SEC Filing | Evergy, Inc.

(a)	Mr. Chesser was previously Chief Executive Officer of United Water (2002-2003).

(b)	Mr. Downey was previously Executive Vice President of Great Plains Energy (2001-2003).

(c)	Mr. Bassham was previously Executive Vice President, Chief Financial and Administrative Officer (2001-2005) of El Paso Electric Company.

(d)	Ms. Curry was previously Senior Vice President, Retail Operations (2003-2004) and Executive Vice President, Global Human Resources (2001-2003) of TXU Corporation.

(e)	Mr. Deggendorf was previously Senior Director, Energy Solutions of KCP&L (2002-2005).

(f)	Mr. Easley was previously Vice President, Generation Services (2002-2005).

(g)	Mr. Malik was previously a partner of Sirius Solutions LLP, a consulting company, (2002-2004) and was appointed as President and Chief Executive Officer of Strategic Energy effective November 10, 2004 and Executive Vice President of Great Plains Energy effective January 1, 2006.

(h)	Mr. Marshall was previously President of Coastal Partners, Inc., a strategy consulting company (2001-2005), and Senior Vice President, Customer Service of Tennessee Valley Authority (2002-2004).

Available Information

Great Plains Energy’s website is www.greatplainsenergy.com and KCP&L’s website is www.kcpl.com. Information contained on the companies’ websites is not incorporated herein. Both companies make available, free of charge, on or through their websites, their annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act as soon as reasonably practicable after the companies electronically file such material with, or furnish it to, the SEC. In addition, the companies make available on or through their websites all other reports, notifications and certifications filed electronically with the SEC.

The public may read and copy any materials that the companies file with the SEC at the SEC’s Public Reference Room at 100 F Street, NE, Washington, DC, 20549. For information on the operation of the Public Reference Room, please call the SEC at 1-800-SEC-0330. The SEC also maintains an Internet site at http://www.sec.gov that contains reports, proxy statements and other information regarding the companies.

ITEM 1A. RISK FACTORS

Actual results in future periods for Great Plains Energy and consolidated KCP&L could differ materially from historical results and the forward-looking statements contained in this report. Factors that might cause or contribute to such differences include, but are not limited to, those discussed below. The companies’ business is influenced by many factors that are difficult to predict, involve uncertainties that may materially affect actual results and are often beyond the companies’ control. Additional risks and uncertainties not presently known or that the companies’ management currently believes to be immaterial may also adversely affect the companies. The risk factors described below, as well as the other information included in this Annual Report and in the other documents filed with the SEC, should be carefully considered before making an investment in the Company’s securities. Risk factors of consolidated KCP&L are also risk factors for Great Plains Energy.

The Company is subject to complex utility and environmental regulation that could adversely affect its operations.

The Company is subject to, or affected by, extensive federal and state utility regulation, as described below. The Company must also comply with environmental legislation and associated regulations. In the Company’s business planning and management of operations, it must address the effects of existing and proposed regulation on its businesses and changes in the regulatory framework, including initiatives by federal and state legislatures, regional transmission organizations, utility regulators and taxing authorities. Failure to obtain adequate rates or regulatory approvals, in a timely manner, adoption of new regulations by federal or state agencies, or changes to current regulations and interpretations of such regulations may materially affect the Company’s business and its results of operations, financial position and cash flows.

The outcome of KCP&L’s retail rate proceedings could have a material impact on its business and is largely outside its control.

The rates that KCP&L is allowed to charge its customers are the single most important item influencing its results of operations, financial position and liquidity. These rates are subject to the determination, in large part, of governmental entities outside of KCP&L’s control, including the MPSC, KCC and FERC. KCP&L also is exposed to cost-recovery shortfalls due to the inherent lag in the rate-setting process, especially during periods of significant cost inflation. A reduction or rejection by the MPSC or KCC of rate increase requests reflecting the costs of projects under the Comprehensive Energy Plan or Collaboration Agreement, which are discussed below, or other costs and expenses, could lead to lowered credit ratings, reduced access to capital markets, increased financing costs, lower flexibility due to constrained financial resources and collateral security requirements.

As a part of the Missouri and Kansas stipulations approved by the MPSC and KCC in 2005, KCP&L began implementation of its Comprehensive Energy Plan. Under the Comprehensive Energy Plan, KCP&L agreed to undertake certain projects, including building and owning a portion of Iatan No. 2, installing a new wind-powered generating facility, installing environmental upgrades to certain existing plants, infrastructure improvements and demand management, distributed generation, and customer efficiency and affordability programs. In March 2007, KCP&L entered into a Collaboration Agreement with the Sierra Club and Concerned Citizens of Platte County that provides for increases in KCP&L’s wind generation capacity and energy efficiency initiatives, reductions in certain emission permit levels at its Iatan and LaCygne generating stations, and projects to offset certain carbon dioxide emissions. Most, but not all, of these commitments are conditioned on regulatory approval. A reduction or rejection by the MPSC or KCC of rate increase requests reflecting the costs of projects under the Comprehensive Energy Plan or Collaboration Agreement would adversely affect KCP&L’s results of operations, financial position, and cash flows, and the effect could be material.

The MPSC order approving an approximate $51 million increase in annual revenues effective January 1, 2007, was appealed in February 2007 to the Circuit Court of Cole County, Missouri, by the Office of Public Counsel, Praxair, Inc., and Trigen-Kansas City Energy Corporation, seeking to set aside or remand the order to the MPSC. The court affirmed the MPSC’s decision in December 2007 and this decision has been appealed by Trigen-Kansas City Energy Corporation. Although subject to the appeal, the MPSC order remains in effect pending the court’s decision.

The KCP&L rate increase authorized by the MPSC of $35 million, effective January 1, 2008, may be appealed to the Missouri courts. Parties have until March 3, 2008, to appeal. If there is an appeal, it is possible that the MPSC order could be vacated and the proceedings remanded to the MPSC. Management cannot predict or provide any assurances regarding the outcome of these proceedings.

In response to competitive, economic, political, legislative and regulatory pressures, KCP&L may be subject to rate moratoriums, rate refunds, limits on rate increases or rate reductions, including phase-in plans designed to spread the impact of rate increases over an extended period of time for the benefit of customers. Any or all of these could have a significant adverse effect on KCP&L’s results of operations, financial position and cash flows.

Regulatory requirements regarding KCP&L’s utility operations may increase KCP&L’s costs and may expose KCP&L to compliance penalties.

The MPSC and KCC have the authority to implement utility operational standards and requirements, such as vegetation management standards, facilities inspection requirements, and quality of service standards. The costs of new or modified operational standards and requirements could have an adverse effect on KCP&L’s results of operations, financial position and cash flows, and could expose KCP&L to penalties if it does not meet these standards and requirements.

The ability of Strategic Energy to compete in states offering retail choice may be materially affected by state regulations and host public utility rates.

Strategic Energy is a participant in the wholesale electricity and transmission markets, and is subject to FERC regulation with respect to wholesale electricity sales and transmission matters. Additionally, Strategic Energy is subject to regulation by state regulatory agencies in states where it has retail customers. Each state has a public utility commission and rules related to retail choice. Each state's rules are distinct and may conflict. These rules do not restrict the amount Strategic Energy can charge for its services, but can have an impact on Strategic Energy's ability to compete in any jurisdiction. Additionally, the timing and amount of changes in host public utility rates can materially affect Strategic Energy’s results of operations, financial position and cash flows.

Financial market disruptions and declines in the credit ratings of Great Plains Energy or KCP&L may increase financing costs or limit access to the credit markets, which may adversely affect liquidity and results.

KCP&L’s capital requirements are expected to be substantial over the next several years as it implements its Comprehensive Energy Plan. The amount of credit support required for Strategic Energy operations varies with a number of factors, including the amount and price of power purchased for its customers. The amount of collateral or other credit support required under Strategic Energy and KCP&L power supply agreements is also dependent on credit ratings. If the proposed acquisition of Aquila occurs, the future capital requirements of Aquila will further increase the Company’s overall capital requirements. The Company relies on access to both short-term money markets and long-term capital markets as significant sources of liquidity for capital requirements not satisfied by cash flows from operations. The Company also relies on the financial markets for credit support, such as letters of credit, to support Strategic Energy and KCP&L operations.

Great Plains Energy, KCP&L and certain of their securities are rated by Moody's Investors Service and Standard & Poor's. A decrease in these credit ratings would have an adverse impact on the Company’s access to capital, its cost of funds, the amount of collateral required under power supply agreements and Great Plains Energy’s ability to provide credit support for its subsidiaries. While management anticipates that Great Plains Energy, KCP&L and Aquila will be rated investment grade if the proposed acquisition of Aquila closes, Great Plains Energy and KCP&L credit ratings were negatively affected by the announcement of the proposed acquisition, and may be further negatively affected.

The recent sub-prime mortgage issues have adversely affected the overall financial markets, generally resulting in increased credit spreads, reduced access to the capital markets and actual or potential downgrades of municipal bond insurers and the bonds insured by those insurers, among other adverse matters. The interest rates on $257.0 million aggregate principal amount of KCP&L’s EIRR bonds are periodically reset through auction processes. These auction rate bonds are supported by municipal bond insurance policies issued by either XL Capital Assurance, Inc. or Financial Guaranty Insurance Company. Both firms and the supported KCP&L auction rate bonds were downgraded by at least two rating agencies in January and February 2008. Concerns related to municipal bond insurers' credit have adversely affected the ordinary course of operation of auctions for these types of bonds. The interest rates set in recent auctions of KCP&L's auction rate bonds have been adversely affected by these concerns, and the adverse effects are expected to continue until the bonds are changed to another interest rate mode.

The Company’s management believes that it will maintain sufficient access to the financial markets at a reasonable cost based upon current credit ratings and market conditions. However, changes in financial or other market conditions or credit ratings could adversely affect the Company’s ability to access financial markets, increase borrowing costs, increase collateral or other credit support requirements, or impact the rate treatment provided to KCP&L, and therefore materially affect its results of operations, financial position and cash flows.

Great Plains Energy is subject to business and regulatory uncertainties as a result of the potential acquisition of Aquila, which could adversely affect its business.

On February 6, 2007, Great Plains Energy entered into definitive agreements under which it would acquire all the outstanding shares of Aquila. Immediately prior to this acquisition, Black Hills would acquire from Aquila its electric utility in Colorado and its gas utilities in Colorado, Kansas, Nebraska and Iowa. These transactions are complex, remain subject to outstanding regulatory approvals and other conditions, and there is no assurance as to whether or when the transactions will be consummated. While various regulatory approvals have been obtained, the approvals of the MPSC and KCC have not yet been obtained. The timing of, and the conditions imposed by, regulatory approvals may delay or

give rise to the ability to terminate the transactions. In the event of termination, Great Plains Energy would be required to write-off its deferred transaction costs, which could be material. The conditions imposed by regulatory approvals could increase the costs, or decrease the benefits, anticipated by Great Plains Energy from the transaction.

Uncertainty about the effect of the merger on employees and customers may have an adverse effect on the Company. Although the Company has taken steps to reduce any adverse effects, these uncertainties could impair the Company’s ability to attract, retain and motivate key personnel until the merger closes and for a period of time afterwards, and could cause customers, suppliers and others to seek to change existing business relationships.

The anticipated costs and benefits of the Aquila transaction may not be realized, which could adversely affect the Company’s business and results of operations.

Great Plains Energy entered into the Aquila proposed transaction with the expectation that the acquisition would result in various benefits to it and KCP&L including, among other things, synergies, cost savings and operating efficiencies. Although Great Plains Energy expects to achieve the anticipated benefits of the acquisition, achieving them cannot be assured. The Company expects to incur significant costs relating to the acquisition of Aquila and its operational integration with KCP&L. These costs may be significantly greater than the Company’s estimates. Although the Company has requested to recover a portion of these costs through utility rates, there is no assurance regarding the recovery of these costs or other regulatory treatment of benefits or costs in rate cases occurring after the closing of the transaction.

The Company expects to achieve various benefits, including synergies, cost savings and operating efficiencies in connection with the proposed acquisition. Approximately half of the total estimated cost savings and synergies, over the first five years following the transaction are expected to come from reductions in Aquila’s corporate overhead and other costs currently not being recovered through Aquila’s Missouri utility rates, and are not expected to be recovered through utility rates following the merger. If the Company is not able to eliminate these non-Missouri utility costs as anticipated, its results from operations will be negatively impacted.

Integration of Aquila and KCP&L utility operations following the transaction will pose significant challenges due to the size and complexity of each organization. The Company has dedicated substantial efforts and resources since the proposed transaction was announced to plan for an efficient and successful integration of utility operations. The Company believes that it will have the necessary employees to successfully operate the integrated utility operations after the transaction closes. However, there is no assurance that the utility operations integration will be completed successfully or in a timely manner.

Most of the Aquila employees remaining after the sale to Black Hills are expected to become employees of KCP&L. KCP&L employees will operate and manage both KCP&L properties and Aquila’s properties, and KCP&L will charge Aquila for the cost of these services. These expected arrangements may pose risks to KCP&L, including possible claims arising from actions of KCP&L employees in operating Aquila’s properties and providing other services to Aquila. KCP&L’s claims for reimbursement for services provided to Aquila will be unsecured and rank equally with other unsecured obligations of Aquila. KCP&L’s ability to be reimbursed for the costs incurred for the benefit of Aquila depends on the financial ability of Aquila to make such payments.

Additionally, Aquila’s utility operations are subject to regulation by numerous government entities, including the MPSC and FERC. As such, a successful acquisition of Aquila will subject Great Plains Energy to additional regulatory risk.

The announced review of alternatives for Strategic Energy may cause business uncertainties, which could adversely affect the Company’s results of operation.

Strategic Energy contributed 60% of the Company’s consolidated revenues and 24% of the Company’s consolidated net income in 2007. In November 2007, the Company announced that it was undertaking a review of strategic and structural alternatives for Strategic Energy. The alternatives may include, among others, continuation of Strategic Energy’s current subsidiary status and business plans, joint ventures with strategic partners, acquisitions of similar businesses, or sales of part or all of Strategic Energy.

Uncertainty about the outcome of this review on Strategic Energy employees, suppliers and customers may have an adverse effect on the Company. Although the Company has taken steps to reduce any adverse effects, including employee retention agreements, these uncertainties could impair the Company’s ability to attract, retain and motivate key personnel until the outcome of the review and for a period of time after, and could cause customers, suppliers and others to seek to terminate or change existing business relationships.

The Company is subject to current and potential environmental laws and the incurrence of environmental liabilities, any or all of which may adversely affect the Company’s business and financial results.

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

KCP&L currently projects a range of capital expenditures of $1.0 billion to $1.6 billion (KCP&L’s share of jointly owned units) over an approximate ten year period to comply with environmental requirements regarding SO2, NOx, mercury and particulate emissions that will take effect during that period. The actual cost and the timing of such expenditures may be materially different than these estimates due to the risks described in this risk factor and in the risk factor regarding construction risks.

There is also a risk of new environmental laws and regulations, and judicial interpretations of environmental laws and regulations, affecting KCP&L’s operations. In particular, various stakeholders, including legislators, regulators, shareholders and non-governmental organizations, as well as utilities and other companies in many business sectors, are considering ways to address climate change. These include regulation of carbon dioxide and other greenhouse gas emissions and efforts to encourage or mandate the use of renewable resources, energy efficiency and demand response management. Federal and/or state legislation or regulation to reduce greenhouse gas emissions may be enacted in the near future. The Kansas Department of Health and Environment has indicated that it intends to engage industries and stakeholders to establish goals for reducing CO2 emissions and strategies to achieve those goals. KCP&L’s current generation capacity is primarily coal-fired, and is estimated to produce about one ton of CO2 per MWh, or approximately 17 million tons per year. Efforts to reduce greenhouse gas emissions may cause the Company to incur material costs to reduce the greenhouse gas emissions from its operations (through additional environmental control equipment, retiring and replacing existing generation, or selecting more costly generation alternatives), procure emission allowance credits, or incur taxes, fees or other governmental impositions on account of such emissions. Another area of law that is in a state of flux is the rules governing emissions of mercury. Rules issued by the Environmental Protection Agency (EPA) were overturned in February 2008, and it is unclear what standards will be imposed in the future, or when we may have to comply with any new

standards. KCP&L’s proposed capital expenditures reflect estimated costs to comply with the overturned rule, and compliance with any new standards is likely to result in the incurrence of increased costs, although at this point there is insufficient information to estimate those costs. Other new environmental laws and regulations affecting KCP&L’s operations may be adopted, and new interpretations of existing laws and regulations could be adopted or become applicable to KCP&L or its facilities, any of which may adversely affect the Company’s business and substantially increase its environmental expenditures in the future.

New facilities, or modifications of existing facilities, may require new environmental permits or amendments to existing permits. Delays in the environmental permitting process, denials of permit applications, conditions imposed in permits and the associated uncertainty may materially affect the cost and timing of the environmental retrofit projects included in the Comprehensive Energy Plan, among other projects, and thus materially affect KCP&L’s results of operations, financial position and cash flows.

Under current law, KCP&L is also generally responsible for any on-site liabilities associated with the environmental condition of its facilities, including those that it has previously owned or operated, regardless of whether the liabilities arose before, during or after the time it owned or operated the facilities. KCP&L may not be able to recover all of its costs for environmental expenditures through rates in the future. The incurrence of material environmental costs or liabilities, without related rate recovery, could have a material adverse effect on KCP&L’s results of operations, financial position and cash flows. See Note 13 to the consolidated financial statements for additional information regarding environmental matters.

The Federal Clean Air Act requires companies to obtain permits and, if necessary, install control equipment to reduce emissions when making a major modification or a change in operation of an existing facility if either is expected to cause a significant net increase in regulated emissions. The Sierra Club and Concerned Citizens of Platte County have claimed that modifications were made to Iatan No. 1 in violation of Clean Air Act regulations. Although KCP&L has entered into a Collaboration Agreement with those parties that provides, among other things, for the release of such claims, the Collaboration Agreement does not bind any other entity. KCP&L is aware of subpoenas issued by a Federal grand jury to certain third parties seeking documents relating to capital projects at Iatan No. 1. KCP&L has not received a subpoena, and has not been informed of the scope of the grand jury inquiry. The ultimate outcome of these grand jury activities cannot presently be determined, nor can the costs and other liabilities that could potentially result from a negative outcome presently be reasonably estimated. Failure to recover such costs through rates could have a material adverse effect on Great Plains Energy’s and consolidated KCP&L’s results of operations, financial position and cash flows.

The inability of Great Plains Energy’s subsidiaries to provide sufficient dividends to allow Great Plains Energy to pay dividends to its shareholders and meet its financial obligations would have an adverse effect.

Great Plains Energy is a holding company with no significant operations of its own. The primary source of funds for payment of dividends to its shareholders and its financial obligations is dividends paid to it by its subsidiaries, particularly KCP&L. KCP&L has committed to its state regulatory commissions to maintain a 35% equity to total capitalization ratio, and has similar covenants in its revolving credit facility. Strategic Energy also has financial covenants in its financing arrangements. The ability of Great Plains Energy’s subsidiaries to pay dividends or make other distributions, and accordingly Great Plains Energy’s ability to pay dividends on its common stock and meet its financial obligations, principally depends on the actual and projected earnings and cash flow, capital requirements and general financial position of its subsidiaries, as well as on regulatory factors, financial covenants, general business conditions and other matters.

Changes in customer demand, due to sustained downturns or sluggishness in the economy and weather conditions may adversely affect KCP&L’s and Strategic Energy’s business and financial results.

The results of operations of KCP&L and Strategic Energy can be materially affected by changes in weather and customer demand. KCP&L and Strategic Energy estimate customer demand based on historical trends, to procure fuel and purchased power. Sustained downturns or sluggishness in the economy generally affects the markets in which KCP&L and Strategic Energy operate. Declines in economic conditions may reduce overall electricity sales and/or increase bad debt expense, which could materially affect KCP&L’s and Strategic Energy’s results of operations and cash flows.

Weather conditions directly influence the demand for electricity and natural gas and affect the price of energy commodities. In addition, severe weather, including but not limited to extreme heat or cold, tornados, snow, rain, floods and ice storms can be destructive causing outages and property damage that can potentially result in additional expenses and lower revenues. KCP&L’s Iatan and Hawthorn stations use water from the Missouri River for cooling purposes. Low water and flow levels, which have been experienced in recent years, can increase KCP&L’s maintenance costs at these stations and, if these levels were to get low enough, could cause KCP&L to modify plant operations and/or install additional equipment.

The use of derivative contracts in the normal course of business could result in financial losses that could negatively impact Great Plains Energy’s and KCP&L’s results of operations, financial position and cash flows.

Great Plains Energy, KCP&L and Strategic Energy use derivative instruments, such as swaps, options, futures and forwards, to manage commodity and financial risks. Financial losses could be recognized as a result of volatility in the market values of these contracts, if a counterparty fails to perform, or if the underlying transactions which the derivative instruments are intended to hedge fail to materialize. In the absence of actively quoted market prices and pricing information from external sources, the valuation of these financial instruments can involve management’s judgment or use of estimates. As a result, changes in the underlying assumptions or use of alternative valuation methods could affect the reported fair value of these contracts.

Changes in commodity prices could have an adverse effect on the Company’s business and financial condition.

KCP&L and Strategic Energy engage in the wholesale and retail marketing of electricity and are exposed to risks associated with the price of electricity. Strategic Energy routinely enters into contracts to purchase and sell electricity in the normal course of business. KCP&L generates, purchases and sells electricity in the retail and wholesale markets. To the extent that exposure to the price of electricity is not hedged, the Company could experience losses associated with the changing market price for electricity.

Increases in fuel and transportation prices could have an adverse impact on KCP&L’s costs.

New Kansas retail rates effective January 1, 2008, contain an ECA tariff. KCP&L’s Missouri retail rates do not contain a similar provision. Missouri retail rates reflect a set level of non-firm wholesale electric sales margin. KCP&L will not recover any shortfall in non-firm wholesale electric sales margin, but any amount above the level reflected in Missouri retail rates will be returned to retail customers in a future rate case. This exposes KCP&L to risk from changes in the market prices of coal, natural gas, nuclear fuel and purchased power. Changes in KCP&L’s fuel mix due to electricity demand, plant availability, transportation issues, fuel prices, fuel availability and other factors can also adversely affect KCP&L’s fuel and purchased power costs.

KCP&L does not hedge its entire exposure from fuel and transportation price volatility. Forward prices for coal have increased, principally due to international demand, and management expects prices will continue to increase. Management also expects its cost of nuclear fuel to increase significantly from 2009 through 2018. Consequently, its results of operations and financial position may be materially impacted by changes in these prices until increased costs are recovered in Missouri retail rates.

Wholesale electricity prices affect costs and revenues, creating earnings volatility.

KCP&L's level of wholesale sales depends on the wholesale market price, transmission availability and the availability of KCP&L’s generation for wholesale sales, among other factors. A substantial portion of KCP&L’s wholesale sales are made in the spot market, and thus KCP&L has immediate exposure to wholesale price changes. KCP&L is also exposed to price risk because at times it purchases power to meet its customers’ needs. The cost of these purchases may be affected by the timing of customer demand and/or unavailability of KCP&L’s lower-priced generating units. Wholesale power prices can be volatile and generally increase in times of high regional demand and high natural gas prices. While an allocated portion of wholesale purchases and sales are reflected in KCP&L’s Kansas ECA, KCP&L’s Missouri rates are set on an estimated amount of wholesale sales and purchases. KCP&L will not recover any shortfall in non-firm wholesale electric sales margin, but any amount above the level reflected in Missouri retail rates will be returned to retail customers in a future rate case. Declines in wholesale market price or availability of generation or transmission constraints in the wholesale markets could reduce KCP&L's wholesale sales and adversely affect KCP&L’s results of operations and financial position.

Strategic Energy operates in competitive retail electricity markets, competing against the host utilities and other retail suppliers. Wholesale electricity costs, which account for a significant portion of its operating expenses, can materially affect Strategic Energy’s ability to attract and retain retail electricity customers. There is also a regulatory lag that slows the adjustment of host public utility rates in response to changes in wholesale prices. This lag can negatively affect Strategic Energy’s ability to compete in a rising wholesale price environment. Strategic Energy manages wholesale electricity risk by establishing risk limits and entering into contracts to offset some of its positions to balance energy supply and demand; however, Strategic Energy does not exactly match hedges to its aggregate exposure. This imbalance position leaves Strategic Energy subject to the effects of electricity price volatility. Consequently, its results of operations and financial position may be materially impacted by changes in the wholesale price of electricity.

Operations risks may adversely affect the Company’s business and financial results.

The operation of KCP&L’s electric generation, transmission and distribution systems involves many risks, including breakdown or failure of equipment or processes; operating limitations that may be imposed by equipment conditions, environmental or other regulatory requirements; fuel supply or fuel transportation reductions or interruptions; transmission scheduling; and catastrophic events such as fires, explosions, severe weather or other similar occurrences. With the exception of Hawthorn No. 5, which was substantially rebuilt in 2001, all of KCP&L’s coal-fired generating units and its nuclear generating unit were constructed prior to 1986. The age of these generating units increases the risk of unplanned outages and higher maintenance expense. KCP&L has implemented training, preventive maintenance and other programs, but there is no assurance that these programs will prevent or minimize future breakdowns or failures of KCP&L’s facilities.

KCP&L currently has general liability and property insurance in place to cover its facilities in amounts that management considers appropriate. Such policies are subject to certain limits and deductibles and do not include business interruption coverage. Insurance coverage may not be available in the future at current costs or on commercially reasonable terms, and the insurance proceeds received for any loss of, or any damage to, any of KCP&L’s facilities may not be sufficient to restore the loss or damage.

These and other operating events may reduce KCP&L’s revenues, increase its costs, or both, and may materially affect KCP&L’s results of operations, financial position and cash flows.

The cost and schedule of KCP&L’s construction projects may materially change.

KCP&L’s Comprehensive Energy Plan includes the construction of an estimated 850 MW coal-fired generating plant and environmental retrofits at two existing coal-fired units. There are risks that actual costs may exceed budget estimates, delays may occur in obtaining permits and materials, suppliers and contractors may not perform as required under their contracts, there may be inadequate availability or increased cost of qualified craft labor, the scope and timing of projects may change, and other events beyond KCP&L’s control may occur that may materially affect the schedule, budget and performance of these projects.

The construction projects contemplated in the Comprehensive Energy Plan rely upon the supply of a significant percentage of materials from overseas sources. This global procurement subjects the delivery of procured material to issues beyond what would be expected if such material were supplied from sources within the United States. These risks include, but are not limited to, delays in clearing customs, ocean transportation, currency exchange rates and potential civil unrest in sourcing countries, among others.

The demand for environmental projects, similar to those in the Comprehensive Energy Plan, has increased substantially with many utilities in the United States starting similar projects to address changing environmental regulations. This demand has constrained labor and material resources for such projects, and there is a risk that such constraints may increase.

These and other risks could materially increase the estimated costs of these construction projects, delay the in-service dates of these projects, adversely affect the performance of the projects, and/or require KCP&L to purchase additional electricity to supply its retail customers until the projects are completed. KCP&L is not permitted to start recovering the costs of these projects until they are completed and put into service. Thus, these risks may materially affect KCP&L’s results of operations, financial position and cash flows.

The anticipated acquisition of Aquila will increase Great Plains Energy’s ownership of Iatan Nos. 1 and 2. Aquila owns 18% of both Iatan generating units. Great Plains Energy’s post-acquisition ownership percentages of the Iatan generating units would be 88% of Iatan No. 1 and 72.71% of Iatan No. 2, which would expose the Company to greater risks associated with the ongoing Iatan construction projects.

Failure of one or more generation plant co-owners to pay their share of construction, operations and maintenance costs could increase KCP&L’s costs and capital requirements.

KCP&L owns 47% of Wolf Creek, 50% of LaCygne Station, 70% of Iatan No. 1 and 55% of Iatan No. 2. The remaining portions of these facilities are owned by other utilities that are contractually obligated to pay their proportionate share of capital and other costs and, in the case of Iatan No. 2, construction costs.

While the ownership agreements provide that a defaulting co-owner’s share of the electricity generated can be sold by the non-defaulting co-owners, there is no assurance that the revenues received will recover the increased costs borne by the non-defaulting co-owners. The Iatan No. 2 co-owners have provided financial assurances related to their respective construction cost obligations, but there is a risk that such assurances may not be sufficient in the event of a co-owner default. During the construction period, the Iatan No. 2 agreements provide for re-allocations of part or all of a defaulting co-owner’s share of the facility to the non-defaulting owners, which would increase the capital requirements, operations and maintenance costs of the non-defaulting owners. Occurrence of these or other events could materially increase KCP&L’s costs and capital requirements.

An aging workforce and increasing demand for skilled craft labor poses operational and planning challenges to KCP&L.

Through 2011, approximately 22% of KCP&L’s current employees will be eligible to retire with full pension benefits. This is a general industry issue, which has increased the demand for and cost of skilled craft labor for both companies and contractors. KCP&L uses contractors for a substantial portion of its construction and maintenance work. Failure to hire and adequately train replacement employees, including the transfer of significant internal historical knowledge and expertise to the new employees, or the future availability and cost of contract labor may adversely affect KCP&L’s ability to manage and operate its business.

Substantially all of KCP&L’s employees participate in defined benefit and post-retirement plans. If KCP&L employees retire when they become eligible for retirement through 2011, or if KCP&L’s plans experience adverse market returns on investments, or if interest rates materially fall, KCP&L’s contributions to the plans could rise substantially over historical levels. In addition, assumptions related to future costs, returns on investments, interest rates and other actuarial assumptions, including projected retirements, have a significant impact on KCP&L’s results of operations, financial position and cash flows.

The Pension Protection Act of 2006 alters the manner in which pension plan assets and liabilities are valued for purposes of calculating required pension contributions and changes the timing of required contributions to underfunded plans. The funding rules, which became effective in 2008, could significantly affect the Company’s funding requirements. In addition, the Financial Accounting Standards Board (FASB) has a project to reconsider the accounting for pensions and other post-retirement benefits. This project may result in accelerated expense.

KCP&L is exposed to risks associated with the ownership and operation of a nuclear generating unit, which could result in an adverse effect on the Company’s and KCP&L’s business and financial results.

KCP&L owns 47% (545 MW) of Wolf Creek. The NRC has broad authority under federal law to impose licensing and safety-related requirements for the operation of nuclear generation facilities, including Wolf Creek. In the event of non-compliance, the NRC has the authority to impose fines, shut down the facilities, or both, depending upon its assessment of the severity of the situation, until compliance is achieved. Any revised safety requirements promulgated by the NRC could result in substantial capital expenditures at Wolf Creek.

Wolf Creek has the lowest fuel cost per MWh of any of KCP&L's generating units. Although not expected, an extended outage of Wolf Creek, whether resulting from NRC action, an incident at the plant or otherwise, could have a substantial adverse effect on KCP&L's results of operations and financial position in the event KCP&L incurs higher replacement power and other costs that are not recovered through rates. If a long-term outage occurred, the state regulatory commissions could reduce rates by excluding the Wolf Creek investment from rate base.

Ownership and operation of a nuclear generating unit exposes KCP&L to risks regarding decommissioning costs at the end of the unit's life. KCP&L contributes annually to a tax-qualified trust fund to be used to decommission Wolf Creek. The funding level assumes a projected level of return on trust assets. If the actual return on trust assets is below the anticipated level, KCP&L could be responsible for the balance of funds required; however, should this happen, management believes a rate increase would be allowed ensuring full recovery of decommissioning costs over the remaining life of the unit.

KCP&L is also exposed to other risks associated with the ownership and operation of a nuclear generating unit, including, but not limited to, potential liability associated with the potential harmful effects on the environment and human health resulting from the operation of a nuclear generating unit and the storage, handling and disposal of radioactive materials, and to potential retrospective assessments and losses in excess of insurance coverage.

KCP&L’s participation in the SPP could increase costs, reduce revenues, and reduce KCP&L’s control over its transmission assets.

Functional control of the KCP&L transmission systems was transferred to the SPP during the third quarter of 2006. KCP&L may be required to incur expenses or expand its transmission systems, which it would seek recovery for through rate increases, according to decisions made by the SPP rather than according to its internal planning process.

The sale of power in the SPP Energy Imbalance Service (EIS) Market may result in unanticipated transmission congestion and other settlement charges. There is also uncertainty regarding the impact of ongoing RTO developments at FERC. KCP&L is unable to predict the impact these issues could have on its results of operations and financial position.

Strategic Energy operates in competitive retail electricity markets, which could impact financial results.

Strategic Energy has several competitors that operate in most or all of the same states in which it serves customers. It also faces competition in certain markets from regional suppliers and deregulated utility affiliates formed by holding companies affiliated with regulated utilities to provide retail load in their home market territories. Strategic Energy's competitors vary in size from small companies to large corporations, some of which have significantly greater financial, marketing and procurement resources than Strategic Energy. Additionally, Strategic Energy must compete with the host utility in order to convince customers to switch from the host utility to Strategic Energy as their electric service provider. Strategic Energy’s results of operations and financial position are impacted by the success Strategic Energy has in attracting and retaining customers in these markets.

Strategic Energy supplier and customer credit risk may adversely affect financial results.

Strategic Energy has credit risk exposure in the form of the loss that it could incur if a counterparty failed to perform under its contractual obligations. Strategic Energy has two types of counterparty risk – supplier risk and customer risk. Strategic Energy enters into forward contracts with multiple suppliers. In the event of supplier non-delivery or default, Strategic Energy’s results of operations may 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 may also be affected, in a given period, if it were required to make a payment upon termination of a supplier contract to the extent the contracted price with the supplier exceeded the market value of the contract at the time of termination. Strategic Energy has also experienced an increase in customer bad debt expense, primarily related to its small business customer segment. Strategic Energy has taken steps to address this exposure, but there can be no assurance that bad debt expense will be reduced. Failure of suppliers or customers to perform their obligations may adversely affect results of operations.

The outcome of legal proceedings cannot be predicted. An adverse finding could have a material adverse effect on Great Plains Energy’s and KCP&L’s financial condition.

Great Plains Energy and KCP&L are party to various material litigation and regulatory matters arising out of their business operations. The ultimate outcome of these matters cannot presently be determined, nor, in many cases, can the liability that could potentially result from a negative outcome in each case presently be reasonably estimated. The liability that Great Plains Energy and KCP&L may ultimately incur with respect to any of these cases in the event of a negative outcome may be in excess

of amounts currently reserved and insured against with respect to such matters and, as a result, these matters may have a material adverse effect on the consolidated financial position of Great Plains Energy, KCP&L or both. See Notes 2, 6, 13 and 15 to the consolidated financial statements for further information regarding legal proceedings.

ITEM 1B. UNRESOLVED STAFF COMMENTS

None.

ITEM 2. PROPERTIES

KCP&L Generation Resources

realized retail gross margin per delivered MWh, which are settled at contracted prices upon delivery. Because certain of Strategic Energy’s derivative supply contracts do not meet the requirements for cash flow hedge designation and certain other derivative supply contracts designated as cash flow hedges have a level of ineffectiveness, Strategic Energy recognizes unrealized gains or losses during the term of these derivative supply contracts prior to delivery while the associated customer sales contracts are not subject to fair value accounting treatment and therefore do not result in unrecognized gains or losses being recorded during the term prior to delivery. By removing these non-cash timing differences that occur during the term of the contracts prior to delivery and impact only one side of the overall buy-sell transaction, management believes this non-GAAP financial measure provides investors with a measure of average retail gross margin per MWh that more accurately reflects Strategic Energy’s realized margin on delivered MWhs.

Strategic Energy Purchased Power

Purchased power is the cost component of Strategic Energy’s average retail gross margin. The cost of supplying electric service to retail customers can vary widely by geographic market. This variability can be affected by many factors, including, but not limited to, geographic differences in the cost per MWh of purchased power, renewable energy requirements and capacity charges due to regional purchased power availability, requirements of other electricity providers and differences in transmission charges. Strategic Energy purchases electricity from power suppliers based on forecasted peak demand for its retail customers. Actual customer demand does not always equate to the volume purchased based on forecasted peak demand. Consequently, Strategic Energy makes short-term power purchases in the wholesale market when necessary to meet actual customer requirements. Strategic Energy also sells any excess retail electricity supply over actual customer requirements back into the wholesale market. These sales occur on many contracts, are usually short-term power sales (day ahead) and typically settle within the reporting period. Excess retail electricity supply sales also include long-term and short-term forward physical sales to wholesale counterparties, which are accounted for on a mark-to-market basis. Strategic Energy typically executes these transactions to manage basis and credit risks. The proceeds from excess retail supply sales are recorded as a reduction of purchased power, as they do not represent the quantity of electricity consumed by Strategic Energy’s customers. The amount of excess retail supply sales that reduced purchased power was $76.4 million, $80.0 million and $158.5 million in 2007, 2006 and 2005, respectively. Additionally, in certain markets, Strategic Energy is required to sell to and purchase power from a RTO/ISO rather than directly transact with suppliers and end use customers. The sale and purchase activity related to these certain RTO/ISO markets is reflected on a net basis in Strategic Energy’s purchased power.

Strategic Energy utilizes derivative instruments, including forward physical delivery contracts, in the procurement of electricity. Purchased power is also impacted by the net change in fair value related to non-hedging energy contracts and from cash flow hedge ineffectiveness. Net changes in fair value reduced purchased power expenses by $52.8 million in 2007, increased expenses by $56.7 million in 2006 and reduced expenses by $2.5 million in 2005. These changes are a result of volatility in the forward market prices for power. Also in 2006, Strategic Energy prospectively began designating more derivative instruments as cash flow hedges that historically were accounted for by the NPNS election. See Note 22 to the consolidated financial statements for more information.

Strategic Energy Other Operating Expenses (including selling, general and administrative – non-regulated and general taxes)

Strategic Energy’s other operating expenses increased $11.0 million in 2007 compared to 2006 due to a $10.0 million increase in bad debt expense primarily attributable to the small business segment, which has a higher default rate than Strategic Energy’s larger customers, combined with penalty expense related to the purchased power adjustment for under-reported deliveries partially offset by lower employee-related expenses. Strategic Energy’s other operating expenses increased $8.1 million in 2006 compared to 2005 primarily due to a $4.5 million increase for incentive compensation and a

$4.3 million increase in bad debt expense due to the charge off of smaller customers, which have a higher default rate than Strategic Energy’s larger customers.

During 2006, Strategic Energy significantly expanded its small customer business with approximately 25% of new sales in 2006 to small customers. In 2007, Strategic Energy implemented a stronger credit screening policy and shorter permissible contract lengths in the small business segment and as a result, only 3% of new sales in 2007 were attributable to small customers.

Strategic Energy Income Taxes

Strategic Energy had tax expense of $25.8 million in 2007 compared to a tax benefit of $12.7 million in 2006 due to pre-tax income in 2007 compared to a pre-tax loss in 2006. The deferred tax expense related to the net changes in fair value related to non-hedging energy contracts and from hedge ineffectiveness was $21.5 million in 2007 compared to a tax benefit of $23.3 million for the same period in 2006.

Strategic Energy had a tax benefit of $12.7 million in 2006 compared to tax expense of $16.6 million in 2005 due to a pre-tax loss in 2006 compared to pre-tax income in 2005. The change was driven by a $23.3 million deferred tax benefit in 2006 related to the net changes in fair value related to non-hedging energy contracts and from cash flow hedge ineffectiveness.

GREAT PLAINS ENERGY AND CONSOLIDATED KCP&L SIGNIFICANT BALANCE SHEET CHANGES

(December 31, 2007 compared to December 31, 2006)

Great Plains Energy’s and consolidated KCP&L’s receivables increased $88.0 million and $62.1 million, respectively. KCP&L’s receivables increased $22.4 million due to additional receivables from joint owners of Comprehensive Energy Plan projects, $10.0 million mostly attributable to new retail rates effective January 1, 2007, $11.0 million due to an increase in wholesale sales and a $10.5 million increase in intercompany receivables from Great Plains Energy. Strategic Energy’s receivables increased $36.3 million primarily due to increased MWh deliveries at higher prices partially offset by a higher allowance for doubtful accounts primarily due to aging of the small business customer segment.

·	Great Plains Energy’s and consolidated KCP&L’s fuel inventories increased $8.1 million primarily due to increased coal inventory due to plant outages as well as increased coal and coal transportation costs.

·	Great Plains Energy’s deferred income taxes – current assets decreased $19.8 million primarily due to temporary differences resulting from changes in the fair value of Strategic Energy’s energy-related derivative instruments of $24.1 million.

Great Plains Energy’s net liability for derivative instruments, including current and deferred assets and liabilities, decreased $113.0 million. The fair value of Strategic Energy’s energy-related derivative instruments increased $154.2 million, which decreased the net liability. This decrease to the net liability was partially offset by a $16.4 million increase in the net liability for the fair value of an FSS entered into in 2007 by Great Plains Energy and an increase at consolidated KCP&L. Consolidated KCP&L’s net liability for derivative instruments, including current assets and current liabilities, increased $24.8 million primarily related to the fair value of a Treasury Lock (T-Lock) entered into in 2007.

Great Plains Energy’s and consolidated KCP&L’s construction work in progress increased $315.7 million primarily due to a $305.5 million increase related to KCP&L’s Comprehensive Energy Plan, including $227.4 million related to the construction of Iatan No. 2 and $78.1 million for environmental upgrades.

·	Great Plains Energy’s other deferred charges and other assets increased $21.3 million primarily due to deferred costs associated with Great Plains Energy’s anticipated acquisition of Aquila.

·	Great Plains Energy’s notes payable increased $42.0 million due to borrowings on its short-term credit facility used to settle a forward sale agreement for $12.3 million with the remainder due to the timing of cash payments.

·	Great Plains Energy’s and consolidated KCP&L’s commercial paper increased $209.4 million primarily to support expenditures related to the Comprehensive Energy Plan.

Great Plains Energy’s and consolidated KCP&L’s current maturities of long-term debt decreased $389.4 million and $225.5 million, respectively, due to Great Plains Energy’s settlement of the FELINE PRIDES Senior Notes by issuing $163.6 million of common stock and KCP&L’s repayment of $225.0 million of 6.00% Senior Notes at maturity.

·	Great Plains Energy’s and consolidated KCP&L’s accounts payable increased $83.8 million and $61.6 million, respectively, primarily due to a $67.1 million increase in payables related to the Comprehensive Energy Plan.

·	Great Plains Energy’s and consolidated KCP&L’s regulatory liabilities increased $29.4 million primarily due to KCP&L’s regulatory treatment of SO2 emission allowance sales totaling $24.0 million in 2007.

·	Great Plains Energy’s and consolidated KCP&L’s other – deferred credits and other liabilities increased $28.3 million and $20.5 million, respectively, primarily due to the adoption of Financial Accounting Standards Board Interpretation (FIN) No. 48, “Accounting for Uncertainty in Income Taxes.”

·	Consolidated KCP&L’s common stock increased $94.0 million due to an equity contribution from Great Plains Energy.

Great Plains Energy’s accumulated other comprehensive loss decreased $44.6 million primarily due to changes in the fair value of Strategic Energy’s energy related derivative instruments due to volatility in the forward market prices for power partially offset by activity at consolidated KCP&L. Consolidated KCP&L’s accumulated other comprehensive income at December 31, 2006, decreased $14.2 million resulting in accumulated other comprehensive loss at December 31, 2007, due to the fair value of a T-Lock entered into during 2007.

Great Plains Energy’s long-term debt increased $495.4 million due to Great Plains Energy’s issuance of $100.0 million of 6.875% Senior Notes and an increase at consolidated KCP&L. Consolidated KCP&L’s long-term debt increased $396.2 million reflecting the issuance of $250.0 million of 5.85% Senior Notes and the issuance of $146.5 million of EIRR Bonds Series 2007A and 2007B. The proceeds from the issuance of $146.5 million EIRR Bonds Series 2007A and 2007B were used for the repayment of $146.5 million of Series 1998A, B and D EIRR bonds in 2007 that were classified as current maturities at December 31, 2006.

CAPITAL REQUIREMENTS AND LIQUIDITY

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

Great Plains Energy’s capital requirements are principally comprised of KCP&L’s utility construction and other capital expenditures, debt maturities and credit support provided to Strategic Energy. These items as well as additional cash and capital requirements for the companies are discussed below.

Great Plains Energy's liquid resources at December 31, 2007, consisted of $67.1 million of cash and cash equivalents on hand, including $3.2 million at consolidated KCP&L, and $623.8 million of unused bank lines of credit. The unused lines consisted of $222.3 million from KCP&L's revolving credit facility, $142.1 million from Strategic Energy’s revolving credit facility and receivables facility and $259.4 million from Great Plains Energy's revolving credit facility. See Note 18 to the consolidated financial statements for more information on these agreements.

KCP&L currently expects to fund its Comprehensive Energy Plan from a combination of internal and external sources including, but not limited to, contributions from rate increases, capital contributions to KCP&L from Great Plains Energy's security issuances and new short and long-term debt financing. KCP&L’s capital requirements are expected to be substantial over the next several years as it funds the Comprehensive Energy Plan.

KCP&L expects to meet day-to-day cash flow requirements including interest payments, construction requirements (excluding its Comprehensive Energy Plan), dividends to Great Plains Energy and pension benefit plan funding requirements, discussed below, with internally generated funds. KCP&L may 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 environmental regulations and the availability of generating units. The funds Great Plains Energy and consolidated KCP&L need to retire maturing debt will be provided from operations, the issuance of long and short-term debt and/or the issuance of equity or equity-linked instruments. In addition, the Company may issue debt, equity and/or equity-linked instruments to finance growth or take advantage of new opportunities.

Strategic Energy expects to meet day-to-day cash flow requirements including interest payments, credit support fees and capital expenditures with internally generated funds. Strategic Energy may 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, seasonal working capital requirements, commodity-price volatility and the effects of counterparty non-performance.

In February 2007, Great Plains Energy entered into an agreement to acquire Aquila. If the proposed acquisition of Aquila occurs, the future capital requirements of Aquila will further increase Great Plains Energy’s capital requirements. See Note 2 to the consolidated financial statements for additional information.

Cash Flows from Operating Activities

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 in 2007 compared to 2006 reflects an increase in consolidated KCP&L’s cash flows from operating activities partially offset by a $15.5 million increase in deferred merger costs at Great Plains Energy and a lower retail margin per MWh without the impact of unrealized fair value gains and losses at Strategic Energy. Consolidated KCP&L’s increase in cash flows from operating activities in 2007 compared to 2006 reflects KCP&L’s higher retail and wholesale revenues more than offsetting higher operating expenses combined with $24.0 million in proceeds from sales of SO2 emission allowances in 2007. Other changes in working capital detailed in Note 3 to the consolidated financial statements also impacted operating cash flows.

The changes in cash flows from operating activities for Great Plains Energy and consolidated KCP&L in 2006 compared to 2005 reflect KCP&L’s sales of SO2 emission allowances during 2005 resulting in proceeds of $61.0 million and KCP&L’s $12.0 million cash settlement of T-Locks in 2005. The timing of the Wolf Creek outage affects the deferred refueling outage costs, deferred income taxes and amortization of nuclear fuel. Other changes in working capital detailed in Note 3 to the consolidated financial statements also impacted operating cash flows. The individual components of working capital vary with normal business cycles and operations.

Cash Flows from Investing Activities

Great Plains Energy’s and consolidated KCP&L’s cash used for investing activities varies with the timing of utility capital expenditures and purchases of investments and nonutility property. Investing activities are offset by the proceeds from the sale of properties and insurance recoveries.

Great Plains Energy’s and consolidated KCP&L’s utility capital expenditures increased $35.6 million in 2007 compared to 2006 due to KCP&L’s cash utility expenditures, including $27.0 million related to KCP&L’s Comprehensive Energy Plan.

Great Plains Energy’s and consolidated KCP&L’s utility capital expenditures increased $148.6 million and $143.8 million, respectively, in 2006 compared to 2005 due to KCP&L’s cash utility capital expenditures, including $234.3 million related to KCP&L’s Comprehensive Energy Plan, $10.2 million to upgrade a transmission line, $13.8 million to purchase automated meter reading equipment and $23.4 million to purchase rail cars partially offset by 2005 investing activities including $154.0 million to purchase combustion turbines and $25.3 million related to wind generation and environmental upgrades. Additionally in 2006, KCP&L received $15.8 million of litigation recoveries related to Hawthorn No. 5, compared to $10.0 million of insurance recoveries received in 2005.

Cash Flows from Financing Activities

Great Plains Energy’s cash flows from financing activities in 2007 reflect consolidated KCP&L’s repayment and issuance of Senior Notes; Great Plains Energy’s issuance, at a discount, of $100.0 million of 6.875% Senior Notes that mature in 2017, an increase in short-term borrowings and the $12.3 million settlement of an equity forward contract at Great Plains Energy. Consolidated KCP&L’s cash flows from financing activities in 2007 reflect KCP&L’s repayment of its $225.0 million of 6.00% Senior Notes at maturity, issuance, at a discount, of $250.0 million of 5.85% Senior Notes that mature in 2017, and an increase in short-term borrowings. Consolidated KCP&L’s short-term borrowings have increased primarily to support expenditures related to the Comprehensive Energy Plan.

Great Plains Energy’s cash flows from financing activities in 2006 reflect Great Plains Energy’s proceeds of $144.3 million from the issuance of 5.2 million shares of common stock at $27.50 per share in May 2006. Fees related to this issuance were $5.2 million. Great Plains Energy used the proceeds to make a $134.6 million equity contribution to KCP&L. Great Plains Energy and consolidated KCP&L’s net cash from financing activities in 2006 compared to 2005 increased due to an increase in KCP&L’s short-term borrowings primarily to support expenditures related to the Comprehensive Energy Plan. Consolidated KCP&L’s net cash from financing activities also increased due to a $23.7 million decrease in dividends paid to Great Plains Energy.

Great Plains Energy’s and consolidated KCP&L’s cash flows from financing activities in 2005 reflect KCP&L’s issuance of $250.0 million of 6.05% unsecured senior notes, $35.9 million of secured EIRR bonds Series 2005 and $50.0 million of unsecured EIRR bonds Series 2005. The proceeds from these issuances were used to repay $250.0 million of 7.125% unsecured senior notes, $35.9 million of secured 1994 Series EIRR bonds and $50.0 million of Series C EIRR bonds.

Financing Authorization

Under stipulations with the MPSC and KCC, Great Plains Energy and KCP&L maintain common equity at not less than 30% and 35%, respectively, of total capitalization. KCP&L’s long-term financing activities are subject to the authorization of the MPSC. In 2005, the MPSC authorized KCP&L to issue up to $635.0 million of long-term debt and to enter into interest rate hedging instruments in connection with such debt through December 31, 2009. KCP&L utilized $500.0 million of this amount with the issuance of its 6.05% unsecured senior notes maturing in 2035 and its 5.85% unsecured senior notes maturing in 2017, leaving $135.0 million of authorization remaining. In February 2008, KCP&L received authorization from the MPSC to increase the $635.0 million authorization to $1.4 billion through December 31, 2009.

In December 2007, FERC authorized KCP&L to have outstanding at any time up to a total of $800.0 million in short-term debt instruments through December 2009. The authorization is subject to four restrictions: (i) proceeds of debt backed by utility assets must be used for utility purposes; (ii) if any utility assets that secure authorized debt are divested or spun off, the debt must follow the assets and also be divested or spun off; (iii) if any proceeds of the authorized debt are used for non-utility purposes, the debt must follow the non-utility assets (specifically, if the non-utility assets are divested or spun off, then a proportionate share of the debt must follow the divested or spun off non-utility assets); and (iv) if utility assets financed by the authorized short-term debt are divested or spun off to another entity, a proportionate share of the debt must also be divested or spun off.

Significant Financing Activities

Great Plains Energy

Great Plains Energy has an effective shelf registration statement for the sale of unspecified amounts of securities that was filed and became effective in May 2006. During 2007, Great Plains Energy issued $100.0 million of 6.875% unsecured Senior Notes. Great Plains Energy used the proceeds to make a $94.0 million equity contribution to KCP&L.

In February 2007, Great Plains Energy exercised its rights to redeem its $163.6 million FELINE PRIDES senior notes in full satisfaction of each holder’s obligation to purchase the Company’s common stock under the purchase contracts and issued 5.2 million shares of common stock to the holders of the FELINE PRIDES purchase contracts.

In 2006, Great Plains Energy also entered into a forward sale agreement with Merrill Lynch Financial Markets, Inc. (forward purchaser) for 1.8 million shares of Great Plains Energy common stock. In April 2007, Great Plains Energy elected to terminate the forward sale agreement and settle it in cash. Based on the difference between Great Plains Energy’s average stock price of $32.60 over the period used to determine the settlement and the then-applicable forward price of $25.58, Great Plains Energy paid $12.3 million to Merrill Lynch Financial Markets, Inc.

In 2007, Great Plains Energy entered into three FSS, with a total notional amount of $250.0 million, to hedge against interest rate fluctuations on future issuances of long-term debt. The long-term debt issuance is contingent on the consummation of the acquisition of Aquila. The FSS was designed to effectively remove most of the interest rate and to the extent that swap spreads correlate with credit spreads, some degree of credit spread uncertainty with respect to the debt to be issued, thereby enabling Great Plains Energy to predict with greater assurance its future interest costs on that debt.

KCP&L

KCP&L has an effective shelf registration statement providing for the sale of up to $900.0 million of investment grade notes and general mortgage bonds that became effective in January 2008. This is intended to preserve KCP&L’s flexibility to access the debt capital markets.

In 2007, KCP&L’s $146.5 million of unsecured EIRR Bonds Series 2007A and 2007B were issued. The bonds mature on September 1, 2035, and will bear interest as determined through 35-day auction periods. The EIRR Bonds Series 2007A and 2007B are covered by a municipal bond insurance policy issued by Financial Guaranty Insurance Company (FGIC). The insurance agreement between KCP&L and FGIC provides for reimbursement by KCP&L for any amounts that FGIC pays under the municipal bond insurance policy. The insurance policy is in effect for the term of the bonds. The policy also restricts the amount of secured debt KCP&L may issue. In the event KCP&L issues debt secured by liens not permitted by the agreement, KCP&L is required to issue and deliver to FGIC first mortgage bonds or similar securities equal in principal amount to the principal amount of the EIRR Bonds Series 2007A and 2007B then outstanding. The proceeds from the issuance of $146.5 million EIRR Bonds Series 2007A and 2007B were used for the repayment of $146.5 million of Series 1998 A, B and D EIRR bonds.

In 2007, KCP&L issued $250.0 million of 5.85% unsecured Senior Notes. The proceeds from this issuance were used to repay a short-term intercompany loan from Great Plains Energy. KCP&L used the proceeds from the intercompany loan to repay its $225.0 million unsecured 6.00% Senior Notes at maturity.

In 2007, Great Plains Energy entered into three T-Locks with a notional amount of $350.0 million, to hedge against interest rate fluctuations on the U.S. Treasury rate component on future issuances of long-term debt. Following a change in financing plans, Great Plains Energy assigned the T-Locks to KCP&L. The T-Locks will settle simultaneously with the issuance of future long-term fixed rate debt issued by KCP&L. The T-Locks remove the uncertainty with respect to the U.S. Treasury rate component of the debt to be issued, thereby enabling KCP&L to predict with greater assurance its future interest costs on that debt.

Debt Agreements

See Note 18 to the consolidated financial statements for discussion of Great Plains Energy’s, KCP&L’s and Strategic Energy’s revolving credit facilities.

Projected Utility Capital Expenditures

KCP&L’s cash utility capital expenditures, excluding allowance for funds used to finance construction, were $511.5 million, $475.9 million and $332.1 million in 2007, 2006 and 2005, respectively. Utility capital expenditures projected for the next three years, excluding allowance for funds used during construction, are detailed in the following table.


	2007		2006		2005
Great Plains Energy	(millions)
Compensation expense	$	6.4	$	3.9	$	2.8
Income tax benefits		2.1		1.2		1.1
KCP&L
Compensation expense		4.3		2.4		1.7
Income tax benefits		1.4		0.8		0.6

Stock Options Granted 2001 – 2003

Stock options were granted under the plan at market value of the shares on the grant date. The options vested three years after the grant date and expire in ten years if not exercised. The fair value for the stock options granted in 2001 – 2003 was estimated at the date of grant using the Black-Scholes option-pricing model. Compensation expense and accrued dividends related to stock options were recognized over the stated vesting period. Exercise prices range from $24.90 to $27.73 and all stock options are fully vested and have a remaining weighted average contractual term of 3.9 years at December 31, 2007. There was no stock option activity in 2007. At December 31, 2007, there were 109,472 outstanding and exercisable stock options at a weighted-average exercise price of $25.52. At December 31, 2007, the aggregate intrinsic value of the outstanding options was $0.4 million.

Performance Shares

The payment of performance shares is contingent upon achievement of specific performance goals over a stated period of time as approved by the Compensation and Development Committee of Great Plains Energy’s Board of Directors. The number of performance shares ultimately paid can vary from the number of shares initially granted depending on Great Plains Energy’s performance, based on internal and external measures, over stated performance periods. Performance shares have a value equal to the market value of the shares on the grant date with accruing dividends. Compensation expense, calculated by multiplying shares by the related grant-date fair value related to performance shares, is recognized over the stated period.

Performance share activity for 2007 is summarized in the following table. Performance adjustment represents the number of shares of common stock related to performance shares ultimately issued that can vary from the number of performance shares initially granted depending on Great Plains Energy’s performance, based on internal and external measures, over stated performance periods.


				Grant Date
Performance	Shares			Fair Value*
Beginning balance		254,771		$	29.56
Performance adjustment		(22,070	)
Granted		123,542			32.00
Issued		(42,169	)		30.27
Forfeited		(4,385	)		32.35
Ending balance		309,689			30.34
* weighted-average

At December 31, 2007, the remaining weighted-average contractual term was 1.1 years. The weighted-average grant-date fair value of shares granted was $32.00, $28.20 and $30.34 in 2007, 2006 and 2005, respectively. At December 31, 2007, there was $3.3 million of total unrecognized compensation expense, net of forfeiture rates, related to performance shares granted under the Long-Term Incentive Plan, which will be recognized over the remaining weighted-average contractual term. The total fair value of shares of common stock related to performance shares issued was $1.3 million during 2007 and $0.3 million during 2006. No shares of common stock were issued related to performance shares during 2005.

Restricted Stock

Restricted stock cannot be sold or otherwise transferred by the recipient prior to vesting and has a value equal to the fair market value of the shares on the issue date. Restricted stock shares vest over a stated period of time with accruing reinvested dividends. Compensation expense, calculated by multiplying shares by the related grant-date fair value related to restricted stock, is recognized over the stated vesting period. Restricted stock activity for 2007 is summarized in the following table.


Nonvested				Grant Date
Restricted stock	Shares			Fair Value*
Beginning balance		140,603		$	29.75
Granted and issued		348,527			31.93
Vested		(36,406	)		30.34
Forfeited		(5,842	)		31.40
Ending balance		446,882			31.38
* weighted-average

At December 31, 2007, the remaining weighted-average contractual term was 1.4 years. The weighted-average grant-date fair value of shares granted was $31.93, $28.22 and $30.47 during 2007, 2006 and 2005, respectively. At December 31, 2007, there was $6.9 million of total unrecognized compensation expense, net of forfeiture rates, related to nonvested restricted stock granted under the Long-Term Incentive Plan, which will be recognized over the remaining weighted-average contractual term. The total fair value of shares vested was $1.1 million, $0.8 million and $0.8 million in 2007, 2006 and 2005, respectively.

100

10.

TAXES

Components of income tax expense (benefit) are detailed in the following tables.


Great Plains Energy	2007			2006			2005
Current income taxes	(millions)
Federal	$	44.3		$	59.2		$	64.3
State		6.5			0.9			1.3
Total		50.8			60.1			65.6
Deferred income taxes
Federal		22.5			(7.2	)		(4.2	)
State		1.3			(3.8	)		(19.0	)
Total		23.8			(11.0	)		(23.2	)
Noncurrent income taxes (a)
Federal		(0.7	)		-			-
State		(0.9	)		-			-
Total		(1.6	)		-			-
Investment tax credit amortization		(1.5	)		(1.2	)		(3.9	)
Total income tax expense		71.5			47.9			38.5
Less: taxes on discontinued operations
Current tax (benefit) expense		-			-			(1.0	)
Income taxes on continuing operations	$	71.5		$	47.9		$	39.5


Consolidated KCP&L	2007			2006			2005
Current income taxes	(millions)
Federal	$	38.7		$	49.3		$	79.9
State		4.4			4.8			5.6
Total		43.1			54.1			85.5
Deferred income taxes
Federal		17.7			15.6			(14.3	)
State		2.0			1.8			(19.3	)
Total		19.7			17.4			(33.6	)
Noncurrent income taxes (a)
Federal		(1.7	)		-			-
State		(0.3	)		-			-
Total		(2.0	)		-			-
Investment tax credit amortization		(1.5	)		(1.2	)		(3.9	)
Total	$	59.3		$	70.3		$	48.0
(a) For 2007, this includes amounts recognized under FIN No. 48. Tax contingency reserves
for 2006 and 2005 are included in current income tax expense.

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Income Tax Expense (Benefit) and Effective Income Tax Rates

Income tax expense and the effective income tax rates reflected in continuing operations in the financial statements and the reasons for their differences from the statutory federal rates are detailed in the following tables.


	Income Tax Expense									Income Tax Rate
Great Plains Energy	2007			2006			2005			2007			2006			2005
	(millions)
Federal statutory income tax	$	80.7		$	61.4		$	71.3			35.0	%		35.0	%		35.0	%
Differences between book and tax
depreciation not normalized		2.0			(0.3	)		2.3			0.9			(0.2	)		1.1
Amortization of investment tax credits		(1.5	)		(1.2	)		(3.9	)		(0.6	)		(0.7	)		(1.9	)
Federal income tax credits		(7.9	)		(9.3	)		(10.0	)		(3.4	)		(5.3	)		(4.9	)
State income taxes		4.9			0.5			2.7			2.1			0.3			1.3
Changes in uncertain tax positions, net (a)		0.5			0.1			(7.9	)		0.2			-			(3.9	)
Rate change on deferred taxes		-			-			(11.7	)		-			-			(5.8	)
Aquila transaction costs		(3.7	)		-			-			(1.6	)		-			-
Other		(3.5	)		(3.3	)		(3.3	)		(1.6	)		(1.8	)		(1.5	)
Total	$	71.5		$	47.9		$	39.5			31.0	%		27.3	%		19.4	%
(a) For 2007, this includes amounts recognized under FIN No. 48.


	Income Tax Expense									Income Tax Rate
Consolidated KCP&L	2007			2006			2005			2007			2006			2005
	(millions)
Federal statutory income tax	$	75.6		$	76.9		$	67.0			35.0	%		35.0	%		35.0	%
Differences between book and tax
depreciation not normalized		2.0			(0.3	)		2.3			0.9			(0.2	)		1.2
Amortization of investment tax credits		(1.5	)		(1.2	)		(3.9	)		(0.7	)		(0.6	)		(2.0	)
Federal income tax credits		(6.4	)		(4.6	)		-			(2.9	)		(2.1	)		-
State income taxes		4.7			5.5			4.2			2.2			2.5			2.2
Changes in uncertain tax positions, net (a)		(0.3	)		0.6			(1.7	)		(0.1	)		0.3			(0.9	)
Parent company tax benefits		(12.0	)		(4.7	)		(5.4	)		(5.6	)		(2.1	)		(2.8	)
Rate change on deferred taxes		-			-			(11.7	)		-			-			(6.1	)
Other		(2.8	)		(1.9	)		(2.8	)		(1.4	)		(0.8	)		(1.6	)
Total	$	59.3		$	70.3		$	48.0			27.4	%		32.0	%		25.0	%
(a) For 2007, this includes amounts recognized under FIN No. 48.

SFAS No. 109 requires the companies to adjust deferred tax balances to reflect tax rates that are anticipated to be in effect when the differences reverse. In 2005, Great Plains Energy and KCP&L adjusted their deferred tax balances to reflect lower composite tax rates due to the impact of sustained audited positions and state tax planning, which resulted in deferred tax benefits for Great Plains Energy and consolidated KCP&L of $11.7 million in 2005.

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Deferred Income Taxes

The tax effects of major temporary differences resulting in deferred income tax assets (liabilities) in the consolidated balance sheets are in the following tables.


	Great Plains Energy						Consolidated KCP&L
December 31	2007			2006			2007			2006
Current deferred income taxes	(millions)
Nuclear fuel outage	$	(2.4	)	$	(5.2	)	$	(2.4	)	$	(5.2	)
Derivative instruments		9.8			34.1			(0.1	)		0.2
Accrued vacation		4.8			4.5			4.7			4.4
Other		7.6			6.2			1.2			0.7
Net current deferred income tax asset		19.8			39.6			3.4			0.1
Noncurrent deferred income taxes
Plant related		(573.7	)		(566.3	)		(573.7	)		(566.3	)
Income taxes on future regulatory recoveries		(66.5	)		(81.7	)		(66.5	)		(81.7	)
Derivative instruments		(3.6	)		19.3			4.5			(4.3	)
Pension and postretirement benefits		(23.3	)		(28.9	)		(25.8	)		(31.2	)
Storm related costs		-			(0.1	)		-			(0.1	)
Debt issuance costs		(2.3	)		(2.5	)		(2.3	)		(2.5	)
Gas properties related		(0.8	)		(1.1	)		-			-
SO2 emission allowance sales		33.4			24.5			33.4			24.5
Tax credit carryforwards		19.2			15.0			-			-
State net operating loss carryforward		0.4			0.5			-			-
Other		(7.2	)		(0.8	)		(11.8	)		1.6
Net noncurrent deferred tax liability before
valuation allowance		(624.4	)		(622.1	)		(642.2	)		(660.0	)
Valuation allowance		(0.4	)		(0.5	)		-			-
Net noncurrent deferred tax liability		(624.8	)		(622.6	)		(642.2	)		(660.0	)
Net deferred income tax liability	$	(605.0	)	$	(583.0	)	$	(638.8	)	$	(659.9	)


	Great Plains Energy						Consolidated KCP&L
December 31	2007			2006			2007			2006
	(millions)
Gross deferred income tax assets	$	231.0		$	251.3		$	183.0		$	166.9
Gross deferred income tax liabilities		(836.0	)		(834.3	)		(821.8	)		(826.8	)
Net deferred income tax liability	$	(605.0	)	$	(583.0	)	$	(638.8	)	$	(659.9	)

Tax Credit Carryforwards

At December 31, 2007, the Company had $19.2 million of state income tax credit carryforwards. These credits relate primarily to the Company’s Missouri affordable housing investment portfolio, and the carryforwards expire in years 2009 to 2012. Management believes the credits will be fully utilized within the carryforward period.

Net Operating Loss Carryforwards

At December 31, 2007, KLT Inc. and its subsidiaries had Kansas state net operating loss carryforwards of $9.4 million primarily resulting from losses associated with DTI Holdings, Inc. and its subsidiaries, Digital Teleport, Inc. and Digital Teleport of Virginia, Inc. KLT Inc. and its subsidiaries moved its corporate headquarters to Missouri in 2003, and as a result, will not have sufficient presence in Kansas to utilize the losses. The Kansas state net operating loss carryforwards expire in years 2011 to 2012. Management has determined that the loss carryforwards will more likely than not expire unutilized and has provided a valuation allowance against the entire $0.4 million deferred state income tax benefit.

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Uncertain Tax Positions

In 2006, the FASB issued FIN No. 48, “Accounting for Uncertainty in Income Taxes,” an interpretation of SFAS No. 109, “Accounting for Income Taxes.” FIN No. 48 establishes a “more-likely-than-not” recognition threshold that must be met before a tax benefit can be recognized in the financial statements with various additional disclosures required and is effective for fiscal years beginning after December 15, 2006. Upon adoption of FIN No. 48 on January 1, 2007, Great Plains Energy recognized an $18.8 million increase in the liability for unrecognized tax benefits. This increase was offset by a $0.9 million decrease to the January 1, 2007, balance of retained earnings, a $17.9 million decrease in deferred taxes, a $4.0 million decrease in accrued taxes and a $4.0 million increase in accrued interest. The total amount of unrecognized tax benefits at January 1, 2007, was $23.5 million of which $3.5 million would impact the effective tax rate, if recognized. Consolidated KCP&L recognized a $19.8 million increase in the liability for unrecognized tax benefits. This increase was offset by a $0.2 million decrease to the January 1, 2007, balance of retained earnings, a $15.7 million decrease in deferred taxes and a $3.9 million decrease in accrued taxes. The total amount of unrecognized tax benefits at January 1, 2007, was $21.6 million of which $1.6 million would impact the effective tax rate, if recognized.

In addition with the adoption of FIN No. 48, Great Plains Energy and consolidated KCP&L elected to make an accounting policy change to recognize interest accrued related to unrecognized tax benefits in interest expense and penalties in non-operating expenses. As of the date of adoption, Great Plains Energy and consolidated KCP&L had $6.4 million and $2.4 million, respectively, accrued for the payment of interest. No amounts were accrued for penalties with respect to unrecognized tax benefits. At December 31, 2007, accrued interest related to unrecognized tax benefits for Great Plains Energy and consolidated KCP&L was $8.4 million and $3.4 million, respectively.

The following table reflects activity subsequent to the adoption of FIN No. 48 for Great Plains Energy and consolidated KCP&L related to the liability for unrecognized tax benefits.


	Great Plains				Consolidated
	Energy				KCP&L
	(millions)
Balance at January 1, 2007		$	23.5			$	21.6
Additions for current year tax positions			4.1				2.9
Additions for prior year tax positions			0.1				0.1
Reductions for prior year tax positions			(5.0	)			(4.9	)
Statute expirations			(0.8	)			(0.1	)
Balance at December 31, 2007		$	21.9			$	19.6

The total amount of uncertain tax benefits which would impact the effective tax rate, if recognized at December 31, 2007, is $3.6 million and $1.3 million for Great Plains Energy and consolidated KCP&L, respectively.

Great Plains Energy files a consolidated federal income tax return as well as unitary and combined income tax returns in several state jurisdictions with Kansas and Missouri being the most significant. Great Plains Energy and its subsidiaries have completed examinations by federal and state taxing authorities for taxable years prior to 2000; however several tax issues remain unresolved for tax years 2000 through 2003. During 2006, the IRS commenced an audit of Great Plains Energy and its subsidiaries for taxable years 2004 through 2005 and is expected to complete the audit by the end of 2008.

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It is reasonably possible that, as a result of a settlement agreement for the federal audit of the 2000 through 2003 tax years expected to be reached by December 2008, federal and state unrecognized tax benefits related primarily to the timing of tax deductions would be recognized by Great Plains Energy and consolidated KCP&L. An estimate of the amount of unrecognized tax benefits that may be recognized in the next twelve months was $9 million to $11 million as of the date of adoption and $8 million to $10 million at December 31, 2007, for Great Plains Energy and $7 million to $9 million as of the date of adoption and at December 31, 2007, for consolidated KCP&L.

11.	KLT GAS DISCONTINUED OPERATIONS

The KLT Gas natural gas properties (KLT Gas portfolio) was reported as discontinued operations in accordance with SFAS No. 144, “Accounting for the Impairment or Disposal of Long-Lived Assets” after the 2004 Board of Directors approval to sell the KLT Gas portfolio and discontinue the gas business. During 2004 and 2005, KLT Gas completed sales of the KLT Gas portfolio and in 2006 KLT Gas had no active operations. During 2005, KLT Gas had losses from operations before income taxes of $2.9 million and an income tax benefit of $1.0 million, resulting in a net loss from discontinued operations of $1.9 million.

12.	RELATED PARTY TRANSACTIONS AND RELATIONSHIPS

Consolidated KCP&L receives various support and administrative services from Services. These services are billed to consolidated KCP&L at cost, based on payroll and other expenses, incurred by Services for the benefit of consolidated KCP&L. These costs totaled $14.9 million, $18.5 million and $42.6 million for 2007, 2006 and 2005, respectively. These costs consisted primarily of employee compensation, benefits and fees associated with various professional services. At December 31, 2007 and 2006, consolidated KCP&L had a short-term intercompany payable to Services of $1.8 million and $2.5 million, respectively. In 2005, approximately 80% of Services’ employees were transferred to KCP&L to better align resources with the operating business. Also at December 31, 2007 and 2006, consolidated KCP&L had a long-term intercompany payable to Services of $1.5 million and $5.7 million, respectively, related to unrecognized pension expense recorded under the provision of SFAS No. 158. At December 31, 2007 and 2006, consolidated KCP&L’s balance sheets reflect a note payable from HSS to Great Plains Energy of $0.6 million. Also at December 31, 2007, consolidated KCP&L had a short-term intercompany receivable from Great Plains Energy of $10.5 million.

13.	COMMITMENTS AND CONTINGENCIES

Environmental Matters

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

KCP&L seeks to use current environmental technology. KCP&L conducts environmental audits designed to ensure compliance with governmental regulations. At December 31, 2007 and 2006, KCP&L had $0.3 million accrued for environmental remediation expenses. The accrual covers water monitoring at one site. The amounts accrued were established on an undiscounted basis and KCP&L does not currently have an estimated time frame over which the accrued amounts may be paid.

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Environmental-related legislation is continually introduced and such legislation typically includes various compliance dates and compliance limits. It is possible that legislation could be enacted at the federal or state level to address global climate change, including efforts to reduce and control the emission of greenhouse gases, such as CO2, which is created in the combustion of fossil fuels. In addition, there could be national and state mandates to produce a set percentage of electricity from renewable forms of energy, such as wind. The probability and impact of such legislation cannot be reasonably estimated at this time, including the cost to install new equipment to achieve compliance, but such legislation could have the potential for a significant financial and operational impact on KCP&L. KCP&L would seek recovery of capital costs and expenses for such compliance through rate increases; however, there can be no assurance that such rate increases would be granted. KCP&L will continue to monitor proposed legislation.

The Clean Air Act requires companies to obtain permits and, if necessary, install control equipment to reduce emissions when making a major modification or a change in operation if either is expected to cause a significant net increase in regulated emissions. The Sierra Club and Concerned Citizens of Platte County have claimed that modifications were made to Iatan No. 1 in violation of Clean Air Act regulations. Although KCP&L has entered into a Collaboration Agreement with those parties that provides, among other things, for the release of such claims, the Collaboration Agreement does not bind any other entity. KCP&L is aware of subpoenas issued by a Federal grand jury to certain third parties seeking documents relating to capital projects at Iatan No. 1. KCP&L has not received a subpoena, and has not been informed of the scope of the grand jury inquiry. The ultimate outcome of these grand jury activities cannot presently be determined, nor can the costs and other liabilities that could potentially result from a negative outcome presently be reasonably estimated. There is no assurance these costs, if any, could be recovered in rates and failure to recover such costs could have a significant adverse affect on Great Plains Energy’s and KCP&L’s results of operations, financial position and cash flows.

The following table contains current estimates of KCP&L’s capital expenditures (exclusive of allowance for funds used during construction and property taxes) to comply with environmental laws and regulations described below, including accelerated environmental upgrade expenditures outlined in KCP&L’s Comprehensive Energy Plan. The following table does not reflect any costs for complying with future laws or regulations. The ultimate cost could be significantly different from the amounts estimated. The construction environment entering 2008 for the Iatan No. 1 and Iatan No. 2 projects is challenging, particularly the tight market conditions for skilled labor and the lengthening lead times for deliveries of materials. KCP&L is conducting a thorough assessment of the impact of the current environment on the projects' cost and schedule. The results of the assessment are expected to be available in the second quarter of 2008. KCP&L continues to refine its cost estimates detailed in the table below and explore alternatives. The allocation between states is based on location of the facilities and has no bearing as to recovery in jurisdictional rates.

The table does not reflect potential costs relating to additional wind generation, energy efficiency and other CO2 emission offsets contemplated by the Collaboration Agreement. Potential costs relating to the additional wind generation and energy efficiency investments that are subject to regulatory approval cannot be reasonably estimated at this time. As well, the potential costs relating to the additional offset of approximately 711,000 tons of CO2 emissions under the Collaboration Agreement cannot be reasonably estimated at this time. KCP&L will evaluate the available operational and capital resource alternatives, and will select the most cost-effective mix of actions to achieve this additional offset. The potential capital costs of the Collaboration Agreement provisions relating to emission limits at Iatan and LaCygne generating stations are within the overall estimated capital cost ranges disclosed below. KCP&L expects to seek recovery of the costs associated with the Collaboration Agreement through rate increases; however, there can be no assurance that such rate increases would be granted.

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Clean Air Estimated Required
Environmental Expenditures (a)		Missouri			Kansas			Total
		(millions)
CAIR		$426	-	1,020	$	-		$426	-	1,020
Incremental BART			-		538	-	657	538	-	657	(b)
Incremental CAMR		11	-	15	5	-	6	16	-	21
Less: expenditures through December 31, 2007			(103)			-			(103)
Estimated remaining required environmental expenditures		$334	-	932	$543	-	663	$877	-	1,595
(a)	The amounts reflect KCP&L's portion of the cost of projects at jointly-owned units.
(b)	Reflects an estimated $261 million to $318 million associated with the LaCygne No. 1 baghouse and scrubber
	project included in the Comprehensive Energy Plan.

Clean Air Interstate Rule

The Environmental Protection Agency (EPA) Clean Air Interstate Rule (CAIR) requires reductions in SO2 and NOx emissions in 28 states, including Missouri. The reduction in both SO2 and NOx emissions will be accomplished through establishment of permanent statewide caps for NOx effective January 1, 2009, and SO2 effective January 1, 2010. More restrictive caps will be effective January 1, 2015. KCP&L’s fossil fuel-fired plants located in Missouri are subject to CAIR, while its fossil fuel-fired plants in Kansas are not.

KCP&L expects to meet the emissions reductions required by CAIR at its Missouri plants through a combination of pollution control capital projects and the purchase of emission allowances as needed. CAIR establishes a market-based cap-and-trade program with an emission allowance allocation. Facilities will demonstrate compliance with CAIR by holding sufficient allowances for each ton of SO2 and NOx emitted in any given year. KCP&L will also be allowed to utilize unused SO2 emission allowances that it has accumulated during previous years of the Acid Rain Program to meet the more stringent CAIR requirements. At December 31, 2007, KCP&L had accumulated unused SO2 emission allowances sufficient to support just over 80,000 tons of SO2 emissions under the provisions of the Acid Rain program, which are recorded in inventory at zero cost. KCP&L is permitted to sell excess SO2 emission allowances in accordance with KCP&L’s Comprehensive Energy Plan as approved by the MPSC and KCC and in 2007, KCP&L sold 41,500 SO2 emission allowances.

Analysis of the final CAIR rule indicates that NOx and SO2 control may be required for KCP&L’s Montrose Station in Missouri, in addition to the environmental upgrades at Iatan No. 1 included in the Comprehensive Energy Plan. NOx and SO2 control for KCP&L’s Montrose Station could be achieved through a combination of pollution control equipment and the use of or purchase of emission allowances as needed. The timing and necessity of the installation of such control equipment is currently being developed, and as required by the Collaboration Agreement, a study will be completed in 2008 to assess potential future use of Montrose Station, including without limitation, retiring, re-powering and upgrading the units. As discussed below, some of the control technology for SO2 and NOx will also aid in the control of mercury.

Best Available Retrofit Technology Rule

The EPA best available retrofit technology rule (BART) directs state air quality agencies to identify whether visibility-reducing emissions from sources subject to BART are below limits set by the state or whether retrofit measures are needed to reduce emissions. BART applies to specific eligible facilities including LaCygne Nos. 1 and 2 in Kansas and Iatan No. 1 and Montrose No. 3 in Missouri. Initially, in Missouri, compliance with CAIR is compliance with BART for individual sources. Depending on the timing of installation of environmental control equipment and the availability of SO2 emission allowances, the estimated required environmental expenditures presented in the table above could shift from CAIR to incremental BART for Missouri. In the Collaboration Agreement, KCP&L agreed to seek a consent agreement, which it has done, with the Kansas Department of Health and Environment

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(KDHE) incorporating limits for stack particulate matter emissions, as well as limits for NOx and SO2 emissions at its LaCygne Station that will be below the presumptive limits under BART. KCP&L further agreed to use its best efforts to install emission control technologies to reduce those emissions from the LaCygne Station prior to the required compliance date under BART, but in no event later than June 1, 2015. KCP&L further agreed to issue requests for proposal for the equipment required to comply with BART by December 31, 2008, requesting that construction commence by December 31, 2010.

Mercury Emissions

The EPA Clean Air Mercury Rule (CAMR) regulates mercury emissions from coal-fired power plants located in 48 states, including Kansas and Missouri, under the Clean Air Act. In February 2008, a court vacated and remanded CAMR back to the EPA. The court’s order is subject to an appeals process and the EPA has not taken any action in response to the court’s order. Environmental groups have filed a motion with the court asking the court itself to mandate the imposition of maximum achievable control technology (MACT) standards when reviewing permits for new plants now, without waiting for further EPA action. Management cannot predict the outcome of these or further judicial or regulatory actions or their financial or operational effects on KCP&L. The following discussion is based on CAMR prior to the court’s action and future regulations regarding mercury emissions, and the costs to KCP&L, may be materially different than CAMR.

CAMR established a market-based cap-and-trade program to reduce nationwide utility emissions of mercury in two phases, the first phase is effective January 1, 2010, and the second phase is effective January 1, 2018. Facilities will be required to hold allowances for each ounce of mercury emitted in any given year. Under the cap-and-trade program, KCP&L would be able to purchase mercury allowances or elect to install pollution control equipment to achieve compliance.

Management anticipates meeting the first phase cap by taking advantage of KCP&L’s mercury reductions achieved through capital expenditures to comply with CAIR and BART or purchasing allowances as needed. While it is expected that mercury allowances will be available in sufficient quantities for purchase in the 2010-2018 timeframe, the significant reduction in the nationwide cap in 2018 may hamper KCP&L’s ability to obtain reasonably priced allowances beyond 2018. Management expects capital expenditures would be required to install additional pollution control equipment to meet the second phase cap. During the ensuing years, management will closely monitor advances in technology for removal of mercury and expects to make decisions regarding second phase removal based on then available technology to meet the 2018 compliance date.

Carbon Dioxide

Many bills concerning greenhouse gases, including CO2, are being debated at the federal and state levels. There are various compliance dates and reduction strategies stipulated in the bills. While legislation at both the federal and state level has been introduced, it is difficult to predict when or if the legislation will be enacted. The U.S. Supreme Court has determined that the EPA has statutory authority to regulate CO2 from new motor vehicles if EPA forms a judgment that such emissions contribute to climate change. If EPA forms such a judgment, it may ultimately regulate other sources of CO2, which may include KCP&L facilities. The KDHE has indicated that it intends to engage industries and stakeholders to establish goals for reducing CO2 emissions and strategies to achieve those goals.

Greenhouse gas regulation has the potential for a significant financial and operational impact on KCP&L in connection with achieving compliance with limits that may be established. However, the financial and operational consequences to KCP&L cannot be determined until final legislation is passed or regulations enacted. Management will continue to monitor the progress of bills and regulations. As previously discussed, KCP&L has entered into a Collaboration Agreement that includes various provisions regarding wind generation, energy efficiency and other CO2 offsets.

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Ozone

In June 2007, monitor data indicated that the Kansas City area violated the eight-hour ozone national ambient air quality standard. Missouri and Kansas have implemented the responses established in the maintenance plans for control of ozone. The responses in both states do not require additional controls at KCP&L’s generation facilities beyond the currently proposed controls for CAIR and BART. EPA has various options over and above the implementation of the maintenance plans for control of ozone to address a confirmed violation. These options include, but are not limited to, designating the area “non-attainment” and requiring a new regulatory plan to reduce emissions or leaving the designation unchanged, but still requiring a new regulatory plan. At this time, management is unable to predict how the EPA will respond or how that response will impact KCP&L’s operations, but the EPA’s response could have a significant impact on Great Plains Energy's and consolidated KCP&L's results of operations and financial position.

Also in June 2007, EPA issued a proposal for comment to reduce the existing eight-hour ozone national ambient air quality standard. The proposal recommends an ozone standard within a range of 0.07 to 0.075 parts per million (ppm). EPA also is taking comments on alternative standards within a range from 0.06 ppm up to the level of the current eight-hour ozone standard, which is 0.08 ppm. The Kansas City area may have difficulty attaining a revised standard in the future. EPA has taken public comments and has indicated it will issue final standards by March 12, 2008. Although it is difficult to determine the ultimate impact of the proposal at this time, it could have a significant impact on Great Plains Energy's and consolidated KCP&L's results of operations and financial position.

Sulfuric Acid Mist BACT Analysis – Iatan Station

As a requirement of the Iatan Station air permit and the Collaboration Agreement, KCP&L submitted a best available control technology (BACT) analysis for sulfuric acid mist to Missouri Department of Natural Resources (MDNR) in June 2007. MDNR will conduct its own BACT analysis and determine the final emission limit. Although KCP&L believes the emission limit submitted is a BACT limit and can be achieved by the currently proposed emission control equipment, MDNR may ultimately determine a BACT limit for sulfuric acid mist that could require additional control equipment. The above Clean Air Estimated Required Environmental Expenditures table does not reflect the potential costs for additional controls that may be required to meet such a determination. If MDNR does make such a determination, KCP&L will evaluate the available operational and capital resource alternatives, and will select the most cost-effective mix of actions to achieve compliance.

Water Use Regulations

The Clean Water Act (Act) establishes standards for cooling water intake structures. EPA had previously issued regulations pursuant to Section 316(b) of the Act regarding cooling water intake structures. Subsequent to a court ruling, EPA suspended the regulations and is engaged in further rulemaking on this matter. At this time, management is unable to predict how the EPA will respond or how that response will impact KCP&L’s operations.

KCP&L holds a permit from the MDNR covering water discharge from its Hawthorn Station. The permit authorizes KCP&L, among other things, to withdraw water from the Missouri river for cooling purposes and return the heated water to the Missouri river. KCP&L has applied for a renewal of this permit and the EPA has submitted an interim objection letter regarding the allowable amount of heat that can be contained in the returned water. Until this matter is resolved, KCP&L continues to operate under its current permit. KCP&L cannot predict the outcome of this matter; however, while less significant outcomes are possible, this matter may require KCP&L to reduce its generation at Hawthorn Station, install cooling towers or both, any of which could have a material adverse effect on KCP&L. The outcome could also affect the terms of water permit renewals at KCP&L’s Iatan and Montrose Stations.

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Contractual Commitments

Great Plains Energy’s and consolidated KCP&L’s expenses related to lease commitments are detailed in the following table.


	2007		2006		2005
	(millions)
Consolidated KCP&L	$	17.3	$	17.6	$	19.4
Other Great Plains Energy (a)		1.3		1.3		1.4
Total Great Plains Energy	$	18.6	$	18.9	$	20.8
(a) Includes insignificant amounts related to discontinued operations.

Great Plains Energy’s and consolidated KCP&L’s contractual commitments at December 31, 2007, excluding pensions and long-term debt, are detailed in the following tables.


Great Plains Energy Contractual Commitments
		2008		2009		2010		2011		2012		After 2012			Total
		(millions)
Lease commitments		$	18.8	$	15.3	$	9.1	$	8.2	$	8.0		$	75.1	$	134.5
Purchase commitments
	Fuel (a)		120.0		68.1		65.4		12.2		15.3			187.3		468.3
	Purchased capacity		9.0		8.6		6.3		4.7		4.7			10.8		44.1
	Purchased power		738.9		382.9		261.4		146.8		34.5			-		1,564.5
	Comprehensive energy plan		705.4		286.7		53.1		-		-			-		1,045.2
	Other		101.3		19.5		27.8		10.2		11.3			22.4		192.5
Total contractual commitments		$	1,693.4	$	781.1	$	423.1	$	182.1	$	73.8		$	295.6	$	3,449.1
(a)	Fuel commitments consists of commitments for nuclear fuel, coal, coal transportation costs and natural gas.


Consolidated KCP&L Contractual Commitments
		2008		2009		2010		2011		2012		After 2012			Total
		(millions)
Lease commitments		$	17.4	$	14.1	$	8.7	$	7.8	$	7.7		$	74.7	$	130.4
Purchase commitments
	Fuel (a)		120.0		68.1		65.4		12.2		15.3			187.3		468.3
	Purchased capacity		9.0		8.6		6.3		4.7		4.7			10.8		44.1
	Comprehensive energy plan		705.4		286.7		53.1		-		-			-		1,045.2
	Other		101.3		19.5		27.8		10.2		11.3			22.4		192.5
Total contractual commitments		$	953.1	$	397.0	$	161.3	$	34.9	$	39.0		$	295.2	$	1,880.5
(a)	Fuel commitments consists of commitments for nuclear fuel, coal, coal transportation costs and natural gas.

Lease commitments end in 2028 and include capital and operating lease obligations; capital lease obligations are $0.2 million per year for the years 2008 through 2012 and total $3.7 million after 2012. Lease obligations also include railcars to serve jointly-owned generating units where KCP&L is the managing partner. KCP&L will be reimbursed by the other owners for approximately $2.0 million per year ($19.3 million total) of the amounts included in the tables above.

KCP&L purchases capacity from other utilities and nonutility suppliers. Purchasing capacity provides the option to purchase energy if needed or when market prices are favorable. KCP&L has capacity sales agreements not included above that total $11.2 million per year for 2008 through 2011, $6.9 million in 2012 and $1.6 million in 2013.

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Purchased power represents Strategic Energy’s agreements to purchase electricity at various fixed prices to meet estimated supply requirements. Strategic Energy has energy sales contracts for 2008 not included above totaling $16.8 million.

Comprehensive Energy Plan represents KCP&L’s contractual commitment for projects included in its Comprehensive Energy Plan including jointly owned units. KCP&L expects to be reimbursed by other owners for their respective share of Iatan No. 2 and environmental retrofit costs included in the Comprehensive Energy Plan contractual commitments. Other represents individual commitments entered into in the ordinary course of business.

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. The majority of these agreements guarantee the Company’s own future performance, so a liability for the fair value of the obligation is not recorded. Great Plains Energy has provided $279.0 million of credit support for certain Strategic Energy power purchases and regulatory requirements. At December 31, 2007, credit support related to Strategic Energy is as follows:

·	Great Plains Energy direct guarantees to counterparties totaling $167.4 million, which expire in 2008,

·	Great Plains Energy indemnifications to surety bond issuers totaling $0.5 million, which expire in 2008,

·	Great Plains Energy guarantee of Strategic Energy’s revolving credit facility totaling $12.5 million, which expires in 2010 and

·	Great Plains Energy letters of credit totaling $98.6 million, which expire in 2008.

At December 31, 2007, KCP&L had guaranteed, with a maximum potential of $2.9 million, energy savings under an agreement with a customer that expires over the next three years. A subcontractor would indemnify KCP&L for any payments made by KCP&L under this guarantee. This guarantee was entered into before December 31, 2002; therefore, a liability was not recorded in accordance with FIN No. 45, “Guarantor's Accounting and Disclosure Requirements for Guarantees, Including Guarantees of Indebtedness of Others.”

15.	LEGAL PROCEEDINGS

Kansas City Power & Light Company v. Union Pacific Railroad Company

In October 2005, KCP&L filed a rate complaint case with the Surface Transportation Board (STB) charging that Union Pacific Railroad Company’s (Union Pacific) rates for transporting coal from the PRB in Wyoming to KCP&L’s Montrose Station are unreasonably high. Prior to the end of 2005, the rates were established under a contract with Union Pacific. Efforts to extend the term of the contract were unsuccessful and Union Pacific is the only service for coal transportation from the PRB to Montrose Station. KCP&L charged that Union Pacific possesses market dominance over the traffic and requested the STB prescribe maximum reasonable rates.

In February 2006, the STB instituted a rulemaking to address issues regarding the cost test used in rail rate cases and the proper calculation of rail rate relief. As part of that order, the STB delayed hearing KCP&L’s case pending the outcome of the rulemaking, and declared that the results of the rulemaking would apply to KCP&L’s test. In October 2006, the STB issued its decision, adopting the proposals set

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out in its rulemaking. On March 29, 2007, the STB issued an order stating that the rate complaint filed by KCP&L could proceed. A final decision on the rate complaint is anticipated by the end of the second quarter of 2008. Until the STB case is decided, KCP&L is paying the higher tariff rates, subject to refund.

Hawthorn No. 5 Subrogation Litigation

KCP&L received reimbursement for the 1999 Hawthorn No. 5 boiler explosion under a property damage insurance policy with Travelers Property Casualty Company of America (Travelers). Travelers filed suit in the U.S. District Court for the Eastern District of Missouri in November 2005, against National Union Fire Insurance Company of Pittsburgh, Pennsylvania, and KCP&L was added as a defendant in June 2006. The case was subsequently transferred to, and is pending in, the U.S. District Court for the Western District of Missouri. Travelers seeks recovery of $10 million that KCP&L recovered through subrogation litigation.

Emergis Technologies, Inc.

In March 2006, Emergis Technologies, Inc. f/k/a BCE Emergis Technologies, Inc. (Emergis) filed suit against KCP&L in U.S. District Court for the Western District of Missouri, alleging infringement of a patent, entitled “Electronic Invoicing and Payment System” and seeking unspecified monetary damages and injunctive relief. This patent relates to automated electronic bill presentment and payment systems, particularly those involving Internet billing and collection. In March 2006, KCP&L filed a response and denied infringing the patent. KCP&L counterclaimed for a declaration that the patent is invalid and not infringed. The parties filed a joint stipulation of dismissal and the court ordered the case dismissed in February 2008.

Spent Nuclear Fuel and Radioactive Waste

In 2004, KCP&L and the other two Wolf Creek owners filed suit against the United States in the U.S. Court of Federal Claims seeking an unspecified amount of monetary damages resulting from the government’s failure to begin accepting spent nuclear fuel for disposal in January 1998, as the government was required to do by the Nuclear Waste Policy Act of 1982. Approximately sixty-five other similar cases were filed with that court, a few of which have settled. To date, the court has rendered final decisions in twelve of the cases, most of which are on appeal now. The Wolf Creek case is on a court-ordered stay until further order of the court to allow for some of the earlier cases to be decided first by an appellate court. Another Federal appellate court has already determined that the government breached its obligation to begin accepting spent fuel for disposal. The questions now before the court in the pending cases are whether and to what extent the utilities are entitled to monetary damages for that breach.

Class Action Complaint

Tech Met, Inc., et al. v. Strategic Energy

On November 21, 2005, a class action complaint for breach of contract was filed against Strategic Energy in the Court of Common Pleas of Allegheny County, Pennsylvania. The five named plaintiffs purportedly represent the interests of customers in Pennsylvania who entered into Power Supply Coordination Service Agreements (Agreements) for electricity service. The complaint seeks monetary damages, attorney fees and costs and a declaration that the customers may terminate their Agreements with Strategic Energy. In response to Strategic Energy’s preliminary objections, the plaintiffs filed an amended complaint. After additional objections from Strategic Energy, the plaintiffs agreed to file a second amended complaint. Management is awaiting the second amended complaint.

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Weinstein v. KLT Telecom

Richard D. Weinstein (Weinstein) filed suit against KLT Telecom Inc. (KLT Telecom) in September 2003 in the Circuit Court of St. Louis County, Missouri. KLT Telecom acquired a controlling interest in DTI Holdings, Inc. (Holdings) in February 2001 through the purchase of approximately two-thirds of the Holdings stock held by Weinstein. In connection with that purchase, KLT Telecom entered into a put option in favor of Weinstein, which granted Weinstein an option to sell to KLT Telecom his remaining shares of Holdings stock. The put option provided for an aggregate exercise price for the remaining shares equal to their fair market value with an aggregate floor amount of $15 million and was exercisable between September 1, 2003, and August 31, 2005. In June 2003, the stock of Holdings was cancelled and extinguished pursuant to the joint Chapter 11 plan confirmed by the Bankruptcy Court. In September 2003, Weinstein delivered a notice of exercise of his claimed rights under the put option. KLT Telecom rejected the notice of exercise, and Weinstein filed suit alleging breach of contract. Weinstein sought damages of at least $15 million, plus statutory interest. In April 2005, summary judgment was granted in favor of KLT Telecom, and Weinstein appealed this judgment to the Missouri Court of Appeals for the Eastern District, which affirmed the judgment. Weinstein filed a motion for transfer of this case to the Missouri Supreme Court, which was granted. The Missouri Supreme Court reversed the decision of the trial court which granted summary judgment in favor of KLT Telecom and remanded the case to the trial court for further handling on May 29, 2007. On July 26, 2007, Weinstein filed a Renewed Motion for Summary Judgment in the Circuit Court. A hearing on the motion is scheduled to occur on March 10, 2008. The case is set for trial on May 15, 2008. A $15 million reserve was recorded in 2001 for this matter.

16.	ASSET RETIREMENT OBLIGATIONS

Asset retirement obligations associated with tangible long-lived assets are those for which a legal obligation exists under enacted laws, statutes and written or oral contracts, including obligations arising under the doctrine of promissory estoppel. These liabilities are recognized at estimated fair value as incurred and capitalized as part of the cost of the related long-lived assets and depreciated over their useful lives. Accretion of the liabilities due to the passage of time is recorded as an operating expense. Changes in the estimated fair values of the liabilities are recognized when known.

In 2006, KCP&L incurred an ARO for decommissioning and site remediation of its Spearville Wind Energy Facility, a 100.5 MW wind project in western Kansas. KCP&L is obligated to remove the wind turbine towers and perform site remediation within 12 months after the end of the associated 30-year land lease agreements. The ARO was derived from a third party estimate of decommissioning and remediation costs. To estimate the ARO, KCP&L used a credit-adjusted risk free discount rate of 6.68%. This rate was based on the rate at which KCP&L could issue 30-year bonds. KCP&L recorded a $3.1 million ARO for the decommissioning and site remediation and increased property and equipment by $3.1 million.

In 2006, WCNOC submitted an application for a new operating license for Wolf Creek with the NRC, which would extend Wolf Creek’s operating period to 2045. Management determined the fair value of KCP&L’s ARO for nuclear decommissioning should reflect the change in timing in the undiscounted estimated cash flows to decommission Wolf Creek as a result of the extended operating period. Management calculated an ARO revision based on KCP&L’s most recent cost estimates to decommission Wolf Creek. To estimate the ARO layer attributable to the change in timing, KCP&L used a credit-adjusted risk free discount rate of 6.26%. The rate was based on the rate at which KCP&L could issue 40-year bonds. KCP&L recorded a $65.0 million decrease in the ARO to decommission Wolf Creek with a $25.8 million net decrease in property and equipment. The regulatory asset for ARO decreased $8.2 million and a $31.0 million regulatory liability was established to recognize funding of the related decommissioning trust in excess of the ARO due to the extended operating period.

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KCP&L also has AROs related to asbestos in certain fossil fuel plants and for an ash pond and landfill.

KCP&L is a regulated utility subject to the provisions of SFAS No. 71 and management believes it is probable that any differences between expenses under FIN No. 47, “Accounting for Conditional Asset Retirement Obligations – an interpretation of FASB Statement No. 143” or SFAS No. 143, “Accounting for Asset Retirement Obligations” and expense recovered currently in rates will be recoverable in future rates. The following table summarizes the change in Great Plains Energy’s and consolidated KCP&L’s AROs.


December 31	2007			2006
	(millions)
Beginning balance	$	91.8		$	145.9
Additions		-			3.1
Extension of Wolf Creek life		-			(65.0	)
Settlements		(1.1	)		-
Accretion		3.8			7.8
Ending balance	$	94.5		$	91.8

17.	SEGMENTS AND RELATED INFORMATION

Great Plains Energy

Great Plains Energy has two reportable segments based on its method of internal reporting, which generally segregates the reportable segments based on products and services, management responsibility and regulation. The two reportable business segments are KCP&L, an integrated, regulated electric utility, and Strategic Energy, a competitive electricity supplier. Other includes HSS, Services, all KLT Inc. activity other than Strategic Energy, unallocated corporate charges, consolidating entries and intercompany eliminations. Intercompany eliminations include insignificant amounts of intercompany financing-related activities. The summary of significant accounting policies applies to all of the reportable segments. For segment reporting, each segment’s income taxes include the effects of allocating holding company tax benefits. Segment performance is evaluated based on net income.

The following tables reflect summarized financial information concerning Great Plains Energy’s reportable segments.


				Strategic						Great Plains
2007	KCP&L			Energy			Other			Energy
	(millions)
Operating revenues	$	1,292.7		$	1,974.4		$	-			$	3,267.1
Depreciation and amortization		(175.6	)		(8.2	)		-				(183.8	)
Interest charges		(67.2	)		(2.9	)		(23.7	)			(93.8	)
Income taxes		(59.3	)		(25.8	)		13.6				(71.5	)
Loss from equity investments		-			-			(2.0	)			(2.0	)
Net income (loss)		156.8			38.4			(36.0	)			159.2

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				Strategic						Great Plains
2006	KCP&L			Energy			Other			Energy
	(millions)
Operating revenues	$	1,140.4		$	1,534.9		$	-			$	2,675.3
Depreciation and amortization		(152.7	)		(7.8	)		-				(160.5	)
Interest charges		(60.9	)		(2.1	)		(8.2	)			(71.2	)
Income taxes		(71.6	)		12.7			11.0				(47.9	)
Loss from equity investments		-			-			(1.9	)			(1.9	)
Net income (loss)		149.6			(9.9	)		(12.1	)			127.6


				Strategic						Great Plains
2005	KCP&L			Energy			Other			Energy
	(millions)
Operating revenues	$	1,130.8		$	1,474.0		$	0.1		$	2,604.9
Depreciation and amortization		(146.5	)		(6.4	)		(0.2	)		(153.1	)
Interest charges		(61.8	)		(3.4	)		(8.6	)		(73.8	)
Income taxes		(49.1	)		(16.6	)		26.2			(39.5	)
Loss from equity investments		-			-			(0.4	)		(0.4	)
Discontinued operations		-			-			(1.9	)		(1.9	)
Net income (loss)		145.2			28.2			(11.1	)		162.3


			Strategic					Great Plains
	KCP&L		Energy		Other			Energy
2007	(millions)
Assets	$	4,290.7	$	493.0	$	43.0		$	4,826.7
Capital expenditures		511.5		3.7		0.7			515.9
2006
Assets	$	3,858.0	$	459.6	$	18.1		$	4,335.7
Capital expenditures		476.0		3.9		0.2			480.1
2005
Assets	$	3,336.3	$	441.8	$	63.7		$	3,841.8
Capital expenditures		332.2		6.6		(4.7	)		334.1

Consolidated KCP&L

The following tables reflect summarized financial information concerning consolidated KCP&L’s reportable segment, KCP&L. Other includes HSS and intercompany eliminations. Intercompany eliminations include insignificant amounts of intercompany financing-related activities.


							Consolidated
2007	KCP&L			Other			KCP&L
	(millions)
Operating revenues	$	1,292.7		$	-		$	1,292.7
Depreciation and amortization		(175.6	)		-			(175.6	)
Interest charges		(67.2	)		-			(67.2	)
Income taxes		(59.3	)		-			(59.3	)
Net income (loss)		156.8			(0.1	)		156.7

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							Consolidated
2006	KCP&L			Other			KCP&L
	(millions)
Operating revenues	$	1,140.4		$	-		$	1,140.4
Depreciation and amortization		(152.7	)		-			(152.7	)
Interest charges		(60.9	)		(0.1	)		(61.0	)
Income taxes		(71.6	)		1.3			(70.3	)
Net income (loss)		149.6			(0.3	)		149.3


							Consolidated
2005	KCP&L			Other			KCP&L
	(millions)
Operating revenues	$	1,130.8		$	0.1		$	1,130.9
Depreciation and amortization		(146.5	)		(0.1	)		(146.6	)
Interest charges		(61.8	)		-			(61.8	)
Income taxes		(49.1	)		1.1			(48.0	)
Net income (loss)		145.2			(1.5	)		143.7


					Consolidated
	KCP&L		Other		KCP&L
2007	(millions)
Assets	$	4,290.7	$	1.3	$	4,292.0
Capital expenditures		511.5		-		511.5
2006
Assets	$	3,858.0	$	1.5	$	3,859.5
Capital expenditures		476.0		-		476.0
2005
Assets	$	3,336.3	$	3.9	$	3,340.2
Capital expenditures		332.2		-		332.2

18.	SHORT-TERM BORROWINGS AND SHORT-TERM BANK LINES OF CREDIT

In July 2007, pursuant to the terms of their credit agreements, Great Plains Energy and KCP&L transferred $200 million of unused lender commitments from the Great Plains Energy credit agreement to the KCP&L credit agreement. The maximum aggregate amount available under the Great Plains Energy credit agreement was reduced to $400 million from $600 million, and the maximum aggregate amount available under the KCP&L credit agreement was increased to $600 million from $400 million.

Great Plains Energy’s $400 million revolving credit facility with a group of banks expires in May 2011. A default by Great Plains Energy or any of its significant subsidiaries on other indebtedness totaling more than $25.0 million is a default under the facility. Under the terms of this agreement, Great Plains Energy is required to maintain a consolidated indebtedness to consolidated capitalization ratio, as defined in the agreement, not greater than 0.65 to 1.00 at all times. At December 31, 2007, Great Plains Energy was in compliance with this covenant. At December 31, 2007, Great Plains Energy had $42.0 million of outstanding borrowings with a weighted average interest rate of 5.44% and had issued letters of credit totaling $98.6 million under the credit facility as credit support for Strategic Energy. At December 31, 2006, Great Plains Energy had no cash borrowings and had issued letters of credit totaling $103.7 million under the credit facility as credit support for Strategic Energy.

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KCP&L’s $600 million revolving credit facility with a group of banks to provide support for its issuance of commercial paper and other general corporate purposes expires in May 2011. A default by KCP&L on other indebtedness totaling more than $25.0 million is a default under the facility. Under the terms of the agreement, KCP&L is required to maintain a consolidated indebtedness to consolidated capitalization ratio, as defined in the agreement, not greater than 0.65 to 1.00 at all times. At December 31, 2007, KCP&L was in compliance with this covenant. At December 31, 2007, KCP&L had $365.8 million of commercial paper outstanding, at a weighted-average interest rate of 5.92%, $11.9 million of letters of credit and no outstanding cash borrowings under the facility. At December 31, 2006, KCP&L had $156.4 million of commercial paper outstanding, at a weighted-average interest rate of 5.38%, $8.7 million of letters of credit and no cash borrowings under the facility.

During 2007, Strategic Energy entered into a new revolving credit facility with a group of banks, expiring in October 2010. The new facility replaced a $135 million revolving credit facility with a group of banks. The new facility provides for loans and letters of credit not exceeding an aggregate of the lesser of $50 million or the borrowing base, which is generally 85% of Strategic Energy’s retail accounts receivables plus the amount of a Great Plains Energy guarantee less usage under Strategic Energy’s receivable facility. Great Plains Energy issued an initial guarantee in the amount of $12.5 million and may increase the guarantee up to a maximum of $27.5 million to increase the borrowing base or to cure a default of the minimum fixed charge coverage ratio, provided that Great Plains Energy maintains investment grade ratings on its senior unsecured debt. Under the terms of the new agreement, Strategic Energy is required to maintain, as of the end of each quarter, a minimum fixed charge coverage ratio of at least 1.05 to 1.0 and a minimum EBITDA, as defined in the agreement, for the four quarters then ended of $15 million through March 31, 2008, and thereafter increasing to $17.5 million (through September 30, 2008), $20 million (through March 31, 2009) and $22.5 million through maturity. At December 31, 2007, Strategic Energy was in compliance with this covenant. At December 31, 2007, there were no cash borrowings or letters of credit issued under this facility. At December 31, 2006, $59.8 million in letters of credit had been issued and there were no cash borrowings under the $135 million agreement.

At the same time in 2007, Strategic Energy entered into an agreement to sell its retail accounts receivable to its wholly owned subsidiary, Strategic Receivables, which in turn sells undivided percentage ownership interests in the accounts receivable to Market Street and Fifth Third Bank (collectively, the Purchasers) ratably based on each purchaser’s commitments. In addition to its ability to sell accounts receivable to the purchasers for cash, Strategic Receivables may request the issue of letters of credit on behalf of Strategic Energy. Market Street’s and Fifth Third Bank’s obligation to purchase accounts receivable is limited to $112.5 million and $62.5 million, respectively, less the proportionate aggregate amount of letters of credit issued pursuant to the agreement. Under the terms of the agreement, Strategic Receivables is required to maintain a tangible net worth of no less than $10 million at any time. At December 31, 2007, Strategic Receivables was in compliance with this covenant. At December 31, 2007, $82.9 million of letters of credit had been issued.

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19.	LONG-TERM DEBT AND EIRR BONDS CLASSIFIED AS CURRENT LIABILITIES

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


		December 31
	Year Due	2007			2006
Consolidated KCP&L		(millions)
General Mortgage Bonds
7.95% Medium-Term Notes		$	-		$	0.5
4.59%* EIRR bonds	2012-2035		158.8			158.8
Senior Notes
6.00%			-			225.0
6.50%	2011		150.0			150.0
5.85%	2017		250.0			-
6.05%	2035		250.0			250.0
Unamortized discount			(1.9	)		(1.6	)
EIRR bonds
4.75% Series 1998A & B			-			105.2
4.75% Series 1998D			-			39.5
4.65% Series 2005	2035		50.0			50.0
4.75% Series 2007A	2035		73.3			-
4.25% Series 2007B	2035		73.2			-
Current liabilities
Current maturities			-			(225.5	)
EIRR bonds classified as current			-			(144.7	)
Total consolidated KCP&L excluding current maturities			1,003.4			607.2

Other Great Plains Energy
6.875% Senior Notes	2017		100.0			-
Unamortized discount			(0.5	)		-
7.74% Affordable Housing Notes	2008		0.3			0.9
4.25% FELINE PRIDES Senior Notes			-			163.6
Current maturities			(0.3	)		(164.2	)
Total consolidated Great Plains Energy excluding current maturities		$	1,102.9		$	607.5
* Weighted-average interest rates at December 31, 2007.

Amortization of Debt Expense

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


	2007		2006		2005
	(millions)
Consolidated KCP&L	$	1.6	$	1.9	$	2.3
Other Great Plains Energy		1.0		0.7		0.7
Total Great Plains Energy	$	2.6	$	2.6	$	3.0

KCP&L General Mortgage Bonds

KCP&L has issued mortgage bonds under the General Mortgage Indenture and Deed of Trust dated December 1, 1986, as supplemented. The Indenture creates a mortgage lien on substantially all utility plant. Mortgage bonds secure $158.8 million and $159.3 million, respectively, of medium-term notes and Environmental Improvement Revenue Refunding (EIRR) bonds at December 31, 2007 and 2006.

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KCP&L Unsecured Notes

KCP&L had $650.0 million and $625.0 million, respectively, of outstanding unsecured senior notes at December 31, 2007 and 2006. As a result of amortizing the gain recognized in other comprehensive income (OCI) on KCP&L’s 2005 Treasury Locks (T-Locks), the effective interest rate on KCP&L’s $250.0 million of 6.05% Senior Notes is 5.78%. During 2007, KCP&L issued $250.0 million of 5.85% unsecured Senior Notes, maturing in 2017. As a result of amortizing the gain recognized in OCI on KCP&L’s 2006 Forward Starting Swaps (FSS), the effective interest rate on KCP&L’s 5.85% Senior Notes is 5.72%.

KCP&L had $196.5 million of unsecured EIRR bonds outstanding at December 31, 2007 and 2006, excluding the fair value of interest rate swaps of a $1.8 million liability in 2006. The interest rate swaps resulted in an effective rate of 5.85% for the Series 1998A, B and D EIRR bonds in 2006.

KCP&L classified its 4.75% Series 1998A, B and D EIRR bonds with maturity dates of 2015 and 2017 as current liabilities at December 31, 2006, in accordance with Emerging Issues Task Force (EITF) D-61 “Classification by the Issuer of Redeemable Instruments That Are Subject to Remarketing Agreements.” The cash proceeds of $146.5 million from KCP&L’s unsecured EIRR Bonds Series 2007A and 2007B issued during 2007 were used to repay the 4.75% Series 1998A, B and D EIRR bonds.

Municipal Bond Insurance Policies

KCP&L’s EIRR Bonds Series 2007A and 2007B totaling $146.5 million are covered by a municipal bond insurance policy issued by Financial Guaranty Insurance Company (FGIC). The insurance agreement between KCP&L and FGIC provides for reimbursement by KCP&L for any amounts that FGIC pays under the municipal bond insurance policy. The insurance policy is in effect for the term of the bonds. The policy also restricts the amount of secured debt KCP&L may issue. In the event KCP&L issues debt secured by liens not permitted by the agreement, KCP&L is required to issue and deliver to FGIC first mortgage bonds or similar securities equal in principal amount to the principal amount of the EIRR Bonds Series 2007A and 2007B then outstanding.

KCP&L’s secured 1992 Series EIRR bonds totaling $31.0 million, secured Series 1993A and 1993B EIRR bonds totaling $79.5 million, and secured and unsecured EIRR Bonds Series 2005 totaling $35.9 million and $50.0 million, respectively, are covered by a municipal bond insurance policy between KCP&L and XL Capital Assurance, Inc (XLCA). The insurance agreements between KCP&L and XLCA provide for reimbursement by KCP&L for any amounts that XLCA pays under the municipal bond insurance policies. The insurance policies are in effect for the term of the bonds. The insurance agreements contain a covenant that the indebtedness to total capitalization ratio of KCP&L and its consolidated subsidiaries will not be greater than 0.68 to 1.00. At December 31, 2007, KCP&L was in compliance with this covenant. KCP&L is also restricted from issuing additional bonds under its General Mortgage Indenture if, after giving effect to such additional bonds, the proportion of secured debt to total indebtedness would be more than 75%, or more than 50% if the long term rating for such bonds by Standard & Poor’s or Moody’s Investors Service would be at or below A- or A3, respectively. The insurance agreement covering the unsecured EIRR Bond Series 2005 also requires KCP&L to provide XLCA with $50.0 million of general mortgage bonds as collateral for KCP&L’s obligations under the insurance agreement in the event KCP&L issues general mortgage bonds (other than refundings of outstanding general mortgage bonds) resulting in the aggregate amount of outstanding general mortgage bonds exceeding 10% of total capitalization. In the event of a default under the insurance agreements, XLCA may take any available legal or equitable action against KCP&L, including seeking specific performance of the covenants.

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The interest rates on $257.0 million of these EIRR bonds are periodically reset through auction processes. Both FGIC and XLCA, and the supported KCP&L auction rate bonds, were downgraded by at least two rating agencies in January and February 2008. Concerns related to municipal bond insurers' credit have adversely affected the ordinary course of operation of auctions for these types of bonds. The interest rates set in recent auctions of KCP&L's auction rate bonds have been adversely affected by these concerns, and the adverse effects are expected to continue until the bonds are changed to another interest rate mode.

Other Great Plains Energy Long-Term Debt

During 2007, Great Plains Energy issued $100.0 million of 6.875% unsecured Senior Notes, maturing in 2017. As a result of amortizing the loss recognized in OCI on Great Plains Energy’s 2007 T-Locks, the effective interest rate on Great Plains Energy’s 6.875% Senior Notes is 7.33%.

KLT Investments' affordable housing notes are collateralized by the affordable housing investments. Most of the notes also require the greater of 15% of the outstanding note balances or the next annual installment to be held as cash, cash equivalents or marketable securities. At December 31, 2007 and 2006, the collateral was held entirely as cash and totaled $0.3 million and $0.6 million, respectively.

Great Plains Energy’s $163.6 million of FELINE PRIDES each with a stated amount of $25, initially consisted of an interest in a senior note due February 16, 2009, and a contract requiring the holder to purchase the Company’s common stock on February 16, 2007. Great Plains Energy made quarterly contract adjustment payments at the rate of 3.75% per year and interest payments at the rate of 4.25% per year both payable in February, May, August and November of each year. Each purchase contract obligated the holder of the purchase contract to purchase, and Great Plains Energy to sell, on February 16, 2007, for $25 in cash, newly issued shares of the Company’s common stock equal to the settlement rate. The settlement rate was determined according to the applicable market value of the Company’s common stock at the settlement date. The applicable market value of $31.58 was measured by the average of the closing price per share of the Company’s common stock on each of the 20 consecutive trading days ending on the third trading day immediately preceding February 16, 2007. The settlement rate of 0.7915 was applied to the 6.5 million FELINE PRIDES at February 16, 2007, and Great Plains Energy issued 5.2 million shares of common stock. The $163.6 million FELINE PRIDES senior notes originally matured in 2009, but were to be remarketed between August 16, 2006 and February 16, 2007. In February 2007, Great Plains Energy exercised its rights to redeem the $163.6 million FELINE PRIDES senior notes in full satisfaction of each holder’s obligation to purchase the Company’s common stock under the purchase contracts.

Scheduled Maturities

Great Plains Energy's and consolidated KCP&L's long-term debt maturities for the next five years are detailed in the following table.


	2008		2009		2010		2011		2012
					(millions)
Consolidated KCP&L	$	-	$	-	$	-	$	150.0	$	12.4
Other Great Plains Energy		0.3		-		-		-		-
Total Great Plains Energy	$	0.3	$	-	$	-	$	150.0	$	12.4

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20.	COMMON SHAREHOLDERS’ EQUITY

Great Plains Energy filed a shelf registration statement with the Securities and Exchange Commission (SEC) in 2006 relating to Senior Debt Securities, Subordinated Debt Securities, shares of Common Stock, Warrants, Stock Purchase Contracts and Stock Purchase Units. In 2006, Great Plains Energy issued 5.2 million shares of common stock at $27.50 per share under the shelf registration statement with $144.3 million in gross proceeds and issuance costs of $5.2 million.

In 2006, Great Plains Energy entered into a forward sale agreement with Merrill Lynch Financial Markets, Inc. (forward purchaser) for 1.8 million shares of Great Plains Energy common stock. In April 2007, Great Plains Energy elected to terminate the forward sale agreement and settle it in cash. Based on the difference between Great Plains Energy’s average stock price of $32.60 over the period used to determine the settlement and the then-applicable forward price of $25.58, Great Plains Energy paid $12.3 million to Merrill Lynch Financial Markets, Inc.

Treasury shares are held for future distribution upon issuance of shares in conjunction with the Company’s Long-Term Incentive Plan.

Great Plains Energy has 4.0 million shares of common stock registered with the SEC for its Dividend Reinvestment and Direct Stock Purchase Plan. The plan allows for the purchase of common shares by reinvesting dividends or making optional cash payments. Great Plains Energy can issue new shares or purchase shares on the open market for the Plan. At December 31, 2007, 0.7 million shares remained available for future issuances.

In 2007, Great Plains Energy registered an additional 2.0 million shares of common stock with the SEC for a defined contribution savings plan, bringing the total number of shares registered under this plan to 12.3 million. Shares issued under the plans may be either newly issued shares or shares purchased in the open market. At December 31, 2007, 3.2 million shares remained available for future issuances.

Great Plains Energy’s Articles of Incorporation contain a restriction related to the payment of dividends in the event common equity falls to 25% of total capitalization. If preferred stock dividends are not declared and paid when scheduled, Great Plains Energy could not declare or pay common stock dividends or purchase any common shares. If the unpaid preferred stock dividends equal four or more full quarterly dividends, the preferred shareholders, voting as a single class, could elect the smallest number of Directors necessary to constitute a majority of the full Board of Directors. Under the Federal Power Act, KCP&L can only pay dividends out of retained or current earnings. Under stipulations with the MPSC and KCC, Great Plains Energy and KCP&L have committed to maintain consolidated common equity of not less than 30% and 35%, respectively.

Great Plains Energy made a capital contribution to KCP&L of $94.0 million in 2007. This contribution was used by KCP&L to repay a portion of its outstanding commercial paper. Great Plains Energy made capital contributions to KCP&L of $134.6 million in 2006. These contributions were made to fund Comprehensive Energy Plan projects. At December 31, 2007, KCP&L’s capital contributions from Great Plains Energy totaled $628.6 million and are reflected in common stock in the consolidated KCP&L balance sheet.

21.	PREFERRED STOCK

At December 31, 2007, 1.6 million shares of Cumulative No Par Preferred Stock, 390,000 shares of Cumulative Preferred Stock, $100 par value and 11.0 million shares of no par Preference Stock were authorized under Great Plains Energy’s Articles of Incorporation. All of the 390,000 authorized shares of Cumulative Preferred Stock are issued and outstanding. Great Plains Energy has the option to redeem the $39.0 million of issued Cumulative Preferred Stock at prices ranging from 101% to 103.7%

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of par value. If Great Plains Energy voluntarily files for dissolution or liquidation, the Cumulative Preferred Stock holders are entitled to receive the redemption prices. If a proceeding for dissolution or liquidation is filed against Great Plains Energy, the Cumulative Preferred Stock holders are entitled to receive the $100 par value per share plus accrued and unpaid dividends.

22.	DERIVATIVE INSTRUMENTS

The Company is exposed to a variety of market risks including interest rates and commodity prices. Management has established risk management policies and strategies to reduce the potentially adverse effects that the volatility of the markets may have on the Company’s operating results. The risk management activities, including the use of derivative instruments, are subject to the management, direction and control of internal risk management committees. Management’s interest rate risk management strategy uses derivative instruments to adjust the Company’s liability portfolio to optimize the mix of fixed and floating rate debt within an established range. In addition, the Company uses derivative instruments to hedge against future interest rate fluctuations on anticipated debt issuances. Management maintains commodity-price risk management strategies that use derivative instruments to reduce the effects of fluctuations in fuel and purchased power expense caused by commodity price volatility. Counterparties to commodity derivatives and interest rate swap agreements expose the Company to credit loss in the event of nonperformance. This credit loss is limited to the cost of replacing these contracts at current market rates less the application of counterparty collateral held. Derivative instruments, excluding those instruments that qualify for the NPNS election, which are accounted for by accrual accounting, are recorded on the balance sheet at fair value as an asset or liability. Changes in the fair value are recognized currently in net income unless specific hedge accounting criteria are met.

Interest Rate Risk Management

Fair Value Hedges

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

Forward Starting Swaps

In July 2007, Great Plains Energy entered into three FSS, with a total notional amount of $250.0 million, to hedge against interest rate fluctuations on future issuances of long-term debt. The long-term debt issuance is contingent on the consummation of the acquisition of Aquila. The FSS was designed to effectively remove most of the interest rate and, to the extent that swap spreads correlate with credit spreads, some degree of credit spread uncertainty with respect to the debt to be issued, thereby enabling Great Plains Energy to predict with greater assurance its future interest costs on that debt. The transaction is an economic hedge (non-hedging derivative) that does not qualify for cash flow hedge accounting. The change in the fair value of this derivative instrument increased interest expense by $16.4 million in 2007.

In 2006, KCP&L entered into two FSS to hedge against interest rate fluctuations on the $250.0 million 10-year long-term debt that KCP&L issued in the second quarter of 2007. The FSS settled simultaneously with the issuance of the long-term fixed rate debt. The FSS were accounted for as a cash flow hedge and no ineffectiveness was recorded on the FSS. A pre-tax gain of $3.3 million on the FSS was recorded to OCI and is being reclassified to interest expense over the life of the 10-year debt.

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An insignificant amount was reclassified from OCI to interest expense subsequent to the debt issuance. At December 31, 2007, KCP&L had $3.1 million recorded in OCI for the FSS.

Treasury Locks

In 2007, Great Plains Energy entered into three T-Locks, with a notional amount of $350.0 million, to hedge against interest rate fluctuations on the U.S. Treasury rate component on future issuances of long-term debt. Following a change in financing plans, Great Plains Energy assigned the T-Locks to KCP&L. The T-Locks will settle simultaneously with the issuance of future long-term fixed rate debt issued by KCP&L. The T-Locks remove the uncertainty with respect to the U.S. Treasury rate component of the debt to be issued, thereby enabling KCP&L to predict with greater assurance its future interest costs on that debt. The T-Locks are accounted for as cash flow hedges and the fair value is recorded as a current asset or liability with an offsetting entry to OCI, to the extent the hedges are effective, until the forecasted transaction occurs. KCP&L’s interest expense for 2007 includes a loss of $1.4 million due to ineffectiveness of the cash flows. The pre-tax gain or loss on the T-Locks recorded to OCI will be reclassified to interest expense over the life of the future debt issuance.

In 2007, Great Plains Energy entered into a T-Lock to hedge against interest rate fluctuations on the U.S. Treasury rate component of the $100.0 million 10-year long-term debt that Great Plains Energy issued in the third quarter of 2007. The T-Lock settled simultaneously with the issuance of the long-term fixed rate debt. The T-Lock was accounted for as a cash flow hedge and no ineffectiveness was recorded on the T-Lock. A pre-tax loss of $4.5 million on the T-Lock was recorded to OCI and is being reclassified to interest expense over the life of the issued 10-year debt. An insignificant amount was reclassified from OCI to interest expense subsequent to the debt issuance. At December 31, 2007, Great Plains Energy had $4.4 million recorded in OCI for this T-Lock. Great Plains Energy had originally hedged this debt in 2006 using a T-Lock. In the first quarter of 2007, Great Plains Energy allowed the T-Lock to expire while the terms of the debt offering were re-evaluated. The $0.2 million gain recorded in OCI at December 31, 2006, and the first quarter fair value loss of $0.1 million was reclassified to interest expense as cash flow ineffectiveness.

Commodity Risk Management

KCP&L

KCP&L’s risk management policy is to use derivative instruments to mitigate its exposure to market price fluctuations on a portion of its projected natural gas purchases to meet generation requirements for retail and firm wholesale sales. At December 31, 2007, KCP&L had hedged 35% and 4% of its 2008 and 2009, respectively, projected natural gas usage for retail load and firm MWh sales, primarily by utilizing fixed forward physical contracts. The fair values of these instruments are recorded as current assets or current liabilities with an offsetting entry to OCI for the effective portion of the hedge. To the extent the hedges are not effective, the ineffective portion of the change in fair market value is recorded currently in fuel expense. KCP&L did not record any gains or losses due to ineffectiveness during 2007, 2006 and 2005.

Strategic Energy

Strategic Energy maintains a commodity-price risk management strategy that uses forward physical energy purchases and other derivative instruments to reduce the effects of fluctuations in purchased power expense caused by commodity-price volatility. Derivative instruments are used to limit the unfavorable effect that price increases will have on electricity purchases, effectively fixing the future purchase price of electricity for the applicable forecasted usage and protecting Strategic Energy from significant price volatility. The maximum term over which Strategic Energy hedged its exposure and variability of future cash flows was 5.0 years and 5.5 years at December 31, 2007 and 2006, respectively.

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Certain forward fixed price purchases and swap agreements are designated as cash flow hedges. The fair values of these instruments are recorded as assets or liabilities with an offsetting entry to OCI for the effective portion of the hedge. To the extent the hedges are not effective, the ineffective portion of the change in fair market value is recorded currently in purchased power. When the forecasted purchase is completed, the amounts in OCI are reclassified to purchased power. Purchased power expense for 2007, 2006 and 2005 included a gain of $3.1 million, a loss of $1.9 million, and a gain of $1.7 million, respectively, due to the change in ineffectiveness of the cash flow hedges. In addition, Strategic Energy recorded a gain of $16.7 million, a loss of $24.8 million and a gain of $1.6 million for 2007, 2006 and 2005, respectively, for the change in the components of cash flow hedges that were excluded from the measurement of cash flow ineffectiveness.

As part of its commodity-price risk management strategy, Strategic Energy also enters into economic hedges (non-hedging derivatives) that do not qualify for cash flow hedge accounting. The changes in the fair value of these derivative instruments recorded as a component of purchased power expense for 2007, 2006 and 2005 included a gain of $33.0 million, a loss of $30.0 million and a loss of $0.8 million, respectively.

The fair value of non-hedging derivatives at December 31, 2007, also includes certain forward contracts at Strategic Energy that were amended during 2005. Prior to being amended, the contracts were accounted for under the NPNS election in accordance with SFAS No. 133. As a result of being amended, the contracts no longer qualify for NPNS exceptions or cash flow hedge accounting and are now accounted for as non-hedging derivatives with the fair value at amendment being recorded as a deferred liability that will be reclassified to net income as the contracts settle. In 2007, 2006 and 2005, Strategic Energy amortized $0.7 million, $5.1 million and an insignificant amount, respectively, of the deferred liability to purchased power expense related to the delivery of power under the contracts. Strategic Energy will amortize the remaining deferred liability over the remaining original contract lengths, which end in the first quarter of 2008. After the amendment, Strategic Energy is recording the change in fair value of these contracts to purchased power expense.

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The notional and recorded fair values of the companies’ open positions for derivative instruments are summarized in the following table. The fair values of these derivatives are recorded on the consolidated balance sheets.


	December 31
	2007					2006
	Notional					Notional
	Contract		Fair			Contract		Fair
	Amount		Value			Amount		Value
Great Plains Energy	(millions)
Swap contracts
Cash flow hedges	$	267.7	$	(9.5	)	$	477.5	$	(38.9	)
Non-hedging derivatives		80.8		(2.9	)		37.1		(6.8	)
Forward contracts
Cash flow hedges		954.6		24.1			871.5		(69.7	)
Non-hedging derivatives		300.3		3.5			250.7		(24.8	)
Anticipated debt issuance
Forward starting swap		-		-			225.0		(0.4	)
Treasury lock		350.0		(28.0	)		77.6		0.2
Non-hedging derivatives		250.0		(16.4	)		-		-
Interest rate swaps
Fair value hedges		-		-			146.5		(1.8	)
Consolidated KCP&L
Swap contracts
Cash flow hedges		5.5		0.7			-		-
Forward contracts
Cash flow hedges		1.4		-			6.1		(0.5	)
Anticipated debt issuance
Treasury lock		350.0		(28.0	)		-		-
Forward starting swap		-		-			225.0		(0.4	)
Interest rate swaps
Fair value hedges		-		-			146.5		(1.8	)

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The amounts recorded in accumulated OCI related to the cash flow hedges are summarized in the following table.


	Great Plains Energy						Consolidated KCP&L
	December 31						December 31
	2007			2006			2007			2006
	(millions)
Current assets	$	14.1		$	12.7		$	14.6		$	12.0
Deferred charges		31.5			1.7			-			-
Current liabilities		(48.1	)		(56.3	)		(26.6	)		(1.3	)
Deferred income taxes		0.4			32.1			4.5			(4.0	)
Deferred credits		0.2			(35.3	)		-			-
Total	$	(1.9	)	$	(45.1	)	$	(7.5	)	$	6.7

Great Plains Energy’s accumulated OCI in the table above at December 31, 2007, includes $17.1 million that is expected to be reclassified to expenses over the next twelve months. Consolidated KCP&L’s accumulated OCI includes $1.0 million that is expected to be reclassified to expense over the next twelve months.

The amounts reclassified to expenses are summarized in the following table.


	2007			2006			2005
Great Plains Energy	(millions)
Fuel expense	$	-		$	-		$	(0.5	)
Purchased power expense		83.7			54.6			(35.6	)
Interest expense		(0.4	)		(0.4	)		-
Income taxes		(34.1	)		(22.4	)		15.1
OCI	$	49.2		$	31.8		$	(21.0	)
Consolidated KCP&L
Fuel expense	$	-		$	-		$	(0.5	)
Interest expense		(0.6	)		(0.4	)		-
Income taxes		0.2			0.2			0.2
OCI	$	(0.4	)	$	(0.2	)	$	(0.3	)

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23.	JOINTLY OWNED ELECTRIC UTILITY PLANTS

KCP&L’s share of jointly owned electric utility plants at December 31, 2007, is detailed in the following table.


		Wolf Creek		LaCygne		Iatan No. 1			Iatan No. 2
		Unit		Units		Unit			Unit
		(millions, except MW amounts)
KCP&L's share			47%		50%		70%			55%

Utility plant in service		$	1,381.9	$	389.9	$	275.4		$	-
Accumulated depreciation			747.7		262.8		199.8			-
Nuclear fuel, net			60.6		-		-			-
Construction work in progress			27.1		5.1		120.9			294.9
KCP&L's 2008 accredited capacity-MWs			545		709		456	(a)	NA
(a)	The Iatan No. 2 air permit limits KCP&L's accredited capacity of Iatan No. 1 to 456 MWs from
	469 MWs until the air quality control equipment included in the Comprehensive Energy Plan is
	operational.

Each owner must fund its own portion of the plant's operating expenses and capital expenditures. KCP&L’s share of direct expenses is included in the appropriate operating expense classifications in Great Plains Energy’s and consolidated KCP&L’s financial statements.

24.	NEW ACCOUNTING STANDARDS

SFAS No. 157

In September 2006, the FASB issued SFAS No. 157, “Fair Value Measurements.” This statement defines fair value, establishes a framework for measuring fair value in GAAP and expands disclosures about fair value measurements. The statement does not require any new fair value measurements but provides guidance on how to measure fair value when required. SFAS No. 157 also emphasizes that fair value is a market-based measurement, not an entity-specific measurement, and sets out a fair value hierarchy with the highest priority being quoted prices in active markets. The provisions of this statement are effective for Great Plains Energy and consolidated KCP&L January 1, 2008. In February 2008, the FASB issued FASB Staff Position (FSP) FAS No. 157-2 delaying the effective date for all nonfinancial assets and nonfinancial liabilities, except those that are recognized or disclosed at fair value in the financial statements on a recurring basis at least annually. This includes items such as AROs, reporting units and long-lived asset groups measured at fair value for impairment testing, nonfinancial assets and liabilities measured at fair value in a business combination and not measured at fair value in subsequent periods, etc. For these items, the provisions of this statement are effective for Great Plains Energy and consolidated KCP&L beginning January 1, 2009, and interim periods within that fiscal year. The impact to the financial statements of Great Plains Energy and consolidated KCP&L upon adoption of SFAS No. 157 in 2008 is expected to be insignificant. Management is currently evaluating the impact of adoption to those nonfinancial assets and liabilities delayed by FSP FAS No. 57-2 and has not yet determined the impact on Great Plains Energy's and consolidated KCP&L's financial statements. In January 2008, the FASB proposed FSP FAS No. 157-c, “Measuring Liabilities under FASB Statement No. 157” to amend the standard to clarify the principles on fair value measurement of liabilities. Management is currently evaluating the impact of the proposed FSP and will continue to monitor for a final FSP expected in the first quarter of 2008.

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SFAS No. 160

In December 2007, the FASB issued SFAS No. 160, “Noncontrolling Interests in Consolidated Financial Statements – an amendment of ARB No. 51.” This statement amends ARB No. 51, “Consolidated Financial Statements,” to establish accounting and reporting standards for the noncontrolling interests (referred to as minority interest in current practice) in a subsidiary and for the deconsolidation of a subsidiary. This statement requires, among other things, noncontrolling interests to be classified as a separate component of equity and no longer limits accumulated losses to the original carrying amount of noncontrolling interest. The provisions of this statement are effective for Great Plains Energy and consolidated KCP&L beginning January 1, 2009. Management has evaluated the impact of SFAS No. 160 and has determined there will be no impact on Great Plains Energy and consolidated KCP&L consolidated financial statements.

SFAS No. 141(R)

In December 2007, the FASB issued SFAS No. 141 (revised 2007), “Business Combinations.” This statement significantly changes how business combinations are accounted for in current practice. Changes to current practice include, among other things, requiring all assets acquired and liabilities assumed in a business combination to be measured at fair value in accordance with SFAS No. 157 as of the acquisition date, an acquirer to expense transaction costs and equity securities issued as consideration in a business combination be recorded at fair value as of the acquisition date. The provisions of this statement are effective for Great Plains Energy and consolidated KCP&L prospectively for business combinations occurring on or after January 1, 2009, except it requires the prospective application of the provisions related to income taxes to business combinations occurring in 2008. As the anticipated Aquila acquisition is expected to close in 2008, management is currently evaluating the impact of the income tax provisions of SFAS No. 141(R) and has not yet determined the impact on the Aquila acquisition.

FSP FIN 39-1

In April 2007, the FASB issued FSP FIN 39-1 “Amendment of FASB Interpretation No. 39.” This FSP amends FIN 39, “Offsetting of Amounts Related to Certain Contracts – an interpretation of APB Opinion No. 10 and FASB Statement No. 105,” to permit a reporting entity to offset fair value amounts recognized for the right to reclaim cash collateral (a receivable) or the obligation to return cash collateral (a payable) against fair value amounts recognized for derivative instruments executed with the same counterparty under the same master netting arrangement that have been offset in accordance with FIN 39. The provisions of this position are effective for Great Plains Energy and consolidated KCP&L beginning January 1, 2008, and are to be applied retrospectively, allowing a change in accounting policy upon adoption to offset or not offset fair value amounts recognized for derivative instruments under master netting arrangements. Great Plains Energy and consolidated KCP&L currently offset fair value amounts recognized for derivatives instruments under master netting arrangements, which will include rights and obligations to cash collateral, if any, upon adoption.

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25.	QUARTERLY OPERATING RESULTS (UNAUDITED)


	Quarter
Great Plains Energy	1st			2nd		3rd		4th
2007	(millions, except per share amounts)
Operating revenue	$	664.3		$	804.6	$	992.0	$	806.2
Operating income		54.4			54.3		113.0		98.1
Net income		23.4			25.6		62.1		48.1
Basic and diluted earnings per common share		0.28			0.29		0.72		0.56
2006
Operating revenue	$	559.2		$	642.1	$	818.5	$	655.5
Operating income		7.6			73.3		93.6		60.9
Net income (loss)		(1.1	)		38.4		55.9		34.4
Basic and diluted earnings (loss) per common share		(0.02	)		0.49		0.69		0.42


	Quarter
Consolidated KCP&L	1st		2nd		3rd		4th
2007	(millions)
Operating revenue	$	255.7	$	319.1	$	416.0	$	301.9
Operating income		13.1		70.1		127.0		68.7
Net income		2.0		36.5		76.6		41.6
2006
Operating revenue	$	240.4	$	290.9	$	359.3	$	249.8
Operating income		31.7		69.2		118.4		51.7
Net income		13.0		36.6		69.5		30.2

Quarterly data is subject to seasonal fluctuations with peak periods occurring in the summer months.

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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Shareholders of

Great Plains Energy Incorporated

Kansas City, Missouri

We have audited the accompanying consolidated balance sheets of Great Plains Energy Incorporated and subsidiaries (the “Company”) as of December 31, 2007 and 2006, and the related consolidated statements of income, comprehensive income, common shareholders’ equity, and cash flows for each of the three years in the period ended December 31, 2007. Our audits also included the financial statement schedules listed in the Index at Item 15. These financial statements and financial statement schedules are the responsibility of the Company’s management. Our responsibility is to express an opinion on the financial statements and financial statement schedules based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, such consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2007 and 2006, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2007, in conformity with accounting principles generally accepted in the United States of America (“U.S. GAAP”). Also, in our opinion, such financial statement schedules, when considered in relation to the basic consolidated financial statements taken as a whole, present fairly, in all material respects, the information set forth therein.

As discussed in Note 3 to the consolidated financial statements, the Company adopted Statement of Financial Accounting Standard (SFAS) No. 158, Employers’ Accounting for Defined Benefit Pension and Other Postretirement Plans – an amendment of FASB Statements No. 87, 88, 106, and 132(R) on December 31, 2006. As discussed in Note 10 to the consolidated financial statements, the Company adopted Financial Accounting Standards Board Interpretation (FIN) No. 48 Accounting for Uncertainty in Income Taxes – an interpretation of FASB Statement No. 109 on January 1, 2007.

We have also audited, in accordance with the standards of the PCAOB, the Company’s internal control over financial reporting as of December 31, 2007, based on the criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission, and our report dated February 28, 2008, expressed an unqualified opinion on the Company’s internal control over financial reporting.

/s/DELOITTE & TOUCHE LLP

Kansas City, Missouri

February 28, 2008

130

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors of

Kansas City Power & Light Company

Kansas City, Missouri

We have audited the accompanying consolidated balance sheets of Kansas City Power & Light Company and subsidiaries (the “Company”) as of December 31, 2007 and 2006, and the related consolidated statements of income, comprehensive income, common shareholder’s equity, and cash flows for each of the three years in the period ended December 31, 2007. Our audits also included the financial statement schedules listed in the Index at Item 15. These financial statements and financial statement schedules are the responsibility of the Company’s management. Our responsibility is to express an opinion on the financial statements and financial statement schedules based on our audits.

As discussed in Note 3 to the consolidated financial statements, the Company adopted Statement of Financial Accounting Standard (SFAS) No. 158, Employers’ Accounting for Defined Benefit Pension and Other Postretirement Plans – an amendment of FASB Statements No. 87, 88, 106, and 132(R), on December 31, 2006. As discussed in Note 10 to the consolidated financial statements, the Company adopted Financial Accounting Standards Board Interpretation (FIN) No. 48 Accounting for Uncertainty in Income Taxes – an interpretation of FASB Statement No. 109, on January 1, 2007.

/s/DELOITTE & TOUCHE LLP

Kansas City, Missouri

February 28, 2008

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ITEM 9. CHANGES AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

None.

ITEM 9A. CONTROLS AND PROCEDURES

Disclosure Controls and Procedures

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

Based upon these evaluations, the chief executive officer and chief financial officer of Great Plains Energy have concluded as of the end of the period covered by this report that the disclosure controls and procedures of Great Plains Energy are functioning effectively to provide reasonable assurance that: (i) the information required to be disclosed by the Company in the reports that it files or submits under the Securities Exchange Act of 1934, as amended, is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms; and (ii) the information required to be disclosed by the Company in the reports that it files or submits under the Securities Exchange Act of 1934, as amended, is accumulated and communicated to their respective management, including the principal executive and principal financial officers, as appropriate to allow timely decisions regarding required disclosure.

Changes in Internal Control Over Financial Reporting

There has been no change in Great Plains Energy’s internal control over financial reporting that occurred during the quarterly period ended December 31, 2007, that has materially affected, or is reasonably likely to materially affect, its internal control over financial reporting.

Management’s Report on Internal Control Over Financial Reporting

Because of the inherent limitations of internal control over financial reporting, including the possibility of collusion or improper override of controls, material misstatements due to error or fraud may not be prevented or detected on a timely basis. Therefore, even those systems determined to be effective can provide only reasonable assurance with respect to financial statement preparation and presentation. Also, projections of any evaluation of the effectiveness of internal control over financial reporting to future periods are subject to the risk that the controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Great Plains Energy

Management is responsible for establishing and maintaining adequate internal control over financial reporting (as defined in Rule 13a-15(f) under the Securities Exchange Act of 1934, as amended) for Great Plains Energy. Under the supervision and with the participation of Great Plains Energy’s chief executive officer and chief financial officer, management evaluated the effectiveness of Great Plains Energy’s internal control over financial reporting as of December 31, 2007. Management used for this evaluation the framework in Internal Control – Integrated Framework issued by the Committee of Sponsoring Organizations (COSO) of the Treadway Commission. Management has concluded that, as of December 31, 2007, Great Plains Energy’s internal control over financial reporting is effective based on the criteria set forth in the COSO framework. Deloitte & Touche LLP, the independent registered public accounting firm that audited the financial statements included in this annual report on Form 10-K, has issued its report on Great Plain’s Energy’s internal control over financial reporting, which is included below.

132

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Shareholders of

Great Plains Energy Incorporated

Kansas City, Missouri

We have audited the internal control over financial reporting of Great Plains Energy Incorporated and subsidiaries (the “Company”) as of December 31, 2007, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission. The Company's management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’s Report on Internal Control Over Financial Reporting. Our responsibility is to express an opinion on the Company's internal control over financial reporting based on our audit.

We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

A company's internal control over financial reporting is a process designed by, or under the supervision of, the company's principal executive and principal financial officers, or persons performing similar functions, and effected by the company's board of directors, management, and other personnel to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”). A company's internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company's assets that could have a material effect on the financial statements.

Because of the inherent limitations of internal control over financial reporting, including the possibility of collusion or improper management override of controls, material misstatements due to error or fraud may not be prevented or detected on a timely basis. Also, projections of any evaluation of the effectiveness of the internal control over financial reporting to future periods are subject to the risk that the controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2007, based on the criteria established in Internal Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission.

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We have also audited, in accordance with the standards of the PCAOB, the consolidated financial statements and financial statement schedules as of and for the year ended December 31, 2007, of the Company, and our report dated February 28, 2008, expressed an unqualified opinion on those consolidated financial statements and financial statement schedules and included an explanatory paragraph regarding the Company’s adoption of new accounting standards.

/s/DELOITTE & TOUCHE LLP

Kansas City, Missouri

February 28, 2008

ITEM 9A (T). CONTROLS AND PROCEDURES

Disclosure Controls and Procedures

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

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

Changes in Internal Control Over Financial Reporting

There has been no change in KCP&L’s internal control over financial reporting that occurred during the quarterly period ended December 31, 2007, that has materially affected, or is reasonably likely to materially affect, its internal control over financial reporting.

Management’s Report on Internal Control Over Financial Reporting

134

KCP&L

Management is responsible for establishing and maintaining adequate internal control over financial reporting (as defined in Rule 15d-15(f) under the Securities Exchange Act of 1934, as amended) for KCP&L. Under the supervision and with the participation of KCP&L’s chief executive officer and chief financial officer, management evaluated the effectiveness of KCP&L’s internal control over financial reporting as of December 31, 2007. Management used for this evaluation the framework in Internal Control – Integrated Framework issued by the COSO of the Treadway Commission. Management has concluded that, as of December 31, 2007, KCP&L’s internal control over financial reporting is effective based on the criteria set forth in the COSO framework. Deloitte & Touche LLP, the independent registered public accounting firm that audited the financial statements included in this annual report on Form 10-K, has issued its report on KCP&L’s internal control over financial reporting, which is included below.

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors of

Kansas City Power & Light Company

Kansas City, Missouri

We have audited the internal control over financial reporting of Kansas City Power & Light Company and subsidiaries (the “Company”) as of December 31, 2007, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission. The Company's management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’s Report on Internal Control Over Financial Reporting. Our responsibility is to express an opinion on the Company's internal control over financial reporting based on our audit.

135

/s/DELOITTE & TOUCHE LLP

Kansas City, Missouri

February 28, 2008

ITEM 9B. OTHER INFORMATION

The following information was required to be disclosed by Great Plains Energy under Item 5.02(e) of Form 8-K but was not reported.

In January 2008, the Compensation and Development Committee of the Great Plains Energy Board clarified the treatment of outstanding grants of restricted stock and performance shares held by employees of Strategic Energy under Great Plains Energy’s Long-Term Incentive Plan dated as of May 7, 2002 (Plan) in order to provide that such awards would vest, and thus would become payable, in the event that Great Plains Energy were to cease to own, directly or indirectly, more than 80% of the outstanding equity interest in Strategic Energy. Shahid Malik, who is Executive Vice President of Great Plains Energy and the President and Chief Executive Officer of Strategic Energy, is a “named executive officer” of Great Plains Energy (as defined in applicable SEC regulations) and a participant in the Plan.

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

On February 27, 2008, Great Plains Energy, KCP&L, the Staff of the KCC (Staff), the Citizens’ Utility Ratepayers Board (CURB), Aquila, Inc. d/b/a Aquila Networks (Aquila), Black Hills Corporation and Black Hills/Kansas Gas Utility Company, LLC, filed a joint motion and settlement agreement (Agreement) in the pending KCC proceedings regarding the proposed Great Plains Energy – Aquila transaction. The Agreement provides, among other things, for the exclusion from Kansas rate recovery of all transaction costs (currently estimated to total approximately $82 million), exclusion of acquisition premium and recovery of $10 million of transition costs (currently estimated to be approximately $59 million) over five years beginning with rates expected to be effective in 2010. The Agreement establishes certain quality of service performance metrics with a maximum annual penalty exposure of $5.7 million. The Agreement further provides that KCP&L’s rate case expected to be filed in 2008 will not include any of the costs or benefits associated with the transaction, and the allocation factors used in such case will not reflect the proposed transaction. The parties also agreed to not contest the rights of Staff and CURB to request KCC to

136

amend its order to reflect any conditions contained in an order in the Missouri proceedings that are detrimental to Kansas or more favorable to KCP&L.

The Agreement is subject to KCC approval, and the Agreement is void if not approved in its entirety. It is possible that the KCC may approve the Agreement with changes, or may not approve the Agreement. A hearing on the Agreement is anticipated to occur on March 7, 2008.

PART III

ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE

Great Plains Energy Directors

The information required by this item is incorporated by reference from the Great Plains Energy 2008 Proxy Statement, which will be filed with the SEC no later than April 29, 2008 (Proxy Statement):

·	Information regarding the directors of Great Plains Energy required by this item is contained in the Proxy Statement section titled “Election of Directors.”

·	Information regarding compliance with Section 16(a) of the Securities Exchange Act of 1934 required by this item is contained in the Proxy Statement section titled “Section 16(a) Beneficial Ownership Reporting Compliance.”

·	Information regarding the Audit Committee of Great Plains Energy required by this item is contained in the Proxy Statement section titled “Corporate Governance.”

Great Plains Energy and KCP&L Executive Officers

Information required by this item regarding the executive officers of Great Plains Energy and KCP&L is contained in this report in the Part I, Item 1 sections titled “Officers of Great Plains Energy” and “Officers of KCP&L”.

Great Plains Energy and KCP&L Code of Ethics

The Company has adopted a Code of Ethical Business Conduct (Code), which applies to all directors, officers and employees of Great Plains Energy, KCP&L and their subsidiaries. The Code is posted on the investor relations page of our Internet websites at www.greatplainsenergy.com and www.kcpl.com. A copy of the Code is available, without charge, upon written request to Corporate Secretary, Great Plains Energy Incorporated, 1201 Walnut, Kansas City, Missouri 64106. Great Plains Energy and KCP&L intend to satisfy the disclosure requirements under Item 5.05 of Form 8-K regarding an amendment to, or a waiver from, a provision of the Code that applies to the principal executive officer, principal financial officer, principal accounting officer or controller of those companies by posting such information on the investor relations page of their Internet websites.

Other KCP&L Information

The other information required by this item regarding KCP&L has been omitted in reliance on General Instruction (I).

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ITEM 11. EXECUTIVE COMPENSATION

GREAT PLAINS ENERGY

The information required by this item regarding compensation of Great Plains Energy directors and named executive officers contained in the sections titled “Corporate Governance,” “Executive Compensation,” “Director Compensation,” “Compensation Discussion and Analysis” and “Compensation Committee Report” of the Proxy Statement is incorporated by reference.

KCP&L

The information required by this item regarding KCP&L has been omitted in reliance on General Instruction (I).

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS

GREAT PLAINS ENERGY

The information required by this item regarding security ownership of the directors and executive officers of Great Plains Energy contained in the section titled “Security Ownership of Certain Beneficial Owners, Directors and Officers” of the 2008 Proxy Statement is incorporated by reference.

KCP&L

The information required by this item regarding KCP&L has been omitted in reliance on General Instruction (I).

Equity Compensation Plan

The information required by this item regarding Great Plains Energy’s equity compensation plan is in Item 5. Market for the Registrants’ Common Equity and Related Shareholder Matters, of this report and is incorporated by reference.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE

GREAT PLAINS ENERGY

The information required by this item contained in the sections titled “Director Independence” and, if applicable, “Certain Relationships and Related Transactions” of the 2008 Proxy Statement is incorporated by reference.

KCP&L

The information required by this item regarding KCP&L has been omitted in reliance on General Instruction (I).

ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES

GREAT PLAINS ENERGY

The information required by this item regarding the independent auditors of Great Plains Energy and its subsidiaries contained in the section titled “Audit Committee Report” of the 2008 Proxy Statement is incorporated by reference.

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KCP&L

The Audit Committee of the Great Plains Energy Board functions as the Audit Committee of KCP&L. The following table sets forth the aggregate fees billed by Deloitte & Touche LLP for audit services rendered in connection with the consolidated financial statements and reports for 2007 and 2006 and for other services rendered during 2007 and 2006 on behalf of KCP&L and its subsidiaries, as well as all out-of-pocket costs incurred in connection with these services:

Fee Category	2007	2006
Audit Fees	$ 1,020,636	$ 984,256
Audit-Related Fees	59,000	44,200
Tax Fees	36,689	21,831
All Other Fees	-	-
Total Fees	$ 1,116,325	$ 1,050,287

Audit Fees: Consists of fees billed for professional services rendered for the audits of the annual consolidated financial statements of KCP&L and its subsidiaries and reviews of the interim condensed consolidated financial statements included in quarterly reports. Audit fees also include: services provided by Deloitte & Touche LLP in connection with statutory and regulatory filings or engagements; audit reports on audits of the effectiveness of internal control over financial reporting and on management’s assessment of the effectiveness of internal control over financial reporting and other attest services, except those not required by statute or regulation; services related to filings with the SEC, including comfort letters, consents and assistance with and review of documents filed with the SEC; and accounting research in support of the audit.

Audit-Related Fees: Consists of fees billed for assurance and related services that are reasonably related to the performance of the audit or review of consolidated financial statements of KCP&L and its subsidiaries and are not reported under “Audit Fees”. These services include consultation concerning financial accounting and reporting standards.

Tax Fees: Consists of fees billed for tax compliance and related support of tax returns and other tax services, including assistance with tax audits, and tax research and planning.

All Other Fees: Consists of fees for all other services other than those reported above.

Audit Committee Pre-Approval of Audit and Permissible Non-Audit Services of Independent Auditors

The Audit Committee pre-approves all audit and permissible non-audit services provided by the independent auditor to KCP&L and its subsidiaries. These services may include audit services, audit-related services, tax services and other services. The Audit Committee has adopted for KCP&L and its subsidiaries policies and procedures for the pre-approval of services provided by the independent auditor. Under these policies and procedures, the Audit Committee may pre-approve certain types of services, up to aggregate fee levels established by the Audit Committee. The Audit Committee as well may specifically approve audit and permissible non-audit services on a case-by-case basis. Any proposed service within a pre-approved type of service that would cause the applicable fee level to be exceeded cannot be provided unless the Audit Committee either amends the applicable fee level or specifically approves the proposed service. Pre-approval is generally provided for up to one year, unless the Audit Committee specifically provides for a different period. The Audit Committee receives quarterly reports regarding the pre-approved services performed by the independent auditor. The Chairman of the Audit Committee may between meetings pre-approve audit and non-audit services provided by the independent auditor, and report such pre-approval at the next Audit Committee meeting.

139

PART IV

ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES

Financial Statements

Great Plains Energy		Page No.
a.	Consolidated Statements of Income for the years ended December 31, 2007, 2006 and 2005	59
b.	Consolidated Balance Sheets - December 31, 2007 and 2006	60
c.	Consolidated Statements of Cash Flows for the years ended December 31, 2007, 2006 and 2005	62
d.	Consolidated Statements of Common Shareholders’ Equity for the years ended December 31, 2007, 2006 and 2005	63
e.	Consolidated Statements of Comprehensive Income for the years ended December 31, 2007, 2006 and 2005	64
f.	Notes to Consolidated Financial Statements	71
g.	Report of Independent Registered Public Accounting Firm	130

KCP&L
h.	Consolidated Statements of Income for the years ended December 31, 2007, 2006 and 2005	65
i.	Consolidated Balance Sheets - December 31, 2007 and 2006	66
j.	Consolidated Statements of Cash Flows for the years ended December 31, 2007, 2006 and 2005	68
k.	Consolidated Statements of Common Shareholder’s Equity for the years ended December 31, 2007, 2006 and 2005	69
l.	Consolidated Statements of Comprehensive Income for the years ended December 31, 2007, 2006 and 2005	70
m.	Notes to Consolidated Financial Statements	71
n.	Report of Independent Registered Public Accounting Firm	131

Financial Statement Schedules
	Great Plains Energy
a.	Schedule I – Parent Company Financial Statements	149
b.	Schedule II – Valuation and Qualifying Accounts and Reserves	154
	KCP&L
c.	Schedule II – Valuation and Qualifying Accounts and Reserves	155

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Exhibits

Great Plains Energy Documents

Exhibit Number		Description of Document
2.1.1	*	Agreement and Plan of Merger among Aquila, Inc., Great Plains Energy Incorporated, Gregory Acquisition Corp., and Black Hills Corporation dated as of February 6, 2007 (Exhibit 2.1 to Form 8-K dated February 7, 2007).
2.1.2		Mutual Notice of Extension among Aquila, Inc., Great Plains Energy Incorporated, Gregory Acquisition Corp., and Black Hills Corporation dated as of January 31, 2008.
3.1.1	*	Articles of Incorporation of Great Plains Energy Incorporated dated as of February 26, 2001 and corrected as of October 13, 2006 (Exhibit 3.1 to Form 10-Q for the quarter ended September 30, 2006).
3.1.2	*	By-laws of Great Plains Energy Incorporated, as amended May 1, 2007 (Exhibit 3.1 to Form 8-K dated May 1, 2007).
4.1.5	*	Indenture, dated June 1, 2004, between Great Plains Energy Incorporated and BNY Midwest Trust Company, as Trustee (Exhibit 4.5 to Form 8-A/A, dated June 14, 2004).
4.1.6	*	First Supplemental Indenture, dated June 14, 2004, between Great Plains Energy Incorporated and BNY Midwest Trust Company, as Trustee (Exhibit 4.5 to Form 8-A/A, dated June 14, 2004).
4.1.7	*	Second Supplemental Indenture dated as of September 25, 2007, between Great Plains Energy Incorporated and The Bank of New York Trust Company, N.A., as trustee (Exhibit 4.1 to Form 8-K dated September 25, 2007).
10.1.1	*+	Amended Long-Term Incentive Plan, effective as of May 7, 2002 (Exhibit 10.1.a to Form 10-K for the year ended December 31, 2002).
10.1.2	*+	Great Plains Energy Incorporated Long-Term Incentive Plan as amended May 1, 2007 (Exhibit 10.1 to Form 8-K filed May 4, 2007).
10.1.3	*+	Great Plains Energy Incorporated Long-Term Incentive Plan Awards Standards and Administration effective as of February 7, 2006 (Exhibit 10.1.b to Form 10-K for the year ended December 31, 2005).
10.1.4	*+	Form of 2005 three-year Restricted Stock Agreement Pursuant to the Great Plains Energy Incorporated Long-Term Incentive Plan Effective May 7, 2002 (Exhibit 10.2 to Form 8-K dated February 4, 2005).
10.1.5	*+	Form of 2006 Restricted Stock Agreement Pursuant to the Great Plains Energy Incorporated Long-Term Incentive Plan Effective May 7, 2002 (Exhibit 10.1.e to Form 10-K for the year ended December 31, 2005).
10.1.6	*+	Form of Restricted Stock Agreement Pursuant to the Great Plains Energy Incorporated Long-Term Incentive Plan Effective May 7, 2002 (Exhibit 10.1.6 to Form 10-K for the year ended December 31, 2006).
10.1.7	*+	Form of 2005 three-year Performance Share Agreement Pursuant to the Great Plains Energy Incorporated Long-Term Incentive Plan Effective May 7, 2002 (Exhibit 10.1.a to Form 10-Q for the quarter ended March 31, 2005).

141

10.1.8	*+	Form of 2006 three-year Performance Share Agreement Pursuant to the Great Plains Energy Incorporated Long-Term Incentive Plan Effective May 7, 2002 (Exhibit 10.1.h to Form 10-K for the year ended December 31, 2005).
10.1.9	*+	Form of 2007 three-year Performance Share Agreement Pursuant to the Great Plains Energy Incorporated Long-Term Incentive Plan Effective May 7, 2002 for Great Plains Energy and KCP&L officers (Exhibit 10.1.10 to Form 10-K for the year ended December 31, 2006).
10.1.10	*+	Form of 2007 three-year Performance Share Agreement Pursuant to the Great Plains Energy Incorporated Long-Term Incentive Plan Effective May 7, 2002 for Strategic Energy officers (Exhibit 10.1.11 to Form 10-K for the year ended December 31, 2006).
10.1.11	*+	Form of Amendment to 2003 Stock Option Grants (Exhibit 10.1.9 to Form 10-Q for the quarter ended September 30, 2007).
10.1.12	*+	Strategic Energy, L.L.C. Long-Term Incentive Plan Grants 2005, as amended May 2, 2005 and October 31, 2006 (Exhibit 10.1.g to Form 10-Q for the quarter ended September 30, 2006).
10.1.13	*+	Strategic Energy, L.L.C. Executive Long-Term Incentive Plan 2006 (Exhibit 10.1.j to Form 10-K for the year ended December 31, 2005).
10.1.14	*+	Strategic Energy, L.L.C. Executive Committee Long-Term Incentive Plan dated as of January 1, 2007, (Exhibit 10.1.6 to Form 10-Q for the quarter ended June 30, 2007).
10.1.15	*+	Great Plains Energy Incorporated Kansas City Power & Light Company Annual Incentive Plan amended effective as of January 1, 2007 (Exhibit 10.2 to Form 8-K filed May 4, 2007).
10.1.16	*+	Strategic Energy, L.L.C. Executive Committee Annual Incentive Plan dated as of January 1, 2007 (Exhibit 10.3 to Form 8-K filed May 4, 2007).
10.1.17	*+	Form of Indemnification Agreement with each officer and director (Exhibit 10-f to Form 10-K for year ended December 31, 1995).
10.1.18	*+	Form of Conforming Amendment to Indemnification Agreement with each officer and director (Exhibit 10.1.a to Form 10-Q for the quarter ended March 31, 2003).
10.1.19	*+	Form of Indemnification Agreement with officers and directors (Exhibit 10.1.p to Form 10-K for the year ended December 31, 2005).
10.1.20	*+	Form of Change in Control Severance Agreement with Michael J. Chesser (Exhibit 10.1.a to Form 10-Q for the quarter ended September 30, 2006).
10.1.21	*+	Form of Change in Control Severance Agreement with William H. Downey (Exhibit 10.1.b to Form 10-Q for the quarter ended September 30, 2006).
10.1.22	*+	Form of Change in Control Severance Agreement with John R. Marshall (Exhibit 10.1.c to Form 10-Q for the quarter ended September 30, 2006).
10.1.23	*+	Form of Change in Control Severance Agreement with Shahid Malik (Exhibit 10.1.d to Form 10-Q for the quarter ended September 30, 2006).
10.1.24	*+	Form of Change in Control Severance Agreement with other executive officers of Great Plains Energy Incorporated and Kansas City Power & Light Company (Exhibit 10.1.e to Form 10-Q for the quarter ended September 30, 2006).

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10.1.25	*+	Great Plains Energy Incorporated Supplemental Executive Retirement Plan (As Amended and Restated for I.R.C. §409A) (Exhibit 10.1.10 to Form 10-Q for the quarter ended September 30, 2007)
10.1.26	*+	Great Plains Energy Incorporated Nonqualified Deferred Compensation Plan (As Amended and Restated for I.R.C. §409A) (Exhibit 10.1.10 to Form 10-Q for the quarter ended September 30, 2007)
10.1.27	+	Description of Compensation Arrangements with Directors and Certain Executive Officers.
10.1.28	*+	Employment Agreement among Strategic Energy, L.L.C., Great Plains Energy Incorporated and Shahid J. Malik, dated as of November 10, 2004 (Exhibit 10.1.p to Form 10-K for the year ended December 31, 2004).
10.1.29	*+	Severance Agreement among Strategic Energy, L.L.C., Great Plains Energy Incorporated and Shahid J. Malik, dated as of November 10, 2004 (Exhibit 10.1.q to Form 10-K for the year ended December 31, 2004).
10.1.30	*	Credit Agreement dated as of May 11, 2006, among Great Plains Energy Incorporated, Bank of America, N.A., JPMorgan Chase Bank, N.A., BNP Paribas, The Bank of Tokyo-Mitsubishi UFJ, Limited, Chicago Branch, Wachovia Bank N.A., The Bank of New York, Keybank National Association, The Bank of Nova Scotia, UMB Bank, N.A., and Commerce Bank, N.A. (Exhibit 10.1.a to Form 10-Q for the quarter ended June 30, 2006).
10.1.31	*	Notice of Election to Transfer Unused Commitment between the Great Plains Energy Incorporated and Kansas City Power & Light Company Credit Agreements dated as of May 11, 2006, with Bank of America, N.A., as Administrative Agent, JPMorgan Chase Bank, N.A., as Syndication Agent, BNP Paribas, The Bank of Tokyo-Mitsubishi UFJ, Limited, Chicago Branch and Wachovia Bank N.A., as Co-Documentation Agents, The Bank of New York, KeyBank National Association, The Bank of Nova Scotia, UMB Bank, N.A., and Commerce Bank, N.A. (Exhibit 10.1.2 to Form 10-Q for the quarter ended June 30, 2007).
10.1.32	*	General Agreement of Indemnity issued by Great Plains Energy Incorporated and Strategic Energy, L.L.C. in favor of Federal Insurance Company and subsidiary or affiliated insurers dated May 23, 2002 (Exhibit 10.1.a. to Form 10-Q for the quarter ended June 30, 2002).
10.1.33	*	Agreement of Indemnity issued by Great Plains Energy Incorporated and Strategic Energy, L.L.C. in favor of Federal Insurance Company and subsidiary or affiliated insurers dated May 23, 2002 (Exhibit 10.1.b. to Form 10-Q for the quarter ended June 30, 2002).
10.1.34	*	Asset Purchase Agreement by and among Aquila, Inc., Black Hills Corporation, Great Plains Energy Incorporated, and Gregory Acquisition Corp., date d February 6, 2007 (Exhibit 10.1 to Form 8-K dated February 7, 2007).
10.1.35	*	Partnership Interests Purchase Agreement by and among Aquila, Inc., Aquila Colorado, LLC, Black Hills Corporation, Great Plains Energy Incorporated, and Gregory Acquisition Corp., dated February 6, 2007 (Exhibit 10.2 to Form 8-K dated February 7, 2007).

143

10.1.36	*	Letter Agreement dated as of June 29, 2007 to Asset Purchase Agreement and Partnership Interests Purchase Agreement by and among Aquila, Inc., Black Hills Corporation, Great Plains Energy Incorporated, and Gregory Acquisition Corp., dated February 6, 2007 (Exhibit 10.1.1 to Form 10-Q for the quarter ended June 30, 2007).
10.1.37	*	Letter Agreement dated as of August 31, 2007, to Asset Purchase Agreement and Partnership Interests Purchase Agreement by and among Aquila, Inc., Black Hills Corporation, Great Plains Energy Incorporated and Gregory Acquisition Corp (Exhibit 10.1.4 to Form 10-Q for the quarter ended September 30, 2007).
10.1.38	*	Letter Agreement dated as of September 28, 2007, to Asset Purchase Agreement and Partnership Interests Purchase Agreement by and among Aquila, Inc., Black Hills Corporation, Great Plains Energy Incorporated and Gregory Acquisition Corp (Exhibit 10.1.5 to Form 10-Q for the quarter ended September 30, 2007).
10.1.39	*	Letter Agreement dated as of October 3, 2007, to Agreement and Plan of Merger, Asset Purchase Agreement and Partnership Interests Purchase Agreement by and among Aquila, Inc., Black Hills Corporation, Great Plains Energy Incorporated and Gregory Acquisition Corp (Exhibit 10.1.6 to Form 10-Q for the quarter ended September 30, 2007).
10.1.40		Letter Agreement dated as of November 30, 2007, to Asset Purchase Agreement and Partnership Interests Purchase Agreement by and among Aquila, Inc., Black Hills Corporation, Great Plains Energy Incorporated and Gregory Acquisition Corp
10.1.41		Letter Agreement dated as of January 30, 2008, to Asset Purchase Agreement and Partnership Interests Purchase Agreement by and among Aquila, Inc., Black Hills Corporation, Great Plains Energy Incorporated and Gregory Acquisition Corp.
10.1.42	*	$50,000,000 Revolving Credit Facility Credit Agreement by and among Strategic Energy, L.L.C., the lenders party thereto and PNC Bank, National Association, as Administrative Agent, dated as of October 3, 2007 (Exhibit 10.1.1 to Form 10-Q for the quarter ended September 30, 2007).
10.1.43	*	Receivables Purchase Agreement dated as of October 3, 2007, by and among Strategic Receivables, LLC, as Seller, Strategic Energy, L.L.C., as initial Servicer, the Conduit Purchasers party thereto, the Purchaser Agents party thereto, the Financial Institutions from time to time party thereto as LC Participants, and PNC Bank, National Association, as Administrator and as LC Bank (Exhibit 10.1.2 to Form 10-Q for the quarter ended September 30, 2007).
10.1.44	*	Purchase and Sale Agreement dated as of October 3, 2007, by and among the various entities from time to time party thereto as Originators, Strategic Energy, L.L.C., as Servicer, and Strategic Receivables, LLC, as Buyer (Exhibit 10.1.3 to Form 10-Q for the quarter ended September 30, 2007).
12.1		Computation of Ratio of Earnings to Fixed Charges.
21.1		List of Subsidiaries of Great Plains Energy Incorporated.
23.1		Consent of Independent Registered Public Accounting Firm.
24.1		Powers of Attorney.
31.1.a		Rule 13a-14(a)/15d-14(a) Certifications of Michael J. Chesser.
31.1.b		Rule 13a-14(a)/15d-14(a) Certifications of Terry Bassham.

144

32.1

Section 1350 Certifications.

*Filed with the SEC as exhibits to prior SEC filings and are incorporated herein by reference and made a part hereof. The SEC filing and the exhibit number of the documents so filed, and incorporated herein by reference, are stated in parenthesis in the description of such exhibit.

+ Indicates management contract or compensatory plan or arrangement.

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

Great Plains Energy agrees to furnish to the SEC upon request any instrument with respect to long-term debt as to which the total amount of securities authorized does not exceed 10% of total assets of Great Plains Energy and its subsidiaries on a consolidated basis.

KCP&L Documents

Exhibit Number		Description of Document
3.2.1	*	Restated Articles of Consolidation of Kansas City Power & Light Company, as amended October 1, 2001 (Exhibit 3-(i) to Form 10-Q for the quarter ended September 30, 2001).
3.2.2	*	By-laws of Kansas City Power & Light Company, as amended November 1, 2005 (Exhibit 3.2.b to Form 10-K for the year ended December 31, 2005).
4.2.1	*	General Mortgage and Deed of Trust dated as of December 1, 1986, between Kansas City Power & Light Company and UMB Bank, n.a. (formerly United Missouri Bank of Kansas City, N.A.), Trustee (Exhibit 4-bb to Form 10-K for the year ended December 31, 1986).
4.2.2	*	Fourth Supplemental Indenture dated as of February 15, 1992, to Indenture dated as of December 1, 1986 (Exhibit 4-y to Form 10-K for the year ended December 31, 1991).
4.2.3	*	Fifth Supplemental Indenture dated as of September 15, 1992, to Indenture dated as of December 1, 1986 (Exhibit 4-a to quarterly report on Form 10-Q for the quarter ended September 30, 1992).
4.2.4	*	Seventh Supplemental Indenture dated as of October 1, 1993, to Indenture dated as of December 1, 1986 (Exhibit 4-a to quarterly report on Form 10-Q for the quarter ended September 30, 1993).
4.2.5	*	Eighth Supplemental Indenture dated as of December 1, 1993, to Indenture dated as of December 1, 1986 (Exhibit 4 to Registration Statement, Registration No. 33-51799).
4.2.6	*	Eleventh Supplemental Indenture dated as of August 15, 2005, to the General Mortgage and Deed of Trust dated as of December 1, 1986, between Kansas City Power & Light Company and UMB Bank, n.a. (formerly United Missouri Bank of Kansas City, N.A.), Trustee (Exhibit 4.2 to Form 10-Q for the quarter ended September 30, 2005).
4.2.7	*	Indenture for Medium-Term Note Program dated as of February 15, 1992, between Kansas City Power & Light Company and The Bank of New York (Exhibit 4-bb to Registration Statement, Registration No. 33-45736).

145

4.2.8		*	Indenture for $150 million aggregate principal amount of 6.50% Senior Notes due November 15, 2011 and $250 million aggregate principal amount of 7.125% Senior Notes due December 15, 2005 dated as of December 1, 2000, between Kansas City Power & Light Company and The Bank of New York (Exhibit 4-a to Report on Form 8-K dated December 18, 2000).
4.2.9		*	Indenture dated March 1, 2002 between The Bank of New York and Kansas City Power & Light Company (Exhibit 4.1.b. to Form 10-Q for the quarter ended March 31, 2002).
4.2.10		*	Supplemental Indenture No. 1 dated as of November 15, 2005, to Indenture dated March 1, 2002 between The Bank of New York and Kansas City Power & Light Company (Exhibit 4.2.j to Form 10-K for the year ended December 31, 2005).
4.2.11		*	Indenture dated as of May 1, 2007, between Kansas City Power & Light Company and The Bank of New York Trust Company, N.A., as trustee (Exhibit 4.1 to Form 8-K dated June 4, 2007).
4.2.12		*	Supplemental Indenture No. 1 dated as of June 4, 2007 between Kansas City Power & Light Company and The Bank of New York Trust Company, N.A., as trustee (Exhibit 4.2 to Form 8-K dated June 4, 2007).
10.2.1		*	Insurance agreement between Kansas City Power & Light Company and XL Capital Assurance Inc., dated December 5, 2002 (Exhibit 10.2.f to Form 10-K for the year ended December 31, 2002).
10.2.2		*	Insurance Agreement dated as of August 1, 2004, between Kansas City Power & Light Company and XL Capital Assurance Inc. (Exhibit 10.2 to Form 10-Q for the quarter ended September 30, 2004).
10.2.3		*	Insurance Agreement dated as of September 1, 2005, between Kansas City Power & Light Company and XL Capital Assurance Inc. (Exhibit 10.2.e to Form 10-K for the year ended December 31, 2005).
10.2.4		*	Insurance Agreement dated as of September 1, 2005, between Kansas City Power & Light Company and XL Capital Assurance Inc. (Exhibit 10.2.e to Form 10-K for the year ended December 31, 2005).
10.2.5	*			Insurance Agreement dated as of September 19, 2007, by and between Financial Guaranty Insurance Company and Kansas City Power & Light Company (Exhibit 10.2.2 1 to Form 10Q for the quarter ended September 30, 2007).
10.2.6	*			Iatan Unit 2 and Common Facilities Ownership Agreement, dated as of May 19, 2006, among Kansas City Power & Light Company, Aquila, Inc., The Empire District Electric Company, Kansas Electric Power Cooperative, Inc., and Missouri Joint Municipal Electric Utility Commission (Exhibit 10.2.a to Form 10-Q for the quarter ended June 30, 2006).
10.2.7		*	Contract between Kansas City Power & Light Company and ALSTOM Power Inc. for Engineering, Procurement, and Constructions Services for Air Quality Control Systems and Selective Catalytic Reduction Systems at Iatan Generating Station Units 1 and 2 and the Pulverized Coal-Fired Boiler at Iatan Generating Station Unit 2, dated as of August 10, 2006 (Exhibit 10.2.a to Form 10-Q for the quarter ended September 30, 2006).

146

10.2.8	*	Credit Agreement dated as of May 11, 2006, among Kansas City Power & Light Company, Bank of America, N.A., JPMorgan Chase Bank, N.A., BNP Paribas, The Bank of Tokyo-Mitsubishi UFJ, Limited, Chicago Branch, Wachovia Bank N.A., The Bank of New York, Keybank National Association, The Bank of Nova Scotia, UMB Bank, N.A., and Commerce Bank, N.A. (Exhibit 10.2.b to Form 10-Q for the quarter ended June 30, 2006).
10.2.9	*	Stipulation and Agreement dated March 28, 2005, among Kansas City Power & Light Company, Staff of the Missouri Public Service Commission, Office of the Public Counsel, Missouri Department of Natural Resources, Praxair, Inc., Missouri Independent Energy Consumers, Ford Motor Company, Aquila, Inc., The Empire District Electric Company, and Missouri Joint Municipal Electric Utility Commission (Exhibit 10.2 to Form 10-Q for the quarter ended March 31, 2005).
10.2.10	*	Stipulation and Agreement filed April 27, 2005, among Kansas City Power & Light Company, the Staff of the State Corporation Commission of the State of Kansas, Sprint, Inc., and the Kansas Hospital Association (Exhibit 10.2.a to Form 10-Q for the quarter ended June 30, 2005).
10.2.11	*	Purchase and Sale Agreement dated as of July 1, 2005, between Kansas City Power & Light Company, as Originator, and Kansas City Power & Light Receivables Company, as Buyer (Exhibit 10.2.b to Form 10-Q for the quarter ended June 30, 2005).
10.2.12	*	Receivables Sale Agreement dated as of July 1, 2005, among Kansas City Power & Light Receivables Company, as the Seller, Kansas City Power & Light Company, as the Initial Collection Agent, The Bank of Tokyo-Mitsubishi, Ltd., New York Branch, as the Agent, and Victory Receivables Corporation (Exhibit 10.2.c to Form 10-Q for the quarter ended June 30, 2005).
10.2.13	*	Collaboration Agreement dated as of March 19, 2007, among Kansas City Power & Light Company, Sierra Club and Concerned Citizens of Platte County, Inc (Exhibit 10.1 to Form 8-K filed on March 20, 2007).
10.2.14	*	Amendment No. 1 dated as of April 2, 2007, among Kansas City Power & Light Receivables Company, Kansas City Power & Light Company, The Bank of Tokyo-Mitsubishi UFJ, Ltd., New York Branch and Victory Receivables Corporation to the Receivables Sale Agreement date as of July 1, 2005 (Exhibit 10.2.2 to Form 10-Q for the quarter ended March 31, 2007).
10.2.15	*	Notice of Election to Transfer Unused Commitment between the Great Plains Energy Incorporated and Kansas City Power & Light Company Credit Agreements dated as of May 11, 2006, with Bank of America, N.A., as Administrative Agent, JPMorgan Chase Bank, N.A., as Syndication Agent, BNP Paribas, The Bank of Tokyo-Mitsubishi UFJ, Limited, Chicago Branch and Wachovia Bank N.A., as Co-Documentation Agents, The Bank of New York, KeyBank National Association, The Bank of Nova Scotia, UMB Bank, N.A., and Commerce Bank, N.A. (Exhibit 10.1.2 to Quarterly Report on Form 10-Q for the quarter ended June 30, 2007).
12.2		Computation of Ratio of Earnings to Fixed Charges.
23.2		Consent of Independent Registered Public Accounting Firm.
24.2		Powers of Attorney.
31.2.a		Rule 13a-14(a)/15d-14(a) Certifications of William H. Downey.

147

31.2.b			Rule 13a-14(a)/15d-14(a) Certifications of Terry Bassham.
32.2			Section 1350 Certifications.

* Filed with the SEC as exhibits to prior SEC filings and are incorporated herein by reference and made a part hereof. The SEC filings and the exhibit number of the documents so filed, and incorporated herein by reference, are stated in parenthesis in the description of such exhibit.

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

KCP&L agrees to furnish to the SEC upon request any instrument with respect to long-term debt as to which the total amount of securities authorized does not exceed 10% of total assets of KCP&L and its subsidiaries on a consolidated basis.

148

Schedule I – Parent Company Financial Statements

GREAT PLAINS ENERGY INCORPORATED
Income Statements of Parent Company

Year Ended December 31	2007			2006			2005
Operating Expenses	(millions, except per share amounts)
Selling, general and administrative	$	18.5		$	7.1		$	7.1
Maintenance		0.8			-			-
General taxes		0.3			0.3			0.3
Total		19.6			7.4			7.4
Operating loss		(19.6	)		(7.4	)		(7.4	)
Equity from earnings in subsidiaries		195.1			143.0			178.2
Non-operating income		4.2			1.1			1.6
Non-operating expenses		-			-			(0.1	)
Interest charges		(26.8	)		(8.9	)		(9.4	)
Income before income taxes		152.9			127.8			162.9
Income taxes		6.3			(0.2	)		(0.6	)
Net income		159.2			127.6			162.3
Preferred stock dividend requirements		1.6			1.6			1.6
Earnings available for common shareholders	$	157.6		$	126.0		$	160.7

Average number of basic common shares outstanding		84.9			78.0			74.6
Average number of diluted common shares outstanding		85.2			78.2			74.7

Basic earnings per common share	$	1.86		$	1.62		$	2.15
Diluted earnings per common share	$	1.85		$	1.61		$	2.15

Cash dividends per common share	$	1.66		$	1.66		$	1.66

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

149

GREAT PLAINS ENERGY INCORPORATED
Balance Sheets of Parent Company

December 31	2007		2006
ASSETS	(millions, except share amounts)
Current Assets
Cash and cash equivalents	$	6.6	$	5.8
Accounts receivable from subsidiaries		1.0		1.6
Notes receivable from subsidiaries		0.6		2.3
Taxes receivable		3.7		1.9
Other		0.4		0.5
Total		12.3		12.1
Nonutility Property and Investments
Investment in KCP&L		1,479.4		1,383.1
Investments in other subsidiaries		256.8		178.6
Other		0.7		-
Total		1,736.9		1,561.7
Deferred Charges and Other Assets
Deferred Income Taxes		8.0		0.8
Other		23.7		4.6
Total		31.7		5.4
Total	$	1,780.9	$	1,579.2

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

150

GREAT PLAINS ENERGY INCORPORATED
Balance Sheets of Parent Company

December 31	2007			2006
LIABILITIES AND CAPITALIZATION	(millions, except share amounts)
Current Liabilities
Notes payable	$	42.0		$	-
Notes payable to subsidiaries		-			13.2
Current maturities of long-term debt		-			163.6
Accounts payable to subsidiaries		10.8			15.6
Accounts payable		0.1			-
Accrued interest		2.0			1.6
Other		1.3			1.9
Derivative instruments		16.4			-
Total		72.6			195.9
Deferred Credits and Other Liabilities
Payable to subsidiaries		0.2			2.1
Other		1.7			0.3
Total		1.9			2.4
Capitalization
Common shareholders' equity
Common stock-150,000,000 shares authorized without par value
86,325,136 and 80,405,035 shares issued, stated value		1,065.9			896.8
Retained earnings		506.9			493.4
Treasury stock-90,929 and 53,499 shares, at cost		(2.8	)		(1.6	)
Accumulated other comprehensive loss		(2.1	)		(46.7	)
Total		1,567.9			1,341.9
Cumulative preferred stock $100 par value
3.80% - 100,000 shares issued		10.0			10.0
4.50% - 100,000 shares issued		10.0			10.0
4.20% - 70,000 shares issued		7.0			7.0
4.35% - 120,000 shares issued		12.0			12.0
Total		39.0			39.0
Long-term debt		99.5			-
Total		1,706.4			1,380.9
Commitments and Contingencies
Total	$	1,780.9		$	1,579.2

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

151

GREAT PLAINS ENERGY INCORPORATED
Statements of Cash Flows of Parent Company

Year Ended December 31	2007			2006			2005
Cash Flows from Operating Activities	(millions)
Net income	$	159.2		$	127.6		$	162.3
Adjustments to reconcile income to net cash from operating activities:
Amortization		1.0			0.6			0.6
Deferred income taxes, net		(6.2	)		-			-
Equity in earnings from subsidiaries		(195.1	)		(143.0	)		(178.2	)
Cash flows affected by changes in:
Accounts receivable from subsidiaries		0.6			(0.6	)		(0.4	)
Taxes receivable		(1.8	)		(0.1	)		2.6
Accounts payable to subsidiaries		(4.8	)		15.1			0.5
Other accounts payable		0.1			(0.1	)		0.1
Accrued interest		1.1			(0.1	)		0.1
Cash dividends from subsidiaries		159.7			118.0			133.9
Other		1.8			1.7			3.0
Net cash from operating activities		115.6			119.1			124.5
Cash Flows from Investing Activities
Equity contributions to subsidiaries		(94.0	)		(134.6	)		-
Net change in notes receivable from subsidiaries		1.7			3.1			11.0
Purchases of nonutility property		(0.7	)		-			-
Net cash from investing activities		(93.0	)		(131.5	)		11.0
Cash Flows from Financing Activities
Issuance of common stock		10.5			153.6			9.1
Issuance of long-term debt		99.5			-			-
Issuance fees		(1.4	)		(5.7	)		-
Net change in notes payable to subsidiaries		(13.2	)		13.2			-
Net change in short-term borrowings		42.0			(6.0	)		(14.0	)
Equity forward settlement		(12.3	)		-			-
Dividends paid		(144.5	)		(132.7	)		(125.5	)
Other financing activities		(2.4	)		(6.2	)		(5.9	)
Net cash from financing activities		(21.8	)		16.2			(136.3	)
Net Change in Cash and Cash Equivalents		0.8			3.8			(0.8	)
Cash and Cash Equivalents at Beginning of Year		5.8			2.0			2.8
Cash and Cash Equivalents at End of Year	$	6.6		$	5.8		$	2.0

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

152

GREAT PLAINS ENERGY INCORPORATED

Statements of Common Shareholders’ Equity of Parent Company

Statements of Comprehensive Income of Parent Company

Incorporated by reference is Great Plains Energy Consolidated Statements of Common Shareholders’ Equity and Consolidated Statements of Comprehensive Income.

GREAT PLAINS ENERGY INCORPORATED

NOTES TO FINANCIAL STATEMENTS OF PARENT COMPANY

The Great Plains Energy Incorporated Notes to Consolidated Financial Statements in Part II, Item 8 should be read in conjunction with the Great Plains Energy Incorporated Parent Company Financial Statements.

153

Schedule II – Valuation and Qualifying Accounts and Reserves


Great Plains Energy
Valuation and Qualifying Accounts
Years Ended December 31, 2007, 2006 and 2005

			Additions
			Charged
	Balance At		To Costs		Charged						Balance
	Beginning		And		To Other						At End
Description	Of Period		Expenses		Accounts			Deductions			Of Period
Year Ended December 31, 2007	(millions)
Allowance for uncollectible accounts	$	8.3	$	23.2	$	6.8	(a)	$	27.1	(b)	$	11.2
Legal reserves		6.1		2.1		-			5.9	(c)		2.3
Environmental reserves		0.3		-		-			-			0.3
Uncertain tax positions (d)		4.7		2.5		1.7	(e)		0.9	(f)		8.0
Year Ended December 31, 2006
Allowance for uncollectible accounts	$	6.9	$	12.3	$	5.7	(a)	$	16.6	(b)	$	8.3
Legal reserves		5.9		4.9		0.1			4.8	(c)		6.1
Environmental reserves		0.3		-		-			-			0.3
Uncertain tax positions (d)		4.6		1.1		-			1.0	(f)		4.7
Year Ended December 31, 2005
Allowance for uncollectible accounts	$	6.4	$	6.9	$	5.0	(a)	$	11.4	(b)	$	6.9
Legal reserves		3.2		4.5		-			1.8	(c)		5.9
Environmental reserves		0.3		-		-			-			0.3
Uncertain tax positions (d)		13.4		1.2		-			10.0	(f)		4.6
(a) Recoveries. Charged to other accounts for the year ended December 31, 2006 and 2005, respectively, includes the establishment of
an allowance of $1.5 million and $1.6 million.
(b) Uncollectible accounts charged off.
(c) Payment of claims.
(d) Represents the total amount of tax expense that would impact the effective tax rate, if recognized, and amounts accrued for interest expense
related to uncertain tax positions, net of tax.
(e) Upon adoption of FIN 48 on January 1, 2007, $1.7 million was charged to retained earnings.
(f) Reversal of uncertain tax positions and related interest. Deductions for the year ended December 31, 2005, includes a reclass of $0.8
million to franchise taxes payable.

154

Kansas City Power & Light Company
Valuation and Qualifying Accounts
Years Ended December 31, 2007, 2006 and 2005

			Additions
			Charged
	Balance At		To Costs		Charged						Balance
	Beginning		And		To Other						At End
Description	Of Period		Expenses		Accounts			Deductions			Of Period
Year Ended December 31, 2007	(millions)
Allowance for uncollectible accounts	$	4.2	$	5.4	$	2.9	(a)	$	8.2	(b)	$	4.3
Legal reserves		3.9		1.9		-			3.6	(c)		2.2
Environmental reserves		0.3		-		-			-			0.3
Uncertain tax positions (d)		1.8		0.7		0.8	(e)		0.3	(f)		3.0
Year Ended December 31, 2006
Allowance for uncollectible accounts	$	2.6	$	4.5	$	4.4	(a)	$	7.3	(b)	$	4.2
Legal reserves		4.5		2.8		-			3.4	(c)		3.9
Environmental reserves		0.3		-		-			-			0.3
Uncertain tax positions (d)		1.2		0.8		-			0.2	(f)		1.8
Year Ended December 31, 2005
Allowance for uncollectible accounts	$	1.7	$	3.3	$	4.6	(a)	$	7.0	(b)	$	2.6
Legal reserves		3.2		3.1		-			1.8	(c)		4.5
Environmental reserves		0.3		-		-			-			0.3
Uncertain tax positions (d)		3.7		0.3		-			2.8	(f)		1.2
(a) Recoveries. Charged to other accounts for the year ended December 31, 2006 and 2005, respectively, includes the establishment of
an allowance of $1.5 million and $1.6 million.
(b) Uncollectible accounts charged off.
(c) Payment of claims.
(d) Represents the total amount of tax expense that would impact the effective tax rate, if recognized, and amounts accrued for interest expense
related to uncertain tax positions, net of tax.
(e) Upon adoption of FIN 48 on January 1, 2007, $0.8 million was charged to retained earnings.
(f) Reversal of uncertain tax positions and related interest. Deductions for the year ended December 31, 2005, includes a reclass of $0.8
million to franchise taxes payable.

155

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

GREAT PLAINS ENERGY INCORPORATED

Date: February 28, 2008

By: /s/Michael J. Chesser

Michael J. Chesser

Chairman of the Board and

Chief Executive Officer

Pursuant to the requirements of the Securities Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

Signature	Title	Date
/s/Michael J. Chesser Michael J. Chesser	Chairman of the Board and Chief Executive Officer (Principal Executive Officer)	) ) )
		)
/s/Terry Bassham Terry Bassham	Executive Vice President – Finance and Strategic Development and Chief Financial Officer (Principal Financial Officer)	) ) ) )
		)
/s/Lori A. Wright Lori A. Wright	Controller (Principal Accounting Officer)	) )
		)
David L. Bodde*	Director	) February 28, 2008
		)
/s/William H. Downey William H. Downey	Director	) )
		)
Mark A. Ernst*	Director	)
		)
Randall C. Ferguson, Jr.*	Director	)
		)
William K. Hall*	Director	)
		)
Luis A. Jimenez*	Director	)
		)
James A. Mitchell*	Director	)
		)
William C. Nelson*	Director	)
		)
Linda H. Talbott*	Director	)
		)
Robert H. West*	Director	)

*By /s/Michael J. Chesser

Michael J. Chesser

Attorney-in-Fact*

156

SIGNATURES

KANSAS CITY POWER & LIGHT COMPANY

Date: February 28, 2008 By: /s/ William H. Downey

William H. Downey

President and Chief Executive Officer

Pursuant to the requirements of the Securities Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

Signature	Title	Date
/s/ William H. Downey William H. Downey	President and Chief Executive Officer and Director (Principal Executive Officer)	) ) )
		)
/s/Terry Bassham Terry Bassham	Chief Financial Officer (Principal Financial Officer)	) )
		)
/s/Lori A. Wright Lori A. Wright	Controller (Principal Accounting Officer)	) )
		)
David L. Bodde*	Director	) February 28, 2008
		)
/s/Michael J. Chesser Michael J. Chesser	Chairman of the Board	) )
		)
Mark A. Ernst*	Director	)
		)
Randall C. Ferguson, Jr.*	Director	)
		)
Luis A. Jimenez*	Director	)
		)
James A. Mitchell*	Director	)
		)
William C. Nelson*	Director	)
		)
Linda H. Talbott*	Director	)
		)

*By /s/Michael J. Chesser

Michael J. Chesser

Attorney-in-Fact*

157

	Exact name of registrant as specified in charter,
Commission	state of incorporation, address of principal	I.R.S. Employer
File Number	executive offices and telephone number	Identification Number

001-32206	GREAT PLAINS ENERGY INCORPORATED	43-1916803
	(A Missouri Corporation)
	1201 Walnut Street
	Kansas City, Missouri 64106
	(816) 556-2200
	www.greatplainsenergy.com

000-51873	KANSAS CITY POWER & LIGHT COMPANY	44-0308720
	(A Missouri Corporation)
	1201 Walnut Street
	Kansas City, Missouri 64106
	(816) 556-2200
	www.kcpl.com

Abbreviation or Acronym		Definition

KDHE		Kansas Department of Health and Environment
KLT Gas		KLT Gas Inc., a wholly owned subsidiary of KLT Inc.
KLT Inc.		KLT Inc., a wholly owned subsidiary of Great Plains Energy
KLT Investments		KLT Investments Inc., a wholly owned subsidiary of KLT Inc
KLT Telecom		KLT Telecom Inc, a wholly owned subsidiary of KLT Inc.
KW		Kilowatt
kWh		Kilowatt hour
MAC		Material Adverse Change
Market Street		Market Street Funding LLC
MD&A		Management’s Discussion and Analysis of Financial Condition and
		Results of Operations
MDNR		Missouri Department of Natural Resources
MISO		Midwest Independent Transmission System Operator, Inc.
MPSC		Public Service Commission of the State of Missouri
MW		Megawatt
MWh		Megawatt hour
NEIL		Nuclear Electric Insurance Limited
NOx		Nitrogen Oxide
NPNS		Normal Purchases and Normal Sales
NRC		Nuclear Regulatory Commission
OCI		Other Comprehensive Income
PJM		PJM Interconnection, LLC
PRB		Powder River Basin
PURPA		Public Utility Regulatory Policy Act
Receivables Company		Kansas City Power & Light Receivables Company, a wholly owned subsidiary of KCP&L
RTO		Regional Transmission Organization
SEC		Securities and Exchange Commission
SECA		Seams Elimination Charge Adjustment
Services		Great Plains Energy Services Incorporated
SFAS		Statement of Financial Accounting Standards
SIP		State Implementation Plan
SO2		Sulfur Dioxide
SPP		Southwest Power Pool, Inc.
STB		Surface Transportation Board
Strategic Energy		Strategic Energy, L.L.C., a subsidiary of KLT Energy Services
Strategic Receivables		Strategic Receivables, LLC, a wholly owned subsidiary of Strategic Energy, L.L.C.
T - Lock		Treasury Lock
Union Pacific		Union Pacific Railroad Company
WCNOC		Wolf Creek Nuclear Operating Corporation
Wolf Creek		Wolf Creek Generating Station
Worry Free		Worry Free Service, Inc., a wholly owned subsidiary of HSS


			Year	Estimated 2008			Primary
		Unit	Completed	MW Capacity			Fuel
Base Load		Wolf Creek	1985		545	(a)	Nuclear
		Iatan No. 1	1980		456	(a) (b)	Coal
		LaCygne No. 2	1977		341	(a)	Coal
		LaCygne No. 1	1973		368	(a)	Coal
		Hawthorn No. 5 (c)	1969		563		Coal
		Montrose No. 3	1964		176		Coal
		Montrose No. 2	1960		164		Coal
		Montrose No. 1	1958		170		Coal
Peak Load		West Gardner Nos. 1, 2, 3 and 4 (d)	2003		308		Natural Gas
		Osawatomie (d)	2003		76		Natural Gas
		Hawthorn No. 9 (e)	2000		130		Natural Gas
		Hawthorn No. 8 (d)	2000		76		Natural Gas
		Hawthorn No. 7 (d)	2000		75		Natural Gas
		Hawthorn No. 6 (d)	1997		136		Natural Gas
		Northeast Nos. 17 and 18 (e)	1977		117		Oil
		Northeast Nos. 15 and 16 (e)	1975		116		Oil
		Northeast Nos. 13 and 14 (e)	1976		114		Oil
		Northeast Nos. 11 and 12 (e)	1972		100		Oil
		Northeast Black Start Unit	1985		2		Oil
Wind		Spearville Wind Energy Facility (f)	2006		15		Wind
Total					4,048
(a)	KCP&L's share of a jointly owned unit.
(b)	The Iatan No. 2 air permit limits KCP&L's accredited capacity of Iatan No. 1 to 456 MWs from 469 MWs
	until the air quality control equipment included in the Comprehensive Energy Plan is operational, which
	is expected in the fourth quarter of 2008.
(c)	The Hawthorn Generating Station returned to commercial operation in 2001 with a new boiler, air quality
	control equipment and an uprated turbine following a 1999 explosion.
(d)	Combustion turbines.
(e)	Heat Recovery Steam Generator portion of combined cycle.
(f)	The 100.5 MW Spearville Wind Energy Facility's accredited capacity is 15 MW pursuant to SPP reliability
	standards.

Votes For		Votes Against		Abstentions
55,362,672		1,574,331		571,219

Votes For		Votes Against		Abstentions
53,081,961		3,641,183		785,077

Registrant	Title of each class
Great Plains Energy Incorporated	Cumulative Preferred Stock par value $100 per share	3.80%
	Cumulative Preferred Stock par value $100 per share	4.50%
	Cumulative Preferred Stock par value $100 per share	4.35%
	Common Stock without par value

TABLE OF CONTENTS
				Page
				Number
	Cautionary Statements Regarding Forward-Looking Information			3
	Glossary of Terms			4
	PART I
Item 1	Business			6
Item 1A	Risk Factors			14
Item 1B	Unresolved Staff Comments			25
Item 2	Properties			25
Item 3	Legal Proceedings			26
Item 4	Submission of Matters to a Vote of Security Holders			26
	PART II
Item 5	Market for Registrant's Common Equity, Related Stockholder Matters			27
		and Issuer Purchases of Equity Securities
Item 6	Selected Financial Data			29
Item 7	Management's Discussion and Analysis of Financial Condition			30
		and Results of Operation
Item 7A	Quantitative and Qualitative Disclosures About Market Risk			56
Item 8	Consolidated Financial Statements and Supplementary Data
		Great Plains Energy
			Consolidated Statements of Income	59
			Consolidated Balance Sheets	60
			Consolidated Statements of Cash Flows	62
			Consolidated Statements of Common Stock Equity	63
			Consolidated Statements of Comprehensive Income	64
		Kansas City Power & Light Company
			Consolidated Statements of Income	65
			Consolidated Balance Sheets	66
			Consolidated Statements of Cash Flows	68
			Consolidated Statements of Common Stock Equity	69
			Consolidated Statements of Comprehensive Income	70
		Great Plains Energy
		Kansas City Power & Light Company
			Notes to Consolidated Financial Statements	71
Item 9	Changes in and Disagreements With Accountants on Accounting			132
		and Financial Disclosure
Item 9A	Controls and Procedures			132
Item 9A (T)	Controls and Procedures			134
Item 9B	Other Information			136
	PART III
Item 10	Directors, Executive Officers and Corporate Governance			137
Item 11	Executive Compensation			138
Item 12	Security Ownership of Certain Beneficial Owners and Management			138
		and Related Stockholder Matters
Item 13	Certain Relationships and Related Transactions, and Director Independence			138
Item 14	Principal Accounting Fees and Services			138
	PART IV
Item 15	Exhibits, Financial Statement Schedules			140

Abbreviation or Acronym		Definition

Aquila		Aquila, Inc.
ARO		Asset Retirement Obligation
BART		Best available retrofit technology
Black Hills		Black Hills Corporation
CAIR		Clean Air Interstate Rule
CAMR		Clean Air Mercury Rule
Clean Air Act		Clean Air Act Amendments of 1990
CO2		Carbon Dioxide
Collaboration Agreement		Agreement among KCP&L, the Sierra Club and the Concerned Citizens of Platte County
Company		Great Plains Energy Incorporated and its subsidiaries
Consolidated KCP&L		KCP&L and its wholly owned subsidiaries
DOE		Department of Energy
EBITDA		Earnings before interest, income taxes, depreciation and amortization
ECA		Energy Cost Adjustment
EEI		Edison Electric Institute
EIRR		Environmental Improvement Revenue Refunding
EPA		Environmental Protection Agency
EPS		Earnings per common share
ERISA		Employee Retirement Income Security Act of 1974
FASB		Financial Accounting Standards Board
FELINE PRIDESSM		Flexible Equity Linked Preferred Increased Dividend Equity Securities,
		a service mark of Merrill Lynch & Co., Inc.
FERC		The Federal Energy Regulatory Commission
FGIC		Financial Guaranty Insurance Company
FIN		Financial Accounting Standards Board Interpretation
FSP		Financial Accounting Standards Board Staff Position
FSS		Forward Starting Swaps
GAAP		Generally Accepted Accounting Principles
Great Plains Energy		Great Plains Energy Incorporated and its subsidiaries
Holdings		DTI Holdings, Inc.
HSS		Home Service Solutions Inc., a wholly owned subsidiary of KCP&L
IEC		Innovative Energy Consultants Inc., a wholly owned subsidiary of Great Plains Energy
ISO		Independent System Operator
KCC		The State Corporation Commission of the State of Kansas
KCP&L		Kansas City Power & Light Company, a wholly owned subsidiary of Great Plains Energy


							Fuel cost in cents per
	Fuel Mix (a)						net kWh generated
	Estimated			Actual			Estimated		Actual
Fuel	2008			2007			2008		2007
Coal		75	%		72	%		1.39		1.23
Nuclear (b)		21			24			0.47		0.45
Natural gas and oil		2			3			7.57		7.30
Wind		2			1			-		-
Total Generation		100	%		100	%		1.28		1.19
(a) Fuel mix based on percent of total MWhs generated.
(b) 2008 reflects the next scheduled refueling outage.


Name	Age	Current Position(s)	Year First Assumed an Officer Position

Michael J. Chesser (a)	59	Chairman of the Board and Chief Executive Officer – Great Plains Energy and Chairman of the Board – KCP&L	2003
William H. Downey (b)	63	President and Chief Operating Officer – Great Plains Energy and President and Chief Executive Officer – KCP&L	2000
Terry Bassham (c)	47	Executive Vice President - Finance and Strategic Development and Chief Financial Officer – Great Plains Energy and Chief Financial Officer – KCP&L	2005
Barbara B. Curry (d)	53	Senior Vice President - Corporate Services and Corporate Secretary – Great Plains Energy and Corporate Secretary – KCP&L	2005
Michael L. Deggendorf (e)	46	Vice President - Public Affairs – Great Plains Energy	2005
Stephen T. Easley (f)	52	Senior Vice President - Supply - KCP&L	2000
Shahid Malik (g)	47	Executive Vice President – Great Plains Energy President and Chief Executive Officer - Strategic Energy	2004
John R. Marshall (h)	58	Senior Vice President – Delivery - KCP&L	2005
Lori A. Wright	45	Controller – Great Plains Energy and Controller – KCP&L	2002


	Common Stock Price Range								Common Stock
	2007				2006				Dividends Declared
Quarter	High		Low		High		Low		2008			2007		2006
First	$	32.67	$	30.42	$	29.32	$	27.89	$	0.415	(a)	$	0.415	$	0.415
Second		33.18		28.82		28.99		27.33					0.415		0.415
Third		29.94		26.99		31.43		27.70					0.415		0.415
Fourth		30.45		28.32		32.80		31.13					0.415		0.415
(a) Declared February 5, 2008.


Issuer Purchases of Equity Securities
					Maximum Number
				Total Number of	(or Approximate
				Shares (or Units)	Dollar Value) of
	Total			Purchased as	Shares (or Units)
	Number of		Average	Part of Publicly	that May Yet Be
	Shares		Price Paid	Announced	Purchased Under
	(or Units)		per Share	Plans or	the Plans or
Month	Purchased		(or Unit)	Programs	Programs
October 1 - 31	11,316	(1)	$ 28.94	-	N/A
November 1 - 30	2,148	(1)	30.14	-	N/A
December 1 - 31	-		-	-	N/A
Total	13,464		$ 29.13	-	N/A
(1) Represents shares of common stock surrendered to the Company by certain officers to pay taxes
related to the vesting of restricted common stock.


				Impact on		Impact on
				Projected		2007
	Change in			Benefit		Pension
Actuarial assumption	Assumption			Obligation		Expense
				(millions)
Discount rate	0.5	%	increase	$	(32.6)	$	(2.8	)
Rate of return on plan assets	0.5	%	increase		-		(2.0	)
Discount rate	0.5	%	decrease		33.2		2.8
Rate of return on plan assets	0.5	%	decrease		-		2.0


				%			%
	2007			Change	2006		Change		2005
Retail revenues					(millions)
Residential	$	433.8		13	$	384.3	1		$	380.0
Commercial		492.1		11		442.6	2			434.6
Industrial		106.8		7		99.8	(1	)		100.9
Other retail revenues		9.9		12		8.8	3			8.6
Provision for rate refund		(1.1	)	NA		-	NA			-
Total retail		1,041.5		11		935.5	1			924.1
Wholesale revenues		234.0		23		190.4	(1	)		192.4
Other revenues		17.2		19		14.5	1			14.3
KCP&L electric revenues		1,292.7		13		1,140.4	1			1,130.8
Subsidiary revenues		-		-		-	NM			0.1
Consolidated KCP&L revenues	$	1,292.7		13	$	1,140.4	-		$	1,130.9


	2007	% Change	2006	% Change	2005

CDD	1,637	(5)	1,724	6	1,626

HDD	4,925	22	4,052	(15)	4,780


Net MWhs Generated by Fuel Type	2007	% Change	2006	% Change	2005
			(thousands)
Coal	14,894	(1)	15,056	-	14,994
Nuclear	4,873	11	4,395	6	4,146
Natural gas and oil	544	(4)	564	19	473
Wind	305	NM	106	N/A	-
Total Generation	20,616	2	20,121	3	19,613


	Moody's	Standard
	Investors Service	& Poor's
Great Plains Energy
Outlook	Stable	Credit Watch Negative
Corporate Credit Rating	-	BBB
Preferred Stock	Ba1	BB+
Senior Unsecured Debt	Baa2	BBB-

KCP&L
Outlook	Stable	Credit Watch Negative
Senior Secured Debt	A2	BBB
Senior Unsecured Debt	A3	BBB
Commercial Paper	P-2	A-3


							Number Of		Net Exposure Of
							Counterparties		Counterparties
	Exposure						Greater Than		Greater Than
	Before Credit		Credit		Net		10% Of Net		10% of Net
Rating	Collateral		Collateral		Exposure		Exposure		Exposure
External rating	(millions)								(millions)
Investment Grade	$	30.0	$	-	$	30.0		5	$	27.1
Non-Investment Grade		7.2		6.7		0.5		-		-
Internal rating
Investment Grade		0.3		-		0.3		-		-
Non-Investment Grade		-		-		-		-		-
Total	$	37.5	$	6.7	$	30.8		5	$	27.1


Maturity Of Credit Risk Exposure Before Credit Collateral
	Less Than					Total
Rating	2 Years		2 - 5 Years			Exposure
External rating	(millions)
Investment Grade	$	1.6		$	28.4	$	30.0
Non-Investment Grade		4.4			2.8		7.2
Internal rating
Investment Grade		0.3			-		0.3
Non-Investment Grade		-			-		-
Total	$	6.3		$	31.2	$	37.5

Great Plains Energy Contractual Obligations
Payment due by period	2008		2009		2010		2011		2012		After 2012		Total
Long-term debt	(millions)
Principal	$	0.3	$	-	$	-	$	150.0	$	12.4	$	942.9	$	1,105.6
Interest		62.2		62.2		62.2		61.0		52.0		713.2		1,012.8
Lease obligations		18.8		15.3		9.1		8.2		8.0		75.1		134.5
Pension plans		29.3	(a)		(a)		(a)		(a)		(a)			29.3
Purchase obligations
Fuel		120.0		68.1		65.4		12.2		15.3		187.3		468.3
Purchased capacity		9.0		8.6		6.3		4.7		4.7		10.8		44.1
Purchased power		738.9		382.9		261.4		146.8		34.5		-		1,564.5
Comprehensive Energy Plan		705.4		286.7		53.1		-		-		-		1,045.2
Other		101.3		19.5		27.8		10.2		11.3		22.4		192.5
Total contractual obligations	$	1,785.2	$	843.3	$	485.3	$	393.1	$	138.2	$	1,951.7	$	5,596.8
(a) Contributions expected beyond 2008 but not yet determined.

Consolidated KCP&L Contractual Obligations
Payment due by period	2008		2009		2010		2011		2012		After 2012		Total
Long-term debt	(millions)
Principal	$	-	$	-	$	-	$	150.0	$	12.4	$	842.9	$	1,005.3
Interest		55.3		55.3		55.3		54.1		45.1		680.9		946.0
Lease obligations		17.4		14.1		8.7		7.8		7.7		74.7		130.4
Pension plans		29.3	(a)		(a)		(a)		(a)		(a)			29.3
Purchase obligations
Fuel		120.0		68.1		65.4		12.2		15.3		187.3		468.3
Purchased capacity		9.0		8.6		6.3		4.7		4.7		10.8		44.1
Comprehensive Energy Plan		705.4		286.7		53.1		-		-		-		1,045.2
Other		101.3		19.5		27.8		10.2		11.3		22.4		192.5
Total contractual obligations	$	1,037.7	$	452.3	$	216.6	$	239.0	$	96.5	$	1,819.0	$	3,861.1
(a) Contributions expected beyond 2008 but not yet determined.


	Amount of commitment expiration per period
	2008		2009		2010		2011		2012		After 2012		Total
	(millions)
Great Plains Energy Guarantees	$	267.5	$	1.0	$	13.4	$	-	$	-	$	-	$	281.9
Consolidated KCP&L Guarantees		1.0		1.0		0.9		-		-		-		2.9

Great Plains Energy Other Operating Activities
	2007			2006			2005
Cash flows affected by changes in:	(millions)
Receivables	$	(80.0	)	$	(80.8	)	$	6.6
Fuel inventories		(9.3	)		(10.7	)		4.9
Materials and supplies		(4.2	)		(2.8	)		(2.6	)
Accounts payable		43.3			68.1			12.4
Accrued taxes		17.3			(22.5	)		(23.1	)
Accrued interest		(0.7	)		0.7			1.6
Deferred refueling outage costs		7.4			(5.9	)		(4.0	)
Pension and postretirement benefit obligations		17.6			3.6			8.4
Allowance for equity funds used during construction		(2.5	)		(5.0	)		(1.8	)
Deferred merger costs		(18.3	)		(2.8	)		-
Proceeds from the sale of SO2 emission allowances		24.0			0.8			61.0
(Payment of) proceeds from T-Locks		(4.5	)		-			12.0
Proceeds from forward starting swaps		3.3			-			-
Other		(17.8	)		8.5			20.2
Total other operating activities	$	(24.4	)	$	(48.8	)	$	95.6
Cash paid during the period:
Interest	$	91.8		$	67.7		$	68.9
Income taxes	$	33.6		$	77.7		$	84.4
Non-cash investing activities:
Liabilities assumed for capital expenditures	$	72.5		$	38.7		$	13.4

Consolidated KCP&L Other Operating Activities
		2007			2006			2005
Cash flows affected by changes in:		(millions)
Receivables	$	(60.0	)	$	(44.7	)	$	(8.5	)
Fuel inventories		(9.3	)		(10.7	)		4.9
Materials and supplies		(4.2	)		(2.8	)		(2.6	)
Accounts payable		20.6			52.4			16.3
Accrued taxes		5.9			(16.5	)		(17.2	)
Accrued interest		(2.9	)		0.9			1.7
Deferred refueling outage costs		7.4			(5.9	)		(4.0	)
Pension and postretirement benefit obligations		15.4			0.7			4.6
Allowance for equity funds used during construction		(2.5	)		(5.0	)		(1.8	)
Proceeds from the sale of SO2 emission allowances		24.0			0.8			61.0
Proceeds from T-Locks		-			-			12.0
Proceeds from forward starting swaps		3.3			-			-
Other		(16.2	)		(8.6	)		12.9
Total other operating activities	$	(18.5	)	$	(39.4	)	$	79.3
Cash paid during the period:
Interest	$	68.3		$	57.9		$	57.6
Income taxes	$	39.8		$	70.9		$	104.1
Non-cash investing activities:
Liabilities assumed for capital expenditures	$	72.4		$	38.2		$	12.8


		Total	KCP&L's
		Station	47% Share
		(millions)
Current cost of decommissioning (in 2005 dollars)		$ 518	$ 243
Future cost of decommissioning (in 2045-2053 dollars) (a)		3,327	1,564

Annual escalation factor		4.40%
Annual return on trust assets (b)		6.48%
(a)	Total future cost over an eight year decommissioning period.
(b)	The 6.48% rate of return is through 2025. The rate then systematically decreases through 2053
	to 2.82% based on the assumption that the fund's investment mix will become increasingly
	more conservative as the decommissioning period approaches.


		December 31, 2007						December 31, 2006
		Gross Carrying		Accumulated				Gross Carrying		Accumulated
		Amount		Amortization				Amount		Amortization
Consolidated KCP&L		(millions)
	Computer software (a)	$	111.9		$	(84.7	)	$	100.4	$	(76.2	)

Other Great Plains Energy
	Computer software (a)		17.8			(12.3	)		15.5		(8.5	)
	Acquired intangible assets
	Customer relationships		17.0			(10.4	)		17.0		(7.6	)
	Asset information systems		1.9			(1.9	)		1.9		(1.4	)
	Unamortized intangible assets
	Strategic Energy trade name		0.7						0.7
	Total intangible assets	$	149.3		$	(109.3	)	$	135.5	$	(93.7	)
(a)	Computer software is included in electric utility plant or other nonutility property, as applicable, on the
	consolidated balance sheets.


									Estimated Amortization Expense
	2007		2006			2005			2008		2009		2010
	(millions)
Intangible assets	$	3.3	$	10.6		$	15.0		$	2.8	$	2.9	$	0.9
Related liabilities		-		(7.2	)		(11.6	)		-		-		-
Net amortization expense	$	3.3	$	3.4		$	3.4		$	2.8	$	2.9	$	0.9


	Pension Benefits						Other Benefits
	2007			2006			2007			2006
Change in projected benefit obligation (PBO)	(millions)
PBO at beginning of year	$	508.8		$	554.6		$	51.5		$	53.0
Service cost		18.4			18.8			1.2			0.9
Interest cost		29.8			30.9			3.9			3.0
Contribution by participants		-			-			2.0			1.3
Amendments		(0.8	)		-			19.5			-
Actuarial loss (gain)		(9.6	)		6.5			(1.7	)		(1.8	)
Benefits paid		(35.5	)		(17.9	)		(2.9	)		(4.2	)
Benefits paid by Company		(0.4	)		(0.4	)		(0.7	)		(0.7	)
Special termination benefits		2.2			-			0.9			-
Settlements paid		-			(83.7	)		-			-
PBO at end of plan year	$	512.9		$	508.8		$	73.7		$	51.5
Change in plan assets
Fair value of plan assets at beginning of year	$	364.5		$	412.2		$	13.4		$	12.2
Actual return on plan assets		44.1			34.3			(3.2	)		0.6
Contributions by employer and participants		27.0			18.8			6.7			4.8
Benefits paid		(35.5	)		(17.9	)		(2.9	)		(4.2	)
Settlements paid		-			(82.9	)		-			-
Fair value of plan assets at end of plan year	$	400.1		$	364.5		$	14.0		$	13.4
Funded status at end of year	$	(112.8	)	$	(144.3	)	$	(59.7	)	$	(38.1	)
Amounts recognized in the consolidated balance sheets
Current pension and other post-retirement liability	$	(0.5	)	$	(0.5	)	$	(0.8	)	$	(0.5	)
Noncurrent pension liability and other post-retirement liability		(112.3	)		(143.8	)		(58.9	)		(37.6	)
Contributions and changes after measurement date		6.8			0.6			7.2			4.6
Net amount recognized before regulatory treatment		(106.0	)		(143.7	)		(52.5	)		(33.5	)
Accumulated OCI or regulatory asset		185.4			240.3			37.8			19.2
Net amount recognized at December 31	$	79.4		$	96.6		$	(14.7	)	$	(14.3	)
Amounts in accumulated OCI or regulatory asset not
yet recognized as a component of net periodic cost:
Actuarial loss	$	86.1		$	144.8		$	13.8		$	11.6
Prior service cost		23.1			28.3			18.1			0.6
Transition obligation		0.2			0.3			5.8			7.0
Other		76.0			66.9			0.1			-
Net amount recognized at December 31	$	185.4		$	240.3		$	37.8		$	19.2


	Pension Benefits									Other Benefits
Year to Date December 31	2007			2006			2005			2007			2006			2005
Components of net periodic benefit cost	(millions)
Service cost	$	18.4		$	18.8		$	17.3		$	1.2		$	0.9		$	0.9
Interest cost		29.8			30.9			29.8			3.9			3.0			2.9
Expected return on plan assets		(29.5	)		(32.7	)		(32.4	)		(0.7	)		(0.6	)		(0.6	)
Amortization of prior service cost		4.3			4.3			4.3			2.1			0.2			0.2
Recognized net actuarial loss		35.3			31.8			18.6			0.5			0.9			0.5
Transition obligation		0.1			0.1			0.1			1.2			1.2			1.2
Special termination benefits		1.5			-			-			0.2			-			-
Settlement charges		-			23.1			-			-			-			-
Net periodic benefit cost before
regulatory adjustment		59.9			76.3			37.7			8.4			5.6			5.1
Regulatory adjustment		(9.1	)		(52.3	)		(14.6	)		(0.1	)		-			-
Net periodic benefit cost		50.8			24.0			23.1			8.3			5.6			5.1
Other changes in plan assets and benefit
obligations recognized in OCI or
regulatory assets
Current year net loss (gain)		(23.4	)		-			-			2.7			-			-
Amortization of loss (gain)		(35.3	)		-			-			(0.5	)		-			-
Prior service cost (credit)		(0.9	)		-			-			19.6			-			-
Amortization of prior service cost		(4.3	)		-			-			(2.1	)		-			-
Amortization of transition obligation		(0.1	)		-			-			(1.2	)		-			-
Other regulatory activity		9.1			-			-			0.1			-			-
Total recognized in OCI or regulatory asset		(54.9	)		-			-			18.6			-			-
Total recognized in net periodic benefit cost
and OCI or regulatory asset	$	(4.1	)	$	24.0		$	23.1		$	26.9		$	5.6		$	5.1


	2007		2006
Pension plans with the ABO in excess of plan assets	(millions)
Projected benefit obligation	$	327.5	$	323.9
Accumulated benefit obligation		266.4		268.5
Fair value of plan assets		220.1		193.4
Pension plans with plan assets in excess of the ABO
Projected benefit obligation	$	185.4	$	184.9
Accumulated benefit obligation		157.4		158.6
Fair value of plan assets		180.0		171.1


Weighted average assumptions used to determine	Pension Benefits		Other Benefits
the benefit obligation at plan year-end	2007	2006	2007	2006
Discount rate	6.23%	5.87%	6.23%	5.89%
Rate of compensation increase	4.22%	3.81%	4.25%	3.90%


		Plan Assets at
	Target	December 31
Asset Category	Allocation	2007	2006
Equity securities	59%	57%	67%
Debt securities	33%	31%	22%
Real estate	6%	6%	6%
Other	2%	6%	5%
Total	100%	100%	100%


	Pension		Other
	Benefits		Benefits
	(millions)
2008	$	40.7	$	7.2
2009		38.2		7.7
2010		40.5		8.4
2011		40.3		9.3
2012		45.8		9.9
2013-2017		243.8		62.1

By:	/s/ Steve J. Helmers
Name:	Steven J. Helmers
Title:	Senior Vice President and General Counsel

By:	/s/ Terry Bassham
Name:	Terry Bassham
Title:	Executive Vice President – Finance and Strategic Development and Chief Financial Officer

By:	/s/ Christopher M. Reitz
Name:	Christopher M. Reitz
Title:	Senior Vice President, General Counsel and Secretary