UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549  Form 10-Q  xQUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934  For the quarterly period endedMarch 31, 2005  or  o TRANSITION REPORT PURSUANT SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934  For the transition period from _______ to _______  CommissionFile Number
     
     Registrant, State of Incorporation,Address and Telephone Number
     
     I.R.S. EmployerIdentification Number0-33207
     
     GREAT PLAINS ENERGY INCORPORATED
     (A Missouri Corporation)
        1201 Walnut Street
    Kansas City, Missouri 64106
          (816) 556-2200
     www.greatplainsenergy.com
     
     43-19168031-707
     
     KANSAS CITY POWER & LIGHT COMPANY
    (A Missouri Corporation)
       1201 Walnut Street
   Kansas City, Missouri 64106
         (816) 556-2200
          www.kcpl.com
     
     44-0308720  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 _     NoX  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  YesX
        No  _
        Kansas City Power & Light Company  Yes  _
        NoX  As of May 2, 2005, the number of shares outstanding of  (i) Great Plains Energys common stock was 74,577,521 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.  It should be read in conjunction with the consolidated financial statements and related notes and with the managements discussion and analysis included in the companies 2004 Form 10-K.



CAUTIONARY STATEMENTS REGARDING CERTAIN FORWARD-LOOKING INFORMATION

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





     future economic conditions in the regional, national and international markets, including but not limited to regional and
national wholesale electricity markets
     market perception of the energy industry and the Company
     changes in business strategy, operations or development plans
     effects of current or proposed state and federal legislative and regulatory actions or developments, including, but not
limited to, deregulation, re-regulation and restructuring of the electric utility industry and constraints placed on the
Companys actions by the Public Utility Holding Company Act of 1935
     adverse changes in applicable laws, regulations, rules, principles or practices governing tax, accounting and environmental
matters including, but not limited to, air quality
     financial market conditions and performance including, but not limited to, changes in interest rates and in availability and
     cost of capital and the effects on the Companys pension plan assets and costs
     credit ratings
     inflation rates
     effectiveness of risk management policies and procedures and the ability of counterparties to satisfy their contractual
     commitments
     impact of terrorist acts
     increased competition including, but not limited to, retail choice in the electric utility industry and the entry of new
     competitors
     ability to carry out marketing and sales plans
     weather conditions including weather-related damage
     cost, availability, quality and deliverability of fuel
     ability to achieve generation planning goals and the occurrence of unplanned generation outages
     delays in the anticipated in-service dates of additional generating capacity
     nuclear operations
     ability to enter new markets successfully and capitalize on growth opportunities in non-regulated businesses
     performance of projects undertaken by the Companys non-regulated businesses and the success of efforts to invest in and
     develop new opportunities, and
     other risks and uncertainties.This list of factors is not all-inclusive because it is not possible to predict all factors.





2



GLOSSARY OF TERMS

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






Abbreviation or Acronym
     Definition35 Act
     Public Utility Holding Company Act of 1935, as amendedCAIR
     Clean Air Interstate RuleClean Air Act
     Clean Air Act Amendments of 1990CO2
     Carbon DioxideCompact
     Central Interstate Low-Level Radioactive Waste CompactCompany
     Great Plains Energy Incorporated and its subsidiariesConsolidated KCP&L
     KCP&L and its wholly owned subsidiary, HSSDigital Teleport
     Digital Teleport, Inc.DOE
     Department of EnergyDTI
     DTI Holdings, Inc. and its subsidiaries, Digital Teleport, Inc.   and Digital Teleport of Virginia, Inc.Duquesne
     Duquesne Light CompanyEBITDA
     Earnings before interest, income taxes, depreciation and amortizationEEI
     Edison Electric InstituteEIRR
     Environmental Improvement Revenue RefundingEPA
     Environmental Protection AgencyEPS
     Earnings per common shareFASB
     Financial Accounting Standards BoardFELINE PRIDESSM
     Flexible Equity Linked Preferred Increased Dividend Equity Securities,   a service mark of Merrill Lynch & Co., Inc.FERC
     The Federal Energy Regulatory CommissionFIN
     Financial Accounting Standards Board InterpretationGPP
     Great Plains Power Incorporated, a wholly owned subsidiary   of Great Plains EnergyGreat Plains Energy
     Great Plains Energy Incorporated and its subsidiariesHoldings
     DTI Holdings, Inc.HSS
     Home Service Solutions Inc., a wholly owned subsidiary of KCP&LIEC
     Innovative Energy Consultants Inc., a wholly owned subsidiary   of Great Plains EnergyIRS
     Internal Revenue ServiceKCBPU
     Kansas City, Kansas Board of Public UtilitiesKCC
     The State Corporation Commission of the State of KansasKCP&L
     Kansas City Power & Light Company, a wholly owned subsidiary   of Great Plains EnergyKLT Energy Services
     KLT Energy Services Inc., a wholly owned subsidiary of KLT Inc.KLT Gas
     KLT Gas Inc., a wholly owned subsidiary of KLT Inc.KLT Gas portfolio
     KLT Gas natural gas propertiesKLT Inc.
     KLT Inc., a wholly owned subsidiary of Great Plains EnergyKLT Investments
     KLT Investments Inc., a wholly owned subsidiary of KLT Inc.KLT Telecom
     KLT Telecom Inc., a wholly owned subsidiary of KLT Inc.KW
     KilowattkWh
     Kilowatt hourMAC
     Material Adverse ChangeMISO
     Midwest Independent Systems OperatorMPSC
     Missouri Public Service Commission



3



Abbreviation or Acronym
     DefinitionMW
     MegawattMWh
     Megawatt hourNEIL
     Nuclear Electric Insurance LimitedNOx
     Nitrogen OxideNRC
     Nuclear Regulatory CommissionNSPS
     New Source Performance StandardsOCI
     Other Comprehensive IncomeReceivables Company
     Kansas City Power & Light Receivables Company, a wholly owned    subsidiary of KCP&LRTO
     Regional Transmission OrganizationSEC
     Securities and Exchange CommissionSECA
     Seams Elimination Charge AdjustmentSE Holdings
     SE Holdings, L.L.C.Services
     Great Plains Energy Services IncorporatedSFAS
     Statement of Financial Accounting StandardsSO2
     Sulfur DioxideSOX
     Sulfur OxideSPP
     Southwest Power Pool, Inc.Strategic Energy
     Strategic Energy, L.L.C., a subsidiary of KLT Energy ServicesWCNOC
     Wolf Creek Nuclear Operating CorporationWolf Creek
     Wolf Creek Generating StationWorry Free
     Worry Free Service, Inc., a wholly owned subsidiary of HSS





4














PART 1 - FINANCIAL INFORMATIONItem 1 - Consolidated Financial StatementsGREAT PLAINS ENERGYConsolidated Balance Sheets(Unaudited)March 312005
     December 312004ASSETS
     (thousands)Current AssetsCash and cash equivalents
     
     
     $84,671
        
     $127,129Restricted cash
     10,050
        
     7,700Receivables, net
     284,156
        
     247,184Fuel inventories, at average cost
     24,908
        
     21,121Materials and supplies, at average cost
     55,704
        
     54,432Deferred income taxes
     6,736
        
     13,065Assets of discontinued operations
     -
        
     749Derivative instruments
     30,745
        
     6,372Other
     18,570
        
     14,485Total
     515,540
        
     492,237Nonutility Property and InvestmentsAffordable housing limited partnerships
     40,343
        
     41,317Nuclear decommissioning trust fund
     85,112
        
     84,148Other
     34,432
        
     32,739Total
     159,887
        
     158,204Utility Plant, at Original CostElectric
     4,857,076
        
     4,841,355Less-accumulated depreciation
     2,239,908
        
     2,196,835Net utility plant in service
     2,617,168
        
     2,644,520Construction work in progress
     67,327
        
     53,821Nuclear fuel, net of amortization of $130,908 and $127,631
     33,635
        
     36,109Total
     2,718,130
        
     2,734,450Deferred ChargesRegulatory assets
     144,901
        
     144,345Prepaid pension costs
     111,673
        
     119,811Goodwill
     86,767
        
     86,767Other deferred charges
     70,035
        
     63,087Total
     413,376
        
     414,010Total
     $3,806,933
        
     $3,798,901The accompanying Notes to Consolidated Financial Statements are an integral part of these statements.5

GREAT PLAINS ENERGYConsolidated Balance Sheets(Unaudited)March 312005
     December 312004LIABILITIES AND CAPITALIZATION
     (thousands)Current LiabilitiesNotes payable
     
     
     $17,000
        
     $20,000Commercial paper
     9,200
        
     -Current maturities of long-term debt
     398,505
        
     253,230EIRR bonds classified as current
     85,922
        
     85,922Accounts payable
     198,378
        
     199,952Accrued taxes
     42,877
        
     46,993Accrued interest
     13,051
        
     11,598Accrued payroll and vacations
     23,569
        
     32,462Accrued refueling outage costs
     14,903
        
     13,180Supplier collateral
     10,050
        
     7,700Liabilities of discontinued operations
     -
        
     2,129Other
     27,933
        
     24,931Total
     841,388
        
     698,097Deferred Credits and Other LiabilitiesDeferred income taxes
     640,151
        
     632,160Deferred investment tax credits
     32,615
        
     33,587Asset retirement obligations
     115,489
        
     113,674Pension liability
     96,181
        
     95,805Other
     89,577
        
     88,524Total
     974,013
        
     963,750CapitalizationCommon shareholders' equityCommon stock-150,000,000 shares authorized without par value74,587,492 and 74,394,423 shares issued, stated value
     771,181
        
     765,482Unearned compensation
     (2,519
        )
     (1,393
        )Capital stock premium and expense
     (32,060
        )
     (32,112
        )Retained earnings
     440,378
        
     451,491Treasury stock-28,488 shares, at cost
     (856
        )
     (856
        )Accumulated other comprehensive loss
     (32,331
        )
     (41,018
        )Total
     1,143,793
        
     1,141,594Cumulative preferred stock $100 par value3.80% - 100,000 shares issued
     10,000
        
     10,0004.50% - 100,000 shares issued
     10,000
        
     10,0004.20% - 70,000 shares issued
     7,000
        
     7,0004.35% - 120,000 shares issued
     12,000
        
     12,000Total
     39,000
        
     39,000Long-term debt (Note 8)
     808,739
        
     956,460Total
     1,991,532
        
     2,137,054Commitments and Contingencies (Note 11)Total
     $3,806,933
        
     $3,798,901The accompanying Notes to Consolidated Financial Statements are an integral part of these statements.6

GREAT PLAINS ENERGYConsolidated Statements of Income(Unaudited)Three Months Ended March 31
     2005
     2004Operating Revenues
     (thousands, except per share amounts)Electric revenues - KCP&L
     
     
     $233,215
        
     $246,535Electric revenues - Strategic Energy
     311,316
        
     294,111Other revenues
     583
        
     832Total
     545,114
        
     541,478Operating ExpensesFuel
     41,490
        
     40,600Purchased power - KCP&L
     11,490
        
     12,467Purchased power - Strategic Energy
     277,866
        
     264,354Other
     79,895
        
     79,734Maintenance
     29,358
        
     20,471Depreciation and amortization
     37,862
        
     36,520General taxes
     25,856
        
     24,721Gain on property
     (519
        )
     (35
        )Total
     503,298
        
     478,832Operating income
     41,816
        
     62,646Non-operating income
     1,924
        
     1,412Non-operating expenses
     (1,315
        )
     (2,902
        )Interest charges
     (17,487
        )
     (18,339
        )Income from continuing operations before income taxes,minority interest in subsidiaries and loss from equityinvestments
     24,938
        
     42,817Income taxes
     (5,291
        )
     (12,163
        )Minority interest in subsidiaries
     888
        
     (845
        )Loss from equity investments
     (345
        )
     (307
        )Income from continuing operations
     20,190
        
     29,502Discontinued operations, net of income taxes (Note 7)
     -
        
     (2,178
        )Net income
     20,190
        
     27,324Preferred stock dividend requirements
     411
        
     411Earnings available for common shareholders
     $19,779
        
     $26,913Average number of common shares outstanding
     74,436
        
     69,257Basic and diluted earnings (loss) per common shareContinuing operations
     $0.27
        
     $0.42Discontinued operations
     -
        
     (0.03
        )Basic and diluted earnings per common share
     $0.27
        
     $0.39Cash dividends per common share
     $0.415
        
     $0.415The accompanying Notes to Consolidated Financial Statements are an integral part of these statements.7

GREAT PLAINS ENERGYConsolidated Statements of Cash Flows(Unaudited)Three Months Ended March 31
     2005
     2004Cash Flows from Operating Activities
     (thousands)Net income
     
     
     $20,190
        
     $27,324Less: Discontinued operations, net of income taxes
     -
        
     (2,178
        )Income from continuing operations
     20,190
        
     29,502Adjustments to reconcile income to net cash from operating activities:Depreciation and amortization
     37,862
        
     36,520Amortization of:Nuclear fuel
     3,277
        
     3,478Other
     2,659
        
     2,490Deferred income taxes, net
     10,284
        
     (1,471
        )Investment tax credit amortization
     (972
        )
     (996
        )Loss from equity investments
     345
        
     307Gain on property
     (519
        )
     (35
        )Minority interest in subsidiaries
     (888
        )
     845Other operating activities (Note 4)
     (64,809
        )
     (1,291
        )Net cash from operating activities
     7,429
        
     69,349Cash Flows from Investing ActivitiesUtility capital expenditures
     (32,295
        )
     (67,696
        )Allowance for borrowed funds used during construction
     (435
        )
     (397
        )Purchases of investments
     (15,864
        )
     (888
        )Purchases of nonutility property
     (1,601
        )
     (682
        )Proceeds from sale of assets and investments
     15,064
        
     1,664Hawthorn No. 5 partial insurance recovery
     10,000
        
     -Hawthorn No. 5 partial litigation settlements
     -
        
     813Other investing activities
     (2,216
        )
     (3,894
        )Net cash from investing activities
     (27,347
        )
     (71,080
        )Cash Flows from Financing ActivitiesIssuance of common stock
     3,971
        
     -Net change in short-term borrowings
     6,200
        
     8,850Dividends paid
     (31,303
        )
     (29,153
        )Other financing activities
     (1,408
        )
     (895
        )Net cash from financing activities
     (22,540
        )
     (21,198
        )Net Change in Cash and Cash Equivalents
     (42,458
        )
     (22,929
        )Cash and Cash Equivalents from Continuing Operationsat Beginning of Year
     127,129
        
     114,227Cash and Cash Equivalents from Continuing Operationsat End of Year
     $84,671
        
     $91,298Net Change in Cash and Cash Equivalents fromDiscontinued Operations
     $(626
        )
     $(106
        )Cash and Cash Equivalents from Discontinued Operationsat Beginning of Year
     626
        
     168Cash and Cash Equivalents from Discontinued Operationsat End of Period
     $-
        
     $62The accompanying Notes to Consolidated Financial Statements are an integral part of these statements.8

GREAT PLAINS ENERGYConsolidated Statements of Common Shareholders' Equity(Unaudited)Three Months Ended March 31
     2005
     2004Shares
     Amount
     Shares
     AmountCommon Stock
     (thousands, except share amounts)Beginning balance
     
     
     74,394,423
        
     $765,482
        
     69,259,203
        
     $611,424Issuance of common stock
     145,340
        
     4,254
        
     -
        
     -Issuance of restricted common stock
     47,729
        
     1,445
        
     -
        
     -Ending balance
     74,587,492
        
     771,181
        
     69,259,203
        
     611,424Unearned CompensationBeginning balance
     
        
     (1,393
        )
     
        
     (1,633
        )Issuance of restricted common stock
     
        
     (1,445
        )
     
        
     -Compensation expense recognized
     
        
     319
        
     
        
     53Ending balance
     
        
     (2,519
        )
     
        
     (1,580
        )Capital Stock Premium and ExpenseBeginning balance
     
        
     (32,112
        )
     
        
     (7,240
        )Other
     
        
     52
        
     
        
     12Ending balance
     
        
     (32,060
        )
     
        
     (7,228
        )Retained EarningsBeginning balance
     
        
     451,491
        
     
        
     391,750Net income
     
        
     20,190
        
     
        
     27,324Loss on reissuance of treasury stock
     
        
     -
        
     
        
     (54
        )Dividends:Common stock
     
        
     (30,892
        )
     
        
     (28,742
        )Preferred stock - at required rates
     
        
     (411
        )
     
        
     (411
        )Ending balance
     
        
     440,378
        
     
        
     389,867Treasury StockBeginning balance
     (28,488
        )
     (856
        )
     (3,265
        )
     (121
        )Treasury shares acquired
     -
        
     -
        
     (3,183
        )
     (101
        )Treasury shares reissued
     -
        
     -
        
     6,000
        
     207Ending balance
     (28,488
        )
     (856
        )
     (448
        )
     (15
        )Accumulated Other Comprehensive LossBeginning balance
     
        
     (41,018
        )
     
        
     (36,886
        )Derivative hedging activity, net of tax
     
        
     8,724
        
     
        
     3,539Minimum pension obligation, net of tax
     
        
     (37
        )
     
        
     -Ending balance
     
        
     (32,331
        )
     
        
     (33,347
        )Total Common Shareholders' Equity
     
        
     $1,143,793
        
     
        
     $959,121The accompanying Notes to Consolidated Financial Statements are an integral part of these statements.9

GREAT PLAINS ENERGY
Consolidated Statements of Comprehensive Income(Unaudited)Three Months Ended March 31
     2005
     2004(thousands)Net income
     
     
     $20,190
        
     $27,324Other comprehensive incomeGain on derivative hedging instruments
     18,856
        
     8,087Income taxes
     (8,047
        )
     (3,538
        )Net gain on derivative hedging instruments
     10,809
        
     4,549Reclassification to expenses, net of tax
     (2,085
        )
     (1,010
        )Derivative hedging activity, net of tax
     8,724
        
     3,539Change in minimum pension obligation
     (60
        )
     -Income taxes
     23
        
     -Net change in minimum pension obligation
     (37
        )
     -Comprehensive income
     $28,877
        
     $30,863The accompanying Notes to Consolidated Financial Statements are an integral part of these statements.10

KANSAS CITY POWER & LIGHT




COMPANYConsolidated Balance Sheets(Unaudited)March 31
     December 312005
     2004ASSETS
     (thousands)Current AssetsCash and cash equivalents
     
     
     $751
        
     $51,619Receivables, net
     117,276
        
     63,366Fuel inventories, at average cost
     24,908
        
     21,121Materials and supplies, at average cost
     55,704
        
     54,432Deferred income taxes
     11,503
        
     12,818Prepaid expenses
     12,021
        
     12,511Derivative instruments
     1,920
        
     363Total
     224,083
        
     216,230Nonutility Property and InvestmentsNuclear decommissioning trust fund
     85,112
        
     84,148Other
     21,309
        
     20,576Total
     106,421
        
     104,724Utility Plant, at Original CostElectric
     4,857,076
        
     4,841,355Less-accumulated depreciation
     2,239,908
        
     2,196,835Net utility plant in service
     2,617,168
        
     2,644,520Construction work in progress
     67,327
        
     53,821Nuclear fuel, net of amortization of $130,908 and $127,631
     33,635
        
     36,109Total
     2,718,130
        
     2,734,450Deferred ChargesRegulatory assets
     144,901
        
     144,345Prepaid pension costs
     109,545
        
     116,024Other deferred charges
     26,620
        
     21,621Total
     281,066
        
     281,990Total
     $3,329,700
        
     $3,337,394The disclosures regarding KCP&L included in the accompanying Notes to Consolidated Financial Statements are anintegral part of these statements.11






KANSAS CITY POWER & LIGHT COMPANYConsolidated Balance Sheets(Unaudited)March 31
     December 312005
     2004LIABILITIES AND CAPITALIZATION
     (thousands)Current LiabilitiesNotes payable to Great Plains Energy
     
     
     $349
        
     $24Commercial paper
     9,200
        
     -Current maturities of long-term debt
     395,275
        
     250,000EIRR bonds classified as current
     85,922
        
     85,922Accounts payable
     85,041
        
     84,105Accrued taxes
     43,083
        
     34,497Accrued interest
     11,014
        
     9,800Accrued payroll and vacations
     18,696
        
     22,870Accrued refueling outage costs
     14,903
        
     13,180Other
     7,859
        
     8,327Total
     671,342
        
     508,725Deferred Credits and Other LiabilitiesDeferred income taxes
     647,597
        
     654,055Deferred investment tax credits
     32,615
        
     33,587Asset retirement obligations
     115,489
        
     113,674Pension liability
     90,912
        
     90,491Other
     49,321
        
     46,933Total
     935,934
        
     938,740CapitalizationCommon shareholder's equityCommon stock-1,000 shares authorized without par value1 share issued, stated value
     887,041
        
     887,041Retained earnings
     232,346
        
     252,893Accumulated other comprehensive loss
     (39,571
        )
     (40,334
        )Total
     1,079,816
        
     1,099,600Long-term debt (Note 8)
     642,608
        
     790,329Total
     1,722,424
        
     1,889,929Commitments and Contingencies (Note 11)Total
     $3,329,700
        
     $3,337,394The disclosures regarding KCP&L included in the accompanying Notes to Consolidated Financial Statements are anintegral part of these statements.12







KANSAS CITY POWER & LIGHT COMPANYConsolidated Statements of Income(Unaudited)Three Months Ended March 31
     2005
     2004Operating Revenues
     (thousands)Electric revenues
     
     
     $233,215
        
     $246,535Other revenues
     113
        
     441Total
     233,328
        
     246,976Operating ExpensesFuel
     41,490
        
     40,600Purchased power
     11,490
        
     12,467Other
     65,963
        
     63,953Maintenance
     29,346
        
     20,466Depreciation and amortization
     36,395
        
     35,944General taxes
     24,555
        
     23,915Gain on property
     (516
        )
     (35
        )Total
     208,723
        
     197,310Operating income
     24,605
        
     49,666Non-operating income
     1,497
        
     1,190Non-operating expenses
     (1,153
        )
     (1,546
        )Interest charges
     (14,619
        )
     (17,224
        )Income before income taxes and minority interestin subsidiaries
     10,330
        
     32,086Income taxes
     (965
        )
     (12,149
        )Minority interest in subsidiaries
     888
        
     1,243Net income
     $10,253
        
     $21,180The disclosures regarding KCP&L included in the accompanying Notes to Consolidated FinancialStatements are an integral part of these statements.13





KANSAS CITY POWER & LIGHT COMPANYConsolidated Statements of Cash Flows(Unaudited)Three Months Ended March 31
     2005
     2004Cash Flows from Operating Activities
     (thousands)Net income
     
     
     $10,253
        
     $21,180Adjustments to reconcile income to net cash from operating activities:Depreciation and amortization
     36,395
        
     35,944Amortization of:Nuclear fuel
     3,277
        
     3,478Other
     1,956
        
     1,921Deferred income taxes, net
     (3,201
        )
     (591
        )Investment tax credit amortization
     (972
        )
     (996
        )Gain on property
     (516
        )
     (35
        )Minority interest in subsidiaries
     (888
        )
     (1,243
        )Other operating activities (Note 4)
     (50,106
        )
     13,543Net cash from operating activities
     (3,802
        )
     73,201Cash Flows from Investing ActivitiesUtility capital expenditures
     (32,295
        )
     (67,696
        )Allowance for borrowed funds used during construction
     (435
        )
     (397
        )Purchases of investments
     (888
        )
     (888
        )Purchases of nonutility property
     (10
        )
     (19
        )Proceeds from sale of assets
     63
        
     164Hawthorn No. 5 partial insurance recovery
     10,000
        
     -Hawthorn No. 5 partial litigation settlements
     -
        
     813Other investing activities
     (2,218
        )
     (3,898
        )Net cash from investing activities
     (25,783
        )
     (71,921
        )Cash Flows from Financing ActivitiesNet change in short-term borrowings
     9,525
        
     1,507Dividends paid to Great Plains Energy
     (30,800
        )
     (29,000
        )Issuance costs
     (8
        )
     -Net cash from financing activities
     (21,283
        )
     (27,493
        )Net Change in Cash and Cash Equivalents
     (50,868
        )
     (26,213
        )Cash and Cash Equivalents at Beginning of Year
     51,619
        
     26,520Cash and Cash Equivalents at End of Period
     $751
        
     $307The disclosures regarding KCP&L included in the accompanying Notes to Consolidated Financial Statements arean integral part of these statements.14





KANSAS CITY POWER & LIGHT COMPANYConsolidated Statements of Common Shareholder's Equity(Unaudited)Three Months Ended March 31
     2005
     2004Shares
     Amount
     Shares
     Amount(thousands, except share amounts)Common Stock
     
     
     1
        
     $887,041
        
     1
        
     $662,041Retained EarningsBeginning balance
     
        
     252,893
        
     
        
     228,761Net income
     
        
     10,253
        
     
        
     21,180Dividends:Common stock held by Great Plains Energy
     
        
     (30,800
        )
     
        
     (29,000
        )Ending balance
     
        
     232,346
        
     
        
     220,941Accumulated Other Comprehensive LossBeginning balance
     
        
     (40,334
        )
     
        
     (35,244
        )Derivative hedging activity, net of tax
     
        
     800
        
     
        
     247Minimum pension obligation, net of tax
     
        
     (37
        )
     
        
     -Ending balance
     
        
     (39,571
        )
     
        
     (34,997
        )Total Common Shareholder's Equity
     
        
     $1,079,816
        
     
        
     $847,985The disclosures regarding KCP&L included in the accompanying Notes to Consolidated Financial Statements are anintegral part of these statements.15




KANSAS CITY POWER & LIGHT COMPANYConsolidated Statements of Comprehensive Income(Unaudited)Three Months Ended March 31
     2005
     2004(thousands)Net income
     
     
     $10,253
        
     $21,180Other comprehensive incomeGain on derivative hedging instruments
     1,298
        
     404Income taxes
     (498
        )
     (157
        )Derivative hedging activity, net of tax
     800
        
     247Change in minimum pension obligation
     (60
        )
     -Income taxes
     23
        
     -Net change in minimum pension obligation
     (37
        )
     -Comprehensive income
     $11,016
        
     $21,427The disclosures regarding KCP&L included in the accompanying Notes to Consolidated Financial Statementsare an integral part of these statements.16






GREAT PLAINS ENERGY
INCORPORATED KANSAS CITY POWER & LIGHT 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.



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:

KCP&L is an integrated, regulated electric utility, which provides electricity to customers primarily in the
         states of Missouri and Kansas.  KCP&L's wholly owned subsidiary, Home Service Solutions Inc. (HSS) sold its
         wholly owned subsidiary, Worry Free Service, Inc. (Worry Free) in February 2005.KLT Inc. is an intermediate holding company that primarily holds, directly or indirectly, interests in Strategic
         Energy, L.L.C. (Strategic Energy) and affordable housing limited partnerships.  Strategic Energy provides
         competitive electricity supply services in several electricity markets offering retail choice.  KLT Inc. wholly
         owns KLT Gas Inc. (KLT Gas).  See Note 7 for additional information regarding KLT Gas 2004 discontinued
         operations.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.  GPP has made no significant investments to date.Innovative Energy Consultants Inc. (IEC) is an intermediate holding company that holds an indirect interest in
         Strategic Energy.  IEC does not own or operate any assets other than its indirect interest in Strategic Energy.
         When combined with KLT Inc.'s indirect interest in Strategic Energy, the Company owns just under 100% of the
         indirect interest in Strategic Energy.Great Plains Energy Services Incorporated (Services) was formed to provide services at cost to Great Plains
         Energy and its subsidiaries, including consolidated KCP&L, as a service company under the 35 Act.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.


17

2. CASH


Cash and Cash EquivalentsCash 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 $23.7 million and
$21.0 million at March 31, 2005, and December 31, 2004, respectively.


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


Restricted CashStrategic Energy has entered into
Master Power Purchase and Sale Agreements with its power suppliers. Certain of these
agreements contain provisions whereby, to the extent Strategic Energy has a net exposure
to the purchased power supplier, collateral requirements are to be maintained. Collateral
posted in the form of cash to Strategic Energy is restricted by agreement, but would
become unrestricted in the event of a default by the purchased power supplier. Restricted
cash collateral at March 31, 2005, and December 31, 2004, was $10.1 million and $7.7
million, respectively.



3. BASIC AND DILUTED
EARNINGS PER COMMON SHARE CALCULATION


There was no significant dilutive
effect on Great Plains Energys EPS from other securities for the three months ended
March 31, 2005 and 2004. 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 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 PRIDESSM calculated using the treasury stock method.


The following table reconciles Great
Plains Energys basic and diluted EPS from continuing operations.










Three Months Ended March 31
     2005
     2004Income
     (thousands, except per share amounts)Income from continuing operations
     
     
     $20,190
        
     $29,502Less: preferred stock dividend requirements
     411
        
     411Income available to common shareholders
     $19,779
        
     $29,091Common Shares OutstandingAverage number of common shares outstanding
     74,436
        
     69,257Add: effect of dilutive securities
     199
        
     106Diluted average number of common shares outstanding
     74,635
        
     69,363Basic EPS from continuing operations
     $0.27
        
     $0.42Diluted EPS from continuing operations
     $0.27
        
     $0.42As of March 31, 2005 and 2004, there were
no anti-dilutive shares applicable to stock options, performance shares or restricted
stock. As of March 31, 2005, 6.5 million FELINE PRIDES had no dilutive effect because the
number of common shares to be issued in accordance with the settlement rate, assuming
applicable market value equal to the average price during the period, would be equal to
the number of shares Great Plains Energy could re-purchase in the market at the average
price during the period.


18
In May 2005, the Board of Directors
declared a quarterly dividend of $0.415 per share on Great Plains Energys common
stock. The common dividend is payable June 20, 2005, to shareholders of record as of May
27, 2005. The Board of Directors also declared regular dividends on Great Plains
Energys preferred stock, payable September 1, 2005, to shareholders of record on
August 11, 2005.



4. SUPPLEMENTAL CASH
FLOW INFORMATION







Great Plains Energy Other Operating ActivitiesThree Months Ended March 31
     2005
     2004Cash flows affected by changes in:
     (thousands)Receivables
     
     
     $(35,784
        )
     $6,430Fuel inventories
     (3,787
        )
     2,773Materials and supplies
     (1,272
        )
     1,412Accounts payable
     (1,623
        )
     (3,473
        )Accrued taxes
     (17,804
        )
     2,859Accrued interest
     1,446
        
     97Wolf Creek refueling outage accrual
     1,723
        
     2,640Pension and postretirement benefit assets and obligations
     9,224
        
     3,757Allowance for equity funds used during construction
     (786
        )
     (457
        )Other
     (16,146
        )
     (17,329
        )Total other operating activities
     $(64,809
        )
     $(1,291
        )Cash paid during the period:Interest
     $16,806
        
     $17,747Income taxes
     $14,833
        
     $21,512Consolidated KCP&L Other Operating ActivitiesThree Months Ended March 31
     2005
     2004Cash flows affected by changes in:
     (thousands)Receivables
     
     
     $(54,752
        )
     $4,864Fuel inventories
     (3,787
        )
     2,773Materials and supplies
     (1,272
        )
     1,412Accounts payable
     907
        
     (7,257
        )Accrued taxes
     (1,591
        )
     6,466Accrued interest
     1,214
        
     19Wolf Creek refueling outage accrual
     1,723
        
     2,640Pension and postretirement benefit assets and obligations
     7,610
        
     2,690Allowance for equity funds used during construction
     (786
        )
     (457
        )Other
     628
        
     393Total other operating activities
     $(50,106
        )
     $13,543Cash paid during the period:Interest
     $12,756
        
     $16,641Income taxes
     $20,240
        
     $20,500Significant Non-Cash Items
During the first quarter of 2005, HSS
completed the sale of Worry Free. As part of the transaction, HSS received cash of $0.3
million and notes receivable totaling $5.2 million, net of a $3.0 million allowance. The
notes receivable had no effect on Great Plains Energys and consolidated
KCP&Ls cash flows.


19





5. RECEIVABLES


The Companys receivables are
detailed in the following table.









March 312005
     December 312004Consolidated KCP&L
     (thousands)Customer accounts receivable (a) (b)
     
     
     $77,221
        
     $19,866Other receivables
     41,565
        
     45,222Allowance for doubtful accounts
     (1,510
        )
     (1,722
        )Consolidated KCP&L receivables
     117,276
        
     63,366Other Great Plains EnergyOther receivables
     171,420
        
     188,499Allowance for doubtful accounts
     (4,540
        )
     (4,681
        )Great Plains Energy receivables
     $284,156
        
     $247,184(a)  At December 31, 2004, KCP&L's customer accounts receivable were sold
    to      Receivables Company.(b) Customer accounts receivable included unbilled receivables of $27.5 million
    and      $31.2 million at March 31, 2005 and December 31, 2004, respectively.KCP&L had a revolving agreement,
which expired in January 2005, 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 sold most of the receivables to outside
investors. KCP&L is currently evaluating alternatives to replace this agreement. The
expired agreement was structured as a true sale under which the creditors of Receivables
Company were entitled to be satisfied out of the assets of Receivables Company prior to
any value being returned to KCP&L or its creditors. Accounts receivable sold under the
expired revolving agreement totaled $84.9 million at December 31, 2004. As a result of the
sale to outside investors, Receivables Company received up to $70 million in cash, which
was forwarded to KCP&L as consideration for its sale. At December 31, 2004,
Receivables Company had received $65.0 million in cash.


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






Three Months Ended March 31
     2005
     2004Gross proceeds on sale of
     (thousands)accounts receivable
     
     
     $46,124
        
     $200,438Collections
     44,287
        
     209,197Loss on sale of accounts receivable
     34
        
     412Late fees
     112
        
     555Consolidated KCP&Ls other
receivables at March 31, 2005 and December 31, 2004, consist primarily of receivables from
partners in jointly owned electric utility plants and wholesale sales receivables. The
December 31, 2004, amounts also included accounts receivable held by Worry Free. Great
Plains Energys other receivables at March 31, 2005 and December 31, 2004, were
primarily the accounts receivable held by Strategic Energy including unbilled receivables
of $78.2 million and $103.0 million, respectively.



6. ACQUIRED INTANGIBLE
ASSETS


In 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


20


Energy to
just under 100%. The acquired share of intangible assets and related liabilities are
detailed in the following table.









March 31, 2005
     
     December 31, 2004Gross CarryingAmount
     AccumulatedAmortization
     
     Gross CarryingAmount
     AccumulatedAmortizationAmortized intangible assets
     (millions)Supply contracts
     
     
     $26.5
        
     $(10.6
        )
     
     $26.5
        
     $(7.7
        )Customer relationships
     17.0
        
     (2.6
        )
     
     17.0
        
     (1.9
        )Asset information systems
     1.9
        
     (0.5
        )
     
     1.9
        
     (0.3
        )Total
     45.4
        
     (13.7
        )
     
     45.4
        
     (9.9
        )Unamortized intangible assetsStrategic Energy trade name
     0.7
        
     
     
     
     
     0.7Total intangible assets
     $46.1
        
     $(13.7
        )
     
     $46.1
        
     $(9.9
        )Amortized related liabilitiesRetail contracts
     $26.5
        
     $(10.6
        )
     
     $26.5
        
     $(7.7
        )Amortization expense for the acquired
share of intangible assets and related liabilities is detailed in the following table.







Three Months Ended
     Estimated Amortization ExpenseMarch 31, 2005
     2005(a)
     2006
     2007
     2008
     2009(millions)Intangible assets
     
     
     $3.8
        
     $11.2
        
     $10.5
        
     $3.3
        
     $2.8
        
     $2.8Related liabilities
     (2.9
        )
     (8.7
        )
     (7.1
        )
     -
        
     -
        
     -Net amortization expense
     $0.9
        
     $2.5
        
     $3.4
        
     $3.3
        
     $2.8
        
     $2.8(a) Amount represents the remaining estimated amortization expense for 2005.
7. KLT GAS DISCONTINUED
OPERATIONS


In February 2004, the Board of
Directors approved the sale of the KLT Gas natural gas properties (KLT Gas portfolio) and
discontinuation of the gas business. Consequently, in 2004, the KLT Gas portfolio was
reported as discontinued operations and KLT Gas historical activities were
reclassified in accordance with Statement of Financial Accounting Standards (SFAS) No. 144
Accounting for the Impairment or Disposal of Long-lived Assets for all periods
presented. During 2004, KLT Gas completed sales of substantially all of the KLT Gas
portfolio. At December 31, 2004, KLT Gas had $0.7 million of current assets and $2.1
million of current liabilities recorded in assets and liabilities from discontinued
operations, respectively. The following table summarizes the discontinued operations for
the three months ended March 31, 2004.







Three Months Ended March 31
     2004(millions)Revenues
     
     
     $0
        .6Loss from operations, including impairments,before income taxes
     (3
        .7)Income taxes
     1
        .5Discontinued operations, net of income taxes
     $(2
        .2)21





8. CAPITALIZATION


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








Year Due
     March 312005
     December 312004Consolidated KCP&L
     
     (thousands)General Mortgage Bonds7.95%*** Medium-Term Notes
     
     
     
     2007
     
     $500
        
     $5002.43%* and 2.26%** EIRR bonds
     2012-2023
     158,768
        
     158,768Senior Notes7.125%
     2005
     250,000
        
     250,0006.500%
     2011
     150,000
        
     150,0006.000%
     2007
     225,000
        
     225,000Unamortized discount
     
     (410
        )
     (465
        )EIRR bonds2.29%*** Series A & B
     2015
     105,174
        
     106,9912.38%*** Series C
     2017
     50,000
        
     50,0002.29%*** Series D
     2017
     39,498
        
     40,1832.51%* and 2.10%** Combustion Turbine Synthetic Lease
     2006
     145,275
        
     145,274Current liabilitiesEIRR bonds classified as current
     
     (85,922
        )
     (85,922
        )Current maturities
     
     (395,275
        )
     (250,000
        )Total consolidated KCP&L excluding current liabilities
     
     642,608
        
     790,329Other Great Plains Energy4.25% FELINE PRIDES Senior Notes
     2009
     163,600
        
     163,6007.64%*** Affordable Housing Notes
     2005-2008
     5,761
        
     5,761Current maturities
     
     (3,230
        )
     (3,230
        )Total consolidated Great Plains Energy excluding current maturities
     $808,739
        
     $956,460*  Weighted-average rate as of March 31, 2005**  Weighted-average rate as of December 31, 2004***  Weighted-average rate as of March 31, 2005 and December 31, 2004KCP&L will exercise its early
termination option in the Combustion Turbine Synthetic Lease and purchase the leased
property in the second quarter of 2005. Accordingly, the $145.3 million of debt related
to the lease has been reclassified to current maturities in the March 31, 2005, consolidated
balance sheets.  The purchase will be initially funded with the
issuance of commercial paper.


Amortization of Debt Expense
Great Plains Energys and consolidated KCP&Ls amortization of debt expense is detailed in the following
table.





Three Months Ended March 31
     2005
     2004(millions)Consolidated KCP&L
     
     
     $0
        .6
     $0
        .5Other Great Plains Energy
     0
        .1
     0
        .3Total Great Plains Energy
     $0
        .7
     $0
        .8Short-Term Borrowings
And Short-Term Bank Lines of CreditGreat Plains Energy has a $550
million, five-year 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


22




than $25.0 million is a default under the current facility. Under the terms of this
agreement, Great Plains Energy is required to maintain a consolidated indebtedness to
consolidated capitalization ratio, as defined in the agreement, not greater than 0.65 to
1.00 at all times. At March 31, 2005, the Company was in compliance with this
covenant. At March 31, 2005, Great Plains Energy had $17.0 million of
outstanding borrowings with an interest rate of 3.23% and had issued letters of credit
totaling $6.5 million under the credit facility as credit support for Strategic
Energy. At December 31, 2004, Great Plains Energy had $20.0 million of outstanding
borrowings with an interest rate of 3.04% and had issued letters of credit totaling
$8.0 million under the credit facility as credit support for Strategic Energy.


KCP&L has a $250 million,
five-year revolving credit facility to provide support for its issuance of commercial
paper and other general purposes. A default by KCP&L on other indebtedness totaling
more than $25.0 million is a default under the current facility. Under the terms of the
agreement, KCP&L is required to maintain a consolidated indebtedness to consolidated
capitalization ratio, as defined in the agreement, not greater than 0.65 to 1.00 at all
times. At March 31, 2005, KCP&L was in compliance with this covenant. At
March 31, 2005, KCP&L had no borrowings and $9.2 million of commercial paper
outstanding. The weighted-average interest rate of the commercial paper was 2.9%. At
December 31, 2004, KCP&L had no short-term borrowings outstanding.


Strategic Energy has a $125 million,
three-year revolving credit facility with a group of banks. Great Plains Energy has
guaranteed $25.0 million of this 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 terms 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. At March 31, 2005, Strategic
Energy was in compliance with these covenants. At March 31, 2005, $63.9 million
in letters of credit had been issued and there were no borrowings under the agreement. At
December 31, 2004, $69.2 million in letters of credit had been issued and there were
no borrowings under the agreement.



9. PENSION PLANS AND
OTHER EMPLOYEE BENEFITS


Pension Plans and Other Employee Benefits
The Company maintains defined benefit
pension plans for substantially all employees, including officers, of KCP&L, Services
and Wolf Creek Nuclear Operating Corporation (WCNOC). Pension 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 benefits charged to KCP&L are accrued during an employees
years of service and recovered through rates.


23



The following pension benefits tables
provide information relating to the funded status of all defined benefit pension plans on
an aggregate basis. Net periodic benefit costs reflect total plan benefit costs prior to
the effects of capitalization and sharing with joint-owners of power plants.







Pension Benefits
     Other BenefitsThree Months Ended March 31
     2005
     2004
     2005
     2004Components of net periodic benefit cost
     (thousands)Service cost
     
     
     $4,309
        
     $4,071
        
     $235
        
     $241Interest cost
     7,421
        
     7,406
        
     712
        
     771Expected return on plan assets
     (8,081
        )
     (7,825
        )
     (160
        )
     (167
        )Amortization of prior service cost
     1,066
        
     1,070
        
     58
        
     59Recognized net actuarial loss
     4,635
        
     1,905
        
     124
        
     185Transition obligation
     14
        
     12
        
     294
        
     294Net settlements
     -
        
     178
        
     -
        
     -Net periodic benefit cost
     $9,364
        
     $6,817
        
     $1,263
        
     $1,383Equity CompensationThe Companys Long-Term
Incentive Plan is an equity compensation plan approved by its shareholders. The Long-Term
Incentive Plan permits the grant of restricted stock, stock options, limited stock
appreciation rights and performance shares to officers and other employees of the Company
and its subsidiaries. In accordance with the provisions of SFAS No. 123, Accounting
for Stock-Based Compensation, compensation expense and accrued dividends related to
equity compensation are recognized over the stated vesting period. Forfeitures of equity
compensation are recognized when incurred and previously recorded compensation expense
related to the forfeited shares is reversed. The maximum number of shares of Great Plains
Energy common stock that can be issued under the plan is 3.0 million. At March 31, 2005,
2.0 million shares remained available for future issuance.



Performance SharesThe issuance of performance shares is
contingent upon achievement of specific performance goals over a stated period of time as
proposed by Company management and approved by the Compensation Committee of the
Companys Board of Directors. The number of performance shares granted is variable
depending on company performance over stated vesting periods. Performance shares have a
value equal to the fair market value of the shares on the grant date with accruing
dividends. During the first quarter of 2005, performance shares granted totaled 166,982;
6,840 of these shares were forfeited. Additionally, 3,543 of the 19,313 granted
performance shares outstanding at December 31, 2004, were forfeited during the first
quarter of 2005. Performance shares granted and outstanding totaled 175,912 at March 31,
2005. For the three months ended March 31, 2005, the Company recognized $0.3 million of
compensation expense for performance shares and reversed an insignificant amount of
previously recognized compensation expense related to forfeited shares.



Restricted Stock Restricted stock cannot be sold or
otherwise transferred by the recipient prior to vesting and has a value equal to the fair
market value of the shares on the grant date. Restricted stock granted during the first
quarter of 2005 totaled 47,729 shares. Restricted stock shares issued in 2005 vest on a
graded schedule over a stated period of time with accruing reinvested dividends. For the
three months ended March 31, 2005 and 2004, respectively, the Company recognized
compensation expense of $0.3 million and $0.1 million for the restricted stock.



Cash-Based Long-Term Incentives
In 2005, Strategic Energy initiated
long-term incentives designed to reward officers and key members of management with a cash
performance payment for achieving specific performance goals over a


24


stated period of time,
commencing January 1, 2005.  For
the three months ended March 31, 2005, compensation expense of $0.4 million was recognized
for the cash-based incentives.



10. RELATED PARTY
TRANSACTIONS AND RELATIONSHIPS


Pursuant to a service agreement
approved by the SEC under the 35 Act, consolidated KCP&L began receiving various
support and administrative services from Services. These services are billed to
consolidated KCP&L at cost based on payroll and other expenses incurred by Services
for the benefit of consolidated KCP&L. These costs totaled $15.4 million and $15.7
million for three months ended March 31, 2005 and 2004, respectively, and consisted
primarily of employee compensation, benefits and fees associated with various professional
services. At March 31, 2005, and December 31, 2004, consolidated KCP&L had a net
intercompany payable to Services of $6.3 million and $9.2 million, respectively.



11. COMMITMENTS AND
CONTINGENCIES



Nuclear Liability and Insurance
The owners of Wolf Creek, a nuclear
generating station, (Owners) maintain nuclear insurance for Wolf Creek in four areas:
liability, worker radiation, property and accidental outage. These policies contain
certain industry standard exclusions, including, but not limited to, ordinary wear and
tear, and war. Both the nuclear liability and property insurance programs subscribed to by
members of the nuclear power generating industry include industry aggregate limits for
non-certified acts of, as defined by the Terrorism Risk Insurance Act, terrorism-related
losses, including replacement power costs. An industry aggregate limit of $0.3 billion
exists for liability claims, regardless of the number of non-certified acts affecting Wolf
Creek or any other nuclear energy liability policy or the number of policies in place. An
industry aggregate limit of $3.2 billion plus any reinsurance recoverable by Nuclear
Electric Insurance Limited (NEIL), the Owners insurance provider, exists for property
claims, including accidental outage power costs for acts of terrorism affecting Wolf Creek
or any other nuclear energy facility property policy within twelve months from the date of
the first act. These limits are the maximum amount to be paid to members who sustain
losses or damages from these types of terrorist acts. For certified acts of terrorism, the
individual policy limits apply. In addition, industry-wide retrospective assessment
programs (discussed below) can apply once these insurance programs have been exhausted.



Liability Insurance
Pursuant to the Price-Anderson Act,
the Owners are required to insure against public liability claims resulting from nuclear
incidents to the full limit of public liability, which is currently $10.8 billion. This
limit of liability consists of the maximum available commercial insurance of $0.3 billion,
and the remaining $10.5 billion is provided through an industry-wide retrospective
assessment program mandated by the Nuclear Regulatory Commission (NRC). Under this
retrospective assessment program, the Owners can be assessed up to $100.6 million ($47.3
million, KCP&Ls 47% share) per incident at any commercial reactor in the
country, payable at no more than $10 million ($4.7 million, KCP&Ls 47% share)
per incident per year. This assessment is subject to an inflation adjustment based on the
Consumer Price Index and applicable premium taxes. This assessment also applies in excess
of our worker radiation claims insurance. In addition, the U.S. Congress could impose
additional revenue-raising measures to pay claims. If the $10.8 billion liability
limitation is insufficient, management believes the U.S. Congress will consider taking
whatever action is necessary to compensate the public for valid claims.


The Price Anderson Act continues in
effect for reactors, such as Wolf Creek, that commenced construction before December 31,
2003, until they are no longer in service. Provisions that would amend the Price-Anderson
Act to increase the annual limit on retrospective assessments from $10 million to $15
million per reactor per incident and reauthorize the Price Anderson Act through 2028 to


25


include reactors commencing construction after December 31, 2003, are pending before
Congress in a current version of a comprehensive energy bill.



Property,
Decontamination, Premature Decommissioning and Extra Expense Insurance
The Owners carry decontamination
liability, premature decommissioning liability and property damage insurance for Wolf
Creek totaling approximately $2.8 billion ($1.3 billion, KCP&Ls 47% share). NEIL
provides this insurance.


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



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


Under all NEIL policies, the Owners
are subject to retrospective assessments if NEIL losses, for each policy year, exceed the
accumulated funds available to the insurer under that policy. The estimated maximum amount
of retrospective assessments under the current policies could total about
$26.0 million ($12.2 million, KCP&Ls 47% share) per policy year.


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



Low-Level Waste
The Low-Level Radioactive Waste
Policy Amendments Act of 1985 mandated that the various states, individually or through
interstate compacts, develop alternative low-level radioactive waste disposal facilities.
The states of Kansas, Nebraska, Arkansas, Louisiana and Oklahoma formed the Central
Interstate Low-Level Radioactive Waste Compact (Compact) and selected a site in northern
Nebraska to locate a disposal facility. WCNOC and the owners of the other five nuclear
units in the Compact provided most of the pre-construction financing for this project.
KCP&Ls net investment in the Compact was $7.4 million at March 31, 2005, and
December 31, 2004.


On December 18, 1998, the application
for a license to construct this project was denied. After the license denial, WCNOC, the
Compact Commission (Commission) 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 lawsuit issued his decision in the
case finding 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 Commission in the amount of $151.4 million against the state.
After the U.S. Court of Appeals affirmed the decision, Nebraska and the Commission settled
the case by Nebraska agreeing to pay the Commission either a one-time amount currently
$145.8 million, including one year of interest to August 2005, or four annual installments
of $38.5 million beginning on August 1, 2005. The Nebraska legislature is expected to
decide in May 2005 whether to pay the settlement in a lump sum or in four annual
installments. At the request of the Commission, WCNOC along with other members of the
Compact, filed with the Commission their claims for refund. WCNOCs maximum claim is
in excess of


26


$22 million, including pre-judgment interest and attorneys fees. The
Commission will consider these claims at its annual meeting in June 2005. The Commission
continues to explore alternative long-term waste disposal capability and may retain a
portion of the settlement to fund the development of alternative disposal capability.


Wolf Creek continues to dispose of
its low-level radioactive waste at the reopened disposal facility at Barnwell, South
Carolina. South Carolina intends to gradually decrease the amount of waste it allows from
outside its compact until around 2008 when it intends to no longer accept waste from
generators outside its compact. Wolf Creek remains able to dispose of some of its
radioactive waste at a facility in Utah. Although management is unable to predict when a
permanent disposal facility for Wolf Creek low-level radioactive waste might become
available, this issue is not expected to affect continued operation of Wolf Creek.



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


KCP&L operates in an
environmentally responsible manner and seeks to use current technology to avoid and treat
contamination. KCP&L regularly conducts environmental audits designed to ensure
compliance with governmental regulations and to detect contamination. Governmental bodies,
however, may impose additional or more restrictive environmental regulations that could
require substantial changes to operations or facilities at a significant cost. At March
31, 2005 and December 31, 2004, KCP&L had $0.3 million accrued for environmental
remediation expenses. The accrual covers water monitoring at one site. The amounts accrued
were established on an undiscounted basis and KCP&L does not currently have an
estimated time frame over which the accrued amounts may be paid out.


Discussed below are issues that may
require material expenditures to comply with environmental laws and regulations.
Expenditure estimates provided below include the accelerated environmental upgrade
expenditures contemplated in the MPSC and KCC agreements discussed in Note 12.
KCP&Ls expectation is that any such expenditures will be recovered through
rates.



Clean Air Legislation
Congress 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 bills address oxides of sulfur
and nitrogen (SOx and NOx), mercury and carbon dioxide
(CO2), while other 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.


27




NOx and
SO2 Regulations- Clean Air Interstate Rule
On March 10, 2005, the Environmental
Protection Agency (EPA) Administrator signed the Clean Air Interstate Rule (CAIR), which
requires reductions in SO2 and NOx emissions in 28 states including
Missouri. The final regulation is expected to be effective the end of June 2005.


The reduction in both
SO2and NOx emissions will be accomplished through establishment of
permanent statewide caps for NOxeffective January 1, 2009, and
SO2 effective January 1, 2010. More restrictive caps will be effective on
January 1, 2015. KCP&Ls coal-fired plants located in Missouri are subject
to CAIR, while its coal-fired plants in Kansas are not.


KCP&L will need to incur
significant capital costs, purchase power or purchase emission allowances to implement the
emission reductions required by CAIR at its Missouri plants. Analysis of the regulations
indicates that selective catalytic reduction technology for NOx control and
scrubbers for SO2 control will likely be required for some of the KCP&L
Missouri based units. Currently, KCP&L estimates that additional capital expenditures
to comply with these regulations on all existing Missouri plants could range from $470
million to $690 million. The timing of the installation of such control equipment is
currently being developed. 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. As discussed below, certain of
the control technology for SO2 and NOx will also aid in the control
of mercury.


KCP&L is currently allocated
approximately 50,000 tons of SO2 allowances per year to support its emissions
of approximately 50,000 tons per year. KCP&L has accumulated over 190,000 tons of
allocated SO2 allowances; however, the disposition of such credits is subject
to regulatory approvals from both Kansas and Missouri.


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. The EPA is scheduled to adopt final regulations
by June 15, 2005. If the proposed BART regulations are adopted, they will apply to
KCP&Ls coal-fired plants. Based on the results of the state air quality studies,
it is anticipated that KCP&L could substantially achieve compliance at its Missouri
plants by making capital expenditures to comply with CAIR. If adopted, BART would require
additional capital expenditures to comply with the regulations at KCP&Ls Kansas
plants that could range from $220 million to $360 million.



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 from man-made sources. On March 15, 2005, the EPA reversed its earlier finding
to regulate fossil fuel-fired power plants under section 112 of the Clean Air Act,
concluding that the earlier finding lacked foundation and that recent information
demonstrates that it is not appropriate or necessary to regulate fossil fuel-fired power
plants under section 112. This final rule has been published in the Federal Register with
an effective date of March 29, 2005.


On March 15, 2005, the EPA signed the
Clean Air Mercury Rule, which regulates mercury emissions from coal-fired power plants
located in 48 states including Kansas and Missouri under the New Source Performance
Standards (NSPS) of the Clean Air Act. This final regulation is expected to be effective
the end of June 2005. This final rule establishes a market-based cap-and-trade program
that will reduce nationwide utility emissions of mercury in two phases. The first phase
cap is effective


28


January 1, 2010, and establishes a permanent nationwide cap of 38 tons of
mercury for coal-fired power plants. The first phase cap is anticipated to be met by
KCP&L taking advantage of mercury reductions achieved through capital expenditures to
comply with CAIR. The second phase is effective January 1, 2018, and establishes a
permanent nationwide cap of 15 tons of mercury for coal-fired power plants. When fully
implemented, this final rule will reduce utility emissions of mercury by nearly 70% from
current emissions of 48 tons per year.


Facilities will demonstrate
compliance with the standard by holding one allowance for each ounce of mercury emitted in
any given year and allowances will be readily transferable among all regulated facilities
nationwide. Under the cap and trade options, KCP&L will be able to purchase mercury
allowances or elect to install pollution control equipment to achieve compliance. While it
is expected that mercury allowances will be available in sufficient quantities for
purchase in the 2010-2018 timeframe, the significant reduction in the nationwide cap in
2018 may hamper KCP&Ls ability to obtain reasonably priced allowances beyond
2018. Therefore, capital expenditures may be required in the 2016-2018 timeframe to
install additional mercury pollution control equipment. If KCP&L were required to install
mercury control equipment on all of its coal-fired power plants, it is anticipated that
chemical injection would provide the required control. The incremental projected cost to
KCP&L, above the costs to comply with CAIR and BART, for mercury control ranges from
$10 million to $20 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.


The EPAs actions to de-list
mercury under section 112 of the Clean Air Act and sign the Clean Air Mercury Rule remain
controversial and subject to challenge.



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 bills being debated
in the U.S. Congress that address the CO2 issue, including establishing a
nationwide cap on CO2levels. 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


29


emissions from an estimated 183 metric tons per $1 million of GDP in 2002 to 151
metric tons per $1 million of GDP by 2012.


On December 19, 2002, Great Plains
Energy joined the Power Partners through Edison Electric Institute (EEI). Power Partners
is a voluntary program with the DOE under which utilities 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.


On December 13, 2004, Power Partners
entered into a cooperative umbrella MOU with the DOE. This MOU contains supply and
demand-side actions as well as offset projects that will be undertaken to reduce the power
sectors CO2 emissions per kWh generated over the next decade consistent
with the EEI commitment of 3% to 5%. Individual companies, including KCP&L, will now
begin entering 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 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 December 17, 2004, the EPA designated
the Kansas City area as attainment with respect to the PM-2.5 NAAQS. Effective May 3,
2005, the EPA designated Jackson, Platte, Clay and Cass counties in Missouri and Johnson,
Linn, Miami and Wyandotte counties in Kansas as attainment with respect to the eight-hour
ozone NAAQS.



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


30


for cooling purposes. KCP&L is required
to complete a Section 316(b) comprehensive demonstration study on each of its generating
facilities intake structures by the end of 2007. KCP&L plans to complete the
comprehensive demonstration studies by the end of 2006 at an expected cost of $0.3 million
to $0.5 million per facility. Depending on the outcome of the comprehensive demonstration
studies, facilities may be required to implement technological, operational or restoration
measures to achieve compliance. Compliance with the final rule is expected to be achieved
between 2011 and 2014. Until the Section 316(b) comprehensive demonstration studies are
completed, the impact of this final rule cannot be quantified.



Pennsylvania Gross Receipts Tax Contingency
In January 2005, Strategic Energy was
advised by the Pennsylvania Department of Revenue of a potential tax deficiency relating
to state gross receipts tax on Strategic Energys Provider of Last Resort (POLR)
revenues from 2000 to 2002. During the first quarter of 2005, Strategic Energy reached a
final settlement with the State of Pennsylvania for all three years with no deficiency
related to the POLR revenues.



Income Tax Contingencies 
Management evaluates and records
contingent tax liabilities based on the probability of ultimately sustaining the tax
deductions or income positions. Management assesses the probabilities of successfully
defending the tax deductions or income positions based upon statutory, judicial or
administrative authority.


At March 31, 2005, and December 31,
2004, the Company had $12.9 million and $13.4 million, respectively, of liabilities
for contingencies related to tax deductions or income positions taken on the
Companys tax returns. Consolidated KCP&L had liabilities of $3.0 million
and $3.7 million at March 31, 2005, and December 31, 2004, respectively. Management
believes the tax deductions or income positions are properly treated on such tax returns,
but has recorded reserves based upon its assessment of the probabilities that certain
deductions or income positions may not be sustained when the returns are audited. The tax
returns containing these tax deductions or income positions are currently under audit or
will likely be audited. The timing of the resolution of these audits is uncertain. If the
positions are ultimately sustained, the Company will reverse these tax provisions to
income. If the positions are not ultimately sustained, the Company may be required to make
cash payments plus interest and/or utilize the Companys federal and state credit
carryforwards.



12. REGULATORY MATTERS



Executing On Strategic Intent
In the first few months of 2005, the
Company has initiated several important steps in executing on its Strategic Intent. Great
Plains Energy and consolidated KCP&L took action to align the companies
organizations to execute the long-term strategic intent by solidifying their management
teams through the appointment of new officers. The companies expect to continue working to
ensure the right skills and talents are in place throughout the organization in the
upcoming months.


Strategic Energy has continued to
move forward with several initiatives to improve marketing and supply procurement. A few
examples of initiatives for supply procurement include improving load aggregation
strategies allowing power purchases in larger blocks, seeking partnering opportunities
with regional generators and exploring additional hedging strategies. Marketing
initiatives underway include exploring new channels for targeting new customers, product
innovation focused on improving response time to changing customers needs, and
proactive communication with customers to help define strategies in the current
high-priced electricity market.


31



KCP&L has continued to make
progress in implementing its comprehensive energy plan early in 2005 and has filed
agreements recommending the approval and implementation of its comprehensive energy plan
with the Missouri Public Service Commission (MPSC) and The State Corporation Commission of
the State of Kansas (KCC) and is awaiting final rulings. The agreements were reached
between KCP&L, the Commission staffs and certain key parties in the respective
jurisdictions. The KCC has scheduled hearings to be concluded by the end of June 2005. The
MPSC is expected to hold hearings prior to issuing its ruling. The following are brief
descriptions of the major provisions of the agreements.

KCP&L will make energy infrastructure investments as summarized in the table below.EstimatedCapitalProject
     Details
     Expenditures(millions)Iatan No. 2
     
     
     Building and owning up to 500 MW of an 800-900 MW coalfired plant with an estimated completion date of June 2010


     $
776Wind Generation (a)
     Installation of 100 MW of wind generation in 2006
     131Environmental
     Retrofit of selected existing coal plants
     272Asset Management
     Enhanced system performance and reliability
     42Customer Programs
     Various demand management, distributed generation andefficiency programs
     53Total(b)
     
     $1,274(a)  The agreements call for the possible addition of another 100 MW of wind generation in 2008 ifsupported by a detailed evaluation.(b)  Includes approximately $60 million of investments related to a railroad bridge, a substation andtransmission lines.  Wind generation includes approximately $2 million of transmission anddistribution investment.  A decision regarding recovery of costs in Kansas related to the railroad bridgeis deferred to future rate cases, which reduces the total to $1,231 million in the Kansas agreement.KCP&L's current rates will remain in place until 2007, unless significant events impact KCP&L.  The first rate
         case will be filed in 2006, with any rate adjustments going into effect in 2007.  The last rate case defined in
         the agreements is expected to be filed in 2009, with rates effective near the time Iatan No. 2 is placed in
         service.  Two additional rate cases could be filed in 2007 and 2008 at KCP&L's discretion.The Kansas agreement allows KCP&L to recover, on a dollar-for-dollar basis with no profit to the company, actual
         fuel and purchased power expense incurred through an energy cost adjustment that would take effect for Kansas in
         2007.  Similarly, an interim energy charge, based on forecasted costs and subject to customer refund, would take
         effect for Missouri customers in 2007.KCP&L may sell SO2 emission allowances during the term of the agreements.  The sales proceeds will be recorded as
         a regulatory liability for ratemaking purposes and will be amortized over time.KCP&L's pensions costs before amounts capitalized, for regulatory purposes, are established at $22 million until
         2007 through the creation of a regulatory asset or liability, as appropriate.The depreciable life of Wolf Creek Generating Station for Missouri regulatory purposes will be increased from 40
         to 60 years.  The Missouri agreement calls for $10.3 million on an annual jurisdictional basis, of additional
         amortization expense to be recorded upon the effective date of

32
the agreement to offset the reduction in
         depreciation expense due to the change in depreciable life.  The 60-year Missouri depreciable life will match the
         current Kansas regulatory depreciable life.The agreements give KCP&L regulatory mechanisms to be able to recover the prudent costs of its investments as
         they are placed in service and to maintain targeted credit ratios over the five-year term of the agreements.If approved by the MPSC and the KCC,
the agreements will provide regulatory clarity on certain items. However, normal
regulatory risk will continue to exist as the commissions establish rates in the rate
cases, including, but not limited to, the actual amount of costs to be recovered through
rates, the return on equity, the capital structure utilized, and expenses to be recovered.
KCP&L projects that, if the cost of the plan is included in rate base, the rate
increases to support the five year plan and increasing operating expenses would average
approximately 3-4% annually, over the same time period.


The comprehensive energy plan is
currently expected to be funded through a mix of sources as detailed in the following
table.



Funding SourceAnticipated contribution from rate increases
     
     
     25% - 35%New equity financing
     20% - 30%Debt financing
     20% - 30%2007 equity from 2004 FELINE PRIDES
     13%Internal funds and other
     5% - 10%Actual funding sources may differ
from this estimated mix and may be affected by various factors, including the results of
the rate proceedings and market conditions.

Southwest Power Pool Regional Transmission
OrganizationUnder 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.
The Southwest Power Pool (SPP), of which KCP&L is a member, obtained approval from
FERC as an RTO in a January 24, 2005, order. KCP&L intends on participating in the SPP
RTO; however, state regulatory approvals are required. KCP&L anticipates making the
necessary applications to the Missouri Public Service Commission (MPSC) and The State
Corporation Commission of the State of Kansas (KCC), during the second quarter of 2005
upon completion of the regional cost/benefit analysis currently being conducted for the
SPP RTO. The cost/benefit analysis was conducted under the direction of the SPP Regional
State Committee (composed of state commissions from the states where the SPP RTO operates)
and the final report was issued April 25, 2005. The analysis indicates the implementation
of an energy imbalance market within the SPP would provide benefits of approximately $373
million over a 10-year period to members of the SPP RTO; although there was no significant
documented impact for KCP&L over the 10-year period.



FERC Market Power Inquiry
KCP&L is authorized by FERC to
sell wholesale power at market-based rates. As a condition of that authority, KCP&L
must submit to FERC an updated market power analysis every three years. KCP&L
submitted its most recent update in 2004. In December 2004, FERC issued an order finding
that KCP&L potentially has generation market power in its own control area and the
control area of the Kansas City, Kansas Board of Public Utilities (KCBPU). With respect to
those control areas, FERC


33


instructed KCP&L (i) to submit a delivered price test (DPT)
analysis demonstrating that KCP&L does not possess generation market power; (ii)
propose generation market power mitigation measures; or (iii) accept FERCs
default cost-based rates for wholesale power sales or propose alternate cost-based rates
(with cost support for such rates).


In February 2005, KCP&L submitted
a DPT analysis demonstrating that, if KCP&Ls native load obligations are
considered, KCP&L does not possess market power in its control area or the control
area of KCBPU. KCBPU subsequently submitted comments to FERC contesting KCP&Ls
DPT analysis to which KCP&L has responded to FERC with expert testimony refuting
KCBPUs comments and reiterating that KCP&Ls submitted DPT analysis
demonstrates that KCP&L does not have generation market power in KCBPUs control
area. It is likely FERC will issue its final determination in this proceeding in May 2005.


FERC explained in its December 2004
Order that all market-based, wholesale sales into KCP&Ls control area and
KCBPUs control area that occur between March 7, 2005, and the date FERC issues a
final order concerning KCP&Ls alleged market power are subject to refund if FERC
ultimately concludes that KCP&L possesses market power. Any such refund would be based
on the difference between KCP&Ls market-based sales and sales at FERC-determined
cost-based rates. In addition, any such FERC determination would require KCP&L to sell
power at cost-based rates within those control areas in the future. This restriction with
regard to future sales would continue until the SPP implements a fully functioning market
that satisfies FERCs market power concerns, which is currently estimated to occur in
late 2005 or early 2006.


KCP&L makes very few
market-based, wholesale sales to customers with loads that sink within KCP&Ls or
KCBPUs control areas. Therefore, even if FERC determines that KCP&L has market
power, and imposes the refund obligation and restriction on future sales described above,
the financial impact on KCP&L would not be material. However, it is possible that FERC
could define sales within KCP&Ls control area more broadly to include sales to
customers with loads that sink outside KCP&Ls control area, but where such
customers choose to take delivery of the energy at a bus within KCP&Ls control
area. Although KCP&L would vigorously contest such a definition, the estimated refunds
to customers or loss of revenue to KCP&L in that instance, absent mitigation, could be
as high as $14.7 million. Management does not consider this to be a probable outcome.



Duquesne Zone Seams Elimination Charge Adjustment
In March 2005, a compliance filing
made to FERC by certain PJM transmission owners contained an allocation of seams
elimination charge adjustment (SECA) charges for the Duquesne Light Company (Duquesne)
zone within PJM. SECA is a transitional pricing mechanism intended to compensate
transmission owners for the revenue lost as a result of FERCs elimination of
regional through and out rates between PJM and the Midwest Independent Systems Operator
(MISO). Each relevant PJM zone and the load-serving entities within that zone will be
allocated a portion of the SECA based on transmission services provided to that zone
during 2002 and 2003. There are several unresolved matters and legal challenges to the
SECA that are pending before FERC on rehearing.


The compliance filing allocates
approximately $1.5 million of charges to Strategic Energy, as a load-serving entity within
PJMs Duquesne zone, for the months of January and February 2005, subject to refund
and adjustment. The intended recovery period for the transitional SECA extends to March
2006. Accordingly, Strategic Energys exposure to SECA charges may continue at an
undetermined rate through March 2006. Management is unable to predict the transitional
SECA that may be allocated to Strategic Energy in future compliance filings or the
ultimate outcome of such filings, including the outcome of legal challenges to SECA that
are pending before FERC on rehearing. However, based on the compliance filing allocating
January and February 2005 SECA charges, management believes that the SECA allocated to
Strategic Energy in future periods may be significant. If FERC accepts the


34


compliance
filing for billing purposes, PJM may invoice Strategic Energy for these charges as early
as May 2005, subject to refund and adjustment. Strategic Energy has filed a protest to the
compliance filing and FERC is expected to issue an order on the compliance filing during
the second quarter of 2005.


Management believes that a number of
issues exist related to the Duquesne zone SECA allocation contemplated in the March 2005
compliance filing. In procedural Order issued on March 4, 2005, FERC established a
schedule for resolution of certain SECA issues, including the issue of shifting SECA
allocations to the shipper. The shipper in Strategic Energys situation is the
wholesale supplier, which through a contract with Strategic Energy, delivered power to
various zones in which Strategic Energy was supplying retail customers. In most instances,
the shipper was the purchaser of through-and-out transmission service and therefore
included the cost of the through-and-out rate in its energy price. Management believes,
but cannot assure, that Strategic Energy should not ultimately be responsible for the
level of SECA charges for the Duquesne zone indicated in the compliance filing. However,
if allocated and billed SECA charges, management is exploring alternatives under which
Strategic Energy would be able to recover some to all of the SECA charges through billings
to its retail customers or from wholesale suppliers.



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, L.L.C. (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 and SE Holdings
redeemed his equity interest. 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. SE Holdings, and its direct
and indirect owners, have agreed to indemnify Strategic Energy and IEC against any
judgment or settlement of Mr. Haberstrohs claim that relates to his alleged equity
interest in SE Holdings, up to approximately $8 million plus any dividends or interest
received in relation to his alleged interest.



KLT Gas
On July 28, 2004, KLT Gas received a
Notice and Demand for Arbitration Pursuant to Joint Operating Agreement from SWEPI LP
doing business as Shell Western E&P and formerly known as Shell Western E&P Inc.
(Shell). Prior to the October 2004 sale (with a July 1, 2004, effective date) of KLT
Gas working interests in certain oil and gas leases in Duval County, Texas to Shell,
KLT Gas had a 50% working interest in the leases. Shell held the other 50% working
interest and was 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 $5.5 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


35


the JOA. Shell is seeking a
ruling compelling KLT Gas to pay Shell immediately all sums deemed to be due pursuant to
the arbitration. On August 17, 2004, KLT Gas submitted its notice of defense generally
asserting that there is no contractual basis or implied duty for reimbursement or
contribution regarding the settlements and there is no contractual basis for reimbursement
or contribution regarding the Texas Railroad Commission proceedings. KLT Gas also asserted
counterclaims based upon misrepresentations and promissory estoppel, gross negligence in
imprudent operations, full accounting under the JOA and offset. The arbitration is
currently scheduled to begin in May 2005. KLT Gas and its counsel continue to evaluate KLT
Gas rights and obligations under the JOA as well as other possible counterclaims
that KLT Gas may have against Shell.



Hawthorn No. 5 Subrogation Litigation
KCP&L filed suit on April 3,
2001, in Jackson County, Missouri Circuit Court against multiple defendants who are
alleged to have responsibility for the Hawthorn No. 5 boiler explosion. KCP&L and
National Union Fire Insurance Company of Pittsburgh, Pennsylvania (National Union) have
entered into a subrogation allocation agreement under which recoveries in this suit are
generally allocated 55% to National Union and 45% to KCP&L. Certain defendants have
been dismissed from the suit and various defendants have settled with KCP&L. 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 payment of 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. Both KCP&L and the defendant have appealed this case to the Court of Appeals
for the Western District of Missouri.



KLT Telecom On December 31, 2001, a subsidiary of
KLT Telecom Inc. (KLT Telecom), DTI Holdings, Inc. (Holdings) and its subsidiaries Digital
Teleport Inc. (Digital Teleport) 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. DTI Holdings and its two
subsidiaries are collectively called DTI. In 2003, the Bankruptcy Court
confirmed the plan of reorganization for these three companies.


KLT Telecom originally acquired a 47%
interest in DTI in 1997. On February 8, 2001, KLT Telecom acquired control of DTI by
purchasing shares from another Holdings shareholder, Richard D. Weinstein (Weinstein),
increasing its ownership to 83.6%. In connection with this purchase, KLT Telecom granted
Weinstein a put option. The put option provided for the sale by Weinstein of his remaining
shares in Holdings to KLT Telecom during a period beginning September 1, 2003, and ending
August 31, 2005. The put option provides for an aggregate exercise price for these
remaining shares equal to their fair market value with an aggregate floor amount of $15
million. The floor amount of the put option was fully reserved during 2001. On September
2, 2003, Weinstein delivered to KLT Telecom notice of the exercise of his put option. KLT
Telecom declined to pay Weinstein any amount under the put option because, among other
things, the stock of Holdings has been cancelled and extinguished pursuant to the joint
Chapter 11 plan confirmed by the Bankruptcy Court. Weinstein has sued KLT Telecom for
allegedly breaching the put option and seeks damages of at least $15 million plus
statutory interest. In April 2005, summary judgment in the Weinstein litigation was
granted in favor of KLT Telecom. The $15 million reserve has not been reversed because the
judgment is subject to appeal.


36




14. ASSET RETIREMENT
OBLIGATIONS


In March 2005, Financial Accounting
Standards Board (FASB) issued FASB Interpretation (FIN) No. 47, Accounting for
Conditional Asset Retirement Obligations. FIN No. 47 clarifies that the term
conditional asset retirement obligation as used in FASB Statement No. 143,
Accounting for Asset Retirement Obligation, refers to a legal obligation to
perform an asset retirement activity in which the timing and/or method of settlement are
conditional on a future event that may or may not be within the control of the entity.
Accordingly, an entity is required to recognize a liability for the fair value of a
conditional asset retirement obligation if the fair value of the liability can be
reasonably estimated. Great Plains Energy and consolidated KCP&L are required to adopt
the provisions of FIN No. 47 by December 31, 2005, although earlier adoption is permitted.
Great Plains Energy and consolidated KCP&L are currently evaluating the impact of FIN
No. 47, if any, on their consolidated financial statements.



15. SEGMENT AND RELATED
INFORMATION



Great Plains Energy
Great Plains Energy has two
reportable segments based on its method of internal reporting, which generally segregates
the reportable segments based on products and services, management responsibility and
regulation. The two reportable business segments are KCP&L, an integrated, regulated
electric utility, which provides reliable, affordable electricity to customers; and
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. Intercompany eliminations include insignificant
amounts of intercompany financing related activities. The summary of significant
accounting policies applies to all of the reportable segments. For segment reporting, each
segments income taxes include the effects of allocating holding company tax
benefits. Segment performance is evaluated based on net income.


The tables below reflect summarized
financial information concerning Great Plains Energys reportable segments.







Three Months EndedMarch 31, 2005
     KCP&L
     StrategicEnergy
     Other
     Great PlainsEnergy(millions)Operating revenues
     
     
     $233.2
        
     $311.8
        
     $0.1
        
     $545.1Depreciation and amortization
     (36.3
        )
     (1.5
        )
     (0.1
        )
     (37.9
        )Interest charges
     (14.6
        )
     (0.8
        )
     (2.1
        )
     (17.5
        )Income taxes
     (1.5
        )
     (8.5
        )
     4.7
        
     (5.3
        )Loss from equity investments
     -
        
     -
        
     (0.3
        )
     (0.3
        )Net income (loss)
     10.8
        
     12.8
        
     (3.4
        )
     20.2Three Months EndedMarch 31, 2004
     KCP&L
     StrategicEnergy
     Other
     Great PlainsEnergy(millions)Operating revenues
     
     
     $246.5
        
     $294.5
        
     $0.5
        
     $541.5Depreciation and amortization
     (35.7
        )
     (0.6
        )
     (0.2
        )
     (36.5
        )Interest charges
     (17.1
        )
     0.5
        
     (1.7
        )
     (18.3
        )Income taxes
     (12.3
        )
     (7.2
        )
     7.3
        
     (12.2
        )Loss from equity investments
     -
        
     -
        
     (0.3
        )
     (0.3
        )Discontinued operations
     -
        
     -
        
     (2.2
        )
     (2.2
        )Net income (loss)
     21.6
        
     9.3
        
     (3.6
        )
     27.337
KCP&L
     StrategicEnergy
     Other
     Great PlainsEnergyMarch 31, 2005
     (millions)Assets
     
     
     $3,325.0
        
     $429.7
        
     $52.2
        
     $3,806.9Capital expenditures (a)
     32.3
        
     1.5
        
     0.1
        
     33.9December 31, 2004Assets
     $3,330.2
        
     $407.7
        
     $61.0
        
     $3,798.9Capital expenditures (a)
     190.8
        
     2.6
        
     3.3
        
     196.7(a) Capital expenditures reflect year to date amounts for the periods presented.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. Intercompany
eliminations include insignificant amounts of intercompany financing related activities.






Three Months EndedMarch 31, 2005
     KCP&L
     Other
     ConsolidatedKCP&L(millions)Operating revenues
     
     
     $233.2
        
     $0.1
        
     $233.3Depreciation and amortization
     (36.3
        )
     (0.1
        )
     (36.4
        )Interest charges
     (14.6
        )
     -
        
     (14.6
        )Income taxes
     (1.5
        )
     0.6
        
     (0.9
        )Net income (loss)
     10.8
        
     (0.5
        )
     10.3Three Months EndedMarch 31, 2004
     KCP&L
     Other
     ConsolidatedKCP&L(millions)Operating revenues
     
     
     $246.5
        
     $0.5
        
     $247.0Depreciation and amortization
     (35.7
        )
     (0.2
        )
     (35.9
        )Interest charges
     (17.1
        )
     (0.1
        )
     (17.2
        )Income taxes
     (12.3
        )
     0.2
        
     (12.1
        )Net income (loss)
     21.6
        
     (0.4
        )
     21.2KCP&L
     Other
     ConsolidatedKCP&LMarch 31, 2005
     (millions)Assets
     
     
     $3,325.0
        
     $4.7
        
     $3,329.7Capital expenditures (a)
     32.3
        
     -
        
     32.3December 31, 2004Assets
     $3,330.2
        
     $7.2
        
     $3,337.4Capital expenditures (a)
     190.8
        
     -
        
     190.8(a) Capital expenditures reflect year to date amounts for the periods presented.
16. DERIVATIVE
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


38


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 reduce the effects of
fluctuations on purchased power expense caused by commodity price volatility.
Counterparties on commodity derivatives and interest rate swap agreements expose the
Company to credit loss in the event of nonperformance. This credit loss is limited to the
cost of replacing these contracts at current market rates. Derivative instruments measured
at fair value are recorded on the balance sheet as an asset or liability. Changes in the
fair value are recognized currently in net income unless specific hedge accounting
criteria are met.



Fair Value Hedges  Interest Rate Risk Management
In 2002, KCP&L remarketed its
1998 Series A, B, and D EIRR bonds totaling $146.5 million to a five-year fixed interest
rate of 4.75% ending October 1, 2007. Simultaneously with the remarketing, KCP&L
entered into an interest rate swap for the $146.5 million based on the London Interbank
Offered Rate (LIBOR) to effectively create a floating interest rate obligation. The
transaction is a fair value hedge with no ineffectiveness. Changes in the fair market
value of the swap are recorded on the balance sheet as an asset or liability with an
offsetting entry to the respective debt balances with no net impact on net income. The
fair value of the swap was a liability of $1.8 million and an asset of $0.7 million at
March 31, 2005 and December 31, 2004, respectively.


Cash Flow Hedges  Commodity Risk Management
KCP&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 natural gas purchases to meet generation
requirements for retail and firm wholesale sales. As of March 31, 2005, KCP&L had
approximately 65% of its 2005 projected natural gas usage for retail load and firm MWh
sales hedged. These hedging instruments are designated as cash flow hedges. The fair
values of these instruments are recorded as current assets or current liabilities with an
offsetting entry to other comprehensive income (OCI) for the effective portion of the
hedge. To the extent the hedges are not effective, the ineffective portion of the change
in fair market value is recorded currently in fuel expense. KCP&L did not record any
gains or losses due to ineffectiveness for the three months ended March 31, 2005 or 2004.
When the natural gas is purchased, the amounts in OCI are reclassified to fuel expense in
the consolidated income statement.


Strategic Energy maintains a
commodity-price risk management strategy that uses forward physical energy purchases and
other derivative instruments to reduce the effects of fluctuations on purchased power
expense caused by commodity-price volatility. Derivative instruments are used to limit the
unfavorable effect that price increases will have on electricity purchases, effectively
fixing the future purchase price of electricity for the applicable forecasted usage and
protecting Strategic Energy from significant price volatility. The maximum term over which
Strategic Energy is hedging its exposure and variability of future cash flows is 4.0 years
and 3.1 years at March 31, 2005 and December 31, 2004, respectively.


Certain forward fixed price purchases
and swap agreements are designated as cash flow hedges. The fair values of these
instruments are recorded as assets or liabilities with an offsetting entry to OCI for the
effective portion of the hedge. To the extent the hedges are not effective, the
ineffective portion of the change in fair market value is recorded currently in purchased
power. When the forecasted purchase is completed, the amounts in OCI are reclassified to
purchased power. Purchased power for the three months ended March 31, 2005, includes a
$2.1 million gain due to ineffectiveness of the cash flow hedges. Strategic Energy did not
record any gains or losses due to ineffectiveness for the three months ended March 31,
2004.


39




Strategic Energy also enters into
economic hedges (non-hedging derivatives) that do not qualify for hedge accounting. The
changes in the fair value of these derivative instruments recorded into net income as a
component of purchased power were a $2.9 million gain and a $0.3 million loss for the
three months ended March 31, 2005 and 2004, respectively.


The notional and estimated fair
values of the Companys derivative instruments are summarized in the following table.
The fair values of these derivatives are recorded on the consolidated balance sheets.






March 31
     December 312005
     2004Notional
     
     NotionalContract
     Fair
     Contract
     FairAmount
     Value
     Amount
     ValueGreat Plains Energy
     (millions)Swap contractsCash flow hedges
     
     
     $70.3
        
     $15.7
        
     $92.4
        
     $4.5Non-hedging derivatives
     1.7
        
     1.1
        
     2.3
        
     0.7Forward contractsCash flow hedges
     33.4
        
     7.9
        
     23.0
        
     1.6Non-hedging derivatives
     10.5
        
     0.3
        
     5.5
        
     (2.2
        )Consolidated KCP&LSwap contractsCash flow hedges
     9.2
        
     1.1
        
     6.3
        
     (0.3
        )The amounts recorded in accumulated
OCI related to the cash flow hedges are summarized in the following table.





Great Plains Energy
     Consolidated KCP&LMarch 31
     December 31
     March 31
     December 312005
     2004
     2005
     2004(millions)Current assets
     
     
     $14.3
        
     $2.5
        
     $1.1
        
     $(0.3
        )Other deferred charges
     2.4
        
     0.9
        
     -
        
     -Other current liabilities
     1.3
        
     (0.5
        )
     -
        
     -Deferred income taxes
     (7.4
        )
     (0.8
        )
     (0.4
        )
     0.2Other deferred credits
     (0.6
        )
     (0.9
        )
     -
        
     -Total
     $10.0
        
     $1.2
        
     $0.7
        
     $(0.1
        )The amounts reclassified to expenses
during the three months ended March 31, 2005 and 2004 are summarized in the following
table.





Great Plains EnergyThree Months Ended March 31
     2005
     2004(millions)Purchased power expense
     
     
     $(3.6
        )
     $(2.0
        )Minority interest
     -
        
     0.2Income taxes
     1.5
        
     0.8OCI
     $(2.1
        )
     $(1.0
        )40



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 follows is a combined presentation for Great Plains Energy and consolidated KCP&L, both registrants under this filing.  The discussion and analysis by management focuses on those factors that had a material effect on the financial condition and results of operations of the registrants during the periods presented.

OVERVIEW

Great Plains Energy is a public utility holding company registered with and subject to the regulation of the SEC under the 35 Act.  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.  As a diversified energy company, Great Plains Energys reportable business segments include KCP&L and Strategic Energy.

Executing On Strategic Intent

In the first few months of 2005, the Company has initiated several important steps in executing on its Strategic Intent.  Great Plains Energy and consolidated KCP&L took action to align the companies organizations to execute the long-term strategic intent by solidifying their management teams through the appointment of new officers.  The companies expect to continue working to ensure the right skills and talents are in place throughout the organization in the upcoming months.

Strategic Energy has continued to move forward with several initiatives to improve marketing and supply procurement.  A few examples of initiatives for supply procurement include improving load aggregation strategies allowing power purchases in larger blocks, seeking partnering opportunities with regional generators and exploring additional hedging strategies.  Marketing initiatives underway include exploring new channels for targeting new customers, product innovation focused on improving response time to changing customers needs, and proactive communication with customers to help define strategies in the current high-priced electricity market.





41





KCP&L has continued to make progress in implementing its comprehensive energy plan early in 2005 and has filed agreements recommending the approval and implementation of its comprehensive energy plan with the Missouri Public Service Commission (MPSC) and The State Corporation Commission of the State of Kansas (KCC) and is awaiting final rulings.  The agreements were reached between KCP&L, the Commission staffs and certain key parties in the respective jurisdictions.  The KCC has scheduled hearings to be concluded by the end of June 2005.  The MPSC is expected to hold hearings prior to issuing its ruling.  The following are brief descriptions of the major provisions of the agreements.


        KCP&L will make energy infrastructure investments as summarized in the table below.EstimatedCapitalProject
     Details
     Expenditures(millions)Iatan No. 2
     
     
     Building and owning up to 500 MW of an 800-900 MW coalfired plant with an estimated completion date of June 2010


     $
776Wind Generation (a)


     Installation of 100 MW of wind generation in 2006



131Environmental
     Retrofit of selected existing coal plants
     272Asset Management
     Enhanced system performance and reliability
     42Customer Programs
     Various demand management, distributed generation andefficiency programs
     53Total(b)
     
     $1,274(a)  The agreements call for the possible addition of another 100 MW of wind generation in 2008 ifsupported by a detailed evaluation.(b)  Includes approximately $60 million of investments related to a railroad bridge, a substation andtransmission lines.  Wind generation includes approximately $2 million of transmission anddistribution investment.  A decision regarding recovery of costs in Kansas related to the railroad bridgeis deferred to future rate cases, which reduces the total to $1,231 million in the Kansas agreement.
        KCP&Ls current rates will remain in place until 2007, unless significant events impact KCP&L.  The first rate case will be filed in 2006, with any rate adjustments going into effect in 2007.  The last rate case defined in the agreements is expected to be filed in 2009, with rates effective near the time Iatan No. 2 is placed in service.  Two additional rate cases could be filed in 2007 and 2008 at KCP&Ls discretion.
        The Kansas agreement allows KCP&L to recover, on a dollar-for-dollar basis with no profit to the company, actual fuel and purchased power expense incurred through an energy cost adjustment that would take effect for Kansas in 2007.  Similarly, an interim energy charge, based on forecasted costs and subject to customer refund, would take effect for Missouri customers in 2007.
        KCP&L may sell SO2emission allowances during the term of the agreements.  The sales proceeds will be recorded as a regulatory liability for ratemaking purposes and will be amortized over time.
        KCP&Ls pensions costs before amounts capitalized, for regulatory purposes, are established at $22 million until 2007 through the creation of a regulatory asset or liability, as appropriate.
        The depreciable life of Wolf Creek Generating Station for Missouri regulatory purposes will be increased from 40 to 60 years.  The Missouri agreement calls for $10.3 million on an annual



42



jurisdictional basis, of additional amortization expense to be recorded upon the effective date of the agreement to offset the reduction in depreciation expense due to the change in depreciable life.  The 60-year Missouri depreciable life will match the current Kansas regulatory depreciable life.



        The agreements give KCP&L regulatory mechanisms to be able to recover the prudent costs of its investments as they are placed in service and to maintain targeted credit ratios over the five-year term of the agreements.If approved by the MPSC and the KCC, the agreements will provide regulatory clarity on certain items.  However, normal regulatory risk will continue to exist as the commissions establish rates in the rate cases, including, but not limited to, the actual amount of costs to be recovered through rates, the return on equity, the capital structure utilized, and expenses to be recovered.  KCP&L projects that, if the cost of the plan is included in rate base, the rate increases to support the five year plan and increasing operating expenses would average approximately 3-4% annually, over the same time period.

The comprehensive energy plan is currently expected to be funded through a mix of sources as detailed in the following table.


Funding SourceAnticipated contribution from rate increases
     
     
     25% - 35%New equity financing
     20% - 30%Debt financing
     20% - 30%2007 equity from 2004 FELINE PRIDES
     13%Internal funds and other
     5% - 10%

Actual funding sources may differ from this estimated mix and may be affected by various factors, including the results of the rate proceedings and market conditions.

KCP&L

KCP&L is an integrated, regulated electric utility that engages in the generation, transmission, distribution and sale of electricity.  KCP&L has over 4,000 MWs of generating capacity and has transmission and distribution facilities that provide reliable affordable electricity to approximately 500,000 customers in the states of Missouri and Kansas.  KCP&L has continued to experience modest load growth annually through increased customer usage and additional customers.  Rates charged for electricity are below the national average.

KCP&L's wholly owned subsidiary, HSS, sold its wholly owned subsidiary, Worry Free, in February 2005.

FERC Market Power Inquiry

KCP&L is authorized by FERC to sell wholesale power at market-based rates.  In December 2004, FERC issued an order finding that KCP&L potentially has generation market power in its own control area and the control area of the Kansas City, Kansas Board of Public Utilities.  See Note 12 to the consolidated financial statements for further information regarding FERC market power inquiry.

Southwest Power Pool Regional Transmission Organization

Under the FERC Order 2000, KCP&L, as an investor-owned utility, is strongly encouraged to join a FERC approved RTO.  See Note 12 to the consolidated financial statements for further information.



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Strategic Energy

Great Plains Energy owns just under 100% of the indirect interest in Strategic Energy.  Strategic Energy provides competitive electricity supply services by entering into contracts with its customers to supply electricity.  Strategic Energy does not own any generation, transmission or distribution facilities.  Of the states that offer retail choice, Strategic Energy operates in California, Maryland, Massachusetts, Michigan, New Jersey, New York, Ohio, Pennsylvania and Texas.  Strategic Energy also provides strategic planning and consulting services in the natural gas and electricity markets.

Strategic Energy serves approximately 8,400 customers including numerous Fortune 500 companies, smaller companies and governmental entities.  Strategic Energy provides competitive electricity supply to approximately 49,900 commercial, institutional and small manufacturing accounts.  Strategic Energy had a 72% customer retention rate for the three months ended March 31, 2005, and projects MWhs delivered in 2005 to range from 17.5 to 21.0 million.  Strategic Energy currently expects the gross margin per MWh (revenues less purchased power divided by MWhs delivered) on new customer contracts entered into in 2005 to average from $3.00 to $4.00 and gross margin per MWh delivered in 2005 to average $4.85 to $5.50.

Based solely on expected usage under current signed contracts, Strategic Energy has forecasted future MWh commitments (backlog) of 12.0 million for the remainder of 2005 and 5.0 million and 1.5 million for the years 2006 through 2007, respectively.  In some markets, wholesale power prices in 2005 have continued to rise faster than host utility rates.  In markets where this occurs, the savings competitive suppliers can offer to customers are reduced or in some markets are unavailable.  Additionally, in those markets where wholesale power prices are lower than host utility rates, Strategic Energy continues to face strong competition from other competitive suppliers.

Duquesne Zone Seams Elimination Charge Adjustment

In March 2005, a compliance filing made to FERC by certain PJM transmission owners contained an allocation of SECA charges for the Duquesne zone within PJM.  SECA is a transitional pricing mechanism intended to compensate transmission owners for the revenue lost as a result of FERCs elimination of regional through and out rates between PJM and the MISO.  See Note 12 to the consolidated financial statements for further information regarding SECA and the impact on Strategic Energy.

RELATED PARTY TRANSACTIONS

See Note 10 to the consolidated financial statements for information regarding related party transactions.





44





GREAT PLAINS ENERGY RESULTS OF OPERATIONS

The following table summarizes Great Plains Energys comparative results of operations.
Three Months Ended March 31
     2005
     2004(millions)Operating revenues
     
     
     $545.1
        
     $541.5Fuel
     (41.5
        )
     (40.6
        )Purchased power - KCP&L
     (11.5
        )
     (12.5
        )Purchased power - Strategic Energy
     (277.9
        )
     (264.3
        )Other operating expenses
     (135.0
        )
     (125.0
        )Depreciation and amortization
     (37.9
        )
     (36.5
        )Gain on property
     0.5
        
     -Operating income
     41.8
        
     62.6Non-operating income (expenses)
     0.6
        
     (1.5
        )Interest charges
     (17.5
        )
     (18.3
        )Income taxes
     (5.3
        )
     (12.2
        )Minority interest in subsidiaries
     0.9
        
     (0.8
        )Loss from equity investments
     (0.3
        )
     (0.3
        )Income from continuing operations
     20.2
        
     29.5Discontinued operations
     -
        
     (2.2
        )Net income
     20.2
        
     27.3Preferred dividends
     (0.4
        )
     (0.4
        )Earnings available for common shareholders
     $19.8
        
     $26.9Great Plains Energys earnings in the three months ended March 31, 2005, detailed in the table below, decreased to $19.8 million, or $0.27 per share, from $26.9 million, or $0.39 per share, compared to the same period of 2004.

Earnings (loss) per GreatEarnings (loss)
     Plains Energy ShareThree Months Ended March 31
     2005
     2004
     2005
     2004(millions)KCP&L
     
     
     $10.8
        
     $21.6
        
     $0.15
        
     $0.31Subsidiary operations
     (0.5
        )
     (0.4
        )
     (0.01
        )
     -Consolidated KCP&L
     10.3
        
     21.2
        
     0.14
        
     0.31Strategic Energy
     12.8
        
     9.3
        
     0.17
        
     0.13Other non-regulated operations
     (2.9
        )
     (1.0
        )
     (0.04
        )
     (0.01
        )Discontinued operations (KLT Gas)
     -
        
     (2.2
        )
     -
        
     (0.03
        )Preferred dividends
     (0.4
        )
     (0.4
        )
     -
        
     (0.01
        )Total
     $19.8
        
     $26.9
        
     $0.27
        
     $0.39The earnings per share of any segment does not represent a direct legal interest in the asset and liabilitiesallocated to any one segment but rather represents a direct equity interest in Great Plains Energy's assetsand liabilities as a whole.

Scheduled plant maintenance in the three months ended March 31, 2005, combined with less than normal scheduled maintenance in the same period of 2004, was the primary driver of lower earnings at KCP&L.  Total outages led to a 30% decrease in wholesale MWhs sold and a 27% decrease in wholesale revenues.  KCP&L maintenance expenses also increased $8.9 million primarily due to the outages and the January ice storm restoration costs.



45





The May 2004 purchase of an additional indirect interest in Strategic Energy increased net income $1.0 million for the three months ended March 31, 2005, compared to the same period of 2004.  A $5.3 million favorable net change in the fair value of energy related derivative instruments and $1.2 million related to the partial reversal of a tax reserve contributed to the increase in Strategic Energy's net income.  The increases were partially offset by a decrease in gross margin on MWhs delivered despite a 5% increase in MWhs delivered.

Discontinued operations for the three months ended March 31, 2004, reflects a loss due to a write down of the KLT Gas portfolio to its estimated net realizable value, which reduced earnings by $1.2 million, and a loss of $1.0 million from the wind down operations.

CONSOLIDATED KCP&L RESULTS OF OPERATIONS

The following discussion of consolidated KCP&L results of operations includes KCP&L, an integrated, regulated electric utility and HSS, an unregulated subsidiary of KCP&L.  References to KCP&L, in the discussion that follows, reflect only the operations of the utility.  The following table summarizes consolidated KCP&L's comparative results of operations.

Three Months Ended March 31
     2005
     2004(millions)Operating revenues
     
     
     $233.3
        
     $247.0Fuel
     (41.5
        )
     (40.6
        )Purchased power
     (11.5
        )
     (12.5
        )Other operating expenses
     (119.8
        )
     (108.3
        )Depreciation and amortization
     (36.4
        )
     (35.9
        )Gain on property
     0.5
        
     -Operating income
     24.6
        
     49.7Non-operating income (expenses)
     0.3
        
     (0.4
        )Interest charges
     (14.6
        )
     (17.2
        )Income taxes
     (0.9
        )
     (12.1
        )Minority interest in subsidiaries
     0.9
        
     1.2Net income
     $10.3
        
     $21.2

Consolidated KCP&Ls net income for the three months ended March 31, 2005, compared to the same period of 2004, decreased $10.9 million.  The primary driver for the decrease was significant scheduled plant maintenance in the three months ended March 31, 2005, combined with less than normal plant maintenance during the same period of 2004.  Total outages led to a 30% decrease in wholesale MWhs sold, which decreased wholesale revenues 27%.  KCP&L maintenance expenses also increased $8.9 million primarily due to the outages and the January ice storm restoration costs.

Nearly all of KCP&L's 2005 scheduled outages for its generating fleet were accomplished in the three months ended March 31, 2005.  Only Wolf Creek's refueling outage and one other small coal-fired plant maintenance outage remain to be completed.  LaCygne No. 1 maintenance was completed in mid-April and both remaining outages are expected to be completed in the second quarter of 2005.  The maintenance efforts at LaCygne No. 1 and Iatan resulted in uprates of approximately 30 MW for KCP&L's rated capacity.



46




Consolidated KCP&L Sales Revenues and MWh Sales
%Three Months Ended March 31
     2005
     2004
     ChangeRetail revenues
     (millions)Residential
     
     
     $73.2
        
     $74.1
        
     (1
        )Commercial
     91.3
        
     91.2
        
     -Industrial
     22.8
        
     21.8
        
     5Other retail revenues
     2.2
        
     2.1
        
     1Total retail
     189.5
        
     189.2
        
     -Wholesale revenues
     39.1
        
     53.6
        
     (27
        )Other revenues
     4.6
        
     3.7
        
     25KCP&L electric revenues
     233.2
        
     246.5
        
     (5
        )Subsidiary revenues
     0.1
        
     0.5
        
     (74
        )Consolidated KCP&L revenues
     $233.3
        
     $247.0
        
     (6
        )%Three Months Ended March 31
     2005
     2004
     ChangeRetail MWh sales
     (thousands)Residential
     
     
     1,180
        
     1,195
        
     (1
        )Commercial
     1,678
        
     1,679
        
     -Industrial
     510
        
     492
        
     4Other retail MWh sales
     21
        
     21
        
     2Total retail
     3,389
        
     3,387
        
     -Wholesale MWh sales
     1,210
        
     1,717
        
     (30
        )KCP&L electric MWh sales
     4,599
        
     5,104
        
     (10
        )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.  Wholesale revenues decreased by $14.5 million for the three months ended March 31, 2005, compared to the same period of 2004, primarily due to a 30% decrease in wholesale MWhs sold driven by scheduled and forced plant outages.  KCP&Ls coal base load equivalent availability factor decreased to 78% for the three months ended March 31, 2005, from 83% for the same period of 2004.  The effect on revenues of the decreased MWhs sold was slightly offset by a 7% increase in the average market price per MWh sold to $34.88 primarily due to higher gas prices.

Consolidated KCP&L Fuel and Purchased Power

The fuel cost per MWh generated and the purchased power cost per MWh has a significant impact on the results of operations for KCP&L.  Generation fuel mix can change the fuel cost per MWh generated substantially.  KCP&L experienced a lower coal base load capacity factor of 75% for the three months ended March 31, 2005, compared to 80% for the same period in 2004.  Nuclear fuel costs per MWh generated remain substantially less than the cost of coal per MWh generated.  Coal has a significantly lower cost per MWh generated than natural gas and oil.  Fossil plants averaged over 75% of total generation and the nuclear plant the remainder over the last three years.  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 relatively stable through the year 2009.  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 and purchased power, and the requirements of other electric systems to provide reliable power economically.



47




Fuel expense increased $0.9 million for the three months ended March 31, 2005, compared to the same period in 2004, despite an 8% decrease in MWhs generated driven primarily by scheduled plant maintenance outages.  The increase in the cost per MWh generated was driven by a combination of fuel mix and the cost of coal and coal transportation.  Purchased power expense decreased $1.0 million for the three months ended March 31, 2005, compared to the same period in 2004, primarily due to a 35% decrease in MWhs purchased.  The favorable variance was partially offset by a 24% increase in the average price per MWh purchased primarily due to increased purchases during higher priced peak hours during the scheduled and forced plant maintenance outages.

Consolidated KCP&L Other Operating Expenses(including other operating, maintenance and general taxes)

Consolidated KCP&L's other operating expenses increased $11.5 million for the three months ended March 31, 2005, compared to the same period of 2004, primarily due to the following:



        increased expenses of $4.8 million due to the January ice storm restoration costs,
        increased pension expense of $1.9 million primarily due to the amortization of prior year investment losses and slightly lower discount rates and
        increased production maintenance expense of $4.0 million primarily due to scheduled plant maintenance in 2005, combined with less than normal plant maintenance during the same period of 2004.Partial offsets to the increase in other operating expenses included:



        decreased transmission service expense of $2.0 million primarily due to lower wholesale MWhs sold.Consolidated KCP&L Interest Charges

Consolidated KCP&L's interest charges decreased $2.6 million for the three months ended March 31, 2005, compared to the same period of 2004.  The decrease was primarily due to the 2004 redemption of KCP&Ls $154.6 million 8.3% Junior Subordinated Deferred Interest Bonds with proceeds from a Great Plains Energy equity contribution.

Consolidated KCP&L Income Taxes

Consolidated KCP&L's income taxes decreased $11.2 million for the three months ended March 31, 2005, compared to the same period of 2004, primarily due to lower income.  The allocation of $1.5 million in tax benefits from holding company losses pursuant to the Company's intercompany tax allocation agreement also contributed to the decrease.

STRATEGIC ENERGY RESULTS OF OPERATIONS

The following table summarizes Strategic Energy's comparative results of operations.

Three Months Ended March 31
     2005
     2004(millions)Operating revenues
     
     
     $311.8
        
     $294.5Purchased power
     (277.9
        )
     (264.3
        )Other operating expenses
     (10.7
        )
     (11.7
        )Depreciation and amortization
     (1.5
        )
     (0.6
        )Operating income
     21.7
        
     17.9Non-operating income (expenses)
     0.4
        
     0.1Interest charges
     (0.8
        )
     0.5Income taxes
     (8.5
        )
     (7.2
        )Minority interest in subsidiaries
     -
        
     (2.0
        )Net income
     $12.8
        
     $9.3

48



Strategic Energys net income increased $3.5 million for the three months ended March 31, 2005, compared to the same period of 2004.  The May 2004 purchase of an additional 11.45% indirect interest in Strategic Energy increased net income $1.0 million for the three months ended March 31, 2005.  A favorable net change in the fair value of energy related derivative instruments of $5.3 million and a $1.2 million partial reversal of a tax reserve increased average gross margins $1.40 in the comparative period to $7.35 for the three months ended March 31, 2005, compared to $6.85 for the same period of 2004.  The increase in net income was partially offset by a decrease in average gross margin on MWhs delivered despite a 5% increase in MWhs delivered for the three months ended March 31, 2005, compared to the same period of 2004.  A continuing environment of higher energy prices and higher forward electricity
prices continue to negatively impact average gross margins.

Strategic Energy Operating Revenues

Strategic Energys operating revenues increased $17.3 million for the three months ended March 31, 2005, compared to the same period in 2004.  Retail electric revenues increased $18.2 million primarily due to a 5% increase in retail MWhs delivered to 4.6 million for the three months ended March 31, 2005.  The increase is primarily due to growth in MWhs delivered in Michigan and Texas for the three months ended March 31, 2005, compared to the same period in 2004.

Strategic Energy Purchased Power

Strategic Energy primarily purchases power under forward physical delivery contracts to supply electricity to its retail energy customers based on projected usage.  Strategic Energy sells any retail electricity supply in excess of actual customer requirements 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 $106.9 million for the three months ended March 31, 2005, compared to $57.9 million for the same period in 2004.

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 $13.6 million for the three months ended March 31, 2005, compared to the same period in 2004, primarily due to increased MWhs purchased to support the 5% increase in MWhs delivered.  Strategic Energy utilizes derivative instruments including forward physical delivery contracts in the procurement of electricity.  The increase in purchased power expense was partially offset by a $5.3 million favorable net change in the fair value of energy related derivative instruments that do not qualify for hedge accounting and from hedge ineffectiveness; and by $1.2 million related to the partial reversal of a tax reserve.

OTHER NON REGULATED ACTIVITIES

Investment in Affordable Housing Limited Partnerships - KLT Investments

KLT Investments Inc.s (KLT Investments) earnings for the three months ended March 31, 2005, totaled $3.0 million compared to earnings of $3.2 million for the three months ended March 31, 2004 (including an after tax reduction of $0.8 million in its affordable housing investment).  KLT Investments earnings include accrued tax credits of $3.9 million and $4.6 million for the three months ended March 31, 2005 and 2004, respectively.

At March 31, 2005, KLT Investments had $40.3 million in affordable housing limited partnerships.  Approximately 66% 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



49





cash flows from the sales of the properties.  For most investments, tax credits are received over ten years.  A change in accounting principle relating to investments made after May 19, 1995, requires the use of the equity method when a company owns more than 5% in a limited partnership investment.  Of the investments recorded at cost, $26.0 million exceed this 5% level but were made before May 19, 1995.  Management does not anticipate making additional investments in affordable housing limited partnerships at this time.

On a quarterly basis, KLT Investments compares the cost of properties accounted for by the cost method to the total of projected residual value of the properties and remaining tax credits to be received.  Based on the latest comparison, KLT Investments recorded an insignificant reduction in its investments in affordable housing limited partnerships for the three months ended March 31, 2005, compared to a $1.3 million reduction in 2004.  Pre-tax reductions in affordable housing investments are estimated to be $9 million, $1 million and $2 million for the remainder of 2005 through 2007, 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 2005 through 2007.

GREAT PLAINS ENERGY AND CONSOLIDATED KCP&L SIGNIFICANT BALANCE SHEET CHANGES (March 31, 2005 compared to December 31, 2004)



        Great Plains Energys and consolidated KCP&Ls receivables increased $37.0 million and $53.9 million, respectively, primarily due to the termination of KCP&Ls customer accounts receivables sales agreement, which increased receivables $65.0 million.  This increase was partially offset by decreases in accounts receivable at Strategic Energy and KCP&L due to seasonal customer usage patterns, mild weather conditions and decreased wholesale sales.
        Great Plains Energys deferred income taxes  current assets decreased $6.3 million primarily due to the change in the fair value of Strategic Energys derivative instruments.
        Great Plains Energys derivative instruments  current assets increased $24.4 million primarily due to a $22.8 million increase in the fair value of Strategic Energys energy related derivative instruments mostly due to changes in forward market prices for power.
        Great Plains Energys other  current assets increased $4.1 million primarily due to a $5.0 million increase in Strategic Energys deposits with suppliers as a result of increased market prices for power.
        Great Plains Energys and consolidated KCP&Ls construction work in progress increased $13.5 million primarily due to a turbine and generator upgrade at LaCygne No. 1 and seasonal increases in distribution projects.
        Great Plains Energys and consolidated KCP&Ls other deferred charges increased $6.9 million and $5.0 million, respectively, primarily due to the reclass from accrued taxes of an $8.8 million income tax refund that management expects to be delayed until the related IRS audit cycle can be completed.
        Great Plains Energys and consolidated KCP&Ls commercial paper increased $9.2 million due to KCP&Ls issuance of commercial paper as expenditures exceeded cash receipts.
        Great Plains Energys and consolidated KCP&Ls current maturities of long-term debt increased $145.3 million to reflect KCP&Ls decision to exercise its early termination option in the Combustion Turbine Synthetic Lease and purchase the leased property in the second quarter of 2005.



50





        Great Plains Energys and consolidated KCP&Ls accrued payroll and vacations decreased $8.9 million and $4.2 million, respectively, primarily due to the 2005 payout of employee incentive compensation accrued at December 31, 2004.
        Great Plains Energys unearned compensation increased $1.1 million primarily due to the issuance of restricted stock.  The increase was partially offset by the amortization of unearned compensation for all grants.
        Great Plains Energys accumulated other comprehensive loss decreased $8.7 million primarily due to the increase in the fair value of Strategic Energys energy related derivative instruments mostly due to changes in market prices for power.
        Great Plains Energys and consolidated KCP&Ls long-term debt decreased $147.7 million primarily to reflect KCP&Ls Combustion Turbine Synthetic Lease of $145.3 million as current as a result of KCP&Ls decision to exercise its early termination option in the Combustion Turbine Synthetic Lease and purchase the leased property in the second quarter of 2005.CAPITAL REQUIREMENTS AND LIQUIDITY

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

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

Great Plains Energy's liquid resources at March 31, 2005, consisted of $84.7 million of cash and cash equivalents on hand, including $0.8 million at consolidated KCP&L, and $790.7 million of unused bank lines of credit.  The unused lines consisted of $240.8 million from KCP&L's revolving credit facility, $61.1 million from Strategic Energys revolving credit facility, and $488.8 million from Great Plains Energy's revolving credit facility.  See the Debt Agreements section below for more information on these agreements.

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.



51






Cash Flows From Operations

Great Plains Energy generated positive cash flows from operating activities for the periods presented.  The decrease in cash flows from operating activities for Great Plains Energy and consolidated KCP&L for the three months ended March 31, 2005, compared to the same period in 2004 was primarily due to KCP&Ls $65.0 million increase in accounts receivable resulting from the termination of KCP&Ls customer accounts receivables sales agreement.  Consolidated KCP&Ls cash flow from operations also decreased for the three months ended March 31, 2005, compared to the same period in 2004 due to a $10.9 million decrease in net income.

Investing Activities

Great Plains Energys and consolidated KCP&Ls cash used for investing activities varies with the timing of utility capital expenditures and purchases of investments and nonutility property.  Investing activities are offset by the proceeds from the sale of properties and insurance recoveries.  Great Plains Energys and consolidated KCP&Ls utility capital expenditures decreased $35.4 million for the three months ended March 31, 2005, compared to the same period in 2004 primarily due to the $28.5 million buyout of KCP&Ls operating lease for vehicles and heavy equipment in 2004.  In 2005, KCP&L received $10.0 million of insurance recoveries related to Hawthorn No. 5.

Financing Activities

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 $711.2 million of this amount at March 31, 2005, which is a $1.2 million increase from the $710.0 million at December 31, 2004, detailed in the Companys 2004 Form 10-K.  This increase was due to common stock issuances of $3.4 million and $2.3 million under the Companys Long-Term Incentive Plan and Dividend Reinvestment and Direct Stock Purchase Plan, respectively, mostly offset by a $4.5 million decrease in the outstanding balance on Great Plains Energy's revolving credit facility.

KCP&L will exercise its early termination option in the Combustion Turbine Synthetic Lease and purchase the leased property in the second quarter of 2005.  The purchase will be initially funded with the issuance of commercial paper.

KCP&L is planning to file a registration statement for up to $450 million in debt securities in 2005.  This will preserve KCP&Ls flexibility to access the capital markets for long-term debt if required.

KCP&L is currently evaluating alternatives to enter into a revolving agreement to sell all of its right, title and interest in the majority of its customer accounts receivable to Kansas City Power & Light Receivables Company, which in turn will sell most of the receivables to an outside investor.  See Note 5 to the consolidated financial statements.

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 by one nationally recognized statistical rating organization, and (iii) it has maintained common equity as a percentage of consolidated capitalization (as reflected on its consolidated balance sheets as of the end of each quarter) of at least 30%.  Great Plains Energy was in compliance with these conditions as of March 31, 2005.

KCP&L may issue equity and long-term debt only with the authorization of the 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



52



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 given time up to $500 million of short-term debt.  Under this authorization, KCP&L cannot issue short-term debt (other than commercial paper or short-term bank facilities) unless (i) the short-term debt to be issued, if rated, is rated investment grade by one nationally recognized statistical rating organization, (ii) all of its outstanding securities that are rated are rated investment grade by one nationally recognized statistical rating organization, (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 March 31, 2005.

Debt Agreements

Great Plains Energy has a $550 million, five-year revolving credit facility with a group of banks.  The facility contains 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 results in a MAC or 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 the current facility.  Under the terms of this agreement, Great Plains Energy is required to maintain a consolidated indebtedness to consolidated capitalization ratio, as defined in
the agreement, not greater than 0.65 to 1.00 at all times.  At March 31, 2005, the Company was in compliance with this covenant.  At March 31, 2005, Great Plains Energy had $17.0 million of outstanding borrowings with an interest rate of 3.23% and had issued letters of credit totaling $6.5 million under the credit facility as credit support for Strategic Energy.  At March 31, 2005, Great Plains Energy had $488.8 million available under this facility due to limitations under its 35 Act authorization.

KCP&L has a $250 million five-year revolving credit facility to provide support for its issuance of commercial paper and other general purposes.  The facility contains a MAC clause that requires KCP&L to represent, prior to receiving funding, that no MAC has occurred.  The clause does, however, permit KCP&L 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 results in a MAC or occurs in the context of a merger, consolidation or sale.  A default by KCP&L on other indebtedness totaling more than $25.0 million is a default under the current facility.  Under the terms of the agreement, KCP&L is required to maintain a consolidated indebtedness to consolidated capitalization ratio, as defined in the agreement, not greater than 0.65 to 1.00 at
all times.  At March 31, 2005, KCP&L was in compliance with this covenant.  At March 31, 2005, KCP&L had $9.2 million of commercial paper outstanding with a weighted average interest rate of 2.9%.

Strategic Energy has a $125 million three-year revolving credit facility with a group of banks.  Great Plains Energy has guaranteed $25.0 million of this facility.  The facility contains a MAC clause that requires Strategic Energy to represent, prior to receiving funding, that no MAC has occurred.  A default by Strategic Energy of other indebtedness, as defined in the facility, totaling more than $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 terms are defined in the agreement.  In the event of a breach of



53






one or more of these four covenants, so long as no other default has occurred, Great Plains Energy may cure the breach through a cash infusion, a guarantee increase or a combination of the two.  At March 31, 2005, Strategic Energy was in compliance with these covenants.  At March 31, 2005, $63.9 million in letters of credit had been issued and there were no borrowings under the agreement, leaving $61.1 million of capacity available for loans and additional letters of credit.

Great Plains Energy has agreements with KLT Investments associated with notes KLT Investments issued to acquire its affordable housing investments.  Great Plains Energy has agreed not to take certain actions including, but not limited to, merging, dissolving or causing the dissolution of KLT Investments, or withdrawing amounts from KLT Investments if the withdrawals would result in KLT Investments not being in compliance with minimum net worth and cash balance requirements.  The agreements also give KLT Investments lenders the right to have KLT Investments repurchase the notes if Great Plains Energys senior debt rating falls below investment grade or if Great Plains Energy ceases to own at least 80% of KCP&Ls stock.  At March 31, 2005, KLT Investments had $5.8 million in outstanding notes, including current maturities.

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

Pensions

The Company maintains defined benefit plans for substantially all employees of KCP&L, Services and WCNOC and incurs significant costs in providing the plans, with the majority incurred by KCP&L.  Plans are funded to meet the requirements of the Employee Retirement Income Security Act of 1974 (ERISA) with additional contributions made when financially appropriate.

During the first quarter, the Company contributed $1.0 million toward the 2005 expected ERISA funding requirement of $4.7 million, all of which was paid by KCP&L.  Management believes the Company has adequate access to capital resources through cash flows from operations or through existing lines of credit to support the remaining funding requirement.

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 Information

Great Plains Energys and consolidated KCP&Ls contractual obligations were relatively unchanged at March 31, 2005, compared to December 31, 2004.

Off-Balance Sheet Arrangements

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

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



54



SEC authorization, guarantees cannot be issued unless (i) all of its outstanding securities that are rated (except for its preferred stock) are rated investment grade and (ii) it has maintained common equity as a percentage of consolidated capitalization (as reflected on its consolidated balance sheets as of the end of each quarter) of at least 30%.  Great Plains Energy was in compliance with these conditions as of March 31, 2005.  Great Plains Energy is currently authorized to issue up to $600 million of guarantees on behalf of its subsidiaries and the nonutility subsidiaries have $300 million of authorization for guarantees they can issue on behalf of other nonutility subsidiaries.  The nonutility subsidiaries cannot issue guarantees unless Great Plains Energy is in compliance with its conditions to issue guarantees.

Great Plains Energys and consolidated KCP&Ls guarantees were relatively unchanged at March 31, 2005, compared to December 31, 2004.

RISK FACTORS

Actual results in future periods for Great Plains Energy and consolidated KCP&L could differ materially from historical results and the forward-looking statements contained in this report.  Factors that might cause or contribute to such differences include, but are not limited to, those discussed below and in the Managements Discussion and Analysis, Risk Factors section included in the companies 2004 Form 10-K.  These and many other factors described in this report, including the factors listed in the Cautionary Statements Regarding Certain Forward-Looking Information and Quantitative and Qualitative Disclosures About Market Risks sections of this report, could adversely affect the results of operations and financial position of Great Plains Energy and consolidated KCP&L.  Risk factors of consolidated KCP&L are also risk factors for Great Plains Energy.

Strategic Energy has Wholesale Electricity Supplier Concentration and Credit Risk

Credit risk represents the loss that Strategic Energy could incur if a 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 Strategic Energys Exposure Management Committee, counterparty credit risk is monitored by routinely evaluating the credit quality and performance of its suppliers.  Among other things, Strategic Energy monitors counterparty credit ratings, liquidity and results of operations.  As a result of these evaluations, Strategic Energy establishes counterparty credit limits and adjusts the amount of collateral required from its suppliers, among other measures.

Strategic Energy enters into forward contracts with multiple suppliers.  At March 31, 2005, Strategic Energys five largest suppliers under forward supply contracts represented 72% of the total future committed purchases.  Four of Strategic Energys five largest suppliers, or their guarantors, are rated investment grade; and the non-investment grade rated supplier collateralizes its position with Strategic Energy.  In the event of supplier non-delivery or default, Strategic Energys results of operations could be affected to the extent the cost of replacement power exceeded the combination of the contracted price with the supplier and the amount of collateral held by Strategic Energy to mitigate its credit risk with the supplier.  In addition to the collateral, if any, that the supplier provides, Strategic Energys risk is further mitigated by the obligation of the supplier to make a
default payment equal to the shortfall and to pay liquidated damages in the event of a failure to deliver power.  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.





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The following table provides information on Strategic Energys credit exposure to suppliers, net of collateral, as of March 31, 2005.  It further delineates the exposure by the credit rating of counterparties and provides guidance on the concentration of credit risk and an indication of the maturity of the credit risk by credit rating of the counterparties.




Number Of
     Net Exposure OfCounterparties
     CounterpartiesExposure
     
     
     Greater Than
     Greater ThanBefore Credit
     Credit
     Net
     10% Of Net
     10% Of NetRating
     Collateral
     Collateral
     Exposure
     Exposure
     ExposureExternal rating
     (millions)
     
     (millions)Investment Grade
     
     
     $195.1
        
     $41.0
        
     $154.1
        
     3
        
     $102.6Non-Investment Grade
     42.1
        
     33.0
        
     9.1
        
     -
        
     -Internal ratingInvestment Grade
     3.9
        
     -
        
     3.9
        
     -
        
     -Non-Investment Grade
     17.5
        
     11.5
        
     6.0
        
     -
        
     -Total
     $258.6
        
     $85.5
        
     $173.1
        
     3
        
     $102.6Maturity Of Credit Risk Exposure Before Credit CollateralExposureLess Than
     
     Greater ThanRating
     2 Years
     2 - 5 Years
     5 Years
     Total ExposureExternal rating
     (millions)Investment Grade
     
     
     $184.6
        
     $10.5
        
     $-
        
     $195.1Non-Investment Grade
     35.6
        
     5.6
        
     0.9
        
     42.1Internal ratingInvestment Grade
     4.1
        
     -
        
     -
        
     4.1Non-Investment Grade
     15.3
        
     1.7
        
     0.3
        
     17.3Total
     $239.6
        
     $17.8
        
     $1.2
        
     $258.6External ratings are determined by using publicly available credit ratings of the counterparty.  If a counterparty has provided a guarantee by a higher rated entity, the determination has been based on the rating of its guarantor.  Internal ratings are determined by, among other things, an analysis of the counterpartys financial statements and consideration of publicly available credit ratings of the counterpartys parent.  Investment grade counterparties are those with a minimum senior unsecured debt rating of BBB- from Standard & Poors or Baa3 from Moodys.  Exposure before credit collateral has been calculated considering all netting agreements in place, netting accounts payable and receivable exposure with net mark-to-market exposure.  Exposure before credit collateral, after consideration of all netting agreements, is impacted significantly by the power supply volume under
contract with a given counterparty and the relationship between current market prices and contracted power supply prices.  Credit collateral includes the amount of cash deposits and letters of credit received from counterparties.  Net exposure has only been calculated for those counterparties to which Strategic Energy is exposed and excludes counterparties exposed to Strategic Energy.

At March 31, 2005, Strategic Energy had exposure before collateral to non-investment grade counterparties totaling $59.6 million, of which 85% is scheduled to mature in less than two years.  In addition, Strategic Energy held collateral totaling $44.5 million limiting its exposure to these non-investment grade counterparties to $15.1 million.

Strategic Energy is continuing to pursue a strategy of contracting with national and regional counterparties that have direct supplies and assets in the region of demand.  Strategic Energy is also



56



continuing to manage its counterparty portfolio through disciplined margining, collateral requirements and contract based netting of credit exposures against payable balances.

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 2004 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, 2004.

ITEM 4.  CONTROLS AND PROCEDURES

Disclosure Controls and Procedures

Great Plains Energy and KCP&L carried out evaluations of their disclosure controls and procedures (as defined in Rules 13a-15(e) or 15d-15(e) under the Securities Exchange Act of 1934, as amended) as of the end of the fiscal quarter ended March 31, 2005.  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, or person performing similar functions, of each company and the companies disclosure committee.

Based upon these evaluations, the chief executive officer and chief financial officer of Great Plains Energy, and the chief executive officer of KCP&L and the chief financial officer of Great Plains Energy (who is performing functions similar to a chief financial officer of KCP&L), respectively, have concluded as of the end of the period covered by this report that the disclosure controls and procedures of Great Plains Energy and KCP&L are functioning effectively to provide reasonable assurance that: (i) the information required to be disclosed by the respective companies in the reports that they file or submit under the Securities Exchange Act of 1934, as amended, is recorded, processed, summarized and reported within the time periods specified in the SECs rules and forms, and (ii) the information required to be disclosed by the respective companies in the reports that they file or submit
under the Securities Exchange Act of 1934, as amended, is accumulated and communicated to their respective management, including the principal executive and principal financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.

Changes in Internal Control Over Financial Reporting

There has been no change in Great Plains Energys or KCP&Ls internal control over financial reporting that occurred during the quarterly period ended March 31, 2005, that has materially affected, or is reasonably likely to materially affect, those companies internal control over financial reporting.

PART IIOTHER INFORMATION

ITEM 1.  LEGAL PROCEEDINGS

KCP&L Stipulations and Agreements

On March 28, 2005, and April 27, 2005, KCP&L filed Stipulations and Agreements with the MPSC and KCC, respectively, containing a regulatory plan and other provisions.  The Stipulations and Agreements are discussed in the Executing on Strategic Intent section of Item 2. Managements Discussion and



57



Analysis of Financial Condition and Results of Operations, which is incorporated herein by reference.  Parties to the MPSC Stipulation and Agreement are KCP&L, the Staff of the MPSC, Office of Public Counsel, Praxair, Inc., Missouri Industrial Energy Consumers, Ford Motor Company, Aquila, Inc., The Empire District Electric Company, Missouri Joint Municipal Electric Utility Commission and the Missouri Department of Natural Resources.  Parties to the KCC Stipulation and Agreement are KCP&L, the Staff of the KCC, Sprint, Inc. and the Kansas Hospital Association.

Weinstein v. KLT Telecom

Richard D. Weinstein (Weinstein) filed suit against KLT Telecom Inc. (KLT Telecom) in September 2003 in the St. Louis County, Missouri Circuit Court.  KLT Telecom acquired a controlling interest in DTI Holdings, Inc. (Holdings) in February 2001 through the purchase of approximately two-thirds of the Holdings stock held by Weinstein.  In connection with that purchase, KLT Telecom entered into a put option in favor of Weinstein, which granted Weinstein an option to sell to KLT Telecom his remaining shares of Holdings stock.  The put option provided for an aggregate exercise price for the remaining shares equal to their fair market value with an aggregate floor amount of $15 million and was exercisable between September 1, 2003, and August 31, 2005.  In June 2003, the stock of Holdings was cancelled and extinguished pursuant to the joint Chapter 11 plan confirmed by the Bankruptcy Court.  In September 2003,
Weinstein delivered a notice of exercise of his claimed rights under the put option.  KLT Telecom rejected the notice of exercise.  KLT Telecom denied that Weinstein has any remaining rights or claims pursuant to the put option and denied any obligation to pay Weinstein any amount under the put option.  Subsequent to KLT Telecoms rejection of his notice of exercise, Weinstein filed suit alleging breach of contract.  Weinstein sought damages of at least $15 million, plus statutory interest.  In April 2005, summary judgment was granted in favor of KLT Telecom.  The $15 million reserve has not been reversed because the judgment is subject to appeal.

ITEM 2.  UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

None.

ITEM 3.  DEFAULTS UPON SENIOR SECURITIES

None.

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

None.

ITEM 5.  OTHER INFORMATION

Report of Triggering Events in Lieu of Current Report on Form 8-K

Pursuant to the guidance provided by the SEC Division of Corporation Finance in the Current Report on Form 8-K Frequently Asked Questions dated November 23, 2004, the following information is provided pursuant to Item 1.01 Entry into a Material Definitive Agreement of Form 8-K.

At its May 3, 2005, meeting, the Board of Directors of Great Plains Energy increased, effective on that date, the retainers paid to the non-employee Directors serving as the Chairmen of the Audit Committee, the Compensation and Development Committee and the Governance Committee from $3,000 to $6,000, $5,000 and $5,000, respectively.  Also at that meeting, the Board of Directors increased the annual retainer paid to non-employee Directors from $50,000 to $60,000, ($35,000 of which will be used to acquire shares of Great Plains Energys common stock through Great Plains Energys Dividend Reinvestment and Direct Stock Purchase Plan on behalf of each non-employee member of the Board) effective January 1, 2006.



58





On May 2, 2005, the Compensation and Development Committee of the Board of Directors approved the following compensation arrangements for John R. Marshall, who has been elected to the position of Senior Vice President  Delivery of KCP&L effective May 25, 2005.  For 2005, Mr. Marshall will be paid an annual salary of $320,000 with a potential annual incentive bonus at target of 40% of salary (the amount of such incentive may be adjusted based on performance from 100-150% of target) under the Great Plains Energy Annual Incentive Plan 2005.  Mr. Marshall will also receive a one-time cash payment of $150,000 upon commencement of his employment.  A long-term grant of restricted stock at 200% of salary and a long-term grant of performance shares at 70% of salary (the amount of such performance shares incentive may be adjusted based on performance from 0-200% of target) will be made to him in May 2005
under the Great Plains Energy Long-Term Incentive Plan.  Mr. Marshall will also be entitled to receive a lump sum equal to the target payment under the annual incentive plan plus twice his annual salary if his employment is terminated other than for cause.  Regarding pension benefits, Mr. Marshall will receive two credited years of service for every one year of service earned.  The additional year of service will be paid as a supplemental retirement benefit.  In addition, Mr. Marshall will enter into an indemnification agreement and a change of control severance agreement with Great Plains Energy.  He will also be eligible to participate in the Companys Non-Qualified Deferred Compensation Plan, Supplemental Executive Retirement Plan and other benefit plans.  The Company will also pay Mr. Marshalls reasonable relocation costs.

Other Information

On January 31, 2005, the Compensation and Development Committee approved two sets of long term incentive awards for certain Strategic Energy officers.  One set of awards is based on performance goals for the period 2005-2006, and the other set of awards is based on performance goals for the period 2005-2007.  The awards are comprised of cash and restricted stock grants made under the Great Plains Energy Long Term Incentive Plan.  The restricted stock grants were approved by the Board of Directors on February 1, 2005 and disclosed in a current report on Form 8-K dated February 4, 2005.  Pursuant to the awards, the Strategic Energy officers will be eligible to receive up to 300% of a target award equal to the following percentages of their respective 2005 base salary:  chief executive officer, 150%; and other eligible officers, 80% or 100%.  The awards will be based on the weighted average achievement of the following performance goals

:
 cumulative pre-tax net income; return on average book equity; cumulative increase in customer accounts under contract from 2004 baseline; cumulative reduction in general and administrative expenses from 2004 baseline; and reduction in supply cost to retail.

ITEM 6.  EXHIBITS

EXHIBITS

Great Plains Energy Documents




ExhibitNumber
        
        Description of Document10.1.a
        +
        Performance Share Agreement Pursuant to the Great Plains Energy Incorporated Long-Term Incentive Plan Effective May 7, 2002.10.1.b
        +
        Performance Share Agreement Pursuant to the Great Plains Energy Incorporated Long-Term Incentive Plan Effective May 7, 2002.10.1.c
        +
        Great Plains Energy Incorporated / Kansas City Power & Light Company Annual Incentive Plan 2005, Amended May 3, 2005.



59






10.1.d
        +
        Description of Compensation Arrangements with Directors and Certain Executive Officers, Updated May 3, 2005.10.1.e
        +
        Strategic Energy, L.L.C. Annual Incentive Plan 2005, Amended May 3, 2005.10.1.f
        +
        Strategic Energy, L.L.C. Long-Term Incentive Plan Grants 2005, AmendedMay 2, 2005.10.1.g
        +*
        Agreement between Great Plains Energy Incorporated and Andrea F. Bielsker dated March 4, 2005 (Exhibit 10.1.jj to Annual Report on Form 10-K for the year ended December 31, 2004).10.1.h
        +*
        Agreement between Great Plains Energy Incorporated and Jeanie Sell Latz dated April 5, 2005 (Exhibit 10.1 to Current Report on Form 8-K dated April 5, 2005).12.1
        
        Ratio of Earnings to Fixed Charges.31.1.a
        
        Rule 13a-14(a)/15d-14(a) Certifications of Michael J. Chesser.31.1.b
        
        Rule 13a-14(a)/15d-14(a) Certifications of Terry Bassham.32.1
        
        Section 1350 Certifications.

*  Filed as an exhibit to a prior report 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.

+ Indicates management contract or compensatory plan or arrangement.

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




ExhibitNumber
        
        Description of Document10.2
        
        Stipulation and Agreement dated March 28, 2005, among Kansas City Power & Light Company, Staff of the Missouri Public Service Commission, Office of the Public Counsel, Missouri Department of Natural Resources, Praxair, Inc., Missouri Industrial Energy Consumers, Ford Motor Company, Aquila, Inc., The Empire District Electric Company, and Missouri Joint Municipal Electric Utility Commission.12.2
        
        Ratio of Earnings to Fixed Charges.31.2.a
        
        Rule 13a-14(a)/15d-14(a) Certifications of William H. Downey.31.2.b
        
        Rule 13a-14(a)/15d-14(a) Certifications of Terry Bassham.32.2
        
        Section 1350 Certifications.

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





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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 INCORPORATEDDated:  May 6, 2005
        By:/s/Michael J. Chesser(Michael J. Chesser)(Chief Executive Officer)Dated:  May 6, 2005
        By:/s/Lori A. Wright(Lori A. Wright)(Principal Accounting Officer)




KANSAS CITY POWER & LIGHT COMPANYDated:  May 6, 2005
        By:/s/William H. Downey(William H. Downey)(Chief Executive Officer)Dated:  May 6, 2005
        By:/s/Lori A. Wright(Lori A. Wright)(Principal Accounting Officer)





61