%* and  2.16%** Series A & B                                     
|2.25%*** Series C                                                    
|2.29%* and  2.16%** Series D                                         
|8.3% Junior Subordinated Deferred Interest Bonds                     
|1.31%* and 1.25%** Combustion Turbine Synthetic Lease                
|Current liabilities                                                  
|EIRR bonds classified as current                                     
|Current maturities                                                   
|                                                                     
|Total consolidated KCP&L excluding current liabilities               
|Other Great Plains Energy                                            
|4.25% FELINE PRIDES Senior Notes                                     
|7.63%* and 7.84%** Affordable Housing Notes                          
|                                                                     
|Current maturities                                                   
|                                                                     
|Total consolidated Great Plains Energy excluding current maturities  
|                                                                     
|*   Weighted-average rate as of June 30, 2004                        
|**   Weighted-average rate as of December 31, 2003                   
|***   Weighted-average rate as of June 30, 2004 and December 31, 2003

During the first quarter of 2004,
Great Plains Energy syndicated a $150.0 million 364-day revolving credit facility and a
$150.0 million three-year revolving credit facility with a group of banks. These
facilities replaced a $225.0 million revolving credit facility with a group of banks. A
default by Great Plains Energy or any of its significant subsidiaries of other
indebtedness totaling more than $25.0 million is a default under these bank lines. Under
the terms of these agreements, Great Plains Energy is required to maintain a consolidated
indebtedness to consolidated capitalization ratio not greater than 0.65 to 1.0 at all
times and an interest coverage ratio greater than 2.25 to 1.0, as those ratios are defined
in the agreement. At June 30, 2004, the Company was in compliance with these covenants. At
June 30, 2004, Great Plains Energy had $17.0 million of outstanding borrowings under the
364-day revolving credit facility with a weighted-average interest rate of 4.0%.
Additionally, Great Plains Energy had issued letters of credit totaling $25.0 million
under the 364-day revolving credit facility and $5.5 million under the three-year
revolving credit facility as credit support for Strategic Energy at June 30, 2004. At
December 31, 2003, Great Plains Energy had $87.0 million of outstanding borrowings under
the $225.0 million revolving credit facility with a weighted-average interest rate of
2.12% and had issued a letter of credit for $15.8 million as credit support for Strategic
Energy.

23

Through June 30, 2004, Strategic
Energy maintained a secured revolving credit facility for up to $95 million with a group
of banks. This facility was partially guaranteed by Great Plains Energy. The maximum
amount available for loans and letters of credit under the facility was the lesser of $95
million or the borrowing base, as defined in the agreement. The borrowing base generally
was the sum of certain Strategic Energy accounts receivable and the amount of the Great
Plains Energy guarantee which was $40.0 million at June 30, 2004. At June 30, 2004, $45.5
million in letters of credit had been issued and there were no borrowings under the
agreement. A default by Strategic Energy of other indebtedness, as defined in the
facility, totaling more than $5.0 million was a default under the facility. Under the
terms of this agreement, Strategic Energy was required to maintain a minimum net worth of
$30 million, a maximum debt to EBITDA ratio of 2.0 to 1.0 and a minimum fixed charge ratio
of at least 1.05 to 1.0 as those were defined in the agreement. At June 30, 2004,
Strategic Energy was in compliance with these covenants. This facility was replaced with a
new $125.0 million three-year revolving credit facility with a group of banks on July 2,
2004.

Great Plains Energy has guaranteed
$25.0 million of the new $125.0 million facility. A default by Strategic Energy of 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 $62.5 million, a maximum funded indebtedness to EBITDA
ratio of 2.25 to 1.00, 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 are defined in
the agreement. 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.

Great Plains Energy filed a
registration statement, which became effective in April 2004, for the issuance of an
aggregate amount up to $500.0 million of any combination of senior debt securities,
subordinated debt securities, trust preferred securities and related guarantees, common
stock, warrants, stock purchase contracts or stock purchase units. The prospectus filed
with this registration statement also included $148.2 million of securities remaining
available to be offered under a prior registration statement providing for an aggregate
amount of availability of $648.2 million. In June 2004, Great Plains Energy issued 5.0
million shares of common stock at $30 per share under this registration statement with
$150.0 million in gross proceeds. Issuance costs of $5.6 million are reflected in capital
stock premium and expense on Great Plains Energys consolidated balance sheet and
statement of common stock equity.

24

In June 2004, Great Plains Energy
also issued $163.6 million of FELINE PRIDES under this registration statement.
After these transactions, $171.0 million remains available under the registration statement.
FELINE PRIDES, each with a stated amount of $25, initially consist of an interest in a senior
note due February 16, 2009, and a contract requiring the holder to purchase the
Companys common stock on February 16, 2007. Each purchase contract will obligate
the holder of the purchase contract to purchase, and Great Plains Energy to sell, on
February 16, 2007, for $25 in cash, newly issued shares of the Companys common stock
equal to the settlement rate. The settlement rate will vary according to the applicable
market value of the Companys common stock at the settlement date. Applicable market
value will be measured by the average of the closing price per share of the Companys
common stock on each of the 20 consecutive trading days ending on the third trading day
immediately preceding February 16, 2007. The settlement rate will be applied to the 6.5
million FELINE PRIDES at the settlement date to issue a number of common shares determined
as follows:

|                                                                                                                                               
|-----------------------------------------------------------------------------------------------------------------------------------------------
|
|                                                                                                                                               
|$35.40 or greater                                                                                                                              
|                                                                                                                                               
|$35.40 to $30.00                                                                                                                               
|                                                                                                                                               
|$30.00 or less                                                                                                                                 
|                                                                                                                                               
|(a) Assumes that the market price of the Company's common stock on February 16, 2007, is 
             the same as the applicable market value.

Great Plains Energy will make
quarterly contract adjustment payments at the rate of 3.75% per year and interest payments
at the rate of 4.25% per year both payable in February, May, August and November of each
year, commencing August 16, 2004. Great Plains Energy must attempt to remarket the senior
notes, in whole but not in part. If the senior notes are not successfully remarketed by
February 16, 2007, Great Plains Energy will exercise its rights as a secured party to
dispose of the senior notes in accordance with applicable law and satisfy in full each
holders obligation to purchase the Companys common stock under the purchase
contracts.

The fair value of the contract
adjustment payment of $15.4 million is recorded as a liability in other deferred credits
and other liabilities with a corresponding amount recorded as capital stock premium and
expense on Great Plains Energys consolidated balance sheet. Subsequent contract
adjustment payments will be allocated between the liability and interest expense based on
a constant rate over the life of the purchase contract. Expenses incurred with the
offering were allocated between the senior notes and the purchase contracts. Expenses
allocated to the senior notes of $1.2 million have been capitalized and will be recognized
as interest expense over the term of the notes. Expenses allocated to the purchase
contracts of $4.2 million were recorded as capital stock premium and expense. Great Plains
Energy has the right to defer the contract adjustment payment on the purchase contracts,
but not the interest payments on the senior notes. In the event Great Plains Energy
exercises its option to defer the payment of contract adjustment payments, Great Plains
Energy and its subsidiaries are not permitted to, with certain exceptions, declare or pay
dividends on, make distributions with respect to, or redeem, purchase or acquire, or make
a liquidation payment with respect to, any capital stock of Great Plans Energy until the
deferred contract adjustment payments have been paid.

In 1997, KCPL Financing I issued
$150.0 million of 8.3% preferred securities and KCP&L invested $4.6 million in common
securities of KCPL Financing I. The sole asset of KCPL Financing I is the $154.6 million
principal amount of 8.3% Junior Subordinated Deferrable Interest Debentures, due 2037,
issued by KCP&L. In July 2004, KCP&L redeemed the $154.6 million 8.3% Junior
Subordinated Deferred Interest Debentures which were classified as current maturities on
Great Plains Energys and

25

consolidated KCP&Ls balance sheets at June 30,
2004. KCPL Financing I used the proceeds from the repayment of the 8.3% Junior
Subordinated Deferrable Interest Debentures to redeem the $150.0 million of 8.3% preferred
securities and the $4.6 million of common securities held by KCP&L.

# 7. KLT GAS DISCONTINUED
OPERATIONS

At its February 2004 meeting, the
Board of Directors approved managements recommendation to sell the KLT Gas portfolio
and exit the gas business. Consequently, in the first quarter of 2004, the KLT Gas
portfolio was reported as discontinued operations and KLT Gas historical activities
were reclassified in accordance with SFAS No. 144 Accounting for the Impairment or
Disposal of Long-lived Assets. In the first quarter of 2004, the Company wrote down
the KLT Gas portfolio to its estimated net realizable value, which reduced 2004 year to
date earnings by $1.2 million, or $0.02 per share. The 2004 year to date loss from
discontinued operations also reflects a loss of $0.8 million, or $0.01 per share, from the
wind down operations. Year to date 2003 reflects a loss from discontinued operations of
$6.9 million, or $0.10 per share, and includes a loss of $5.5 million, or $0.08 per share,
related to an impairment on a Rocky Mountain project. To the extent actual proceeds from
the sale of the KLT Gas portfolio differ from the estimated net realizable value used to
determine the write down, any difference will be reflected by Great Plains Energy on its
consolidated statement of income at the conclusion of the sale process.

In early August 2004, KLT Gas
completed the sale of certain of the KLT Gas portfolio assets located in Wyoming,
Colorado, Kansas and Nebraska for approximately $14 million. The after tax gain on disposition of
these assets after consideration of transaction costs and asset retirement obligations
assumed by the buyer is approximately $5 million or $0.07 per share. Management continues
the bid evaluation and the marketing and sales process on the remainder of the KLT Gas
portfolio assets, and expects to complete sales transactions on the remainder of the KLT
Gas portfolio assets by the end of 2004.

The following table summarizes the
discontinued operations through June 30, 2004.

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

26

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

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

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

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

|                                                                                                                                                                                                           
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
|
|(millions)                                                                                                                                                                                                 
|Revenues                                                                                                                                                                                                   
|                                                                                                                                                                                                           
|Loss from operations before income taxes                                                                                                                                                                   
|Loss on disposal before income taxes                                                                                                                                                                       
|                                                                                                                                                                                                           
|Total loss on discontinued operations                                                                                                                                                                      
|before income taxes                                                                                                                                                                                        
|Income tax benefit (a)                                                                                                                                                                                     
|                                                                                                                                                                                                           
|Loss on discontinued operations, net                                                                                                                                                                       
|of income taxes                                                                                                                                                                                            
|                                                                                                                                                                                                           
|(a)   RSAE had continual losses and therefore did not recognize tax benefits.     
     The tax benefit reflected is the tax effect of Great Plains Energy's     
     disposition of its interest in RSAE.

# 9. ACQUISITION OF
ADDITIONAL INDIRECT INTEREST IN STRATEGIC ENERGY

Effective May 6, 2004, Great Plains
Energy, through IEC, completed its purchase of an additional 11.45% indirect interest in
Strategic Energy bringing Great Plains Energys indirect ownership interest in
Strategic Energy to just under 100%. The Company paid cash of $90.0 million, including
$1.2 million of transaction costs. In accordance with the purchase terms, the Company also
recorded a $0.9 million liability for 2004 fractional dividends to the previous owner for
its share of 2004 budgeted Strategic Energy dividends. The transaction costs and the
liability for fractional dividends are preliminary and subject to adjustment throughout
the remainder of the year. See Notes 11 and 13 for additional discussion of the
acquisition.

27

The preliminary purchase price
allocation for the net assets acquired is as follows:

|                                          
|------------------------------------------
|
|
|(millions)                                
|Other non-utility property and investments
|Goodwill                                  
|Other deferred charges                    
|                                          
|Total assets                              
|Accounts payable                          
|Other deferred credits and liabilities    
|                                          
|Net assets acquired                       
|                                          

A third party valuation firm was
utilized in the determination of the purchase price allocation. Based on the valuation,
the acquired share of identifiable intangible assets and liabilities were recorded by IEC
at fair value as part of the purchase price allocation. The acquired share of the fair
value of the identifiable intangibles was a net asset of $19.6 million. The fair value of
acquired supply (intangible asset) and retail (intangible liability) contracts is being
amortized over approximately 28 months. Other intangible assets recorded that have finite
lives and are subject to amortization include customer relationships and asset information
systems, which are being amortized over 72 and 44 months, respectively. An intangible
asset for the Strategic Energy trade name was also recorded and deemed to have an infinite
life, and as such, is not being amortized.

# 10. PENSION PLANS AND
OTHER EMPLOYEE BENEFITS

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

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

On December 8, 2003, the Medicare
Prescription Drug, Improvement and Modernization Act of 2003 (Medicare Act) was signed
into law. The Medicare Act, among other things, provides a federal subsidy beginning in
2006 to sponsors of retiree health care benefit plans. At this time, detailed regulations
necessary to implement the Medicare Act have not been issued. Therefore, in accordance
with Financial Accounting Standards Board (FASB) Staff Position Nos. FAS 106-1 and 106-2, Accounting and Disclosure
Requirements Related to the Medicare Prescription Drug, Improvement and Modernization Act
of 2003, the Company elected to defer accounting for the effects of the Medicare Act
until authoritative guidance is available. Such guidance could require
revision of prior financial statements to include the effects of the Medicare Act. Until
detailed regulations necessary to implement the Medicare Act
are issued, the Company cannot determine the benefit, if any, associated with the
new law. The Company will continue to monitor the new regulations and may amend the plan
in order to benefit from the new legislation.  The Company will adopt the guidance
prescribed by FASB Staff Position No. FAS 106-2 in the third quarter of 2004.

28

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

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

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

# 11. RELATED PARTY
TRANSACTIONS AND RELATIONSHIPS

In May 2004, Great Plains Energy,
through IEC, completed its purchase from SE Holdings, L.L.C. (SE Holdings) of an
additional 11.45% indirect interest in Strategic Energy for $88.8 million, excluding
transaction costs. The purchase increased Great Plains Energys indirect ownership of
Strategic Energy to just under 100%. See Note 9 for additional information regarding the
purchase transaction. Richard Zomnir, currently Chief Executive Officer of Strategic
Energy and certain other current and former employees of Strategic Energy held direct or
indirect interests in SE Holdings. Mr. Zomnir has disclosed that he held an approximate
25% interest in SE Holdings. In connection with the transaction, Mr. Zomnir and other
direct and indirect owners of SE Holdings entered into an agreement with IEC and Strategic
Energy, providing for certain indemnification rights related to the litigation described
in Note 13.

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

29

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

# 12. COMMITMENTS AND
CONTINGENCIES

# Nuclear Liability and
Insurance

Liability Insurance
The Price-Anderson Act currently limits the combined public liability of nuclear reactor owners to $10.8 billion for claims
that could arise from a single nuclear incident. The owners of Wolf Creek, a nuclear
generating station, (Owners) carry the maximum available commercial insurance of $0.3
billion. Secondary Financial Protection, an assessment plan mandated by the Nuclear
Regulatory Commission (NRC), provides insurance for the $10.5 billion balance.

Under Secondary Financial Protection,
if there were a catastrophic nuclear incident involving any of the nations licensed
reactors, the Owners would be subject to a maximum retrospective assessment per incident
of up to $95.8 million plus up to an additional 5% surcharge for a total of $100.6 million
($47.3 million, KCP&Ls 47% share). The Owners are jointly and severally liable
for these charges, payable at a rate not to exceed $10 million ($5 million,
KCP&Ls 47% share) per incident per year, excluding applicable premium taxes. The
assessment, most recently revised in 2004, is subject to an inflation adjustment based on
the Consumer Price Index and renewal of the Price-Anderson Act by Congress.

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

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

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

Under all NEIL policies, 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 about $26.0 million
($12.2 million, KCP&Ls 47% share).

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

30

Low-Level WasteThe Low-Level Radioactive Waste
Policy Amendments Act of 1985 mandated that the various states, individually or through
interstate compacts, develop alternative low-level radioactive waste disposal facilities.
The states of Kansas, Nebraska, Arkansas, Louisiana and Oklahoma formed the Central
Interstate Low-Level Radioactive Waste Compact (Compact) and selected a site in northern
Nebraska to locate a disposal facility. WCNOC and the owners of the other five nuclear
units in the Compact provided most of the pre-construction financing for this project.
KCP&Ls net investment in the Compact was $7.4 million at June 30, 2004, and
December 31, 2003.

Nebraska officials and residents in
the area of the proposed facility have raised significant opposition to the project and
have made attempts through litigation and proposed legislation in Nebraska to slow down or
stop development of the facility. On December 18, 1998, the application for a license to
construct this project was denied. After the license denial, WCNOC and others filed a
lawsuit in federal court contending Nebraska officials acted in bad faith while handling
the license application. In September 2002, the U.S. District Court Judge presiding over
the Compact Commissions federal bad faith lawsuit against the State of
Nebraska issued his decision in the case finding clear evidence that the State of Nebraska
acted in bad faith in processing the license application for a low-level radioactive waste
disposal site in Nebraska and rendered a judgment on behalf of the Compact Commission in
the amount of $151.4 million against the state. The state appealed this decision to the
U.S. Court of Appeals for the Eighth Circuit. On February 18, 2004, a three-judge panel of
the appellate court unanimously affirmed the trial courts decision in its entirety.
On March 2, 2004, Nebraska filed a Petition for Rehearing En Banc with the U.S. Court of
Appeals for the Eighth Circuit. The court denied Nebraskas petition on April 21,
2004. Nebraskas only remaining avenue of appeal is to seek review by the U.S.
Supreme Court. Nebraska filed its petition for review with that court on July 16, 2004.
Based on the favorable outcome of the trial and appeal, in KCP&Ls opinion, there
is a greater possibility of reversing the states license denial once the decision in
this case is final. However, at this juncture it appears more likely that the ultimate
remedy in the case will be Nebraskas payment of monetary damages to the Compact
Commission, or an arrangement by Nebraska and the Compact Commission for long-term waste
disposal capability in another compact region, or a combination of the two, in lieu of
issuance of a license to the proposed Boyd County, Nebraska, facility.

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

Environmental MattersThe Company is subject to regulation
by federal, state and local authorities with regard to air and other environmental matters
primarily through KCP&Ls operations. The generation, transmission and
distribution of electricity produces and requires disposal of certain hazardous products
that are subject to these laws and regulations. In addition to imposing continuing
compliance obligations, these laws and regulations authorize the imposition of substantial
penalties for noncompliance, including fines,

31

injunctive relief and other sanctions.
Failure to comply with these laws and regulations could have a material adverse effect on
consolidated KCP&L and Great Plains Energy.

KCP&L operates in an
environmentally responsible manner and seeks to use current technology to avoid and treat
contamination. KCP&L regularly conducts environmental audits designed to ensure
compliance with governmental regulations and to detect contamination. Governmental bodies,
however, may impose additional or more restrictive environmental regulations that could
require substantial changes to operations or facilities at a significant cost. At June 30,
2004, and December 31, 2003, KCP&L had $1.8 million accrued for environmental
remediation expenses covering water monitoring at one site and unasserted claims for
remediation at a second site. The amounts accrued were established on an undiscounted
basis and KCP&L does not currently have an estimated time frame over which the accrued
amounts may be paid out.

On April 15, 2004, the EPA issued to
KCP&L a notice of violation of Hawthorn No. 5 permit limits on SO2
emissions. SO2emissions from Hawthorn No. 5 exceeded the applicable thirty-day
rolling average emission limit on certain days in the third and fourth quarters of 2003
and also exceeded the applicable 24-hour emission limit on one day in the fourth quarter
of 2003. Equipment issues that caused these violations are being addressed by KCP&L.
KCP&L management does not expect the cost of correcting the equipment issues or
resolving this matter with the EPA to be material to its financial statements.

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

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

EPA Phase II NOx SIP Call
On April 1, 2004, the Environmental
Protection Agency (EPA) issued final Phase II NOx State Implementation Plan
(SIP) Call regulation, which specifically excludes coal-fired power plants in the western
part of Missouri, including all of KCP&Ls Missouri coal-fired plants, from the
NOx SIP Call. The final Phase II NOx SIP Call was contained in the
April 21, 2004, Federal Register with an effective date of June 7, 2004. The final Phase
II NOx SIP Call regulation subjects power plants in the eastern one-third of
Missouri to the NOx SIP Call requirements effective May 1, 2007. This action
completes the EPAs response to several decisions from the U.S. Court of Appeals for
the District of Columbia.

NOx and
SO2 Regulations-Proposed Clean Air Interstate Rule
In January 30, 2004, Federal
Register, the EPA published a proposed regulation titled the Interstate Air Quality Rule,
which addresses SO2 and NOx emissions. This title was subsequently
changed to the Clean Air Interstate Rule (CAIR). A supplemental proposal for the CAIR was
published in the June 10, 2004, Federal Register. The proposed CAIR is designed to reduce
NOx and SO2emissions 65% and 70%, respectively, below current
levels in a two-phased program between 2010 and 2015.

32

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

In the May 5, 2004, Federal Register,
the EPA published proposed regulations on best available retrofit technology (BART) that
would amend its July 1999 regional haze regulations regarding emission controls for
industrial facilities emitting air pollutants that reduce visibility. The BART requirement
would direct state air quality agencies to identify whether emissions from sources subject
to BART are below limits set by the state, or whether retrofit measures are needed to
reduce the emissions below those limits. If the proposed BART regulations are adopted,
they will apply to KCP&L units Montrose No. 3, LaCygne No. 1, LaCygne No. 2 and Iatan.
Based on the results of the state air quality studies, KCP&L could be required to
achieve compliance by making capital expenditures that would be similar to those required
for the proposed CAIR. The EPA is scheduled to adopt final regulations by April 15, 2005;
however, if the proposed CAIR is adopted, management believes the EPA will reevaluate the
need for the proposed BART regulation.

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

Under either of the cap and trade
options, both of which would become applicable in 2010, the EPA would establish a
mechanism by which mercury emissions from new and existing coal-fired plants would be
capped at specified, nationwide levels. A first phase cap of 34 tons would become
effective on January 1, 2010, and a second phase cap of 15 tons would become effective on
January 1, 2018. Facilities would demonstrate compliance with the standard by holding one
allowance for each ounce of mercury emitted in any given year and allowances would be
readily transferable among all regulated facilities nationwide. Under the cap and trade
options, KCP&L would be able to purchase mercury allowances that would be available
nationwide or elect to install pollution control equipment to achieve compliance. While it
is expected that mercury allowances would be available for purchase at a reasonable price
in the 2010-2018 timeframe, the significant reduction in the nationwide cap in 2018 may
hamper KCP&Ls ability to obtain reasonably priced allowances beyond 2018.
Therefore, capital expenditures may be required in the 2016-2018 timeframe to install
mercury pollution control equipment.

33

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

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

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

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

On February 14, 2002, President Bush
unveiled his Clear Skies Initiative, which included a climate change policy. The climate
change policy is a voluntary program that relies heavily on incentives to encourage
industry to voluntarily limit emissions. The strategy includes tax credits, energy
conservation programs, funding for research into new technologies, and a plan to encourage
companies to track and report their emissions so that companies could gain credits for use
in any future emissions trading program. The greenhouse strategy links growth in emissions
of greenhouse gases to economic output. The administrations strategy is intended to
reduce the greenhouse gas intensity of the U.S. economy by 18% over the next 10 years.
Greenhouse gas intensity measures the ratio of greenhouse gas emissions to economic output
as measured by Gross Domestic Product (GDP). Under this plan, as the economy grows,
greenhouse gases also would continue to grow, although at a slower rate than they would
have without these policies in place. When viewed per unit of economic output, the rate of
emissions would drop. The plan projects that the U.S. will lower its rate of greenhouse
gas emissions from an estimated 183 metric tons per $1 million of GDP in 2002 to 151
metric tons per $1 million of GDP by 2012.

34

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

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

In the near future, Power Partners
plans to enter into a cooperative umbrella MOU with the DOE. This will contain supply and
demand-side actions as well as offset projects that will be undertaken to reduce the power
sectors CO2 emissions per kWh generated over the next decade consistent
with the EEI commitment. Once the MOU is completed, individual companies, including
KCP&L, will enter into agreements with the DOE that set forth quantitative, concrete
and specific activities to reduce, avoid or sequester greenhouse gases.

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

Air Particulate Matter and Ozone
In July 1997, the EPA revised ozone
and particulate matter air quality standards creating a new eight-hour ozone standard and
establishing a new standard for particulate matter less than 2.5 microns (PM-2.5) in
diameter. These standards were challenged in Federal court. However, the courts ultimately
denied all state, industry and environmental groups petitions for review and thus upheld
as valid the EPAs new eight-hour ozone and PM-2.5 National Ambient Air Quality
Standards (NAAQS). In so doing, the court held that the EPA acted consistently with the
Clean Air Act in setting the standards at the levels it chose and the EPAs actions
were reasonable and not arbitrary and capricious, and cited the deference given the
EPAs decision-making authority. The court stated that the extensive records
established for each rule supported the EPAs actions in both rulemakings. This
removed the last major hurdle to the EPAs implementation of stricter ambient air
quality standards for ozone and fine particles. On April 15, 2004, the EPA designated the
Kansas City area as unclassifiable with respect to the eight-hour ozone NAAQS based on
2003 ozone season data and in attainment with respect to the PM-2.5 NAAQS. However, the
EPA could review the 2004 ozone season data and reclassify the Kansas City area with
respect to the eight-hour ozone NAAQS as early as November 2004. On April 15, 2004, Kansas
recommended that the EPA designate all of Kansas as in attainment/unclassifiable with
respect to the PM-2.5 NAAQS.

Proposed Water Use Regulations
On February 16, 2004, the EPA
finalized the Phase II rule implementing Section 316(b) of the Clean Water Act
establishing standards for cooling water intake structures at existing facilities. The
final rule was published in the July 9, 2004, Federal Register with an effective date of
September 7, 2004. This final regulation is applicable to certain existing power producing
facilities that employ cooling water intake structures that withdraw 50 million gallons or
more per day and use 25% or more of that water

35

for cooling purposes. KCP&L will be
required to complete a Section 316(b) comprehensive demonstration study on each of its
generating facilities intake structures within the next three and one half years.
Depending on the outcome of the comprehensive demonstration study, facilities may be
required to implement technological, operational, or restoration measures to achieve
compliance. Overall, compliance is scheduled to be achieved between 2011 and 2014. Costs
of the required comprehensive demonstration study are expected to be $0.3 million to $0.5
million per facility and occur between 2004 and 2006. Until the Section 316(b)
comprehensive demonstration studies are completed, the impact of this final rule cannot be
quantified.

# 13. LEGAL PROCEEDINGS

Strategic Energy On March 23, 2004, Robert C.
Haberstroh filed suit for breach of employment contract and violation of the Pennsylvania
Wage Payment Collection Act against Strategic Energy Partners, Ltd. (Partners), SE
Holdings and Strategic Energy in the Court of Common Pleas of Allegheny County,
Pennsylvania. Mr. Haberstroh claims that he acquired an equity interest in Partners under
the terms of his employment agreement and that through a series of transactions, Mr.
Haberstrohs equity interest became an equity interest in SE Holdings. In 2001, Mr.
Haberstrohs employment was terminated. Mr. Haberstrohs equity interest was
redeemed by SE Holdings. Mr. Haberstroh is seeking the loss of his non-equity compensation
(including salary, bonus and benefits) and equity compensation and associated
distributions (his equity interest in SE Holdings).

Strategic Energy has filed a
counterclaim against Mr. Haberstroh for breach of contract and a declaratory judgment. SE
Holdings, and its direct and indirect owners, have agreed to indemnify Strategic Energy
and Innovative Energy Consultants Inc. against any judgment or settlement of Mr.
Haberstrohs claim that relates to his equity interest in SE Holdings, up to a
maximum amount of approximately $8 million.

See Note 11 for further information
regarding related party transactions.

KLT GasOn July 28, 2004, KLT Gas received a
Notice and Demand for Arbitration Pursuant to Joint Operating Agreement from SWEPI LP
(d/b/a Shell Western E&P and f/k/a Shell Western E&P Inc.) (Shell). KLT Gas has a
50% working interest in certain oil and gas leases in Duval County, Texas; Shell holds the
other 50% working interest and is the operator of the properties under a joint operating
agreement, as amended (JOA). Three groups of current or past lessors filed suit against
Shell in Duval County, Texas, alleging various claims against Shell. Additionally, Shell
has been party to ongoing proceedings before the Texas Railroad Commission relating to a
well drilled on acreage adjacent to the properties of Shell and KLT Gas mentioned above.
Through arbitration, Shell is seeking recovery from KLT Gas of 50% of the fees and costs
incurred in the three lawsuits and the Texas Railroad Commission proceedings and
settlement proceeds paid with respect to the three lawsuits, which Shell asserts is a
total amount of not less than $5.4 million for KLT Gas share. Shell is also seeking
a declaration that the fees and costs incurred and settlement proceeds paid, including any
fees and costs incurred in the future, are reimbursable expenses under the JOA and that
Shell, among other things, may recoup such expenses, if necessary, from KLT Gas
production proceeds earned on properties covered by the JOA. Shell is seeking a ruling
compelling KLT Gas to pay Shell immediately all sums deemed to be due pursuant to the
arbitration. KLT Gas and its counsel continue to evaluate KLT Gas rights and
obligations under the JOA as well as possible counterclaims that KLT Gas may have against
Shell; however, it is too early to predict the ultimate outcome of this demand for arbitration.

36

# 14. SEGMENT AND RELATED
INFORMATION

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

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

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

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

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

37

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

|                                                                                                                                                               
|---------------------------------------------------------------------------------------------------------------------------------------------------------------
|
|
|
|June 30, 2004                                                                                                                                                  
|Assets                                                                                                                                                         
|Capital and investment expenditures (a)                                                                                                                        
|                                                                                                                                                               
|December 31, 2003                                                                                                                                              
|Assets                                                                                                                                                         
|Capital and investment expenditures (a) (b)                                                                                                                    
|                                                                                                                                                               
|(a) Capital and investment expenditures reflect annual amounts for the periods presented.                                                                      
|(b) At December 31, 2003, KLT Gas discontinued operations had $19.4 million in capital and    
        investment expenditures not included in the table above.

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

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

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

38

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

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

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

# 15. DERIVATIVE FINANCIAL
INSTRUMENTS

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

Interest Rate Risk Management
In 2002, KCP&L remarketed its
1998 Series A, B, and D Environmental Improvement Revenue Refunding bonds totaling $146.5
million to a 5-year fixed interest rate of 4.75% ending October 1, 2007. Simultaneously
with the remarketing, KCP&L entered into an interest rate swap for the $146.5 million
based on the London Interbank Offered Rate (LIBOR) to effectively create a floating
interest rate obligation. The transaction is a fair value hedge with no ineffectiveness.
Changes in the fair market value of the swap are recorded on the balance sheet as an asset
with an offset to the respective debt balances with no impact on earnings. The fair value
of the swap was an asset of $0.3 million and $3.3 million at June 30, 2004, and December
31, 2003, respectively.

39

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

Strategic Energy maintains a
commodity-price risk management strategy that uses forward physical energy purchases and
derivative instruments to minimize significant, unanticipated earnings fluctuations caused
by commodity-price volatility. Supplying electricity to retail customers requires
Strategic Energy to match customers projected demand with fixed price purchases.
Derivative instruments are used to limit the unfavorable effect that price increases will
have on electricity purchases, effectively fixing the future purchase price of electricity
for the applicable forecasted usage and protecting Strategic Energy from significant price
volatility. Certain forward fixed price purchases and swap agreements are designated as
cash flow hedges resulting in changes in the hedge value being recorded as OCI. To the
extent that the hedges are not effective, the ineffective portion of the changes in fair
market value is recorded currently in purchased power. Strategic Energy also enters into
economic hedges that do not qualify as accounting hedges. The changes in the fair value of
these derivative instruments are recorded into earnings as a component of purchased power.

The amounts recorded in accumulated
other comprehensive income (AOCI) related to the cash flow hedges are summarized in the
following tables:

|Activity for the three months ended June 30, 2004
|-------------------------------------------------
|
|
|
|(millions)                                       
|Current assets                                   
|Other deferred charges                           
|Other current liabilities                        
|Deferred income taxes                            
|Other deferred credits                           
|                                                 
|Total                                            
|                                                 
|Consolidated KCP&L                               
|Other current assets                             
|Deferred income taxes                            
|                                                 
|Total                                            
|                                                 

40

|Activity for the three months ended June 30, 2003
|-------------------------------------------------
|
|
|
|(millions)                                       
|Other current assets                             
|Other deferred charges                           
|Other current liabilities                        
|Deferred income taxes                            
|Other deferred credits                           
|                                                 
|Total                                            
|                                                 
|Consolidated KCP&L                               
|Other current assets                             
|Deferred income taxes                            
|                                                 
|Total                                            
|                                                 

|Activity for the year to date June 30, 2004
|-------------------------------------------
|
|
|
|(millions)                                 
|Current assets                             
|Other deferred charges                     
|Other current liabilities                  
|Deferred income taxes                      
|Other deferred credits                     
|                                           
|Total                                      
|                                           
|Consolidated KCP&L                         
|Other current assets                       
|Deferred income taxes                      
|                                           
|Total                                      
|                                           

|Activity for the year to date June 30, 2003
|-------------------------------------------
|
|
|
|(millions)                                 
|Other current assets                       
|Other deferred charges                     
|Other current liabilities                  
|Deferred income taxes                      
|Other deferred credits                     
|                                           
|Total                                      
|                                           
|Consolidated KCP&L                         
|Other current assets                       
|Deferred income taxes                      
|                                           
|Total                                      
|                                           

41

|Reclassified to earnings for the three months ended June 30
|-----------------------------------------------------------
|
|
|
|(millions)                                                 
|Purchased power expense                                    
|Minority interest                                          
|Income taxes                                               
|                                                           
|OCI                                                        
|                                                           

|Reclassified to earnings for the year to date June 30
|-----------------------------------------------------
|
|
|
|(millions)                                           
|Purchased power expense                              
|Minority interest                                    
|Income taxes                                         
|                                                     
|OCI                                                  
|                                                     

42

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

The Managements Discussion and
Analysis of Financial Condition and Results of Operations that follow are a combined
presentation for Great Plains Energy and consolidated KCP&L, both registrants under
this filing. The discussion and analysis by management focuses on those factors that had a
material effect on the financial condition and results of operations of the registrants
during the periods presented. It should be read in conjunction with the accompanying
consolidated financial statements and related notes and with the managements
discussion and analysis included in the companies 2003 Form 10-K.

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

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

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

|  |                                                                                                                                                                                                                                                                                                                           
|- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|o | KCP&L, an integrated, regulated electric utility, which provides reliable, affordable electricity to customers in the states
     of Missouri and Kansas and                                                                                                                                                              
|o | Strategic Energy, which provides competitive electricity supply services by entering into contracts with its customers to
     supply electricity, operates in several electricity markets offering retail choice, including California, Massachusetts,
     Michigan, New Jersey, New York, Ohio, Pennsylvania and Texas.

Strategic Planning and
IntentOver the first six months of 2004,
the Company engaged in a comprehensive strategic planning process to map its view of the
future of the electric industry, and ultimately the Company, over the next five to ten
years. This inclusive process drew on the creativity and skills of employees, outside
experts and community leaders. KCP&L held a series of public forums during June and
July 2004 in Missouri and Kansas to discuss how to meet the areas growing need for
electricity and cleaner air.

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

In July 2004, Great Plains Energy unveiled six key elements to its long-range strategic intent.

|  |                                                                                                                                                                                                                                        
|- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|o | KCP&L will expand and diversify its regulated supply portfolio to include new coal and wind generation.                                                                                                                                
|o | KCP&L will accelerate its investments in improving the environmental performance of its fleet, helping to protect its community's
     quality of life and preparing for an uncertain future of potentially more stringent regulations.

43

|o | KCP&L will adopt new delivery technology to enhance the reliability and efficiency of its delivery system.  This technology will
     allow KCP&L to transform the delivery grid from a one-way to a two-way system.  Customers will serve as both consumers and
     virtual suppliers of electricity through distributed generation and various demand response programs.
|- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|o | Great Plains Energy will continue to profitably grow its competitive supply business, expanding into new markets, and creating
     new offerings when economical, and further cementing its reputation as the premium energy retailer from the standpoint of
     customer focus and value added.                                                                         
|o | Great Plains Energy will collaborate even more closely with customers, communities, and regulators to take a broader view in
     anticipating and meeting their energy needs.                                                                                                                                                                                             
|o | Great Plains Energy will continue to manage its business to achieve disciplined growth, and strong operating performance, and
     deliver strong returns to its shareholders.                                                                                                                                                                                             

In initiating the Company's
strategic intent, KCP&L held a series of public forums during June and July 2004 in
Missouri and Kansas to discuss how to meet the area's growing need for electricity and
cleaner air.  After receiving input through the public forums, KCP&L is currently
discussing with Kansas and Missouri state regulators a proposed plan including:

|  |                                                                                                                               
|- | ------------------------------------------------------------------------------------------------------------------------------
|o | accelerated environmental investments of $300 million to $350 million for selected existing plants,                           
|o | investment in up to 200 megawatts of wind generation,                                                                         
|o | building and owning up to 500 megawatts of an 800 to 900 megawatt regulated coal fired plant at the Iatan site in Missouri and
|o | development of technologies and pilot programs to help customers conserve energy.                                             

The proposal has the potential to add
over $1 billion in rate-based investment for KCP&L over the next 10 years. For more
information concerning the strategic intent, refer to www.greatplainsenergy.com.

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

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

In February 2004, the Great Plains
Energy Board of Directors approved managements recommendation to sell the KLT Gas
portfolio and exit the gas business. The Company evaluated this business and determined
the amount of capital and the length of time required for development of reserves and
production combined with the earnings volatility of the exploration process are no longer
compatible with the Companys strategic vision. As a result of this decision, the
Company wrote down

44

the KLT Gas portfolio to its estimated net realizable value in the
first quarter of 2004. The $1.9 million write down reduced earnings by $1.2 million year
to date June 30, 2004, and is included in Loss from discontinued operations, net of income
taxes in Great Plains Energys consolidated statement of income.

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

Related Party TransactionsIn May 2004, Great Plains Energy,
through IEC, completed the purchase from SE Holdings of an additional 11.45% indirect
interest in Strategic Energy for $88.8 million, excluding transaction costs. The purchase
increased Great Plains Energys indirect ownership of Strategic Energy to just under
100%. In connection with the transaction, Mr. Zomnir, currently Chief Executive Officer of
Strategic Energy, and other direct and indirect owners of SE Holdings entered into an
agreement with IEC and Strategic Energy, providing for certain indemnification rights
related to the litigation described in Note 13 to the consolidated financial statements.
SE Holdings continues to be a member of Custom Energy Holdings and be represented on the
Management Committees of Custom Energy Holdings and Strategic Energy.

Great Plains Energy Results of
Operations

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

45

Three months ended June
30, 2004, compared to June 30, 2003Great Plains Energys earnings
for the three months ended June 30, 2004, detailed in the table below, decreased to $41.2
million, or $0.59 per share, from $50.5 million, or $0.73 per share, compared to the same
period of 2003.

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

KCP&Ls earnings increased
$10.3 million for the three months ended June 30, 2004, compared to the same period of
2003. KCP&Ls operating revenues increased $27.4 million primarily due to
significant increases in wholesale MWhs sold and the average market price per MWh sold.
This increase was partially offset by fuel expense and other operating expenses.

Strategic Energys earnings
decreased $0.3 million for the three months ended June 30, 2004, compared to the same
period of 2003. The decrease is the result of a reduction in the gross margin per MWh and
increased administrative and general expenses. Gross margin per MWh (revenues less
purchased power divided by MWhs delivered) decreased 18% to $6.20 for the three months
ended June 30, 2004.

Other non-regulated operations
earnings for the three months ended June 30, 2003, includes $25.9 million for the effects
of the June 2003 confirmation of the restructuring plan of DTI Holdings, Inc., Digital
Teleport, Inc., and Digital Teleport of Virginia, Inc. and sale of substantially all of
the assets of Digital Teleport, Inc. to a subsidiary of CenturyTel, Inc.

Year to date June 30,
2004, compared to June 30, 2003Great Plains Energys earnings
year to date June 30, 2004, detailed in the table below, increased to $68.1 million, or
$0.98 per share, from $64.6 million, or $0.93 per share, compared to the same period of
2003.

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

46

KCP&Ls earnings increased
$18.5 million year to date June 30, 2004, compared to the same period of 2003.
KCP&Ls operating revenues increased $39.5 million primarily due to a significant
increase in wholesale MWhs sold and the average market price per MWh sold. This increase
was partially offset by increases in fuel expense and other operating expenses.

Strategic Energys earnings
decreased $0.8 million year to date June 30, 2004, compared to the same period of 2003.
The decrease is the result of a reduction in the gross margin per MWh and increased
administrative and general expenses. Gross margin per MWh (revenues less purchased power
divided by MWhs delivered) decreased 15% to $6.50 year to date June 30, 2004.

Other non-regulated operations
earnings year to date June 30, 2003, includes the $25.9 million effect of DTI discussed
above.

The loss from discontinued operations
(KLT Gas) of $2.0 million year to date June 30, 2004, includes a write down of the KLT Gas
portfolio to its estimated net realizable value, which reduced earnings by $1.2 million,
and year to date losses of $0.8 million from the wind down operations. Year to date June
30, 2003, loss of $6.9 million includes a loss of $5.5 million related to an impairment on
a Rocky Mountain project. The $6.9 million loss has been reclassified and presented as
discontinued operations.

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

Consolidated KCP&L Business
OverviewAs an integrated, regulated electric
utility, KCP&L engages in the generation, transmission, distribution and sale of
electricity. KCP&L has over 4,000 MW of generating capacity and has transmission and
distribution facilities that served over 490,000 customers as of June 30, 2004. KCP&L
has continued to experience load growth approximating the historical average of 2.0% to
2.5% annually through increased customer usage and additional customers. Rates charged for
electricity are below the national average.

Under the Federal Energy Regulatory
Commission (FERC) Order 2000, KCP&L, as an investor-owned utility, is strongly
encouraged to join a FERC approved Regional Transmission Organization (RTO). RTOs combine
transmission operations of utility businesses into regional organizations that schedule
transmission services and monitor the energy market to ensure regional transmission
reliability and non-discriminatory access. During February 2004, the Southwest Power Pool
(SPP), of which KCP&L is a member, obtained conditional approval from FERC as an RTO.
In response to the conditional approval, SPP made a compliance filing with FERC in early
May 2004, demonstrating how it will comply with all of the conditions required to obtain
final RTO approval. On July 2, 2004, FERC issued an Order responding to SPPs
compliance filing. In this latest FERC Order, FERC recognized SPPs significant
progress towards obtaining RTO status; however, FERC also directed SPP to make an
additional compliance filing within 30 days. It is anticipated that SPP can meet the terms
of this Order. The SPP made its second compliance filing in early August 2004. KCP&L
intends on participating in SPPs RTO; however, state regulatory approvals will be
required.

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

47

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

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

Consolidated KCP&Ls income
from continuing operations for the three months ended June 30, 2004, compared to the same
period of 2003, increased $10.3 million. Consolidated KCP&Ls operating revenues
increased $27.1 million primarily due to a 21% increase in KCP&Ls wholesale MWh
sales. The increase was partially offset by increased fuel, purchased power and other
operating expenses including pension, transmission and employee-related expenses.

Consolidated KCP&Ls income
from continuing operations increased $18.4 million year to date June 30, 2004, compared to
the same period of 2003. Consolidated KCP&Ls operating revenues increased $39.2
million primarily due to an 18% increase in KCP&Ls wholesale MWh sales and an
11% increase in average wholesale power prices. The increase was partially offset by
increased fuel and other operating expenses.

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

Discontinued operations from RSAE
year to date June 30, 2003, were a loss of $8.7 million, which included a $7.5 million
loss for the three months ended June 30, 2003. The $7.5 million included a $7.1 million
loss on the disposition of HSS interest in RSAE.

48

# Consolidated KCP&L
Sales Revenues and MWh Sales

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

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

Retail revenues increased by $9.3
million for the three months ended and $13.3 million year to date June 30, 2004, compared
to the same periods of 2003. The increases in revenues are primarily due to warmer spring
weather and continued load growth. Load growth consists of higher usage per customer and
the addition of new customers. Weather most significantly affects residential
customers usage patterns. Residential usage per customer increased 8% and 5% for the
three months ended and year to date June 30, 2004, compared to the same periods of 2003,
respectively. Less than 1% of revenues include an automatic fuel adjustment provision.

Wholesale revenues increased by $17.6
million for the three months ended and $24.9 million year to date June 30, 2004, compared
to the same periods of 2003. Bulk power sales, the major component of wholesale sales,
vary with system requirements, generating unit and purchased power availability, fuel
costs and requirements of other electric systems. KCP&Ls coal fleet equivalent
availability factor increased to 79% for the three months ended and 81% year to date June
30, 2004, compared to 72% and 74%, respectively, for the same periods of 2003,
contributing to an increased volume of MWhs available to sell. In addition to these
factors, wholesale MWh sales increased by 21% for the three months ended and 18% year to
date, compared to the same periods of 2003, due to market prices in excess of
KCP&Ls generation cost, the packaging of generation and transmission service to
provide a delivered product and expanded marketing efforts. Higher average market prices
per MWh of power sold increased 37% for the three months ended and 11% year to date,
compared to the same periods of 2003, which also contributed to the increases in wholesale
revenues.

KCP&L Fuel and Purchased PowerThe fuel cost per MWh generated and
the purchased power cost per MWh has a significant impact on the results of operations for
KCP&L. Generation fuel mix can change the fuel cost per MWh generated

49

substantially.
Nuclear fuel costs per MWh generated remain substantially less than the cost of coal per
MWh generated. Replacement power costs for planned Wolf Creek outages are accrued evenly
over the units operating cycle. KCP&L expects its cost of nuclear fuel to remain
constant through the year 2008. Coal has a significantly lower cost per MWh generated than
natural gas and oil. KCP&Ls procurement strategies continue to provide delivered
coal costs below the regional average. Fossil plants averaged over 75% of total generation
and the nuclear plant the remainder over the last three years. The cost per MWh for
purchased power is still significantly higher than the fuel cost per MWh of coal and
nuclear generation. KCP&L continually evaluates its system requirements, the
availability of generating units, availability and cost of fuel supply, availability and
cost of purchased power and the requirements of other electric systems to provide reliable
power economically.

Fuel expense increased $5.2 million
for the three months ended and $8.4 million year to date June 30, 2004, compared to the
same periods of 2003, primarily due to an increase in MWhs generated of 10% and 9%,
respectively, due mostly to fewer planned and unplanned plant outages than in the 2003
comparative periods.

Purchased power expense increased
$1.5 million for the three months ended, but decreased $2.1 million year to date June 30,
2004, compared to the same periods of 2003. The three months ended increase is primarily
due to a 20% increase in the average price per MWh driven by increased natural gas prices
and increased demand in the market area. The year to date decrease is due to a 14%
decrease in MWhs purchased partially offset by an 11% increase in the average price per
MWh. The decrease in MWhs purchased is primarily due to a 9% increase in net generation.
The partial settlement of Hawthorn No. 5 litigation also reduced purchased power expense
by $0.6 million year to date June 30, 2004.

Consolidated KCP&L Other Operating
Expenses (including operating, maintenance and general taxes) Consolidated KCP&Ls other
operating expenses increased $4.9 million for the three months ended June 30, 2004,
compared to the same period of 2003 primarily due to the following:

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

Consolidated KCP&Ls other operating
expenses increased $9.5 million year to date June 30, 2004, compared to the same period
of 2003 primarily due to the following:

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

50

|o |  | partially offsetting the increases were lower production maintenance expense of $3.2 million primarily due to differences in timing and scope of outages. | 
|- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------- | 

Consolidated KCP&L DepreciationConsolidated KCP&Ls
depreciation expense increased $1.4 million for the three months ended and $2.4 million
year to date June 30, 2004, compared to the same periods of 2003. The increases are
primarily due to the consolidation of the Lease Trust, as described in the 2003 Form 10-K,
which began in the fourth quarter of 2003.

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

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

There has been significant opposition
and delays to development of a low-level radioactive waste disposal facility. See Note 12
to the consolidated financial statements for additional information. An inability to
complete this project would require KCP&L to write-off its net investment in the
project, which was $7.4 million at June 30, 2004. KCP&L, and the other owners of Wolf
Creek, could also still be required to participate in development of an alternate site.

Ownership and operation of a nuclear
generating unit exposes KCP&L to risks regarding decommissioning costs at the end of
the units life and to potential retrospective assessments and property losses in
excess of insurance coverage. These risks are more fully discussed in the related sections
of Note 12 to the consolidated financial statements.

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

Great Plains Energy owns just under
100% of the indirect interest in Strategic Energy after IECs May 6, 2004, purchase
of an additional 11.45% indirect interest. The Company paid cash of $90.0 million,
including $1.2 million of transaction costs. See Note 9 for additional information about
the acquisition.

In the normal course of business,
Great Plains Energy provides financial or performance assurance to third parties on behalf
of Strategic Energy in the form of guarantees to those third parties. Additionally, Great
Plains Energy provides guarantees and indemnities supporting letters of credit and surety
bonds obtained by Strategic Energy. These agreements are entered into primarily to support
or enhance the

51

creditworthiness otherwise
attributed to Strategic Energy on a stand-alone basis, thereby facilitating the extension
of sufficient credit to accomplish Strategic Energys intended business purposes.

At June 30, 2004, Strategic Energy
provided competitive electricity supply to almost 53,000 commercial, institutional and
small manufacturing accounts. Strategic Energys customer base is very diverse.
Strategic Energy served almost 7,700 customers, including numerous Fortune 500 companies,
smaller companies and governmental entities. Based solely on current signed contracts and
expected usage, Strategic Energy has forecasted future MWh commitments (backlog) of 9.8
million for the remainder of 2004, 12.8 million for 2005 and 3.9 million for 2006.
Strategic Energy expects to deliver additional MWhs in these years through growth in
existing markets and expansion into new markets. Strategic Energy made modest progress on
building backlog in the three months ended June 30, 2004, due primarily to the difficult
current environment in the competitive supply business. At June 30, 2004, the combination
of MWhs delivered and backlog for 2004 was approximately 19.3 million MWhs, compared to
18.1 million MWhs at March 31, 2004. This figure is already within the 2004 target of
19-21 million MWhs delivered. At June 30, 2004, backlog for 2005 was approximately 12.8
million MWhs compared to 12.0 million MWhs at March 31, 2004.

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

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

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

Strategic Energy enters into forward
contracts with multiple suppliers. At June 30, 2004, Strategic Energys five largest
suppliers under forward supply contracts represented 67% of the total future committed
purchases. Strategic Energys five largest suppliers, or their guarantors, are rated
investment grade. In the event of supplier non-delivery or default, Strategic
Energys results of operations could be affected to the extent the cost of
replacement power exceeded the combination of the contracted price with the supplier and
the amount of collateral held by Strategic Energy to mitigate its credit risk with the
supplier. Strategic Energys results of operations could also be affected, in a given
period, if it was required to make a payment upon termination of a supplier contract to
the extent that the contracted price with the supplier exceeded the market value of the
contract at the time of termination.

The following table provides
information on Strategic Energys credit exposure, net of collateral, as of June 30,
2004. It further delineates the exposure by the credit rating of counterparties and
provides

52

guidance on the concentration of
credit risk and an indication of the maturity of the credit risk by credit rating of the
counterparties.

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

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

External ratings are determined by
using publicly available credit ratings of the counterparty. If a counterparty has
provided a guarantee by a higher rated entity, the determination has been based on the
rating of its guarantor. Internal ratings are determined by, among other things, an
analysis of the counterpartys financial statements and consideration of publicly
available credit ratings of the counterpartys parent. Investment grade
counterparties are those with a minimum senior unsecured debt Standard & Poors
rating of BBB- or a Moodys rating of Baa3. Exposure before credit collateral has
been calculated considering all netting agreements in place, netting accounts payable and
receivable exposure with net mark-to-market exposure. Exposure before credit collateral,
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, guarantees and letters of credit received from counterparties.
Net exposure has only been calculated for those counterparties to which Strategic Energy
is exposed and excludes counterparties exposed to Strategic Energy.

Strategic Energys total
exposure before credit collateral at June 30, 2004, increased $78.7 million from December
31, 2003, primarily due to the increase in wholesale electricity prices. At June 30, 2004,
Strategic Energy had exposure before collateral to non-investment grade counterparties
totaling $42.6 million, of which 70% is scheduled to mature in less than two years. In
addition, Strategic Energy held collateral totaling $41.0 million limiting its exposure to
these non-investment grade counterparties to $1.6 million.

53

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

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

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

Strategic Energys net income
decreased $0.3 million for the three months ended and $0.8 million year to date June 30,
2004, compared to the same periods of 2003. The decreases are the result of a reduction in
gross margins per MWh and increased administrative and general expenses including employee
related expenses. Gross margins per MWh (revenues less purchased power divided by MWhs
delivered) decreased 18% to $6.20 for the three months ended and 15% to $6.50 year to
date, primarily due to the roll-off of older, higher margin contracts, increased
competition and the persistent environment of relatively high current and forward natural
gas prices. Higher wholesale energy prices have reduced savings available to customers in
some markets compared to prevailing utility rates creating more customer price sensitivity
and reducing average contract lengths and the rate of backlog growth. A continuing
environment of higher and less volatile energy prices and flat to higher forward
electricity prices would further impact the average gross margins. Based on Strategic
Energys recent experience in this environment, average margins for new customers
would be expected to be in the $3.00-$5.00 range. Due to these factors, Strategic
Energys average gross margin for the year is expected to be at the lower end of the
$6.20-$6.50 range by the end of 2004.

Strategic Energy Operating RevenuesOperating revenues from Strategic
Energy increased $83.3 million for the three months ended and $148.6 million year to date
June 30, 2004, compared to the same periods in 2003, as shown in the following table.

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

54

At June 30, 2004, Strategic
Energys customer accounts totaled almost 53,000 a 33% increase from June 30, 2003.
Strategic Energy may provide periodic billing credits to its customers resulting from its
competitive electricity supply efforts. The amounts credited back to the customer are
treated as a reduction of retail electric revenues when determined to be payable.

Retail electric revenues increased
$85.0 million for the three months ended and $153.1 million year to date June 30, 2004,
compared to the same periods of 2003, due to both increased retail MWhs delivered and
increased average retail revenues per MWh. MWhs delivered increased 32% to 5.1 million for
the three months ended and 24% to 9.5 million year to date, compared to 3.8 million and
7.7 million, respectively, for the same periods of 2003. The increased MWh deliveries
resulted primarily from strong sales efforts in customer retention as well as signing new
customers in new markets in which Strategic Energy continued to experience favorable
conditions for growth. Average retail revenues per MWh increased by 2% for the three
months ended and 7% year to date, compared to the same periods of 2003, primarily due to a
higher underlying electricity price that was impacted by higher natural gas prices.
However, several factors can contribute to changes in the average retail price per MWh,
including the underlying electricity price, the nature and type of products offered and
the mix of sales by geographic market.

Strategic Energy Purchased PowerTo supply its retail contracts,
Strategic Energy primarily purchases blocks of electricity under forward contracts in
fixed quantities at fixed prices from power suppliers based on projected usage. Strategic
Energy sells any excess retail supply of electricity back into the wholesale market. The
proceeds from the sale of excess supply of electricity are recorded as a reduction of
purchased power. The amount of excess retail supply sales that reduced purchased power was
$66.6 million for the three months ended and $124.4 million year to date June 30, 2004,
compared to $37.3 million and $70.7 million, respectively, for the same periods of 2003.

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

As previously discussed, Strategic
Energy operates in several retail choice electricity markets. The cost of supplying
electricity to retail customers can vary widely by geographic market. This variability can
be affected by many factors including, among other items, geographic differences in the
cost per MWh of purchased power and capacity charges due to regional purchased power
availability and requirements of other electricity providers and differences in
transmission charges.

Purchased power expense increased
$81.4 million for the three months ended and $145.8 million year to date June 30, 2004,
compared to the same periods of 2003. The increases are partially due to higher average
prices per retail MWh purchased, which increased by 4% for the three months ended and 10%
year to date, compared to the same periods of 2003. The primary reason for the higher
average prices per retail MWh is the effect of higher natural gas prices on the wholesale
electricity market. Additionally, purchased power expense increased to support increases
in MWhs delivered as discussed above.

Strategic Energy Other Operating
ExpensesStrategic Energys other
operating expenses increased $3.0 million for the three months ended and $5.3 million year
to date June 30, 2004, compared to the same periods of 2003. Strategic Energy experienced
increased labor and benefits expenses as well as other general and administrative
expenses, compared to the same periods of 2003. The increases are primarily due to the
addition of

55

employees and higher other general and administrative expenses associated with
geographic market expansion, and regulatory and market development initiatives.

Other Non Regulated
Activities

Investment in Affordable Housing
Limited Partnerships - KLT InvestmentsKLT Investments Inc.s (KLT
Investments) earnings for the three months ended June 30, 2004, totaled $3.2 million
(including an after tax reduction of $0.9 million in its affordable housing investment)
compared to earnings of $3.9 million for the three months ended June 30, 2003 (including
an after tax reduction of $0.1 million in its affordable housing investment). KLT
Investments earnings include accrued tax credits of $4.5 million and $4.8 million
for the three months ended June 30, 2004 and 2003, respectively. Earnings year to date
June 30, 2004, totaled $6.4 million (including an after tax reduction of $1.7 million in
its affordable housing investment) compared to earnings of $6.2 million year to date June
30, 2003 (including an after tax reduction of $1.6 million in its affordable housing
investment). KLT Investments earnings include accrued tax credits of $9.1 million
and $9.5 million year to date June 30, 2004 and 2003, respectively.

At June 30, 2004, KLT Investments had
$48.2 million in affordable housing limited partnerships. Approximately 65% of these
investments were recorded at cost; the equity method was used for the remainder. Tax
expense is reduced in the year tax credits are generated. The investments generate future
cash flows from tax credits and tax losses of the partnerships. The investments also
generate cash flows from the sales of the properties. For most investments, tax credits
are received over ten years. KLT Investments projects declining tax credits to run through
2009. A change in accounting principle relating to investments made after May 19, 1995,
requires the use of the equity method when a company owns more than 5% in a limited
partnership investment. Of the investments recorded at cost, $30.4 million exceed this 5%
level but were made before May 19, 1995. KLT Investments management does not
anticipate making additional investments in affordable housing limited partnerships at
this time.

On a quarterly basis, KLT Investments
compares the cost of properties accounted for by the cost method to the total of projected
residual value of the properties and remaining tax credits to be received. Estimated
residual values are based on studies performed by an independent firm. Based on the latest
comparison, KLT Investments reduced its investments in affordable housing limited
partnerships by $1.4 million and $2.7 million for the three months ended and year to date
June 30, 2004, respectively, compared to $0.2 million and $2.5 million for the three
months ended and year to date June 30, 2003, respectively. Pretax reductions in affordable
housing investments are estimated to be $5 million, $10 million and $3 million for the
remainder of 2004, 2005 and 2006, respectively. These projections are based on the latest
information available but the ultimate amount and timing of actual reductions could be
significantly different from the above estimates. The properties underlying the
partnership investment are subject to certain risks inherent in real estate ownership and
management. Even after these estimated reductions, earnings from the investments in
affordable housing are expected to be positive for the years 2004 through 2006.

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

56

In December 2002, Digital Teleport
entered into an agreement to sell substantially all of its assets (Asset Sale) to
CenturyTel Fiber Company II, LLC, a nominee of CenturyTel, Inc. The Asset Sale was
approved by the Bankruptcy Court on February 13, 2003, and closed on June 6, 2003.

The Company recorded a net gain of
$25.9 million or $0.37 per share during the three months ended June 30, 2003, related to
the DTI bankruptcy. The impact on three months ended and year to date June 30, 2003, net
income was primarily due to the net effect of the Chapter 11 plan confirmation and the
resulting distribution, the reversal of a $15.8 million tax valuation allowance, and the
reversal of $5 million debtor in possession financing previously reserved.

Note 9 to the consolidated financial
statements in the companies 2003 Form 10-K should be read for further discussion of
the DTI bankruptcy.

Discontinued Operations
(KLT Gas)

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

Discontinued operations (KLT Gas)
year to date June 30, 2004, reflects a loss of $2.0 million. This loss includes a $1.9
million write down of the KLT Gas portfolio to its estimated net realizable value, which
reduced earnings by $1.2 million, and a loss of $1.8 million from the wind down
operations, which reduced earnings by $0.8 million. Year to date June 30, 2003, loss of
$6.9 million includes an impairment of $9.0 million on a Rocky Mountain project, which
reduced earnings by $5.5 million. This impairment was in response to lower revised
estimates of future gas production from that property.

Management expects to incur losses
during the remainder of 2004 to operate KLT Gas while it markets the KLT Gas portfolio for
sale. Management estimates the remaining losses to operate KLT Gas will not be material to
the Companys 2004 earnings. The after tax losses will be reflected as a loss from
discontinued operations in Great Plains Energys consolidated statements of income in
the periods incurred. The ultimate impact to Great Plains Energys consolidated
statements of income for 2004 will be different than the estimates to the extent costs to
operate deviate from the budget and/or the timing of the KLT Gas portfolio sale deviates
from December 31, 2004.

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

In early August 2004, KLT Gas
completed the sale of certain of the KLT Gas portfolio assets located in Wyoming,
Colorado, Kansas and Nebraska for approximately $14 million. The after tax gain on disposition of
these assets after consideration of transaction costs and asset retirement obligations
assumed by the buyer is approximately $5 million or $0.07 per share. Management continues
the bid evaluation and the marketing and sales process on the remainder of the KLT Gas
portfolio assets, and expects to complete sales transactions on the remainder of the KLT
Gas portfolio assets by the end of 2004.

57

On July 28, 2004, KLT Gas received a
Notice and Demand for Arbitration Pursuant to Joint Operating Agreement from SWEPI LP
(d/b/a Shell Western E&P and f/k/a Shell Western E&P Inc.) (Shell). KLT Gas has a
50% working interest in certain oil and gas leases in Duval County, Texas; Shell holds the
other 50% working interest and is the operator of the properties under a joint operating
agreement, as amended (JOA). Three groups of current or past lessors filed suit against
Shell in Duval County, Texas, alleging various claims against Shell. Additionally, Shell
has been party to ongoing proceedings before the Texas Railroad Commission relating to a
well drilled on acreage adjacent to the properties of Shell and KLT Gas mentioned above.
Through arbitration, Shell is seeking recovery from KLT Gas of 50% of the fees and costs
incurred in the three lawsuits and the Texas Railroad Commission proceedings and
settlement proceeds paid with respect to the three lawsuits, which Shell asserts is a
total amount of not less than $5.4 million for KLT Gas share. Shell is also seeking
a declaration that the fees and costs incurred and settlement proceeds paid, including any
fees and costs incurred in the future, are reimbursable expenses under the JOA and that
Shell, among other things, may recoup such expenses, if necessary, from KLT Gas
production proceeds earned on properties covered by the JOA. Shell is seeking a ruling
compelling KLT Gas to pay Shell immediately all sums deemed to be due pursuant to the
arbitration. KLT Gas and its counsel continue to evaluate KLT Gas rights and
obligations under the JOA as well as possible counterclaims that KLT Gas may have against
Shell; however, it is too early to predict the ultimate outcome of this demand for arbitration.

Great Plains Energy and
Consolidated KCP&L

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

58



|o | Great Plains Energys accounts payable increased $19.9 million primarily due to a $21.5 million increase in
         Strategic Energys accounts payable due to increased power purchases for the start of the summer season and
         increased market prices for power.                                                                                                                                                                                                                                                                                                                                                                
|- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|o | Great Plains Energys accrued taxes increased $23.1 million primarily due to a $13.3 million increase in
         consolidated KCP&Ls property tax accrual.  The remaining increase was primarily the result of the accrual of
         2004 income taxes offset by the payment of 2003 income taxes accrued at December 31, 2003.                                                                                                                                                                                                                                                                                                         
|o | Great Plains Energys accrued payroll and vacations decreased $11.0 million primarily due to the 2004 payout of
         employee related expenses accrued at December 31, 2003.                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|o | Great Plains Energys other current liabilities decreased $1.5 million due to the payout of amounts accrued at
         December 31, 2003, mostly offset by the $5.6 million current portion of the FELINE PRIDES purchase contract
         adjustment.                                                                                                                                                                                                                                                                                                                                                                                    
|o | Great Plains Energys other deferred credits and liabilities increased $22.4 million primarily due to the $24.6
         million intangible liability, net of amortization, recorded as a result of the purchase of the additional
         indirect interest in Strategic Energy in May 2004, partially offset by a $3.1 million decrease in consolidated
         KCP&Ls other deferred credits and liabilities.  Consolidated KCP&Ls other deferred credits and liabilities
         decreased primarily due to a $2.1 million decrease in minority interest, which was primarily the result of losses
         at KCP&Ls Lease Trust.
|o | Great Plains Energys common stock increased $150.0 million due to the issuance of five million shares of common
         stock in June 2004.  Consolidated KCP&Ls common stock increased $150.0 million due to an equity contribution
         from Great Plains Energy.                                                                                                                                                                                                                                                                                                                                                                  
|o | Great Plains Energys capital stock premium and expense increased $25.2 million primarily due to recording $19.6
         million related to the FELINE PRIDES purchase contract adjustment, allocated fees and expenses and $5.6
         million of common stock issuance costs.                                                                                                                                                                                                                                                                                                                                                          
|o | Great Plains Energys accumulated other comprehensive loss decreased $8.1 million primarily due to the increase
         in the fair value of Strategic Energys derivatives as a result of increased market prices for power.                                                                                                                                                                                                                                                                                                                                                                                                              
|o | Great Plains Energys long-term debt increased $5.0 million primarily due to Great Plains Energys issuance of
         $163.6 million of FELINE PRIDES senior notes mostly offset by a $156.2 million decrease in consolidated KCP&Ls
         long-term debt.  Consolidated KCP&Ls long-term debt decreased primarily due to the July 2004 redemption of
         KCP&Ls $154.6 million 8.3% Junior Subordinated Deferred Interest Bonds, which caused the bonds to be classified
         as current maturities.                                                                                                                      

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

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

59

Great Plains Energys liquid
resources at June 30, 2004, included cash flows from operations of subsidiaries, $249.6
million of cash and cash equivalents on hand and $452.0 million of unused bank lines of
credit. The unused lines consisted of $150.0 million from KCP&Ls short-term bank
lines of credit, $49.5 million from Strategic Energys revolving credit facility, and
$252.5 million from Great Plains Energys revolving credit facilities. See the Debt
Agreements section below for more information on these agreements. On July 21, 2004,
KCP&L paid $155.4 million in cash to pay down long-term debt, including interest,
discussed below.

Cash Flows From OperationsGreat Plains Energy and consolidated
KCP&L generated positive cash flows from operating activities for the periods
presented. The decrease in cash flows from operating activities for Great Plains Energy
year to date June 30, 2004, compared to the same period in 2003 was primarily due to a
$13.5 million increase in deposits with suppliers. Also contributing was a $10.1 million
decrease in income from continuing operations primarily due to a $25.9 million net gain
related to the DTI bankruptcy recorded during 2003, partially offset by an $18.5 million
increase in consolidated KCP&Ls income from continuing operations. Consolidated
KCP&Ls cash flows from operations increased year to date June 30, 2004, compared
to the same period in 2003 primarily due to the $18.5 million increase in income from
continuing operations and the changes in working capital detailed in Note 4 to the
consolidated financial statements.

Investing ActivitiesGreat Plains Energys and
consolidated KCP&Ls cash used for investing activities varies with the timing of
utility capital expenditures and purchases of investments and nonutility property.
Investing activities are offset by the proceeds from the sale of properties and insurance
recoveries. Great Plains Energys and consolidated KCP&Ls utility capital
expenditures increased $24.3 million year to date June 30, 2004, compared to the same
period in 2003 primarily due to the buyout of KCP&Ls operating lease for
vehicles and heavy equipment in the first quarter of 2004 for $28.4 million. This increase
was more than offset by an additional $27.7 million in insurance recoveries and litigation
settlements related to Hawthorn No. 5. Additionally, Great Plains Energy paid $90.0
million to acquire an additional indirect interest in Strategic Energy during May 2004.

Financing ActivitiesThe change in Great Plains
Energys cash flows from financing activities year to date June 30, 2004, compared to
the same period in 2003 reflects Great Plains Energys June 2004 proceeds of $150.0
million from the issuance of five million shares of common stock at $30 per share and
$163.6 million from the issuance of FELINE PRIDES. Fees related to these issuances were
$10.2 million. Great Plains Energy used the proceeds to repay short-term borrowings and to
make a $150.0 million equity contribution to KCP&L. In July 2004, KCP&L redeemed
the $154.6 million 8.3% Junior Subordinated Deferred Interest Bonds. KCP&L Financing I
used those proceeds to redeem the $150.0 million of 8.3% Trust Preferred Securities and
liquidate the $4.6 million common securities held by KCP&L. See Note 6 for additional
information.

Consolidated KCP&Ls cash
flows from financing activities year to date June 30, 2003, reflects the first quarter
2003 equity infusion of $100.0 million from Great Plains Energy to KCP&L and
KCP&Ls subsequent redemption of $104.0 million of medium-term notes. Great
Plains Energy essentially funded the infusion with proceeds from its $151.8 million common
stock offering in late 2002; however, prior to the infusion, Great Plains Energy used the
offering proceeds to repay short-term borrowings in late 2002 and then re-borrowed in
early 2003 to make the equity infusion into KCP&L at the time of redemption. An
additional $20.0 million of KCP&Ls medium term notes were retired during the
second quarter of 2003.

60

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

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

Great Plains Energy filed a
registration statement, which became effective in April 2004, for the issuance of an
aggregate amount up to $500.0 million of any combination of senior debt securities,
subordinated debt securities, trust preferred securities and related guarantees, common
stock, warrants, stock purchase contracts or stock purchase units. The prospectus filed
with this registration statement also included $148.2 million of securities remaining
available to be offered under a prior registration statement providing for an aggregate
amount of availability of $648.2 million. In June 2004, Great Plains Energy issued $150.0
million of common stock and $163.6 million of FELINE PRIDES. After these issuances, $171.0
million remains available under this registration statement, which reflects the effect of
the $163.6 million stock purchase contract component of FELINE PRIDES.

As a registered public utility
holding company, Great Plains Energy must receive authorization from the SEC under the 35
Act to issue securities. Great Plains Energy is currently authorized to issue up to $1.2
billion of debt and equity through December 31, 2005. Great Plains Energy has utilized
$977.9 million of this amount of this amount, which is a $477.2 million increase from the
December 31, 2003, amount of $500.7 million due to the $150.0 million common stock
issuance and the $163.6 million of FELINE PRIDES (with a $163.6 million stock purchase
contract component) in June 2004.

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

KCP&L may issue equity and
long-term debt only with the authorization of the Missouri Public Service Commission
(MPSC). In June 2004, the MPSC authorized KCP&L to issue up to $600 million of
long-term debt through March 31, 2006. The authorization contains the following
conditions, among others: (i) no more than $150.0 million of the authorized debt can be
used for purposes other than refinancing existing securities and (ii) the proceeds of the
authorized debt must be used exclusively for the benefit of KCP&Ls regulated
operations.

Issuances of short-term debt by
KCP&L are subject to SEC authorization under the 35 Act. Under the current
authorization, KCP&L may issue and have outstanding at any one time up to $500 million
of short-term debt. Under this authorization, KCP&L cannot issue short term debt (other than commercial

61

paper or short-term bank facilities) unless (i) the short-term debt
to be issued, if rated, is rated investment grade by one nationally recognized statistical
rating organization, (ii) all of its outstanding securities that are rated are rated
investment grade, (iii) all of the outstanding rated securities of Great Plains Energy
(except preferred stock) are rated investment grade, and (iv) Great Plains Energy and
KCP&L have maintained common equity as a percentage of consolidated capitalization (as
reflected on their consolidated balance sheets as of the end of each quarter) of at least
30%. KCP&L was in compliance with these conditions as of June 30, 2004.

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

Debt AgreementsDuring the first quarter of 2004,
Great Plains Energy syndicated a $150.0 million 364-day revolving credit facility and a
$150.0 million three-year revolving credit facility with a group of banks. These
facilities replaced a $225.0 million revolving credit facility with a group of banks. The
existing facilities contain a Material Adverse Change (MAC) clause that requires Great
Plains Energy to represent, prior to receiving funding, that no MAC has occurred. The
clause does, however, permit the Company to access the facility even in the event of a MAC
in order to repay maturing commercial paper. Available liquidity under this facility is
not impacted by a decline in credit ratings unless the downgrade occurs in the context of
a merger, consolidation or sale. A default by Great Plains Energy or any of its
significant subsidiaries of other indebtedness totaling more than $25.0 million is a
default under these bank lines. Under the terms of these agreements, Great Plains Energy
is required to maintain a consolidated indebtedness to consolidated capitalization ratio
not greater than 0.65 to 1.0 at all times and an interest coverage ratio greater than 2.25
to 1.0, as those ratios are defined in the agreement. At June 30, 2004, the Company was in
compliance with these covenants. At June 30, 2004, Great Plains Energy had $17.0 million
of outstanding borrowings with a weighted-average interest rate of 4.0% under the 364-day
revolving credit facility. Additionally, Great Plains Energy had issued letters of credit
totaling $25.0 million under the 364-day revolving credit facility and $5.5 million under
the three-year revolving credit facility as credit support for Strategic Energy.

Through June 30, 2004, Strategic
Energy maintained a secured revolving credit facility for up to $95 million with a group
of banks. This facility was partially guaranteed by Great Plains Energy. The maximum
amount available for loans and letters of credit under the facility was the lesser of $95
million or the borrowing base, as defined in the agreement. The borrowing base generally
was the sum of certain Strategic Energy accounts receivable and the amount of the Great
Plains Energy guarantee which was $40.0 million at June 30, 2004. At June 30, 2004, $45.5
million in letters of credit had been issued and there were no borrowings under the
agreement, leaving $49.5 million of capacity available for loans and additional letters of
credit. The facility contained a MAC clause that required Strategic Energy to represent,
prior to receiving funding, that no MAC had occurred. A default by Strategic Energy of
other indebtedness, as defined in the facility, totaling more than $5.0 million was a
default under the facility. Under the terms of this agreement, Strategic Energy was
required to maintain a minimum net worth of $30 million, a maximum debt to EBITDA ratio of
2.0 to 1.0 and a minimum fixed charge ratio of at least 1.05 to 1.0 as those were defined
in the agreement. At June 30, 2004, Strategic Energy was in compliance with these
covenants. This facility was replaced with a new $125 million three-year revolving credit
facility with a group of banks on July 2, 2004.

Great Plains Energy has guaranteed
$25.0 million of the new $125.0 million facility. The $125.0 million facility contains a
MAC clause that requires Strategic Energy to represent, prior to receiving funding, that
no MAC has occurred. A default by Strategic Energy of other indebtedness, as defined in
the facility, totaling more than $7.5 million is a default under the facility. Under the
terms of this agreement,

62

Strategic Energy is required to maintain a minimum net worth of
$62.5 million, a maximum funded indebtedness to EBITDA ratio of 2.25 to 1.00, 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 are defined in the agreement. 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.

KCP&Ls primary sources of
liquidity are cash flows from operations and bilateral credit lines totaling $150.0
million with seven banks (as of June 30, 2004). KCP&L uses these lines to provide
support for its issuance of commercial paper. These bank facilities are each for a 364-day
term and mature at various times throughout the year. The facilities can be extended for
one year under their term out provisions. KCP&L has MAC clauses in three agreements
covering $70.0 million of available bilateral credit lines. These three facilities require
KCP&L to represent, prior to receiving funding, that no MAC has occurred. Under these
agreements, KCP&L is able to access the facilities even in the event of a MAC in order
to redeem maturing commercial paper. KCP&Ls available liquidity under these
facilities is not impacted by a decline in credit ratings unless the downgrade occurs in
the context of a merger, consolidation or sale. A default by KCP&L on other
indebtedness is a default under these bank line agreements. Under the terms of certain
bank line agreements, KCP&L is required to maintain a consolidated indebtedness to
consolidated capitalization ratio, as defined in the agreements, not greater than 0.65 to
1.0 at all times. At June 30, 2004, KCP&L was in compliance with these covenants and
KCP&L had no outstanding borrowings under these lines.

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 June 30, 2004, KLT Investments had $6.4 million in outstanding
notes, including current maturities.

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

PensionsThe Company maintains defined benefit
plans for substantially all of its 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
Employment Retirement Income Security Act of 1974 (ERISA) and further contributions may be
made when deemed financially advantageous.

After consideration of additional
funding made in 2003, KCP&L is required to contribute $4.2 million during 2004 to meet
the minimum funding requirements of ERISA, of which $1.5 million has been funded by
KCP&L. Management believes the Company has adequate access to capital resources
through cash flows from operations or through existing lines of credit to support the
remaining required funding.

63

Participants in the plans may request
a lump-sum cash payment upon termination of their employment. A change in payment
assumptions could result in increased cash requirements from pension plan assets with the
Company being required to accelerate future funding.

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

Supplemental Capital Requirements
and Liquidity InformationGreat Plains Energys long-term
debt at June 30, 2004, compared to December 31, 2003, increased $163.6 million due to the
issuance of FELINE PRIDES. Additionally, Great Plains Energy has a contractual obligation
for the $15.4 million present value of the contract adjustment payments related to the
FELINE PRIDES. Consolidated KCP&Ls contractual obligations were relatively
unchanged at June 30, 2004, compared to December 31, 2003.

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

As a registered public utility
holding company system, Great Plains Energy must receive authorization from the SEC, under
the 35 Act, to issue guarantees on behalf of its subsidiaries. Under its current SEC
authorization, guarantees cannot be issued unless (i) all of its outstanding securities
that are rated (except for its preferred stock) are rated investment grade and (ii) it has
maintained common equity as a percentage of consolidated capitalization (as reflected on
its consolidated balance sheets as of the end of each quarter) of at least 30%. Great
Plains Energy was in compliance with these conditions as of June 30, 2004. Great Plains
Energy is currently authorized to issue up to $600 million for guarantees on behalf of its
subsidiaries and the nonutility subsidiaries have $300 million of authorization for
guarantees they can issue on behalf of other nonutility subsidiaries. The nonutility
subsidiaries cannot issue guarantees unless Great Plains Energy is in compliance with its
conditions to issue guarantees. Great Plains Energys and consolidated
KCP&Ls guarantees were relatively unchanged at June 30, 2004, compared to
December 31, 2003.

KCPL Financing I, a trust, has issued
$150.0 million of preferred securities. In connection with the issuance of the preferred
securities, KCP&L issued a preferred securities guarantee, which guarantees the
payment of any accrued and unpaid distributions, the redemption price and payments upon
dissolution, winding-up or termination of the trust, all to the extent that the trust has
funds available therefore. KCPL Financing I redeemed the $150.0 million of preferred
securities in July 2004. There were no accrued and unpaid distributions at that time.

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

64

KCP&L operates in an
environmentally responsible manner and seeks to use current technology to avoid and treat
contamination. KCP&L regularly conducts environmental audits designed to ensure
compliance with governmental regulations and to detect contamination. Governmental bodies;
however, may impose additional or more restrictive environmental regulations that could
require substantial changes to operations or facilities at a significant cost. See Note 12
to the consolidated financial statements.

# ITEM 3. QUANTITATIVE AND
QUALITATIVE DISCLOSURES ABOUT MARKET RISK

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

Great Plains Energy and consolidated
KCP&L interim period disclosures about market risk included in quarterly reports on
Form 10-Q address material changes, if any from the most recently filed annual report on
Form 10-K. Therefore, these interim period disclosures should be read in connection with
Item 7A. Quantitative and Qualitative Disclosures About Market Risk, included in our 2003
Form 10-K, incorporated herein by reference. There have been no material changes in Great
Plains Energys or consolidated KCP&Ls market risk since December 31, 2003.

# ITEM 4. CONTROLS AND
PROCEDURES

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

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

There has been no change in Great
Plains Energys or KCP&Ls internal control over financial reporting that
occurred during the quarterly period ended June 30, 2004, that has materially affected, or
is reasonably likely to materially affect, those companies internal control over
financial reporting.

65

# Part II  Other
Information

# ITEM 1. LEGAL PROCEEDINGS

Hawthorn No. 5 LitigationKCP&L filed suit against National
Union Fire Insurance Company of Pittsburgh, Pennsylvania (National Union) and Travelers
Indemnity Company of Illinois (Travelers) in Missouri state court on June 14, 2002, which
was removed to the U.S. District Court for the Western District of Missouri. In 1999,
there was a boiler explosion at KCP&L Hawthorn No. 5 generating unit, which was
subsequently reconstructed and returned to service. National Union and Reliance National
Insurance Company (Reliance), primary carriers, had issued a $200 million primary
insurance policy and Travelers had issued a $100 million secondary insurance policy
covering Hawthorn No. 5. A dispute arose between KCP&L and these two insurance
companies regarding the amount payable under these insurance policies for the
reconstruction of Hawthorn No. 5 and replacement power expenses, and KCP&L filed suit
against the carriers. Prior to the second quarter, National Union and Reliance had
collectively paid approximately $169 million under their primary insurance policy. In the
second quarter, KCP&L received an additional $30.8 million from National Union,
representing the remaining amount of the primary insurance policy less the deductible.
National Union and Reliance have subrogation rights in the litigation described in the
next paragraph. The case continues against Travelers for the remaining $85 million of
KCP&Ls current proof of loss of approximately $285 million. Trial of this case
is scheduled to begin in January 2005.

KCP&L also filed suit on April 3,
2001, in Jackson County, Missouri Circuit Court against multiple defendants who are
alleged to have responsibility for the Hawthorn No. 5 boiler explosion. KCP&L and
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 have been dismissed from the suit and various other defendants have settled
with KCP&L, resulting in KCP&L receiving $35.8 million under the terms of the
subrogation allocation agreement. 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. 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), the verdict would have resulted in an award against the defendant
of approximately $97.6 million (of which KCP&L would have received $33 million
pursuant to the subrogation allocation agreement after attorneys fees). In response
to post-trial pleadings filed by the defendant, in May 2004 the trial judge reduced the
award against the defendant to $0.2 million. KCP&L has filed a motion to amend or
vacate this order.

Hawthorn No. 5 Notice of ViolationOn April 15, 2004, the EPA issued to
KCP&L a notice of violation of Hawthorn No. 5 permit limits on SO2
emissions. SO2emissions from Hawthorn No. 5 exceeded the applicable thirty-day
rolling average emission limit on certain days in the third and fourth quarters of 2003
and also exceeded the applicable 24-hour emission limit on one day in the fourth quarter
of 2003. Equipment issues that caused these violations are being addressed by KCP&L.
KCP&L management does not expect the cost of correcting the equipment issues or
resolving this matter with the EPA to be material to its financial statements.

66

# ITEM 2. CHANGES IN
SECURITIES AND USE OF PROCEEDS

Purchases of Great Plains Energy
common stock were made during the quarter by or for the Great Plains Energy Incorporated
Long-Term Incentive Plan, which is an equity compensation plan approved by the
shareholders providing for grants by the Compensation Committee of the Board of Directors
of stock options, restricted stock, performance shares and other stock-based awards.

The following table provides
information regarding these purchases of Great Plains Energy common stock during the
quarter.

|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|Total Number of                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|Shares (or Units)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|Total Number of                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|Shares (or Units)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|Month                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|April 1 - 30                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|May 1 - 31                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|June 1 - 30                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|Total                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|(1) The Great Plains Energy Long-Term Incentive Plan
        became effective on May 5, 1992. The aggregate       number of shares of common stock
        available for awards under this plan is not more than three million.        Awards
        may be granted under this plan until May 5, 2012.  The shares in this column represent the
              aggregate number of securities remaining available for future issuance
         under the Great Plains Energy       Long-Term Incentive Plan.

# ITEM 3. DEFAULTS UPON
SENIOR SECURITIES.

There are no matters reportable under
this Item 3 for the quarter.

# ITEM 4. SUBMISSION OF
MATTERS TO A VOTE OF SECURITY HOLDERS.

Great Plains EnergyGreat Plains Energys annual
meeting of shareholders was held on May 4, 2004. The shareholders elected eleven directors
and ratified the appointment of Deloitte & Touche LLP as independent auditors.

67

Election of DirectorsGreat Plains Energys board of
directors consists of eleven directors, who are elected annually. The eleven persons named
below were elected, as proposed in the proxy statement pursuant to Regulation 14A of the
Securities Exchange Act of 1934, as amended, to serve as directors until Great Plains
Energys annual meeting in 2005 and until their successors are elected and qualified.

|                                                                   
|-------------------------------------------------------------------
|
|                                                                   
|David L. Bodde                                                     
|Michael J. Chesser                                                 
|William H. Downey                                                  
|Mark A. Ernst                                                      
|Randall C. Ferguson, Jr                                            
|William K. Hall                                                    
|Luis A Jimenez                                                     
|James A. Mitchell                                                  
|William C. Nelson                                                  
|Linda H. Talbot                                                    
|Robert H. West                                                     
|                                                                   
|* No votes were cast against the nominees due to cumulative voting.

Ratification of
Independent AuditorsGreat Plains Energy shareholders
ratified the appointment of Deloitte & Touche LLP as independent auditors for 2004.
The voting regarding the appointment of auditors was as follows:

|                     
|---------------------
|
|                     
|Deloitte & Touche LLP
|                     

KCP&LKCP&Ls board of directors consists
of eleven directors, who are elected annually.  Great Plains Energy is KCP&Ls sole
shareholder. By a unanimous written consent dated as of May 4, 2004, Great Plains Energy,
as the sole shareholder, elected the eleven directors of Great Plains Energy as the
directors of KCP&L for the ensuing year and until their successors are duly elected and
qualified, or until their resignations.

# ITEM 5. OTHER
INFORMATION.

None.

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

# EXHIBITS

# Great Plains Energy
Documents

|      
|------
|Number
|4.1   

68

|4.2  | * | Pledge Agreement, dated June 14, 2004, between Great Plains Energy Incorporated and BNY Midwest
Trust Company, as Collateral Agent, Custodial Agent and Securities Intermediary and BNY Midwest Trust Company, as Purchase Contract Agent (Exhibit 4.2 to Form 8-A/A, dated June 14, 2004).                                                                                                                                                                                                                                                                                                               
|---- | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|4.3  | * | Remarketing Agreement, dated June 14, 2004, among Great Plains Energy Incorporated, BNY Midwest
Trust Company, as Purchase Contract Agent, and the Remarketing Agent named therein (Exhibit 4.3 to Form 8-A/A, dated June 14, 2004).                                                                                                                                                                                                                                                                                                                                                                      
|4.4  | * | Indenture, dated June 1, 2004, between Great Plains Energy Incorporated and BNY Midwest Trust Company,
as Trustee (Exhibit 4.4 to Form 8-A/A, dated June 14, 2004).                                                                                                                                                                                                                                                                                                                                                                                                                                       
|4.5  | * | First Supplemental Indenture, dated June 14, 2004, between Great Plains Energy Incorporated and BNY Midwest Trust Company, as Trustee (Exhibit 4.5 to Form 8-A/A, dated June 14, 2004).                                                                                                                                                                                                                                                                                                                                                                                                                   
|4.6  | * | Form of Income PRIDES (included in Exhibit 4.1 to Form 8-A/A, dated June 14, 2004, as Exhibit A thereto).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|10.1 |   | First Amendment to Credit Agreement, dated as of May 3, 2004, by and among Strategic Energy,
L.L.C., LaSalle Bank National Association, PNC Bank, National Association, Citizens Bank of Pennsylvania, Provident Bank and Fifth Third Bank.                                                                                                                                                                                                                                                                                                                                                               
|10.2 |   | Amended and Restated Credit Agreement, dated as of July 2, 2004, by and among Strategic Energy,
L.L.C., LaSalle Bank National Association, PNC Bank, National Association, Citizens Bank of Pennsylvania, Provident Bank, Fifth Third Bank and Sky Bank.                                                                                                                                                                                                                                                                                                                                                  
|10.3 |   | 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.                                                                                                                                                                                                                                                                                                    
|10.4 |   | First Amendment, dated as of June 30, 2004, to 364-Day Credit Agreement, dated as of March 5, 2004 by and among Great Plains Energy Incorporated, Bank One, NA, BNP Paribas, Commerzbank AG, Keybank National Association, Wachovia Bank, National Association, CoBank, ACB, The Bank of New
 York, The Bank of Nova Scotia, PNC Bank, National Association, U.S. Bank, National Association, Bank Hapoalim, LaSalle Bank National Association, Bank of America, N.A., The Bank of Tokyo-Mitsubishi, Ltd., Mizuho Corporate Bank, Ltd., Fleet National Bank, Fifth Third Bank, and Merrill Lynch Bank USA.
|10.5 |   | First Amendment, dated as of June 30, 2004, to Three-Year Credit Agreement, dated as of March 5, 2004 by and among Great Plains Energy Incorporated, Bank One, NA, BNP Paribas, Commerzbank AG,
Keybank National Association, Wachovia Bank, National Association, CoBank, ACB, The Bank of New York, The Bank of Nova Scotia, PNC Bank, National Association, U.S. Bank, National Association,
Bank Hapoalim, LaSalle Bank National Association, Bank of America, N.A., The Bank of Tokyo-Mitsubishi, Ltd., Mizuho Corporate Bank, Ltd.,                                                                 

69

|       |  | Fleet National Bank, Fifth Third Bank, and Merrill Lynch Bank USA.                                                                                                                        
|------ |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|10.6   |  | Agreement dated May 10, 2004, by and among SE Holdings, LLC, members of SE Holdings, LLC, SE, Inc., shareholders of SE, Inc., Strategic Energy, LLC and Innovative Energy Consultants Inc.
|12.1   |  | Ratio of Earnings to Fixed Charges                                                                                                                                                        
|31.1.a |  | Rule 13a-14(a)/15d-14(a) Certifications of Michael J. Chesser.                                                                                                                            
|31.1.b |  | Rule 13a-14(a)/15d-14(a) Certifications of Andrea F. Bielsker.                                                                                                                            
|32.1   |  | Section 1350 Certifications.                                                                                                                                                              

* Filed as exhibits to a prior
Registration of Certain Classes of Securities Pursuant to Section 12(b) or (g) of the
Securities Exchange Act of 1934 on Form 8-A/A and incorporated by reference and made a
part hereof. The exhibit number and report reference of the documents so filed, and
incorporated herein by reference, are stated in parentheses in the description of such
exhibit.

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

# KCP&L Documents

|      
|------
|Number
|12.2  
|31.2.a
|31.2.b
|32.2  

Copies of any of the exhibits filed
with the Securities and Exchange Commission in connection with this document may be
obtained from KCP&L upon written request.

# REPORTS ON FORM 8-K

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

Great Plains Energy filed on May 12,
2004, a report on Form 8-K dated May 12, 2004, including Item 6. Selected Financial Data,
Item 7. Managements Discussion and Analysis of Financial Condition and Results of
Operations, Item 8. Consolidated Financial Statements, and Schedule II - Valuation
and Qualifying Accounts and Reserves as listed in Item 15. Exhibits, Financial Statement
Schedules, and

70

Reports on Form 8-K from Great Plains Energys and KCP&Ls
combined Annual Report on Form 10-K, as amended by Amendment No. 1 on Form 10-K/A for the
year ended December 31, 2003, recast to show discontinued operations presentation as a
result of the February 2004 announcement by Great Plains Energy of its plan to sell the
KLT Gas Inc. natural gas properties and exist the gas business.

Great Plains Energy filed on June 1,
2004, a report on Form 8-K dated May 26, 2004, regarding KCP&Ls filing of
applications with the Missouri Public Service Commission and the Kansas Corporation
Commission to begin a regulatory workshop process to explore how to meet the areas
growing need for electricity and cleaner air, and developments in the Hawthorn No. 5
litigation discussed in Part II Item 1, above.

Great Plains Energy furnished on June
4, 2004, a report on Form 8-K dated June 4, 2004, furnishing press releases regarding
Great Plains Energys announcement of its plans for public offerings of common stock
and mandatory convertible securities and its announcement of an increase in 2004 ongoing
earnings guidance.

Great Plains Energy filed on June 14,
2004, a report on Form 8-K dated June 14, 2004, filing underwriting agreements regarding
the issuance of common stock and FELINE PRIDES, and instruments defining the rights of
holders of the FELINE PRIDES.

Great Plains Energy furnished on July
27, 2004, a report on Form 8-K dated July 26, 2004, furnishing a press release regarding
second quarter 2004 earnings.

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

KCP&L filed on May 12, 2004, a
report on Form 8-K dated May 12, 2004, including Item 6. Selected Financial Data, Item 7.
Managements Discussion and Analysis of Financial Condition and Results of
Operations, Item 8. Consolidated Financial Statements, and Schedule II - Valuation
and Qualifying Accounts and Reserves as listed in Item 15. Exhibits, Financial Statement
Schedules, and Reports on Form 8-K from Great Plains Energys and KCP&Ls
combined Annual Report on Form 10-K, as amended by Amendment No. 1 on Form 10-K/A for the
year ended December 31, 2003, recast to show discontinued operations presentation as a
result of the February 2004 announcement by Great Plains Energy of its plan to sell the
KLT Gas Inc. natural gas properties and exist the gas business.

KCP&L filed on June 1, 2004, a
report on Form 8-K dated May 26, 2004, regarding KCP&Ls filing of applications
with the Missouri Public Service Commission and the Kansas Corporation Commission to begin
a regulatory workshop process to explore how to meet the areas growing need for
electricity and cleaner air, and developments in the Hawthorn No. 5 litigation discussed
in Part II Item 1, above.

KCP&L furnished on June 4, 2004,
a report on Form 8-K dated June 4, 2004, furnishing press releases regarding Great Plains
Energys announcement of its plans for public offerings of common stock and mandatory
convertible securities and its announcement of an increase in 2004 ongoing earnings
guidance.

KCP&L furnished on July 27, 2004,
a report on Form 8-K dated July 26, 2004, furnishing a press release regarding second
quarter 2004 earnings.

71

# SIGNATURES

Pursuant to the requirements of the
Securities Exchange Act of 1934, Great Plains Energy Incorporated and Kansas City
Power & Light Company have duly caused this report to be signed on its behalf by
the undersigned thereunto duly authorized.

|                       | GREAT PLAINS ENERGY
INCORPORATED
|---------------------- | --------------------------------
|Dated:  August 6, 2004 | By: /s/Michael J. Chesser       
|                       | (Michael J. Chesser)            
|                       | (Chief Executive Officer)       
|Dated:  August 6, 2004 | By: /s/Lori A. Wright           
|                       | (Lori A. Wright)                
|                       | (Principal Accounting Officer)  

|                       | KANSAS CITY POWER
& LIGHT COMPANY
|---------------------- | ---------------------------------
|Dated:  August 6, 2004 | By: /s/William H. Downey         
|                       | (William H. Downey)              
|                       | (Chief Executive Officer)        
|Dated:  August 6, 2004 | By: /s/Lori A. Wright            
|                       | (Lori A. Wright)                 
|                       | (Principal Accounting Officer)   

72