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

# Form 10-Q

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

For
the quarterly period ended June 30, 2003

or

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

For the transition period from
_______ to _______

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

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

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

As of August 12, 2003, the
number of shares outstanding of (i) Great Plains Energys common stock was
69,193,057 and (ii) Kansas City Power and Light Companys common stock
was one, which was held by Great Plains Energy.

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

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

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

# CAUTIONARY STATEMENTS
REGARDING CERTAIN FORWARD-LOOKING INFORMATION

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

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

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

2

# GLOSSARY OF TERMS

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

|Abbreviation or Acronym | Definition
|----------------------- | ----------
|
|35 Act                  |           
|ARB                     |           
|CO2                     |           
|COLI                    |           
|Clean Air Act           |           
|Compact                 |           
|Company                 |           
|Consolidated KCP&L      |           
|DTI                     |           
|                        |           
|Digital Teleport        |           
|EIRR                    |           
|EPA                     |           
|EPS                     |           
|ERISA                   |           
|FASB                    |           
|FERC                    |           
|GPP                     |           
|                        |           
|Great Plains Energy     |           
|HSS                     |           
|Holdings                |           
|IEC                     |           
|                        |           
|IRS                     |           
|ISO                     |           
|KCC                     |           
|KCP&L                   |           
|                        |           
|KLT Gas                 |           
|KLT Energy Services     |           
|KLT Inc.                |           
|KLT Investments         |           
|KLT Telecom             |           
|MAC                     |           
|MACT                    |           
|MISO                    |           
|MPSC                    |           
|MWh                     |           
|NEIL                    |           
|NOx                     |           
|NRC                     |           
|OCI                     |           
|RSAE                    |           
|RTO                     |           

3

|Abbreviation or Acronym | Definition
|----------------------- | ----------
|
|Receivables Company     |           
|                        |           
|SEC                     |           
|SPP                     |           
|SFAS                    |           
|Strategic Energy        |           
|WCNOC                   |           
|Wolf Creek              |           
|Worry Free              |           

4

PART I  FINANCIAL
INFORMATIONItem 1. Consolidated
Financial Statements

GREAT PLAINS ENERGYConsolidated Balance
Sheets(Unaudited)

|                                                           | June 30 | December 31
|---------------------------------------------------------- | ------- | -----------
|
|
|(thousands)                                               
|ASSETS                                                     |         |            
|Current Assets                                             |         |            
|Cash and cash equivalents                                  |         |            
|Restricted cash                                            |         |            
|Receivables                                                |         |            
|Fuel inventories, at average cost                          |         |            
|Materials and supplies, at average cost                    |         |            
|Deferred income taxes                                      |         |            
|Assets of discontinued operations                          |         |            
|Other                                                      |         |            
|                                                           |         |            
|Total                                                      |         |            
|
|Nonutility Property and Investments                        |         |            
|Affordable housing limited partnerships                    |         |            
|Gas property and investments                               |         |            
|Nuclear decommissioning trust fund                         |         |            
|Other                                                      |         |            
|                                                           |         |            
|Total                                                      |         |            
|
|Utility Plant, at Original Cost                            |         |            
|Electric                                                   |         |            
|Less-accumulated depreciation                              |         |            
|                                                           |         |            
|Net utility plant in service                               |         |            
|Construction work in progress                              |         |            
|Nuclear fuel, net of amortization of $128,977 and $121,951 |         |            
|                                                           |         |            
|Total                                                      |         |            
|
|Deferred Charges                                           |         |            
|Regulatory assets                                          |         |            
|Prepaid pension costs                                      |         |            
|Goodwill                                                   |         |            
|Other deferred charges                                     |         |            
|                                                           |         |            
|Total                                                      |         |            
|
|Total                                                      |         |            
|

|                                       |  | 
|-------------------------------------- |  | 
|LIABILITIES AND CAPITALIZATION         |  | 
|Current Liabilities                    |  | 
|Notes payable                          |  | 
|Commercial paper                       |  | 
|Current maturities of long-term debt   |  | 
|EIRR bonds classified as current       |  | 
|Accounts payable                       |  | 
|Accrued taxes                          |  | 
|Accrued interest                       |  | 
|Accrued payroll and vacations          |  | 
|Accrued refueling outage costs         |  | 
|Supplier collateral                    |  | 
|Liabilities of discontinued operations |  | 
|Other                                  |  | 
|                                       |  | 
|Total                                  |  | 
|
|Deferred Credits and Other Liabilities |  | 
|Deferred income taxes                  |  | 
|Deferred investment tax credits        |  | 
|Asset retirement obligation            |  | 
|Accrued nuclear decommissioning costs  |  | 
|Pension liability                      |  | 
|Other                                  |  | 
|                                       |  | 
|Total                                  |  | 
|
|Capitalization (see statements)        |  | 
|
|Commitments and Contingencies (Note 6) |  | 
|
|Total                                  |  | 
|

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

5

GREAT
PLAINS ENERGYConsolidated
Statements of Capitalization(Unaudited)

|                                                              | June 30 | December 31
|------------------------------------------------------------- | ------- | -----------
|
|
|(thousands)                                                  
|Long-term Debt (excluding current maturities)                 |         |            
|General Mortgage Bonds                                        |         |            
|Medium-Term Notes due 2004-07,                                |         |            
|7.55%*** weighted-average rate                                |         |            
|2.23%* and 2.48%** EIRR bonds due 2012-23                     |         |            
|EIRR bonds classified as current liabilities                  |         |            
|Senior Notes                                                  |         |            
|7.125% due 2005                                               |         |            
|6.500% due 2011                                               |         |            
|6.000% due 2007                                               |         |            
|Unamortized discount                                          |         |            
|EIRR bonds                                                    |         |            
|2.26%* and 2.41%** Series A & B due 2015                      |         |            
|2.26%* and 2.41%** Series D due 2017                          |         |            
|4.50%*** Series C due 2017                                    |         |            
|EIRR bonds classified as current liabilities                  |         |            
|Affordable Housing Notes                                      |         |            
|7.63%* and 7.84%** weighted-average rate due 2004-08          |         |            
|                                                              |         |            
|Total                                                         |         |            
|
|Company-obligated Mandatorily Redeemable Preferred Securities |         |            
|of a trust holding solely KCP&L Subordinated Debentures       |         |            
|
|Cumulative Preferred Stock                                    |         |            
|$100 Par Value                                                |         |            
|3.80% - 100,000 shares issued                                 |         |            
|4.50% - 100,000 shares issued                                 |         |            
|4.20% - 70,000 shares issued                                  |         |            
|4.35% - 120,000 shares issued                                 |         |            
|                                                              |         |            
|Total                                                         |         |            
|
|Common Stock Equity                                           |         |            
|Common stock-150,000,000 shares authorized without par value  |         |            
|69,196,322 shares issued, stated value                        |         |            
|Capital stock premium and expense                             |         |            
|Retained earnings (see statements)                            |         |            
|Treasury stock                                                |         |            
|Accumulated other comprehensive income (loss)                 |         |            
|Gain on derivative hedging instruments                        |         |            
|Minimum pension obligation                                    |         |            
|                                                              |         |            
|Total                                                         |         |            
|
|Total                                                         |         |            
|

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

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

6

GREAT
PLAINS ENERGY Consolidated
Statements of Income(Unaudited)

|                                            | Three Months Ended | Year to Date
|------------------------------------------- | ------------------ | ------------
|
|
|
|(thousands)                                
|Operating Revenues                          |                    |             
|Electric revenues - KCP&L                   |                    |             
|Electric revenues - Strategic Energy        |                    |             
|Other revenues                              |                    |             
|                                            |                    |             
|Total                                       |                    |             
|
|Operating Expenses                          |                    |             
|Fuel                                        |                    |             
|Purchased power - KCP&L                     |                    |             
|Purchased power - Strategic Energy          |                    |             
|Other                                       |                    |             
|Maintenance                                 |                    |             
|Depreciation and depletion                  |                    |             
|General taxes                               |                    |             
|(Gain) Loss on property                     |                    |             
|                                            |                    |             
|Total                                       |                    |             
|
|Operating income                            |                    |             
|Loss from equity investments                |                    |             
|Minority interest in subsidiaries           |                    |             
|Non-operating income                        |                    |             
|Non-operating expenses                      |                    |             
|Interest charges                            |                    |             
|
|Income from continuing operations before    |                    |             
|income taxes and cumulative effect of a     |                    |             
|change in accounting principle              |                    |             
|Income taxes                                |                    |             
|Income  from continuing operations          |                    |             
|before cumulative effect of a change        |                    |             
|in accounting principle                     |                    |             
|Loss from discontinued operations, net      |                    |             
|of income taxes (Note 8)                    |                    |             
|Cumulative effect to January 1, 2002, of    |                    |             
|a change in accounting principle            |                    |             
|
|Net income                                  |                    |             
|Preferred stock dividend requirements       |                    |             
|
|Earnings available for common stock         |                    |             
|
|                                           
|Average number of common shares outstanding |                    |             
|                                           
|Basic and diluted earnings per common share |                    |             
|Continuing operations                       |                    |             
|Discontinued operations                     |                    |             
|Cumulative effect                           |                    |             
|
|Basic and diluted earnings per common share |                    |             
|
|                                           
|Cash dividends per common share             |                    |             
|

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

7

GREAT PLAINS ENERGY Consolidated Statements
of Cash Flows (Unaudited)

|Year to Date June 30                                         | 2003 | 2002
|------------------------------------------------------------ | ---- | ----
|
|(thousands)                                                 
|Cash Flows from Operating Activities                         |      |     
|Net income                                                   |      |     
|Less: Loss from discontinued operations, net of income taxes |      |     
|                                                             |      |     
|Net income from continuing operations                        |      |     
|Adjustments to reconcile income to net cash                  |      |     
|from operating activities:                                   |      |     
|Cumulative effect of a change in accounting principle        |      |     
|Depreciation and depletion                                   |      |     
|Amortization of:                                             |      |     
|Nuclear fuel                                                 |      |     
|Other                                                        |      |     
|Deferred income taxes (net)                                  |      |     
|Investment tax credit amortization                           |      |     
|Loss from equity investments                                 |      |     
|(Gain) Loss on property                                      |      |     
|Deferred storm costs                                         |      |     
|Minority interest                                            |      |     
|Other operating activities (Note 3)                          |      |     
|                                                             |      |     
|Net cash from operating activities                           |      |     
|
|Cash Flows from Investing Activities                         |      |     
|Utility capital expenditures                                 |      |     
|Allowance for borrowed funds used during construction        |      |     
|Purchases of investments                                     |      |     
|Purchases of nonutility property                             |      |     
|Proceeds from sale of assets                                 |      |     
|Hawthorn No. 5 partial insurance recovery                    |      |     
|Other investing activities                                   |      |     
|                                                             |      |     
|Net cash from investing activities                           |      |     
|
|Cash Flows from Financing Activities                         |      |     
|Issuance of long-term debt                                   |      |     
|Repayment of long-term debt                                  |      |     
|Net change in short-term borrowings                          |      |     
|Dividends paid                                               |      |     
|Other financing activities                                   |      |     
|                                                             |      |     
|Net cash from financing activities                           |      |     
|
|Net Change in Cash and Cash Equivalents                      |      |     
|Cash and Cash Equivalents from Continuing                    |      |     
|Operations at Beginning of Year                              |      |     
|                                                             |      |     
|Cash and Cash Equivalents from Continuing                    |      |     
|Operations at End of Period                                  |      |     
|
|                                                             |      |     
|
|Net Change in Cash and Cash Equivalents from                 |      |     
|Discontinued Operations                                      |      |     
|Cash and Cash Equivalents from Discontinued                  |      |     
|Operations at Beginning of Year                              |      |     
|                                                             |      |     
|Cash and Cash Equivalents from Discontinued                  |      |     
|Operations at End of Period                                  |      |     
|

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

8

GREAT
PLAINS ENERGYConsolidated
Statements of Comprehensive Income(Unaudited)

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

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

GREAT
PLAINS ENERGYConsolidated
Statements of Retained Earnings(Unaudited)

|                                    | Three Months Ended | Year to Date
|----------------------------------- | ------------------ | ------------
|
|
|
|(thousands)                        
|Beginning balance                   |                    |             
|Net income                          |                    |             
|                                    |                    |             
|                                    |                    |             
|Dividends declared                  |                    |             
|Preferred stock - at required rates |                    |             
|Common stock                        |                    |             
|                                    |                    |             
|Ending balance                      |                    |             
|

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

9

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

|                                                           | June 30 | December 31
|---------------------------------------------------------- | ------- | -----------
|
|
|(thousands)                                               
|ASSETS                                                     |         |            
|Current Assets                                             |         |            
|Cash and cash equivalents                                  |         |            
|Receivables                                                |         |            
|Fuel inventories, at average cost                          |         |            
|Materials and supplies, at average cost                    |         |            
|Deferred income taxes                                      |         |            
|Assets of discontinued operations                          |         |            
|Other                                                      |         |            
|                                                           |         |            
|Total                                                      |         |            
|
|Nonutility Property and Investments                        |         |            
|Nuclear decommissioning trust fund                         |         |            
|Other                                                      |         |            
|                                                           |         |            
|Total                                                      |         |            
|
|Utility Plant, at Original Cost                            |         |            
|Electric                                                   |         |            
|Less-accumulated depreciation                              |         |            
|                                                           |         |            
|Net utility plant in service                               |         |            
|Construction work in progress                              |         |            
|Nuclear fuel, net of amortization of $128,977 and $121,951 |         |            
|                                                           |         |            
|Total                                                      |         |            
|
|Deferred Charges                                           |         |            
|Regulatory assets                                          |         |            
|Prepaid pension costs                                      |         |            
|Other deferred charges                                     |         |            
|                                                           |         |            
|Total                                                      |         |            
|
|Total                                                      |         |            
|
|                                                           |         |            
|LIABILITIES AND CAPITALIZATION                             |         |            
|Current Liabilities                                        |         |            
|Notes payable                                              |         |            
|Commercial paper                                           |         |            
|Current maturities of long-term debt                       |         |            
|EIRR bonds classified as current                           |         |            
|Accounts payable                                           |         |            
|Accrued taxes                                              |         |            
|Accrued interest                                           |         |            
|Accrued payroll and vacations                              |         |            
|Accrued refueling outage costs                             |         |            
|Liabilities of discontinued operations                     |         |            
|Other                                                      |         |            
|                                                           |         |            
|Total                                                      |         |            
|
|Deferred Credits and Other Liabilities                     |         |            
|Deferred income taxes                                      |         |            
|Deferred investment tax credits                            |         |            
|Asset retirement obligation                                |         |            
|Accrued nuclear decommissioning costs                      |         |            
|Pension liability                                          |         |            
|Other                                                      |         |            
|                                                           |         |            
|Total                                                      |         |            
|
|Capitalization (see statements)                            |         |            
|
|Commitments and Contingencies (Note 6)                     |         |            
|
|Total                                                      |         |            
|

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

10

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

|                                                              | June 30 | December 31
|------------------------------------------------------------- | ------- | -----------
|
|
|(thousands)                                                  
|Long-term Debt (excluding current maturities)                 |         |            
|General Mortgage Bonds                                        |         |            
|Medium-Term Notes due 2004-07,                                |         |            
|7.55%*** weighted-average rate                                |         |            
|2.23%* and 2.48%** EIRR bonds due 2012-23                     |         |            
|EIRR bonds classified as current liabilities                  |         |            
|Senior Notes                                                  |         |            
|7.125% due 2005                                               |         |            
|6.500% due 2011                                               |         |            
|6.000% due 2007                                               |         |            
|Unamortized discount                                          |         |            
|EIRR bonds                                                    |         |            
|2.26%* and 2.41%** Series A & B due 2015                      |         |            
|2.26%* and 2.41%** Series D due 2017                          |         |            
|4.50%*** Series C due 2017                                    |         |            
|EIRR bonds classified as current liabilities                  |         |            
|                                                              |         |            
|Total                                                         |         |            
|
|Company-obligated Mandatorily Redeemable Preferred Securities |         |            
|of a trust holding solely KCP&L Subordinated Debentures       |         |            
|
|Common Stock Equity                                           |         |            
|Common stock-1,000 shares authorized without par value        |         |            
|1 share issued, stated value                                  |         |            
|Retained earnings (see statements)                            |         |            
|Accumulated other comprehensive income (loss)                 |         |            
|Gain on derivative hedging instruments                        |         |            
|Minimum pension obligation                                    |         |            
|                                                              |         |            
|Total                                                         |         |            
|
|Total                                                         |         |            
|

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

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

11

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

|                                                    | Three Months Ended | Year to Date
|--------------------------------------------------- | ------------------ | ------------
|
|
|
|(thousands)                                        
|Operating Revenues                                  |                    |             
|Electric revenues                                   |                    |             
|Other revenues                                      |                    |             
|                                                    |                    |             
|Total                                               |                    |             
|
|Operating Expenses                                  |                    |             
|Fuel                                                |                    |             
|Purchased power                                     |                    |             
|Other                                               |                    |             
|Maintenance                                         |                    |             
|Depreciation and depletion                          |                    |             
|General taxes                                       |                    |             
|(Gain) Loss on property                             |                    |             
|                                                    |                    |             
|Total                                               |                    |             
|
|Operating income                                    |                    |             
|Non-operating income                                |                    |             
|Non-operating expenses                              |                    |             
|Interest charges                                    |                    |             
|
|Income from continuing operations before            |                    |             
|income taxes and cumulative effect                  |                    |             
|of a change in accounting principle                 |                    |             
|Income taxes                                        |                    |             
|
|Income from continuing operations before cumulative |                    |             
|effect of a change in accounting principle          |                    |             
|Loss from discontinued operations, net              |                    |             
|of income taxes (Note 8)                            |                    |             
|Cumulative effect to January 1, 2002, of            |                    |             
|a change in accounting principle                    |                    |             
|
|Net income                                          |                    |             
|

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

12

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

|Year to Date June 30                                          | 2003 | 2002
|------------------------------------------------------------- | ---- | ----
|
|(thousands)                                                  
|Cash Flows from Operating Activities                          |      |     
|Net income                                                    |      |     
|Less:  Loss from discontinued operations, net of income taxes |      |     
|                                                              |      |     
|Net income from continuing operations                         |      |     
|Adjustments to reconcile income to net cash                   |      |     
|from operating activities:                                    |      |     
|Cumulative effect of a change in accounting principle         |      |     
|Depreciation and depletion                                    |      |     
|Amortization of:                                              |      |     
|Nuclear fuel                                                  |      |     
|Other                                                         |      |     
|Deferred income taxes (net)                                   |      |     
|Investment tax credit amortization                            |      |     
|(Gain) Loss on property                                       |      |     
|Deferred storm costs                                          |      |     
|Other operating activities (Note 3)                           |      |     
|                                                              |      |     
|Net cash from operating activities                            |      |     
|
|Cash Flows from Investing Activities                          |      |     
|Utility capital expenditures                                  |      |     
|Allowance for borrowed funds used during construction         |      |     
|Purchases of investments                                      |      |     
|Purchases of nonutility property                              |      |     
|Proceeds from sale of assets                                  |      |     
|Hawthorn No. 5 partial insurance recovery                     |      |     
|Other investing activities                                    |      |     
|                                                              |      |     
|Net cash from investing activities                            |      |     
|
|Cash Flows from Financing Activities                          |      |     
|Issuance of long-term debt                                    |      |     
|Repayment of long-term debt                                   |      |     
|Net change in short-term borrowings                           |      |     
|Dividends paid to Great Plains Energy                         |      |     
|Equity contribution from Great Plains Energy                  |      |     
|Other financing activities                                    |      |     
|                                                              |      |     
|Net cash from financing activities                            |      |     
|
|Net Change in Cash and Cash Equivalents                       |      |     
|Cash and Cash Equivalents from Continuing                     |      |     
|Operations at Beginning of Year                               |      |     
|                                                              |      |     
|Cash and Cash Equivalents from Continuing                     |      |     
|Operations at End of Period                                   |      |     
|
|                                                              |      |     
|
|Net Change in Cash and Cash Equivalents from                  |      |     
|Discontinued Operations                                       |      |     
|Cash and Cash Equivalents from Discontinued                   |      |     
|Operations at Beginning of Year                               |      |     
|                                                              |      |     
|Cash and Cash Equivalents from Discontinued                   |      |     
|Operations at End of Period                                   |      |     
|

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

13

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

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

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

KANSAS
CITY POWER & LIGHT COMPANYConsolidated
Statements of Retained Earnings(Unaudited)

|                                         | Three Months Ended | Year to Date
|---------------------------------------- | ------------------ | ------------
|
|
|
|(thousands)                             
|Beginning balance                        |                    |             
|Net income                               |                    |             
|
|                                         |                    |             
|Dividends declared                       |                    |             
|Common stock held by Great Plains Energy |                    |             
|
|Ending balance                           |                    |             
|

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

14

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

In managements opinion, the
consolidated interim financial statements reflect all adjustments (which, unless otherwise
noted, include only normal recurring adjustments) necessary to present fairly the results
of operations for the interim periods presented. These statements and notes should be read
in connection with the financial statements and related notes included in the combined
2002 annual report on Form 10-K, of Great Plains Energy and consolidated KCP&L.

The notes to consolidated financial
statements that follow are a combined presentation for Great Plains Energy and
consolidated KCP&L, both registrants under this filing.

# 1. ORGANIZATION

Great Plains Energy currently has
five direct subsidiaries:

| |  |  
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| |  |  

The operations of Great Plains Energy
and its subsidiaries are divided into three reportable segments: KCP&L, Strategic
Energy and KLT Gas. 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 and GPP, all KLT Inc.
operations other than Strategic Energy and KLT Gas, and holding company operations.

15

# 2. CASH

Cash and Cash EquivalentsCash and cash equivalents consist of
highly liquid investments with original maturities of three months or less. For Great
Plains Energy this includes Strategic Energys cash held in trust of $9.1 million at
June 30, 2003, and $11.4 million at December 31, 2002.

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

Restricted CashStrategic Energy has entered into
Master Power Purchase and Sale Agreements with its purchased 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 and
would become unrestricted in the event of a default by the purchased power supplier.
Restricted cash collateral at June 30, 2003, was $88.5 million. There were no such cash
collateral deposits at December 31, 2002.

# 3. SUPPLEMENTAL CASH
FLOW INFORMATION

|                                                   
|---------------------------------------------------
|Year to Date                                       
|June 30                                            
|                                                   
|2003                                               
|
|(thousands)                                        
|Great Plains Energy Other Operating Activities     
|Cash flows affected by changes in:                 
|Receivables                                        
|Fuel inventories                                   
|Materials and supplies                             
|Accounts payable                                   
|Accrued taxes and current income taxes             
|Accrued interest                                   
|Wolf Creek refueling outage accrual                
|Pension and postretirement benefit obligations     
|Allowance for equity funds used during construction
|Other                                              
|
|Total other operating activities                   
|
|Cash paid during the period:                       
|Interest                                           
|Income taxes                                       
|

16

|                                                   
|---------------------------------------------------
|Year to Date                                       
|June 30                                            
|                                                   
|2003                                               
|
|(thousands)                                        
|Consolidated KCP&L Other Operating Activities      
|Cash flows affected by changes in:                 
|Receivables                                        
|Fuel inventories                                   
|Materials and supplies                             
|Accounts payable                                   
|Accrued taxes and current income taxes             
|Accrued interest                                   
|Wolf Creek refueling outage accrual                
|Pension and postretirement benefit obligations     
|Allowance for equity funds used during construction
|Other                                              
|
|Total other operating activities                   
|
|Cash paid during the period:                       
|Interest                                           
|Income taxes                                       
|

KCP&L adopted Statement of
Financial Accounting Standards (SFAS) No. 143, Accounting for Asset Retirement
Obligations, on January 1, 2003, and recorded a liability for asset retirement
obligations of $99.2 million and increased property and equipment, net of accumulated
depreciation, by $18.3 million. KCP&L is a regulated utility subject to the provisions
of SFAS No. 71, Accounting for the Effects of Certain Types of Regulation, and
management believes it is probable that any differences between expenses under SFAS No.
143 and expenses recovered currently in rates will be recoverable in future rates. As a
result, the $80.9 million cumulative effect of the adoption of SFAS No. 143 was recorded
as a regulatory asset and therefore, had no impact on net income. KLT Gas also adopted
SFAS No. 143 and recorded a liability for asset retirement obligations of $1.2 million,
increased gas property and investments by $1.0 million and increased operating expense by
$0.2 million for the immaterial cumulative effect of the accounting change. The adoption
of SFAS No. 143 had no effect on Great Plains Energy and consolidated KCP&Ls
cash flows.

On June 13, 2003, HSS board of
directors approved a plan to dispose of its interest in residential services provider
RSAE. On June 30, 2003, HSS completed the disposition of its interest in RSAE. See Note 8
for additional information concerning the disposition of RSAE. The table below summarizes
the effects of this transaction.

|                                     
|-------------------------------------
|Year to Date                         
|June 30                              
|RSAE disposition                     
|
|(thousands)                          
|Cash repayment of supported bank line
|Write-off of intercompany note       
|Accrued transaction costs            
|Investment write-off                 
|Income tax benefit                   
|                                     
|Loss on disposition                  
|Pre-disposition operating losses     
|                                     
|Discontinued operations              
|

17

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, which cases have been
procedurally consolidated. In December 2002, Digital Teleport entered into an agreement to
sell substantially all of its assets (Asset Sale) to CenturyTel Fiber Company II, LLC
(CenturyTel), a nominee of CenturyTel, Inc. The Asset Sale was approved by the Bankruptcy
Court on February 13, 2003, and closed on June 6, 2003. Distributions from the bankruptcy
estates were made to DTI creditors in June 2003. The table below summarizes the effects of
these distributions. See Note 7 for additional information concerning the confirmation of
the restructuring plan.

|                                          
|------------------------------------------
|Year to Date                              
|June 30                                   
|2003                                      
|
|(thousands)                               
|Cash proceeds from bankruptcy estates     
|Cash proceeds from sale of office building
|Receivables                               
|                                          
|Total proceeds                            
|Book basis of office building sold        
|DIP financing accrual reversal            
|Accounts payable                          
|Income tax                                
|Reversal of valuation allowance           
|
|Gain on sale of assets                    
|

# 4. RECEIVABLES

The Companys accounts
receivables are comprised of the following:

|                                     
|-------------------------------------
|June 30                              
|2003                                 
|
|(thousands)                          
|Customer accounts receivable sold to 
|Receivables Company                  
|Consolidated KCP&L other receivables 
|                                     
|Consolidated KCP&L receivables       
|Great Plains Energy other receivables
|
|Great Plains Energy receivables      
|

KCP&L has entered into a
revolving agreement, which expires in October 2003, to sell all of its right, title and
interest in the majority of its customer accounts receivable to Kansas City Power &
Light Receivables Company (Receivables Company), which in turn sells most of the
receivables to outside investors. KCP&L expects the agreement to be renewed annually.
Accounts receivable sold under this revolving agreement totaled $100.8 million at June 30,
2003, and $89.2 million at December 31, 2002. These sales included unbilled receivables of
$40.0 million at June 30, 2003, and $27.2 million at December 31, 2002. As a result of the
sales to outside investors, Receivables Company received $70 million in cash, which was
forwarded to KCP&L as consideration for its sale. The agreement is structured as a
true sale under which the creditors of Receivables Company are entitled to be satisfied
out of the assets of Receivables Company prior to any value being returned to KCP&L or
its creditors.

18

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

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

|                                             
|---------------------------------------------
|Three Months Ended                           
|June 30                                      
|                                             
|2003                                         
|
|(thousands)                                  
|Gross proceeds on sale of accounts receivable
|Collections                                  
|Loss on sale of accounts receivable          
|Late fees                                    
|

Consolidated KCP&L other
receivables at June 30, 2003, and December 31, 2002, consist primarily of receivables from
partners in jointly-owned electric utility plants, wholesale sales receivables and
accounts receivable held by Worry Free. Great Plains Energy other receivables at June 30,
2003, and December 31, 2002, are primarily the accounts receivable held by Strategic
Energy including unbilled receivables held by Strategic Energy of $60.7 million at June
30, 2003, and $57.3 million at December 31, 2002.

# 5. CAPITALIZATION

Great Plains Energy syndicated a $225
million, revolving credit facility with a group of banks in the first quarter of 2003.
This facility replaced a $205 million syndicated facility and a $20 million credit
facility with a bank. The line has a 364-day term but may be extended for an additional
year at the Companys option. 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
occurs in the context of a merger, consolidation or sale. A default by Great Plains Energy
or any of its significant subsidiaries of material other indebtedness totaling more than
$25.0 million is also a default under this bank line. Under the terms of this agreement,
Great Plains Energy is required to maintain a consolidated indebtedness to consolidated
capitalization ratio not greater than 0.65 to 1.0 at all times and an interest coverage
ratio greater than 2.25 to 1.0. At June 30, 2003, the Company was in compliance with these
covenants. At June 30, 2003, Great Plains Energy had $133.0 million of outstanding
borrowings under this facility with a weighted-average interest rate of 2.19%.

KCP&Ls short-term
borrowings consist of funds borrowed from banks or through the sale of commercial paper as
needed. As of June 30, 2003, KCP&L had $16.7 million of commercial paper outstanding
and $3.2 million of funds borrowed from banks, which were both repaid in July 2003. A
default by KCP&L on other indebtedness is a default under these bank line agreements.
Under the terms of certain bank line agreements, KCP&L is required to maintain a
consolidated indebtedness to consolidated capitalization ratio not greater than 0.65 to
1.0 at all times. At June 30, 2003, KCP&L was in compliance with these covenants.

In 2003, KCP&L has redeemed
$124.0 million of its medium term notes, including $104.0 million called prior to
maturity. The medium term notes were paid off primarily with proceeds from a $100.0
million equity contribution received from Great Plains Energy during the first quarter of
2003. The average

19

interest rate on the $104.0 million of notes called early was 7.28% and
the original maturity dates were 2005 through 2008.

Strategic Energy syndicated a secured
revolving credit facility for up to $95 million with a group of banks in the second
quarter of 2003. This facility is partially guaranteed by Great Plains Energy. The new
agreement replaced a $30 million bank line of credit and a $25 million letter of credit
facility. The new facility enhances Strategic Energys liquidity including its
ability to provide credit support through letters of credit for purchased power and
regulatory requirements. The maximum amount available for loans and letters of credit
under the facility is the lesser of $95 million or the borrowing base, as defined in the
agreement. The borrowing base generally is the sum of certain Strategic Energy accounts
receivable and the amount of the Great Plains Energy guarantee which was $25.0 million at
June 30, 2003. At June 30, 2003, $32.4 million in letters of credit had been issued under
the agreement, leaving $29.5 million of capacity available for loans and additional
letters of credit. The line has a 364-day term that may be extended for an additional year
by Strategic Energy with mutual agreement of the parties. The facility contains a MAC
clause that requires Strategic Energy to represent, prior to receiving funding, that no
MAC has occurred. A default by Strategic Energy of other indebtedness, as defined in the
facility, totaling more than $5.0 million is a default under facility. Under the terms of
this agreement, Strategic Energy is required to maintain a minimum net worth of $30
million and a maximum debt to EBITDA ratio of 2.0 to 1.0. At June 30, 2003, Strategic
Energy was in compliance with these covenants.

On June 30, 2003, HSS completed the
disposition of its interest in RSAE. RSAEs line of credit totaling $27 million was
cancelled. With proceeds from a note to Great Plains Energy, HSS repaid $22.1 million on
the supported bank line. At June 30, 2003, HSS notes payable to Great Plains Energy
totaled $25.0 million. See Note 8 for additional information concerning the disposition of
RSAE.

KCP&L Financing I (Trust) has
previously issued $150.0 million of 8.3% preferred securities. KCP&L owns all of the
common securities issued by the Trust. The sole asset of the Trust is the $154.6 million
principal amount of 8.3% Junior Subordinated Deferrable Interest Debentures, due 2037,
issued by KCP&L. The terms and interest payments on these debentures correspond to the
terms and dividend payments on the preferred securities. KCP&L deducts these payments
for tax purposes. KCP&L may elect to defer interest payments on the debentures for a
period up to 20 consecutive quarters, causing dividend payments on the preferred
securities to be deferred as well. In case of a deferral, interest and dividends will
continue to accrue, along with quarterly compounding interest on the deferred amounts.
KCP&L may redeem all or a portion of the debentures at any time. If KCP&L redeems
all or a portion of the debentures, the Trust must redeem an equal amount of preferred
securities at face value plus accrued and unpaid distributions. The back-up undertakings
of KCP&L in the aggregate provide a full and unconditional guarantee of amounts due on
the preferred securities.

In January 2003, the Financial
Accounting Standards Board (FASB) issued Interpretation No. 46, Consolidation of
Variable Interest Entities. The Interpretation clarifies the application of
Accounting Research Bulletin (ARB) No. 51, Consolidated Financial Statements,
to certain entities in which equity investors do not have the characteristics of a
controlling financial interest or do not have sufficient equity at risk for the entity to
finance its activities without additional subordinated financial support from other
parties (Variable Interest Entities). FASB Interpretation No. 46 is effective July 1,
2003, for Great Plains Energy and consolidated KCP&L. The accounting profession and
others are deliberating the impact, if any, of FASB Interpretation No. 46 on Mandatorily
Redeemable Preferred Securities issued by a Trust. If, as a result of the deliberations,
management determines that under FASB Interpretation No. 46, KCP&L is not the primary
beneficiary of the Trust, KCP&L would be required to de-consolidate the Trust.
De-consolidation would result in an increase of $4.6 million in Great Plains Energys
and consolidated KCP&Ls other nonutility property and investments representing
KCP&Ls investment in the common stock of the Trust. Additionally, both companies
long-term debt would increase by $154.6

20

million reflecting the 8.3% Junior Subordinated
Deferrable Interest Debentures issued by KCP&L and held by the Trust. This increase in
both companies consolidated statements of capitalization would be mostly offset by
the de-consolidation of the $150.0 million of Mandatorily Redeemable Preferred Securities
issued by the Trust.

# 6. COMMITMENTS AND
CONTINGENCIES

# Nuclear Liability and
Insurance

Liability InsuranceThe Price-Anderson Act currently
limits the combined public liability of nuclear reactor owners to $9.4 billion for claims
that could arise from a single nuclear incident. The owners of Wolf Creek, a nuclear
generating station, (the Owners) carry the maximum available commercial insurance of $0.2
billion. Secondary Financial Protection, an assessment plan mandated by the Nuclear
Regulatory Commission (NRC), provides insurance for the $9.2 billion balance.

Under Secondary Financial Protection,
if there were a catastrophic nuclear incident involving any of the nations licensed
reactors, the Owners would be subject to a maximum retrospective assessment per incident
of up to $88 million ($41 million, KCP&Ls 47% share). The Owners are jointly and
severally liable for these charges, payable at a rate not to exceed $10 million ($5
million, KCP&Ls 47% share) per incident per year, excluding applicable premium
taxes. The assessment, most recently revised in 1998, is subject to an inflation
adjustment based on the Consumer Price Index and renewal of the Price-Anderson Act by
Congress.

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

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

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

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

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

Low-Level WasteThe Low-Level Radioactive Waste
Policy Amendments Act of 1985 mandated that the various states, individually or through
interstate compacts, develop alternative low-level radioactive waste disposal

21

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. Wolf Creek Nuclear Operating Corporation (WCNOC)
and the owners of the other five nuclear units in the Compact provided most of the
pre-construction financing for this project. KCP&Ls net investment in the
Compact was $7.4 million at June 30, 2003, and December 31, 2002.

Significant opposition to the project
has been raised by Nebraska officials and residents in the area of the proposed facility
and attempts have been made through litigation and proposed legislation in Nebraska to
slow down or stop development of the facility. On December 18, 1998, the application for a
license to construct this project was denied. After the license denial, WCNOC and others
filed a lawsuit in federal court contending Nebraska officials acted in bad faith while
handling the license application. In September 2002, the U.S. District Court Judge
presiding over the Central Interstate Compact Commissions federal bad
faith lawsuit against the State of Nebraska issued his decision in the case finding
clear evidence that the State of Nebraska acted in bad faith in processing the license
application for a low-level radioactive waste disposal site in Nebraska and rendered a
judgment on behalf of the Compact in the amount of $151.4 million against the state. The
state has appealed this decision to the 8th Circuit, U.S. Court of Appeals.
Based on the favorable outcome of this trial, in KCP&Ls opinion, there is a
greater possibility of reversing the states license denial once the decision in this
case is final.

In May 1999, the Nebraska legislature
passed a bill withdrawing Nebraska from the Compact. In August 1999, the Nebraska Governor
gave official notice of the withdrawal to the other member states. In June 2003, the
Compact revoked Nebraskas membership in the Compact effective July 17, 2004. As a
result, Nebraskas legal rights under the Compact will be extinguished on the
effective date, but its legal obligations incurred prior to the effective date, including
the obligation to be the host state for a disposal site, are expected to continue.
Nebraska may appeal this revocation.

Environmental MattersKCP&Ls operations are
subject to regulation by federal, state and local authorities with regard to air and other
environmental matters. The generation and transmission 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 KCP&L.

KCP&L operates in an
environmentally responsible manner and seeks to use current technology to avoid and treat
contamination. KCP&L regularly conducts environmental audits designed to ensure
compliance with governmental regulations and to detect contamination. Governmental bodies,
however, may impose additional or more restrictive environmental regulations that could
require substantial changes to operations or facilities at a significant cost. At June 30,
2003, and December 31, 2002, KCP&L had $1.9 million accrued for environmental
remediation expenses covering water monitoring at one site and unasserted claims for
remediation at a second site. The amounts accrued were established on an undiscounted
basis and KCP&L does not currently have an estimated time frame over which the accrued
amounts may be paid out. Expenditures to comply with environmental laws and regulations
have not been material in amount during the periods presented and are not expected to be
material in the upcoming years with the exception of the issues discussed below.

Certain Air Toxic
SubstancesIn July 2000, the National Research
Council published its findings of a study under the Clean Air Act Amendments of 1990
(Clean Air Act), which stated that power plants that burn fossil fuels, particularly coal,
generate the greatest amount of mercury emissions. As a result, in December 2000, the

22

Environmental Protection Agency (EPA) announced it would propose Maximum Achievable
Control Technology (MACT) requirements by December 2003 to reduce mercury emissions and
issue final rules by December 2004. Until the rules are proposed, KCP&L cannot predict
the likelihood or compliance costs of such regulations.

Air Particulate MatterIn 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 the U.S. Court of Appeals for the District of
Columbia (Appeals Court) that decided against the EPA. Upon further appeal, the U.S.
Supreme Court reviewed the standards and remanded the case back to the Appeals Court for
further review, including a review of whether the standards were arbitrary and capricious.
On March 26, 2002, the Appeals Court issued its decision on challenges to the 8-hour ozone
and PM-2.5 national ambient air quality standards (NAAQS). This decision denied all state,
industry and environmental groups petitions for review and thus upheld as valid the
EPAs new 8-hour ozone and PM-2.5 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 decision by the Appeals Court
removed the last major hurdle to the EPAs implementation of stricter ambient air
quality standards for ozone and fine particles. The EPA has not yet issued regulations
incorporating the new standards. Until new regulations are issued, KCP&L is unable to
estimate the impact of the new standards. However, the impact on KCP&L and all other
utilities that use fossil fuels could be substantial. In addition, the EPA is conducting a
three-year study of fine particulate ambient air levels. Until this testing and review
period has been completed, KCP&L cannot determine additional compliance costs, if any,
associated with the new particulate regulations.

Nitrogen OxideThe EPA announced in 1998 regulations
implementing reductions in Nitrogen Oxide (NOx) emissions. These regulations
initially called for 22 states, including Missouri, to submit plans for controlling
NOx emissions. The regulations require a significant reduction in
NOx emissions from 1990 levels at KCP&Ls Missouri coal-fired plants
by the year 2003.

In December 1998, KCP&L and
several other western Missouri utilities filed suit against the EPA over the inclusion of
western Missouri in the NOx reduction program based on the 1-hour
NOx standard. On March 3, 2000, a three-judge panel of the District of Columbia
Circuit of the U.S. Court of Appeals sent the NOx rules related to Missouri
back to the EPA, stating the EPA failed to prove that fossil plants in the western part of
Missouri significantly contribute to ozone formation in downwind states. On March 5, 2001,
the U.S. Supreme Court denied certiorari, making the decision of the Court of Appeals
final.

In February 2002, the EPA issued
proposed Phase II NOx SIP Call regulations which specifically exclude the
fossil plants in the western part of Missouri from the NOx SIP Call. To date,
the EPA has not issued its final Phase II NOxSIP Call regulation.

If fossil plants in western Missouri
are required to implement NOx reductions, KCP&L would need to incur
significant capital costs, purchase power or purchase NOx emission allowances.
Preliminary analysis of the regulations indicates that selective catalytic reduction
technology, as well as other changes, may be required for some of the KCP&L units.
Currently, KCP&L estimates that additional capital expenditures to comply with these
regulations could range from $40 million to $60 million. Operations and maintenance
expenses could also increase by more than $2.5 million per year. KCP&L

23

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.

Carbon DioxideAt a December 1997 meeting in Kyoto,
Japan, delegates from 167 nations, including the United States, agreed to a treaty (Kyoto
Protocol) that would require a seven percent reduction in United States carbon dioxide
(CO2) emissions below 1990 levels. Although the United States agreed to the
Kyoto Protocol, the treaty has not been sent to Congress for ratification. The financial
impact on KCP&L of future requirements in the reduction of CO2 emissions
cannot be determined until specific regulations are adopted.

Clean Air LegislationCongress has debated numerous bills
that would make significant changes to the current federal Clean Air Act including
potential establishment of nationwide limits on power plant emissions for several specific
pollutants. These bills have the potential for a significant financial impact on KCP&L
through the installation of new pollution control equipment to achieve compliance with the
new nationwide limits. The financial consequences to KCP&L cannot be determined until
the final legislation is passed. KCP&L will continue to monitor the progress of these
bills.

Proposed Water Use
RegulationsIn February 2002, the EPA issued
proposed rules related to certain existing power producing facilities that employ cooling
water intake structures that withdraw 50 million gallons or more per day and use 25% or
more of that water for cooling purposes. The proposed rules establish national minimum
performance requirements designed to minimize adverse environmental impact. The EPA must
take final action by August 2003. KCP&L will continue to monitor the progress of this
rulemaking. The impact of these proposed rules has not yet been quantified, however,
KCP&Ls generating stations would be affected.

Strategic Energy
Purchased Power Energy CommitmentsStrategic Energy has entered into
agreements to purchase electricity at various fixed prices to meet the estimated demand
requirements of long-term sales agreements with its customers. Commitments at June 30,
2003, under these agreements total $1,295.6 million through 2010. Commitments for the
remainder of 2003 total $383.5 million, and for the years 2004 through 2007 total $499.3
million, $312.4 million, $65.6 million, and $23.2 million, respectively. See Note 17 for
further discussion.

KCP&L LeasesIn 2001, KCP&L entered into a
synthetic lease arrangement with a Trust (Lessor) to finance the purchase, installation,
assembly and construction of five combustion turbines and related property and equipment
that will add 385 MWs of peaking capacity (Project). The Trust is a special-purpose entity
and has an aggregate financing commitment from third-party equity and debt participants of
$176 million. In the second quarter of 2003, construction and installation of
KCP&Ls five combustion turbines was completed and the units were placed in
service. At June 30, 2003, cumulative project costs were approximately $147.4 million.
Total project costs, projected to be under $155 million, are anticipated to be finalized
by the end of the third quarter and rental payments under the lease will begin after these
costs have been finalized. Upon a default during the lease period, KCP&Ls
maximum obligation to the Lessor equals 100% of project costs. KCP&Ls rental
obligation, which reflects interest payments only, is expected to be approximately $17.5
million in the aggregate. At the end of the lease term (October 2006), KCP&L may
choose to sell the project for the Lessor, guaranteeing to the Lessor a residual value for
the Project in an amount which may be up to 83.21% of the project cost.

The Trust, acting as Lessor in the
synthetic lease arrangement discussed above, is considered a Variable Interest Entity
under FASB Interpretation No. 46. Because KCP&L has variable interests in

24

the Trust,
including among other things, a residual value guarantee provided to the Lessor, KCP&L
is the primary beneficiary of the Trust. Accordingly, KCP&L will be required to
consolidate the Trust effective July 1, 2003. Great Plains Energys and consolidated
KCP&Ls utility plant and long-term debt will increase by the total project cost
and depreciation expense will increase upon consolidation of the Trust.

Internal Revenue Service
Settlement  Corporate-Owned Life InsuranceIn November 2002, KCP&L accepted
a settlement offer related to corporate-owned life insurance (COLI) from the Internal
Revenue Service (IRS). The offer allowed 20% of the interest originally deducted and taxed
only 20% of the gain on surrender of the COLI policies. KCP&L surrendered the policies
in February 2003. KCP&L will make cash payments of approximately $1.3 million to the
IRS in the fourth quarter of 2003 to satisfy the liability associated with the surrender.
The remaining $9.9 million related to the disallowed interest will be paid upon completion
of the 1995  1998 IRS audit.

7.
          DTI HOLDINGS, INC. AND SUBSIDIARIES BANKRUPTCY UPDATE

On December 31, 2001, a subsidiary of
KLT Telecom, Holdings and its subsidiaries, 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,
which cases have been procedurally consolidated. Holdings and its two subsidiaries are
collectively called DTI.

In December 2002, Digital Teleport
entered into an agreement to sell substantially all of its assets (Asset Sale) to
CenturyTel Fiber Company II, LLC (CenturyTel), a nominee of CenturyTel, Inc. (Asset
Purchase Agreement). The Asset Sale was approved by the Bankruptcy Court on February 13,
2003, and closed on June 6, 2003. The Asset Sale produced approximately $38 million of
cash proceeds, $3.8 million of which was escrowed (Escrow Funds). The Escrow Funds will be
disbursed 180 days following the closing of the Asset Sale, subject to any reduction for
the amount of claims by CenturyTel for breaches of representations and warranties of
Digital Teleport under the Asset Purchase Agreement. Assuming full release of the Escrow
Funds, the proceeds of the Asset Sale together with Digital Teleports net cash on
hand are expected to total approximately $47.6 million (Anticipated Assets), which except
for certain reserves was distributed in the second quarter of 2003 pursuant to the Chapter
11 plan discussed below.

Digital Teleport, Digital Teleport of
Virginia and Holdings prepared a joint Chapter 11 plan (Chapter 11 Plan) and disclosure
statement based on the provisions of settlement agreements which are discussed below. The
Chapter 11 Plan provides that Digital Teleport, Holdings, and Digital Teleport of Virginia
will be liquidated after distribution of those companies assets to their creditors
pursuant to the Chapter 11 Plan The Chapter 11 Plan was confirmed by the Bankruptcy Court
on June 11, 2003, and became effective on June 24, 2003.

After providing for certain reserves
associated with the Escrow Funds, the MODOR Claim (as discussed below), certain
administrative expenses and payment of secured and priority claims, an initial
distribution of 82.5 cents on each dollar of approved claims was made by Digital Teleport
to its creditors (other than KLT Telecom), a $13.8 million distribution was made by
Holdings to its creditors, and an initial distribution of approximately $14.9 million was
made by Digital Teleport to KLT Telecom (net of the approximate $13.8 million paid by KLT
Telecom to Holdings, as discussed below). Additionally, KLT Telecom anticipates that it
will realize approximately $21 million of cash tax benefits in late 2003. Pending final
resolution of certain items including the Escrow Funds, the MODOR Claim and the put option
of a certain minority shareholder (which is described in Note 19 of the 2002 Form 10-K),
the Company recorded a net gain of $25.9 million or $0.37 per share during the second
quarter 2003 related to the DTI bankruptcy. The impact on net income is primarily due to
the net effect of the

25

Chapter 11 Plan confirmation and the resulting distribution, the
reversal of a $15.8 million tax valuation allowance, and the reversal of a $5 million
debtor in possession financing previously reserved.

Settlement agreements entered into by
Digital Teleport and Holdings, which provided the basis of the Chapter 11 plan, were also
approved by the Bankruptcy Court in its June 11, 2003, confirmation order. KLT Telecom,
KLT Inc., KCP&L, Great Plains Energy, Digital Teleport and the Official Unsecured
Creditors Committee of Digital Teleport (Creditors Committee) entered into a Settlement
Agreement as of December 23, 2002 (Teleport Settlement Agreement). Under the Teleport
Settlement Agreement, Digital Teleport, the Creditors Committee and three members of the
Creditors Committee holding claims against Digital Teleport released claims and possible
causes of action against the Company and any other entity currently or previously a member
of the Great Plains Energy or KCP&L consolidated tax group, and creditors receiving
payments are deemed to receive such payments in full satisfaction of their claims against
Digital Teleport. In addition, the Teleport Settlement Agreement provides for the receipt
by KLT Telecom of an assignment of claims of Digital Teleport, the Creditors Committee and
the bankruptcy estate of Digital Teleport against any officer or director of Digital
Teleport, or any other person or entity. The Teleport Settlement Agreement resolves all
material issues and disputes among the parties to those agreements.

The Teleport Settlement Agreement
does not, however, purport to resolve (i) three priority proofs of claim by the Missouri
Department of Revenue in the aggregate amount of $2,848,446 (collectively, the MODOR
Claim); (ii) an unsecured proof of claim by Gary Douglass, the former Chief Financial
Officer of DTI, in the amount of $2,055,900 (Douglass Claim); or (iii) any claims by
Holdings against KLT Telecom, KLT Inc., KCP&L and Great Plains Energy, or by creditors
of Holdings, including the holders of $265 million of Senior Discount Notes of Holdings.
However, the Holdings Settlement Agreement, discussed below, does resolve all material
issues and disputes among the parties to that agreement. Digital Teleport objected to the
MODOR Claim and the Douglass Claim asserting that each claim should be disallowed in full.
The Bankruptcy Court conducted an evidentiary hearing regarding the MODOR Claim, and ruled
substantially in favor of Digital Teleport. MODOR is appealing this ruling. The Bankruptcy
Court disallowed the Douglass Claim. In lieu of an appeal or motion to reconsider the
Bankruptcy Courts ruling regarding the Douglass Claim, Digital Teleport and Douglass
entered into a settlement agreement, which was approved by the Bankruptcy Court, that
afforded Douglass a $15,000 general unsecured claim against Digital Teleport.

The Teleport Settlement Agreement
provided for a pro rata distribution from the Anticipated Assets ranging from 82.5% to 90%
of the sum of (i) the non-priority unsecured claims of approximately $10.5 million held by
Digital Teleports trade creditors, (ii) an amended claim of $1 million by Union
Electric Co. d/b/a Ameren UE, and (iii) the allowed, non-priority unsecured portions, if
any, of the MODOR Claim, with the exact percentage being determined by the extent to which
the MODOR Claim is resolved in the Digital Teleport bankruptcy proceeding and is not
disallowed. After the payment of administrative, secured and priority claims (which
claims, excluding the MODOR Claim, are estimated to total approximately $3 million), the
Teleport Settlement Agreement provided for the balance of the Anticipated Assets to be
distributed to KLT Telecom, subject to the resolution of the MODOR Claim and the Douglass
Claim, and subject, further, to a payment to the creditors of Holdings pursuant to the
Holdings Settlement Agreement described below.

On March 14, 2003, KLT Telecom, KLT
Inc., Great Plains Energy, KCP&L, Holdings, The Bank of New York (as trustee of an
Indenture, as amended, relating to the Senior Discount Notes issued by Holdings)
(Trustee), and three principal holders of Senior Discounted Notes (including the largest
creditor) of Holdings (collectively, the Noteholders) entered into a Settlement Agreement
and Plan Term Sheet (the Holdings Settlement Agreement).

26

Under the Holdings Settlement
Agreement, KLT Telecom paid to the Holdings bankruptcy estate approximately $13.8 million
from the distribution that KLT Telecom received under the Teleport Settlement Agreement
for distribution to unsecured creditors of Holdings. In addition, Holdings, the Trustee
and the Noteholders released claims and possible causes of action against the Company and
any other entity currently or previously a member of the Great Plains Energy or KCP&L
consolidated tax group, and creditors receiving payments are deemed to receive such
payments in full satisfaction of their claims against Holdings. In addition, the Holdings
Settlement Agreement provides for the receipt by KLT Telecom of an assignment of claims of
Holdings, the bankruptcy estate of Holdings, the Trustee and the Noteholders against any
officer or director of Holdings, or any other person or entity. The Holdings Settlement
Agreement resolves all material issues and disputes among the parties to that agreement.

Within 190 days after the closure of
the Asset Sale, KLT Inc. and KLT Telecom will pay a base sum of $1.6 million to certain
executives of Digital Teleport for entering into employment agreements required as a
condition precedent to the Asset Sale. KLT Telecom accrued the $1.6 million in the second
quarter of 2003 and the amount was considered in the determination of the $25.9 million or
$0.37 per share net gain related to the DTI bankruptcy recorded during the second quarter
of 2003. This sum will be increased based upon the amount of Escrow Funds released to
Digital Teleport, but the sum may not exceed $2.5 million (collectively, the Payment). The
Payment will be made pursuant to a December 26, 2002 letter from KLT Inc. and KLT Telecom
to Mr. Paul Pierron, President of Digital Teleport.

Because DTI filed for bankruptcy
protection under the U.S. Bankruptcy Code, KLT Telecom no longer had control over nor
could it exert significant influence over DTI. As a consequence, as of December 31, 2001,
DTI was de-consolidated and was presented on the cost basis. Because of this
de-consolidation, KLT Telecom did not include in its financial results the ongoing results
of operations, earnings or losses incurred by DTI since December 31, 2001.

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

On June 13, 2003, HSS board of
directors approved a plan to dispose of its interest in residential services provider
RSAE. On June 30, 2003, HSS completed the disposition of its interest in RSAE. Under terms
of the agreement, HSS repaid $22 million of RSAEs outstanding debt under its bank
line of credit and forgave $4 million of inter-company debt. The financial statements have
been restated to reflect RSAE as discontinued operations for all periods presented as
prescribed under SFAS No. 144, Accounting for the Impairment or Disposal of
Long-Lived Assets.

27

The following table summarizes the
operating results for the discontinued operations.

|                                        
|----------------------------------------
|Three Months Ended                      
|June 30                                 
|2003                                    
|
|(millions)                              
|Revenues                                
|
|
|Loss from operations before income taxes
|Loss on disposal before income taxes    
|                                        
|Total loss on discontinued operations   
|before income taxes                     
|Income tax benefit (a)                  
|                                        
|Loss on discontinued operations, net    
|of income taxes                         
|

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

Assets and liabilities of the
discontinued operations were as follows:

|                                            
|--------------------------------------------
|December 31                                 
|2002                                        
|
|(millions)                                  
|Current assets                              
|Other nonutility property and investments   
|Goodwill                                    
|Other deferred charges                      
|                                            
|Total assets of discontinued operations     
|
|                                            
|Current liabilities                         
|Deferred taxes                              
|Other deferred credits and liabilities      
|Long-term debt                              
|                                            
|Total liabilities of discontinued operations
|

# 9. INCOME TAXES

# 

DTI Holdings, Inc. and
subsidiariesDuring the fourth quarter of 2001,
Great Plains Energy recognized a $15.8 million tax valuation allowance related to the
bankruptcy of DTI due to significant uncertainty regarding the ability to realize future
tax deductions while in the bankruptcy process. Upon the close of the Asset Sale to
CenturyTel on June 6, 2003, uncertainty no longer existed regarding the ability to realize
future tax benefits; therefore, the entire $15.8 million valuation allowance was reversed
in the second quarter of 2003. The $15.8 million tax benefit was partially offset by tax
expense associated with the income impact of the asset sale, the DIP reversal, the
estimated escrow proceeds and the Noteholder recovery.

The full amount of the tax benefits
associated with the sale of DTI assets is limited by KLT Telecoms tax basis in DTI.
The financial statements reflect the full tax benefit allowable considering the basis
limitation.

28

The tax loss on the DTI transaction will reduce Great Plains Energys
2003 consolidated taxable income. The loss will reduce estimated tax payments by
approximately $21 million, otherwise payable in late 2003.

# 

R.S. Andrews
Enterprises, Inc.Great Plains Energy recognized an
$11.8 million book tax benefit relating to the disposition of its interest in RSAE. This
is net of $9.7 million of tax benefits recorded in prior years. The $21.5 million total
tax benefit relates to Great Plains Energys original $30.4 million investment, the
payment of RSAE debt of $22 million and $1 million of fees pursuant to the disposition.

The disposition of RSAE resulted in a
capital loss for tax purposes. Under corporate tax laws, capital losses can only be offset
by capital gains. Great Plains Energy will carry back this capital loss to offset capital
gains recognized on Great Plains Energys 2001 tax return. Great Plains Energy
expects to realize these tax benefits in late 2004.

# 10. BASIC AND DILUTED
EARNINGS PER COMMON SHARE CALCULATION

There was no dilutive effect on Great
Plains Energys earnings per share (EPS) from other securities for the three months
ended and year to date June 30, 2003 and 2002. To determine EPS, preferred stock dividend
requirements are deducted from both income from continuing operations before cumulative
effect of a change in accounting principle and net income before dividing by average
number of common shares outstanding. The EPS impact of the loss from discontinued
operations, net of income taxes, is determined by dividing the loss from discontinued
operations, net of income taxes, by the average number of common shares outstanding. The
EPS impact of the cumulative effect of a change in accounting principle is determined by
dividing the cumulative effect of a change in accounting principle by the average number
of common shares outstanding.

The following table reconciles Great
Plains Energys calculation of basic and diluted EPS from continuing operations
before the cumulative effect of a change in accounting principle:

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

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

29

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

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

Options to purchase 305,000 shares of
common stock for year to date June 30, 2003, were excluded from the computation of diluted
EPS because the option exercise prices were greater than the average market price of the
common shares during the period. For the three months ended June 30, 2003, there were no
anti-dilutive shares. Options to purchase 363,818 shares of common stock for the three
months ended and year to date June 30, 2002, were excluded from the computation of diluted
EPS because the option exercise prices were greater than the average market price of the
common shares during the period.

# 11. REGULATORY MATTERS

Regulatory Assets and
LiabilitiesKCP&L is subject to the
provisions of SFAS No. 71. Accordingly, KCP&L has recorded assets and liabilities on
its balance sheet resulting from the effects of the ratemaking process, which would not be
recorded under GAAP for non-regulated entities. Regulatory assets represent incurred costs
that have been deferred because they are probable of future recovery in customer rates.
Regulatory liabilities generally represent probable future reductions in revenue or
refunds to customers. KCP&Ls continued ability to meet the criteria for
application of SFAS No. 71 may be affected in the future by competitive forces and
restructuring in the electric industry. In the event that SFAS No. 71 no longer applied to
all, or a separable portion, of KCP&Ls operations, the related regulatory assets
and liabilities would be written off unless an appropriate regulatory recovery mechanism
is provided.

30

|                                        
|----------------------------------------
|Amortization                            
|ending                                  
|period                                  
|
|Regulatory Assets                       
|Taxes recoverable through future rates  
|Coal contract termination costs         
|Decommission and decontaminate federal  
|uranium enrichment facilities           
|Loss on reaquired debt                  
|January 2002 incremental ice storm costs
|Change in depreciable life of Wolf Creek
|Asset retirement obligations            
|Other (a)                               
|
|Total Regulatory Assets                 
|
|Regulatory Liabilities                  
|Taxes recoverable through future rates  
|Emission allowances (b)                 
|
|Total Regulatory Liabilities            
|

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

Retail Rate MattersAt the end of January 2002, a severe
ice storm occurred throughout large portions of the Midwest, including the greater Kansas
City metropolitan area. In 2002, the Kansas Corporation Commission (KCC) approved a
stipulation and agreement regarding the treatment of the Kansas portion of the ice storm
costs. Pursuant to the stipulation and agreement, KCP&L implemented a retail rate
reduction January 1, 2003, and began calculating depreciation expense on Wolf Creek using
a 60 year life instead of a 40 year life. As a result of the stipulation and agreement,
KCP&L retail revenues decreased approximately $3.0 million and $5.6 million for the
three months ended and year to date June 30, 2003 periods, respectively. Depreciation
expense decreased approximately $2.0 million and $3.9 million for the three months ended
and year to date June 30, 2003 periods, respectively. The reduction in depreciation
expense has been recorded as a regulatory asset.

In 2002, the Missouri Public Service
Commission (MPSC) approved KCP&Ls application for an accounting authority order
related to the Missouri jurisdictional portion of the storm costs. The order allows
KCP&L to defer and amortize $20.1 million, representing the Missouri portion of the
storm costs, through January 2007. The amortization began in September 2002 and will
amortize approximately $4.6 million annually for the remainder of the amortization period.
KCP&L amortized $1.2 million and $2.3 million of deferred ice storm costs for the
three months ended and year to date June 30, 2003 periods, respectively.

# 12. STOCK OPTIONS

The Company adopted the fair value
recognition provisions of SFAS No. 123, Accounting for Stock-Based
Compensation, for its stock options as of January 1, 2003. The Company has elected
to use the modified prospective method of adoption as prescribed under SFAS No. 148,
Accounting for Stock-Based Compensation-Transition and Disclosure. Under the
modified prospective method of adoption, stock option compensation cost recognized
beginning January 1, 2003, is the same as if the fair value recognition provisions of SFAS
No. 123 had been applied to all stock options granted after October 1, 1995. Compensation
expense recorded for the three months ended and year to date June 30, 2002, was
immaterial.

31

The following table illustrates the
effect on net income and EPS for Great Plains Energy if the fair value method had been
applied to all periods presented.

|                                    
|------------------------------------
|Three Months Ended                  
|June 30                             
|                                    
|2003                                
|
|(thousands except per share amounts)
|Net income, as reported             
|Pro forma net income as if fair     
|value method were applied           
|Basic and diluted earnings          
|per common share, as reported       
|Pro forma basic and diluted earnings
|per common share                    
|

# 13. RELATED PARTY
TRANSACTIONS AND RELATIONSHIPS

Custom Energy Holdings, L.L.C. holds
100% of the direct ownership interests in Strategic Energy. Great Plains Energy holds an
89% indirect ownership position in Strategic Energy. SE Holdings, L.L.C. (SE Holdings)
owns the remaining 11% indirect ownership position in Strategic Energy. Richard Zomnir,
President and Chief Executive Officer of Strategic Energy, holds a 56% interest in SE
Holdings and certain other employees of Strategic Energy hold the remaining interests in
SE Holdings.

SE Holdings has a put option to sell
all or part of its 11% interest in Strategic Energy to Custom Energy Holdings at any time
within the 90 days following January 31, 2004, under certain circumstances, at fair market
value. Fair market value would be determined by the mutual agreement of the parties or if
an agreement cannot be reached, by third party appraisal.

Custom Energy Holdings business
and affairs are controlled and managed by a three member Management Committee composed of
one representative designated by KLT Energy Services Inc. (KLT Energy Services), one
representative designated by IEC, and one representative designated by SE Holdings.
Certain actions (including amendment of Custom Energy Holdings operating agreement,
approval of actions in contravention of the operating agreement, approval of a dissolution
of Custom Energy Holdings, additional capital contributions and assumption of recourse
indebtedness) require the unanimous consent of all the members of Custom Energy Holdings.
Certain other actions (including mergers with Custom Energy Holdings, acquisitions by
Custom Energy Holdings, assumption of non-recourse indebtedness, sales of substantial
assets, approval of distributions, filing of registration statements, partition of assets,
admission of new members and transfers of interests in Custom Energy Holdings) can be
approved by the Management Committee, but to the extent they affect the rights,
obligations, assets or business of Strategic Energy, the approval of the Strategic Energy
Management Committee is also required.

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

32

# 14. GUARANTEES

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 and indemnification of
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 prescribed in FASB Interpretation
No. 45, Guarantors Accounting and Disclosure Requirements for Guarantees,
Including Guarantees of Indebtedness of Others, the Company began recording a
liability for the fair value of the obligation it has undertaken for guarantees issued
after December 31, 2002. The liability recognition requirements of FASB Interpretation No.
45 are to be applied on a prospective basis to guarantees issued or modified after
December 31, 2002, while the disclosure requirements are to be applied to all guarantees.
The interpretation does not encompass guarantees of the Companys own future
performance, such as credit support provided to its subsidiaries. As of June 30, 2003,
KCP&L recorded an immaterial amount for the fair value of guarantees issued for the
residual value of vehicles and heavy equipment under an operating lease.

The following table reflects Great
Plains Energys and consolidated KCP&Ls maximum potential amount of future
payments that could be required under guarantees and describes those guarantees:

|                         
|-------------------------
|Guarantor                
|                         
|(millions)               
|KCP&L                    
|                         
|                         
|                         
|                         
|KCP&L                    
|                         
|                         
|                         
|Total consolidated KCP&L 
|                         
|Great Plains Energy      
|                         
|                         
|                         
|                         
|KLT Energy Services      
|                         
|                         
|                         
|                         
|                         
|Total Great Plains Energy
|                         

In 2001, KCP&L entered into a
synthetic lease arrangement with a Trust (Lessor). At the end of the lease term (October
2006), KCP&L may choose to sell the project for the Lessor, guaranteeing to the Lessor
a residual value for the Project in an amount, which may be up to 83.21% of the project
cost. As a result of the new consolidation requirements of FASB Interpretation No. 46, the
synthetic lease arrangement will be consolidated in the third quarter of 2003. See Note 6
for additional information regarding KCP&Ls synthetic lease arrangement.

33

# 15. ASSET RETIREMENT
OBLIGATIONS

Effective
January 1, 2003, the Company adopted SFAS No. 143. SFAS No. 143 provides accounting
requirements for the recognition and measurement of liabilities associated with the
retirement of tangible long-lived assets. Under the standard, these liabilities are
recognized at fair value as incurred and capitalized as part of the cost of the related
long-lived asset. Accretion of the liabilities due to the passage of time is recorded as
an operating expense. Retirement obligations associated with long-lived assets included
within the scope of SFAS No. 143 are those for which a legal obligation exists under
enacted laws, statutes, written or oral contracts, including obligations arising under the
doctrine of promissory estoppel.

The adoption of SFAS No. 143 changed
the accounting for and the method used to report KCP&Ls obligation to
decommission its 47% share of Wolf Creek. The legal obligation to decommission Wolf Creek
was incurred when the plant was placed in service in 1985. The estimated liability,
recognized on KCP&Ls balance sheet at January 1, 2003, is based on a third party
nuclear decommissioning study conducted in 2002. KCP&L used a credit-adjusted risk
free discount rate of 6.42% to calculate the retirement obligation. This rate is based on
the rate KCP&L could issue 30-year bonds, adjusted downward to reflect the portion of
the anticipated costs in current year dollars that had been funded at date of adoption
through the tax-qualified trust fund. The cumulative impact of prior decommissioning
accruals recorded consistent with rate orders issued by the MPSC and KCC has been reversed
and a new regulatory contra-asset for such amounts has been established. Amounts collected
through these rate orders have been deposited in a legally restricted external trust fund.
The fair market value of the trust fund was $69.1 million and $63.3 million at June 30,
2003 and December 31, 2002, respectively.

KCP&L also must recognize, where
possible to estimate, the future costs to settle other legal liabilities including the
removal of water intake structures on rivers, capping/filling of piping at levees
following steam power plant closures and capping/closure of ash landfills. Estimates for
these liabilities are based on internal engineering estimates of third party costs to
remove the assets in satisfaction of legal obligations and have been discounted using
credit adjusted risk free rates ranging from 5.25% to 7.50% depending on the anticipated
settlement date.

KLT Gas has estimated liabilities for
gas well plugging and abandonment, facility removal and surface restoration. These
estimates are based upon internal estimates of third party costs to satisfy the legal
obligations and have been discounted using credit adjusted risk free rates ranging from
6.00% to 7.25%, depending upon the anticipated settlement date.

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

On January 1, 2003, KCP&L
recorded an asset retirement obligation of $99.2 million and increased property and
equipment, net of accumulated depreciation, by $18.3 million. KCP&L is a regulated
utility subject to the provisions of SFAS No. 71 and management believes it is probable
that any differences between expenses under SFAS No. 143 and expenses recovered currently
in rates will be recoverable in future rates. As a result, the $80.9 million cumulative
effect of the adoption of SFAS No. 143 was recorded as a regulatory asset and therefore,
had no impact on net income.

As a result of its adoption of SFAS
No. 143, KLT Gas recorded an asset retirement obligation of $1.2 million, increased
property and equipment by $1.0 million and increased operating expense by $0.2 million for
the immaterial cumulative effect of the accounting change.

34

KCP&L has legal asset retirement
obligations for certain other assets where it is not possible to estimate the time period
when the obligations will be settled. Consequently, the retirement obligations cannot be
measured at this time. For transmission easements obtained by condemnation, KCP&L must
remove its transmission lines if the line is de-energized. It is extremely difficult to
obtain siting for new transmission lines. Consequently, KCP&L does not anticipate
de-energizing any of its existing lines. KCP&L also operates, under state permits, ash
landfills at several of its power plants. While the life of the ash landfill at one plant
can be estimated and is included in the estimated liabilities above, the future life of
ash landfills at other permitted landfills cannot be estimated. KCP&L can continue to
maintain permits for these landfills after the adjacent plant is closed.

The following table illustrates the
effect on asset retirement obligations if the provisions of SFAS No. 143 had been applied
beginning January 1, 2000. Pro forma amounts for the periods prior to the January 1, 2003,
adoption were measured using assumptions consistent with the period of adoption.

|                                               
|-----------------------------------------------
|Year to Date                                   
|June 30                                        
|2000                                           
|
|(millions)                                     
|Asset retirement obligation beginning of period
|Additions                                      
|Accretion                                      
|                                               
|Asset retirement obligation end of period      
|
|Other Great Plains Energy                      
|Asset retirement obligation beginning of period
|Additions                                      
|Accretion                                      
|                                               
|Asset retirement obligation end of period      
|
|Consolidated Great Plains Energy               
|Asset retirement obligation beginning of period
|Additions                                      
|Accretion                                      
|                                               
|Asset retirement obligation end of period      
|

# 16. SEGMENT AND RELATED
INFORMATION

Great Plains EnergyGreat Plains Energy has three
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 three reportable business segments are: (1) KCP&L, an integrated,
regulated electric utility, generates, transmits and distributes electricity; (2)
Strategic Energy provides power supply coordination services by entering into long-term
contracts with its customers to supply electricity Strategic Energy purchases under
long-term contracts, operating in several electricity markets offering retail choice; and
(3) KLT Gas explores for, develops, and produces unconventional natural gas resources,
including coalbed methane properties. Other includes the operations of HSS and
GPP, all KLT Inc. operations other than Strategic Energy and KLT Gas, unallocated
corporate charges and intercompany eliminations. The summary of significant accounting
policies applies to all of the reportable segments. Segment performance is evaluated based
on net income.

35

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

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

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

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

|                                 
|---------------------------------
|Strategic                        
|KCP&L                            
|
|(millions)                       
|Operating revenues               
|Depreciation and depletion       
|Loss from equity investments     
|Interest charges                 
|Income taxes                     
|Loss from discontinued operations
|Cumulative effect of a change    
|in accounting principle          
|Net income (loss)                
|

36

|                                       
|---------------------------------------
|Strategic                              
|KCP&L                                  
|
|(millions)                             
|Assets                                 
|Capital and investment expenditures (a)

|                                       
|---------------------------------------
|(millions)                             
|Assets                                 
|Capital and investment expenditures (a)
|

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

Consolidated KCP<he table below reflects summarized
financial information concerning consolidated KCP&Ls reportable segment. Other
includes the operations of HSS and immaterial intercompany eliminations.

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

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

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

37

|                                 
|---------------------------------
|Consolidated                     
|KCP&L                            
|
|(millions)                       
|Operating revenues               
|Depreciation and depletion       
|Interest charges                 
|Income taxes                     
|Loss from discontinued operations
|Cumulative effect of a change    
|in accounting principle          
|Net income (loss)                
|

|                                       
|---------------------------------------
|Consolidated                           
|KCP&L                                  
|
|(millions)                             
|Assets                                 
|Capital and investment expenditures (a)
|
|December 31, 2002                      
|Assets                                 
|Capital and investment expenditures (a)
|

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

# 17. DERIVATIVE FINANCIAL
INSTRUMENTS

The Companys activities expose
it to a variety of market risks including interest rates and commodity prices. Management
has established risk management policies and strategies to reduce the potentially adverse
effects that the volatility of the markets may have on its operating results. The
Companys risk management activities, including the use of derivatives, are subject
to the management, direction and control of internal risk management committees.

The Companys interest rate risk
management strategy uses derivative instruments to adjust the Companys liability
portfolio to optimize the mix of fixed and floating rate debt within an established range.
The Company maintains commodity-price risk management strategies that use derivative
instruments to minimize significant, unanticipated earnings fluctuations caused by
commodity price volatility. Derivative instruments are recorded on the balance sheet as an
asset or liability measured at fair value. Changes in fair value are recognized currently
in earnings unless specific hedge accounting criteria are met.

Interest Rate Risk
ManagementKCP&L utilizes interest rate
management derivatives to adjust its liability portfolio to optimize the mix of fixed and
floating rate debt within an established range.

In 2002, KCP&L remarketed its
1998 Series A, B, and D Environmental Improvement Revenue Refunding (EIRR) bonds totaling
$146.5 million to a 5-year fixed interest rate of 4.75% ending October 1, 2007.
Simultaneously with the remarketing, KCP&L entered into an interest rate swap for the
$146.5 million based on LIBOR to effectively create a floating interest rate obligation.
The transaction is a fair value hedge with the assumption of no ineffectiveness. Changes
in the fair market value of the swap are recorded on the balance sheet as an asset with an
offset to the respective debt balances with no impact on earnings. At June 30, 2003, the
fair value of the swap was $7.7 million.

38

KCP&L had two interest rate swap
agreements in place to fix the interest rate on $30 million of floating-rate long-term
debt. The swap agreements expired in June 2003.

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

Strategic Energy maintains a
commodity-price risk management strategy that uses forward physical energy purchases and
derivative instruments to minimize significant, unanticipated earnings fluctuations caused
by commodity-price volatility.

As a result of supplying electricity
to retail customers under fixed rate contracts, Strategic Energys policy is to match
customers projected demand with fixed price purchases. In certain markets where
Strategic Energy operates, entering into forward fixed price contracts is cost
prohibitive. By entering into swap contracts for a portion of its forecasted purchases in
these markets, the future purchase price of electricity is effectively fixed under these
swap contracts protecting Strategic Energy from price volatility. The swap contracts limit
the unfavorable effect that price increases will have on electricity purchases. The
majority of the swap agreements are designated as cash flow hedges resulting in the
difference between the market value of energy and the hedge value being recorded as other
comprehensive income (loss). To the extent that the hedges are not effective, the
ineffective portion of the changes in fair market value is recorded directly in purchased
power.

In March 2003, Strategic Energy
initiated a termination agreement with a swap counterparty due to credit and performance
concerns. Strategic Energy received a $4.8 million fair value settlement. The swap was
designated as a cash flow hedge of a forecasted transaction and Strategic Energy
management believes the forecasted transaction will occur. During the second quarter,
Strategic Energy reclassified $1.6 million to earnings. The remaining $3.2 million will be
reclassified to earnings in the third and fourth quarters of 2003, the remaining term of
the underlying forecasted transaction.

KLT Gas risk management policy
is to use firm sales agreements or financial hedge instruments to mitigate its exposure to
market price fluctuations on up to 85% of its daily natural gas production. KLT Gas is
currently developing and testing gas properties; therefore, no production was hedged in
2002 or 2003.

SFAS No. 149, Amendment of
Statement 133 on Derivative Instruments and Hedging Activities is effective for
contracts entered into or modified after June 30, 2003. The accounting profession is
currently considering differing interpretations of the provisions of this statement
therefore, the effects, if any, on Great Plains Energys and consolidated
KCP&Ls financial condition and results of operations have not yet been
determined.

39

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

|Great Plains Energy activity for the three
         months ended June 30, 2003
|------------------------------------------------------------------------------
|
|Increase                                                                      
|(Decrease) in                                                                 
|March 31                                                                      
|2003                                                                          
|
|Assets                                                                        
|Cash                                                                          
|Other current assets                                                          
|Other deferred charges                                                        
|Liabilities and capitalization                                                
|Other current liabilities                                                     
|Other comprehensive                                                           
|income                                                                        
|Deferred income taxes                                                         
|Other deferred credits                                                        
|

|Consolidated KCP&L activity for the three months ended June 30, 2003
|--------------------------------------------------------------------
|
|Increase                                                            
|(Decrease) in                                                       
|March 31                                                            
|2003                                                                
|
|Assets                                                              
|Other current assets                                                
|Liabilities and capitalization                                      
|Other comprehensive                                                 
|income                                                              
|Deferred income taxes                                               
|

|Great Plains Energy activity for the three
         months ended June 30, 2002
|------------------------------------------------------------------------------
|
|Increase                                                                      
|(Decrease) in                                                                 
|March 31                                                                      
|2002                                                                          
|
|Assets                                                                        
|Other current assets                                                          
|Other deferred charges                                                        
|Liabilities and capitalization                                                
|Other current liabilities                                                     
|Other comprehensive                                                           
|income                                                                        
|Deferred income taxes                                                         
|Other deferred credits                                                        
|

40

|Consolidated KCP&L activity for the three months ended June 30, 2002
|--------------------------------------------------------------------
|
|Increase                                                            
|(Decrease) in                                                       
|March 31                                                            
|2002                                                                
|
|Assets                                                              
|Other current assets                                                
|Liabilities and capitalization                                      
|Other comprehensive                                                 
|income                                                              
|Deferred income taxes                                               
|

|Great Plains Energy activity year to date June 30, 2003
|-------------------------------------------------------
|
|Increase                                               
|(Decrease) in                                          
|December 31                                            
|2002                                                   
|
|Assets                                                 
|Cash                                                   
|Other current assets                                   
|Other deferred charges                                 
|Liabilities and capitalization                         
|Other current liabilities                              
|Other comprehensive                                    
|income                                                 
|Deferred income taxes                                  
|Other deferred credits                                 
|

|Consolidated KCP&L activity year to date June 30, 2003
|------------------------------------------------------
|
|Increase                                              
|(Decrease) in                                         
|December 31                                           
|2002                                                  
|
|Assets                                                
|Other current assets                                  
|Liabilities and capitalization                        
|Other comprehensive                                   
|income                                                
|Deferred income taxes                                 
|

41

|Great Plains Energy activity year to date June 30, 2002
|-------------------------------------------------------
|
|Increase                                               
|(Decrease) in                                          
|December 31                                            
|2001                                                   
|
|Assets                                                 
|Other current assets                                   
|Other deferred debits                                  
|Liabilities and capitalization                         
|Other current liabilities                              
|Other comprehensive                                    
|income                                                 
|Deferred income taxes                                  
|Other deferred credits                                 
|

|Consolidated KCP&L activity year to date June 30, 2002
|------------------------------------------------------
|
|Increase                                              
|(Decrease) in                                         
|December 31                                           
|2001                                                  
|
|Assets                                                
|Other current assets                                  
|Liabilities and capitalization                        
|Other current liabilities                             
|Other comprehensive                                   
|income                                                
|Deferred income taxes                                 
|

|Reclassified to earnings for the three months ended June 30,
|------------------------------------------------------------
|
|Great Plains Energy                                         
|2003                                                        
|
|(millions)                                                  
|Gas revenues                                                
|Fuel expense                                                
|Purchased power expense                                     
|Minority interest                                           
|Income taxes                                                
|
|Other comprehensive income                                  
|

|Reclassified to earnings year to date June 30,
|----------------------------------------------
|
|Great Plains Energy                           
|2003                                          
|
|(millions)                                    
|Gas revenues                                  
|Fuel expense                                  
|Purchased power expense                       
|Minority interest                             
|Income taxes                                  
|
|Other comprehensive income                    
|

42

# 18. GAS PROPERTY AND
INVESTMENTS

In June 2001, the FASB issued SFAS
No. 141, Business Combinations, which requires the purchase method of
accounting for business combinations initiated after June 30, 2001. In July 2001, the FASB
also issued SFAS No. 142, Goodwill and Other Intangible Assets, which
discontinues the practice of amortizing goodwill and indefinite lived intangible assets
and initiates an annual review for impairment. Intangible assets with a determinable
useful life will continue to be amortized over that period. The amortization provisions
apply to goodwill and intangible assets acquired after June 30, 2001. SFAS No. 141 and 142
clarify that more assets should be distinguished and classified between tangible and
intangible. KLT Gas did not change or reclassify contractual mineral rights included in
gas property and investments on Great Plains Energys consolidated balance sheet upon
adoption of SFAS No. 142. KLT Gas management believes its classification of such mineral
rights under the full cost method of accounting for natural gas properties, which is
consistent with industry practice, is appropriate. However, the accounting profession and
others are engaged in industry-wide deliberations regarding whether SFAS No. 141 and 142
require contractual mineral rights to be classified as intangible assets. Based on the
results of the deliberations, if management determines reclassification is necessary, KLT
Gas gas property and investments would be reduced by $8.3 million and $6.0 million
and intangible assets would have increased by a like amount at June 30, 2003, and December
31, 2002, respectively, representing cost incurred from the effective date of June 30,
2001. The provisions of SFAS No. 141 and 142 impact only the balance sheet and associated
footnote disclosure, and any required reclassification would not impact Great Plains
Energys cash flows or results of operations.

43

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

The Managements Discussion and
Analysis of Financial Condition and Results of Operations that follow are a combined
presentation for Great Plains Energy and KCP&L, both registrants under this filing.
The discussion and analysis by management focuses on those factors that had a material
effect on the financial condition and results of operations of the registrants during the
periods presented. It should be read in conjunction with the accompanying consolidated
financial statements and related notes and with the managements discussion and
analysis included in the companies 2002 annual report on Form 10-K.

Losses in prior periods related to
the operations of RSAE have been reclassified and are presented as discontinued operations
due to the June 2003 disposition of RSAE.

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

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

The Companys goal is to become
a premier diversified energy company that achieves annual growth in earnings per share in
a financially disciplined manner. To achieve this goal, Great Plains Energy intends to
focus on its three reportable segments of business:

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

# Critical Accounting
Policies

Regulatory MattersAt the end of January 2002, a severe
ice storm occurred throughout large portions of the Midwest, including the greater Kansas
City metropolitan area. In 2002, the KCC approved a stipulation and agreement regarding
the treatment of the Kansas portion of the ice storm costs. Pursuant to the stipulation
and agreement, KCP&L implemented a retail rate reduction January 1, 2003, and began
calculating depreciation expense on Wolf Creek using a 60 year life instead of a 40 year
life. As a result of the stipulation and agreement, KCP&L retail revenues decreased
approximately $3.0 million and $5.6 million for the three months ended and year to date
June 30, 2003 periods, respectively. Depreciation expense decreased approximately $2.0
million and $3.9 million for the three months ended and year to date June 30, 2003
periods, respectively. The reduction in depreciation expense has been recorded as a
regulatory asset.

In 2002, the MPSC approved
KCP&Ls application for an accounting authority order related to the Missouri
jurisdictional portion of the storm costs. The order allows KCP&L to defer and
amortize $20.1 million, representing the Missouri portion of the storm costs, through
January 2007. The amortization began in September 2002 and will amortize approximately
$4.6 million annually for the remainder of the

44

amortization period. KCP&L amortized
$1.2 million and $2.3 million of deferred ice storm costs for the three months ended and
year to date June 30, 2003 periods, respectively.

Asset Retirement
ObligationsEffective January 1, 2003, the
Company adopted SFAS No. 143. SFAS No. 143 provides accounting requirements for the
recognition and measurement of liabilities associated with the retirement of tangible
long-lived assets. Under the standard, these liabilities are recognized at fair value as
incurred and capitalized as part of the cost of the related long-lived asset. Accretion of
the liabilities due to the passage of time is recorded as an operating expense. Retirement
obligations associated with long-lived assets included within the scope of SFAS No. 143
are those for which a legal obligation exists under enacted laws, statutes written or oral
contracts, including obligations arising under the doctrine of promissory estoppel.

The adoption of SFAS No. 143 changed
the accounting for and the method used to report KCP&Ls obligation to
decommission its 47% share of Wolf Creek. The legal obligation to decommission Wolf Creek
was incurred when the plant was placed in service in 1985. The estimated liability,
recognized on KCP&Ls balance sheet at January 1, 2003, is based on a third party
nuclear decommissioning study conducted in 2002. KCP&L used a credit-adjusted risk
free discount rate of 6.42% to calculate the retirement obligation. This rate is based on
the rate KCP&L could issue 30-year bonds, adjusted downward to reflect the portion of
the anticipated costs in current year dollars that had been funded at date of adoption
through the tax-qualified trust fund. The cumulative impact of prior decommissioning
accruals recorded consistent with rate orders issued by the MPSC and KCC has been reversed
and a new regulatory contra-asset for such amounts has been established. Amounts collected
through these rate orders have been deposited in a legally restricted external trust fund.
The fair market value of the trust fund was $69.1 million and $63.3 million at June 30,
2003 and December 31, 2002, respectively.

KCP&L also must recognize, where
possible to estimate, the future costs to settle other legal liabilities including the
removal of water intake structures on rivers, capping/filling of piping at levees
following steam power plant closures and capping/closure of ash landfills. Estimates for
these liabilities are based on internal engineering estimates of third party costs to
remove the assets in satisfaction of legal obligations and have been discounted using
credit adjusted risk free rates ranging from 5.25% to 7.50% depending on the anticipated
settlement date.

KLT Gas has estimated liabilities for
gas well plugging and abandonment, facility removal and surface restoration. These
estimates are based upon internal estimates of third party costs to satisfy the legal
obligations and have been discounted using credit adjusted risk free rates ranging from
6.00% to 7.25%, depending upon the anticipated settlement date.

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

On January 1, 2003, KCP&L
recorded an asset retirement obligation of $99.2 million and increased property and
equipment, net of accumulated depreciation, by $18.3 million. KCP&L is a regulated
utility subject to the provisions of SFAS No. 71 and management believes it is probable
that any differences between expenses under SFAS No. 143 and expenses recovered currently
in rates will be recoverable in future rates. As a result, the $80.9 million cumulative
effect of the adoption of SFAS No. 143 was recorded as a regulatory asset and therefore,
had no impact on net income.

As a result of its adoption of SFAS
No. 143, KLT Gas recorded an asset retirement obligation of $1.2 million, increased
property and equipment by $1.0 million and increased operating expense by $0.2 million for
the immaterial cumulative effect of the accounting change.

45

If the provisions of SFAS No. 143 had
been applied to the consolidated balance sheets presented, Consolidated KCP&Ls
liability for asset retirement obligations would have been $99.2 million at December 31,
2002. Great Plains Energys liability for asset retirement obligations at December
31, 2002, would have been $100.4 million, reflecting consolidated KCP&Ls
liability and the KLT Gas liability of $1.2 million.

KCP&L has legal asset retirement
obligations for certain other assets where it is not possible to estimate the time period
when the obligations will be settled. Consequently, the retirement obligations cannot be
measured at this time. For transmission easements obtained by condemnation, KCP&L must
remove its transmission lines if the line is de-energized. It is extremely difficult to
obtain siting for new transmission lines. Consequently, KCP&L does not anticipate
de-energizing any of its existing lines. KCP&L also operates, under state permits, ash
landfills at several of its power plants. While the life of the ash landfill at one plant
can be estimated and is included in the estimated liabilities above, the future life of
ash landfills at other permitted landfills cannot be estimated. KCP&L can continue to
maintain permits for these landfills after the adjacent plant is closed.

Although the liability for Wolf Creek
decommissioning costs recorded under the new asset retirement obligations method will be
substantially the same at the end of Wolf Creeks life as the liability that would
have been recorded under the former ratemaking method, the rate at which the liability
will increase will be different under the two methods. In the near term, the asset
retirement obligations liability will be higher than the liability under the former
method. Because KCP&L is subject to SFAS No. 71, the difference in the recognition of
the liability will have no impact on earnings.

Prior to the adoption of SFAS No.
143, KLT Gas did not record separate asset retirement costs and liabilities, or the
associated depreciation and accretion. Under the full cost method of accounting followed
by KLT Gas, estimated dismantlement and abandonment costs, net of estimated salvage
values, were recorded to the property cost to be amortized. Under SFAS No. 143, KLT
Gas reserve for depreciation and asset retirement liabilities will increase
systematically over the asset life up to the time of settlement with corresponding charges
to expense.

46

# Great Plains Energy
Results of Operations

|                                   
|-----------------------------------
|Three Months Ended                 
|June 30                            
|2003                               
|
|(millions)                         
|Operating revenues                 
|Fuel                               
|Purchased power - KCP&L            
|Purchased power - Strategic Energy 
|                                   
|Revenues, net of                   
|fuel and purchased power           
|Other operating expenses           
|Depreciation and depletion         
|Loss on property                   
|                                   
|Operating income                   
|Loss from equity investments       
|Non-operating income (expenses)    
|Interest charges                   
|Income taxes                       
|Discontinued operations            
|Cumulative effect of a change      
|in accounting principle            
|                                   
|Net income                         
|Preferred dividends                
|
|Earnings available for common stock
|

Three months ended June
30, 2003 compared to June 30, 2002Great Plains Energys three
months ended June 30, 2003 earnings, as detailed in the table below, increased to $50.5
million, or $0.73 per share, from $35.5 million, or $0.57 per share, compared to the same
period of 2002. The issuance of 6.9 million shares in November 2002 diluted three months
ended 2003 earnings per share $0.08.

|                              
|------------------------------
|Earnings per Great            
|Earnings (Loss)               
|
|2003                          
|
|(millions)                    
|Three Months Ended June 30    
|KCP&L                         
|Subsidiary operations         
|Discontinued operations       
|
|Consolidated KCP&L            
|Strategic Energy              
|KLT Gas                       
|Other non-regulated operations
|
|Total                         
|

KCP&L earnings decreased $5.0
million for the three months ended June 30, 2003, compared to the same period of 2002.
KCP&L revenue, net of fuel and purchased power decreased $5.1 million primarily due to
decreased retail revenues as a result of mild June 2003 weather and the effect of the
January 2003 Kansas rate reduction partially offset by a 35% increase in wholesale MWh
sales at

47

higher wholesale prices. Increased operating and maintenance expenses including
pension and plant maintenance expenses were partially offset by a decrease in interest
expense.

Discontinued operations includes a
$7.1 million loss on the June 2003 disposition of the Companys interest in RSAE and
$0.4 million of continuing operating losses at RSAE through the date of disposition.

Strategic Energys earnings
increased $1.4 million for the three months ended June 30, 2003, compared to the same
period of 2002. The increase is the result of a $3.8 million increase in revenues net of
purchased power primarily due to a 31% increase in MWhs sold. This increase was partially
offset by an increase in administrative and general expenses including employee related
expenses. In addition to the continued growth, Great Plains Energys ownership of
Strategic Energy was increased by 5.8% in the fourth quarter of 2002.

Other non-regulated operations
includes $25.9 million for the effects of the June confirmation of the restructuring plan
of DTI Holdings, Inc., Digital Teleport, Inc., and Digital Teleport of Virginia, Inc. and
sale of substantially all of the assets of Digital Teleport, Inc. to a subsidiary of
CenturyTel, Inc. See Note 7 to the consolidated financial statements for additional
information regarding DTI. Other non-regulated operations also included a $1.2 million
increase in earnings primarily due to lower reductions in affordable housing limited
partnerships in the second quarter of 2003 compared to 2002.

Year to date June 30,
2003 compared to June 30, 2002Great Plains Energys year to
date June 30, 2003 earnings, as detailed in the table below, increased to $64.6 million,
or $0.93 per share, from $29.2 million, or $0.47 per share, compared to the same period of
2002. The issuance of 6.9 million shares in November 2002 diluted year to date 2003
earnings per share $0.11.

|                                    
|------------------------------------
|Earnings per Great                  
|Earnings (Loss)                     
|
|2003                                
|
|(millions)                          
|Year to Date June 30                
|KCP&L                               
|Subsidiary operations               
|Discontinued operations             
|Cumulative effect to January 1, 2002
|of a change in accounting principle 
|
|Consolidated KCP&L                  
|Strategic Energy                    
|KLT Gas                             
|Other non-regulated operations      
|
|Total                               
|

KCP&L earnings increased $15.3
million year to date June 30, 2003, compared to the same period of 2002. KCP&L
revenue, net of fuel and purchased power increased $21.8 million primarily due to a
significant increase in wholesale MWhs sold and favorable first quarter 2003 weather
partially offset by the effect on retail revenues of the January 2003 Kansas rate
reductions. This increase combined with a $4.7 million decrease in interest expense more
than offset mild June 2003 weather, a $5.9 million increase in pension expense and a $5.1
million increase in power plant maintenance. The amortization of the Missouri
jurisdictional portion of the storm costs totaled $2.3 million year to date June 30, 2003.

48

Year to date June 30, 2002, KCP&L expensed $16.0 million for the Kansas jurisdictional
portion of the storm costs.

Discontinued operations includes a
$7.1 million loss on the June 2003 disposition of the Companys interest in RSAE and
$1.6 million of continuing operating losses at RSAE through the date of disposition.

Strategic Energys earnings
increased $4.3 million year to date June 30, 2003, compared to the same period of 2002.
The increase is the result of an $11.7 million increase in revenues net of purchased power
primarily due to a 48% increase in MWhs sold. This increase was partially offset by an
increase in administrative and general expenses including employee related expenses. In
addition to the continued growth, Great Plains Energys ownership of Strategic Energy
was increased by 5.8% in the fourth quarter of 2002.

KLT Gas continues to focus on the
testing and development of several unconventional natural gas properties. Year to date
June 30, 2003, includes a first quarter after tax impairment charge of $5.5 million
recorded by KLT Gas on a Rocky Mountain project in response to lower revised estimates of
future gas production.

Other non-regulated operations
includes the $25.9 million effect of DTI discussed above and a $3.0 million increase in
earnings primarily due to lower reductions in affordable housing limited partnerships year
to date June 30, 2003, compared to 2002.

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

Consolidated KCP&L
Business OverviewAs an integrated electric utility,
KCP&L engages in the generation, transmission, distribution and sale of electricity.

KCP&Ls power business has
over 4,000 megawatts of generating capacity following the second quarter 2003 completion
of five combustion turbine units that added 385 megawatts of peaking capacity. KCP&L
has entered into a five-year construction and synthetic operating lease transaction with a
Trust for the five combustion turbines. The total estimated cost for the purchase,
installation, assembly and construction of the five combustion turbines is projected to be
under $155 million. Under FASB Interpretation No. 46, KCP&L will be required to
consolidate the Trust effective July 1, 2003. KCP&Ls utility plant and long-term
debt will increase by the total project cost and depreciation expense will increase upon
consolidation of the Trust. Because of the manner in which the current synthetic lease is
treated for covenant purposes in the Companys and KCP&Ls financing
arrangements, as well as by the rating agencies, liquidity and credit ratings are not
expected to be impacted by this new accounting standard.

KCP&Ls delivery business
consists of transmission and distribution facilities that serve over 485,000 customers as
of June 30, 2003. KCP&L continues to experience load growth approximating the
historical average of 2.0% to 2.5% annually through increased customer usage and
additional customers. Rates charged for electricity are below the national average.

At the end of January 2002, a severe
ice storm occurred throughout large portions of the Midwest, including the greater Kansas
City metropolitan area. At its peak, the storm caused over 300,000 customer outages
throughout the KCP&L service territory, an unprecedented level in the KCP&Ls
120-

49

year history. Crews from other utilities in numerous states were called in to assist
in the restoration of power and power was restored in nine days. Total costs related to
the January ice storm were approximately $51.3 million of which $14.7 million were capital
expenditures and therefore charged to utility plant. KCP&L expensed a total of $16.5
million in 2002 for the Kansas jurisdictional portion of the storm costs and deferred
$20.1 million of the storm costs applicable to Missouri. In January 2003, Edison Electric
Institute honored KCP&L for exemplary performance and dedication in restoring power to
customers during the storm and recognized KCP&L by awarding it the associations
annual Emergency Response Award.

Under the Federal Energy Regulatory
Commission (FERC) Order 2000, KCP&L, as an investor-owned utility, is strongly
encouraged to join a FERC approved Regional Transmission Organization (RTO). RTOs combine
regional transmission operations of utility businesses into a regional organization that
schedules transmission services and monitors the energy market to ensure regional
transmission reliability and non-discriminatory access. During the first quarter of 2002,
the Southwest Power Pool, Inc. (SPP) and the Midwest Independent System Operator (MISO)
voted to consolidate the two organizations to create a larger Midwestern RTO, a non-profit
organization that would operate in twenty states and one Canadian province. During March
2003, SPP and MISO mutually agreed to terminate the process of consolidating the
organizations. Subsequent to the termination of the merger between SPP and MISO, the SPP
formulated and approved a strategic plan for SPP. The plan includes provisions for SPP to
become compliant with FERC Order 2000. It is anticipated that SPP will file their
compliance plan with FERC in the Fall of 2003. KCP&L is directly participating in the
SPP process to become FERC Order 2000 compliant and intends to continue SPP participation.

During the third quarter of 2002, the
FERC issued a Notice of Proposed Rulemaking to Remedy Undue Discrimination through Open
Access Transmission Service and Standard Electricity Market Design. The proposed
rulemaking is designed to establish a single non-discriminatory open access transmission
tariff with a single transmission service that is applicable to all users of the
interstate transmission grid and to standardize wholesale energy market rules. All public
utilities that own, control or operate interstate transmission facilities would be
required to become independent transmission providers, turn over the operation of their
transmission facilities to an RTO that meets the definition of an independent transmission
provider or contract with an entity that meets the definition of an independent
transmission provider. KCP&L filed comments with the FERC on the proposed rulemaking
in November 2002. In late April 2003, the FERC issued a white paper titled Wholesale
Power Market Platform, in response to comments received on its proposed rulemaking.
In the white paper, the FERC stated its intent to require all public utilities to join an
RTO or Independent System Operator (ISO). The FERC also stressed that state authorities
will play a significant role in RTO and ISO formation through the formation of Regional
State Committees. The proposal also allows for phased-in implementation and market rules
tailored to each region. The FERC also indicated that divestiture is not required to
achieve independent operation of the transmission system. Companies may remain vertically
integrated under an RTO or ISO. Additionally, as proposed, each RTO or ISO would be
required to have a clear transmission cost recovery policy outlined in its tariff.

KCP&L has a wholly-owned
unregulated subsidiary, HSS, that holds a residential services investment, Worry Free. In
June 2003, HSS completed the disposition of its interest in RSAE.

50

Consolidated KCP&L
Results of OperationsThe following table summarizes
consolidated KCP&Ls comparative results of operations.

|                               
|-------------------------------
|Three Months Ended             
|June 30                        
|2003                           
|
|(millions)                     
|Operating revenues             
|Fuel                           
|Purchased power                
|                               
|Revenues, net of               
|fuel and purchased power       
|Other operating expenses       
|Depreciation and depletion     
|Gain (loss) on property        
|                               
|Operating income               
|Non-operating income (expenses)
|Interest charges               
|Income taxes                   
|Discontinued operations        
|Cumulative effect of a change  
|in accounting principle        
|
|Net income                     
|

Consolidated KCP&L earnings from
continuing operations decreased $5.3 million due to decreased earnings from KCP&L of
$5.0 million for the three months ended June 30, 2003, compared to the same period of
2002. KCP&L revenue, net of fuel and purchased power decreased $5.1 million primarily
due to decreased retail revenues as a result of mild June 2003 weather and the effect of
the January 2003 Kansas rate reduction partially offset by a 35% increase in wholesale MWh
sales at higher wholesale prices. Increased operating and maintenance expenses including
pension and plant maintenance expenses were partially offset by a decrease in interest
expense.

Consolidated KCP&L earnings from
continuing operations increased $14.6 million due to increased earnings from KCP&L of
$15.3 million year to date June 30, 2003, compared to the same period of 2002. KCP&L
revenue, net of fuel and purchased power increased $21.8 million primarily due to a
significant increase in wholesale MWhs sold at higher wholesale prices and favorable first
quarter 2003 weather partially offset by the effect on retail revenues of the January 2003
Kansas rate reduction. This increase combined with a $4.8 million decrease in interest
expense more than offset a $5.9 million increase in pension expense and a $5.1 million
increase in power plant maintenance. The amortization of the Missouri jurisdictional
portion of the storm costs totaled $2.3 million year to date June 30, 2003. Year to date
June 30, 2002, KCP&L expensed $16.0 million for the Kansas jurisdictional portion of
the storm costs.

Discontinued operations for the 2003
periods includes a $7.1 million loss on the June 2003 disposition of HSS interest in
RSAE and continuing losses through the date of disposition of $0.4 million and $1.6
million during the three months ended and year to date, respectively. Losses from RSAE
during the three months ended and year to date June 30, 2002, of $0.2 million and $1.4
million, respectively have been reclassified and are presented as discontinued operations.
Additionally, year to date June 30, 2002, earnings reflect the $3.0 million cumulative
effect to January 1, 2002, of a change in accounting principle for the adoption of SFAS
No. 142 and the associated write-down of RSAE goodwill.

51

# 

|Consolidated KCP&L
Sales Revenues and MWh Sales
|-----------------------------------------------
|
|Three Months Ended                             
|June 30                                        
|2003                                           
|
|Retail revenues                                
|Residential                                    
|Commercial                                     
|Industrial                                     
|Other retail revenues                          
|
|Total retail                                   
|Wholesale revenues                             
|Other revenues                                 
|
|KCP&L electric revenues                        
|Subsidiary revenues                            
|
|Consolidated KCP&L revenues                    
|

|                        
|------------------------
|Three Months Ended      
|June 30                 
|2003                    
|
|Retail MWh sales        
|Residential             
|Commercial              
|Industrial              
|Other retail MWh sales  
|
|Total retail            
|Wholesale MWh sales     
|
|KCP&L electric MWh sales
|

Retail revenues decreased $11.5
million for the three months ended and $4.6 million year to date June 30, 2003, compared
to the same periods of 2002. Mild June 2003 weather was the primary reason for the
decrease in the three months ended which was more than offset in the year to date period
by favorable weather earlier in 2003 and continued load growth. The Kansas rate reduction
effective January 1, 2003 decreased retail revenues approximately $3.0 million for the
three months ended and $5.6 million year to date June 30, 2003. See Critical Accounting
Policies for additional information. Less than 1% of revenues include an automatic fuel
adjustment provision.

Wholesale revenues increased $11.3
million for the three months ended and $40.1 million year to date. 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. In
addition to these factors, a more focused sales effort helped increase MWh sales by 35%
for the three months ended and 53% year to date. Additionally, average market prices per
MWh of power sold increased 18% for the three months ended and 50% year to date compared
to the same periods of 2002. The increase was driven by increased natural gas prices.

KCP&L Fuel and
Purchased PowerThe fuel cost per MWh generated and
the purchased power cost per MWh have a significant impact on the results of operations
for KCP&L. Generation fuel mix can change the fuel cost per MWh generated
substantially. Nuclear fuel costs per MWh generated remain substantially less than the
cost of coal per MWh generated. Replacement power costs for planned Wolf Creek outages are
accrued evenly over the units operating cycle. KCP&L expects its cost of nuclear
fuel to remain fairly constant through the year 2008. Coal has a significantly lower cost
per MWh generated than natural gas and oil. KCP&Ls procurement strategies
continue to provide delivered coal costs below the regional average. The cost

52

per MWh for
purchased power is significantly higher than the fuel cost per MWh of coal and nuclear
generation. KCP&L continually evaluates its system requirements, the availability of
generating units, availability and cost of fuel supply, availability and cost of purchased
power and the requirements of other electric systems to provide reliable power
economically. Fossil plants averaged 75% of total generation and the nuclear plant the
remainder over the last three years.

Fuel costs increased $1.7 million for
the three months ended and $5.1 million year to date June 30, 2003, compared to the same
periods of 2002. MWh generated increased 4% and 12% for the same periods,
respectively. The increase in MWh generated was partially offset by lower fuel cost
per MWh.

Purchased power expenses increased
$3.5 million for the three months ended and $8.7 million year to date June 30, 2003
compared to the same periods of 2002. The three months ended increase is due to a 28%
increase in MWh purchased combined with a 15% increase in the average price per MWh driven
by increased natural gas prices. The primary reason for the year to date increase was a
40% increase in the average price per MWh purchased, driven by increased natural gas
prices.

# 

Consolidated KCP&L
Other Operating Expenses (including operating, maintenance and general taxes)Consolidated KCP&Ls other
operating expenses increased $8.7 million for the three months ended June 30, 2003,
compared to the same period of 2002 primarily due to the following:

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

Consolidated KCP&Ls other
operating expenses increased $1.1 million year to date June 30, 2003, compared to the same
period of 2002 primarily due to the following:

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

Consolidated KCP&L
DepreciationConsolidated KCP&Ls
depreciation expense decreased $1.4 million for the three months ended and $2.7 million
year to date June 30, 2003, compared to the same periods of 2002 primarily due to the
change to a 60 year life for Wolf Creek pursuant to the 2002 KCC stipulation and
agreement. The change decreased depreciation expense approximately $2.0 million and $3.9
million for the three months ended and year to date June 30, 2003 periods, respectively.
See Critical Accounting Policies for additional information.

Consolidated KCP&L
Interest ChargesConsolidated KCP&Ls
interest charges decreased $3.6 million for the three months ended and $4.8 million year
to date June 30, 2003, compared to the same periods of 2002 primarily due to lower levels
of outstanding debt as a result of the repayment of $124.0 million of medium-term notes in
2003. Lower interest rates on variable rate debt compared to the prior year periods also
contributed to the decreases.

53

Wolf CreekWolf Creek, a nuclear unit, is 20% of
KCP&Ls base load generating capacity and 14% of KCP&Ls total
generating capacity, including the second quarter 2003 addition of five leased combustion
turbines that added peaking capacity. Wolf Creeks operating performance has remained
strong over the last three years, contributing an average of 25% of KCP&Ls
annual MWh generation while operating at an average capacity of 92%. Wolf Creek has the
lowest fuel cost per MWh generated of any of KCP&Ls generating units.

KCP&L accrues the incremental
operating, maintenance and replacement power costs for planned outages evenly over the
units operating cycle, normally 18 months. As actual outage expenses are incurred,
the refueling liability and related deferred tax asset are reduced. Wolf Creek returned to
service on April 27, 2002, following a 35-day refueling and maintenance outage that began
on March 23, 2002. The next outage is scheduled for the fall of 2003 and is estimated to
be approximately 35 days.

There has been significant opposition
and delays to, development of a low-level radioactive waste disposal facility. See Note 6
to the consolidated financial statements for additional information. An inability to
complete this project would require KCP&L to write-off its net investment in the
project, which was $7.4 million at June 30, 2003. KCP&L, and the other owners of Wolf
Creek, could also still be required to participate in development of an alternate site.

Ownership and operation of a nuclear
generating unit exposes KCP&L to risks regarding decommissioning costs at the end of
the units life and to potential retrospective assessments and property losses in
excess of insurance coverage. These risks are more fully discussed in the related sections
of Note 6 to the consolidated financial statements.

Strategic Energy

Strategic Energy
Business OverviewStrategic Energy provides power
supply coordination services by entering into long-term contracts with its customers to
supply electricity that Strategic Energy purchases under long-term contracts to manage its
customers electricity needs. In return, Strategic Energy receives an ongoing
management fee, which is included in the contracted sales price for the electricity.
Strategic Energy operates in several electricity markets offering retail choice, including
Pennsylvania, California, Ohio, New York, Massachusetts, Texas, Michigan and New Jersey.
During the second quarter of 2003, Strategic Energy delivered power to its first customers
in the Michigan market, and announced expansion into the New Jersey market anticipating
beginning power delivery to New Jersey customers during the second half of 2003. This
expands Strategic Energys operations into eight of the sixteen states that offer
retail choice. Strategic Energy also provides strategic planning and consulting services
in the natural gas and electricity markets.

Great Plains Energys indirect
ownership in Strategic Energy totals 89%. In the normal course of business, Great Plains
Energy and KLT Inc. provide financial or performance assurance to third parties on behalf
of Strategic Energy in the form of guarantees to those third parties. Additionally, Great
Plains Energy provides guarantees and indemnities supporting letters of credit and surety
bonds obtained by Strategic Energy. These agreements are entered into primarily to support
or enhance the creditworthiness otherwise attributed to Strategic Energy on a stand-alone
basis, thereby facilitating the extension of sufficient credit to accomplish Strategic
Energys intended business purposes.

At June 30, 2003, Strategic Energy
provided power supply coordination services on behalf of approximately 39,600 commercial,
institutional and small manufacturing accounts. Strategic Energys customer base is
very diverse. Strategic Energy served approximately 5,400 customers, including

54

numerous
Fortune 500 companies, smaller companies, and governmental entities. Based solely on
current signed contracts and expected usage, Strategic Energy has forecasted future MWh
commitments of 8.1 million for the remainder of 2003 and 10.8 million, 6.9 million, and
1.6 million for the years 2004 through 2006, respectively. Strategic Energy expects to
also supply additional MWh sales in these years through growth in existing markets by
re-signing existing customers and by signing new customers as well as through expansion
into new markets.

Strategic Energy maintains a
commodity-price risk management strategy that uses forward physical energy purchases and
derivative instruments to minimize significant, unanticipated earnings fluctuations caused
by commodity-price volatility. As a result of supplying electricity to retail customers
under fixed rate contracts, Strategic Energys policy is to match customers
demand with fixed price purchases. In certain markets where Strategic Energy operates,
entering into forward fixed price contracts is cost prohibitive. By entering into swap
contracts for a portion of its forecasted purchases in these markets, the future purchase
price of electricity is effectively fixed under these swap contracts. The swap contracts
limit the unfavorable effect that price increases will have on electricity purchases. All
of the swap agreements are currently designated as cash flow hedges resulting in the
difference between the market value of energy and the hedge value being recorded as other
comprehensive income (loss). At June 30, 2003, the accumulated comprehensive gain, net of
income taxes and minority interest, reflected in Great Plains Energys consolidated
statements of capitalization included a $0.1 million gain related to such cash flow
hedges. However, substantially all of the energy hedged with the swaps has been sold to
customers through contracts at prices different than the fair market value used to value
the swaps. Therefore, Strategic Energy does not anticipate realizing the gain represented
in comprehensive income.

During the third quarter of 2002, the
FERC issued a Notice of Proposed Rulemaking to Remedy Undue Discrimination through Open
Access Transmission Service and Standard Electricity Market Design. The proposed
rulemaking is designed to establish a single non-discriminatory open access transmission
tariff with a single transmission service that is applicable to all users of the
interstate transmission grid and to standardize wholesale energy market rules. Strategic
Energy has evaluated the impact of the proposed rulemaking on its operations and provided
comments to the FERC that are generally supportive of the provisions of the proposal, but
suggested some changes to the proposed rule. In late April 2003, the FERC issued a white
paper titled Wholesale Power Market Platform, in response to comments received
on its proposed rulemaking. In the white paper, the FERC stressed that state authorities
will play a significant role in RTO and ISO formation through the establishment of
Regional State Committees. The proposal also allows for phased-in implementation and
market rules tailored to each region.

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

55

Strategic Energy enters into forward
contracts with multiple suppliers. At June 30, 2003, Strategic Energys five largest
suppliers under forward supply contracts represented 60% of the total future committed
purchases. In the event of supplier non-delivery or default, Strategic Energys
results of operations could be affected to the extent the cost of replacement power
exceeded the combination of the contracted price with the supplier and the amount of
collateral held by Strategic Energy to mitigate its credit risk with the supplier.
Strategic Energys results of operations could also be affected, in a given period,
if it was required to make a payment upon termination of a supplier contract to the extent
that the contracted price with the supplier exceeded the market value of the contract.

The following table provides
information on Strategic Energys credit exposure, net of collateral, as of June 30,
2003. 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           
|Counterparties      
|Exposure            
|Before Credit       
|Rating              
|
|(millions)          
|External rating     
|Investment Grade    
|Non-Investment Grade
|Internal rating     
|Investment Grade    
|Non-Investment Grade
|
|Total               
|

|                    
|--------------------
|
|Exposure            
|Less Than           
|Rating              
|
|(millions)          
|External rating     
|Investment Grade    
|Non-Investment Grade
|Internal rating     
|Investment Grade    
|Non-Investment Grade
|
|Total               
|

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

56

been calculated for those counterparties Strategic
Energy is exposed to and excludes counterparties exposed to Strategic Energy.

At June 30, 2003, Strategic Energy
had exposure before collateral to non-investment grade counterparties totaling $91.0
million of which 74% is scheduled to mature in less than two years. In addition, Strategic
Energy held collateral totaling $74.7 million limiting its exposure to these
non-investment grade counterparties to $16.3 million at June 30, 2003, of which $8.7
million was related to Mirant Americas Energy Marketing, LP (Mirant), as discussed below.

In July 2003, Mirant filed a
voluntary petition for reorganization under Chapter 11 of the U.S. Bankruptcy Code. The
bankruptcy court entered an Interim Order, which authorized Mirant to comply with the
terms of its prepetition trading contracts. In accordance with the Master Power Purchase
and Sale Agreement and the ISDA Master Agreement between Strategic Energy and Mirant, the
$10.0 million collateral threshold limit in both agreements was reduced to zero upon the
bankruptcy filing. At the time of the petition filing, exposure to Mirant was $18.0
million for physical transactions and $0.4 million for financial transactions with Strategic
Energy holding collateral of $8.9 million. Upon reduction of the collateral thresholds to
zero, Mirant provided the additional $9.5 million of collateral required at that time
under Strategic Energys contracts. Mirant has moved to assume its contracts with
Strategic Energy and the hearing to assume the contracts and to finalize the Interim Order
is scheduled for August 21, 2003.

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

57

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

|                               
|-------------------------------
|Three Months Ended             
|June 30                        
|2003                           
|
|(millions)                     
|Operating revenues             
|Purchased power                
|
|Revenues, net of               
|purchased power                
|Other operating expenses       
|Depreciation                   
|
|Operating income               
|Non-operating income (expenses)
|Interest charges               
|Income taxes                   
|
|Net income                     
|

Strategic Energys earnings
increased $1.4 million for the three months ended and $4.3 million year to date June 30,
2003, compared to the same periods of 2002. The increased net income for the three months
ended and year to date is primarily due to continued growth in retail electric sales from
the expansion into new markets and continued sales efforts in existing markets. In
addition to continued growth, Great Plains Energys ownership of Strategic Energy was
increased by 5.8% in the fourth quarter of 2002. These increases were partially offset by
increased general and administrative expenses including employee related expenses and
income taxes due to increased sales in states with higher income tax rates. Also, total
gross margin per MWh decreased to $7.58 for the three months ended and $7.64 year to date
June 30, 2003, compared to $8.49 for the three months ended and $8.94 year to date June
30, 2002. The total gross margin per MWh for 2003 is expected to be in the range of $7.00
to $7.25. The decreases in gross margin per MWh for the three months ended and year to
date comparative periods was primarily due to the roll-off of higher margin contracts that
were obtained during periods of high market price volatility in late 2000 and early 2001
and to a lesser extent due to slightly increased competition.

Strategic Energy
Operating RevenuesOperating revenues from Strategic
Energy increased $54.0 million for the three months ended and $136.8 million year to date
June 30, 2003, compared to the same periods in 2002. The following table reflects
Strategic Energys operating revenues.

|                        
|------------------------
|Three Months Ended      
|June 30                 
|2003                    
|
|(millions)              
|Electric - Retail       
|Electric - Wholesale    
|Other                   
|
|Total Operating Revenues
|

At June 30, 2003, Strategic Energy
served approximately 5,400 customers, compared to approximately 4,600 customers at June
30, 2002. These customers represented approximately 39,600 accounts and 27,500 accounts at
June 30, 2003 and 2002, respectively. Strategic Energy has added approximately

58

200
customers since the beginning of 2003. Strategic Energy may provide periodic billing
credits to its customers resulting from its power supply coordination efforts. The amounts
credited back to the customer are treated as a reduction of retail electric revenues when
determined to be payable.

Retail electric revenues increased
$54.9 million for the three months ended and $137.6 million year to date June 30, 2003,
compared to the same periods in 2002, primarily due to increased retail MWh sales,
partially offset by a 2% decrease for the three months ended and a 4% decrease year to
date in average retail revenues per MWh. Retail MWhs sold increased approximately 31% to
3.8 million for the three months ended June 30, 2003, from 2.9 million for the same period
in 2002. Retail MWhs sold increased approximately 48% to 7.7 million year to date June 30,
2003, from 5.2 million for the same period in 2002. The increases in MWh sales resulted
primarily from strong sales efforts in re-signing customers as well as signing new
customers in markets in which Strategic Energy continued to experience favorable
conditions for growth. Several factors contribute to changes in the average retail
revenues per MWh, including the underlying price of the commodity, the nature and type of
products offered and the mix of sales by geographic market.

Strategic Energy
Purchased PowerTo supply its retail contracts,
Strategic Energy purchases long-term blocks of electricity under forward contracts in
fixed quantities at fixed prices from power suppliers based on projected usage. Strategic
Energy sells any excess retail supply of electricity back into the wholesale market. The
proceeds from the sale of excess supply of electricity is recorded as a reduction of
purchased power. The amount of excess retail supply sales that reduced purchased power was
$51.1 million for the three months ended and $105.1 million year to date June 30, 2003,
compared to $28.9 million for the three months ended and $50.2 million year to date June
30, 2002.

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

Purchased power increased $50.2
million for the three months ended and $125.1 million year to date June 30, 2003, compared
to the same periods in 2002, primarily due to 31% and 48% increases in MWh purchases for
the three months ended and year to date, respectively, to supply the increase in retail
MWh sales discussed above. The effect of the year to date increase in MWh purchases was
partially offset by a 2% decrease in the cost per MWh of purchased power.

Strategic Energy Other
Operating ExpensesStrategic Energys other
operating expenses as a percentage of operating revenues decreased to 3.7% for the three
months ended and 3.9% year to date June 30, 2003, from 4.1% for the three months ended and
4.4% year to date June 30, 2002, due to Strategic Energys efforts in leveraging its
infrastructure and the effects of achieving economies of scale. Strategic Energy
experienced increased labor and benefits as well as other general and administrative
expenses for the three months ended and year to date June 30, 2003, compared to the same
periods in 2002. The increase is primarily due to higher labor and benefit costs from the
addition of employees, higher profit sharing and deferred compensation expense which are
tied to earnings and financial performance, and higher other general and administrative
expenses associated with higher sales volumes, geographic market expansion, and regulatory
and market development initiatives.

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Strategic Energy
Non-operating Income (Expenses)Strategic Energys non-operating
income (expenses) includes non-operating income less minority interest expense and
non-operating expenses. Minority interest expense represents the share of Strategic
Energys net income not attributable to Great Plains Energys indirect ownership
interest in Strategic Energy. For the three months ended and year to date June 30, 2003,
non-operating income (expenses) decreased $1.0 million and $1.3 million, respectively,
primarily due to a decrease in minority interest expense resulting from Great Plains
Energys acquisition of an additional 5.8% indirect ownership interest in Strategic
Energy during the fourth quarter of 2002.

KLT Gas

KLT Gas Business OverviewKLT Gas is focused on exploring for,
developing and producing unconventional natural gas resources, including coalbed methane
properties. KLT Gas believes that unconventional natural gas resources provide an
economically attractive alternative source of supply to meet the growing demand for
natural gas in North America. Additionally, KLT Gas management team has experience
and expertise in identifying, testing and producing unconventional natural gas properties
and, as a result, it believes its expertise provides a competitive advantage in this niche
of the exploration and production sector.

Although gas prices have been
volatile historically, KLT Gas continues to believe that the long-term future price
scenarios for natural gas appear strong. Environmental concerns, especially air quality,
and the increased demand for natural gas for new electric generating capacity are
contributing to this projected growth in demand.

KLT Gas leased properties are
primarily located in Colorado, Kansas and Wyoming with some leases in Nebraska and Texas.
These leased properties cover approximately 249,000 undeveloped acres. The testing of this
acreage is in accordance with KLT Gas exploration plan and capital budget. The
timing of the testing may vary from current plans based upon obtaining the required
environmental and regulatory approvals and permits and future changes in market
conditions.

In March 2003, KLT Gas completed the
sale of approximately 30,000 undeveloped acres in Kansas. KLT Gas follows the full cost
accounting method for its natural gas properties, under which the acreage sale was
accounted for as an adjustment to capitalized costs with no gain recognized in earnings.

During the first half of 2003, KLT
Gas leased additional acreage in the Rocky Mountain region. Exploration of the newly
acquired acreage is anticipated to begin during the second half of 2003. In addition, KLT
Gas continued to test a new prospect in Colorado as well as the development of a pilot
project in the Powder River Basin and two additional projects in the Rocky Mountain
region.

Gas Property and
InvestmentsIn June 2001, the FASB issued SFAS
No. 141, Business Combinations, which requires the purchase method of
accounting for business combinations initiated after June 30, 2001. In July 2001, the FASB
also issued SFAS No. 142, Goodwill and Other Intangible Assets, which
discontinues the practice of amortizing goodwill and indefinite lived intangible assets
and initiates an annual review for impairment. Intangible assets with a determinable
useful life will continue to be amortized over that period. The amortization provisions
apply to goodwill and intangible assets acquired after June 30, 2001. SFAS No. 141 and 142
clarify that more assets should be distinguished and classified between tangible and
intangible. KLT Gas did not change or reclassify contractual mineral rights included in
gas property and investments on Great Plains Energys consolidated balance sheet upon
adoption of SFAS No. 142. KLT Gas management believes its classification of such mineral
rights under the full cost method of accounting for natural gas properties, which is
consistent with industry practice, is appropriate.

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However, the accounting profession and
others are engaged in industry-wide deliberations regarding whether SFAS No. 141 and 142
require contractual mineral rights to be classified as intangible assets. Based on the
results of the deliberations, if management determines reclassification is necessary, KLT
Gas gas property and investments would be reduced by $8.3 million and $6.0 million
and intangible assets would have increased by a like amount at June 30, 2003, and December
31, 2002, respectively, representing cost incurred from the effective date of June 30,
2001. The provisions of SFAS No. 141 and 142 impact only the balance sheet and associated
footnote disclosure, and any required reclassification would not impact Great Plains
Energys cash flows or results of operations.

KLT Gas Results of
OperationsThe following table summarizes KLT
Gas comparative results of operations.

|                               
|-------------------------------
|Three Months Ended             
|June 30                        
|2003                           
|
|(millions)                     
|Operating revenues             
|Other operating expenses       
|Depreciation and depletion     
|Loss on property               
|
|Operating loss                 
|Non-operating income (expenses)
|Interest charges               
|Income taxes                   
|
|Net loss                       
|

KLT Gas loss increased $0.3
million for the three months ended and $6.7 million year to date June 30, 2003, compared
to the same periods of 2002. Throughout 2002 and the first half of 2003, KLT Gas has been
developing and testing gas properties, as well as continuing production at its South Texas
properties. Additionally, KLT Gas net loss year to date June 30, 2003, includes a
first quarter 2003 impairment of $9.0 million on a Rocky Mountain project, which reduced
earnings by $5.5 million. The impairment was in response to lower revised estimates of
future gas production from that property.

KLT Gas Income TaxesKLT Gas recorded tax credits related
to its investment in natural gas properties of $1.4 million and $2.8 million for the three
months ended and year to date June 30, 2002, respectively. The law that allowed
substantially all of these credits expired at the end of 2002.

Other Non Regulated
Activities

Investment in Affordable
Housing Limited Partnerships  KLT InvestmentsKLT Investments Inc.s (KLT
Investments) earnings for the three months ended June 30, 2003, totaled $3.9 million
(including an after tax reduction of $0.1 million in its affordable housing investment)
compared to earnings of $2.7 million for the three months ended June 30, 2002 (including
an after tax reduction of $1.1 million in its affordable housing investment). KLT
Investments earnings include accrued tax credits of $4.8 million and $4.9 million in
the three months ended June 30, 2003 and 2002, respectively. Earnings year to date June
30, 2003, totaled $6.2 million (including an after tax reduction of $1.6 million in its
affordable housing investment) compared to earnings of $3.2 million year to date June 30,
2002 (including an after tax reduction of $4.5 million in its affordable housing
investment). KLT Investments earnings include accrued tax credits of $9.5 million
and $9.6 million year to date June 30, 2003 and 2002, respectively.

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At June 30, 2003, KLT Investments had
$64.4 million in affordable housing limited partnerships. Approximately 67% of these
investments were recorded at cost; the equity method was used for the remainder. Tax
expense is reduced in the year tax credits are generated. The investments generate future
cash flows from tax credits and tax losses of the partnerships. The investments also
generate cash flows from the sales of the properties. For most investments, tax credits
are received over ten years. KLT Investments projects tax credits to run through 2009. A
change in accounting principle relating to investments made after May 19, 1995, requires
the use of the equity method when a company owns more than 5% in a limited partnership
investment. Of the investments recorded at cost, $42.1 million exceed this 5% level but
were made before May 19, 1995. KLT Investments management does not anticipate making
additional investments in affordable housing limited partnerships at this time.

On a quarterly basis, KLT Investments
compares the cost of those properties accounted for by the cost method to the total of
projected residual value of the properties and remaining tax credits to be received.
Estimated residual values are based on studies performed by an independent firm. Based on
the latest comparison, pretax reductions in affordable housing investments were $0.2
million for the three months ended and $2.5 million year to date June 30, 2003, compared
to $1.8 million for the three months ended and $7.1 million year to date June 30, 2002.
Pretax reductions in affordable housing investments are estimated to be $10 million for
the remainder of 2003 and $7 million, $10 million, and $3 million for the years 2004
through 2006, respectively. These projections are based on the latest information
available but the ultimate amount and timing of actual reductions could be significantly
different from the above estimates. The properties underlying the partnership investment
are subject to certain risks inherent in real estate ownership and management. Even after
these estimated reductions, earnings from the investments in affordable housing are
expected to be positive for the years 2003 through 2006.

Subsidiary of KLT
Telecom Files for Bankruptcy  DTIThe accounting treatment related to
DTI and its 2001 bankruptcy is complex and is addressed in greater detail in Note 19 to
the consolidated financial statements of the Companies 2002 annual report on Form
10-K. Additionally, Note 7 of the consolidated financial statements in this quarterly
report on Form 10-Q is incorporated by reference in this portion of Managements
Discussion and Analysis. Both notes should be read as a component of this discussion.

On December 31, 2001, a subsidiary of
KLT Telecom, Holdings and its subsidiaries, 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,
which cases have been procedurally consolidated. Holdings and its two subsidiaries are
collectively called DTI.

In December 2002, Digital Teleport
entered into an agreement to sell substantially all of its assets (Asset Sale) to
CenturyTel Fiber Company II, LLC, a nominee of CenturyTel, Inc. The Asset Sale was
approved by the Bankruptcy Court on February 13, 2003, and closed on June 6, 2003. The
Asset Sale produced approximately $38 million of cash proceeds, including $3.8 million of
escrowed proceeds.

DTI filed a joint Chapter 11 plan,
based on the provisions of settlement agreements which are discussed below. The Chapter 11
plan was confirmed by the Bankruptcy Court of June 11, 2003, and became effective on June
24, 2003. After providing for certain reserves and payment of secured and priority claims,
an initial distribution of 82.5 cents on each dollar of approved claims was made by
Digital Teleport to its creditors (other than KLT Telecom), a $13.8 million distribution
was made by Holdings to its creditors, and an initial distribution of approximately $14.9
million was made by Digital Teleport to KLT Telecom (net of the approximate $13.8 million
paid by KLT Telecom to Holdings, as

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discussed below). Additionally, KLT Telecom
anticipates that it will realize approximately $21 million of cash tax benefits in late
2003. Pending final resolution of certain items, the Company recorded a net gain of $25.9
million or $0.37 per share during the second quarter of 2003 related to the DTI
bankruptcy. The impact on net income is primarily due to the net effect of the Chapter 11
plan confirmation and the resulting distribution, the reversal of a $15.8 million tax
valuation allowance, and the reversal of $5 million debtor in possession financing
previously reserved.

Settlement agreements entered into by
Digital Teleport and Holdings, which provided the basis of the Chapter 11 plan, were also
approved by the Bankruptcy Court in its June 11, 2003, confirmation order. In the Digital
Teleport bankruptcy case, KLT Telecom, KLT Inc., KCP&L, Great Plains Energy, Digital
Teleport and the Official Unsecured Creditors Committee of Digital Teleport entered into a
Settlement Agreement as of December 23, 2002 (Teleport Settlement Agreement). The Teleport
Settlement Agreement provides that unsecured creditors will receive up to 90 cents on each
dollar of approved claims after the consummation of the Asset Sale, and that the remaining
estate balance after the payment of administrative expenses and all other claims will be
distributed to KLT Telecom. The Teleport Settlement Agreement resolves all material issues
and disputes among the parties to that agreement.

In addition, in the Holdings
bankruptcy case, KLT Telecom, KLT Inc., Great Plains Energy, KCP&L, Holdings, The Bank
of New York (as trustee of an Indenture, as amended, relating to the senior discount notes
issued by Holdings) (Trustee) and three principal noteholders of Holdings (the
Noteholders) entered into a Settlement Agreement and Plan Term Sheet as of March 14, 2003
(Holdings Settlement Agreement). Under the Holdings Settlement Agreement, KLT Telecom paid
to the Holdings bankruptcy estate approximately $13.8 million from the distribution that
KLT Telecom received under the Teleport Settlement Agreement. The Holdings Settlement
Agreement resolves all material issues and disputes among the parties to that agreement.

Because DTI filed for bankruptcy
protection under the U.S. Bankruptcy Code, KLT Telecom no longer had control over nor
could it exert significant influence over DTI. As a consequence, as of December 31, 2001,
DTI was de-consolidated and presented on the cost basis. Because of this de-consolidation,
KLT Telecom did not include in its financial results the ongoing results of operations,
earnings or losses incurred by DTI since December 31, 2001.

Significant Balance
Sheet Changes(June
30, 2003 compared to December 31, 2002)

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

Great Plains Energys capital
requirements are principally comprised of KCP&Ls utility capital expenditures,
KLT Gas capital expenditures, and KCP&Ls pension benefit plan funding
requirements discussed below. Additional cash and capital requirements for the companies,
including long-term debt requirements, are discussed below.

Great Plains Energys liquid
resources at June 30, 2003, included cash flows from operations of subsidiaries, $78.0
million cash and cash equivalents on hand and $231.6 million of unused bank lines of
credit. The unused lines consisted of $110.1 million from KCP&Ls short-term bank
lines of credit, $29.5 million from Strategic Energys revolving credit facility, and
$92.0 million from Great Plains Energys revolving credit facility. See the debt
agreements section below for more information on these agreements.

Great Plains Energy and consolidated
KCP&L generated positive cash flows from operating activities for the periods
presented. The increase in cash flows from operating activities for Great Plains Energy
and consolidated KCP&L year to date June 30, 2003, compared to the same period of 2002
is due to increased net income before non-cash expenses and the changes in working capital
detailed in Note 3 to the consolidated financial statements. The individual components of
working capital vary with normal business cycles and operations. Also, the timing of the
Wolf Creek outage affects the refueling outage accrual, deferred income taxes and
amortization of nuclear fuel.

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. Utility capital expenditures and the allowance for borrowed funds used during
construction increased $13.4 million year to date June 30, 2003, compared to 2002
primarily due to transmission plant and nuclear fuel additions partially offset by 2002
capital expenditures of $14.7 million related to the January 2002 ice storm and insurance
proceeds from Hawthorn No. 5 received in 2003. Additionally, Great Plains Energy received
proceeds of $14.9 million as a result of the June confirmation of the restructuring plan
of DTI Holdings, Inc., Digital Teleport, Inc., and Digital Teleport of Virginia, Inc. and
sale of substantially all of the assets of Digital Teleport, Inc. to a subsidiary of
CenturyTel, Inc.

The change in Great Plains Energy and
consolidated KCP&Ls cash flows from financing activities reflects the equity
infusion of $100.0 million from Great Plains Energy to KCP&L and KCP&Ls
subsequent redemption of $104.0 million of medium-term notes. Great Plains Energy
essentially funded the infusion with proceeds from its $151.8 million common stock
offering in late 2002; however, prior to the infusion, Great Plains Energy used the
offering proceeds to repay short-term borrowings in late 2002 and then re-borrowed in
early 2003 to make the equity infusion into KCP&L at the time of redemption. An
additional $20.0 million of KCP&Ls medium-term notes were retired during the
second quarter of 2003. The increase in dividends paid by Great Plains Energy is primarily
attributable to the public offering of 6.9 million of common shares in late 2002.

KCP&L expects to meet day-to-day
operating requirements including interest payments, construction requirements (excluding
new generating capacity) and dividends 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

65

Energy and consolidated KCP&L need to retire maturing debt
(detailed below) 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.

Great Plains Energy filed a
registration statement in April 2002 for the issuance of an aggregate amount up to $300
million of any combination of senior debt securities, subordinated debt securities, trust
preferred securities, convertible securities, or common stock. The registration statement
became effective in November 2002 and Great Plains Energy issued $151.8 million of common
stock. The proceeds were used for repayment of debt and general corporate purposes.

As a registered public utility
holding company, Great Plains Energy must receive authorization from the Securities and
Exchange Commission (SEC) under the Public Utility Holding Company Act of 1935 (35 Act) to
issue equity or debt. Great Plains Energy is currently authorized to issue up to $450.0
million of debt and equity. Great Plains Energy has utilized $423.8 million of this amount
as follows: (i) $39.0 million in preferred stock issued in connection with the October 1,
2001, reorganization; (ii) $225.0 million in revolving credit facilities and (iii) $159.8
million in common equity issued in a public offering and in connection with IECs
acquisition of an indirect ownership interest in Strategic Energy. Great Plains Energy has
filed an application with the SEC seeking authorization to issue an additional $750
million in debt and equity over the $450 million currently authorized and anticipates the
SEC will act on the application in 2003.

KCP&L anticipates filing a shelf
registration statement for up to $255 million of senior and subordinated debt securities,
trust preferred securities and related guarantees in the current year. This will preserve
KCP&Ls flexibility to access the capital markets.

In the third quarter of 2003,
KCP&L will remarket its 1998 Series C EIRR bonds totaling $50.0 million. The bonds are
classified as current liabilities in the June 30, 2003 balance sheet. The bonds were
initially issued with a five-year fixed interest rate and a final maturity of 2017.

KCP&L has entered into a
revolving agreement, which expires in October 2003, to sell all of its right, title and
interest in the majority of its customer accounts receivable to Receivables Company, which
in turn sells most of the receivables to outside investors. KCP&L expects the
agreement to be renewed annually. See Note 4 to the consolidated financial statements.

Debt AgreementsGreat Plains Energy syndicated a $225
million, revolving credit facility with a group of banks in the first quarter of 2003.
This facility replaced a $205 million syndicated facility and a $20 million credit
facility with a bank. The line has a 364-day term but may be extended for an additional
year at the Companys option. The facility contains a MAC clause that requires Great
Plains Energy to represent, prior to receiving funding, that no MAC has occurred. The
clause does, however, permit the Company to access the facility even in the event of a MAC
in order to repay maturing commercial paper. Available liquidity under this facility is
not impacted by a decline in credit ratings unless the downgrade occurs in the context of
a merger, consolidation or sale. A default by Great Plains Energy or any of its
significant subsidiaries of material other indebtedness totaling more than $25.0 million
is a default under this bank line. Under the terms of this agreement, Great Plains Energy
is required to maintain a consolidated indebtedness to consolidated capitalization ratio
not greater than 0.65 to 1.0 at all times and an interest coverage ratio greater than 2.25
to 1.0. At June 30, 2003, the Company was in compliance with these covenants.

Strategic Energy syndicated a secured
revolving credit facility for up to $95 million with a group of banks in the second
quarter of 2003. This facility is partially guaranteed by Great Plains Energy. The

66

new agreement replaced a $30 million bank line of credit and a $25 million letter of credit
facility. The new facility enhances Strategic Energys liquidity including its
ability to provide credit support through letters of credit for purchased power and
regulatory requirements. The maximum amount available for loans and letters of credit
under the facility is the lesser of $95 million or the borrowing base, as defined in the
agreement. The borrowing base generally is the sum of certain Strategic Energy accounts
receivable and the amount of the Great Plains Energy guarantee which was $25.0 million at
June 30, 2003. At June 30, 2003, Strategic Energy had a minimum fixed charge ratio of at
least 1.05 to 1.0; however, if the ratio drops below 1.05 to 1.0, Great Plains
Energys guarantee amount is required to be increased based on quarterly
calculations. At June 30, 2003, $32.4 million in letters of credit had been issued under
the agreement, leaving $29.5 million of capacity available for loans and additional
letters of credit. In July 2003, to increase the available borrowing base, Great Plains
Energy increased its guarantee to $40 million. During July and early August 2003,
approximately $25 million in additional letters of credit were issued under the agreement.
The line has a 364-day term that may be extended for an additional year by Strategic
Energy with mutual agreement of the parties. The facility contains a MAC clause that
requires Strategic Energy to represent, prior to receiving funding, that no MAC has
occurred. A default by Strategic Energy of other indebtedness, as defined in the facility,
totaling more than $5.0 million is a default under facility. Under the terms of this
agreement, Strategic Energy is required to maintain a minimum net worth of $30 million and
a maximum debt to EBITDA ratio of 2.0 to 1.0. At June 30, 2003, Strategic Energy was in
compliance with these covenants.

KCP&Ls primary sources of
liquidity are cash flows from operations and bilateral credit lines totaling $130.0
million with six banks (as of June 30, 2003). KCP&L uses these lines to provide
support for its issuance of commercial paper. KCP&L had $16.7 million of commercial
paper and $3.2 million of notes payable outstanding at June 30, 2003, which were both
repaid in July 2003. These bank facilities are each for a 364-day term and mature at
various times throughout the year. The facilities can be extended for one year under their
term out provisions. KCP&L has MAC clauses in two agreements covering $50.0 million of
available bilateral credit lines. These two facilities require KCP&L to represent,
prior to receiving funding, that no MAC has occurred. Under one of these agreements
totaling $35 million, KCP&L is able to access the facility even in the event of a MAC
in order to redeem maturing commercial paper. KCP&Ls available liquidity under
these facilities is not impacted by a decline in credit ratings unless the downgrade
occurs in the context of a merger, consolidation or sale. A default by KCP&L on other
indebtedness is a default under these bank line agreements. Under the terms of certain
bank line agreements, KCP&L is required to maintain a consolidated indebtedness to
consolidated capitalization ratio not greater than 0.65 to 1.0 at all times. At June 30,
2003, KCP&L was in compliance with the covenant.

Under the indenture relating to
KCP&Ls 8.3% Junior Subordinated Deferrable Interest Debentures, due 2037
(Debentures), which are held by KCP&L Financing I, KCP&L may not declare or pay
any dividends on any shares of its capital stock if at the time (i) there is an event of
default (as defined in the indenture), (ii) KCP&L is in default with respect to its
payment of any obligations under its guarantee of preferred securities issued by KCP&L
Financing I, or (iii) KCP&L has elected to defer payments of interest on the
Debentures.

Great Plains Energy has agreements
with KLT Investments associated with notes KLT Investments issued to acquire its
affordable housing investments. Great Plains Energy has agreed not to take certain actions
including, but not limited to, merging, dissolving or causing the dissolution of KLT
Investments, or withdrawing amounts from KLT Investments if the withdrawals would result
in KLT Investments not being in compliance with minimum net worth and cash balance
requirements. The agreements also give KLT Investments lenders the right to have KLT
Investments repurchase the notes if Great Plains Energys senior debt rating falls
below investment grade, or if Great Plains Energy ceases to own at least 80% of
KCP&Ls stock. At June 30, 2003, KLT Investments had $11.2 million in outstanding
notes, including current maturities.

67

Pursuant to agreements with the MPSC
and the KCC, KCP&L maintains its common equity at not less than 35% of total
capitalization. Additionally, Great Plains Energy maintains its consolidated common equity
at not less than 30% of total consolidated capitalization.

PensionsKCP&L maintains defined benefit
plans for substantially all of its employees. The plans are funded on an actuarial basis
to provide assets sufficient to meet the benefit obligation to participants upon their
retirement and to meet the funding requirements of the Employee Retirement Income Security
Act of 1974 (ERISA).

Due to sharp declines in debt and
equity returns since the third quarter of 2000, the value of plan assets to satisfy
pension plan obligations has decreased significantly. As a result, under the minimum
funding requirements of ERISA, contributions have increased accordingly. KCP&L will be
required to fund approximately $9.7 million in 2003 ($7.7 million was funded as of June
2003) and $21.3 million in 2004. Contributions of $1.6 million and $1.0 million were made
in 2002 and 2001, respectively.

Participants in the plans can elect
to receive benefits in either a lump-sum payment or an annuity upon termination of their
employment. A change in payment assumptions could result in increased cash requirements
from pension plan assets with KCP&L being required to accelerate future funding.

Due to uncertain market conditions
and other factors used to estimate future cash requirements, additional funding may be
required in future years. Under the terms of the pension plans, KCP&L reserves the
right to amend or terminate the plans, and from time to time benefits have changed.

Supplemental Capital
Requirements and Liquidity InformationGreat Plains Energys and
consolidated KCP&Ls projected lease obligations have decreased approximately
11-12% for 2003 through 2006. The overall decrease is 6% of the total lease obligations of
both registrants. The decrease is due to the change in the projected cost of the
combustion turbines under the synthetic lease, lower projected interest rates and the
disposition of RSAE in June 2003. These lease obligations exclude a commitment to either
purchase the leased combustion turbines at termination of the construction leasing
agreement for a price equal to amounts expended by the Lessor or sell the turbines on
behalf of the Lessor while guaranteeing to the Lessor a residual value which may be up to
83.21% of the project cost. See Note 6 to the consolidated financial statements for
additional information.

Great Plains Energys other
long-term obligations, net increased approximately 22% at June 30, 2003, over the $1,466.3
million level at December 31, 2002, reflecting increases of approximately $200 million,
$90 million, $16 million and $15 million in 2004 through 2007, respectively, for new
Strategic Energy purchased power contracts. All other contractual cash obligations for
Great Plains Energy and consolidated KCP&L were relatively unchanged at June 30, 2003,
compared to December 31, 2002.

GuaranteesIn 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 and indemnification of
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 prescribed in FASB Interpretation
No. 45, the Company began recording a liability for the fair value of obligations it
undertakes for guarantees issued after December 31, 2002. The interpretation does not
encompass guarantees of the Companys own future performance, such as Great Plains
Energys

68

guarantees to support Strategic Energy power purchases and regulatory
requirements. KCP&L began recording an immaterial amount for the fair value of
guarantees issued in 2003 for the residual value of vehicles and heavy equipment under an
operating lease.

Great Plains Energys total
guarantees at June 30, 2003, decreased $32.0 million from the December 31, 2002, total of
$241.0 million reflecting the repayment of the RSAE line of credit ($25.0 million at
December 31, 2002) and a decrease in the credit support guarantees Great Plains Energy
provides on behalf of Strategic Energy for its power purchases and regulatory
requirements.

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

KCP&L operates in an
environmentally responsible manner and seeks to use current technology to avoid and treat
contamination. KCP&L regularly conducts environmental audits designed to ensure
compliance with governmental regulations and to detect contamination. Governmental bodies,
however, may impose additional or more restrictive environmental regulations that could
require substantial changes to operations or facilities at a significant cost. See Note 6
to the consolidated financial statements.

Adoption of SFAS No. 149SFAS No. 149 is effective for
contracts entered into or modified after June 30, 2003. The accounting profession is
currently considering differing interpretations of the provisions of this statement
therefore, the effects, if any, on Great Plains Energys and consolidated
KCP&Ls financial condition and results of operations have not yet been
determined.

69

# 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, interim period disclosures should be read in connection with the
quantitative and qualitative disclosures about market risk included in our 2002 combined
annual report on Form 10-K. There have been no material changes in Great Plains
Energys or consolidated KCP&Ls market risk since December 31, 2002.

# ITEM 4. CONTROLS AND
PROCEDURES

Great Plains Energy and KCP&L
carried out evaluations, under the supervision and with the participation of each
companys management, including the chief executive officer and chief financial
officer of those companies and those companies disclosure committee, of the
effectiveness of the companies disclosure controls and procedures (as defined in
Rules 13a-15(e) or 15d-15(e) under the Securities Exchange Act of 1934, as amended). Based
upon these evaluations, the chief executive officer and chief financial officer of Great
Plains Energy and KCP&L have concluded, as of the end of the period covered by this
report, that the disclosure controls and procedures of those companies are functioning
effectively to provide reasonable assurance that the information required to be disclosed
by those 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 Securities and Exchange Commissions rules and forms.

There has been no change to Great
Plains Energys or KCP&Ls internal control over financial reporting that
occurred during the quarterly period ended June 30, 2003 that has materially affected, or
is reasonably likely to materially affect, those companies internal control over
financial reporting.

70

# Part II  Other
Information

# ITEM 1.     LEGAL PROCEEDINGS

On December 31, 2001, a subsidiary of
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 in Case Nos. 01-54369-399, 01-54370-399 and
01-54371-399. These cases were consolidated for joint procedural administration. In the
Digital Teleport bankruptcy case, KLT Telecom, KLT Inc., KCP&L, Great Plains Energy,
Digital Teleport and the Official Unsecured Creditors Committee of Digital Teleport
entered into a Settlement Agreement as of December 23, 2002 (Teleport Settlement
Agreement). The Teleport Settlement Agreement provides that unsecured creditors will
receive up to 90 cents on each dollar of approved claims, and that the remaining estate
balance after the payment of administrative expenses and all other claims will be
distributed to KLT Telecom. The Teleport Settlement Agreement resolves all material issues
and disputes among the parties to that agreement.

In the Holdings bankruptcy case, KLT
Telecom, KLT Inc., Great Plains Energy, KCP&L, Holdings, The Bank of New York (as
trustee of an indenture, as amended, relating to the senior discount notes issued by
Holdings) (Trustee) and three principal noteholders of Holdings (the Noteholders) entered
into a Settlement Agreement and Plan Term Sheet as of March 14, 2003 (Holdings
Settlement Agreement). The Holdings Settlement Agreement provides, among other things, for
the payment by KLT Telecom to the Holdings bankruptcy estate of approximately $13.8
million from the distribution that KLT Telecom will receive under the Teleport Settlement
Agreement. The Holdings Settlement Agreement resolves all material issues and disputes
that may exist among the parties to that agreement.

The Teleport Settlement Agreement and
the Holdings Settlement Agreement provide that all claims and possible causes of action
against KLT Telecom, KLT Inc., Great Plains Energy, KCP&L and all other entities
currently or previously a member of the Great Plains Energy or KCP&L consolidated tax
group are released by the other parties to those two agreements. Further, KLT Telecom
received an assignment of any claims those other parties have against any officer or
director of Holdings, Digital Teleport or any other person or entity.

The Teleport Settlement Agreement and
the Holdings Settlement Agreement are incorporated into a joint Chapter 11 plan dated
March 31, 2003 and filed by the three DTI entities. The Chapter 11 plan was confirmed by
the Bankruptcy Court on June 11, 2003, and became effective on June 24, 2003.
For further information regarding the DTI bankruptcy proceedings, see Note 7 to the
consolidated financial statements, which is incorporated by reference.

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

# Great Plains Energy

Great Plains Energys annual
meeting of shareholders was held on May 6, 2003. The shareholders elected ten
directors and ratified the appointment of Deloitte & Touche LLP as independent
auditors.

Election
of Directors.Great Plains Energys board of directors consists of ten directors,
who are elected annually. The ten persons named below were elected, as proposed in the
proxy statement pursuant to Regulation 14A of the Securities Exchange Act of 1934, as
amended, to serve as directors until Great Plains Energys annual meeting in 2004 and
until their successors are elected and qualified.

71

There were over 59,590,000 votes cast in
the election of directors. The voting regarding each nominee was as follows:

|                   |           |           
|------------------ | --------- | ----------
|Nominee            | Votes For | Withheld  
|B. J. Beaudoin     |           | 58,720,408
|D. L. Bodde        |           | 58,575,241
|M. A. Ernst        |           | 58,590,689
|R. C. Ferguson, Jr |           | 58,587,003
|W. K. Hall         |           | 58,702,102
|L. A. Jimenez      |           | 58,729,950
|J. A. Mitchell     |           | 58,749,402
|W. C. Nelson       |           | 58,516,842
|L. H. Talbott      |           | 58,658,167
|R. H. West         |           | 58,514,221

*No votes were cast against the nominees due to cumulative voting.

Ratification
of Independent Auditors   Great Plains Energy shareholders ratified the
appointment of Deloitte & Touche LLP as independent auditors for 2003. The voting
regarding the appointment of auditors was as follows:

|                      |         |             |            
|--------------------- | ------- | ----------- | -----------
|Votes For             | Against | Abstentions | Total Votes
|Deloitte & Touche LLP |         | 57,511,824  |            

# KCP&L

KCP&Ls board of directors
consists of ten directors, who are elected annually. Great Plains Energy is
KCP&Ls sole shareholder. By a unanimous written consent dated as of May 6,
2003, Great Plains Energy, as the sole shareholder, elected the ten directors of Great
Plains Energy as the directors of KCP&L for the ensuing year and until their
successors are duly elected and qualified, or until their resignations.

# ITEM 5.     OTHER INFORMATION

Bernard J. Beaudoin, Chairman,
President and Chief Executive Officer of Great Plains Energy and Chairman of the Board and
Chief Executive Officer of KCP&L, announced on March 13, 2003, his retirement which
will be effective by year-end. A search firm has been engaged to select appropriate
candidates as the successor. Until a successor is chosen, Mr. Beaudoin will continue his
responsibilities.

On April 1, 2003, Great Plains Energy
formed Great Plains Energy Services Incorporated (Services), which provides services at
cost to Great Plains Energy and certain of its subsidiaries, including KCP&L, as a
service company under the 35 Act. Approximately 400 KCP&L employees were transferred
to Services. Great Plains Energy does not anticipate any material financial or operational
effects on the Company or KCP&L resulting from the creation of Services and the
transfer of KCP&L employees.

72

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

# EXHIBITS

Great
Plains Energy Documents

|      
|------
|Number
|
|10.1.a
|      
|      
|      
|10.1.b
|      
|      
|      
|      
|10.1.c
|      
|      
|10.1.d
|      
|      
|10.1.e
|      
|      
|10.1.f
|      
|      
|10.1.g
|      
|      
|31.1.a
|      
|31.1.b
|      
|32.1  

Kansas
City Power & Light Company

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

73

# REPORTS ON FORM 8-K

Great
Plains Energy Incorporated

Great Plains Energy Incorporated
filed on April 16, 2003, a report on Form 8-K dated April 15, 2003, furnishing a
press release regarding pre-earnings release information.

Great Plains Energy Incorporated
filed on April 24, 2003, a report on Form 8-K dated April 23, 2003, furnishing a
press release regarding 2003 first quarter earnings information and accompanying
financials.

Great Plains Energy Incorporated
filed on June 25, 2003, a report on Form 8-K dated June 23, 2003, including a
press release announcing results from the approval of the joint bankruptcy plan filed by
its subsidiaries DTI Holdings, Inc., Digital Teleport, Inc. and Digital Teleport of
Virginia, Inc.

Great Plains Energy Incorporated
filed on July 1, 2003, a report on Form 8-K dated June 30, 2003, including a
press release announcing the divestiture of its interest in residential services provider,
R.S. Andrews Enterprises, Inc.

Great Plains Energy Incorporated
filed on July 24, 2003, a report on Form 8-K dated July 23, 2003, furnishing a
press release announcing 2003 second quarter earnings information and affirming 2003
earnings guidance.

Kansas
City Power & Light Company

Kansas City Power & Light Company
filed on April 16, 2003, a report on Form 8-K dated April 15, 2003, furnishing a
press release regarding pre-earnings release information.

Kansas City Power & Light Company
filed on April 24, 2003, a report on Form 8-K dated April 23, 2003, furnishing a
press release regarding 2003 first quarter earnings information and accompanying
financials.

Kansas City Power & Light Company
filed on July 1, 2003, a report on Form 8-K dated June 30, 2003, including a
press release announcing the divestiture of its interest in residential services provider,
R.S. Andrews Enterprises, Inc.

Kansas City Power & Light Company
filed on July 24, 2003, a report on Form 8-K dated July 23, 2003, furnishing a
press release announcing 2003 second quarter earnings information and affirming 2003
earnings guidance.

74

SIGNATURES

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

|                        | GREAT PLAINS ENERGY INCORPORATED
|----------------------- | --------------------------------
|
|Dated:  August 13, 2003 |                                 
|                        |                                 
|                        |                                 
|                        |                                 
|Dated:  August 13, 2003 |                                 
|                        |                                 
|                        |                                 

|                        | KANSAS CITY POWER & LIGHT COMPANY
|----------------------- | ---------------------------------
|
|Dated:  August 13, 2003 |                                  
|                        |                                  
|                        |                                  
|                        |                                  
|Dated:  August 13, 2003 |                                  
|                        |                                  
|                        |                                  

75