ML11133A348

Great Plains Energy, Inc. and Kansas Electric Power Cooperative, Inc. - Item 8. Financial Statemnts and Supplemental Data

ML11133A348
Person / Time
Site:	Wolf Creek
Issue date:	05/08/2011
From:	Great Plains Energy, Kansas Electric Power Cooperative
To:	Office of Nuclear Reactor Regulation
References
RA 11-0134
Download: ML11133A348 (154)

Text

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA-'

Page Number Great Plains Energy Incorporate d Consolidated Statements of Income: 54 Consolidated Balance Shieets------- - 55 Consolidated Statements of Cash:Flows 57 Consolidated Statements of Common Shareholders' Equity Consolidated Statements of Comprehensive Income 59 KansasCity Power"& Light company . - . -

Consolidated Statements of Income ",60 Consolidated Balance Sheets' . -- - . - 61 Consolidated Statemients of Cash:Flows - - . ", .%.63 Consolidated Statements of Comimon Shareholder's Equity '. .. . 64 Consolidated Statements of Compirehensive Income . - - 65 Combined Notes to Consolidated Financial Statements f6r dreat'tý ins'Energyy Incorporated.......

and Kansas City Power & Light Company Note 1: Summary of Significant Accounting Policies . .,i66 Nbie-2:- Stiiplemelital Cash. Flow Infornfaii6n 77.......2. -72 Note 3: ReceiVables .- , .,74 Note 4: Assets,'Held For Sale ., v.,75 Note 5: Nuclear Plant .. -... r.75  :

Not6 6: Regulatory Matters . ' 78 Note 7: Goodwill antd Intaiiigible Assets 83 Note 8:,' Asset Retirement Obligations ... ... ... ".... 84 Note 9: Pen~i6h Plans and Other Employee Benefits - .. 85 Note 10: Equity Compensation` '

Note 11: Short-Term Borrowings and Short-Term Bank Lines of Credit, , _1.98 Note 12:. Long-Term'Debt.,, -. '.- 99 Note 13: Common Shareholders" .Equity....... 102 Note 14: . Preferred Stock "' .... 103 Note 15: Commitments and Contingencies 103 Note 16: Legal Proceedings.

Note 17: Guarantees 11 5 Note 18:, Related Party Transactions and Relationships .116 Note 19: Derivative Iiisthiiiefits 117 Note 20: FairValue Measurements , .... vi' ,.h,'- . -. ., 122 128 Note 21: Taxes Note 22: Segments and Related Ifif6rmatiodn , **.;.,.*.,

i, .. * .. ' ' " *: 133 Note 23: Discontinued Operations 134 Note 24: Jointly-Owned Electric Utility Plants *135 Note 25: Quarterly Operating Results (Unaudited) 136 Report of Independent Registered Public Accounting Firm.

Great Plains Energy Incorporated. 137 Kansas City Power & Light Company 138

'53

GREAT PLAINS ENERGY INCORPORATED.  ;'/.. ."

Consolidated Statements of Income Year Ended December 31 2010 2009 2008 Operating Revenues (millions, except per shire amounis)

Electric revenues $ 2,255.5 -. $ .1,965.0 $ 1,670.1 Operating Expenses "1  : - .-

'Fuel . 430.-77; .405..-5, 311L4 Purchased power ..... . 213.8.183.7 208..9

, Transmission of electricity by others .. 27.4 26.9 22.5 Utility operating and maintenance expenses 602.5 572.4 477.2 Depreciation and amortization 331.6 302.2 235.0 General taxes " 155.1 139*8` 128.1 Other '22.1 ' " 14.4 - i2.0

• Total 1,783.2 . .1,644.9 ,.,, 1,395!1 "

Operating income  :, 472131 .320.1 ,.275W0 Non-operating income " " ,m...: ,43.9 " 4.'-

9.5  ; 3i9 Non-operating expenses ' ,... .-. (19,5).,.:(6.9). (10.8),

Interest charges (184.8) (180.9) (111i.3)

Income from continuing operations before income taX expense and loss from equity investments - 311.9 - 1'81.8 '" 184.8 Income tax expense ' (99.0) "'(29.5) '(63.8)

Loss from equity investments, net of income taxes " ' - .-; .(10). (0:4) ' (.3)

Income from continuing operations '" "211,9

1. .. " 151.9. '.119.7 Income (loss) from discontinued operations, net of income taxes (Note 23) - . 1..5) 35:0..

,Net, income 211.9 **" ,150A4.. .154.7.-

Less

Net income attributable to noncontrolling interest (0.2) . (0.3). . (0.2,):

Net income attributable to Great Plains Energy 211.7 . ,150.1. . .154.5 Preferred stock dividend requirements 1.6 1.6 1.6.

,Earnings available for common shareholders $ 210:1 $ 148.5' $ 152.9 "Average number of basic common' shares outstanding ' . .. ., , ** 135.1 - 129i3,. .q 101.1

.Average number of diluted common shares outstanding 136.9 129.81 . 101.2 Basic earnings (loss) per common share, " '. . ""* '-",. ...... . .

-:'Continuing operations $ 1.55' ;,'J$. 1:16: ,.$ . 1.16" Discontinued operations . ,3..- , ,,- .(O.0.. .' 5

/Basic earnings per common share $ 1.55 * $ 1.15. $. 1.51..

.Diluted earnings (loss) per common share

.Continuing operations $ 1.53 $ 1.15 ' $ 1116 Discontinued operations " (0.01) 0.35 Diluted earnings per common share '"' $ '"' -4.'."

'153 1'41.4- $

S 1!51 Cash dividends per common share $ , 0:83. "$ '083, $ 1.66 The accompanying Notes to Consolidated Financial Statements are an integral part of these statements.. . ". .

e :i ." . '*"-*,

'-'-'I' 1.,"'

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GREAT PLAINS ENERGY INCORPORATED Consolidated Balance'Sheets December 31 2010 2009 ASSETS (milliofns, except share amounts)

Current Assets Cash and cash equivalents $ 10.8 $ 65.9 Funds on deposit 5.2 4.4 Receivables, net 241.7 - 230.5 Accounts receivable pledged as collateral , 95.0 -

Fuel inventories, at average cost 85.1 85.0 Materials and supplies, at average cost 132.8 121.3 Deferred refueling outage costs -9.6 *, '19.5 Refundable income taxes 2A1 " .13.5 Deferred income taxes 114.3. -36.8 Assets held for sale (Note 4) -" 19.4 Derivative instruments 1.1 -1.5

'Prepaid expenses and other assets 13.9 ,14.7 Total -"-.

,-* - 611.6" 612.5 Utility Plant, at Original Cost Electric 10,536.9 . 8,849.0 Less-accumulated depreciation *4,031.3 . .. . 3,774.5

- Net utility plant in service - t- .6,505.6 5,074.5 "Construction work irf pfogress 307.5 . 1,508:4 Nuclear fuel, net of amortization of $131.1 and $106.0 79.2:. 68:2

'Total I 6,892.3 6,651.1 InVeitments and Othei Assets Affordable housing limited partnerships 0.3 13.2 Nuclear decommissioning trust fund 129.2 . . 112.5 Regulatory assets 924.0 .,822.2 Goodwill ,**169.0 169.0 Derivative instruments 7.8 " , 7.9

-Other S.84.0 .. . 94.4 Total -- 1,314.3. . 1;219.2 Total $ 8,818.2 $ 8,482.8 The accompanying Notes to Consolidated Financial Statements are an integral part of these statements.

,.?

55

GREAT PLAINS ENERGY INCORPORATED Consolidated Balance Sheets December 31 2010 . 2009 LIABILITIES AND CAPITALIZATION (millions, except share amounts)."

Current Liabilities Notes payable $ 9.5 $. 252.0 Collateralized note Payable 95.0 .. ,

Commercial paper ' i, 263.5 . . . 186.6 Current maturities of long-term debt 485.7,

• 1.3 Accounts payable 276.3 315.0 Accrued taxes .. . 26.6 .*." ,. 27.9 Accrued interest., - 75.4. . ,72:5 Accrued compensation and benefits 46.8 .. . - 45.1 Pension and post-retirement liability 4A -,4.6 Derivative instruments 20.8, , !--. 03 Other 35.6i... .... 53.0 Total 1;339.3, - 958:3 Deferred Creditsand.Other Liabilities Deferred income taxes 518.3 . ." 381.9

'Deferred tax credits ,. 133.4 140.5 Asset retirement obligations 143.3 . 132.6 Pension and post-retirement liability 427.5 440.4 Regulatory liabilities -258.2 237.8

'Derivative instruments - -0.5 Other .. ,. 129.4 '145.1 Total 1,610.1 .1,478.8 Capitalization Great Plains Energy common shareholders' equity .. .. -

Common stock-250,000,000 shares authorized without par value 136,113,954 and 135,636,538 shares issued, stated value 2,324.4 2,313.7 Retained earnings 626.5 . , 529.2 Treasury stock-400,889 and 213,423 shares, at cost (8.9) (5.5)

'Accumulated other c6mprehensive loss . (56.1) (44.9)

Total. 2,885.9 2,792.5 Noncontrolling interest 1...1.2 1.2 Cumulative preierr-ed'stockl$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 (Note 12) 2,942.7 3,213.0 Total 5,868.8 6,045.7 Commitments and Contingencies (Note 15)

Total $ 8,818.2 $ 8,482.8 The accompanying Notes to.Consolidated Financial Statements are an integral part of these statements.

5.6

G"REAT PLAINS ENERGY

• Coiisolidate'd Statements of Cash Flows" Year Ended December 31 2010 .... 2009 .2008 _.

Cash Flows from Operating Activities (millions)

.,Net income $ 211.9 $ 150.4 $ 154.7

,Adjustments to reconcile income to net cash from operating activities:.

Depreciation and amortization 331.6 302.2 -1238.3 Amortization of:.

Nuclear fuel. 25.1 16.1. 14.5" Other (4.7) (10.1) .. -.9)

Deferred income taxes, net 123.8 (3.6) . 44.1, Investment tax credit amortization (2.9) (2.2) ,, (1.8),

Loss from equity investments, net of income taxes 1.0 .0.4 .. . 1.3 Fair value impacts from interest rate hedging *,

• 9.2 Fair value impacts from energy contracts - Strategic Energy (189.1)-

Loss on sale of Strategic Energy 116.2 Other o.per ting acti(,ities (Note 2). (133.7) (117.8) .52.4, Net cash from operating activities 552.1 335.4 .437.9, Cash Flows from Investing Activities -

Utility capital expenditures * (618.0) (841.1) (1,023.7)

Allowance for bbrrowed funds used during construction (28.5) (37.7) (31.7)

Payment to Black Hills for asset sale working capital adjustment (7.7) -

Proceeds from sale of Strategic Energy, net of cash sold 218.8 GMO acquisition, Aet cash received - - 271.9 Purchases of nuclear decommissioning trust investments (83.3) (99.0) (49.1)

Proceeds from nuclear decommissioning trust investments 79.6 95.3 45.4 Other investing-actixiities ...- .. .... * (7.5) (7:4) "- (-10.7)

Net cash from investing activities (657.7) (897.6) (579.1)

Cash Flows from Financing Activities

. ,Issuance of common stock 6.2 219.9 15.3 Issuance of long-term debt' 249.9 700.7 363.4 "Issufarfce fees . . .... . (12.1) (22.8) - (5.3)

Repayment of long-term debt (1.3) (70.7) (169.9)

Net change in short-term borrowings (165.6) .. (145.6) . 118.4 Net change in collateralized short-term borrowings, 95.0 - -

Dividends paid (114.2) (110.5) (172.0)

Credit facility termination fees S- ~-,-. .7... * (12.5)

Other financing activities (7.4) (4.0) (2.2)

Net cash from financing activities 50.5 567.0 135.2 Net Change in Cash and Cash Equivalents (55.1) 4.8 (6.0)

Cash and Cash Equivalents at Beginning of Year (includes $43.1 million in assets of discontinued operations in 2008) 65.9 61.1 67.1 Cash and-Cash Equivalents at End of Year- $ 10.8 $ 65.9 $ 61.1" The accompanying Notes to Consolidated Financial Statements are an integral-part of these stitemenis.

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GREAT PLAINS ENERGY INCORPORATED Consolidated Statements of Common Shareholders' Equity and Noncontrolling Interest Year Ended December 31 2010 2009 2008 Shares- Amount Shares . -Amount -Shares" Amount Common Stock * (millions, except share amounts)

$ 2,313.7 Beginning balance' 135,636,538 119,375,923 $ 2,118.4 86,325,136 $ 1,065.9 Issuance of common stock 347,279' '6.6 15,883,948 220.1 32,962,723 1,042.0 Common stock issuance fees (7.0)

Issuance of restricted common stock 130,137 2.3 376,667 5.4 88,064 2.3 Equity compehsation expense, net of forfeitures .1.0 0.8 5.9 Uneamed Compensation Issuance of restricted common stock (2.3) (5.4) (2.3)

Forfeiture of restricted common stock.: 0.8 *1.1.

Compensation expense recognized 2.2 3.8' 5.6 Equity Units*allocated fees and expenses and the present value of contract adjustment payments (22.5)

^

Other 0.1 ..... . (1.0) (1.0)

Ending balance -, - 136,113,954 2,324.4 135,636,538. , 2,313.7 ... 119,3:75,923 2,118.4 Retained Earnings . . . - ,

Beginning balance 529.2 4,89.3 ,. . 506.9 Cumulative effect of a change in accounting principle I , (0.1)

Net income attributable to Great Plains.Energy . 211.7 .. , . 150.1 154.5 Dividends: . . ,* . . ,,.. .

Common stock (112.6)... . . (108.9) , (170.4)

Preferred stock - at required rates (1.6) (1.6) (1.6)

Performance shares .-. (0.2) (0.1)

Performance shares amendment 0.4 Ending

.. balance 626.5 529.2 489.3 Treasury Stock * * .

Beginning balance . ...  :..(213,423) '(5.5) (120,677) .(3.6j (90,929) (2.8)

Treasury shares acquired (188,383) (3.4) (132,593) *(2.9) (39,856) (1.1)

Treasury shares reissued . 917 39,847 1.0 10,108 0.3 Ending balance .... (400,889) (8.9) (213,423) " (5.5) (120,677) (3.6)

Accumulated Other Comprehensive Income (Loss)

Beginningbalance (44.9) (53.5) (2.1)

Derivative hedging activity, 'net of tax . (10.6)

• 5.3 (47.5)

Change in unrecognized-pension expense, net of tax (0.6) 3'3 (3.9)

Endingl*alance . . (56.1) (44.9) . " (53.5)

Total Great Plains Energy Common Shareholders' Equity $ 2,885.9 $ 2,792.5 . $ 2,550.6 Noncontrolling Interest . ...

Beginnin~g balance $ 1:2 . $' .. 1 . ' $

GMO acquisition July 14, 2008 - 0.8 Net income attributable to noncontrolling interest 0.2 0.3 0.2 Distribution (0.2) (0.1)

Ending balance $ 1.2 $ 1.2 1.0 The accompanying Notes to Consolidated Financial Statements"are an integral part of these statements.

58

GREAT PLAINS ENERGY INCORPORATED Consolidated Statements of Comprehensive Income Year Ended December 31' 2010 .2009' " 2008 (millions)

Net income $ 211.9 $ 150.4 $ 154.7 Other comprehensive income (loss)

Gain (loss) on derivative hedging instruments "(28.0) (0.4) '" 27.0 Income tax benefit (expense) 10.8 0.1 (12.5)

Net gain (loss) on derivative hedging instruments (17.2) (0.3) 14.5 Reclassification to expenses, net of tax (Note 19) 6.6 5.6 (62.0)

Derivative hedging activity, net of.tax (10.6) 5.3 *' (47.5)

Defined benefit pension plans Net gain (loss) arising during period (1.3) 5.0 (6.7)

Less: amortization of net gain included in net. 0.4 0.3 0.3 periodic benefit costs Less: amortization of.prior service costs included in net periodic benefit costs "  :" 0.1 Income tax benefit (expense) .. ..-0.4 (2.1)'... ." 2.4 Net change in unrecognized pension'expense. ,(0.6) 3.3 (3.9)

Comprehensive incomeme 200.7 159.0 103.3 Less: comprehensive income attributable to noncontrolling interest (0.2) S(0.3) (0.2)

Comprehensive income attributable to Great Plains Energy $ 200.5 $ 158.7 $ 103.1 The accompanying Notes to Consolidated Financial Statements are an integral part of these statements.

59

KAN*SAS'CITY POWER & LIGHT COMPANY

-.. ;'Consolidated Statements.ofIncome .

Year Ended December 31 2010 2009 2008 Operating Revenues (millions)

. Electric revenues $ 1,517.1 $ 1,318.2 - .$.,1,343.0 OperatingExi*in'scs' Fuel . 278.8 251.3 253.3 .. ,.

78.9' 70.8: ...

Pirciasdd ýoxvf - 119:0,0 Transmission of electricity by others 15.0, 12.31, Operating and maintenance:expenses 434.3 403.32 398.1,.

S'Depreciationand amortizatidti 256.4 ,*229.6 204.3

• "118.7. " .,

General taxes 129.3 118.9.

Other'* 13.0,. .0.2

. Total . . . . . . . 1,205.7 1,086.0,.., . 1,10,4.9.,

Operating income .. , 311.4,., ?232.2, 238'.1 Non-operating income *24.7, 332 ,25.9.

Non-operating expenses (5.6) (4.7). .. 67)

Interest charges (85.7) .. (84.9) .. (72.3)'

• Income before income tax expense 244.8 175.8 ... 185.0

-Income tax expense (81.6) (46.9) - (59.8).

Ne'incomhe . $ 16372 .... $ .128.9, $ 125.2,.

The disclosures regarding KCP&L includec Sin the accompanying Notes to Consolidated Financial St'atements -I are.an integral part of these statements.

.60

KANSAS CITY POWER & LIGHT COMPANY Consolidated Balance Sheets December 31 2010 2009 ASSETS' (ihilli6ns,'except share amounts)

Current Assets Cash and cash equivalents $ .3.6, $ 17.4 rFunds on deposit 0.4 .. 0.1 Receivables, net 169.4 161.7 Accounts receivable pledged as collateral 95.0 Fuel inventories, at average cost 44.9 . 45.6

,Materials and supplies, at average cost 94.4 84.8 Deferred refueling outage costs ,9.6. 19.5 Refundable income taxes 9.0 -

Deferred income taxes 5.6 .0.3 Derivative instruments 0.2 Prepbsid expenses and other assets 10.0 .- 111.0 Total 441.9 340.6 Utility Plant, at Original Cost

.Electric 7,540.9 . 6,258.5

-Less-accumulated depreciation 3,104.4 .2,899.0 Net utility plant in service 4,436.5 - 3,359.5

-Construction work in progress 227.6 1,144.1 Nticl~ar fuel, net of amortization of $131.1 and $106.0 79.2 .68.2 Total 4,743:3 .4,511.8 Investments and Other Assets Nuclear decommissioning trust fund 129.2 112.5 Regulatory assets "679.6*.. 612.1 Other 32.3 65.3

-Total 841.1 . /89.9 Total' $ 6,026.3 $ .,5,702.3 The disclosures regarding KCP&L included in the accompanying Notes to Consolidated Financial Statements are an iýitegral part of these statements." -. ,:.

I - , _ . .. ., . . 1 .- .  : ý i .

KANSASCITY POWER & LIGHT COMPANY Consolidated'Balance Sheets December 31 2010 2009 LIABILITIES AND CAPITALIZATION (millions, except share amiounts)

Current Liabilities Collateralized note payable " 95.0 $

Commercial paper 263.5 186.6 Current maturities of long-term debt 150.3 0.2 Accounts payable 201.7 ,' 237.9 Accrued taxes 21.3 '23.7 Accrued interest* 26.2 26.7

'Accrued compensation and benefits 46.8 45.1 Pension and post-retirement liability '2.6 3'.2 Other '7.8 " 6 126.1 Total 815.2 549.5 Deferred Credits and Other Liabilities Deferred income taxes` ... .. . 692.0 . 559.4 Deferred tax credits 129.4 135ý.7 Asset retirement oblig'ations 129.7 119.8 Pension and post-retirement liability 407.3 421.2 Regulatory liabilities. 141.3 126.9 Other' 76.7 78.2 Total. - . "'1,576.4 -i,441.2 Capitalization ..

Common shareholder's equity Common stock- 1,000 shares authorized without par value

• 1 share issued, ktated value 1,563.1 1,563.1

• Retained earnings. . 478.3 410.1 "Accumulated other comprehensive loss . .... (36.4) (41.5)

.Total .... . ... . . . ...... 2,005.0. 1,931.7 Long-term debt (Note 12) 1,629.7 1,779.9 Total

• 3,634.7 3,711.6 Commitments and Contingencies (Note 15)

Total $ 6,026.3 $ 5,702.3 The disclosures regarding KCP&L included in the accompanying Notes to Consolidated Financial Statements are an integral part of these statements.

62

KANSAS CITY,PO"IýE &.LIGHT COMPANY Consolidated Statements.of Cash Flows Year Ended December 31 2010 2009 2008 Cash Flows from Operating Activities (millions)

Net indom& $" 163.2 $ 128.9 $ 125.2 Adjustments to reconcile income to net cash from operating activities:

Depreciation and amortization 256.4 229.6 204.3 Amortization of:

Nuclear fuel 25.1 16.1 S14.5 Other 24.2 "19.0' Jfr 11.1 Deferred income taxes, net 83.2 (38.2) .. (7.5)

Investment tax credit amortization (2.1) (1.4)

(1:4).

Other operating activities (Note 2) (127.8) (66.1) 72.8 Net cash from operating activities 422.2 287.9 419.0 Cash Flows from Investing Activities ,

Utility capital expenditures (463.1) (626.5) (8$10.5)

Allowance for borrowed funds used during constfu~tion ... .. (22.4) . (31.1) -(23.6)1 Purchases of nuclear decommissioning trust investments (83.3) (99.0) . (49.1),.

Proceeds from nuclear decommissioning trust investments 79.6 95.3 45.4 Net money pool lending " ". (6.1) (6.0)

Other ihvegting activities ... (13.4) (0.6) (8.5) r.

Net cash'from investing activities . .(508.7) (667.9) - (846.3)

Cash Flows from'Financing Activities "

Issuance of long-term debt 413.2 363.4 Repayment of long-term debt (0.2) - -

Net change in short-term borrowings 76.9 (193.6) 14.4 Net change in collateralized short-term borrowings 95.0 -

Net money pool borrowings 1.1 0.9 Dividends paid to Great Plains Energy (95.0) (72.0) (144.0)

Equity contribution from Great Plains Energy 247.5 200.0 Issuance fees (5.1) (4.0) (4.3)

Net cash from financing activities 72.7 392.0 429.5 Net Change in Cash and Cash Equivalents (13.8) 12.0 2.2 Cash and Cash Equivalents at Beginning of Year 17.4 5.4 3.2 Cash and Cash Equivalents at End of Year $ 3.6 $ 17.4' $ 5.4 The disclosures regarding KCP&L included in the accompanying Notes to Consolidated Financial Statements are an integral part of these statements.

63

KANSAS CITY POWER & LIGHT COMANY Consolidated Statements of Common Shareholder's Equity Year Ended December 31 2010 2009 2008 Shares Amount Shares Amount Shares Amount Common Stock (millions, exceit share amnounts)

Beginning balance 1 $ 1,563.1 1 $' 1,315.6' 1 $ 1,115.6 Equity contribution from Great Plains Energy - 247.5 200.0 Ending balance 1 1,563.1 1 1,563.1 .1 1,315.6 Retained Earnings Beginning'balance 410.1 353.2 371.3 Net income 163.2 128.9 125.2 Transfer.o fHSS to KLT Inc. -*0.7 Dividends: .... ,

Common stock held by Great Plains Energy (95.0) (72.0) (144.0)

Ending balance 478.3 410.1 353.2 Accumulated Other Comprehensive Income (Loss)

Beginning balance (41.5) (46:9) (7.5)

Derivative hedging activity, net of tax 5.1 5.4 (39.4)

Ending balance (36.4) (41.5) (46.9)

Total Common Shareholder's Equity $ 2,005.0 S 1,931.7 $ 1,621.9 The disclosures regarding KCP&L included in the accompanying N1otes to Consolidated Financial-Statements are an-infegral pard of these statements.

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KANSAS CITY POWER & LIGHT COMPANY '

Consolidated Statements of Comprehensive Income Year Ended December 31 2010 2009 2008'-

.. ,.  :.(millions).

Net income ..... $ 163.2 $ 128.9 $ 125.2

-Other comprehensive income (loss).

Gain (loss) on derivative hedging,instruments " (0.9) 0.2 (65.0)

Incomý tax benefit (expense) 0.3 (0.1) 25.4 Net gain (loss) on derivative hedging instruments (0.6) 0.1 (39.6)

Reclassification to expenses, net of tax (Note 19) 5.7 5.3 0.2 Derivative hedging activity, net of tax

• 5.1 5.4 (39.4)

Comprehensive income $ 168.3 $ 134.3 $ 85.8 The disclosures, regarding KCP&L included in the accompanying Notes to Consolidated Financial Statements are an integral part of these statements. . ,,

I, ,

".t 65

GREAT PLAINS ENERGY INCORPORATED KANSAS CITY POWER & LIGHT COMPANY '

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

"Companies" refers to Great Plains Energy Incorporated and i'ts c6ns~lidated §u1sidiairiesand*KCP&L and' its consolidated subsidiaries. -

1.

SUMMARY

OF SIGNIFICANT ACCOUNTING POLICIES Organization ..

Great Plains Energy, a Missouri corporation incorporated in 2001, is a public utility holding company and does not own or operate any significant'ass~ts 6tfidrthan the stock of its'subsidiaries' Great Plains Energy's whblly owned direct subsidiaries with operations or active subsidiaries are as follows:

• KCP&L is an integrated, regulated electric utility that provides electricity to customers primarily in the states of Missouri and Kansas. KCP&L has one active wholly owned subsidiary, Kansas City Power &

Light Receivables Company (Receivables Company).

• KCP&L Greater Missouri Operations Company (GMO) is an integrated, regulated electric utility that primarily provides electricity to customers in the state of Missouri. GMO also provides regulated steam service to certain customers in the St. Joseph, Missouri area. GMO wholly owns MPS Merchant 1 Services, Inc. (MPS Merchant), which has certain long-term natural gas contracts remaining from its former non-regulated trading operations.

Each of Great Plains Energy's and KCP&L's consolidated financial statements includes the accounts of their subsidiaries. All intercompany transactions have been eliminated.

Great Plains Energy's sole reportable business segment is, electric utility. See Note 22 for additional information.

Use of Estimates The process of preparing financial statements in conformity with Generally Accepted Accounting Principles (GAAP) requires the use of estimates and assumptions that affect the reported amounts of certain types ofiassets, liabilities, revenues, and expenses. Such estimates primarily relate to unsettled transactions and events as of the date of the financial statements. Accordingly, upon settlement, actual results may differ from estimated amounts.

Cash and Cash Equivalents Cash equivalents consist of highly liquid investments with original maturities of three months or less at acquisition.

Funds on Deposit Funds on deposit consist primarily of cash provided to counterparties in support of margin requirements related to commodity purchases, commodity swaps and futures contracts. Pursuant to individual contract terms with counterparties, deposit amounts required vary with changes in market prices, credit provisions and various other factors. Interest is earned on most funds on deposit. Great Plains Energy also holds funds on deposit from counterparties in the same manner. These funds are included in other current liabilities on the consolidated balance sheets.

66

Fair Value of Financial Instruments I V n -* r The following~methods and-assumptions were used to estimate the fair value of each class -offinancial.instruments for which it.is practicable to.estimate that value... , .,  :-.. .. ... . ,.,.,

Nuclear decommissioningtrustfund- KCP&L's nuclear decommissioning.trust fund assets are recorded at fair value. Fair Value is based on. quoted market prices of the-investments held by the fund and/or valuation models>

Rabbi trust - GMO's.rabbi trusts, related to itsSuppjemental, Executive Retirement.Plans (SERP) are recorded at fair value, which are based on quoted market prices, of the.investments held by the trusts and/or valuation models..

The rabbi trusts are included in Other Investments and Other Assets on Great -Plains Energy's consolidated, balance sheets.,.. . . . ,. ,.4, . ....... ... .,

Long-term debt - Fair value is based on quoted market prices, with the incremental borrowing rate for similar' debt used to determine fair. value ifquoted market prices were.not available. At December 31, 2010, the book value and fair value of Great Plains Energy's. long-term debt, *including ctrrent maturities, was $3.4 billion and

$317 billion, respect*veiy. At December 31, 201,0,j hebook value and fair value of KCP&L.'s. long-term debt, includi.ngcurrent maturities,mwas $1.8:billion and $1.9 billion, respectively. -At December 31, 2009,.the book value and fair value. of Great Plains Energy,s long-term.debt,.including current maturities,,was $3.2 billion and

$3.4 billion, respectively. At December 31, 2009, the book value and fair value of KCP&L's.lo0ng-terrm debt, including current maturities, was $1.8 billion and $1.9 billion, respectively.

• 4. -, , - . . 4 £ . * -  ; " . * . :

Derivative instruments - The fair value of derivative instruments is estimated using market quotes, over-the-7 counter forward price and volatility curves and correlation among fuel prices, net of estimated credit risk.

Pensionplans - For financial reporting purposes,'the market value of plan assets is the fair value. KCP&L uses a five-year smoothing of assets to determine fair'value for regulatory reporting purposes.

Derivative Instruments The Company records derivative instruments on-the balance sheet at fair value in.accordance with GAAP. Great Plains Energy and KCP&L enter .into derivative contracts to manage exposure to commodity price and interest rate fluctuations. Derivative instruments designated as normal-purchases and normal sales (NPNS) and cash flow hedges are used solely for hedging purposes-and ade, not .issued or held-for speculative reasons.

.The Company considers various qualitatiVe factors, such'as contract and *narket place attributes, in designating derivative instruments at inception. Great Plains Energy and KCP&L may elect the NPNS exception, which requires the effects of the derivative to be recorded when the underlying contract settles. Great Plains Energy and KCP&L account for derivative instruments that are not designated as NPNS as cash flow hedges or non-hedging derivatives, which are recorded as assets or liabilities on the consolidated balancehsheets at fair value. In addition, if a derivative instrument is designated as a cash -flow hedge, Great Plains Energy and KCP&L document the method of determining hedge effectiveness and measuring ineffectiveness. --See Note 19 for additional information regarding derivative financial instruments and hedging activities. -

Great Plains Energy and KCP&L offset fair.value amounts' recognized for derivative instruments under master netting arrangements, which include rights to-reclaim cash collateral (a receivable), or the obligation to return cash collateral (a payable). Great, Plains Energy: and KCP&L classify cash flowsfrom derivative instruments in the same category as the cash floiw'-fiomhthe'itedmn beifig hedgd.' '" ...

~~... . ......*:... *. ... . '* .. ,t: -: ,;*4 67

Utility Plant.. .

Great Plains Energy's and KCP&L's utility plant'is stated-at historicalcost. Thege costs include taxes,'an allowance for the'cost of borrowed and equity funds used to finance construction and.payroll-related costs,9.

including pensions and other fringe benefits. Replacements, improvements and'additions to units of property are capitafized. ,Repairs of property and replacemenits of items not considered to be units of property are expensed as incurred (exceptas discussed:under Deferred Refueling Outage Costs and Accounting for Planned Major-!

Maintenance). When property units are retired or otherwise disposed, the original cost, net of salvage, is charged toa6cu'mulated dejifeciation. Substantially all of KCP&L's titility plant is pledged as collateral for KCP&L's mrtgage bonds under the General MrtgageIndenture'and Deed of Trust'datedDecember 1, 1986, as supplemented. Substantially all'of GMO's St.Joseph Light & Powerdivision utility plant is pledged as collateral for GMO's mortgage bonds under the General Mortgage Indenture and Deed of Trust dated April 1,4 9461 as'.

supplemented.

As prescribed by the Federal Eriergy Regulatory Commissiori (FERC), All6wance for Funds Used During:

Construction (AFUDC) is' charged to the'cost of the plant during construction: -AFUDC equity funds are included as a nonbcash itemin non-operating income and AFUDC'borrowedfunds are aWreductionof interest charges. The rates used to' cdmipute gross'"AFUDC are compounded semi-annually and averaged6.8%,in.2010, 7.6% in.12009, and 7:1% in 2008 for KCP&L and fof GMO averaged 4-6% in 2010, 5.4% in 2009 and 4:9% in 2008 subsequeiit to its acquisition on July 14, 2008. , ':. .. ' .

Great Plains Energy's and KCP&L's balances of utility plant, at original cost, with a range of estimated useful lives are listed in the followingtables. . " .

GreatPlainsEnergy December31 .. . 2010 -' 2009 Utility Plant, atoriginal cost-" .(inillions)

Production (20 - 60 years) $ 6,369.4 $ 4,892.3 Transmission (15 - 70 years). 716.9 660.4 Distribution (8-66 years) 2,813.4 . 2 08.3 General (5 - 50 years) . 637:2 588.0 Total (a)  :'10,536.9 .8,849.0

.8$

(a) Includes $103.0 million and $96.3 million ai December 31, 2010 and 2009, respectively,.of land dnd other as'sets that

.are not depreciated.  : . .

_q

_KCP&L ' ' ,. *' . - ...- ",

December31  : 2010 2009 Utility Plant;'at original cost.-- .. (millions).

Production-(20 - 60years) $ 4,886.2 $',3,742.6.

Transmission (15 - 70 years.) 408.7 371.3 Distribution (8 - 55 years)' 1776.4 j' .. l,709.5 General (5 - 50 years)' ' . 469.6 - .435.1

• Total (a) $. -..7,540.9 $ '6,258.5 (a) Includes $59.9 million and'$56.1 million at December 31, 2010 and 2009, respectively, of land and other assets that are not depreciated.

'68

Depreciation and Amortization ' .. ... . -. ,V.

Depreciation an&amortization of utility plantother than-nuclear fuel -is computed using.the straightline method over the estimated lives of depreciable property based on rates approved by state regulatory authorities. Annual ,

depreciation rates average approximately 3%. Nuclear fuel is amortized to fuel expense based on the quantity of heat produced during the generation of electricity.

Great Plains Energy's depreciation expense.was $243.6 million,, $228.9 million, and;$l75.1' million for 2010, 2009, and 2008, respectively. KCP&L's depreciation expense was.$170.9 million,. $158.4 million, and $145.4 -

million for 2010, 2009 and 2008, respectively..,Great Plains Energy -s.and;KCP&L'sdepreciation and amortization expense includes $72.6 million, $58.2 million, and $47.4 million for 2010, 2009 and 2008, respectively, of additional amortization to help maintain cash flow levels during KCP&L's Comprehensive-..

• Energy Planpursuant to orders of the Public Service Commission of the State of Missouri (MPSC) Qand The State Corporation Commission of the State of Kansas (KCC).

Nuclear Plant Decommissioning Costs Nuclear plant decommissioning cost-estimates. are based on the immediate, dismantlement method and- include, the costs of decontamination, dismantlement. and site restoration.. Based onthese cost estimates, KCP&L. contributes.,

to a tax-qualified trist fuhd to be used to decommission Wolf Creek Generating Station (Wolf Creek): Related.

liabilities- for decommissioning are included on'Great Plains Energy's and KCP&L's balance sheet in Asset Retirement Obligations (AROs). i- .. .. , .. - .

As a resultiof the -authorized regulatory.treatment and related regulatory accounting, differences between the decommissioning trust fund asset and the related ARO are recorded as a regulatory assetlor liability. See Note&8 for discussion of AROs including those associated with nuclear plant decommissioning costs. .

Deferred Refueling Outage Costs' - -. , -. . ,. . - . .

KCP&L uses the deferral method to account for operations and maintenance expenses incurred in support of Wolf Creek's scheduled refueling outages and amortizes them evenly (monthly) over the unit's operating.cycle of 18, months until the nextscheduled outage. Replacement.power costs during an outage. are expensed~as ýincurred.

Regulatory ,Matters " .' - , . -.. . ,-,.

• KCP&L. and.GMO- defer items on, the balance sheet resulting from.the effects of the ratemaking process, which would not be recorded if KCP&L and GMO were not regulated. See Note 6 for additional information-. .

concerning regulatory matters.

? .

RevenueRecognition . , :- ... -- , ,

Great Plains Energy and KCP&L recognize revenues on sales of electricity when the service is provided. -.

Revenues recorded include electric services provided but not yet billed by KCP&L and GMO. Unbilled revenues are recorded for kWh usage in the period-following the customers', billing cycle to the end-of the month. -.

KCP&L's and GMO's estimate is based onnet system kWh usageless actual billed kWhs.: KCP&L's and GMO's estimated unbilled-kWhs, are allocated-andpficed,'by regulatory~jurisdiction across therate, classes, based on actual billing rates.

KCP&L: and GMO collect~from customers gross-receipts taxes levied by state and -local governments. These taxes from KCP&L's-Missouri customers are recorded gross in operating revenues and general taxes-on' Great Plains Energy's and KCP&L's statements-of income. -:KCP&L's gross receipts taxes collected from Missouri customers were $54.3 million, $46.8 million and $45.9 million in 2010, 2009 and.2008, respectively. These taxes from KCP&L's Kansas customers and GMO's customers are recorded net in operating revenues on Great Plains Energy's statements of income. , ' *- -

Great Plains Energy and KCP&L collect sales taxes from customers and remit to state and local governments.

These taxes are presented on a net basis on Great Plains Energy's and KCP&L's statements of income.

69

Great Plains Energy and KCP&L record sale and purchase activity on a net basis'in wholesale'revenue.or purchased power when transacting with Regional Transmission Organization (RTO)/IndependenfSystem Olperator (ISO) markets. " i" . - """

Allowance for Doubtful Accounts This reserve represents estimated uncollectible accounts receivable and is based on management's judgmefit considering historical loss experience and the characteristics of existing accounts. 'Provisions for losses on, receivables are expensed to maintain the allowance at-a level considered adequate to cover expected losses.

Receivables are charged off against the reserve when, they areideemed uncollectible. , . .

Property Gains and Losses* , * ,

Net gains' and losses from the sales of assets, businesses and asset impairments are recorded in operating expenses. .. . . ,.

Asset Impairments Long-lived assets and finite lived intangible assets subject to amortization' are reviewed for impairment whenever events or. changes in circumstances indicate that the carrying amount of an asset'may not be recoverable. If the sum of the undiscourited expected future'cash flows from an asset to be held and used is less than the carrying value of the asset, an asset impairment must be recognized in the financial statements. The amount of impairment recognized is the excess of the carrying value of the asset over its fair value.

Goodwill and indefmite.lived intangible'assets aretested for impairment annually and when an event occurs indicating the possibility that an impairment exists. The annual test must be performed at the same time each year. If the fair value of a reporting unit is less.than its carrying value including goodwill, an impairment charge 'for goodwill' must be recognized in the financial statements: To measure the amount of the impairment loss to recognize, the implied fair value of the reporting unit'goodwill is compared with its carrying value.'

Income Taxes, "

Great'Plains Energy. has recognized deferred taxes for temporary book to tax: differences using the liability method. The liability method requires that deferred tax balances be adjusted to reflect enacted tax rates that are anticipated to be in effect when the temporary differences reverse. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion of the deferred tax assets will not be realized. .~ . ' ., .' , .'

Great Plains Energy and KCP&L recognize tax benefitsbased on a "more-likely-than-not" recognition threshold.

In addition, Great Plains Energy and KCP&L recognize interest accrued related to unrecognized tax benefits in interest expense and penalties in non-operating expenses. ' . - .

Great Plains Energy and its subsidiariesfile consolidated federal and combined and separate state income tax returns. Income taxes for consolidated or combined subsidiaries areallocated to the subsidiaries based on I separate company computations of income or loss. KCP&L's income tax provision includes taxes allocated based on its separate company income or loss.

Great Plains Energy and KCP&L have established a net regulatory asset for the additional future revenues to be collected from customers fordeferred income taxes. Tax credits are recognized in the year generated except for certain.KCP&L and GMO investment'tax credits that 'have been deferred, and amortized over the remaining service lives of the related properties. ' . . .

Environmental Matters Environmental costs are accrued when it is probable a liability has been incurred and the amount of the liability can be reasonably estimated.. ....... I . 1,I

'70

Basic and Diluted Earnings per Common Share Calculation To determine basic EPS, preferred stock dividend requirements and net income attributable to noncontrolling interest are deducted from income from continuing operations~and net income before dividing by the average number of common shares outstanding. -The eaifiings (loss) lief share impact of discontinued operations is determined by dividing income (loss) from discontinued operations, net of income, taxes,by the average number of common shares outstanding. The effect of dilutive securities, calculated using the treasury stock method, assumes the.issuance of common shares applicable to performance.shares, restricted stock, stock options and Equity Units.

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

2010 2009 2008 Income (millions, except per share amounts)

Income fromcontinuing operations $ 211.9" $ 151.9 $i19.7 Less: net income attributable to noncontrolling interest 0.2 0.3 0.2 Less: preferred stock dividend requirements 1.6 r 1.6 1.6 Income from continuing operations available for comn-tn shareholders $V210.1 $ 150.0 $ "117.9 Common Shares Outstanding Average numberofcomnon shares outstanding 135.1 129.3 101.1 Add: effect of dilutive securities '1.8 0.5 0.1 Diluted average number of common shares outstanding "136.9 129.8 101.2 Basic EPS from continuing operations ....... 1.55 $ -1.16 $ 1.16 DilutedEPS fromcontinuing operations -. .. $ 1.53' $ .1.i5 $ 1.16 The computation of diluted EPS for 2010 excludes anti-dilutive shares consisting of 340,690 performance shares, 251,526 restricted stock shares and 196,137 stock options. - *

• The computation of diluted EPS for 2009 excludes anti-dilu'tive shares consisting of 150,895 'performance shares, 438,281 restricted stock shares and 231,670 stock options.

The computation of diluted EPS for 2008 excludes anti-dilutive shares consisting of 364,217 performance shares, 530,398 restricted stock shares and 455,469 stock options.

Dividends Declared In February 2011, Great Plains Energy's Board of Directors (Board) declared a quarterly dividend of $0.2075 per share on Great Plains Energy's common stock. The commoni dividend is payable March 21, 2011, to shareholders of record as of February 28, 2011-. The Board also declared regular dividends on Great Plains Energy's preferred stock, payable June 1, 2011, to shareholders of record as of May 10, 2011.

In February 2011, KCP&L's Board of Directors declared a cash dividend payable to Great Plains Energy of $25 million payable on March 17, 2011.

71

2. SUPPLEMENTAL CASH FLOW INFORMATION GreaiPlainsEnergy'OtherOperatingActivities 2010 '2009 2008-Cash flows affected by changes in: S'"," (millionS)

Receivables"- S(12.6) $ "..9 S - 61.9 .:

$. 619 ,

• Accounts receivable pledged as collateral (95.0)

Fuel inventories (0.1) 2.0 (16.7)

Materials and supplies (11.5) (22.0) (3.7)

Accounts payable 12:8 . , (70D9) 56.2 '

Accrued taxes 6.7 42.2 73.2

, Accrued interest' 2.9 2.9 17.8 SDeferredrefueling outage costs' .. 9.9 " (7.1) (5.9/)

Accrued plant maintenance costs 1.7 2.9 .2.1 Fuel adjustment clauses 2.,7 7.8 ,(18.0)

Pension and post-retirement benefit obligations (10.2) . 18.4 3.1

" Allowance for equity funds used during construction, (26.9), (39.6) (24.2)

Wtite down of affordable housing investments 11.2 -

latan Nos. 1 and 2 impact of disallowed construction costs 16.8 Deferred acquisition costs (5.'8)

" Interest rate hedge settlements (6.9) .M(79.1) S (41.2).

-(36.4) :

-Other - (36.i) 1-6.8

• $ 52.4 ,

, Total other operating activities. $ (133.7) $S211 (117.8)

. 9 Cash paid duriig the period:' .

Interest $ 237.7 $ 211.9 $ 95.0

$ 5.1 In'dome taxest .' .,-'.: . 4.9 0$ $ 27.1".

Non-cash investing activities:

Liabilities assumed for capital expenditures $ 44.9 $ 82.8 $ 104.7 A I .

SI ,1 72

KCP&L Other OperatingActivities * *1*

2010 2009 2008 ..

Cash flows affected by changes in: (millions)

Receivables (4.1) $ (7.6) $ 50.9 Accounts receivable pledged as collateral (95.0)

Fuel inventories 0.7 6.1 (16.0)

Materials and supplies (9.6) (16.5) - (4.3)

Accounts payable -0.8 (54.3) 57.3 Accrued taxes .(15.7) .8. 81.3 Accried interest *(0.5) . 8.6 8&5 Deferred refuelirg outage.costs 9.9 . (7.1) (5.9)

Pension and post-retirement benefit obligations 7.9 39.3 (5.1)

Allowance for equity funds used during construction (21.9) (30.6) (22.5)

Kansas Energy Cost Adjdstment * (8.8) .-. 2.2 (1.6) latan Nos.ý I and 2 impact-of disallowed construction costs 13.0 *,. ..

Interest rate hedge settlements * .- (79.1) 7 (41.2)

Other (4.5)  !.21.1 (28.6)

Total other operating activities $ (127.8) $, (66:1), $ 72.8 Cash paid during the period: . . '

Interest $ 101.1 $ 77.2 $ 63.0 Income taxes $ 18.2 $ 31.9 $ 23.5 Non-ca'sh investing actj.,ities: j .:.. . .

Liabilities assuined for capital expenditures . $ 37.4 "$ 75.5 $ 90.8 '.

Significant Non-Cash Items , .* .. .... . ... *.

On January ,1., 2010, Great Plains Energy and KCP&L adopted new accounting guidance for transfers of financial assets, which resulted in the'recognition of $95.0 million of accounts receivables pledged as collateral and a corresponding short-term collateralized note payable on Great Plains Energy's and KCP&L.'s balance sheets. at..,

December 31, 2010. See Note 3 for additional information. As a. result, cash flows from operating activities, were reducedby $95;0 million andcash. flows from financing activities were raised by $95.0,million with no impact to the net.change.in, cash at December.3 1, 2010. . ..

On July 14, 2008, Great Plains Energy closed its acquisition of GMO. The total purchase price of the acquisition was. approximately $,1.7 billion. The fair value, of the 32.2 million shares of Great Plains Energy common stock issued was approximately $1.0 billion.. Great Plains Energy paid approximately $0.7 billionof -cash, .

consideration. . . .. .... . . . .

In May 2008,:KCP&L's Series 2008 Environmental Improvement Revenue Refunding (EIRR) bonds totaling,.

$23.4 million maturing in,2038 were issued. The proceeds were deposited with a.trustee pending KCP&L's. .

submission of qualifying expenses for reimbursement. At December 31, 2008, KCP&L had received $13.4 million in cash proceeds and had a $10.0 million short-term receivable for the proceeds that were deposited with the trustee. In 2009, KCP&L received the remaining $10.0 million in cash.

In 2008, KCP&L recorded a $12.6 million net increase in AROs, consisting ofa$14.2 million increase as a result of changes in cost estimates and timing used to compute the present value of asbestos AROs for KCP&L's generating stations, with a corresponding increase in net utility plant and a decrease of $1.6 million resulting from an update to the cost estimates to decommission Wolf Creek, with a corresponding increase in regulatory liabilities. This activity had no impact on Great Plains Energy's or KCP&L's 2008 cash flows.

73

3. RECEIVABLES Great Plains Energy's and KCP&L's receivables are detailed in the following'table.

December,311 2010 .2009 Great Plains Energy .(millions)

Customer accounts receivable - billed $ 62.0 $ 47.3 Customer accounts receivable - unbilled 82.3 77.9 Allowance for doubtful accounts (2.7) .(2.8)

Other receivables 100.1 108.1 Total $241.7 $ 230.5.

KCP&L Customer accounts receivable - billed $ 6.5 $ -

Customer accounts receivable - unbilled 50.1. 44.6 Allowance for doubtful accounts (1.5) (1.7)

Intercompany receivables 43.2 42.4 Other receivables .711 76.4 Total $ 169A, .$ 161.7 Great Plains Energy's and KCP&L's other receivables at December 31, 2010 and 2009, consisted primarily of receivables from partners in jointly owned electric utility plants and wholesale sales receivables. ,

Sale of Accounts Receivable - KCP&L KCP&L sells all of its retail electric accounts receivable to its wholly owned subsidiary, Receivables Company, which in turn sells an undivided percentage ownership interest in the accounts receivable to Victory Receivables Corporationý an independent outside investor. On January '1, 2010, Great Plains Energy and KCP&L adopted new accounting guidance 'or transfers of financial a'ssets; Which resulted in the sale 'of the undivided percentage ownership interest in accounts receivable by Receivables Company no longer meeting thecriteria' for 11 derecognition and nowbeing accounted foi'as a secured borrowing. As a result, $95-0 million of accounts receivables pledged as collateral are recognized with a corresponding short-term collateralized note payableon Great Plains E.nergy's and KCP&L's balance sheets at December 31, 2010. I KCP&L sells its receivables at a fixed price based upon the expectdd cost 'of funds and charge-offs. These costs comprise KCP&L's losg on the sale of accounts receivable. KCP&L services the receivables' and receives an:.-

annual servicing fee of 1.5% to 2.5% of the outstanding principal amount of the receivables sold to Receivables Company. KCP&L does not recognize a servicing asset or liability because management determined the collection"agent fee earned by KCP&L approximates maiket value:: Iti February-2011, the agreement was'--

amended to extend the expiration date of the agreement from May 2011 to October 2011.'

74

Information regarding KCP&L's sale of accounts receivable to Receivables Company is reflected in the following tables.'.

Receivables CdAsolida ted 2010- KCP&L Comuanv ~KCPý&L (millions)

Receivables (sold) purchased $ (1,341.0)" $ .1,341.0, Gain,(loss) on sale of accounts receivable (a) (17.0) 16.8.

Servicing fees, '1< '. 3.2 * '.. (3:'2)'

Fees to.outside investor (1.2) (1.2),

Cash flows during the, period Cash from customers trans ferred to Receivables..Company (1,3.37.4) . 1,.337.4, Cash paid to KCP&L for receivables purchased 1,320.7 (1,320.7)

Servicing fees 3.2 (3.2)

A C (Aq CX*

Interest on intercompany note .

Receivables Consolidated 2009 -. KCP&L Company, KCP&L

. . ~(millions) .

Receivables (so.d),purchased s (1,172.4) $. 1,172.4 $

Gain (loss) on sale of accounts receivable t (14.8) 14.6 (0.2)

Servicing fees 2.0 (2.0)_

Fees to outside investor , . .. - (1:2) (1.2)

Cash floiis during the period, Cash from customers transferred to Receivables Company (1,167.6) .1,167.6 Cash paid to KCP&L for receivables purchased 1,153:0 (1,153.0)

Servicing fees . .2.0 (2.0)

Interest on intercompany note 0.4 (0.4)

(a) Any net gain (loss) is the result of the timing difference inherent in.collecting receivables and over the'life of the agreement will net to zero.

4. ASSETS HELD FOR SALE As of December 31, 2009, Great Plains Energy had several real estate properties available for immediate sale in their present condition and management was actively marketingthese properties. The carrying amounts for these assets were presented at fair value less estimated selling cost and were included in assets heldfor.sale on Great Plains Energy's consolidated balance sheets as of December 31, 2009. In March 2010, one of the properties with a book value of $0.6 million was sold resulting in an-insignificant loss on ihe 'sale. In October 2010, one of the properties included in the electric utility segment With a book value of $11.1Y million was sold resulting in an insignificant gain on the sale. "As of December*31, 2010, management determined that the sale of the remaining properties was no longer considered probable. Accordingly; the $S7.7million of properties were reclassified from assets held for sale to other-investments and other assets on the consolidated balance sheet as of December 31, 2010.

5. NUCLEAR PLANT , .

KCP&L owns47% of Wolf Creek, its only nuclear generating unit. Wolf Creek is regulated by tlie Nuclear RegulatoryqComnmission (NRC), with respect to licensing, operations and safety-related requirements.

75

$pentNuclear Fuel and -igLevel Radioactive Waste ... . 2. ',

Under the Nuclear Waste Policy Act of 1982, the Department of Energy (DOE) is responsible for the permanent-disposal of spent nuclear fuel. KCP&L pays the DOE a quarterly fee of one-tenth of a cent for each kWh of net nuclear geherationdelivered and s,o1d for'the future disposal of'spefit nuclear fuel These'disposal costs are' charged io fuel exliense. In March'2010, the DOE filed a motion to withdraw its application to the NRC to construct-a national repository-for the disposal'of spent-nuclear fuel and-high-level radioactive waste at Yucca Mountain, Nevada" which would bring the licensing process to an end. An NRC board denied the DOE's motion to withdraw its application in June 2010, and the DOE appealed that decision to the full NRCi'ri early July 2010.

The NRC has not yet decided that appeal. 'The question of the DOE's' legal authority to withdraw its -license application also is pending in multiple lawsuits filed with a federal appellate court. Oral argumentto the c6urt is set for late March 2011. Wolf Creek has an on-site storage facility designed to hold all spent fuel-generated at the plant through 2025, and believes it will be able to expand on-site storage as needed past 2025. Management cannot predict when, or if, an alternative disposal site will be available to receive Wolf Creek's spent nuclear fuel and will continue to monitorthis activity:', See Note 16 for a related legal proceeding: '

Low-Level Radioactive Waste ... -.

Wolf Creek disposes of most ofits low-level radioactive waste (Class, Awastej)at afi 6kisting third-party 7:

repository in Utah. Management expects that the site located in Utah will remain available to Wolf Creek for disposal of its Class A waste. . Wolf Creekhas contracted with a waste processor thatwill process, take title and store in ahnother §tate most of therermainder of Wolf Creek's low level radioactive waste (Classes B and C waste, which is higher-in radioactivity but much lower in-volume). Should on-site waste storage-be needed in the, future, Wolf Creek has current storage dapacity on site for about four years' generation of Classes B and C waste and believes it will be"able toexpand that storage capacity as needed if it becomes necessary to do so.'

Nuclear Plant Decommissioning Costs - "

The MPSC and KCC require KCP&L and the other owners of Wolf Creek to submit an updafed decommissioning cost study every three years and to propose funding levels. The most recent study was submitted to the MPSC and KCC in August 2008 and is the basis for the current cost of decommissioning estimates in the table below.

KCC issued its order in August 2009 approving the 2008 decommissioning c6st study, and,approved funding levels in its order issued in November 2010. The MPSC does niot explicitly approve'ordisapprove of the decommissioning cost study and issued its order approving the funding levels in May 2009.

-I -

lotal KIUIP&L's Station 47% Share (millions)

Current cost of decommissioning (in 2008 dollars) $ 594 $ 279 Future cost of decommissioning (in 2045-2053 dolliars)

(a) "

• -2-575 ' ' 1,210 Annual escalation factor 3.73%Oo

"(b) . . . . . .6.83%

Ann ual relum on trust assets (a) Ttlf~ueot0era

)Total future costover an eight,year decomnmissioning period.

(b) The 6.83% rate-of return is through;2025. The rate then:systematically decreases through 2053 to 1.87% based on the assumption that the fund's investment.mix will become increasingly more:conservative-as the decommissionmg period approaches.

Nuclear Decommissioning Trust Fund r In 2010 and 2009, KCP&L contributed approximately $3.7 million to a tax-qualified trust fund to be used to.

decommission Wolf Creek. Amounts fuhded are charged to0bther operating expense and recoxered in customfers' rates. The fundingiexel assumes a projected level of return on trust a~sets. If the actual return on trust asets 'is 76

below the projected level oractual decommissioning costs are higher than estimated,, KCP&L could.be,-

responsible -for the balance of funds required; however, while there can be no assurances, management b elieves, a rate'increase would be allowed to recover decommissioning costs over the, remaining life of:the unit.

The following table summarizes the change in Great Plains Energy's and KCP&L's decommissioning trust fund.

-4' Decembei31i'". . 2010 '2009 Deicommissioning Trust. ' "' (millions) "

'Beginning balanceJanuar1 ' $ 1,12.5 . $ 96.9 Contributions "* " 3.7. . . 3.7 Earned incone, net of fees 2.0 .2.8 Net realized gains/(losses) 6.7 (5.5)

Net uniealized~gains' ' "- 4.3* " 14.6

• K "*'Ending balance "" $ 129:2 $ '112.5 The 'lecommissioning trust js reported at fair value on the balance sheets and.is irivested in'assets as detailed in the following table. At December 31, '2009, KCP&L was holding Short-term iiivestments in the decbmmissioning trust ftud, which were invested in equity securities in early,2010"as a result 0f a change'in the asset allocationof the trust to a higher proportion of equity securities given the 20-year extension of Wolf Creek's operating license approved by theNRC in November 2008 . . ..

December31" 2010 2009 Gross Gross Gro*s"s Gross Cost Unrealized Unrealized Fair 'Cost Unrealized Unrealized' Fair

Basis Gains " .losses 'Value Basis Gainsi ý' Losses Value Equity'secirities $ 73.4 ' '$ 13.1' $ (1.6) ' $ 85.5 $ 36.3 $ 8.9 $ '(0.7) " $ 44.5 Debt securities ' 38.1 2.6 '(0'.1f) 40.6 ' 35:3 ' 2.1 ' ' - 37.4 Othedr ' 3.1 ": ' " " ' 3.1 30.6 - ' . 30.'6 Total $ 114.6 $ 15.7 $ '(il) $ 129.2 $ -102.2 $ "1*0 ' $ (0.7) $ 112.5 The weighted average maturity of debt securities held by the trust at December.31,20.10, was approximately 7.6, years. The:costs of securities sold are determined on the basis, ofspecific identification. The following table.

summarizes the realized gains and losses from the sale of securities by the nuclear decommissioning trust fund.

" 2010 2009 `- 2008 (millions) . ' ,

Realized Gains $ 7.3 $ 2.8 $ 217 Realized Losses (0.6) (8.3) (10.9)

Nuclear Insurance The oývners of Wolf Creek (Owners) maintain nuclear insurance for Wolf Creek for nuclear liability, nuclear property and'accidental outage..: These policies contain certain industry standard excluisions, including, but not limited to, 6rdihniy wear and tear, andwar. The nuclear property' insurance 15ograms subscribed to by, members of thd nucle6r power generating industiy include industry aggregate limits for'acts of terrorism and related losses, including replacement power costs. There is no industry aggregate limit for liability claims, regardless~of the number of acts affecting Wolf Creek or any other nuclear energy liability policy or the number of policies in place. An'industry aggregate limit of $3.2' billion plus any reinsurance recoverable by Nuclear Electric Insurance!

Lii'ited (NEIL), the Owners' insuranceprovider," exists for property claims,'including accidental outage power 77

costs for acts' of terrorism affecting Wolf Creek, or any other nuclear.energy facility property policy within twel-ýe mofiths from the date of thefirst act. These limits plus:any recoverable reinsurancelare the maximum amount to be paid to members who sustain losses 'or darnages from these types ff.terrotist'acis. In additionf, industry-wide" retrospective assessment programs (discussed below) can apply once these insurance programs have been !!

exhausted.: '- * " " " - , .. ,

In the event of a catastrophic"l6sg atWolf Cieek, the 'insurance coverag niiayýiiOt be.adequate to cover property damage and extra expenses fiicuif6d. Uninsured l6sges'to the .xkteiit not re6v6yerec.through rates, would be assumed by KCP&L and the other owners and could havea material adverse effect on Great Plains Energy's and KCP&L's results of operations, financial position and cash flows.

Nuclear Liability Insurance Pursuant to the Price-Anderson Act, Which was reauthorized through December 3 1,:2025, by the Energy Policy Act of 2005, the Owners are required-o insu'rea-againist public fiabilify claims resultinig from nuclear incidents to the full limit of public liability,'wliich is icurrerifly $12.6 billion.' This limit of liabilityi consists of the maximum available commercial insurance of $0.4 billion and the remaining $12 2billion is provided through an industry-wide retrospective assessment pogram imaiidated bylaw, known as ,the Secondary Financial 'Prtection"(SFP)'

program. Under the SFP programi the Owneris can be assessed up to $117.5"million ($55.2 milhon,'KCP&L s 47% share) per incid-entat ariy 66mmercial reactor in the country, patyable at no more than $17.5 million (08.1" million', KCP&L's 47% share)'pdrincidehtlper year. This assessmrent is subject to an inflati6f atljfistment bhsed*

on the Consumer Price Index and applicable premium taxes. In addition,'the'U]. S."Congre§s could -iipos." '

'additional revenue-raising measures to'pay claims. ,. .. . ... . .

Nuclear PropertyInsurance The Owners carry decontamination liability, premature decomisslonmg hability and property damage insurance from NEIL for Wolf Creek totaling approximately $2.8 billion ($1,3 billion, KCP&L's 47 % share). In the event of an accident, insurance proceeds musi first be.used'for reactor gtabilization and-site decontamination' in accordance with a plan mandated by the NRC. KCP,&L's share of any remainingproceefs can be used for further decontamination, property damage restoration and premature decommissioning costs. Premature decommissioning. coverage applies only if an accident at Wolf Creek exceeds $500 million in property damage and' decontamination exp'ensds; and only after-trust funds hav~ebeen exhausted. "

Accidental Nuclear Outage Insurance The Owners 'als6 carriy additional insurance:from NEIL to:tdver costs of'replacbcinent power and other extra -

expenses inicuirre'd in the' event bf a prolonged Outage resilting from 61n-identdl 'orop'erty damage-at Wolf Creek.

Under all NEIL policies, the Owners are subject to retrospective assessments if NEIL losses, for each policy year, exceed the accumulated funds available to'tih iisiiirer und'er that policy. The estimated maximum amount of retrospective assessments under the current. policies could fotalf'approxii-iately $26.2 million ($12.3 million, KCP&L's 47% share) per policy year.

6. REGULATORY MATTERS - ,

KCP&L's Comprehensive Energy Plan . '

KCP&L s CoMprehensiveEnergy -Plan included, construction of latan No.:2, wind generation, environmental, upgrades at certain coal-fired generating stations, infrastructure investments, and energyefficiency, affordability and demand responseprograms. With.the construction of Iatan No: 2 completed in 201.0, the remaining,:, ,

component of KCP&L's Comprehqensive Energy Plan is to obtain state legu4latry approval to iriclude th* cost of.

latan No. 2.in rate base and: begin recovering the investment in rates . .. . . . . '

In August 2010, latan No; 2 successfully completed in-service testing, which was confirmed by KCC in October 201-0, but is still subject to confirmation bythe MPSC, which is expected during the current Missouri rate cases.

78

In the fourth quarter of 2010, Great Plains Energy and KCP&L completed a final.cost estimate.for Jatan No. 2; -:

The final cost estimate and previous cost estimate ranges are shown in thefollowing table. The cost estimate ranges do not include AFUDC or the cost of common facilities that were identified at the time of the start-up of the latan No. 1 environmental project that will be usedby both latan No. 1 and Iatan No. 2.

,.Final Cost Previous Estimate Estimate Range Range . . .Change" (millions)

Great Plains Energy's 73%'.share oflatan Noý 2 $ 1,203- $ 1,218 $ 1,222 - $ 1,251 $ ý(19) - $ (33)

KCP&L's 55% share oflatan No. 2 905. 917 919 941 (14) - (24)

Kansas Reg'ulatorIy Proceedings - '

In December 2009, KCP&L filed a requestwith KCC to increase retail electric annual revenues by 5'5.2 mil.lion.

The requesi was subsequently adjusted by KCP&L durimg the' rate case proceedimigs to $50.9 m'illionl as the net result of updates to the case. The request 'included costs related to latan No. 2, a' new'c6 il-fiied generation unit, upgrades, to the transmission and distribution system to improve.reliability and overall increased costs of service.

In November 2010, KCC issued its order, effective December 1, 2010, authorizing an' increase in' annual 'revenues of $21.8 millioln, a return on equity* of 1"0:0%, an equity ratio of approximately 49.7% and aKansaS jurisdictional rate base of $1.78 1'billion. The annual revenue increase was-subsequently adjusted by KCC in a January 2011 reconsideration'order to $22.0 million. In February 2011, KCC issued an order granting KCP&L and another.

party to the case their respective petitions for reconsideration. regarding rate case expenses: The $22.0 million annual revenue increase is considered as interim subject to refund or true-up pending the outcome of the .-f recongiderati6n proceedings regarding rate case expenses.' Also in February 2011, KCP&L and another party to the case filed petitions for judicial review with the Court of Appeals' of the State of Kansas, which are stayed until conclusion-of the reconsideration proceedings. .The rates authorized by KCC will be effective unlessand until modified by KCC or stayed by a court. , . . , . ..

Accounting rules state that when it becomes probable that part of the cost of a recently completed plant will be disallowed ,for rate-making purposes. and a reasonable estimate of the amount of the-disallowance ,can be made, the estimated amount of the probable disallowance shall be deducted from, the reported cost of the p1ant'and,,.

recognized as a loss.. As a result of disallowances in the KCC order, KCP&L recognized Kansas jurisdictional

losses of $4.4,million for construction costs related'to latan No. 2 and $2.0 million for construction costs related to the latan No. 1 environmental project.,.Management determined.it is probable that the MPSC would disallow these costs as well in KCP&L's and GMO's pending rate cases. Therefore, ,KCP&L's Missourijurisdictional..

portion and GMO's portion of these costs were recognized as a loss in addition to the KCP&L Kansas jurisdictional portion resulting in a $16.8 -million pre-tax loss representing KCP&L's and GMO's combined share for construction costs. incurred through December 31, 2010..

79

Missouri Regulatory Proceedings The following table summarizes pending requests for retail rate increases with the MPSC.

Annual

, Revenue Return on Rate-Making Rate Jurisdiction File Date Increase Equity Equity Ratio (millions)

KCP&L-Missouri(a) 6/4/2010 $ 92.1 (b) 11.00% (b) 46.16o (b) dVIO-Missouri Public Service division () (C)

, 6/4/2010 75.8 11.00% - 46.16% (d)

GMvIO- St. Joseph Light & Power division (a) 6/4/2010. *22.1 (d) 4./(d) . 46.160 (a) The request includes costs related to latan No. 2, a new coal-fired generation unit, upgrades to the transmission and distribution system to improve reliability and overall increased costs ofservice. For KCP&L,'it also include:

increased coal.transportation.costs .due to the expiration in 20I0.ofihe'majority ofKCP&L's current coal 1,11 transportation contracts. Any authorized changes to retail rates are exp ected to be effective im May 201'1 for KCP&L and June 2011 for GMO.

(b) The requested'increase was adjusted by KCP&L in a February 22,2011, filing with the MPSC to $55.8 million mainly due to lower fuel and purchased power costs, as.there is no fuel recovery mechanism, and increased deferred income taxes fromrbonus. depreciation.. The lower fuel and purchased power costs were driven by more, favorable coal transportation costs and lower actual 2010 fuel and purchased power costs than-the amounts .

included in the June.4, 2010,-initial request. The requested return on equity wasadjusted by KCP&L to .10.75%/.

• and the rate-making equity~ratio was adjusted to 46.286%.. - . .

(c) The requested increase was adjusted by GMO in a February 22, 2011:, filing with the MPSC to $65.2 million'as the net result of updates to the.case. The requested return on equity was adjusted by GMvlO to 10.75% and the rate-making equity ratio was adjusted to 46.286%. . * "

(d) The requested increase was adjusted by GMO in a February 22, 2011, filing with the MPSC to $23.2 million'as the net result of updates to the case. The requested return on equity was adjusted by GMO to 10.75% and the .

rate-making equity ratio was adjusted to 46.286%.

In September 20 10,GMO received an order from'the MPSC approving construction accounting for'the Iatan No:

2 project from the Iatan No. 2 in-service date to the effective date of new rates in the current rate case. The effect of the order'is to deferGMO's share Of latan No. 2 operating costs; depreciation expense and carrying costs -....

(interest) offset by latan N6 2's system energy value to. a regulatory asset rather than impacting the income statement-until new rates are effective. KCP&L (Missouri jurisdiction only) was granted construction accounting as part of the Comprehensive Energy Plan.

In-November 20 10,' the MPSC staff filed its construction audit and prudence review regarding- construction - - .

expenditures through June 30, 2010, for latan No. 2 and the latan No..1 environmental- project. The MPSC staff* -

recommended disallowances of approximately $130 million and $70 million of the total costs incuired through June 30, 2010, for latan No. 2 and the latan No. 1 environmental project, respectively, representing all audited expenditures above the associated December 2006 control budget estimates of approximately $1.685 billion and

$377 million.

The MPSC staff also filed testimony in KCP&L's and GMO's rate cases in November 2010. TheMPSC staff's testimony recommended a return on equity range of 8.5% to 9.5% and revenue increase/(decrease) ranges of approximately $(0.2) million to $14 million for KCP&L, approximately $0.9 million to $10.1 million for GMO's Missouri Public Service division, and approximately $28.8 million to $32.6 million for GMO's St. Joseph: Light

& Power division. On February 22, 2011, the MPSC Staff filed updated testimony recommending the same return on equity range of 8.5% to 9.5% and revenue increase ranges of approximately $2.2 million to $17..0 million for KCP&L, approximately $29,000 to $9.2 million for GMO's Missouri Public Service division, and approximately $14.9 million to $18.4 million for GMO's St. Joseph Light & Power division. The revenue 80

recommendations reflect the MPSC staff's proposed construction cost disallowances of all audited expenditures as of October 31, 2010, above the control budget estimates, among other differences from KCP&L's and.GMO's requests . .. . - . . . .

Hearin were held i late Januiry,201 1 for KCP&L and ran throughr6id-February 201-1 for GMO.

The MPSC Staff will file reconciliations of the differences between its February 22, 2011, recommendations and KCP&L's and GMO's February 22, 2011, recommendations with hearings scheduled for March 3 - 4, 2011.

New rates are expected to go into effect in May 2011 for KCP&L and'June 2011 for GMO.

SPP and NERC Audits In November 2009, the Southwest Power Pool, Inc. (SPP) and the North American Electric Reliability Corporation (NERC) conducted scheduled audits of KCP&L and GMO regarding c6mpliance with NERC reliability and critical infrastructure protection standards. KCP&L and GMO received the final audit report, alleging violation of certain standards and management anticipates paying a penalty that will have an immaierial impact to cash flows and results of bperations. The SPP also conducted a compliance inquiry regardiiig a transmission system outage that occurred.in the St. Joseph, Missouri area in the summer of 2009. NERC is also investigating the circumstances surrounding thistransmission system outage. The outc6me of the outage inquiry cannot be predicted at this-time. . ..

Energy Efficiency Great Plains Energy and KCP&L have implemented various energy efficiency programs. KCP&L also agreed in the Collaboration Agreement to pursue initiatives, including energy efficiency, designed to offset CO 2 emissions.

The Companies currently recover energy efficiency program expenses on a deferred basis with no recovery ,

mechanism for associated lost revenues. An MPSC rulemaking proceeding in Missouri, to address recovery. of and earnings on investments in energy efficiency programs is near completion with final rules expected to be.

effective in the second quarter of 2011. Great Plains Energy and KCP&L will evaluate alternatives for future energy efficiency programs under these new rules.

MPSC Regulatory Approval of the GMO Acquisition - .. .

Appeals of the MPSC order approving the GMO acquisition were filed with the Cole County, Missouri, Circuit Court, which affirmed the order in June 2009. That decisionwas appealed and the Missouri Court of Appeals, Western District, upheld the MPSC order in August 2010. "The case was transferred to the Missouri Supreme-Court in December 2010.

GMO Missouri 2007 Rate Case.Appeal Appeals of the May 2007 MPSC order approving an approximate $59 million increase in annual revenues were filed in July and August of.2007 with the Circuit Court of Cole County, Missouri, by the Office of Public Counsel, AG Processing, Sedalia Industrial Energy Users' Association and AARP seeking to set aside or'remand the order of the MPSC. In February 2009, the Circuit Court affirmed the MPSC order. The Circuit Court's decision was affirmed by the Court of Appeals in August 2009. The case was transferred to the Missouri Supreme Court in August 20.10. In December 2010, the Missouri Supreme Court re-transferred the case to the Court of Appeals, Westem District, which re-adopted its opinion and re-affirmed the MPSC order on January 4, 2011. The Company does not currently expect any further action with respect to this matter.

Regulatory Assets and Liabilities Great Plains Energy and KCP&L have recorded assets, and liabilities on their consolidated balance sheets*

resulting fromi the effects of the ratefnaking process, which wouild hot otherwise be recorded if the' Companies were not regulated.' Regulatory' assets represent incurred costs that are probable of recovery from future revenues.

Regulatory liabilities represent future reductions in revenues or refunds to customers.

81

Managemnrit regulI ry assesses wether reguilatory assets and Iliabilities are probable4of future recovery orrefund by considering factors such as de igion by-the MPSC, KCC-or FERC in KCP&L's and GM0'S rate case filings; decisions in other regulatory proceedings, including decisions related to other companies that establish~pre6cedent' on matters applicable to the Companies; and changes in laws and regulations. If recovery or refund of regulatory assets 6r liabilities is not approved by regulators or is no longer deemed pi6bable, these regulatory assets or liabilities are reo6gnized in the curreh t period results of operations. The Companies' continued ability to mpeet the criteria for recording regulatory assets anid'iiabilities may'be affected in the future by restructuring and deregulation in the electric industry or changes in accounting rules. In the event that the criteria'no longer applied to any or all of the Companies' operations, the related regulatory assets and liabilities would be written off unless an appropriate regulatory recovery mechanism is provided. Additionally, these factors could result in an impairment on utility' plantassets'.'.  : .

Great Plains Energy's and KCP&L's regulatory assets and liabilities are detailed in the folloA'ihg tables. I Great December 31,2010 " ., KCP&L- GMO - Plains'Energy Regulatory Assets - " - ' * . . " (millions)-'

Taxes recoverable through future rates $ 117.2 $ 25.3 .'. $. 142.5 Loss on reacquired debt 5.0 (a) 0.7 (a) 5.7 Cost of removal 8.5 - ,  : ' 85 Asset 'retirement obfigationfs ,  : '... '" 27.5' 12.8' . ' 40.3

'Pension settlements *. ,' . - . 9.0 , (b) - - - , . 9.0 Pension ahd post-retirement costs ,. 377:1 (c) .106.7 (*) ' 483.8 Deferred customer programs ... . 44.7 (d) 15.6 -' * - 60.3 ,:.

Rate case expenses ' ' '., ,'. 12.3 .-: (e) .33 (e) 15.6 Skill set realignment costs. . 4.8 .:: '- .' 4-;4.8 Fuel adjustment clauses 8,4 ..!. (e) 37.1, (e) .. ' 455 Acqiiisition transition costs 29.3 (g) 22.5 (g) (51.8 St. Joseph Light & Power acquisition -. .. 2.-'6 (h) 1.2.6' Storm damage, -, . ' ' ,', . . - -' * . 3.2 0i) . 3.2 Derivative instruments ' ' , "'.' ..' ". * ' ' . . 3.1 , (i) 3.1.

latan No. I andCommon facilities depreciation andcarrying costs 15.1 ' (k)

• 4.3 (1) 19.4 latan No. 2 construction accounting costs 17.2 (' ':6.5 23.7 Other 3.5 (i) 0.7 (i) 4.2 Total -$ 679.6 $ 244.4 '. $ 924.0 Regulatory Liabilities . ' . . ,~ . ,...'

Emission allowances$ 85.9.. ..05 $ 86.4.

.Asset retirement obligations . - . 44.9 *- - *. .44.9 Pension ." .  : , . * ' -.- ,, 37.1, . .37.1 Cost of removal , . . . . . 62.8 (n) 62.8 Other

• 10.5 16.5 27.0 Total .- . ... , $ 141.3 $ 116.9 $ 258.2 (a) Amortized over the life of the related new debt issuances or the remaining lives of the old debt issuances if no new debt was issued.

(b) $5.0 million not included-in rate base and amortized through 2012. " , . '

(c) Represents the funded status of the pension plans more than offset by related liabilities. Also representsfinancial.

and regulatory accounting, method differences not included in rate .base that will be eliminated over the life; of the pension plans.

(d) $13.2 million not included in rate base and amortized over various periods. ' '

(e) Not included in rate base and amortized over various periods.

(f) $2.8 million not included in rate base and amortized through 2017.

82

.(g) Not included in rate base. The MPSC order provided for the deferral of transition costs to be amortized over a five-year~period to the extent that synergy savings exceed transition cost amortization. The Company seftled its first post-transaction rate cases and the settlement agreements did not addressg transition co~ts. The Compan* wil continue to defer transftion costs until amortization is ordered by the MPSC. KCC order appi6ved the deferral of up

'tb $10.0 milliofi of transition'coststo be aijiortized over a fiveyear period beginriing With rates effective in lbecember2010. -- i. . "

(h)' Not included'in rate base and amortized through'201,5. K . .. -

(i) -Not includedin rate base and amortized through2012... . .2.61 (j) Represents the fair value of derivative instruments for commodity contracts. Settlements of the contracts are recognized in fuel expense and included in GMO's fuel adjustment clause (FAC).

(k) $11.6 million not included in rate base and under consideration in the pending Missouri rate case.

(1) Not included in rate base, and under consideration in the pending Missouri rate cases. *.

(in) Certain insignificant items are not included in rate base and amortized over various periods.

(n) Estimated cumulative net provision for future removal costs.

Great December 3i, 2009 .KCP&L GMO Plains Energy Regulatory Assets . . . -* *. . (millions) .

Taxes recoverable through.future rates , ., $ 77.6 $ 22.9 $ 100.5 Loss on reacquired debt 5.3 0.3 5.6 Cost of removal 7.9 7.9 Asset retirement obligations 23.8 11.9 *, 35.7 Pension. settlements .* 13.5 . . 13.5 Pension and post-retirement. costs 395.0. 84.5... 479.5 Deferred customer programs 35.6 . ,7.1.. 42.7

'Rate case expenses ------ `7.4 1.5 . . 8.9 Skillset realignment costs 6.1 - 6.1

'Fuel'adjustmentclauses " 0.7 ' 47.5 .'48.2 -

Acquisition transition costs 29.3 22.2 51.5 St. Joseph Light & Power acquisition ..- - 3.1 3.1 Storm damage - 4.8 4.8 Derivative instruments . . , .. -. 2.1 2.1 Iatan No. 1 and Common facilities depreciation and carrying costs -4.6 1.4 6.0 Other .. 5.3 0.8 6.1 Total $ 612.1 $ 210.1 $ 822.2 Regulatory labilities "*.. . " ,' .

Emission allowaines ' " $ 86 ' - $ 0.8"' $ 87.0-.

Asset retirement obligations 33.4 .`- . ' 33.4. ,

Pension. 34.0 34.0 Cost of removal ,, ' ' . ." - 62.5 62.5 Other ' ".. .'." . 7.3 " 13.6" 20.9 Total ..- $ 126.9 . $ 110.9 $ 237.8

7. GOODWILL AND INTANGIBLE ASSETS Accounting rules require goodwill to be tested for impairment annually and when an event. occurs indicating, the possibility that an impairment exists. The annual impairment test for the $169.0 million of GMO acquisition goodwill was conducted on September 1, 2010'. The goodwill impairment test is a two step process. The firslt step compares the fair yalue of a reporting unit to its carrying amount, including goodwill, to idetify poiefitial impairment;, If the carrying amount exceeds the fair.value of.the reporting unit, the second step of the, test is performed, consisting of assignment of thelreporting unit's fair value to its assets and liabilities to'detemnine an implied fair value of goodwill, wvhich is compared to the carrying amount of goodwill to determine the.,

impairment loss, if any, to be recognized in the financial statements. Great Plains Eriergy's regulated electric 83

utility operratinons are considered 'one reporting unit for assessment of impairment, as they are included within the same operating segment and' have sim ilar e~noimic characteristics. The determination of fair value of the reporting unit consisted of two valuation'tech'..iques: an income approach consisting of a discounted cash flow analysis and a markettapproach consi of determination of reporting unit invested capital usingmarket multiples derived from the historical revenue, EBITDA and net utility asset values and market prices of stock of electric and gas company regulated peers. The results of the two techniques, were evaluated and weighted to, determine a point within the range that management consideredrepresentative, offair value for the reporting.unit.

Fair value of the-reporting unit exc6eded the carrying amount,' including goodwill; therefore, there was no impairment of goodwill. . - -..

C .. . . 4 Great Plains Energy's and KCP&UL's'initngi.ible assets are included in electric utility plant on the consolidated balance sheets and are detai'led in the following table. * .. ' "' ' * ' .7 1. ' ( " . .

December 31, 2010 - December-31, 2009 -

Gross Carrying Accumulated Gross Carrying Accumulated Amount Amortization Amount- - Amortization',

KCP&L (millions) )

Computer'sfftware $ 168.2 $ (118.0) i$47.0 " $ (106.3)

Transmission line 5.8

• Great Plains Energy Computer software $ 201.1 $ (137.3) $ 170.8 '* $(117.8) '"

Transmission line and upgrades 27.9 (4.4) .22.' (3.7): P.

Organization start-up costs 0.1 0.1 ':" -.

th I .., . . L 1 * * .

Great Plains Energy's-and KCP&L's amortization expense related to intangible assets is detailed in the f6llowing table. n). J, 2010 2009"::-'5 -'-*:- '" '* ;

(millions) . 2 :

Great Plains Energy $ 13.1 $ 10.9 KCP&L "' 12.:2 10.4 ..

.- " " , ".:' 7" - -' T, The-following table provides.iheestimated amortization expense 'related to'Great Plains Efiergy's arid KCP&L's intangible assets for 2011 through 20.15 for the intangible assets included in the consolidated balance.shemets at December 31, 2010.

", *l L IJ;.UA q9.iI Ifl A (millions)

- . Great Plains Energy $12.7. . $ 10.8 .$,-8.4 .. $ ,5.0 $'*2.9 KCP&L 11.9 10.0 7.6 4.3 2.3 .!

8. ASSET RETIREMENT' OBLIGATIONS, , .  : . '; .

Asset retiternent obligations associated with ta'nigii'e long-lived assets7 are those for which 'a',lgal o ,igation exists under enadcted laws, statutes and wrifttn' o" 6rial contracis, inicluding obligatios arising iinder"the"doctrinne 6f proriiissoy pr m s' e'stoppel. ThTheseliabilitieS'

,oy estoppel, s 'la ii ie recognized

' " 'are-. * .nz. . '

at *estimated'fair

. ' r -

valuereo as incurred and capitalized  : .;

as part'of , .' '

the cost of the related lo6g-lived assets and depreciated over their useful' hves Accretioni of 'ihe liabeilitis due to-'

the passage of time is rec'orded to a regulatory asset'ad/or liability. Changes in'the estinated fair values of the liabilities are recognized when known.

84

KCP&Lhas AROs related tq de6ommissiohing Wolf Creek; site remediation of its Spearville Wind Energy Facilities, asbestosabatement and for remonval of storage tanks, an ash pond and landfill. GMO has'AROs related to asbest6o ibatement, an'ash pond and landfill ahd ieri6al of storage tanks and ,coniiurication towers.

Management has identifiedian additional asbestos ARO. Certain wiring used in generating stations includes asbestos insulation, which would require special handling if disturbed. Due to the inability to reasonably estimate the.quantities or the amount of disturbance that will be necessary during dismantlement at theend of the life of a plant, a fair value of the obligation cannot be reasonably estimated at this time. Management will continue to monitor the obligation and will recognize a liability in the period in which sufficient information becomes available to reasonably estimate its fair:value.

The following table summarizes tie change in, GreaitPlaiins Energy's and KCP&L's AROs].

Great Plains Energy "KCP&L 2010 2009 2010 2009 (milli6ls) -'

Beginning badlince $ 132.6 .$ 124.3. $- 11.9.8. $ 11,1.9

-Additions '. . - 2.0 .1.2 12.0 .06.6

.. evision in.tiriiing and/orestifiiates - .. (1.0) .. " -

Accretion 8.7 " 8.1 7.9.... Ti.3 - . "

Ending balance $ 143.3 $ 1326- $ 1'29.7 $ 119.8 . "

. I" ' . ' ." ,. - '. , '"

9. PENSiON PLANS ANDOTHER EMPLOYEE BENEFITS . . -.

Great Plains Energy maintains defined benefit pension plans fr substantially all aictive and inactive emll'by'ees,"

including officers, of KCP&L, GMO, and Wolf Creek Nuclear Operating Corporafibn (WCNOC) and incurs significant costs in providirig the plans: Pension benefits under these plans reflect the employees' compensation, years of service and age at retirement.

KCP&L and GMO record pension expense in accordance with rate orders from the MPSC and KCC that allow the 'differencebetween pensioin costs uiider GAAP and pension costs- forraieirmaking to be recognized.ýs a regulatory asset or liability. This difference between financial and regulatory accounting methods is due to timing and will be eliminated over the life of the pension plans.

In addition to providing pension benefits, Great Plains Energy provides certain post-retirement health care and life insurance benefits for substantially all retired employees of KCP&L, GMO, and WCNOC. The cost of post-retirement benefits charged to KCP&L and GMO are accrued during an employee's years of service and recovered through rates.

The following pension benefits tables provide information relating to the funded status of all defined benefit pension plans on an aggregate basis as well as the components of net periodic benefit costs. For financial reporting purposes, the market value of plan assets is the fair value. KCP&L uses a five-year smoothing of assets to determine fair value for regulatory reporting purposes. As a result of the GMO acquisition on July 14, 2008, the Company's 2008 pension and post-retirement expenses under GAAP increased $2.4 million and $1.1 million, respectively. The underfunded status of the pension and other post-retirement benefit plans transferred at the date of acquisition was $48.9 million. Net periodic benefit costs reflect total plan benefit costs prior to the effects of capitalization and sharing with joint-owners of power plants.

85

Pension Benefits Other Benefits 20.10 2009 2010 2009 Change in projected benefit obligation(PBO)' (millions)

PBO at beginning of year $ 836.3 $ 772.5 $ 148.9 $ 135.4 Servic'e cost 30:.3' 29.1 " 3.8 4.1 Iterest cost 49.3 47.3 8.8 8.3

`

Contributioh by participants ..- - . - 5.6 4 5.3 Amendments ... . 0.5 5.7, 1 -- . 3.4 Actuarial (gain) lo~ss 55.1 . 33.1 . (12.5) 3.9 Benefits paid (60.1) (49.3) (11.0) (11.5)

Settlements .- (2.1) -

PBO at end of plan' year $ 911.4 $ 836.3' $ 143.6 $ 148.9 Change in plan assets I Fair value of plan assets at'beginrning of year -. $ 488.2 $ 418.7 $ 52.0 $ 38.9 Actual return on plan assets .... 62.7 75.1 0.5 0.7 Contributions by emrployer and p'articipants 64.5 42.1 23.9 22.0 Benefits paid .... (57.8) (47.7) . , (10.6) (9.6)

Fair value ofplan assets at end of plan year $ 557.6 $ 488.2 $ 65.8 $ 52.0 Funded status at end of year $ (353.8) $ (348.1) $ (77.8) $' (96.9)

Amounts recognized in the consolidated balance sheets Current pension and otherpost-retirement liability' $' (3.1) $ (3.7)- $, (1.0) $', (0.9)

Noncurrent pension liability and other post-retirement liability '(350.7) (344.4) ' (76.8) (96.0)

Net amount recognized before regulatory treatment (353.8) (348.1) (77.8) (96.9)

Accumulated OCI or regulatory asset/liability 403.2 386.2 54.8 74.0 Net amount recognized at December 31 $ 49.4. ' $-38.1 $ (23.0) $!i (22.9)

Amounts in accumulated OCI or regulatory assettliability ' .,

not yet recognized as a component of net periodic cost: . ,.,

Actuarial loss ,"-......$ 219.5 $ 227.8 S 8.5 $19.3, Prior service cost 15.3 19.4 44.1 51.3 Transition obligation - 0.1 3.0 4.3 Other 168.4. '

• 138.9 . . (0.8) ,, (0.9).

Net amount recognized at December 31. $ 403.2 $'j86.2 $ '54.8 $11 74.0 86

Pension Benefits Other Benefits 2010 2009 2008 201'0 2009 2008 Components of net periodic benefit costs' . (milliins)

Service cost $ 30.3 $29.1 $ 20.8 $. 3.8 $ 4.1 $ 1.7 Interest cost 49.3 47.3 37.6 8.8 8.3 5.7 Expected return on plan assets (36.6) '(32.4) (38.6) (2.1) (1.6) (1.0)

Prior service cost 4.6 4.2 4.2 7.2 6.9 2.7 Recognized net actuarial (gain) los's 37.4 36.3 32.3 (0.1) (0.4) 0.6 Transition obligation . 0.1 0.1 0.1 ' 1.3 1.3 1.2 Settlement charges -'0.1 --

Net periodic benefit costs before regulatory adjustment 85.1 84.7 56.4 18.9 18.6 10.9 Regulatory adjustment . (32.3). (28.4) (3.5) - (0.3)

Net periodic benefit costs 52.8 56.3 52.9 18.9 18.3 10.9 Other changes in plan assets and benefit obligations recognized in OCI or (a) regulatory assets/liabilities Current year net (gain) loss 29.1 (9.2) 227.1 (10.9) (0.2) . 6.0 Amortization of gain (loss) (37.4) (36.3) (39.9) , 0.1 0.4 (0.7)

Prior service-cost . . 0.5 5.7 . - - 24.8 18.7 Amortization.of prior service cost (4.6) (4.2) .... (5.2) - (7.2) (6.9) (3.4)

Transition obligation ... - * - 1.2 ,

Amortization of transition obligation, (0.1) 1(0.) -

7 ., (1.3) (1.3) (1.4)

Other regulatory'activity 29.5 .10.1 .52.8 0.1, (3.1) 2.1 Totalrecognized in OCI or regulatory asset/liability 17.0. (34.0) 234.8. (19.2). 14.9 21.3 Total recognized in net periodic benefit costs I and OCI or regulatory asset/liability $ 69.8 $22.3. $287.7 $ (0.3) $ .33.2 $ 32.2 2008 includes theeffect ofthe,remeasurement adjustment, For financial reporting purposes, the estimated prior service cost, net loss and transition .costs for the defined benefit plafis that will be amortized from accumulated OCI or a regulatory asset into net periodic benefit cost in 2011 are $4.5 million, $38.5 million and $0.1. million, respectively. For financial reporting purposes, net actuarial gains and losses are recognized on a rolling five-year aVerage basis.. For regulatory reporting purposes,. net actuarial gains and losses are amortized over ten years. The estimated prior service cost, net gain and transition costs for the other post-retirement benefit plans that will be amortized from accumulated OCI or a regulatory asset into net periodic benefit cost in 2011 are $7.2 million, $(I.0) million and $1.3million, respectively.

87

The accumulated benefit obligation (ABO) for all defined benefit pension plans was $808.8 million and $741.4 million at December 31,,2010 and 2009, respectively. The PBO, ABO and the fair value 'ofplan assets at plan year-end are aggregated by funded and under funded plans in the following table..,

2010 .2009 Pension plans with the ABO in-excess of plan assets (millions)

Projected benefit obligation $' 911.4 $ 836.3 Accumulated benefit obligation 808.8 741.4 Fair value of plan assets 557.6 488.2 Pension plans with plan assets in excess of the ABO Projected benefit obligation $ - $.

Accumulated benefit obligation Fair value of plan assets The GMO SE"I is reflected as an unfunded ABO of $21.1 million. The Company has segregated approximately

$21.5 million of assets for this plan as of December 31, 2010, and expects to fund future benefit payments from these assets.

The expected long-term rate of return on plan assets represents the Company's estimate of the long-term return on plan assets and is based on historical and projected rates of return for current and planned asset classes in the plans' investment portfolios. Assumed projected rates of return for each asset class were selected after: analyzing historical experience and future expectations of the returns of various asset classes. Based on the target as~et allocation for each asset class, the overall expected rate of return for the portfolios was developed and adjusted for the effect of projected benefits paid from plan assets and future plan contributions. The following tables provide the weighted-average assumptions used to determine'benefit obligations and net costs.

Weighted average assumptions used to determine Pension Benefits Other Benefits the benefit obligation at plan year-end 2010 . 2009 2010 2009, Discount rate 5.54% 5.92% 5.50% 5.87%

Rate of compensation increase 4.08% 4.26% 4.06% 4.25%

Weighted average assumptions usedto determine Pension Benefits Other Benefits net costs for years endedat December 31 2010 2009ý .2010 2009 Discount rate . 5.92% 6.11% 5.87% 6.10%

Expected long-termretum on plan~assets 8.00% 8.00% 4.25%

• 4.00%.*

Rate of compensation increase 4.26% 4.27% 4.25% 4.25%

• after tax For pension benefits, the Company's 2011 projected weighted average long-term rate of return on plan assets is 7.3%, a 0.7% decrease from 2010. The reduction in the rate of return is expected to increase 2011 GAAP pension expense approximately $4 million.

The Company expects to contribute $104.6 million to the pension plans in 2011 to meet Employee Retirement Income Security Act of 1974 (ERISA) funding requirements and regulatory orders, the majority of which is expected to be paid by KCP&L. The Company's funding policy is to contribute amounts sufficient to meet the ERISA funding requirements and MPSC and KCC rate orders plus additional amounts as considered appropriate; therefore, actual contributions may differ from expected contributions. The Company also expects to contribute*

$15.8 million to other post-retirement benefit plans in 2011, the majority of which is expected to be paid b' KCP&L.

88 q,

The following benefit payments, which ieflect expected, future service, as appropriate, are expected to be paid through 2020.

Pension Other

" .." . .. ... Benefits ene its (millions) 2011, $ 71.4 $ 8.4 2012' 66.9 8.3

,2013 66.2 8.4

-.2014 65.3 8.6

-'2015 67.9 8.6 2016-2020 370.:0 47.7 Pension plan assets are managed in accordance with "prudent investor" guidelines contained in the ERISA requirements. The investment strategy supports the objective of the fund, which is to earn the highest possible return on plan assets within a reasonable and prudent level of risk. The portfolios are invested, and periodically rebalanced, to achieve targeted allocations of approximately 28% U.S. large cap and small cap, equity securities, 22% international equity securities, 37% fixed income securities, 7% real estate and 6% commodities. Fixed income securities include domestic and foreign corporate bonds, collateralized mortgage obligations and asset-backed securities, U.S. government agency, state and local obligations, U.S. treasury notes and money market funds.

C . J .

89

The fair values of the Company's pension plan assets at December 31, 2010 and,.2009, by asset category are in the following tables.

Fair Value Measurements Using Quoted

-Prices in Active Significant '

Markets for Other Significant Identical Observable Unobservable December 31 Assets Inputs Inputs Description 2010 (Level 1) (Level 2) (Level, 3)

(millions)

Pension Plans "1 Equify:.securities ,t

"-- U .S. ()

$ 158.5 , '$ 90.5 $ ,68.0 International (b). 122.4 39.4 83.0' Limited partneiships 0:1" Real estate (C). ,30.3 *3013 Commodities (d) 37.0 37.0 '

Fixed income securities Fixed income funds (e) 148.7 23.0 125.7 U.S. Treasury notes 1.8 1.8 U.S. Agency, state and local obligations 14.8 14.8 U.S. corporate bonds () 24.2 24.2 Foreign corporate bonds 1.5 1.5 Hedge funds (g) 8.4 8.4 Total $ 547.7 $ 154.7 $ 354.2 $ *'38.8 Cash equivalents -money market funds 9.9 Total Pension Plans $ 557.6 90

Fair Value Measurements Using Quoted Prices in Active Significant Markets for Other Significant Identical Observable Unobservable December31 Assets Inputs Inputs Description 2009 (Level 1) (Level 2) (Level 3)

(millions)

Pension Plans.

Equity securities U.S. (a) $ 188.8 $ 102.9 $ 85.9 $

International 1b) 75.2 18.4 56.8 Limited partnerships 0.1, - 0.1 Real estate (c) 26.8 26.8 Commodities (d) 17.6 17.6 Fixed income securities Fixed income funds (e) 1171.9 3.0 114.9 U.S. Treasury notes 1.3 1.3 -

U.S. Agency, state and local obligations . 18.7 - 18.7 U.S. corporate bonds "025.5 0.9 24.6 Foreign corporate bonds 1.2 - 1.2 Hedge fund 2.4 .- 2.4 Total $ 475.5 $ 126.5 $ 319.7 $ 29.3 Cash equivalents - money market funds 12:7 Total Pension Plans 4 $ 488.2 (a) At December 31, 2010 and 2009, this category iscomprised of $90.5 million and $102.9 million,,respectively, of traded mutual funds valued at daily listed prices and $68.0 million and $85.9 million,,respectively, of institutional common/collective trust funds valued at daily Net Asset Values (NAV) per share.

(b) At December 31, 2010 and 2009, this category is comprised of $39.4,million and $18.4 million, respectively, of traded mutual funds valued at daily listedprices and $83.0 million ande$56.8 million, respectively, of institutional common/collective trust funds valued at daily NAV per share. .

(c) This category is. comprised of institutional common/collective trust funds and a limited partnership valued at NAV on a quarterly basis:', . .. , - -

(d) This category is comprised of institutional common/collective trust funds valued at daily NAV per share.

(a) At December 31, 2010 and 2009, this category is comprised of $23.0 million and $3.0 million, respectively, of traded mutual funds valued at daily listed prices and $125.7 million and $114.9 million, respectively, of institutional common/collective trust funds valued at daily NAV per share.

( At December 31, 2010 and 2009, this category is comprised of $13.9 million and $13.0 million, respectively, of corporate bonds, $8.0 million and $9.3 million, respectively, of collateralized mortgage obligations and $2.3 million and $3.2 million,,

respectively, of other asset-backed securities.

(g) This category is comprised of closely-held limited partnerships valued at NAV on a quarterly basis.

91

Thefoll0wving tables reconcile'.he beginning an& ending baldnces for all level 3 pension plan assets measured at fair value on a recurring basis for 2010 and 2009.

Fair Value Measurements Using Significant Unobservable Inputs (Level 3)

Real Hedge limited Description Estate' Fund Partnerships Total (millions)

Balance January 1; 2010 $ - 26.8 $ 2.4 . $ 0.1 $ 29:3 Actual return on plan assets Relating to assets still held. 2.5 (0.2) 2.3 Relating to assets sold - (0.7) (0.7)

Purchase, issuances, and settlements 1.0 6.9 7.9 "

Transfers in and/or out of Level 3 Balance December 31, 2010 $ ' 30.3 $ 8.4 $ 0.1 $ 38'.8

- I Fair Value Measurements Using Significant Unobservable Inputs (Level 3)

Real Hedge limited Description . Estate Fund ' Partnerships Total (millions)

Balance January 1,2009 $ 36.9 $ 6:6 " $ 0.5 $ 44!0, Actual return on plan assets Relatingto assets still held (10.2) 0.1 0.2 (9.9)

Relating to assets sold ..'0.1........ (1.I)... (1.2)

Purchase, issuances, and settlements .- ,(3.0) (0.6) " . (3.6)

Transfers in and/or out of Level 3 ,

Balance December 3,1, 2009 .* .... - ,$. 26.8 $,. 2.4. $ . 0.1 .29.3 Other post-retiremerit plan assets are also managed in accordance with "prudent investor" guidelines contained in the ERISA requirements. The investment strategy supports the objective of the funds; which is,to preserve !'.,

capital, maintain sufficient liquidity and earn a consistent rate of return. Other post-retirement plan-assets are invested entirely in fixed income securities which may, include domestic and foreign corporate bonds, .

collateralized mortgage obligations and asset-backed securities, U.S. government agency, state and"local obligations, U.S. Treasury notes and money market funds.* . . ,, , .

92

The fair values of the Company's other post-retirement plan assets at December 31; 2010. and 2009, by asset category are in the following tables, .,

Fair Value Measurements Using

-Pice ,s in

,"Active ISignificant-'-

Markets for Other .Significant Identical Observable Unobservable

-December31 - Assets -.Inputs Inputs Description . 2010 (Level 1) (Level 2) (Level 3)

(millions)

Other Post-Retirement Benefit Plans Fixed income U.S. Treasury $ 12.1 $ 12.1 $ - $

U.S. Agency 21.7 - 21.7. . -

State and local obligations . -. 0.5,%: .. 0.5 . . ,

Corporate bonds (a) 11.4 -, *....> 11.4 < ,

Foreign corporate bonds 1.0 ., -- - . 1.0-Mutual funds .* - , 0.1 0.1.. . -

Total $ 46.8 $ 12.2 $ 34.6 $ _

Cash and cash equivalents - money market funds 19.0 Total Other Post-Retirement Benefit Plans $ 65.8 (a) This category is comprised of $9.2 million of corp orate bonds, $0.9 million of collateralized mortgage obligations and $1.3 million of other asset-backed securities. - .,

r. *Fairlyalue Measurements Using

"' ' " ' ";*

• Q uoted f .  :. ,'

Prices in Active ' Significant Markets for Other Significant

."Identical Observable -Unobservable December 31 Assets Inputs Iputs In-.

Description 2009 (Level 1) (Level 2) (Level 3)

(millions)' '- "

Other Post-Retirement Benefit Plans  ;, , .

Fixed income U.S. Treasury $ 0.8" $ -0.8 $ -

U.S. Agency 0.6-2 -- . 0.6 Corporate bonds 1.0 .* 1.0 Mutual funds , 0.1. .0.1 -

Total $ 2.5 $ 0.9

• 1.6 Cash and cash equivalents - money market funds 49.5 Total Other Post-Retirement Benefit Plans $ 52.0 93

Assumed health care cost trend rates have a significant effect on the amounts reported for the health care plans.

The cost trend assumed for 2010 and 2011 was 8.0%, with the rate declining through 2018 to the ultimate cost trend rate of 5%. The health care plan requires retirees to make monthly contributions on behalf of themselves and their dependents in an drmouiht determined by the Company.

The effects of a one-percentage point change in the assumed health care cost trend rates, holding all other 11 assumptions constant, at December 31, 20.10, are detailed in the following table. The results reflect the increase in the Medicare Part D employer subsidy which is assumed to increase with the medical trend and employer caps on post-65 plans.

Increase Decrease

. . . . ... (millions)

Effect on total service and interest component $ 0.2 $,(0.3)

Effect on post-retirement benefit obligation 2.2 (2.1) ;I Employee Savings Plans Great Plains Energy has defined contribution savings'plans (401(k)) that cover substantially all employees. Great Plains Energy matches employee contributions, subject to limits. The annual cost of the plans was approximately

$8.9 million, $8.8 million and $6.9 million in 2010, 2009 and 2008, respectively. KCP&L's annual cost of the plans was approximately $6.5 million; $6.5. millionand $5.8 million in 2010, 2009, and 2008, respectively..-

10. EQUITY COMPENSATION Great Plains Energy's Long-Term Incentive Plan is an equity compensation plan approved by GreatfPlains Energy's shareholders.: The Long-Term -Incentive Plan perihits the grant of restricted :stock; stock options; limited stock appreciation rights, director shares, director deferred share units and performance shares t6 directors, officers and other employees of Great Plains Energy and KCP&L. The maximum number of shares of Great Plains Energy common stock that can be issued under the plan is 5.0 million. Common stock shares delivered by Great Plains Energy under the Long.-Term Incentive Plan may be authorized but unissued, held in the treasury or purchased on the open market (including private purchases) in accordance with applicable securities laws. Great Plains Energy has a policy of delivering.newly issued shares, or shares surrendered by Long-Term Incentive Plan participants on account of withholding taxes and held in treasury, or both, and does not expect to repurchase common shares during2011 io satisfy jerformance share payments, stock option exercises and director deferred share, unit conversion. Forfeiture rates are based on historical forfeitures and future expectations and are reevaluated annually.

The following table summarizes'Great Plains Energy's and KCP&L's e'quity'compensation expense and associated income tax benefits.

2010 2009 2008 Great Plains Energy (millions)

Compensation expense $ 4.3 $ 6.3 $ 9.0 Income taxbenefits 1...........1.0 1.6 2.7 KCP&L Compensation expense 3.0 ' 4.3 . 5.5 Income taxbenefits 0.5. . 0.8 2.0

'94

Performnanice Shares. reso " p .. t o .... "

The payment of.performance shares is contingent upon achievement of specific performance goals over a stated period'bf time as approved by the Compensation and DeVelopment C6mmittee of Gieat Plains.ne.gy's Board of Directors. The number of performfance shares ultimately paid can vary from the-ntmber of shares initoallygranted depending on' Gieat Plains Energy's performanice over stated performrhance pe riods Iand Great Plains'Energy's' stock'price following the end of the performance period as compared t6 the stock price on' the giant'date.

Comipensation expense for performance'sh'ares issu'sed subsequent to the amefndment discussed below is calculated by taking the change in fair value between reporting periods 0fothe portion for which the requisite service has been rendered. Dividends are a~crued over the vesting period and paid in cash based on the number of performance shar6'~ultlm'ately paid..........."

The fair value of performance 'share awards is estimated using a Monte Carlo simulation technique that uses the" closing stock price at the valuation date and incorporates assumptions for inputs of expected volatilities, dividend.

yield and risk-free rates. Expected volatility is based 6n daily'stock price change during a historical period commenisurate,;ith the remaining tei-m of the' performance period of the grant. The'ri'sk-fre6 rate is based upon the rate at the' time of the evaluationTor 'zero-coupon govemnent'bonds 'with a maturity "Cofisisthiitwith the' remaining performance period of the grant. The dividend yield is based on the most recent dividends paid and the actual closing stock price on the valuation date. For shares granted in 2010, inputs for expected volatility, dividend yield and risk-free rates were 31%, 4.65%, and 1.2%, respectively.

Perfbrnance share activity foi 2010 is summarized in the following table. Performance adjiistnient iepresents the' numiber of shares of common stock related to performance shares ultimately issued that can vary from the number' of perforniance'shares initially granted depending on Great PlainsEnergy's performfince over stated *performance periods and Great Plains Ehergyi's stock price following the end of the performance period as compared to the'"

stock price on the grant date. '

Performance -Grant Date Shares Fair Value*

Beginning balance '. 294,641 $ 13.62 Performance adjustment ' (21,674)

Granted ' " 231,598 23.37 Earned ' (8,433) 10.87 Forfeiied '" . (64,348) ' 20.54 Ending balance .. 431,784 18.01

• weighted-average '

At December 31, 2010, the remaining 'Weighted-average contractual term was 1.3 years. The'weighted-average grant-date.fair value of shares granted was $23.37; $15.04 and $26;22 in 2010, 2009 and 2008, respectively; At December 3','2010,'there was $2.5 million oftotal Unrecognized compensation expense, net of forfeiture rates, related to-perfo'rmance' shares granted under'the Long-Te'rm Incentive Plan, which will be recognized over the remaining:veifghted-average contractua.l' term. 'The total fair value of performance shares earned and-paid ih'201 0 was insignificant. There were no performance shares earned and paid during 2009: 'The fair Value of common stock issued related to performance shares earned and paid during 2008 was $1.6 million.'

Amendment to Performance Shares In May'2009,the independent members of the Board ýapproved affiendments to certain outstanding'performance -

share agreements (Originial Agreements) for the 2007-2009 and 2008-2010Mperformance periods. The Original-Agreements, as "aniehded, aire referred to as' 'the Amffended Agreements. Due to changes in economic. and financial market conditions since the Original Agreements were entered into, the Compensation and'Development Committee (Committee) and Board determined that the Original Agreements no longer provided meaningful incentives.

95

The Original Agreements granted performance shares based on a single performance metric - the Cornpanqy's total shareholder return (TSR) as compared.to the Edison Electric Institute TSR index for electric utility comianies over the[ relevant p~rfornance periods. The Amended Agreements provide for a combination of.;

performance shares and time-based restricted stock. In calculating the number of performance shares and restircted stock under the Amended Agreements, the value of the performance shar&s granted under the Original Agreements (determined'as of the date of thie"original awards) was' first reduced by two-thirds (for the 2007-2009 performance awards) and one-tlhird (for the 2008-2010 performance awards). The resulting amounts were then -

divided by the fair'market value (as defined in the Long-Term Incentive Plan) of Great Plains Energy stock on the amenrdme'rit date to arrive at a number of shlaires, which was then divided equally between performance shares and.

restricted stock. The two 6qually weighted performance share award metrics under the Amended Agreements are funds from operations as a percentage of total adjusted debt and EPS, with the number of shares of common stock ultimately issued varying depending on Great Plains Energy's performance.over stated performance periods, The performance shares under the Amended Agreements will be re-measured at fair value each reporting.period, with compensation cost to be. recorded at the greater of the grant-date fair value of the Original Agreements or the fair value of the Amended Agreements for the portion'for which the requisite'service has been rendered. The amendment resulted in an insignificant amount of incremental compensation cost for Great Plains Energy and KCPý&L. * ""

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 shaies on'the issue date. Restricted stock shares vest over a'stated period of time with accruing reinvesied'.'dividen'ds subject to the same restrictions. Compensation expense, calculated by multiplying shares by the grant-date fair value .relatedto restricted stock' is recognized over the stated vesting period.

Restricted stock activity for 2010 is summarized in the following table.

Nonvested Grant Date Restricted Stock Fair Value*

Beginning balance 612,587,. $ 20.24 Granted and issued . 130,137 17.80 Vested (291,787) 25.00, Forfeited (44,280) 17.99 Ending balance  :; 406,657 16.23 ."

• weighted-average At December. 31, 2010, the remaining weighted-average contractual term was 1.2 years. The weighted-average grant-date fair value. of shares granted was $17.80, $.14.3.6, and $26.09 during 2010, 2009.and 2008, respectively.

At December 31, 2010, there was $2.8 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 $7.3. million, $5.4 million, and $2.2- million in 2010, 2009 and 2008, respectively..

Stock Options GrantedUnder Long-Term Incentive Plan Stock options were granted under the plan during 2001-2003 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 fairyvalue for the stock options was estimated atthe date of grant using the Black-Scholes option-pricing model. Compensation expense and accrued divi~dends related to stock options were recognized over the stated vesting period.

9'6

GMO.Acquisition GMO stock options outstanding on the July 14, 2008, acquisition date of GMO, were converted to Great Plains Energy stock options upon acquisition. ,' ,

St6ck option activity under all plans for 2010 is summarized inthe following table.. All stock options are fully.

vested atDecember 31', 2010.: . . . .

• • - Exercise Stock Options Shares Price*.-

Beginning balance 244,610 $ 36.73 Exercised ,.*. - (917) 9.21 Forfeited or expired . . . . . (44,912) 55.97 Outstanding and exercisable at December,31, 2010 198,781 32.51 wTweighted-average .. .

The weighted-av4eIrage grant-date fair value of.options exercised for.20 10 and 2009 was $9.21 an[d $11.53, respectively... Th e aggregate' intrinsic value and cash received for options exercised in.2010 and 2009 was insignificant. At; )ecember '31f, 2010, there were~no in the money outstanding and, exercisable, o ptions.'.

The following tat le summarizes-all outstanding and exercisable stock. options as of December 3 1, 2010.

Outstanding and Exercisable Options

• : ' ,.;..,,' ... * *!' W eiphted Awra~e ,,

Remaining. .. Weighted Exercise' Number of 'Contractual Life Awrage

ý'Price Range ' . ' Shaes . .in Years Exercise Price

$23.91,- $27.73", '. 189,852 .. 1.0:, .',$ 24.44.

$181.11 . '3,998 0.1 , 181.11

$221.82 - $251.86 4,931 .0.3 222.48 Total 198,781 ' '..O,',9 32.51 Director Deferred Shire Uits' ' . '

Non-employee directors receive. shares of Great Plains Eniergy's 6pmmon' stock as part of their annWhl retainer.

Each director may elect to defer receipt of their shares until th6 end of January ini the year after they'leave the' Board. 'Director Deferred Share Units have a' value equal.to the market valueof Great Plains Energy s common stock on the grant date with accruing dividends.. Compensationexpense, calculated by multiplying.the directotr, deferred 'share units by therelated. grant-date fair' value, is recognized at the grant dite. The total' fair value'of

'shares of Director Deferred Share Units issued was insignificant for'2010 and2009. 'Directr Deferred"Share lUnits'activity for 2010 is summarized in the following table. ' .'

Share Grant Date' Units Fair Value*

Beginning balance 21,443 $ 22.36 Issued 17,620 17.21 Ending balance ' ' 39,063" 20.04

• weighted-average

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

Great Plains Energy's $200 Million Revolving Credit Facility Great Plains Energy's $200 million revolving credit facility with a group of banks expires in August 2013. The facility's terms permit transfers of unused commitments between this facility and the KCP&L andGM0,facilities discussed below, with the total amount of the facility not exceeding $400 million at any one time.- A default by Great Plains Energy or any of its significant.subsidiaries on other indebtedness totaling more than $50.0 million is a default under the facility. Under the terms of this facility, Great Plains Energy is required to maintain a consolidated indebtedness to consolidated capitalization ratio, as defined in the facility, not greater than 0.65 to 1.00 at all times. At December 31, 2010; Great Plains Energy was in compliance with this covenant. At December 31, 2010, Great Plains Energy had $9.5 million of outstanding cash borrowings with a weighted->

average interest rate of 3.06% and had issued letters of credit totaling $15.8 million under.the. credit facility. At December 31, 2009, Great Plains Energy had $20.0 million of outstanding cash borrowings with a weighted-average interest rate of 0.68% and had issued letters of credit totaling $25.4 million under the credit facilityr KCP&L's $600 Million Revolving Credit Facility and Commercial Paper' 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 August 2013. Great Plains' Energy and KCP&L may transfer up to $200 million of unused commitments between Great Plains Energy's and KCP&L's facilities. A default by KCP&L on other indebtedness' totaling more than $50.0 million is a default under the facility. Under the terms of this facility, KCP&L is required to maintain'a consolidated indebtedness to consolidated capitalization ratio, as defined in the facility, not greater than 0.65 to 1.00 at all times. At December 31, 2010, KCP&L was in compliance with this'covenant. At December 31, 2010, KCP&L had $263.5 milllonof commercial paper outstanding, at a weighted-average'interest rate of 0.41%, $24.4 million of letters of credit' outstanding and no outstanding cash borrowings'under'the facility. At December 31,-2009, KCP&L had $ f86.6 million of commercial paper outstanding, at a weighted-average'interest rate of 0`58%,.$20.9 million of letters of credit outstanding and no outstanding cash borrowings under the facility.

GMO's $450 Million Revolving Credit Facility.

GMO's $450 million revolving credit facility with a group of banks expires in August 2013. Great Plains Energy and GMO may transfer up to $200 million of unused commitments between Great Plains Energy's and GMO's facilities. A default by GMO, Great Plains Energy or any of its significant subsidiaries on other indebtedness totaling more than $50.0 million is a default under the facili.y. Under the terms ofýthis facility, GMO is required to maintain a consolidated indebtedness to consolidated capitalization ratio, as defined in th~e facility, not greater than 0.65 to 1.00 at all times. At December 31ý 2010, GMO was in compliance with this covenant. At December 31, 201.0, GMO had no outstanding cash. borrowings and had issuedletters of credit totaling $13.2 million under the credit facility. At December 31, 2009,' GMOQ had.$232.0 million of outstanding cash borrowings, with aI weighted-average interest rate of 1.50%; and had issued letters of credit totaling $13.2 million under the credit facility.

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12. LONG-TERM DEBT Great Plains Energy's and KCP&L's long-term debt is detailed in the following table.

December31 Year Due 2010 2009 KCP&L . (millions)

General Mortgage Bonds 4.90%* EIRR bonds 20 12-2035 $ 1.58.8 $ 158.8 7.15% Series 2009A (8a59% rate*.*), 2019 400.0 400.0 4.65% EIRR Series 2005 2035 50.0 50.0 5.125% EIRR Series 2007A-1 2035 63.3 ,63.3 2.625% EIRR Series 2007A-2 2035 10.0 10..0

• 2035 5.375% EIRR Seres 2b07B 73.2 73:2 Sefibr'Notes 150.0 6.501o Serie's 2011 - 130.0 5.85% Series (5.72% rate**) 2017 250.0 250.0 6.375% Series (7.49% rate**) 2018 350.0 350.0

.6.05% Series (5.78%rate*'*) 2035. .- 250.0 ,250.0 EIRRBonds ." .

4.90% Series 2008 2038 23.4 23.4 Other 2011-2018 3.3 3.5 Current maturities (150.3) . (0.2)

(2.0) (2.1)

Unamortized 'discotmt-TotalKCP&L 1,629.7 1,779.9.

Other Great Plains Energy GMO First Mortgage Bonds.

. 9.44%Series ., . . , " , 2011-2021 12.4 .. 13.5 GMQ Pollution Control Bonds 5.85% SJLP Pollution Control.., . 2013 5.6 5.6 0..298%***,Wamego Series 1996 . 2026, .. ,.".7.3 . 7.3 0.650%*** State Environmental 1993 . 2028". 5.0 '5.00 GMO SeniorNotes .. ' .. " . " . . .

7.95%/o Series . 2011 137.3 1' '1i7.3 7.75% Series 2011 197.0 197.0 11.875% Series 2012 500.0 500.0 8.27% Series .. , 2021 80.9 80.9

49:9 Fair Value Adjustment* , 499 .84.5o GMO M~edium Term Notes 7.16% Series . " 2013 6.0 '64 1'.33% Series' ,2023 ' 3.0'3 7 17%,Series' 2023 7:0 '7.0 Great'Plains Energy 2:75% Senior Notes (3.67% rate**)' - 2013 ... 250.0 . ...

Great Plains Energy 6.875% Senior Notes (7.33% rate**) . 2017 . 100.0. . 100.0; Great Plains Energy 10.00% , Equity Units Subordinated Notes 2042 287.5 . 287.5 Current maturities , .. (335.4)4,. *(1.1)

Unamortized discount . . . (0.5) . (0.4)

' Total Great Plains Energy excluding current maturities $ 2,942.7 $ 3,213.0

• Weighted-average interest rates at December 31, 2010 .

• • Rate after amortizing gains/losses recognized in OCI on settlements of interest rate hedging instruments *

• Variable rate * " "

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• Amortization of Debt Expense . ..

Great Plains Energy's and KCP&L's amortization of debt expense is detailed in the followinfg table.

2010 2009 2008 (millions)

KCP&L $ 2.8 $ 2.0 $ 1.6.

Other Great Plains Energy 3.6 2.4 -' 1.0

- Total Great Plains' Energy $ 6.4 $ 4.4 $"'"2,6 KCP&L General Mortgage Bonds and EIRR Bonds . .

KCP&L has.issued mortgage bonds under the General Mortgage Indenture and Deed of Trust dated December 1, 1986, as supplemented (Indenture). The Indenture creates a mortgage lien on sublstantially all of KCP&L's utility plant. Mortgage bonds totaling $755.3 million were outstanding at December .31, 2010 and 2009. . .

In March 2010, KCP&L remarketed its 5;00% EIRR Series 2007A-2 general mortgage bonds maturing-in 2035 totaling $10.0 million to a new fixed rate of 2.625% from April 1, 2010, through March 31, 2011.

KCP&L Municipal Bond Insurance Poli-ies KCP&L's EIRR Bonds Series 2007A-1, 2007A-2 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, EIC~paysunder the municipal bond insurance policy. The policy also restricts the amount of secured debt, KCP&L may issue.

Because KCP&L issued debt secured by liens'not permitted by the agreement or resulting in the aggregate amount of outstanding general mortgage bonds exceeding 10% of total capitalization, KCP&L was required, to issue and deliver collateral to FGIC, in the form of first mortgage bonds, equal in principal amount to the p'fihcipal amount of the EIRR Bonds Series 2007A-1, 2007A-2 and 2007B then outstanding: In 2009, KCP&L issued ,$146.5 million ofMortgage Bonds Series 2007 EIRR Insurer due 2035 to FGIC. The bonds are .not incremental debt for KCP&L but collateralize FGIC's claim on KCP&L if FGIC was required to meet its obligatiofr.under` the insurance agreement.

KCP&L's secured 1992 Series EIRR bonds totaling $31.0 million, secured Series 1993A and 1993B EIRRbonds totaling $79.5 million, andisecured 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 Syndora Guarantee, Inc. (Syncora). The insurance agreements between KCP&L and Syncora provide for reimbursement by KCP&L for any amounts that Syncora pays under the municipal bond insurance policies. 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, 2010, KCP&L was infcompliance with this covenant.

KCP&L is also restricted from issuing additional bonds under its General Mortgage Indenttre if, afler.giving effect to such additional bonds, the proportion of secured debt to total indebtedness would be' mofd than 75%, or more than-50% if the long term rating for.such bonds by Standard & Poor's or Mqody.'s Investors Service would be at or below A-'or A3, respectively. Theinsurance agreement covering'theu*nsecured EIRR Bond Series, 2005 also required KCP&L to provide collateral to Syncora in'the form of $50.0 million of Mortgage Bonds Series 2005 EIRR Insurer due 2035 for KCP&L's obligations under the insurance agreement as a result of KCP&L issuing general mortgage bonds in 2009 (other than refunding of outstanding general mortgage bonds) resulting in the aggregate amount of outstanding general mortgage bonds exceeding 10% of total capitalization. The bonds are not incremental debt for KCP&L but collateralize Syncora's claim on KCP&L if Syncora was required ,to meet its obligation under the insurance agreement. In the event of a default under the insurance agreements, Syncora may take any available legal or equitable action against KCP&L, including seeking specific performance of the covenants.

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GMO First Mortgage Bonds GMO has issued mortgage bonds under the General Mortgage Indenture and Deed of Trust dated April 1, 1946, as supplemented. The Indenture creates a mortgage lien on substantially all of GMO's St. Joseph Light &,Power-division utility plant. Mortgage bonds totaling $12.4 million and $13.5 million, respectively, were outstanding at December 31, 2010 and 2009.

GMO Senior Notes The fair value adjustment for GMO represents the $133.3 million purchase accounting adjustment to record GMO's debt related to the 11.875%' series and 7.75% series Senior Notes that are not fully reflected in'electric retail rates as of the July 14, 2008, acquisition date, at estimated fair value, with the offset recorded to goodwill.

The fair value adjustment is being amortized as a reduction to interest expense over the remaining life of the individual debt issues. Amortization for 2010, 2009 and 2008 was $34.6 million, $33.0 million and $15.8 million, respectively 'Amortization for 2011 and 2012 is estimated at $33.8 million and $16.1 million, respectively.

Great Plains Energy 2.75% Senior Notes In August 2010, Great Plains Energy issued $250.0 million of 2.75% unsecured Senior Notes, maturing in 2013.

As a result of amortizing the loss recognized in Other Comprehensive Income (OCI) on Great Plains Energy's Forward Starting Swaps (FSS), the effective interest rate is 3.67%.

Great Plains Energy 10.00% Equity Units Subordinated Notes In May 2009, Great Plains Energy issued $287.5 million of Equity Units. Equity Units,.each with a stated amount of $50, initially consist of a 5% undivided beneficial interest in $1,000 principal amount of 10ý00% subordinated notes due June 15, 2042, and a purchase contract requiring the holder to purchase the Company's common'stock by June 15, 2012 (the settlement date). Each purchase contract obligates the holder of the purchase contract to purchase, and Great Plains Energy to sell, no later than June 15, 2012, for $50 in cash, newly issued shares of the Company's common stock equal to the settlement rate. The purchase contracts may be settled earlier at the option of the holder subject to certain conditions, including but not limited to, the occurrence of a fundamental change (as defined in the agreement) at least, 20 business days prior to June 15, 2012. The settlement rate will vary according to the applicable market value of the Company's common stock at the settlement date. The applicable

'market value will be measured by the average of the closing price per share of the Company's common stock on each of the 20, consecutive trading days ending on the third trading day immediately preceding June 15, 2012.

The settlement rate will be applied to the 5,750,000 Equity Units at the settlement date to issue a number of common shares determined as described in the following table.

Applicable ,Settlement rate Market value market value (in common shares) per Equitv Unit (a)

$16.80 or greater .2.9762 to 1 " Greater than $50 per,Equity Unit

• $16.80 to $14.00 $50 divided by the applicable Equal to $50 per Equity Unit market value to 1

$14.00 or less 315714 to 1 Less than $50 per Equity Unit (a). Assumes that the market price of the Company's conmmon stock on June 15, 2012, is the same as the applicable market value.

Great Plains Energy makes quarterly contract adjustment payments at the rate of 2.00% per year of the stated amount of $50 per Equity Unit and interest payments at the rate of 10.00% per year on the subordinated notes.

Great Plains Energy must attempt to remarket the subordinated notes, in whole but not in part, between December 15, 2011, and June 12, 2012. In connection with a successful remarketing of the notes, Great Plains Energy may elect, without the consent of any of the holders, to modify the notes' stated maturity to any date on or after June "101

15, 2014 and earlier than June 15, 2042. The proceeds from a successful remarketing will be used to satisfy the holders' obligationunder the purchase'contract.. If the notes have not been successfully remarketed by June 12, 2012, the holders of all notes will have the right to put their notes to Great Plains Energy.on June 15, 2012, in -

satisfaction of the holders' obligation under the purchase contracts and Great Plains Energy will issue -tothe holders newly issued shares of the Compahy's common stock equal to the settlement rate.

The May 2009 present value of the contract adjustment payments of $15.1 million was recorded as a liability in.*

other current liabilities and other deferred, credits and other liabilities with ,a corresponding amount recorded as, capital stock premium and expense on Great Plains Energy's consolidated balance sheet. 'The liability is 'being relieved as Great Plains'Energy makes quarterly contract adjustment payments.

Scheduled Maturities Great Plains Energy's. and KCP&L's long-term debt maturities for the next five. yearsare detailed in the following table.

2011'2"12 2013 2014 2015

.(millions)

Great Plains Energy $ 485.7 $ 513.9 $ 263.1 $ 1:5 $ 15.5 KCP&L 150.3 12.7 0.4 0.4 14.4 At December 31; 2010, Great Plains Energy's long-term debt maturities in 2011 and 2012 were $485.7 million and $513.9 million, respectively. In February 2011, repayment.of GMO's $137.3 million of 7.95% Senior'Notes that matured in February 2011 reduced the 2011 long-term debt maturities to $348.4 million. Great Plains Energy is evaluatingaltematives to refinance the remaining long-term.debt, including.issuing new long-term debt. Based on current market conditions and.Great Plains Energy's unused bank lines of credit, Great Plains. Energy expects to have the ability to access the markets to complete the necessary refinancing..,

13. COMMON SHAREHOLDERS' EQUITY .

Great Plains Energy has'an effectiVe shelf registration :statement'for the sale ofunspecified' amounts of securities with the-Securities and Exchange Commission (SEC) that was filed and became effective in May 2009.

In August 2008, Great Plains Energy entered into a Sales Agency Financing Agreement with BNY' Mellon Capital Markets, LLC (BNYMCM). Under the terms of the agreement, Great Plains Energy may offer and sell up to 8.0.

million shares of its common stock from time to .time through BNYMCM, as 'agent, for a period of no more than three years. Great Plains Energy will pay 'BNYMCM a commission' equal to 1% of the sales price of all shares sold under the agreement. No shares were sold during 2010. During 2009, 3.8 million shares were sold for $49.5 million in net proceeds. During,2008,'0.2 million shares were sold for $3.5 million in net proceeds.

Great Plains Energy has 5.0,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 reinyesting 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., 2010, 0.8 million shares remained available for future issuances.

Great Plains Energy has 12.3 million shares of common stock registered with the SEC for a defined contribution savings plan. Shares issued under the plans may be either newly issued shares or shares purchased in the open market. At December 31, 2010, 1-.9 million shares remained available for future issuances.

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

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Great Plains 'Energy's'articles of incorporation restrict the payment of common stock. dividends in the event .,

common equity is 25%'or less',of total capitalization.' In addition, if preferred stock dividends are not declared and paid when scheduled, Great Plains Energy could not declare or pay common: stockdividends or purchase any common shares. If the unpaid preferred stock dividends equal four or more full quarterly dividends, the preferred' shareholders, voting as a sinigle class, could elect.the smallest number of directors necessary to constitute a majority of the full Board. Certain conditions in the MPSC and KCC orders authorizing the holding c'o pany structure require Great Plains Energy and KCP&L to maintain consolidated common equity of at least 30% and 35%, respectively, of total capitalization (including only the amount of short-term debt in excess of the amount of construction work in progress). Under the Federal Power Act, KCP&L and GMO generally can pay dividends only out of retained earnings.' 'The revolving credit agreements of Great Plains Energy, KCP&L and GMO' ,

contain a covenant requiring each company to maintain a consolidated indebtedness to' consolidated total capitalization ratio of not more than 0.65 to1.00. In addition, Great Plains Energy' is prohibited' fr6m' paying dividends on its common and preferred stock in the' event its Equity Unit' contract payments or interest-payments on the debt underlying the Equity Units' are deferred until such deferrals have been paid.

As of December 31, 2010, all of Great Plains Energy's and KCP&L's retained earnings and net income were free of restrictions. As a result of the above restrictions; Great Plain' Energy's subsidiaries had restricted net assets' of'.

approximately $2.8 billion as of December 3.1,.2010. The restrictions are not expected to affect the Companies' ability to pay dividends at the current level in the foreseeable future. ": *'*

14. PREFERRED STOCK. ' ' , ; '

At December 31, 2010, 1.6 million shares of Cumulative No Par.Preferred Stock, 390,000 shares of Cum'ulative, Preferred Stock, $100 par value and 11.0 million shares of no par Prefereiice 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% of par value. If.Great Plains Energy voluntarily, files for dissolution or liquidation, the Cumulative Preferred Stock holders are entitled to receive theredemption'prices. If a proceeding for dissolution or liquidation is filed agaist Great Plains Energy, the Cumulative Preferred Stock holders are entitled to receive the $100. par value per share plus accrue d and uinpaid dividends.

15. COMMITMENTS AND CONTINGENCIES Environmental Matters. ' .

Great Plains Energy and KCP&L are subject to extensive regulation by federal, state and local authorities with regard to"environmental matters primarily through their utility operations. In addition to imposing extensive and continuing compliance obligations, laws, regulations 'and permits authorize the imposition of substantial penalties for noncompliance, including fines, injunctive relief and other sanctions. The cost of complying with current and future environmental requirements is expected to be material to Great Plains Energy and KCP&L. Failure to comply 'with' environmental requirements Or to timely recover environmental costs through rates'could have a matdrial, adverse effect on Great Plains Energy and KCP&L.

The following discussion groups environmental'and certain associated matters into the broad :categories of air and climate change; water, solid waste and remediation.

Air and Climate Change,- ' '>: ',

The Clean Air Act and associated regulations enacted by -the Environmental Protection Agency (EPA)' form a comprehensive program to preserve' air quality. ..States are required to establish regulations and'programs to address all requirements of the Clean Air Act and have the flexibility to.enact more stringent requirements. All of Great Plains Energy's and KCP&L's generating'facilities, and certain of their other facilities, are subject to the Clean Air Act. . ' .... .

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u Great Plains Energy's.and KCP&L's current estimate of.'capital;expenditures (exclusive of AFUDC,and puoperty taxes),to comply with the currently, effective,Clean Air Interstate Rule (CA'IR) andý with the best available ietrofit.

technology (BART) rule-is approximately $lbillion. As discussed below, CAIR has been remanded to .the-EPA, but remains in effect until the-EPA issues final rules consistent with the court's.order or until the court takes ,

further action.., In July 2010,-the EPA-proposed the Transport Rule~to replace.,CAIR.' However, due to.- .

uncertainties regarding the~proposal (discussed below), itis not~possible to .predict what the final rules-may be;-

when the rules may be issued,.or the costsassociated with such rules. Thge actual cost of compliance withany.

future rules; and with BART, may be significantly different from the,cost esti.mate provided.

The potentialcapital,'costs of the, Collaboration Agreement provisions .(discussed.below,) relating to NOx, SO2 and particulate emission. limits at the, LaCygne generating station arewithin the disclosed overall capital cost estimate of approximately $1 billion (discussed above). However, 4he estimated-capital costs do, not reflect potential[costs relating to requirements enacted in,thefuture, including potential requirements regarding.climate change and.,,.

control of mercury emissions (discussed below), and also do, not reflect costs relating to additional wind generation, energy efficiency and other CO 2 emission offsets contemplated by the Collaboralion Agreement or that may be requiredunder the Missouri or Kansas renewable energy standards,'which. are discussed belo.,V, The estimate does not reflect the:non-capital coststhe Companies incur. on an,ongoing.basis to comply with .

environmental laws, which may. increase in the future due.to the .implementation.of KCP&L's Compreherisive Energy Plan and the Companies' ongoing compliance with current9or.future environmental laws. KCP&L, expects to seek recovery of the costs associated with the Collaboration Agreement and the Companies expect to seek recovery of the costs associated with environmental requirements through rate increases; howeverthere-can.-

be no assurance that suchrate increases would be granted. The, Companies may be subject to. materially adverse ratesponse of'tlhetmet*i' perception spns tocopettieeconomic, to cometve,tive Co'tpanies political, 16gislateore

.environinental repujtation. or, gulatory.' pressures

• , and/ordpiblic

- Clean'AirInlerstaie Rule (CAIR)A'and TransportRule :' ' . . . .

Tle CA.IR 'requires reductionus in So 2 and NOx emissions in 28- s sincluding Missouri. The rediuction Thehe

+equire'sde CA1R Mores i both7 SO 2 and NO, emigsions is 'acc6mphshed thoUghtstatevide c'ais for NO, and SO 2. M6re' -

restr-ictive caps are'scheduled ia becoffle effectiv"Jauairy' ,' 2-015 . "Great Plaiis En"'/gy's and KCP&L's" fossil fuel-fired plants located 'in Missouri are subjedt to CAIR, 'whiletheir fossil fuel-fir'ed plantsin""

Kansas are not..... ...... . .

On July 11, 2008, the D.C. Circuit Court of Appeals vacated CAIR in its entirety and remanded the matter to the EPA to promulgate a new rule cgnsistenta with its opinion. On December 23, 2008; the' Court issued an order remanding CAIR-to the EPA to revise;the rule consistent with its July 20081 order.

The, CAIR thus remains in effect pending-future*EPA or.court action-. inclyuding the proposed Transport Rule discussed below. .-. , , '-* .', . . , .. .. . ...

CAIR currently establishes.a market-based cap-and-trade.programwith an.emission allowance, al-location.

Facilities demonstrate compliance with CAIR by.holding, sufficient a.llowances for each.ton of SO 2 ,apd.

NOx emitted in any given year. KCP&L and GMO are currently allowed to utilize unused SO 2 emission allowances that they have either accumulated-during previous, years of the.Acid.Rain Program or , , '

purchased to meet the more stringent CAIR requirements. At December.31, 29010, KCP&L had.,

accumulated unused S02 emission allowances sufficient to support over 135,000 tons of SO 2 emissions (enough to support expected requirements under the current CAIR for the foreseeable future) under the-.

provisions of the Acid 'Rain~program, 'which are recorded in.inventory, atrzero cost. .At-Decemberi 31, 2010,. GMO had accumulated unused SO 2 emission-allowances sufficient,to support-just.over 13 ,000 tons of S02 emissions (enough. to,support expected requirements underthe current CAIR through 201 l),

.which:it-has receivied under the Acid Rain Program or purchased, and are recorded in inventory at average cost. KCP&L and GMO purchase NO. allowances as needed. $I, ' :.-;

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Analysis of the current CAIR rule indicates that NO. and SO 2 control. may be required for KCP&L's

, Mpntrose Station and,,GMO's Sibley and Lake Road Stations in Missouri, and control may be achieved through a c9mbination of pollution control ,equipment and,the useor purchaseof emission allowances as needed. . , . ... "* ' ,.

• In July,2010, the EPA proposed the Transport Rule to replace the current CAIR., The Transport Rule, like

. CAIR;*will require the states within its scope to reduce power plant SO2 and NO,, emissions that contributeto ozone and fine particle nonattainment in other states. The: geographical scope,of the Transport Rule is broader than CAIR, and includes Kansas in addition to Missouri and other states. The Traiisport Rule would also impose more stringent emissions limitations than CAIR and, unlike CAIR, would not utilize Acid Rain Program allowances for compliance. The EPA is proposing a preferred approach and is taking comment on two alternatives. In the. EPA's preferred approach,.the EPA would

-set, an emissions, budget for each of the affected states and the District of.Columbia. The preferred approach would allow-limited interstate emissions allowance trading among power plants;, however, it would not permit trading of SO 2 allowances between the Companies' Kansas and Missouri power plants.

In the first alternative, the EPA is proposing to set an emissions budget for each state and allow emissions allowance. trading only among power plants within a state. In the second alternative, the EPA is

-Proposing:tojset ap emissions budget for eaph state., specify the allowable emission limit for each power plant and-allow some, averaging. Compliance with the Transport Rule would begin in 2012. There would be additional reductions in SO 2 allowances allocable to the Companies' Missouri power plants taking effect in 2014 pursuant.to the preferred approach. There is no such additional, reduction in S0 2 allowances allocable to the Companies' Kansas power plants. , . .

. In. January,20,! 1, the EPA supplemented the record supporting the proposed Transport Rule. The EPA made available additional information relevant to the rulemaking, including, among, other things, unit-level allowances for existing units. calculated using two alternative methodologies and data~supporting those calculations.

The proposed Transport Rule is complex and, as noted, contains alternative approaches.. Great Plains Energy -a!nd.KCP&L are unable to predict when the Transport Rule (or other rule *replacing CAIR) might be adopted, or the actual requirements of such rule. Preliminary analysis of the Transport Rule has raised various questions regarding the emission allowances allocation to, and the allowable emission rates for, 4: the. Companiest. power plants pursuant to the preferred approach and alternat~ives, which the Companies addressed during the rule's comment period. Regardless of the resolution of those questions, the Companies:project that they,may not be allocated sufficient SO 2 or NOx emissions allowances to cover their currently expected operations- starting in 2012 pursuant to the preferred approach. Any, shortfall in allocated allowances would need to be addressed through permissible allowance trading, installing additional emission control equipment, changes in plant operation, purchasing-additional power~in the wholesale market, or!a-combination of these and other alternatives. While Great.Plains Energy and KCP&L cannot reasonably predict at this time the impacts of the final TransportRule, if it were finalized

,-as currently proposed, the Companies expect that any required capital expenditures would not exceed the

$1 billion estimate of capital expenditures (exclusive of AFUDC and property taxes) to comply with the

• currently effective CAIR and BART rule disclosed above. Any final rule could, have a significant adverse

,effect on Great Plains Energy's and KCP&L,'s results of operations, financial position and cash flows.

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1i Best Availabld'Retrofit Techinology (BART) Rule "'

EPA BARTni~dle directs state air quality agencies to identify ,Vhethef visibility-reducing emissions

.The from:sources subject tO BART'hre below limits set by the state or whether retrofit nmeasures.idre ne"eded to reduce emissions. BART applies to specific eligible facilities including KCP&L's'LaCygne Nos. 1 and 2 in Kansas, KCP&L's latan No. 1, in which GMO has an 18% interest, KCP&L's Montrose No. 3 in Missouri, GMO's Sibley.UnitNo. 3 and Lake Road Uhit -No.'6 in Missouri and Westar Energy, Iric.'s (Westar) JTffrey Unit Nos:. land 2 in Kansas, in which, GMO has 'an 8% ifiterest. Initially, in Missouri,

,omliliance with CAIR will be compliance Nrith BART fdr individual s9ircres. Both Missouri and Kansas ha.V6 submitted BART plans to the EPA but neither Missouri nor Kansas has received EPA approval for their BART plans. ' .. '

Mercury and Other HazardousAir PollutantEmissions in'aianiuary 2009,the EPA issued a memorandum stating that new 'electric steam generating units' (EGUs)

'that began 66nstruction while the Cleaii Air Mercury Rule (CAMR) 'Wasý effective are'subject'to a new source maximum'achievable control technology (MACT)ý determination on a case-by-case basis.

In Julyý 2009, the EPA sent letters notiffying KCP&L that MACT determinati'ons and schedules ofi compliance are required for 'co'al and'oil-fired EGUs that began' actual constructionor reconstruction after

' December 15, 2000, and iderifiied Jatan No. 2 and Hawth0rii No. 5as affected-EGUs: This was an outcome of the D.C. Court of Appeals" vacatur of both the CAMR and the contemporaneously promulgated'rule'renioving EGUs from' MACT requirements.' KCP&L believes that Hawthorn No. 5 is not an affected EGU based on the reconstructibn dates: of the init, and provided supporting documentation to the Missouri Department of Natural Resources (MDNR). It is not currently known how

• ' MACT deteiniihafions and §chedules of compliance will' impact the permitting or operating requirements

• for these two'units, but it is possible a MACT determination may ultimately require additional emission control equipment' and permit limits at Iatan'No. 2, Hawthorn No. 5, or both.'

In April 2010, the EPA, in a court approved settlement, agreed to develop MACT standards for mercury

.....- du potentially other-hazardous air pollutant emissions: In the settlement agreement, the EPA agreed to

-propose MACT standards in March 2011- with final standards byNoviember 2011. *TheseMACT "standards, if adopted, couldimpact KCP&L's and GMO's new and existing facilities.

"'Management cannot pr'edict the outcome of further judicial, administrative or regulatory actions or their financial or,6perational effects on Great'Plains Energy and KCP&L. Such actions could have a',

significant effect on Great Plains Energy's and KCP&L's resiults of operations, financial position and cash:flows. :Some 'of the'control technology for S0 2 and NOx could also aid in the control of mercury.

IndustrialBoilerRule - . . .

In April 2010, the EPA-issued a proposed~rule that would set MACT standards for hazardous air' pollutants from industrial boilers. The proposed rule would establish emission limits for KCP&L's and

-- GMO's new and existing unitsthat produce steam other than for the generation of electricity. This proposed rule does not apply to KCP&L's and GMO's electricity generating boilers, .but would 'apply to

.. most of GMO's Lake Road boilers, which also serve steam customers, and to auxiliary boilers at other generating facilities. The EPA finalized the rule in late February.2011. The financial and operational impacts to Great Plains Energy and KCP&L, which could be material, are being evaluated but cannot be determined at this time.

New Source Review 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.

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In Januaiy 2004, Westar received notification from the EPA alleging that it had violated new source, review requirements.and Kansas environmental regulations'by making modifications to the Jeffrey Energy Center. without obtaining the proper permits; In February 2009, the Attorney General of the United States filed a complaint against Westar alleging that it violated the Clean Air Act and related federal and state regulations by making major modifications to the Jeffrey Energy Center beginning in 1994 without first obtaining appropriate permits authorizing this construction and without installing and operating best available control technology to control emissions. The Jeffrey Energy Center consists of three coal-fired units located in Kansas that is 92% owned by Westarand operated exclusively by Westar.

GMO has an 8% interest in the Jeffrey Energy Center and is generally responsible for.its 8% share of the facility's operating costs and capital expenditures. In January 2010, Westar entered into a settlement agreement, which was approved by the court in March 2010. The settlement agreement requires, among other things, the installation of a selective catalytic reduction (SCR). system at one of the Jeffrey Energy Center units by the end of 20,14 and the payment of a $3 million civil penalty. Westar has preliminarily estimated the cost of this SCR at approximately $240. million. This amount could materially change depending on'final engineering and design, Depending on the NOx emission reductions attained by that SCR and attainable through the installation of other- controls at the other two units, the settlement

• agreement may require the installation of a second SCR system on one of the other two units by, the end of 2016. There is no assurance that GMO's share of these costs-would be recovered in rates and failure to recover such costs could have a significant adverse effect on Great Plains Energy's results of operations, financial position and cash flows.

CollaborationAgreement In March 2007, KCP&L, the Sierra Club and the Concerned Citizens of Platte County entered into a Collaboration Agreement under which KCP&L agreed to pursue a set of initiatives including energy efficiency, additional wind generation, lower emission permit levels at its Iatan and LaCygne.generating stations and other initiatiyes designed to offset CO 2 emissions. Full implementation of the terms of the

.Collaboration Agreement will necessitate approval from the appropriate authorities, as, some of the initiatives in the agreement requireregulatory approval.

In 2006, KCP&L installed 100MW of wind generation at its Spearville wind, site. KCP&L.agree~d in the Collaboration Agreement to pursue increasing its wind generation capacity to 500MW in total by the end of 2012 With 100MW to be added by the end of 2010 and the remainder added by the end of 2012, subject to regulatory approval. In 2010, KCP&L completed a 48MW wind project adjacent. to its existing Spearville wind site with wind turbines it already owned and also secured 52MW of renewable energy credits., KCP&L issued requests forproposals to add up to 100MW of wind generation in 2012 and is evaluating the proposals. KCP&L is evaluating alternatives to meet the remaining wind generation capacity requirement, including the purchase of renewable energy credits, power purchase agreements, KCP&L-built installations or some combination thereof.

KCP&L agreed in the Collaboration Agreement to seek a.consent agreement, which it has done, with the Kansas Department of Health and.Environment (KDHE) incorporating limits for stack particulate matter emissions, as well as limits, for NOx and SO 2 emissions at. its LaCygne Station thatwill 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 inmno event later than June 1, 2015: KCP&L has issued requests for proposals for environmental equipment required to comply with BART at the LaCygne Station and. is evaluating the responses. In February 2011, KCP&L filed a request with KCC for predetermination of the ratemaking treatment that will apply to the recovery ofcosts for its 50% share of the environmental equipment required to comply with BART at the LaCygne Station. The request for predetermination includes an estimated total project cost of $1.23 billion. KCP&L's 50% share of the estimated cost is $615 million.

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In the Collaboration Agreement, KCP&L also agreed to offset an additional 711,000 tons of CO2 by the end of 2012. KCP&L cui-rently expects to achieve this offset through. a number of alternatives, including improving the efficiency of its coal-fired units, equipping certain gas-fired units for winter operation and, if necessary, possibly reducing output of, or retiring, one or more coal-fired units.

Climate Change The Companies are subject to existing greenhouse gas reporting regulations and, as discussed below, will be subject to ,certain greenhouse. gas permitting requirements starting in 2011. Management b'elieves it is likely that additional'federal or relevant state or-local laws or regulations could be enacted to address global climate change. At the international level, while the United States is not a current party to the Kyoto Protocol, it has agreed to undertake certain voluntary actions under the non-binding Copenhagen Accord and pursuant to subsequent international discussions relating to climate change, including the establishment of a goal to reduce greenhouse gas emissions. International agreements legally binding on the United States may be reached in the future. Such new laws or regulations could mandate new:,or increased requirements to control Or reduce 'the emission of greenhouse gases, such as C0 2, which are created in the combustion of fossil fuels. The Companies' current generation capacity is primarily coal-fired and is estimated to produce about one ton of CO 2 per MWh, or approximately 28 million tons and 21 million tons per year for Great Plains Energy and KCP&L, respectively.

Laws have recently been passed in 'Missouri and Kansas, the states in which the Companies' retail electric businesses are operated, setting renewable energy standards, and management believes that national clean or renewable energy standards are also likely. While management believes'additional requirements addressing these matters will probably be enacted, the timing, provisions and impact of such requirements, including the cost to obtain and install new equipment to achieve compliance, cannot be reasonably estimated at this time. in addition, certain 'federal courts have held that state and local governments and private parties have standing to bring climate change tort suits seeking company-specific emission reductions and monetary or other damages. The U.S. Supreme Court hlis agreed to hear an appeal of one of those suits. While the Companies are not a party to any climate' change tort suit, there is no assurance that such suits may not be filed in the future or the outcome if such suits are filed.' Such requirements or litigation'outcomes could have the potential for a significant financial and operational impact on Great Plains Energy and KCP&L. The Companies would seek recovery of capital costs and expenses for compliance' through rate increases; however, there can be no assurance that such rate increases would be granted.

Legislation concerning the reduction of emissions of greenhouse gases, including C0 2, is being considered at the federal and state levels.' The timing and effects of any such legislation cannot be determined at this time. In the absence of new Congressional mandates, the EPA is proceeding with the.

regulation of greenhouse gases under the existing Clean Air Act.

In May 2010, the EPA issued a final rule addressing greenhouse gas emissions from stationary so urces under theClean Air Act permitting programs. This final rule sets thresholds for greenhouse gas emissions that define when permits under the Prevention of Significant Deterioration (PSD) and Title V Operating'Permit programs are required for new and. existing industrial facilities. The'EPA phased in the Clean Air Act permitting requirements for greenhouse gas emissions in two initial steps. In step 1, which started January 2, 201 1, only sources currently subject to the PSD permitting program (i.e., those'that are newly-constructed or modified in a way that significantly increases emissions of a pollutant other; than' greenhouse gas) are subject- to Title V or PSD permitting requirements, respectively, 'for their greenhouse gas emissions. For these projects, only projects with new or increases of'greenho.use gas emissions of 75,000 tons per year'or'more of total greenhouse gases, on a CO 2 equivalent basis, need to determine the best available control technology for their greenhouse gas emissions. In addition, sources subject to the Title V Operating Permit Program need to address greenhouse gas emissions as those permits are applied 108

for or renewed. In step 2, starting July 1, 201.1, Title V and PSD permitting requirements will cover, for the first time, new construction projects that emit, greenhouse gas emissions of at least 100,000 tons per year even if they do not exceed the permitting thresholds for any other pollutant. In addition, modifications at such existing.facilities that increase greenhouse gas emissions.by, at least 75,000 tons per year will be subject to permitting.requirements, even if they do not significantly increase emissions of any other pollutant.- Great Plains Energy's and KCP&L's generating facilities that trigger.these thresholds for new installations, modifications or Title V operating permits will be subject to this rule. .

."In December 20 10, the EPA announced it entered into a proposed settlement agreement to issue a rule that will address greenhouse gas emissions from EGUs. The rule. would establish new source.,

performance standards for new and modified EGUs and emission guidelines for existing EGUs. Under the settlement agreement, the EPA would commit to issuing proposed regulations by July 2011, and final

• regulations by May 2012. . . . -,-.-.

At the state level, aKansas law enacted in May 2009- requires Kansas public electric utilities, including

.KCP&L, to have renewable energy generation capacity equal to at least 10% of their three-year average Kansas peak retail demand by 2011. The percentage increases to 15% by 2016. and 20% by 2020. A..

Missouri law enacted in November 2008 requires at least 2% of the electricity provided by Missouri investor-owned utilities (including .KCP&L and GMO) to their Missouri retail customers to come from

!renewable resources, including wind,, solar, biomass and hydropower, by 2011, increasing to 5% in 2014, 10% in 2018, and 15% in 2021, with a small portion (estimated to be about 2MW in,2011 for each of KCP&L and GMO) required to come from solar, resources.

, KCP&L.and GMO project that their current renewable resources (including accumulated renewable energy credits) will be sufficient for compliance with the Missouri requirements, exclusive of the solar requirement, through 2017 and 2015, respectively. KCP&L and GMO project that the purchase 'of solar renewable energy credits will be sufficient for compliance with the Missouri requirements through 2011.

-The Companies haye issued requests for-proposals for compliance witlh the solar requirement beyond

• 2011 and are evaluating the proposals. KCP&L and GMO continue to evaluate options for compliance

-beyond these years. , .. ,.. ;. . .,-. - . .

KCP&L also projects that its current renewable resources (including accumulated renewable energy credits) combined with the 48MW wind project and 52MW of renewable energy credits discussed above will be sufficient for compliance with the 2011 Kansas requirements. KCP&L issued requests for proposalsto add up to,100MW of wind generation in 2012 and is evaluating the proposals.

... Additionally, in November 2007, governors from six Midwestem states,, including Kansas, signed the Midwestern Greenhouse Gas Reduction' Accord, which has established the goal of reducing member states' greenhouse-gas, emissions to 15% to 20%.below 2005 levels by 2020, and 60% to 80% below 2005

. levelsby 2050....

Greenhouse gas legislation or regulation has the potential of having significant financial and operational impacts on Great Plains Energy and KCP&L, including the potential costs and impacts of achieving compliance.with limits that may be established. However, the ultimate financial and operational consequences to Great Plains Energy and KCP&L cannot be determined until such' legislation is passed, regulations are issued or, with respect to those regulations that have been issued, additional guidance is provided. Management will continue to monitor the progress of relevant 'legislation and regulations.

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Ozone'NAAQS .

In June 2007, monitor data indicated that the Kansas City area violated the 1,997 primary eight-hour ozone national ambient air quality standard (NAAQS).: Missouri and Kansas-have iriplemented the

-responses e.stablished in the maintenance plans for control of ozone. The responses in both states do not require additional controls at Great'Plains Energy's and KCP&L's generation facilities beyond the currently proposed controls f0o CAIR and BART. The EPA has various options over and above the implementation of the maintenance plans for control of ozone to address the viblation but has not yet acted, At this time, management is unable to predict how the EPA will respond or how that resp6nse will

" impact Great Plains Energy's and KCP&L's'operations. However, the EPA's response could have a significant effect-on Gieat Plains Energy's and KC.P&L's results of operations, financial positiOn~and cash flows. . .

In March 2008, the EPA significantly strengthened its NAAQS for ground-level ozone. The EPA revised the primary eight-hour' ozone standard, designed to protect public health, to a level of 0.075 parts per million (ppm). The EPA also strengthened the secondary eight-hour ozone standard to the level of 0.075 ppm making it identical fo~the revised primary standard. The previous p rimary and secondary standards, set in 1997, were effectively 0.084 ppm.>  : - . '

In March 2009, the MDNR andXKDHE submitted to the:EPA their determinations that the Kansas City area is a'nonattaihment area under~the 2008, primary eight-hour ozone standard. The EPA will mhke final designations of attainment and nonattainment, areas., By 201,3,'states must submit state implementation plans outlining how states will reduce ozone to meet the standards in nonattainment areas. Although the impact on Great Plains Energy's and KCP&L's operations will not be known until after the final nonatiainment designations ýand the state implementation plans are submitted, it could have a significant effect on Great Plains Energy's and KCP&L's results of operations, financial position and cash flows.

In January 2010, the EPA proposed to reconsider and further-strengthen the 2008 NAAQS for ground-level ozone. The EPA proposedto strengthen the primary eight-hour ozone standard to a level within the

,iange'of0.060-0.070 ppm. The EPA also proposed to establish'a distinct cumulative; seasonal secondary standard, designed to protect sensitive vegetation and ecosystems, to within the range of 7-15 ppm-hours.

• In December 2010, the EPA filed a motion requesting court approval for additional time, until July,2011, tofinalize the rule.

S02 NAAQS.

In June 2010, the EPA strengthened the'pr'imary NAAQS for SO 2. The EPA revised the primary S02 standard by establishing a new 1-hour standard at a level of 0.075 ppm. The EPA revoked the two existing primary Standards of 0.140 ppm evaluated over 24-hours and 0.030 ppm evaluated over an entire yeai. Although the impact on Great Plains Energy's and KCP&L's operations-will not be knowni until after the nonattainmen't designations are approved adnd the state implementation plans-submitted, it could have a significant effect on Great Plains Energy's and KCP&L's results of operations, financial position and cash flows.

Montrose'Station Notice of Violation ' " I.

In Jun62009, KCP&L received notification' from the MDNR alleging that its Montrose Station had excess particulate matter emissions in 2008. KCP&L is working with the MDNR to resolve this issue and management believes the outcome will have an insignificant impact to Great Plains-Energy's and KCP&L's results of operations,; financial'position and cash flows.' '

'1,0

Water- ,: .. ,-

The Clean Water Act and. associated regulations enacted by the EPA form a, comprehensive program to preserye water quality. Like the. Clean Air Act, states- are required to..establish regulations and programs to address all . .

requirements of the Clean Water Act, and have the flexibility to enact more. stringen.trequirements. All of Great Plains Energy's and KCP&L's generating facilities, and certain of their other facilities, aresubjecttothe Clean Water Act. ,, .,.

Section 316(b) of the Clean Water Act is designed to protect aquatic life from being killed or injured by cooling water intake structures. The EPA had previously issued regulations pursuant to Section 316(b) of the Clean Water Act regarding cooling water intake structures. Subsequent to an appellate. court ruling, the EPA, suspended the regulations and is engaged in further rulemaking on this matter. In December2010, in a court approved-,

settlement, the, EPA agreed to propose anewrule in March 2011 and to finalize it in July 2012. At this time-.

management is unable to predict how the; EPA will respond or how that response will impact Great Plains- ,

Energy's and KCP&L's operations. .

KCP&L holds a permit from the MDNR covering water discharge from its Hawthorn Station. The-permit.

"authorizes* KCP&L to, among other things, 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 outcomesare -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 significant impact on KCP&-L. - The outcome could also affect the terms of water permit renewals at KCP&L's.

latan Station and at GMO's Sibley and LakeRodid Stations. - . -.  : . "- - --

Additionally,-in- September 2009, the EPA announced plans to revise the existing standards for water discharges from coal-fired power plants. In November 2010, the EPA filed a motion reque*sting court approval of a consent

• agreement in which the EPA agreed to propose a rule in July 2012 and to finalize it in January 2014. Until a rule -

is proposed and finalized, the financial and operational impacts to. Great Plains Energy and KCP&L cannot be.

determ ined. - - . .. ... --- -

Solid Waste' Solid and-hazardous waste generation, storage, transportation, treatment and disposal is regulated at the federal and state levels under various laws and regulations. In May 2010, the EPA proposed to regulate coal combustion residuals (CCRs) under the Resource Conservation and Recovery Act (RCRA) to address the risks from the disposal of-CCRs generated from the.combustion of coal at electric generating facilities. The EPA.isconsidering two options in this'pr6posal. -Under the first proposal, the EPA would regulate CCRs as special wastes, subject to regulation under subtitle C of RCRA (hazardous), when they' are destined for disposal in landfills or surfacei impoundments. Under the second proposal, the EPA wvould regulate disposal of CCRs under subtitle D of RCRA-(non-hazardous): The Companies principally use coal in generating electricity and dispose of the CCRs in both on-site facilities and facilities owned by third parties. The proposed CCR rule has the potential of having a significant financial and operational impact on Great Plains Energy and KCP&L in connection with achieving compfiance with the proposed requirements. However, the. financial and operational consequences t6 Great Plains Energy and KCP&L cannot be determined until an option is selected by the EPA and the final regulation is enacted. .-

Remediation Certain federal and state laws,'including the Comprehensive Environmental Response, Compensation and Liability Act (CERCLA) hold current and previous owners or operators of real property, and any person who arranges for the disposal or treatment of hazardous substances at a property, liable on a joint and several basis for the costs of cleaning up contamination at or migrating from such real property, even if they did not know of and 1.11

were not responsible for such contamination. CERCLA and other laws also authorize the EPA and otheri agencies to issue orders compelling potentially responsible parties-to clean up sites that are determined to present an actual or potential threat to human health or the environment., GMO is named as a potentially responsible party! at two disposal sites for polychlorinated biphenyls (PCBs), and retains'some environmental liability for several operations and investments it no longer owns. In addition, GMO also owns, or has acquired liabilities from companies that once owned or operated, former manufactured gas plant (MGP) sites, which are subject to the-*

supervision of the EPA and various state environmental agencies.

At December 31, 201.0 and 2009, KCP&L had $0.3 million accrued for environmental remediation expenses, which covers ground water monitoring at a former MGP site. At December 31, 2010 and 2009,. Great Plains.

Energy had $0.4 million accrued for environmental remediation expenses, which includes the $0.3 million at KCP&L, and additional potential remediation and ground water monitoring costs relating to two GMO sites. The amounts accrued were established on an undiscounted basis and Great Plains Energy and KCP&L do not, currently have an estimated time frame over which the accrued amounts may be paid.

In addition to the $0.4 million accrual above, at December 31, 2010, GreatPlains Energy had $2.1 million.

accrued for the future investigation .and remediation of certain additional GMO identified MGP sites, PCB sites.

and retained liabilities. This estimate was based upon review of the potential costs associated .with conducting investigative and remedial actions at identified sites, as well as the likelihood of whether such action's-will be necessary. This estimate could change materially after further investigation, andcould.alsobe affected by the actions of environmental agencies and the financial viability of other potentially responsible parties.

GMO has pursued recovery of remediation costs from insurance carriers and other potentially responsible parties.

As a result of a settlement with an insurance carrier, approximately $2.3 million in insurance proceeds less an..

annual deductible is available to GMO to recover qualified MGP remediation expenses. GMO would seek recovery, of additional remediation costs and expenses through rate increases; however, there can be no: assurance that such rate increases would be- granted.

In January 2010, the EPA announced an advance notice of proposed rulemaking under CERCLA'identifying.

classes of facilities for which the EPA will develop financial assurance requirements, including the electric power generation, transmission and distribution industry. The CERCLA financial assurance would be for risks associated with Great Plains Energy's and KCP&L's production, transportation, treatment, storage or' disposal of CERCLA hazardous substances. The impact on Great Plains Energy and KCP&L cannot be determinedi until the regulations are finalized. . .. .

In April 2010, the EPA announced an advance notice of proposed rulemaking for the use and distribution in commerce of certain.PCBs, PCB items' and certain other areas of the PCB regulations. The-EPA is reassessing the use, distribution in commerce, marking, and storage for reuse of liquid PCBs in electric and non-ele'ctricf ,*.

equipment and the use of the 50 ppm level for excluded PCB products. among other things. The impact 6`h Great Plains Energy and KCP&L cannot be determined until the regulations are finalized... , 'I, Contractual Commitments ' . .. . -

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

2010 2009 2008 (millions)

Great Plains Energy $ 17.2 $ 23.4 $ 20.7

1' KCP&L $ 13.2 $ 19.3 $ 18.1 112

Great Plains Energy's and KCP&L's contractual commitments at December 31, 2010; excluding pensions and long-term debt, are detailed in the following tables.

GreatPlainsEnergy' 2011 2012 2013 .2014 2015 After 2015 Total Lease commitments (millions),

Operating lease $. 17.9 .$ 16.8 $ 15.0 $ 14.3 $ 13.5 $ 129.4 $ 206.9 Capital lease. 0.4 0.4 0.4 0.4. 0.4 5.5 7.5 Purchase commitments Fuel ' 348.7 '282.7 287:7 164.8 108.8 125.3 1,318.0 Purchased capacity 20.3 13.4 12.4 4.5 4.2 2.4 57.2 Non-regulated natural gas transportation 4.6 2.9 2.9 2.9 2.9 3.4 "19.6 Other 163.4 17.6 6.8 8.1 2.7 55.1 253.7 Totalcontractualcommitments $ 555.3 $ 333.8 $ 325.2 $ 195.0 $ 132.5 $ 321.1 $ 1,862.9 KCP&L

-,2011 2012 2013 2014 2015 After 2015 .' Total Lease commitments . . , . (millions)'

Operating lease.. $ 14.1 $ 13.1 $ 12.7 $ 12:5 $ 12.1 $ 129.4 '$ 193.9 Capital lease 0.2 0.2 0.2 0.2 0.2 . 3.2 . 4.2 Purchase commitments . .

Fuel 296.8 241.5 249.1 144.4 104.9 125.3 1,162.0 Purchased capacity 5.5 4.7. 3.7 2.9 3.0 1.2 21.0 Other ,. . , ' 127.5., 15.0 6.0 ' 7.3 . 1.9 40.8 198.5 Totalcontractualcommitments. $ 444.1 $ 274.5 $ '271.7 . $ 167.3 $ 122.1, $. 299.9. $ 1,579.6 Great Plains Energy has expected sublease income of $2.0 million for the 'years 2011-2013. Lease commitments end in 2032. Operating lease commitments include' rail oars 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 j($ 3.7 million total) of the amounts included in the table above. ' " "

Fuel commitments consist'of commitments for nuclear fuel, coal and coal transportation. -KCP&L and GMO purchase capacity from: other utilities and nonutility suppliers. Purchasing capacity provides the option to, purchase energy if needed or whenh market prices are 'favorable. KCP&L'ha*.capacity sales agreements' not included above that total $6.9 million for 2011, $3.8'million for 2012, and $1.6 million for 2013. Non-iegulated natural gas tran'spor-tation,conisists of MPS Merchani's commitments. Other represents individual commitments entered into in the ordinary course of business. : "' * " '

entered

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I I

16. LEGAL PROCEEDINGS KCP&L Hawthorn No. 5 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 n the U.S:District Court for the Eastern Districtof.Missouri in November 2005, against National Union Fire Insurance Company of Pittsburgh, Pennsylvania, (National Union) and KCP&L was added as a defendant in June 2006.

.The case was subsequently iransferred to the U.S. District Court for the Western District of Missouri. Travelers sought recovery of $10 million that KCP&L recovered through subrogation litigation. On July 24, 2008, the Court held that Travelers is.not entitled to any recovery from KCP&L. Travelers appealed this decision on March 11, 2009, to the Court of Appeals for the Eighth Circuit. 'In September 2010, the Court of Appeals affirmed the District Court's decision. The Company does not currently expect any further action with respect to this matter.

.KqP&L Spent Nuclear Fuel and Ridioactive Waste * .. .

-In January 2004; KCP&L and the, other'two Wolf Creek owners filed a lawsuit, against the United States, int&

U.S. Court of Federal Claims seeking $14.1 million of 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. -The Wolf Creek case was tried before a U.S. Court of Federal Claims judge in June, 20 10, and a decision was issued in November 2010, granting KCP&L and the other two Wolf Creek owners $10.6 million ($5.0 million KCP&L share) in damages. In January 2011, KCP&L and the other two Wolf Creek owners

as well as the United States filed appeals of the decision of the U.S. Court of Federal Claims to the U.S. Court-of Appeals for the Federal Circuit.

KCP&L Advanced Coal Credit Arbitration In July 2009, KCP&L was.served a notice to arbitrate by The Empire District Electric Company (Empire), Kansas Electric Cooperative, Inc. (KEPCO) and Missouri-Joint Municipal Electric Utility Commission (MJMEUC), the non-Company joint owners of latan No. 2. These joint owners asserted that they were entitled to receive proportionate shares (or the monetary equivalent) of approximately $125 million of.qualifying adyance coal project credits for latan JNo. 2. As independent entities, the'joint'owers are taxed separately and the not-Company joint owners do not dispute that they did not, in fact,.apply f6r.the credits themselves. Notwithstandiiig this, they contended that they should receive propo0ional sharies of the credit. On December 30, 2009, ann arbitration panel issued its order denying the KEPCO and MJMEUC' cikims but ordering KCP&L and Empire to jointly, seek a reallocation of the, tax credit from the IRS. giving Empire its representative percentage of the, total tax credit, worth approximately $17.7 milion; Theorder further specified that 1ffthe IRS denies the parties'.

reallocation request or if Emp'ire is-allocated less than its proportion'ate'share. of'the tax credits, KCP&I.will be responsible for paying Empire the full value of its representative percentage of the tax credits (less the amount of tax credits,.if any, Empire.ultimately:receives) in cash. In September 2010, theIRS issued an amended, memorandum of understanding to reallocate '$17.7 millioni of the original $125 million of the advanced!coal project credits to Empire, meeting the requirements of the arbitration order issued on December 30, 2009.

KCP&L subsequently dismissed its March 31, 20 10, appeal of the arbitration order. In 2010, KCP&L reversed a

$17.7 million liability previously recorded in other current liabilities for this matter.

latan Levee Litigation On May 22, 2009, several farmers filed suit against Great Plains Energy and KCP&L in the Circuit Court of Platte County, Missouri, alleging negligence, private nuisance, trespass and violations of the Missouri Crop Protection Act and seeking unspecified compensatory and punitive damages. These allegations stem from flooding at or near the latan Station in 2007 and 2008. The farmers allege the flooding was a result of maintenance of a nearby.

levee. The petition seeks class certification from the courts. Written discovery' and depositions are underway.

This matter is set for trial in Octobe.r2011. Management cannot predict the outcome of this matter.

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GMO PriceReportingLitigation .. "

In response to complaints of manipulation of the California energy market, in July 2001, FERC issued an order requiring net sellers of power in the California iiarkets"frmi October 2, '2000, through June 20, 20'01 .it p'rices above a FERC determined competitive market clearing price to make refunds to net purchasers of power in the California market during that time period. Because MPS'Merchant was a net purchaser of power during the refund period, it has received approximately $8 million in refunds through settlements with certain sellers of power. MPS Merchant estimates that it is entitled to approximately $12 million in additional refunds under the standards FERC has used in this case. FERC has stated that interest will'be. applied to the refunds but the amount of interest has not yet been determined. However, in December 2001, various parties appealed the FERC order to the.UnitedStates Court of Appeals for the Ninth Circuit seeking review of a number of issues, including changing the refund period to include periods prior to October.2, 2000. MPS Merchant was.a net seller of power during the period prior to October 2, 2000. On August 2, 2006, the U.S. Court of Appe.als for the Ninth Circuit issued an order finding, among other things, that FERC did not provide a sufficient justification for refusing to exercise its remedial authority under the Federal Power Act to determine whether market participantsviolated FERC- ..

approved tariffs during the period prior to October 2,.2000, and imposing a remedy for any such violations. The court renmanded the matter to FERC to determine whether-tariff violations occurred and, if so, the appropriate remedy. In March 2008, FERC issued an order declining to order refunds for the period' prior to October 2, 2000.:

That order has beenappealed to the US. Court of Appeals for the Ninth Cirýuit. If FERC ultimnately includes the period prior t6'October 2, 2000, MPtS Merchant could'be found to owe refunds.

FERC initiated a separate docket, generally referred to as the Pacific Northwest refund proceeding' to deterline if any refunds were warranted related to the potential impact of the California market issues on buyers in the Pacific Northwest between December 25, 2000, and June 20, 2001. FERC rejected the refund requests, but its decision was remanded by the Court of Appeals .for FERC to consider whether any acts of market manipulation support the imposition of refunds. Claims against MPS Merchant total $5.1 million for the periodaddressed under the Pacific Northwest refund proceedings.

In October 2006, the MPSC filed suit in the Circuit Court of Jackson County, Missouri against 18 companies, including GMO and MPS Merchant alleging that the companies manipulated natural gas pricesthrough the misreporting of natural gas trade data and, therefore, vi0lated.Missouri antitrust laws. The suif does not specify alleged damages and was filed on behalf of all local distribution gas companies in Missouri who bought and sold natural gas from June 2000 to October 2002. The defendants' motions to dismiss the case were granted in January 2009. In February 2009, the MPSC appealed the dismissal to the Missouri Court of Appeals for the Western District of Missouri. In December 2009, the Missouri Court of Appeals affirmed the dismissal and the MPSC filed a request for rehearing or, in the alternative, transfer to the Missouri Supreme Court. The Missouri Supreme Court accepted the transfer in April 2010, but-in September 2010, transferred the case back to the Court of Appeals, which then reaffirmed its earlier opinion. The Company does not currently expect any further action with respect to this matter.

17. GUARANTEES In the ordinary 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 letters of credit. 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.

115

At December 31, 2010, Great Plains Energy has provided $1,030.4 million of credit'support for GMO as follows:

• Great Plains-Energy direct guaranteess to'GMO counterparties totaling $65.4 million, .ofwhich $45.4 million expire in 201.1 and $20.0. million expire in2012, .

" Great Plains Energy letters of credit to GMO counterparties totaling $15.8 million, which expirei in 20.1,1, and.

" Great Plains*Energy,guarantee of GMO long-term debt totaling $949.2 million, which includes debt with

'maturity 'dates ranging from 2011-2023.:. .

Great Plains Energy has also guaranteed GMO's $450!million revolving line of credit dated August 9; 2010, with a group of banks; expiring August 9, 201-3. At December 31',-201,0, GMO had no outstanding cash borrowings and had issued letters Of credit totaling $13.2 million under this facility-

18. RELATED PARTY TRANSACTIONS AND RELATIONSHIPS '

KCP&L employees mana'ge GMO's business and'operatý its facilities- at cost. These costs totaled. $100.9 million for 2010, $102.7. million for 2009 and $41.0 million, for 2008, subseuent to-the July 14, 2008, acqulsion of GMO. Additionally; KCP&L and GMO engag6 in wholesale'electri~itý.transa~tions with each other. KC`P&L and GMO are also authorized to participate in the Great Plains Energy money pool, an internal financing" arrangement in which funds may be lent on a short-term basis to KCP&L and GMO. The following table summarizes KCP&L's related party receivables and payables.

December31t

.2010 2009

, ". "': (millions) .

Receivable from GMO $ 29.6 $ 26.4 - ,4' Payable to Great Plains Energy Services Incorporated - (0.2)

Receivable from Great Plains Energy .*13.3 - 15.1 Receivable from MPS Merchait 0.03 '0.9 7' . .: ,

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19. DERIVATIVE INSTRUMENTS Great Plains Energy and KCP&L are exposed to a variety of market risks including interest rates and commodity prices. Management has-established risk management policies and strategies to reduce the potentially adverse effects that the volatility of the markets may have on Great Plains Energy's and KCP&L's operating results.

Commodity risk management, activities; including the use of certain derivative instruments, are subject to the management, direction and control of an internal risk management committee. Management's interest rate risk management strategy uses derivative instruments to adjust Great Plains Energy's and KCP&L's liability portfolio to optimize th& mix'of fixed and floating rate debt within an established range. In.addition, Great Plains Energy and KCP&L use 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 expense caused by commodity price volatility. Counterparties to commodity derivatives and interest rate swap agreements expose Great Plains Energy and KCP&L to credit loss, in the event of nonperformance. This credit loss is limited to the cost of replacing these contracts at current market rates.. Derivative instruments, excluding those instruments that qualify for the normal purchase normal sale 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 yalue of derivative instrumnents are recognized currently in net income unless specific hedge accounting criteria are met; except GMO utility operations hedges' that are recorded to a regulatory asset or liability consistent with MPSC regulatory orders, as discussed below.

Great Plains Energy and KCP&L have posted collateral, in the ordinary course of business, for the aggregate fair value of all derivative instruments with credit risk-related contingent features that are-in a liability position. At December 31, 2010, Great Plains Energy and KCP&L have posted collateral in excessof the aggregate fair value of its derivative instruments; therefore, if the credit risk-related contingent features underlying these agreements were triggered, Great Plains Energy and KCP&L would not be required to post additional collateral to its counterparties.

The Dodd-Frank Wall Street Reform and Consumer Protection Act, signed into law in July 2010, includes provisions related to the swaps and over-the-counter derivative markets. The Companies currently expect that their commodity and interest rate hedges will be exempt from mandatory clearing and exchange trading requirements. Capital and margin requirements for these hedges are expected to be determined over the next year as regulatory agencies implement rules. While the Companies currently do not anticipate this law and the associated regulatory rules to have a material impact on their financial condition, the ultimate impact cannot be reasonably determined until the final rules are issued.'

Interest Rate Risk Management In August 2010, Great PlainsEnergy issued $250.0 million of long-term debt and settled two FSS simultaneously with the issuance of the long-term fixed rate debt. Great Plains Energy had entered into the two FSS with notional amounts of $125.0 million to hedge against interest rate fluctuations on a portion of the August 2010 debt issuance. The two FSS were treated as cash flow hedges with no ineffectiveness recorded in 2010 or 2009. A pre-tax loss of $6.9 million was recorded to OCI and is being reclassified to interest expense over the life of the three-year debt. At December 31, 2010, $0.9 million of the loss has been reclassified from OCI to interest expense.

In December 2009 and January 2010, Great Plains Energy entered into five FSS with total notional amounts of

$350.0 million to hedge against interest rate fluctuations on debt anticipated to be issued in 2011. The five FSS remove a portion of the interest rate variability on $350.0 million of the debt expected to be issued thereby enabling Great Plains Energy to predict with greater assurance its future interest costs on that debt. The five FSS are treated as cash flow hedges with no ineffectiveness in 2010 or 2009: At December 31, 2010, a $20.8 million loss was recorded in OCI for the five FSS. The FSS will settle simultaneously with the issuance of the underlying long-term debt expected to be issued. Any gain or loss on the settlement will be recorded to OCI and reclassified to interest expense over the life of the debt.

117

Commodity Risk Management-KCP&L's risk. management policy is to usederivative instruments to mitigate its exposure to market price, fluctuations on a portion~of its projected natural gas purchases to meet generation reqluirements, for retail and firm wholesale sales. At December 31, 2010, KCP&L has hedged 66%, 4.5% and 22%, respectively, of the 2011, 2012 and 2013 projected natural gas usage for retail load and firm MWh' sales, primarily by utilizing futures contracts, and financial instruments. The fair values of these instruments are recorded as derivative.assets or liabilities with effective, any..

an offsetting entry to OCI for.the effective portion of the hedge.. To the extent the hedges are not ineffective portion of the change in fair market value would be recorded currently in fuel expense. KCP&L has' not recorded any ineffectiveness on natural gas hedges in 2010, 2009 or 2008. ,

GMO's risk management policy is to use derivative instruments to mitigate price exposure to natural gas price volatility in the market. The. fair value of the portfolio relates to financial contracts that will settle against"actual .'

purchases of natural gas and purchased.power. At December 31, 2010, GMO had financial contracts in place to hedge, approximately 67%, 45% and 38% of the expected on-peak natural gas and natural gas equivalent purchased power price exposure for 2011, 2012 and 201.3, respectively. In connection with GMO's 2005 Missouri electric rate case, it was- agreed that the settlement costs of these contracts would be recognized in fuel expense. The settlement cost is included in GMO's FAC. A regulatory -assei has been recorded to.reflect the change in the timing of recognition authorized by the MPSC. To the extent recovery of actual costs incurred is allowed, amounts will not impact earnings, but will impact cash flows due to the timing of the recovery mechanism.

MPS Merchant manages the daily delivery of its remaining contractual commitments with economic hedges (non-hedging derivatives) to reduce its exposure to changes in market-prices.. Within the trading portfolio, MPS Merchant takes certain positions to hedge physical sale or purchase contracts. MPS Merchant records the fair value of physical trading energy contracts as derivative assets orliabilities with an offsetting entry to the consolidated statements of income.

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The notional and recorded fair values of open positions for derivative instruments are summarized in the following table. The fair values 0fthese derivatives are recorded on the consolidated balance sheets. The fair values below are gross valuesbefore netting agreements and netting of cash collateral.  :... .

December 31 2010 2009 Notional Notional Contract Fair  :-Contract - Fair

",Amount Value Amount Value Great Plains Energy (millions)

Futures contracts Cash flow hedges $ '4.0 $ ' $ -'3.2 "

Non-hedging derivatives 59.5 *(2.5). 29.8 (0.9)

Forward contracts Non-hedging derivatives 202.8 8.9 234.4 9.1 Opti6n contracts '"

Cash flow hedges ... 2.3 0.2 Non-hedging derivatives 0.2

.Anticipated debt issuance Forward starting swaps 350.0 (20.8) 362.5 (0.7)

KCP&L ,

Futures contracts ,

Cash flow hedges . 4.0 3.2 -

Option contracts " .

• Cash flow hedges. 2.3 0.2, The fair value.ofGreat'Plains Energy's and KCP&L's open derivative positions are summarized- in the following tables. The tables contain derivative instruments designated as hedging instruments as well as derivative instruments not designated as hedging instruments (non-hedging derivatives) under GAAP. The fair values below are gross values before netting agreements and netting of cash collateral.

Gredt PlainsEnergy

. " . Balance Sheet - Asset-Derivatives liability Derivatives December 31, 2010 .... . , * . . Classification - Fair-Value' ,- .Fair.Value Derivatives Designated as Hedging Instruments (millions)

Commodity contracts Derivative instruments $ 0.1. $ 0.1 Interest rate contracts Derivative instruments 20.8 Derivatives Not Designated as Hedging Instruments Commodity contracts Derivative instruments -9.4 3.0 Total Derivatives $ 9.5 $ 23.9 December 31, 2009 Derivatives Designated as Hedging Instruments Commodity contracts Derivative instruments $ 0.4 $ 0.2 Interest rate contracts Derivative instruments 0.7 Derivatives Not Designated as Hedging Instruments Commodity contracts Derivative instruments 9.9 1.7 Total Derivatives $ 10.3 $ 2.6

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KCP&L *"" I  :

.-. .'Balance *,. Sheet Asset Derivative's Liability Deiivatives December 31, 2010 Classification Fai~r Value Fair Value

Derivatives Designated as Hedging Instruments (millions)

Commodity contracts ." Derivative instruments $ 0.1 $ 01 December 31, 2009 Derivatives Designated as Hedging Instruments Commodity contracts . . Derivative instruments $ 0.4 $ 0.2 The following tables summarize the amount of gain (loss) recognized in OCI or earnings for interest rate and commodity hedges.

GreatPlainsEnergy Derivatives in Cash Flow-Hedging Relationship Gain (Loss) Reclassified from

'Accumulated OCI into Income (Effective Portion)

Amount of Gain (Loss) Recognized in OCI on Derivatives Income Statement.

(Effective Portion) Classification Amount 2010 (millions) (millions)

Interest rate contracts . $ (27.1) Interest charges $ (10.1)

Commodity contracts (0.9) Fuel (0.5)

Income taxbenefit (expense) 10.8 Income taxbenefit (expense) 4.0 Total. - $ (17.2) Total $ (6.6) 2009 . ,,. .* .

Interest rate contracts $ 0.4 Interest charges $ (8.0)

Commodity contracts (0.8) Fuel .. .. (1j1)

Income taxbenefit (expense) 0.1 Income tax benefit (expense)' 3.5 Total . ,$ (0.3) Total $ (5.6)

,.,- . . - I" 120

KCP&L .

Derivatiws in Cash Flow Hedging Relationship Gain (Loss) Reclassified from Accumulated OCI into Income

, (Effectiw Portion)

. . .... ..  :; ... .Amount of Gairff . . . .

. (Loss) Recognized

. in OCI on Derivatiws Income Statement (Effectiw Portion) Classification Amount 2010 , ,- (millions) (millions)

Interest rate co..tracts $ . Interest charges " $ (8.8).

Commodity contracts .'(0.9) i' Fuel . ... - (0.5)

Income taxbenefit (expense) 0.3 Income taxbenefit (expense) 3.6 Total - "K, $- (0.6)' ' Total -:$ .(5.7);

2009 .--. ., . . ., * . . .

Interest rate contracts " $ 1.0 Interest charges $ (7.5)

Commodity contracts ' - " (0.8). ' Fuel " . "

• Income taxbenefit (expense) * . .. , (0.1). .Incomeh.. taxbenefit (expense) 3.3 Total ' . . . $ 0.1 ... .Total .. $ (5.3)

The following table summarizes ihe amount of gain (loss) recognized in a regulatory balance sheet account or earnings for GMO utility commodity hedges. GMO utility commodity derivatives-fdir value changes are recorded to either a regulatory asset or liability consistent'With MPSC regulatory orders.* ' -

GreatPlainsEnergy ... - .......... .......

Derivatives in Regulatory Account.Relationship , -:,

- Gain (Loss) Reclassified from

- Regulatory Account Amount of Gain (Loss)'-  ;

Recognized on Regulatory..

Account on Derihatives Income Statement (Effectiw Portion) Classification Amount (millions) . 2 (millions) 2010 Cobmnodity contractC' - 2 $ (8.2) . P u. l , .d . .

- '<" $ (7.2)

Toial $. (8.2) . Ttal $

2' 0 - ,. I . ,

" Commodity contracts $' ('8) . u.I $: (20.5j Total $ .(12.8)  : - Total -." $$: (20.5) -

GreatPlains Energy's income statement.reflects a loss for the.change in fair Value of the MPS Merchantcommodity contract derivatives, notdesignated as hedging instruments of $0,2 million for 2010 and a gain of $1.6 million for..-,,

2009. - -, . -,

1M21

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

" Great Plains Energy KCP&L December 31 December 31

- 2010 2009 2010 2009 (millions)

Current assets $ 12.0 $ 13.3 $ 12.0 $ 13.3 Current liabilities (101.5)* " (84.9) (71.6) (81.2)

Noncurrent liabilities - J(0.5) ... .

Deferred incomentaxes 34.8 28.0 23.2 26.4 Total $ (54.7) $ (44.1) $ (36.4) $ (41:5)

Great Plains Energy's accumulated OCI in the table above at December 31, 2010, includes $15.6 million that is expected to be reclassified to expenses over the next twelve months. KCP&L's accumulated OCI includes $8.8 million that is expected to be reclassified to expense over the next twelve months.

The amounts reclassified to expenses for 2008 are summarized in the following table.

2008 Great Plains Energy (millions)

Fuel expense $ (2.3)

Interest expense 2.8 Income taxexpense ." ,,(0.2)

Income (loss) from discontinued operations Purchased power expense (106.1).

Income taxes 43.8 OCI . $"(62.0)"'

KCP&L Fuel expen se $ (2.3)

Interest expense . 2.5 OCI $ 0.2

'7 RAfliVATT1JFX41WAQT1rJ1WX4VNTQ GAAP defines fair value as the price that would be received to sell an asset or paid to transfer a liability in 'an orderly transaction between market participants at the measurement date. GAAP establishes a fair value, hierarchy, Which.lrioritizes the inputs to valuation techniques used to measure fair value into three broad categories, giving the highest priority to quoted prices in active markets for identical assets or liabilities and lowest priority to unobservable inputs. A definition of thevarious levels, as well as discussion of the various measurements Within the levels,.is as follows:

Level 1 - Unadjusted quoted prices for identical assets or liabilities in active markets that Great Plains Energy and KCP&L'have acceSS to at the measurement date.; Assets categorized within this level'corisist of Great Plains' Energy's andKCP&L'S'various exchange traded den v"tive instruments and equity and U.S.: Treasury securities that are actively traded within KCP&L's decommissioning trust fund and GMO's SERP rabbi trust fund.

Level 2 - Market-based inputs for assets or liabilities that are observable (either directly or indirectly) or inputs that are not observable but are corroborated by market data:. Assets and liabilities categorized within this level consist of Great Plains Energy's and KCP&L's various non-exchange traded derivative instruments traded in

'122

over-the-counter 'ifarkets and certain debt securities-within KCP&L' s' dcorimissioning' trst fund and GMO's SERP rabbi trust fund. .

L Level 3- Unobservable inputs, reflecting Great Plains Energy's and KCP&L's own assumptions about the assumptions market participants would use in pricing the asset or liability. Assets categorized within this level*"

consist of Great Plains Energy's various non-exchange traded derivative instruments traded in over-the-counter markets and certain debt securities within KCP&L's decommissioning trust fund for which sufficiently observable market data is not available to corroborate the valuation inputs.

t2t 123

Thefollowing tables include Great Plains.Energy's'and KCP&L's balances.:ffinanclaassets-and liabilities ,

measured at fair value on a recurring basis at December 31, 2010 and 2009.

.. " Fair.Value Measurements: Using Quoted Prices in-

"iAiivle Significant Markets for Other Significant Identical Observable Unobservable December 31 Assets Inputs Inputs Description 2010 Netting(d) (Level 1) (Level 2) (Level 3)

KCP&L (millions)

Assets Derivative instruments (a) $ $ (0.1) $ 0.1 $ $

Nuclear decommissioning trust (b)

Equity securities 85.5 85.5 Debt securities U.S. Treasury 8.9 8.9 -

U.S. Agency 4.8 - 4.8 State and local obligations 2.5 - 2.5 Corporate bonds 23.7 - 23.7 Foreign governments 0.7 - 0.7 Other 0.4 - 0.4 Total nuclear decommissioning trust 126.5 94.4 32.1 Total 126.5 (0.1) 94.5 32.1 Liabilities Derivative instruments (a) - (0.1) 0.1 -

Total $ (0.1) $ 0.1 $ $

Other Great Plains Energy Assets Derivative instruments (a) $ 8.9 $ (0.5) 0.5 $ 5.2 3.7 SERP rabbi trust (W)

Equity securities 0.2 0.2 Debt securities 7.0 - 7.0 Total SERP rabbi trust 7.2 0.2 7.0 Total 16.1 (0.5) 0.7 12.2 3.7 Liabilities Derivative instruments (a) . 20.8 (3.0) 3.0 20.8 Total $ 20.8 $ (3.0) $ 3.0 $ 20.8 $

Great Plains Energy Assets Derivative instruments (a) 8.9 $ (0.6). $ 0.6 $ 5.2 * $ 3.7 Nuclear decommissioning trust (b) 126.5 94.4 32.1 SERP rabbi trust W 7.2 0.2 " 7.0 Total 142.6 (0.6) 95.2 44.3 3.7 Liabilities Derivative instruments (a) 20.8 (3.1) 3.1 20.8 Total $ 20.8 $ (3.1) 3.1 $. 20.8 $

.-124

Fair Value Measurements Using Quoted

" ,; " " Active Significant

- .... , . ,°, . ,Markets~for ...... Other.

.J Significant

" * , .. Identical Observable-,. t: Unobservable

• .r:Decemberi31 . . " Assets .. ,.. Inputs. " . Inputs Description 2009 Nettingd (Level 1) (Level 2) (Level 3)

KCP&L -, **,(il -

A ssets., . . - ,..j* S . .. . ,

Derivative instruments (a) $ 0.2 $ (0.2) $ 0.2 $ 0.2 $

Nuclear decommissioning.trust- .

Equity securities......... ... . 44.5' -, - . . -,445 44 " .

Debt securities U.S. Treasury' 11.2 11.2 -

U.S. Ageiicy 3.5 3.5 State and local obligations 3.1 .... 2.9 0.2 Corporate bonds '18.9' 18.9 -

Foreign ggvemets 0.7 - " 0.7 Other 1.2 . 1.2 Total nuclear decommissioning trust 83.1 - 55.7 27.2 0.2 Total 83.3 (0.2) 55.9 1'127.4'. " 0.2 Liabilities .

Derivative instruments (a) (0.2) 0.2 ""-

Total . . ,$ $ (0.2) $ - _ $ 0.2 $

Other Great Plains Energy . ........ . .

Assets , . ,,

Derivative instruments (a) $ 9.2 $ (0.7) $ 0.7 $ 5.1 $ 4.1 SERP rabbi trust (c)

Equity securities '.02 - 0.2 "" ' ,

Debt securities 6.9 - 6.9 Total SERP rabbi trust 7.1 0.2 6.9 Total 16.3 (0.7) 0.9 . 12.0 4.1 Liabilities Derivative instruments (a) 0.8 (1.6) 1.6 0.8 Total *$ 0.8 $ (1.6) $ 1.6 $ 0.8 $

Great Plains Energy Assets Derivative instruments (a) $ 9.4 $ (0.9) $ 0.9 $ 5.3 $ 4.1 Nuclear decommissioning trust (b) 83.1 55.7 27.2 0.2 SERP rabbi trust (c) 7.1 0.2 6.9 Total 99.6 (0.9) 56.8 39.4 4.3 Liabilities Derivative instruments (a) 0.8 (1.8) 1.6 1.0 Total $ 0.8 $ (1.8) $ 1.6 $ 1.0 $

(a) The fair value of derivative instruments is estimated using market quotes, over-the-counter forward price and volatility curves and correlations among fuel prices, net of estimated credit risk.

(b) Fair value is based on quoted market prices of the investments held by the fund and/or valuation models.

The total does not include $2.7 million and $29.4 million at December 31, 2010 and 2009, respectively, of cash and cash equivalents, which are not subject to the fair value requirements.

.125

(c) Fair value is based on quoted.market prices of the investments held by the fund and/or valuation modelsk.

The"total does not include $14:6 million and $16.2 million at December 31, 2010 and 2009, respectively, of cash and cash equivalents, whichare not subject to the fair value-requirements.

(d) Represents the difference between derivative contracts in an asset or liability position presented on a net basis by counterparty on the consolidated balance sheet where a master netting agreement exists between the Company and the counterparty. At December 31, 2010 and 2009, Great Plains Energy netted $2.5 inillion and $0.9 million, respectively, of cash collateral posted with-counterparties.

m The following tables reconcile the beginning and ending balances for all level 3 assets and liabilities, net measured at fair value on a recurring basis for 2010 and 2009.

Fair Value Measurements Using Significant Unobservable Inputs (Level 3)

Other Great Great Plains Plains KCP&L Energy. ,Energy State & Local Derivative Obligations instruments Total (millions)

BalanceJa'n'uary 1,20O 1 . . $ . 0.2 ..$ ,;4.1 $ '43.

Total realized/unrealized gains or (losses)

Included in non-operating income. ........... (12.5) .... (1ý2.5)

Sales . , (0.2) .(0:2)

Settlements 12.1 12.1 Balance December 31, 2010 $ $ 3.7 $ .3.7 Total unrealized gains and (losses) included in non-operating income relating to assets and liabilities still on the consolidated balance sheet at December 31, 2010 $ $ 0.1 $ dO I' I

J:

126

Fair Value Measurements Using Significant Unobservable Inputs (Level 3)

'* .. ' o*-( , o*,, .-  ;  : , , ,,*

.. . *:O ther , - *. ° Great Great

• . Plains Plains KCP&L 'Energy Energy

• U.S. Mortgage U.S. State & Local Backed Dn*vative Description Agency . Obligations Securities Total Instruments Total

. . . . (millions)

Balance January 1, 2009............ ........ $ ..3.9. $ . .. $ 2.9 . $. 6.8 $. .3.8

- $ 10.6 Total realized/unrealized gains or (losses)

Included in regulatory' liability " - 1.1 1. . 1.1 Included in nofi-operatfng.income. - .... '"1.2 1.2 Purchase, issuances, arid ettlements--. .. .(3.9)-.. .... (4.0) - (7.9)-.. (0.9) (8.8)

Transfers in and/or out of Level 3 0.2 0.2 0.2 Balance December 31, 2009 " $ $ 0.2 $ $ 0.2 $ '4.1 $ 4.3 Total unrealized gains and (losses) include~d in non-operating income relating to assets-and'liabilities ýstill . ...................... ...

on the consolidated balance sheet at December 31, 2009 $ $ - $ $ " $ 0.8 $ 0.8 Investments in Affordable Housing Limited artners.hip...........

Nearly all of Great Plains Energy's investments in affordable housing limited partnerships were recorded at cost; the equity method was used for the remainder. Accounting guidance requires entities to evaluate whether an event or change in'circumstan6e9 has occurred that may have a significant adverse effect on the fair value of the investment (an impairment indicator). During 2010, an impairment indicator occurred;,.which required Great Plains Energy to eviluate if its cost method jny.estments .i.naffordable housing !imited partnerships, were impaired.

The value of these investment§ is derived fidmfi tak credits and potential cash-distributions-from the partnerships upon sales of the underlying properties. All of the tax credits have been received and management does not anticipate receiving any cash distbutio.ns-from'the partnership; therefore, mnanagement concluded that the investments were inpioired and thaft the impairmnen. was other than temporary since the partnerships ar& in the process of liquidating over the.iexi 2 3 years. As a result of the evaluation, management concluded that the cost method investments have no value and acc6rdingly, Great Plains Energy recorded an $11.2 million, pre-tax impairment loss in non-operating expense.on the consolidated income statement.

127

21.'Com eSo Components of income tax expense are detailed in the following tables.

Great Plains Energy..., 2010 2009 2008 Current income taxes ........ .... (millions)

Federal " .. $ (7.4) $ (11.1) $ (21.0)

State , (4.3) (0.9) 1.1 "Foreignr . " 0.1- 1.3 Total .. , (11.6) (10.7) (19.9)

Deferred income taxes 1~

Federal 99.8 (13.6) 3.3 State 24.0 10.0 40.8 Total 123.8 (3.6)ý 44.1 Noncurrent income taxes

,, Federal' .......... (4.8) 8.3 (0.6),.

-(1.8) .. 1."

1.t -- (1*

) .. . .a ... . ..

State 0.5 (1.5)

Foreign Total

'(6.1)' 7.9 S(1.65 Investment tax credit . . 74.2 Deferral (4.2) 37.2- 74..

Amortization (2.9) (2.2) (1.8)

Total,....... .'. (7.1) . 35.0= "72.4 ¶ Totalincome taxexpense " .. '. ... ' ... . 99.0 .,. 28:6. . .,95.0.

Less: taxes on discontinued operations Cu'rrent taxexpense. . -. . . . ...a

. . . . ,- .2.1.1) .5.8;r

, :"*Deferred.-taxexpense . .

01 0.9 45

" - ,Noncurrent-income tax expens~e T_ T Do ~.

UIIA.*UIl* c~aA1AyIfl* a1 1UII fItUlUUlII .Up*Ina.tnlIfl  ! .', Z. U . 4' l.Y.J at .P1 20U.O 0 . *.

KCP&L 2010 2009 '-..- 2008 Current income taxes . . * (millions) "

f, ederl,. .... .- ... . $- 5.5. ,J.-,$,a41.2 $ (8.0)

State - . , . .- 1.1 .. . :... 4.8 ,*.. ., 4.5 Total 6.6 46.0 (3.5)

Deferred income taxes Federal 69.8 (41.7) .'(38.4)

State 13.4 3.5 30.9 Total 83.2 (38.2) (7.5)

Noncurrent income taxes Federal (1.6) 3.4 (1.7)

State (0.3) (0.1) (0.3)

Total (1.9) 3.3 (2.0)

Investment tax credit Deferral (4.2) 37.2 74.2 Amortization . (2.1) (1.4) . (1.4)

Total (6.3) 35.8 72.8 Total $ 81.6 $ 46.9 $ 59.8 128

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

Income Tax Expense Income Tax Rate Great Plains Energy.. 2010 .. 2009 2008 2010 2009 2008 (millions)

Federal statutory income tax .. ,5.-. $ 108.7 $ 63.4 $ 64.2 . 35.0 % J35.0 -% ,, 35.0 %

Differences between book and tax .

depreciation not nornalized (5.2) (9.9) (5.4) (1.7)' (5.5) (2.9)

Amortization of investment tax credits (2.9) (2.2) _,(1.8) -(0.9) ,:(2) (1.0)

Federal income taxcredits. (12.5) (8.0) (10.2) (4.1) 0 ., (4.4) (5.6)

State income taxes 11.4. 7.9 3.2 3.7 4. - , 1.8 Rate change, on deferred taxes -- - _9.3 1 - ,.-. .. 10.5 Medicare Part D subsidy*legislation- 2.8 ......-. 0.9

0. ..  ; - - -

Changes in uncertain taxpositions, net- 0.3, (72.1) 0.1 0.1 (39.8) 0.1 GMO transaction costs . - - *. (1.9) . -, (1.0)

Valuation allowance . (2.7) 55.8 (0.9), 30.8 -

Other .; .' . . (0.9) (5.4) (3.7). .-.. (0.3) t(3.0) (2.1)

Total .. $ 99.0 $ 29.5 $ 63.8 . 31.8 ,%i .. 16.3. % 34.8 %

,: ' .Income Tax Expense  :-Income Tax Rate:

KCP&L 2010 2009 2008 2010 .2 009. 2008 (millions) -. . . .,

Federal statutory income tax . $ 85.7 $ 61.5 $ 64.7-,-*, 35.0.,0 - -,,35.0. % 35.0 %

Differences ,between bookand tax . . (

depreciation not normalized (4.5) (7.7) ..,(5.2) (1.8) (4.4) (2.8)

Amortization of'investment:taxcredits *, (2.1)' (1.4) . (1.4) (0.9). .. (0.8) (0.8)

Federal income tax credits . (8.5). (7.8) (9.8) (3.5) . (44) ., (5.3)

State income taxes . ,. 8.9, 5.8 3.8 '. 3.6,.. 3.3 .. 2.1 Medicare Part D subsidy legislation . " 2.8 '1 . - ... 1.1-. .,) . -

Changes 'in uncertain taxpositions., et - J.(0.5) (0.6)" - (0.3) - (0.3)

Parent company taxbenefits (a) - - (6.7) - - (3.6)

Rate change on deferred taxes * * ..- . - - 20.3 " 11.0 Other . - -(0..7) (3.0) (5.3) (0.2) "(1.7).., . (3.0)

Total $ 81.61 1 ..$"1 46.9 $ 59.8 . 33.3 % 26.7 % . newýI 32.3 %

(a)

The tax sharing between Great Plains Energy and its subsidiaries was modified onJuly 14,2008. As part of the new agreement, parent coi'npariy-tax benefits are no lohg~e allocated.to KCP&L or othefsubsidiaries.

Great Plains Energy and KCP&L are required to adjust deferred tax assets and liabilities to reflect tax rates that are anticipated to be in effect when timing differences reverse. Due to the 2008 sale of S.tategic Energy, L.L.C..,.

(Strategic. Energy), the composite tax. rate for. the companies was exxpected to increase as,.a result of the ,change in.

composition of states that Great.Plains Energy. conducts business. Therefore,deferred tax assets and liabilities were adjusted in 2008 to reflect the expected, increase in the composite tax rate. Tlhe impact 6f.the increase in the composite tax rate on.deferred tax assets and liabilities. resulte~d in tax-expense forGreat Plains Energy and KCP&L of-$19.3 million and $20.3 million, respectjiyely, at December, 3.1,.2008. ..... , ..

129

Deferred Income Taxes - j.

The tax: effects of maj ortemporary differences resultingin deferred income tax assets.(liabilities):in; the I",1 consolidated balance sheets are in the following tables.

-GreatPlalins Eniergy. KCP&L "

December 31 "2010 2009 2010 2009 Current deferred hicome taxes (millions)

Net operating loss carryforward $ $ 30.4 $ $.';,"

Other - 14.7. 7.8 5.6 0.3" Net current deferred income tax asset before valuatio0n allowance 14.7 38.2 5.6 0.3; Valuation allowance (0.4) (1.4)

Net current deferred income taxasset 14.3 36.8 Noncurrent deferred income taxes Planf related * (975.5) (854.7): (.711"5) ',. (631.0)

Income taxes on future regulatory recovenes (142.6) (104.5) (117.2) (77.6)* ,

Derivditive instrurmnts - 46.0 39.3 34.4 37.4

.1.6.3) (4.5) _2.0 ... . _6.5 Pension and postretirementbenefits.

_SO2 emion allowa'ce. sales 30.3 33.4. 34.51i Fuel clause adjustments (16.6) (17.6) (3.2) 0.2' Transition-costs., (.20,.0) (!19.2) (11.4),.

(11.4)..

Tax credit darryfoiwards  ; ' 204.3 202.4 101.5 97.6

.Long-terfi debt_fair value adjustisnen. - 19.21' 32.5.

Customer denmnd programs (23.3) (16.5) (17.3) (13.8)

Net operating loss carryforward- .409.2 .361.3 1.1 Other (7.3) (1.6) (3.8) ... . (2.4)`° Net noncuirent deferred tax liability before valuation allowance (492A1) (353.5). (692.0): (559.4)

Valuation allowance (26:2) (28.4) -

(51f8:3) (381.9) (692.0) ""(559.4,)

Net noncurrent deferred tax liability Net deferred income tax liability $ (504.0) $ (345.1) $ (686.4) .. $ (559.1).

Great Plains Energy ..:-;KCP&L - i December 31 2010': 2009 2010 2009

- * (millions)

.1. 1. ý - - i, Gross deferred income taxassets $,1,140.7.. $1,126.4 . $, 602.4 $ 597.9 Gross deferred income tax liabilities (1,644.7): (1,471.5) (1,288.8). (1,157.0)

Net deferred income tax liability $ (504.0) $ (345.1)" $ (686.4) $ (559.1)

TaxCre'ditCarryforwitrds h d $901million, res 'ectiv 1ý1: of At December ý,31-,:2010 and 2009,1'Gr6f Plains E erkX had $1016'rnillion'an p e federal 'general. business income -tax*creditcarryforwards;. At December 3 1, -2010 1and 2009,'KCP&L had,$101.5 million"and $97.6-million, r6sp&tivelý, of federal'genetal busines's inýome tax credit ca*forwards.'The, carryfor'ward§ for both'dýeat Plaiiis*Energy and KC P&L relate"primarily to Advanc 6d Coal-Investment -Týx Credits and Wind Production tax credft.s and ýxpire in years 2028 to 2030.".Approximately'ý0.5'm'illio'n' of Gr6t Plains Energy's credits are related to Low Income Housing credits that were acquired in the GMO acquisition.

Due to federal limitations on the utilization of income tax attributes acquired in the GMO acquisition, management expects these credits to expire unutilized and has provided a valuation allowance against $0.4 million of the federal income tax benýfit.

'130

At December 31,2010 and 2009, Great Plains Energy had $90.0 million and $87.6 million, respectively, of,.,

federal alternative minimum tax credit carryforwards. Of this amount, $89.8 million was acquired, in the GMO acquisition. These credits do not expire and can be used to reduce taxes paid in the -future.

At December 31, 2010 and 2009, Great Plains Energy had $11.8 million and $16.2 million, respectively; of state-income tax credit carryforwards. The state income tax credits relate primarily to the Company's Missouri.)

affordable housing investment portfolio, and the carryforwards expire in years 2011 to 2015.: Management expects that a portion of these credits Will expire unutilized and has provided a valuation allowance against $0.6 million of the state income tax benefit. ... , -'- , . -.-

Advanced Coal Credit In April 2008; KCP&L was notified that its, application filed in 2007. for $125.0 million in advanced coal investment tax credits (ITC) was approved by the IRS. The credit is-based on the amount of expenses incurred on the construction of iatan No. 2. Additionally,.in order to meet the advanced clean' coal staridards andavoid forfeiture and/or the recapture of tax credits in the future, KCP&L must meet or exceed certain environmental :

performance'standards for at least five' years once the plant is placed in service.,,,,

In September 2010, the IRS issued an amended memorandum of understanding to -reallocate $17.7 million of the original $125. million of the-advanced coal project credits to Empire, meeting the requirements of an arbitration order issued on December 30, 2009. See Note 16 for the related legal proceeding., As a result,,.Great-plains Energy and KCP&L reduced the amount of advanced coal credit previously recognized: The amount, of deferred federal tax expense associated with the reduction in 2010, was $4.2 million. Since the tax laws require'KCP&L to reduce income tax expense for ratemaking and financial statement purposes ratably over the life of the plant, Great Plains Energy and KCP&L concurrently recognized a separate deferred advanced c6alITC.benefit to.offset the current and deferred federal tax expense. Great Plains Energy and KCP&L recognized $0.7 million ofITC .ini 2010 after the plant was placed in service and will continue-to recognize. the tax benefits over the life of the-plant.

At December 31, 2010, Great Plains Energy and'KCP&L had-$106.6 million of deferred~advanced.coal ITC..

Net Operating Loss Carryforwards At December 31, 2010 and 2009, Great Plains Energy had $353.0 million and $337.5 million, respectively; of taix benefits related to federal net operating loss (NOL) carryforwards. Approximately $317.5 million and $320;5, million, at.December,31, 2010 and 2009, respectively,,are tax benefits related to .NOLsthatwere,.acquired in the GMO. acquisition.: The tax benefits for NOLs originatifig in 2003 are $34.4 million, $152.4 million originating in 2004, $74. 1.million originating in 2005, $53.3. million originating in 2006, $1.3 million.originating in 2007,, $2.5 million originating in 2008, $26.9 mrillion originating in 2009 and $8.1 million originating in.2010. The federal NOL carryforwards expire in' years 2023' to 2030. ' ".

In addition, Great Plains Energy also had deferred' tax benefits of $56.2 milli6dnand-$542 million related to state NOLs as of December 31, 2010 and 2009, respectively. Approximately'$49.4 million and $49.'9 million atv' December 31,,2010 and 2009, respectively, were acquired in the GMO acquisition. Managemeit-does 'notexpect to utilize $25.7 million of NOLs in state'tax jurisdictions where the Company does not expect to opeiate; in the future.: Therefore, a valuation allowance has been prbvided against $25.7 million of state tax bendfits*'

Valuation Allowances ' . .. '

Great Plains Energy is required to assess the ultimate realization of deferred tax assets using a "more likely than not" assessment threshold. This-assessment takes into considerationtax planning, strategies within. Great-Plains. ,,

Energy's control. As a result.of this, assessment, Great Plains Energy has established a partial valuation allowance for federal and state-.tax NOL:carryforwardsý,and tax credit.carryforwards.':,. - :". .

During 2010 and 2009, $3.2 million of tax benefit and, $6.5. million of.tax' e ense,respectivel-y,on~continuing operations was recorded .and primarily relates to aportionof the valuation allowance against federal.and, state...

.131

NOL carryforwards. The remaining valuation allowances, against federal and state NOL carryforwards and'*tax credit carryforwards were acquired in the GMO acquisition and were recorded as a part of the purchase accounting entries impacting goodwill. .. ,. .. . ..

UncertainTax Positions *. .: .. .

At December. 31 2010 and 2009, Great PlainstEnergy'had $42.0 million'and,$51 .4 million, respectively,. o6 liabilities' related ýto unrecognized tax benefits:, Of these amounts, $17.3 million at December 31,2010 and 2009,:

is expected to impact the effectii,e tax rate if recognized. The $9.4 millioni decrease in unrecognized-tax benefits is primarily due to a decrease of $8.6 million of unrecognized tax benefits related to the sale-of certain GMO property during 2010.

At December 31, 2008; Great Plains Energy had $97.3 million of liabilities.related to unrecognized tax beniefits of which $80.2 million. is expected to' impact the effective rate if recognized. The.$45.9 million decrease in , .

unrecognized' tax benefits in 2009 was primarily due to a decrease of unrecoghized tax benefits of $74.5 million.

related:to the Joint Committee on Taxation approval'of the IRS audit'for GMO's 2003-2004 tax years, offset by.

an increase of $11.3 million of unrecognized' tax benefits related to prior year tax positions takeh on GMO tax',

returns, and a $20.5 million increase of unrecognized tax benefits related to Great Plains Energy consolidated 2008 and 2009 tax years. The tax benefits recognized related to the 2003-2004 IRS audii'were also offset by an.i increase in valuation allowance'for federal. and state .net: operating losses of $5610..million hnd a reduction in deferred income tax assets of $2.5-million, .which 'esulted in an increase to netincome of $1.6.0 millioWin 2009.

related to the, 2003-2004 IRS~audit. . . ' . . . .

At December31, 2010 and 2009, KCP&L had $19.1 and $20.9 million, respectively, of liabilities related to"-.,,

unrecognized.tax benefits. Of these amounts, $0.3 million at December 31, 20.10,'and $0.4 million at Deceinber,'

31, 2009, are expected to. impact the effective tax rate if recognized. The $18 million decrease in unrecognized ,

taxbenefits is primarily due to a $2.6 million.decrease asýaxresult of the settlements of the IRS audit.for the iGreat Plains Eneigy consolidated 2005 .tax year.' At December 31, 2008,' KCP&Lthad'$17.6 millionof liabilities related to unrecognized tax benefits of which $1.1 million is expected to impact the effective rate if recognized.

The following table reflects activity for Great Plains Energy and KCP&L related to. the liability 'for unrecognized tax benefits;: * ' . , .. . . . '. ".

,. .... . .... ., GreatPlains Energy - . . KCP&L, . J '

.2010 ,: 2009,- , 2008 2010, 2009. 2008.

.(millions)>. ,

Balance at January 1 $ 51.4 $ 97.3 ",1$ 21.9 ,$ 20.9. $. 17.6 $ .9.6 1.-

Additions for current year taxpositions. 2.7 13.2 5.3 1.3 3.9 iý3.8 Additions, for prior year tax positions '2.1 .8.2,. 2.*6. -. ,:1.5. 3.0 2.6 12*.

Additions for UMO prior, year taxpositions.. 11.6., ,.,- 77.0, Reductions forprioryeartaxpositions (10.6). ,(1.3) (0.8) (1.6) ,(0.8) ; .(0.7)

Settlements:......-,.** .. (3.8) (76.7) *,.(8.5).. (2.9). (7.5)

.(2.2).

Statute exp.'ations (0.3) (0.7) S" .(0.2).,., .(0.1) .(0.6), ' (0.2)

Foreign currency translation adjustments u.0) tu.4) $ - -

Balance at December 31 $ 42.0 $ 51.4 $ 97..3 $ 19.1 $20.9. $ , 17.6, Great Plains Energy and KCP&L,r~cognize interest'accrued related-tounrecognized tax benefits in interesV" expense and penalties in non-Operating expenses. At' December 31; '2010,.2009 and 2008', accrued interest related to unrecognized tax benefits for Great Plains Energy was:$6.7 million, $5-9. millionand'$2.6..millioh, respectively.

Amounts accrued for penalties with respect to unrecognized tax benefits was $1.i million at December 31, 2010 and--2009:"Inr2010'and'2009, Great Plains Enefgy'recognized aniincrea-eof $0.5 riillion and $1.4-million,  :

respectively, of interest expense' related to uiirecogriized tax benefits. The'reihifidiing increase in accrued interest

'1.32

and the penalties of $ 1.1 million were primarily 'associated with'prior year GMO tax return positions identified and recorded to goodwill. In 2008, Great Plains Energy recognized a reduction in interest expense..of $6.6 million. '

KCP&L'had accrued interest related to unrecognýized tax benefits of $1.4 million at December 3 1, 2010 and $1.7 million at December 31, 20.09ijand 2008. Amounts accrued for penalties wih respect to unrecognized tax benefits for KCP&L are insignificant. In 2010, KICP&L recognized a reduction of $0.3 million of interest expense. In 2008, KCP&L.recognized a reduction of $1.7 million of interest expense.

The IRS is currently auditing.Great Plains Energy and its subsidiaries for the 2006-2008tax years and the Company is protesting an audit assessment by the Canada Revenue Authority (CRA) against a forirmer GMO subsidiary for the 2002 tax year. The Company estimates that it is reasonably possible that $18.2 million for Great Plains Energy 'and $12.2 'Millionf6r,;IKCP&L 6f uiirecdgnizetdtax benefits nm-iaybe recognized ihi'the next twelve months due to statute. expirations or settlement agreements with tax authorities.

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. .The Company also files separate company returns in Canada and,certain other states.

22. SEGMENTS AND RELATED INFORMATION Great Plains Energy Great Plains Energy has one reportable segment based on its method -ofinternal reportinig, which generally segregates reportable segments based on products and services, management responsibility and regulation. The one reportable business segment-is electricutility,.consisting of KCP&L and GMO's regulated utility operations.

Other includes GMO Activity other than its regulated utility operidtioi s, Strategic Energy discontinued operations, unallocated corporate charges, cdnsolidating entries aiid.intercompany eliminations. Intercompany eliminations include insignificant amounts of intercompany' financing-related activities. The summary of significant accounting policies applie s to the iýejortable segment. For segment reporting, the segment's income taxes include the effects of allocating, holding company tax~benefits prior to July 14, 2008. .GMO is.only included for periods subsequent to the July 14, 2008, date of acquisition. Segment performance is evaluated based on' net income attributable to Great Plains Energy: '-

The following tables reflect summarized financial information concerning Great Plains Energ's reportable segm ent. ' .. ,

- Electric Great Plains 2010 Utility Other Energy (millions) . ,

Operating revenues $ 2,255.5 $ r $ 2,255.5

-Depreciation and arnofttization" ' ' - ' '(331.6) . . ,. .. " (331.6).

Interest.charges. .,,' " . . .: ., (143:1), ' (41.7). (184.8)

Incoie tax(expen'se).benefit: - . .. ' . . 24.3 (99.0)

Loss from equity investments. . - ." ... ' (1.0) ,(.0)

Net income (loss) attributable to Great Plains Energy 235.3 (23.6) 211.7

' " *~~~~~~~.......................'" "

~ 44 133

... .lectric Great Plains 009Utility Other Energy (millions)

Operating revenues 1,965.0 $ $ 1,965.0 Depreciation nd amorizaion ." (302.2) - "(302.2) *ii Iiterest charges (151.0) (29.9) (180.9)

• icobme tax (expens e) benefit "" ' (63.6) '34.1 (29.5)

Loss from equity investments - " .. (0.4) (0.4)'

Discontinued operations - (1.5) (1.5)

• Net inc6ime (16§s) attributable to Great PIMins Energy 157.8 (7.7) ' 150.1

1. .

S" Electric' Great Plains 2008 ' Utility Other Ene'rgy (millions)

"operatingrevenues '""$ 1,670.16 $-1,670.1 Deip'reciation and' arortization ": " (235.0) - (235.0) . r ,! .

Interest charges '* (96.9) (14.4) - (111.3)'

Income tax (expense) benefit (70.9) 7.1 (63.8)

Loss fromequity investments " '(1.3)' , (1.3)

Discontinued operations 35.0 35.0 Net.income attributable to Great 'Plains Energy - 143.1 11.4 154.5

1.1%, I

,, ,.,. ... .  : lectric. ' . Great Plains, Utility Other., Fliminations Energy 2010 . .. . . .. . (millions)

Assets . $ 9,152.7. $ .66.3. $ (400.8) . $ 8,818.2'

-Capital expenditures . 618.1 . ' - ' , 618.1 2009.9, " " . ' , .

Assets $ 8,765.3 152.5 $ (435.0). $ 8,482.8 Capital expenditures 841.3 - 841.3 2008 ,, ,

Assets $ 8,161.9 $. 141.7 $ (434.3) $ 7,869.3 Capital expenditures (a) 1,023.7 1.2 - 1,024.9 Includes capital expenditures trom discontinued operations of $0.8 million.

23. DISCONTINUED OPERATIONS On June 2, 2008, Great Plains Energy completed the sale of Strategic Energy to Direct 'Energy Services, LLC (Direct Energy), a subsidiary of Centrica plc. Great Plains Energy received gross cash proceeds of $307.7' million, including the base purchase price of $300.0 million, plus a working capital adjustment of $7.7 million.

Strategic Energy.*is reported as discontinued operations for the periods presented.

Under the terms of the purchase agreement with Direct Energy, Great Plains Energy indemnified Direct Energy for various matters, including: breaches of representations, warranties and covenants; funds advanced by Strategic Energy to certain of its channel partners if such funds became uncollectible before December 2, 2009, (approximately $8 million, excluding commission offseis); and losses associated with litigation and other certain claims to the extent such losses exceed $7.5 million in the aggregate.

,134

At.December 31, 2008, Great.Plains Energy, had.reserved $2.0 million with respect to the. indemnification.

obligations. Great Plains Energy. subsequently reversed this reserve. Additionally,-during 2009, Great Plains Energy recorded $3.8 million of gross receipts taxes for periods prior to.:the sale for which Great Plains Energy.

indemnified Direct Energy. The following table summarizes the income (loss) from Strategic Energy's.

discontinued operations. " T.

2009 2008

.. (millions).

Revenues ..- , $ - $ 667.4 Income from operations' before income taxes (a) $ - $ 182.4 Loss on disposal before income taxes . .. . (2.4) (1162)

Total inc6me, (loss) on discontinued operations .

before income taxes (2.4) 66.2 Income tax benefit (expeiise) . . .. "0.9 - (31.2)

Income (loss) from discontinued operations, net of income taxes $ (1.5) $ 35.0

. ) For 2008, amount includes $189.1 millon of unrealized net gains related.to derivative instruments.

24. JOINTLY OWNED ELECTRIC UTILITY PLANTS ., . ... ,. , .

Great Plains Energy's and KCP&L's share ofjointly owned electric utility plants at December 31" 2010, are detailed in the following tables.

GreatPlainsEnergy .. . . . ......

Wolf Creek -LaCygne latan No. 1 latan No. 2 latan Jeffrey

............ ~ .... -Unit ... Units -- Unit ..Unit . Common Energy Center (millions, except MW amounts)

Great Plains Energy's share 47%. 50% 88% 73% '79% 8%

Utility plant in service - $. 1,423.7 $ . 410.5 .. =$ 638.9, $ .1,282.4 " $ '326.8 $ 151.1 Accumulated depreciation 778.2 298.0 239.9 58.9 16.1 74.8 Nuclear fuel, net 79.2-  : .. ." - - . " -

Construction work i progress . 75.3 48.1 - 23.4 - 8.0 - -- 23.3 6.4 2011accredited capacity-MWs 5.60 .709. 621 61.8, .. NA 173 KCP&L

-  :- Wolf Creek-,: LaCygne latan No. 1 1latan No.'2' - .Jatan' .

S -. - " Unit , - Units, Unit- Unit - . Common S,,-' , - ". .. ",-(millions,

-,*: except M W amounts), - ... '

KCP&L's share .... "...... . 47%;. .50%4 70..

• o*

0,  ? ¶.1.,

,55%. -. L. "61%.

Utility plant in service $ 1,423.7 $ 410.5 $ 514.1 $ 973.0 $ 255.0 Accumulated depreciation 778.2 298.0 196.3 56.4 13.9 Nuclear fuel, net 79.2 - - - -

Construction work in progress 75.3 48.1 14.5 7.1 14.4 2011 accredited capacity-MWs 560 709 494 465 NA

-135

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

25. QUARTERLY OPERATING RESULTS (UNAUDITED)

. .. Quarter Great Plains Energy , . 1st 2nfd 3rd 4th 2010 (millions, except per share amounts)

Operating revenue ."$ 506.9 $ 552:0- $ " 728.8 i$ 467.8 Operating income 62.0 134.9 243.8 31.6 Net income (loss) 20.3 64.4 132.0 (4.8)

Net income (loss) attributable to Great Plains Energy 20.3' 64.3 132.0 (4.9)

Basic earnings (loss) per comntan share " 0.15 - 0.47 0.97 (0.04)

Diluted earnings (loss) per comrnon share 0.15' 0.47 .0.96 (0.04) 2009 .

Operating revenue $. "419.2 . '480.5 $ 587.7 $ 477.6 Operating income.... -...... . 20.9 ".90.3.!.. 151.2 57.7 Income from continuing operations 21.7 36.9 78.4 14.9 Net income 21.7 -33.8 79.2 15.7

,Net income attributable to Great Plains Energy 21.7 33.7 79.1 15.6 Basic and diluted earnings per common share from . . .

continuing operations 0.18 - 0.8 .0.57.,., . 0.10 Basic and diluted earnings per common share 0.18 0.26 0.58 . ... 0.11 1st 2-d.:"

'. " Quarter " .t.

.!st 2nd 3rd 4th 4

- KCP&L 2010 (milnons)

Operating revenue ,$. 335.6 $. 372.6 $ 486.5 $ 322.4 Operating rincome 40.5 84.7 163.6 22.6 Net income, 19.2 48.2, 92.6 3.2.. '

2009

$ 395.5 $

Operating revenue $ 277.5 324.8 320.4 Operating income 14.9 68.2 105.9 43.2' Net income 8.4 34.9 65.6 200 Quarterly data is subject to seasonal fluctuations with peak periods occurring in,the summer months. In the third and fourth quarters of 2010, Great Plains Energy recorded, a $4.0 million and $12.8 million, respectively, "pre-tax loss for KCP&L's 'and GMO's combined share of certain latan construction costs. See Note 6 for additional information. In tle -fourth quarter of 2010, Great Plains Energy recorded an $11.2 millionpre-tax impairment loss related to its investments: in affordable housing limited partnerships. See Note 20 for additional .information.

• 'b.......... ......-

• 136

REPORT OF INDEPENDENT? REGISTERED PUBLIC AXCCOUNTING FIRM';-

To the Board of Directors and Shareholders of Great Plains Energy Incorporated Kansas City, Missouri We have audited the'acco npanying.cdnsolidated balance sheets;of Great PlainsEnergy. Incorporated and subsidiaries (the ,Company"),as of December'31, 20 1.0:and -2009,ýandlthe relited consolidated statements of income, comprehensive income, common.shareholders1 .equity and noncontrolling interest,;and cash flows for,-

each of the-three years in the~periodcended'December 31.,:201 OiOui 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 isto express an iopinion onwthe. financial, .

statements and financial statement schedules based on our audits. -,'.,*,.

We conducted oui auditsin accordance witfi~the standards of the Public Company -Accounting Oversight Board-(United States).>Those standards-require:that we.plan:and perfoft-nthe~audit'to obtain reasonable assurance about whether the financial statements arefree-of material~misstatement.An auditincludes.examining& on-a test basis,:

evidence supporting the amounts and disclosures inthe: financial' statements. Anýaudit alsoincludesassessing the.

.accounting principles used and significant estimates made by management,.as, well as evaluating the oyerall financial statement presentation. We believe that our audits provide a reasonable basisfor our;opinion -' . -.-

In our.opinion,:such. consolidated financial statements present-fairly; in all material-respects, the,-financialpositioni of'Great.PlainsiEnergy incorporatbd and; subsidiariis, as of December31, 2010 and 2009, and the results of their; operations anid their cash flows for each of the three years in the' period ended Deceniber 3 l1;2010,dn conformity with. accounting principles generally accepted'in.theUnited States Lof America:. Alsoin our opiniofi, such financial statement schedulesjývhen consideied in relation-to the basic consolidated financial statements taken as a whole, present fairly, in all material iespects,;the information-set forth therein. .

We have also audited; in accordance-with the stahdards of the Public Compiany Accounting Oversight-Board (United States); the Company's internal control oyer financial repoiting as of Decemiber 31 ;2010,.based on the. -

criteria established -inInternalControl--Integrated-Frameworkissued-by the-Committee of Sponsoring. . , ,

Organizations of the Treadway Commission and our ieport dated February 24, 2011-expressed anrunqualified opinion on the Company's internal control over financial ieporting. : - .

/s/DELOITTE & TOUCHE LLP ' .' ,

Kansas City, Missouri ,

February 24, 2011

-13:7

REPORT OF INDEPENDENT: REGISTERED PUBLIC ACCOUNTING FIRM..

To the Board of Directors of , . .

Kansas City Power & Light Company Kansas City, Missouri We have 'auditedthe. accompanying consolidated-balance: sheetsfof Kansas-City Power &Light.Company. and, subsidiaries .(the "C6mpaffy")-as of December 31, 2010. and 2009,: and' the related. consolidated statements.of income, comprehenisive income, common shareholder's equity, and cash flows~for each of the:three.years in the period ended December,31, 2010. Ouraudits also.included the financial statement schedule ,listed in the Index at..

Item 15.. These financial statements -andfinancial statementschedUle are the responsibilityof the, Companyls.. "..

management,.Our responsibilityis.,to express an opinion on the finfancial statements and financial statement..

schedule based on our audits. .,; ,.  :. .!t' , .:z,' ' ' . .

We. coriducted our audits in accordance withthestandards of the P.ublic .Company'Accounting Oversight Board (United States). Those. standards require that We planand perform the:audit to4obtain reasonable assurance about-'

whether the financial statements are free of material misstatement. An audit-includes examining, .on.a test basis;,-!:

evidence supportingthe amounts-and disclosures in the, financial statements. An audit also includesasse.ssing the accounting principles used and significant, estimates made by management,. as-well as evaluating the overall.,

financial statemenet.presentation.. Wdbelieve that our., audits provide a reasonable basis'for ouropinion: ..,' " .

In our opinion, such consolidated financial statements present fairly,.in all -material respects, the financial position of Kansas .City .Power.& Light Company and subsidiaries as. of December,3 1, 201.0-and 2009, andthe: results of their~operations and theit cashflows:for eachf -the three years in-the'period ended December 3 1,-,20 10, :*"n*'

conformitywith accounting principlesigenerally, acceptediin-the United Statesof America. Also,'in our opinion,-,

such financial statement. schedule,-when.considered in relation to.lthe basic -consolidated financial statements taken as a whole, presents fairly, in all material,4espects, .the.information' set forth therein. . . ,. .. .. .'

• We have also audited, in accordance with,the standards of the Public:Company:Accounting OversightBoard:

(United States); the:Company's internal control'over financial reporting as of December 31, 201.0, based onf the.

criteria established in Internal Control-IntegratedFr,amework issued 'by the Committee.of Sponsoring.-

Organizations of the Treadway Commission and our report dated February 24, 20.11 expressed an. unqualified.,

opinion on the Company's intemal control over financial reporting:.- .. " . ...

/s/DELOITTE & TOUCHE LLP ' .:, ) >.

Kansas City, Missouri ... o ' ..i*

February 24, 2011 , "

.1338

ITEM 9. CHANGES AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND..*

FINANCIAL DISCLOSURE.

None.

ITEM 9A. CONTROLS AND PROCEDURES GREAT PLAINS ENERGY, . . * .. . -

Disclosure Controls'and Procedures ".. " .-. ', .

Great Plains'Energy carried out anmevaluation ofits disclosure controls andprocedures (as defined in Rules ,13a-.

15(e) or 15d-l'5(e) underthe Securities Exchange Act'of 1934, as amended (the "Exchange Act"),.,'This evaluation-was conducted under.the supervision, and-with the participation, of Great.Plains Energy's management, including the chief executive officer and chlief financial officer, and-Great Plains Energy's ;

disclosure committee. Based upon this evaluation, 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 GreatPlains Energy' were.effective' at a reasonable assurance level...... ....

Changes inInteinalControl Over Financial Reporting . . ' ' . "

There has-been no change' in.Great Plains Eneigy's~intemal ýontrol over financial reporting (as defined in Rule l3a-15(f) and 15d-15(f) of the Exchange Act) that occurred during the quarterly period ended December 31,;2010, that has materially affected, or is reasonably likely to materially affect; its internal control, over financial.,'

reporting.

Management's Report on Internal Control Oyer FindncialReporting'. ' .,, - .. ', ' ,

Becauseiof-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! Alsi, projections of any evaluation of.

the effectiveriess 'of internal control over'financial reporting to future periods are subject to the risk that the.

controls may become-inadeqiuate because of changes in conditions, or that the degree'of compliance with, the policies.or.proceduresmay deteriorate.' ' -i. - '- .

Management is responsible 'for establishihg and maintaining adequate internal control over financial reporting (as defined in Rule 13a- 15(f) and 15d- 15(f) under theýExchange Act) 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 effectiven'es"s of Great Plains Energy's internal control over financial'reporting as 0fDecember 31,:'

2010. Management usedifor this evaluation the framework in Internal Control - IntegratedFramework issued by the Committee. of Sponsoring Organizations (COSO) of the Treadway Commis~ion... ' ' .

Management has'concluded-that, as of December,31, 2010, Great Plaing 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 attestation reportonGreat!Plains Energy.'s internal control over financial reporting,:

which is included below.  : I" . . . ".  :'..  :,

139

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, 2010, based on criteria established in InternalControl- Integrated Frameworkissued by the Committee of-Sponsoring Organizations of the Treadway Commission. TheCompany's management is responsible for maintaining effective:internal control over, financial reporting and for its. 1 assessment of-the effectiveness of internal control~oer finiancial reporting, included in the. accompanyingi Management'sReport on Iinternal Control Over FinanicialReporting. Our respohsibility is to express an opinion on the Company's internal control over finiancial, reporting based on our audit. . -'" I We conducted our audit in accordance with the standards of the Public Company Accounting Qversight Board (United States). Those standards require that.we plan and perform theauidit 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 *onthe. .

assessed risk, and performing such other~procedures as we considered necessary in the circumstances. We believe that our audit providesa,reasonable basis for ourtopinion..-

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, ,andr,-d 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 purposesiin accordance vwith generally accepted accounting princilles. A companiy's- internal 'control over financial repIorting includes those policies and procedures that (1) pertain to the maintenance of records; that,. in reasonable detail.

accurately and fairly xeflect the transactions and dispositions of the assets of the company; (2) provide reasonable.

assurance that transactions are recorded as necessary topermit 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'regairding~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 thedegree' 6f compliance with the policies or'procedures may, .

deteriorate. - .* . . . ., .

In ouropinion, the Company~maintained, inall material respects, effective internal.control over financial".

reporting as of December 31, 2010, based on the criteria established in Internal Control-,Integrated Framewoak issued by the Committee of Sponsoring Organizations of the Treadway Commission.

140

We have also audited, in accordance with the standards of the Public Company, AcdountingOversight Board (United States), the consolidated financial statements and financial statement schedules. as of and for the year, ended December 31, 2010, of the Company and our report dated February 24, 2011 expressed an unqualified opinion on those financial statements and financial statement schedules.

/s/DELOITTE & TOUCHE LLP ' .

Kansas City, Missouri . . ., . .

Februar 24,ýP Ip1 . . - y. ., .

KCP&L , ,' , . ~ . -

Disclosure Controls and Procedures . ,.:. , '" . . '5'.

KCP&L carried out an evaluation of its disclosure controls and procedures (as defined in Rules 13a-15(e) or 15d-15(e) under the Exchange Act).! This evaluation wasi'onducted under the supervision,.aand with the participationi, of KCP&L's management, including the chief executive officer and, chief financial officer, and KCP&L's disclosure committee. .Based. upon this, evaluation, 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 were effective at a reasonable assurance level.. . . .-. *- .,

Changes in Internal Control Over Financial Reporting. . ....... ,.

There has been no change in KCP&L's internal control over financial reporting (as defined in Rule 13a- 15(f) and 15d-'1'5(f)'of the Exchange Act):that occurred during the quarterly period ended December 3.1, 2010, that has materially affected,. ordis reasonably'likely to materially affect, its internal-contr0l over financial reporting. *

Management's Reporton 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,.eventhose systems determihed tobe effective: can provide-only reasonable assurance with respect.to financial statement preparation and presentation. Also, projections of any eyaluation of, the effectiveness of internalcontrol ov'er financial reporting t6;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............., . .- ," . .,

Management is responsible for establishing and maintaining adequate internal control over financial reporting (as defined in Rule 13a:- 5(f) and 415d- 15,(f)under-the 'Exchange'Act).for KCP&L. Under the supervisioi and with,.

the participation. of KCP&L's chief executive officer and chief financial officer, management evaluated the effectiveness of KCP&L's internalcontrol over financial reporting as of December 3 1., 2010. Managementused.

for this evaluation the framework in Internal Control- IntegratedFrameworkissued by the COSO of the Treadway Commission.-.'-,-: "......' . ... ,,. ' . .. . , .. .

Management has concluded that, as of December 31, 2010, KCP&L's internal control over financial reporting is effective based 6n the criteria setforth in the COSO -framework: D'loitte-& Touche LLP, the independent.. -1, 2 registered publicaccounting firm that audited the, financial statements included in this annual, report. on Form 10-K, has issued its attestation report. on,KCP&L's,'intetnal control over-financial reporting, which is included below:

141

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM..

• To the Bo~i-d ofDirectotsof - , . . . .

Kansas City Power & Light Company " ' . ' - " f '

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, 2010, based on criteria established in Internal Control-IntegratedFrameworkissued by the Committee of Sponsoring Organizations of the Treadway Commission. The' Company's management is responsible for maintaining effective internal control over financial re0orting an~d fkor' its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management's Report on InternalControl Over FinancialReporting. Our responsibility is to express an op inion 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'Acc6unting, Oversight Board (United States). Those standards~require that.We.plan and perform,the audit to obtainreasonable assurance about whether effective internal control overfinancial reporting. was maintained in all material respects: Our audit included'obtaining an understanding of internal.c6ntrol over finaricial reporting, assessing; the. risk that a material weakness exists, testing and evaluating the design! and operating effectiveness' of internal control' based on ihe 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 ext&mrl purposes :in.

accordance with generally acceptedaccountingprinciples. A company's internal control over financial reporting includes those policies arnd'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 beingmade.ý only in accordance with authorizationg, 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 limitatiohs of inteinal 'control over financial' reporting, including the possibility of collusion or.improper.management override of controls, material misstatements due to errof. or fraud, may 'not be prevented or detected oh 'a timely basis. Also,'projections, of-any'evaluation of the effectiveness: of.the internal',s control over financial reporting to future periods are subject to the. risk that thetcontrols 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, 2010, based on the criteria established in Internal Control-'-IntegratedFramework issued by'the Committee of SponsoringOrganizations of the Treadway,Commission.,. - - " ' '

142

We have also audited, in accordance With the' standards of the Public Comnpany-iAccouiiting Oversight Board (United States), the consolidated financial statements and financial statement schedule a9 of and for the-year ended December 31'. 2010, of the Company and our report dated February:24, 2011 expressed an unqualified ."

opiniofi on those financial statements-and financial statement. schedule...:*. ,. -""

/s/DELOITTE'& TOUCHE LLP :

Kansas City, Missouri ,

February 24, 2011 ..  :. . . .. .....

ITEM 9B. OTHER INFORMATION .. .'

Extension of Accounts Receivable Facility .

The following information is provided in this Annual Report in lieu of reporting such information under Item 1.01, Entry into a Material Definitive Agreement, of Form 8-K.,. ..

KCP&L, Receivables Company, The Bank of Tokyo-Mitsubishi UFJ, Ltd., New York Branch-(Agent) andV.

Victory Receivables Corporation (Puirchasei) are parties to a-certain Receivables Sale Agreement; dated as :of July 1, 2005; as previously amended (as amended, the "RSA"). Pursuant to the RSA and associated agreements,,

KCP&L sells all, 0fits retail electric accounts receivable to its wholly owned subsidiary, Receivables Company,.

which in turn sells an undivided percentage ownership interest in the accounts receivable to the.Purchaser. On.

February 23, 2011, the parties entered into an amendment to the RSA, extending the termination date of the RSA from May 4, 2011 to October 31, 2011.

The Agent and an affiliate are lenders under revolving credit agreements with Great Plains Energy, KCP&L and GMO aggregating to,$1.25 billion. An affiliate of the Agent istrustee ,tinder indentures associated with all 6f GMO's long-term debt. The Agent and certain of its affiliates have provided, and in the'fiture may continue to-ý.

provide, investment banking, commercial banking and/or other financial services, including the provision of credit facilities, to Great Plains Energy, KCP&L; and/or their affiliates in the ordinary course of business for which they have received and may in the future receive customary. corn'pensation. ..

PART III ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE Great Plains Energy Directors 'i2:.. .,:* . .

The information required by this item is incorporated by reference from the Great Plains Energy 2011 Proxy Statement (Proxy Statement),.which will be filed with the SEC no later than April 30, 2011: .,

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 ie~uired by this item is contained in the Proxy Statement section titled "Security Ownership of Certain Beneficial

'Owners, Directors and'Offic~rs - Section 16(a).Beneficial Ownership Reporiing Compliance",,

. Information-regarding the Audit Committee of Great Plains Energy required~by this item is contained in the Proxy Statement section titled "Corporate Governance - Committees of the Board" ."

Great Plains Energy and KCP&L Executive'Officers . . . . .

Information required by this item regarding the executive officers of GreatPlains Energy and KCP&L is contained in this report in-the Part I, Item 1 section titled"Executive Officers." ..

143

Great'Plains.Energy'and.. KP&L Code of EthicalBusiness Conduct 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 corporate govemanfce, page of the Internet websites at www.greatplainsenergy.comand www.kcpl.com. A-copy of the. Code is ayailable..,

without charge, upon written request to Corporate Secretary, Great Plains Energy Incorporated, 1200 Main St.,

Kansas City, Missouri 64105. Great Plains Energy and KCP&L intend to satisfy the disclosure requirementsiunder.;

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 corporate governance page of the Internet websites.

Other KCP&L Information ... * ,

The other information required by this item regarding KCP&L has been omitted in reliance on General Instruction ITEM 11. EXECUTIVE COMPENSATION .,:::. . - - " ' "

Great Plains Energy... " . . . . . . . .* . ." '-

The. information required.by this item contained. in the sections titled "Executive, Compensation," '"Director Compensation," "C6mpensation Discussion and Analysis", "Compen~ation Committee Report',, and "Director Independence -. Compensation. Committee Interlocks and Insider,Participation'"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. SECURITYOWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS'.

Great Plainis Eneýr'gy . . .,. . . .,¶-

The information 'required by this itemn regardming security 6wnership of ttie directors anld executive officersp'of Great Plains Energy contained in the sedtion tltled-"Security O~vners'hip of Certain Beneficial Ovfiet'f, Directors' and Officers" 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).

Equity CompensationPlai~ l s * , . ..

K - - . . .P ..

Great Plains Energy's Long-Term hicefiffive P1n is an'equitycomp'e'isationpainA approved by'its shareholders."

The Long-Term' In&entive Plan permitsthe grant of restricted stock; stock option§'; limited stock-appreciation rights, director shares, director deferred share units and performance sharesý to direct6rs, officers and other, employees of GreatPlains Energy-and.KCP&L. . -.

Effective with the July 14, 2008 acquisition 6f GMO, Great Plains Energy assumed GMO .... .KCP&L 10.17 *+ Form of'2010;three-year Performance, Share Agreement (Exhibit ,.  :, Great Plains Energy 10.1.1 to Form 10-Q for the quarter ended March 31, 2010). .'. KCP&L 151

10.18 *+ Form of 2010 Restricted Stock Agreement (Exhibit 10.1.2 to Form "Great Plains Epergy 10-Q for the quarter ended March 31, 2010). KCP&L 10.19

• Aquila, Inc. 2002 Omnibus Incentive Compensation Plan (Exhibit_. Great Plains Energy 10.3 to Form 10-.Q for the quaiter.ended Septeber 30, 2002, filed by Aquila, Inc.).

10.20 Great Plains Energy Incorporated and Kansas City Power & Light Great Plains Energy' Company 4nnual Incentive Plan Award Standards, and Performance :7 KCP&L Criteria"amended effectiv'e as of January 1, 2009 (Exhibit 10.1.7 to Form 10-Q for the quarter ended March 31 `2009).

10.21 *+ Great Plains Energy Incorporated, Kahsas City Power &'Light Great Plains Energy Company and KCP&L Greater Missouri Operations Company , KCP&L Annual Incehtive Plan amendedeffective as of January 1.,2010 (Exhibit 10.1.4 to Form 10-Q for the quarter ende .-d March 3*1.1,10.2,010).'.

10.22 Form of Indemnification Agreementwith each officer and director, Great Plains Energy (Exhibit i0-flto Form 10-K, for year ended December 31, 1995). KCP&L

• + Form of Conforming Amendmetnt to indemnification.Agreement "re'at Plains Energy 10.23 with each officer and director Exhibit 10.1 .a to Form'10-Q for the KCP&L

'quarter ended'Mdrch 31,2003).  : .,

10.24 *'+ Form of Indemnification Agreement with each director and officer Great Plains Energy (Exhibit 10.1 to Form,8-K filed on iecermber 8, 2008).. KCP&L 10.25' *+ Form of Indemnification Agreement with:officers and'directors' Great Plains Energy-(Exhibit 10 1.p to 'Form 10-K for the year ended December .3 1- ,KCP&L 2005).

10.26 *+ Form of Change in ControlSeverance Agreement with Michael J. Great Plains Energy Chesser (Exhibit.10. .a to Form i0'-Q for the quarter ended Septemlber KCP&L

30. 2006V .....

10.27 4!+ Form of Change in.Control Severance Agreement with .WilliamH.. Great Plains Energy,,

Downey (Exhibit 10.1 .b to Form 10-Q for.the quarter ended September. KCP&L 30, 2006).

10.28 *+ Form-of Change in Control Severance Agreement with John R. Great Plains Energy.

Marshall (Exhibit 10.1 .c-to Form 10-Q for the quarter ended KCP&L September 30, 2006).

10.29., *+ Form of Chatge in Control Severance Agreement with other executive, Great Plains Energy officers of Great Plains Energy Incorporated and Kansas City Power & KCP&L Light Company (Exhibit 10.1.e to Form 10-Q for the quarter ended September 30, 2006)-. .

10.30 + Great Plains Energy'lncorp6rated Supplemental Executive ,,Great Plains Energy Retirement Plan (As Amended and Restated for I.R.C. §409A) KCP&L (Exhibit 10.1.10 ýto Formn10-Q forthe quarter eiided'Septeinber 3,0, 2007).

1 52

10.31 *+!;,-Great Plains Energy Incorporated Supplemental Executive ., ... , Great Plains Energy*

Retirement Plan (As Amended and:Restated for. I.R.C. §409A), .asv, KCP&L amended February 10, 2009 (Exhibit:10.1.29 to Form, 10-K for the...

Syear ended December 31. 2008).

10.32 *+b Great Plains Energy Incorporated Supplemental Executive Great Plains Energy Retirement Plan (As Amendedand Restated ford.R.C..§409A), as ;KCP&L amended December 8, 2009 (Exhibit 10,1.27 to Form 10-K for the

..year ended mbe' 3' ')

10.33 *+ Great Plains Energy Incorporated Nonqualified Deferred .. Great Plains Energy

('E ' t Compensation 1.NPlan (As Amended fo and hoFRestated fored2. ebtber 3 I.R.C..§409A), KCP&L (E:xhibit l0:1.11 to Form16-Q fothe quarter ended Sept 3,,b. .

2007).

10.34 *+ Great Plains Energy Incorporated Nonqualified' Deferred 'Great Plains Energy CompensationPPlan (As Amended and Restated for I.R.C. §409A), KCP&L amended effective'Janiuary 1, 2010 Ehibit 10.1 .5 to Formlo-Q for the quarter ended-Match 31,20100)'

10.35 + Description, of CompensationArrangements with Directors and, - ->5.Great Plains Energy Certain Executive Officers. KCP&L 10.36 *+ . Letter regarding enhanced supplemental retirement and, severance K. ,Great Plains Energy, benefit for William-H. Downey, dated August 5, 2008 (Exhibit 10! 1.23 ,KCP&L to Form 10-Qf6r~the quarter ended June 30, 2008).,.  :

10.37 *+ Employment offer'letters'to MichaellJ. (CesserdatedSepfe~mber 106"" Great Plains Energy and Septerfiber 16, 2003 (Exhibit 10.1.35 to Form 10-K for the year KCP&L ended December 31, 2008).

10.38 .. Bonus Agrgeem-ent dated as of May 5, 2i09 betweefi Great*Plains Great Plains Energy' Energy ricbrp'orated and Michaael J. Chessei (Exhibit W.0.1.10 to KCP&L Form 10-Q f6r the .qartefende~d June;3'0, 2009).

10.39 *+ Discretionary Bonus Agreement dated, as. of.May 5, 2009 between .; Great Plains Energy Great Plains Energy Incorporated and Terry Bassham (Exhibit KCP&L 10.1.11ito Form 100Q for the qUartl ended June'.3.0, 2009).:

10.40 *+ Discretionary.-Bonus Agreement dated as of May 5, ,2009 between . Great Plains Energy Great Plains Energy Incorporated and Barbara B., Curry, (Exhibit .*. .KQP&L 10.1.35 to Form 10-K for the year ended:December 31, 2009)...

10.41. , ::* Employment offer-letter.to JohnR. Marshall dated April 7, 2005 - Great Plains Energy (Exhibit.4 0.2.21 to Form 40-K for the year ended December 31,, KCP&L 2008). , ., ,:j  %- ..

10.42 *+ Retirement and Consulting Agreemenanti6ng Great Plains Enegy '-GreatPlains Energy.

Incorporated, katisas City Po&ier &Light Compdrty, KCP&Lý :" KCP&L Greater Missouri Operations Company and JohnY'R. Marshall

!:-(Exhibit 10.1;to.Form 8-Kfibed..onMay 5,2010)... . . --

10.43 *+ Consulting Services Assignment.and AssumptinioAgreemente ' Great Plains Energy between JohtiR. Marshall and Coastal Partners Inc.'(Exhibit 10.2 to- KCP&L Form 0-Q fdrilthe quarter ended Jurie 30, 2010). : " ' "

153

10.44 *+ Retirement and Consulting Agreement among Great Plains Energy Gre at Plains Energy Incorporated, Kansas City Power & Light Company, KCP&L " KC P&L

• Greater Missouri Operations Company-and Barbara B. Curry.,

(Exhibit 10.1 to Form 8-K filed on May 5, 2010). .... ..

10.45 + Agreement among Great Plains Energy Incorporated, Kansas City Gre at-Plains Energy

• '.,. Power & Light Company, KCP&L Greater Missouri Operations" . KC P&L

• .- Company and William G. :Riggins dated as of October 26, 2010. . -

10.46 *+ Agreement between'Kansas City Power & Light Company and 'G at Plains Energy Stephen T. Easley dated December 2, 2008 (Exhibii 10.2.20 to Form KC P&L

"..' .10-K for the year ended December 31, 2008). . -

10.47

• Asset Purchase'Agreement by and among, Nquila, Inc., Black Hills ' Gre at Plains Energy Corporation, Great Plains Energy Incorp6rated, and Gregory Acquisition Corp., dated February 6, 2007 (Exhibit 10.1 to Form 8-K:filed on Februar 8, 2007): '

10.48

• Partnership Interests Purchase; Ageement by and among Aquila, ' Gre at Plains Energy Corporition, Great Plains ..

Inc., Aquila Colorado, LLC,' Black Hills Energy Incorporated, and Gregory Acquisition Corp., dated

• February 6, 2007 (Exhibit .10.2 to Form 8-K filed on-February 8,"

."2007).

10.49ý Letter Agreement dated as of Junle 29, 2007 to Asset Purchase- . .. Gre at Plains Energy-Agreemefit' and Partnership Interests Purchase Agreement by and, among Aquila, Inc., Black Hills Corporation, Great Plains Energy "

Incorporated, and Gregory AcquisitionCorp., dated February 6, 2.007 (Exhibit 10.1.1 to Form 10-Q for the quarter ended June'30,-

2007).

10.50

• Letter Agreement dated as of August 31,,2007, to Asset Purchase ,Gre at Plains Energy.

Agreement'and Partnership Interests Purchase Agreemeit by and -

Energy ..

among Aquila', Inc.,"Black Hills Corpoiation Great Plains Incorporated and Gregory 'Acquisition Corp. (Exhibit 10.1 4,to Form'

... lO-Q for the quarter ended September 30, 2007)..

10.51, Letter Agreemient dated as of Septeembero28, 2007,.to Asset Purchase Gre at Plains Energy Agreement and Partnership Interests PurchaseAgreement 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).

10.52

• Letter Agreement dated as of October 3, 2007,'to Agreement and, . Great Plains Energy.

Plan of Merger, Asset-Pu'rchase Agreement and-Partnership Iiterests, Purchase Agreement by and among Aquila, Inc., Black Hills' Corporation; Great Plains Energy Incorporated and Gregory Acquisition Corp. (Exhibit 10.1.6 to Fon'l'o-'Qýý-0r the quarter .

ended September 30, 2007). . -..-

10.53

• Letter Agreement dated as of November 30:,2007,.tb Asset.Purchase Great Plains Energy Agreemeni and Partnership Interests Purchase A'reement by and among Aquila, Inc., Black Hills. Corporation, Great Plains Energy Incorporated and Gregory Acquisition Corp. (Exhibit 106.1.40.to Form 10-K for the year ended*December 31, 2007).

'154

10.54 " Letter Agreement dated.as of January 30, 2008, toAsset Purchase. Great Plains Energy Agreement and Partnership Interests Purchase Agreement by and 2.

among Aquila, Inc., Black Hills Corporation, Great Plains Energy Incorporated'and Gregory Acquisition Corp. (Exhibit 10.1.41 to Form 10-K for the:year ended December 31, 2007),.

10.55 " Letter Agreement daied as'of February 28, 2008, to&Asset Purchase Great Plains Energy Agreement and Partnership Interests Purchase Agreement -by and among Aquila, Inc., Black Hills Corpor'ation, Great PlailisEner~gy Incorporated and Gregory Acquisition Corp. (Exhibit 10.1.3 to Form Q for the quarter ended.March 31, 2008).

10.56

• Letter Agreement dated as of March 28, 2008; to Asset Pu rctiase 'Great Plains Energy Agreement and Partnnrship 'interests P'lurchase Agreeinent by and among Aquila, Inc., Black Hills'Corporation, Great Plains' Energy Incorporated and Gregory Acquisition Corp. (Exhibit 10.1.4 to Forim, 10-Q for the quarter ended March 31, 2008). '

10.57 Letter Agreement dated as of April 28, 2008, to Asset Purchase, Great Plains Energy Agreement and Partnership Interests Purchase Agreement by and among Aquila, Inc., Black Hills Corporation, Great Plains Energy Incorporated and Gregory Acquisition Corp. (Ekhibit 10.1 :5 to Form 10-Q for the quarter ended March 31, 2008).

10.58 Letter Agreement dated as of May 29, 2008, to Asset Purchase . Great Plains Energy 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 June 30, 2008).

10.59 " Letter Agreement dated as of June 19, 2008, to Asset Purchase Great Plains Energy

'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 June 30, 2008).

10.60 " Letter Agreement dated as of June 27, 2008, to Asset Purchase " Great Plains Energy Agreement an~dPartnershipInterests Purchase Agreement by and among Aquila, Inc., Black Hills Corporation, Great Plains Energy Incorporated and Gregory Acquisition Corp. (Exhibit 10.1.7 to Form 10-Q for the.quarter ended June 30, 2008).,-.

10.61 " Joint Motion and Settlement Agreement dated as of February 26, Great Plains Energy

.2008, among Great Plains Energy Incorporated, Kansas City Power -;-KCP&L

& Light Company, the Kansas Corporation Commission Staff, the Citizens' Utility Ratepayers Board, Aquila, Inc. d/b/a Aquila Networks, Black Hills Corporation, and Black Hills/Kansas. Gas Utility Company, LLC (Exhibit 10.1.7 to Form 10-Q for the quarter:.

ended March 31, 2008).

10.62 Purchase Agreement, dated as of April 1, 2008, by and among .. ' Great Plains Energy Custom Energy Holdings,. L.L.C., Direct Energy Services, LLC and Great Plains. Energy Incorporated (Exhibit. 10.1 to Form, 8-K filed on April 2, 2008).

4155

10.63  :-" ri' '* ,'Credit Agreement dated as' of August 9,'2010 among Great Plains Great Plains Energy Energy Incorporated, Certain Lenders, Bank:of America, N.A:, as AdministratiVe Agentand Union Bank, N.A. and Wells Fargo Bank, National Association, as Syndication Agents', Barclays Bank.

PLC and U.S. Bank National Association; as Documentation

,,Agents, Banc of America Securities LLC, UnionBank, N.A. and Wells Fargo Securities, LLC as Joint Lead Arrangers anid Joint Book Managers (Exhibit 10.1 to-Form 10-Q for'the quarter ended September 30, ;010). * .......

10.64

• Credit Agreement dated as of August 9, 20.10 among Kansas City *GreatPlains Energy Power & Light Company, Certain Lenders, Bank of America, N.A., KCP&L as Administrative Agent, and Union Bank, N.A. and Well s.Fargo Bank, National Association, as Syndication Agerit, The R'yal-Bank of Scotland PLC a'nd BNP Paribas, as' ocumentation. Agents, 'anc of America Securities LLC, Union Ban.ik,N.A. and Wells Fargo:.'

Securities, LLC as Joint Lead Arrangers and Joint Book Managers (Exhibit 10.2 toForhn 10-Q for the'quarter ended September 30;,. ...

• 2010). '" c . - . .. . .

Credit 'greement dated asof August 9,, 2010 among KCP&L Great Plains Energy 10.6 5.

• Greater Miss~uri Operations C(ompany, Certain Lenders,'Bank'of America, N.A., as Administrative Agent, and Union Bank, N.A. and

' "Wells Fargo'Bank, National Association, as Syndication Agents, The Royal Bank of.Scotland PLC arid BNP Paribas','as' Documentation Agents, Banc of America Securities LLC, Union Bank, N.A. and Wells Fargo Securities,' LLC as Joint Lead Arrangers and Joint Book Manageis,(Exhibit'10.3 to Form 10-Qfor the auarter ended September 30, 2010).

Aq

• Guaranty dated.aso6f July 15, 2008,issued byGreat Plains Energy.': Gre*at Plains Energy Incorporated in favot, of Union. Bank of California,'N.A., as .

successor-trustee, and the hollers-of the Aquila, Inc., 11.875%

Senior Notes due July 1, 2012 (Exhibit 10.3 to Form 8-K'filed on

..July 18, 2008).., . - .. ,. .,.;

• Guaranty dated as of July 15,-2008, issued by:Great Plains"Energy ."Gref at Plains Energy 10.67 Incorporated6 ii favor. f Union Bank of California, Tý.A., as successor trustee; and-the holders of the Aquila;, Inc.; 7.75% Senior Notes due June 15, 2011 (Exhibit 10.4 to Form 8-K filedon July'.18,

-- .*... 2008).

2 10.68 .5-Guaranty dated as of July 15, 2008, issued by Great Plains Energy Gre at Plains Energy Incorporated in favot of Union Bank of California, NA., as '. '

successor trustee,' and'the holdersof the Aquila, Inc., 7:95% Senior.

Notes due February' 1, 2011' (Exhibit' 10.5 to Form 8-K filed on'July 18, 2008). -' "

• Guaranty dated as of July 15, 2008, issued by Great Plains Energy Gre at Plains Energy 10.69

% . Incorporatedln'favor of Union Bank of Californa,.A!,as .

successor trnistee,' andthe holders of the Aqiiila, Inc.; 8.27% Senior Notes due NOvember' 15, 2021 (Exhibit 10.6 to.Form 8-K filed on July 18, 2008).

156

10.70

• Sales Agency Financing Agreement dated August 14, 2008 between Great Plains Energy Great Plains Energy, Incorporated and BNY Mellon Capital Markets, LLC (Exhibit 1.1 to.Form 8-K filed on August. 14, 20.08)...

10.71

• Insurance agreem.ent between Kansas City Power.& Light'Company' Great Plains Energy and XL Capital Assurance Inc., dated December 5, 2002 -(Exhibit' KCP&L 10.2.f to Form 10-K for the year ended'December 31,2002). . '

10.72

• Insurance Agreement dated as of August 1, 2004, between Kansas Great Plains Energy City Power & Light Company and XL Capital Assurance Inc. KCP&L (Exhibit 2004). 10.2tto: Form

' ? 10-Q'for

.. ' ' the. quarter ehded'Septemfiber

. =  : . 30, 10.73 " Insurance Agreement dated as of September 1, 2005, between ,.: Great Plains Energy Kansas City Power & Light Company and XL Capital Assurance. -, KCP&L Inc. (Exhibit 10.2.e to Form 10-K for the year ended December 31, 2005). ' ' -

10.74 *Insurance Agreement dated as of September 1, 2005,,,between Great Plains Energy Kansas-CityPower& Light Company and XL Capital Assurance- ,. KCP&L

'Inc. (Exhibit 10.2.f to Form 10-K for the year ended December.31, 2005).

10.75, Insurance Agreement dated as of September 19, 2007, by'and,. . Great Plains Energy

.-between Financial Guaranty Insurance Company and Kansas City . .KCP&L Power & Light Company (Exhibit 10.212 to Form 10,TQfor the quarter ended September-30, 2007)..,.

10.76 Purchase and Sale Agreement dated as of July 1,;200'5, between" Great Plains Energy Kansas City Power & Light Company, as Originator, 'and Kansas" KCP&L City Power & Light Receivables Company, as Buyer. (Exhibit 10.2.b to-Form 10-Q for the-quarter ended June 30, 2005). .. ., *.

10.77 Receivables Sale Agreement dated as of July 1, 2005, among Kansas 'Great Plains Energy City Power & Light Receivables Company, as the Seller, Kansas" - -KCP&L City Power & Light Company, as the Initial Collection"Ageiit, The*

Bank of Tokyo-Mitsubishi, Ltd' 'New York Branch, a's~the Agent, and Victory Receivables Corporation (Exhibit 10.2.c to Form I-O-Q' for the quarter ended June 30, 2005).

10.78 ** krfendment No. I dated as of April 2,'2007,'among Kanss City " Great Plains Energy Power & Light Receii'ables Company, Kansas City Power & Lighf'i KCP&L Company, The Bank of Tokyo-Mitsubish i UFJ, Ltd., Ne w York Branch and Victory ReceivablesýCorporatidn to'thie Reci6Vables Sale&'.

Agreement dated as of July 1, 2005 (Exhibit 10.2.2 to Form. I'0-Q'for' the quarter,ended March 31, 2007).

10.79,

• Amendment No. 2 dated as of July I 2'2008, among Kansas Cit' ' Great Plains Energy' Power & Light Receivables Company, Kansas City Power &-Liglit KCP&L Company, The.Bank of Tokyo-Mi tsubishi UFJ, Ltd., New Yoirk. .' , '

Branch and Victory Receivables Corporation to the Receivables Sale Agreementfdated as of July 1, 2005 (Exhibit 10.2.2 to-Form Q for' the quarter ended June 30, 2008). - 11 "

'157

10.80

• Amendment dated as of July 9, 2009 to Receivables Sale Agreement Great Plains Energy dated as of July 1,2005 among Kansas City Power & Light , KCP&L Receivables Company, Kansas City Power & Light Company, The Bank of Tokyo-Mitsubishi UFJ, Ltd., New York Branch and Victory Receivables Corporation (Exhibit. 10.4,tq Form 8-K filed on July 13, 2009).

10.81

• Amendment and Waiver dated as of September 25 2009 to the Great Plains Energy Receivables Sale Agreement dated as of July 1,'2005 amrongKansas KCP&L City Power & Light Receivables Company, Kansas City IPower'&

Light Company, The Bank of Tokyo-Mitsubishi UFJ, Ltd., New York Branch and Victory Receivables Corporation (Exhibit 10.2.2 to Form I0-Q for the quarter ended September 30, 2009).

10.82 Amendment dated as of May 5,'2010 to Receivables Sale Agreement Great Plains Energy dated as of July 1, 2005 among Kansas City Power & Light KCP&L Receivables Company; Kansas City Power & Light Company, The

- Bank of Tokyo-Mitsubishi UFJ, Ltd.; New York Branch and Victory Receivables Corporation (Exhibit 10.2.2 to Form'10-Q for the, quarter ended March 31, 2010).

10.83

• latan Unit 2 and'Common Facilities Ownership Agreement, dated as Great Plains Energy of May 19, 2006, among Kansas City Power & Light Company, KCP&L 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).

10.84

• Stipulation and Agreement-dated March 28, 2005, among Kansas Great Plains Energy City Power & Light Company, Staff of the Missouri Public Service KCP&L

• 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).

10.85 Stipulation and Agreement filed April 27, 2005, among Kansas City Great Plains Energy Power & Light Company, the Staff of the State Corporation KCP&L 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). . .

10.86 *

• Joint Motion and Settlement Agreement dated as of February 26, Great Plains Energy 2008, among Great Plains Energy Incorporated, Kansas City Power KCP&L

& Light Company, the Kansas Corporation Commission Staff, the Citizens' Utility Ratepayers Board, Aquila, Inc. d/b/a Aquila Networks, Black Hills Corporation, and Black Hills/Kansas .Gas Utility Company, LLC (Exhibit 10.1.7 to Form 10-Q for the quarter, ended March 31, 2008). '.

'158

10.87

• Stipulation and Agreement dated April 24, 2009, among Kansas City Great Plains Energy Power & Light Company, Staff of the Missouri Public Service, . KCP&L Commission, Office of Public Counsel, Praxair, Inc., Midwest Energy Users Association, U.S. Department of Energy and the U.S.

Nuclear Security Administration, Ford Motor Company, Missouri Industrial Energy Consumers and Missouri Department of Natural Resources (Exhibit 10.1 to Form 8-K filed April k, 2009).

10.88

• Non-Unanimous Stipulation and Agreement dated May 22; 2009.. *Great Plains Energy among KCP&L Greater Missouri Operations Company, the Staff of

• the Missouri Public Service Commission, the Office of the.Public Counsel, Missouri Department of Natural Resources and Dogwood Energy, LLC (Exhibit 10.1 to Form 8-K filed on May 27, 2009).

10.89

• Collaboration Agreement dated as of March 19, 2007, among Great Plains Energy Kansas City Power &<Light Company, Sierra Club and Concerned -.KCP&L

• Citizens of Platte County, Inc. (Exhibit 10.1 to Form 8-K filed on March 20, 2007).

10.90, '" Amhendment to the Collaboration Agreement effectie as of Great'Plains Energy" September 5, 2008 among Kansas City Prwer & Light Copiaiiy, KCP&L, Sierra Club and Concerned Citizens of Platie County,*Inc. (Eihibit 10.2.20 to Form 10-K for the year ended December 31, 2009).

10.91.  ;, .JointOperating AgreementbetweenKansas City Power & Light *GreatPlains Energy Company and Aquila, Inc., dated as of October 10,. 2008 (Exhibit KCP&L 10.2.2 to Form 10-Q for the quarter ended September 30,,2008).

12.1 Computation of Ratio of Earnings to Fixed Charges. Great Plains Energy.,

12.2 -

• Computation of Ratio of Earnings to Fixed Charges.. KCP&L 21.1 List of Subsidiaries of Great Plains Energy incorporated. Great Plains Energy 23:1 Consent..of Independent. Registered Public Acounting Firm., Great;Plains Energy 23.2 Consent of Independent Registered Public Accounting Firm. KCP&L 24.1 Powers of Attorney. Great Plains Energy 24.2 Powers of Attorney. KCP&L 31.1 Rule 13a- 14(a)/15d- 14(a) Certification of Michael J. Chesser. Great Plains Energy 31.2 Rule 13a-14(a)/15d-14(a) Certification of James C. Shay. Great Plains Energy 31.3 Rule 13a- 14(a)/15d- 14(a) Certification of Michael J. Chesser. KCP&L 31.4 Rule 13a-14(a)/15d-14(a) Certification of James C. Shay. KCP&L 159

32.1 ** Section 1350 Certifications. Great Plains Energy 32.2 ** Section 1350.Certificadtions. . KCP&L 101.INS ** XBRL Instance Document. - Great Plains Energy KCP&L 101E.SCH

• XBRL Taxonoy Extension Schema Document. Great Plains Energy

." KCP&L 101.CAL' .:** XBRL Taxohomy'Extefision Calculation Linkbase.Document. .; Great Plains Energy.

" KCP&L 101.DEF ** XBRL Taxonomy Extension Ddfinition'Linkbase Document.' Great Plains Energy

-! 7 ,.,KCP&L 101.LAB ** XBRL Taxonomy Extension"Labels' Liikbase Documnt.'- Great Plains Energy

• *.** KQP&L 101.PRE **"' 'XBRL Taxonomy ExtensioniiPresentation.Linkbase.Document. . Great Plains Energy

, . .,..........,.........KCP&L

• 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 refe'rence, are stated in parenthesis in the description of such exhibit... . *

• • Furnished and shall not be deemed filed for the purpose of Section 18 of the Securities Exchange Act of 1934, as amended (the "Exchange Act').t Suci document shall notibe indrrporated by reference into any registratiohn statement or other document ptirsuant to the. Exchange Act or the Securities Ad of 1933, as amended, unless otherwise indicated in such registration statement or Otlierdodunment.' ..

+ Indicates management contract or compensatory plan or arrangement.

Copies of any of theexhibits filed with the SEC in connection'with this document maybhe ol6tained from KCP&L upon written request. , .

The registrants agree 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.notexceed 10% of total assets of such registrant and its subsidiaries on a consolidated basis.

-i . *. .*-. ..- . ,, ,. " i ' .v . P',

160

Schedule I - Parent Company Financial Statements GREAT PLAINS ENERGY INCORPORATIED

, Income'Statements of Parent Compahy Year Ended December 31 2010W".- 2009"' '2008 Operating Expenses (mrllions, 'e'ept per share amounts)

Selling, general and administrative $ 1.2 $ 8.8 $ 9.3 Maintenance .. 0.2 1.0 General taxes 0.9 1.1 0.8 Total 2.1 .10.1. 111 oOperatihg loss (2.1) (10.1) - (11.1)

Equity in earnings from subsidiaries 239.3 174.7 144.8 Non-operating income 3.4 - 0.6 Interest charges - . (44.7) (28.2) .. (19.2)

Incomerfromcontinuing operations before income taxs 195.9" 136.4 . -115.1, Income taxes 15.8 15.2, .4.4 Income from continuing operations 211.7. 151.6 .11'9.5 Equity in earnings (loss) from discontinued subsidiary (1.5), - 35.0 Net income 211.7. 150.1

• 154.5 Preferred stock dividend requirements 1.6 '1.6 1.6 Earningi.available for corfmhn shareholders $ 210.1 $ 148.5 -$",

152.9 Average'numberof.basic comnon shares outstanding 135.1 . 129.3 1101.1 Average number of diluted.comnon shares outstanding - 136.9 ... 129.8. . ". . 101.2 Basic earnings (loss) per cormnn share . . ..

Continuing operations- ?. .. $ 1.55 $ 1.16 $ 1.16 Discontinued operations-.. (0.01)..- . .0.35 Basic earnings perconmion share $ 1.55 . $ 1.15 $ 1.51 Diluted earnings (loss) per comnmon share ".

Continuing operations . $ 1.53 $ 1.15 ,$ 1.16 Disconitinued operations - - (0.01) - 0.35 Diluted earnings per conion share 1.53: $. 1.14 . ,$ . 1.51 Cash dividends per comnorn share $ 0.83, $ 0.83 $r7 1.66 The accompanying Notes. to Financial Statements of Parent Company are an integral part of these statements.

I ..

161

GREAT PLAINS ENERGYJINCORPORATIJ)

Balance Sheets of Parent Company

...... ~

December 31 2010 2009 ASSETS (millions, except share amounts)

Current Assets Cash and cash equivalents $ 0.3 $ 6:1 Accounts receivable from subsidiaries Notes, r'eiei'i6le from siubsidihii6s' 249.4 06' OW.

Money pool receivable -2.0 69, Taxes receivable 07.f '7.2' Other 0.7 0!1 Total .. "' 259.6 . 15.1 Investments and Other Assets *.: .

"Investment m.KcP&L 2,005.0 ... l,93 i'-1 Investments in other subsidiaries 1,3,60.2 .1,328.3 "Deferredincomre taxes 7.2 8.3 Other 6.2 .' ' 5.6" Total.:. .. - ......... 3,378.6 . .. .3,273;9.

• Total . . .  ;: $ 3,638:2 "' ,. :.-$ '3;289.0

- LIABILIrHS-AND CAPITALIZATION .... .......

Current Liabili.i.s.

-'Notes payable _..  : .' - $ ",--9.5 .. -. .$ ,1220.0 Accounts payable to subsidiariesi,_. 31.1 28.9..

Accounts payable -- ,0.11 .,,

A'cc-ue~-intr6rdst 6.4 ': ' 3.6' Derivativeinstruments . . . .. ,.. . 20.8 .. 0.2 Other '/-2 ,, . ..... 7.1 .  :.,5.4 Total .. . 74.9, 58.2 Deferred Credits and Other Liabilities Derivative instruments . .. 17 . . 0.5 .c.

Other , , 1.4 . . . 11.7 Total 1.4 12.2 Capitalization "........................ ....

Common shareholders."eauitv" ... ...... ... .' ...

Common stock-250,000,000 shares authorized without par value 136,113,954 and 135,636,538 shares issued, stated value .... 2,3214.4 Retained earnings 626.5 529.2.

Treasury st6ck-400,889 and 213,423 shares, .at cost . (8.9) ' .. ."

- Accumulatedother comprehensive loss J56~1. (44.9)...

2,792.5 Total 2,885.9 iCumulative preferred stock $10.0p'ar value 3.80% - 100,000 shares issued 10.0 10.0 4.50% -. 100,000 shares issued , ...... ... 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 637.0 387.1 Total 3,561.9 3,218.6 Commitments and Contingencies Total $ 3,638.2 $ 3,289.0 The accompanyingNotes to Financial Statements of Parent Company are an integral part of these statements.

162

GREAT PLAINS ENERGY INCORPORATED Statements.of Cash Flows. of Parent Company.

2010 2009 2008 Year Ended December 31 (millions,)  %

Cash Flovs from Operating Activities . .

Net income $ 211.7 $ 150.1 $ 154.5 Adjustments to reconcile income to net cash frnom operating'activities:"

Amortization " 3.9 1.9 0.9 Deferred income taxes, net '13.9 (6.1) 3.3 Equity in eamings..from subsidiaries . . ...... . . (239.3) -..(17,4.7),.... (514408)

Equity in (earnings) loss from discontinued'subsidiary 1.5 (35.0)

Cash flows affect ed by changes in:

Accounts receivable fromsubsidiaries . (2.6) 3.7 (26.3)

'Taxes receivable  : - 4.8 (8.7)

.'Accounts payable to subsidiaries'... ...... 2.2 0.2.- _17.7.

Other accounts payable (0.1) 10.1 :7_ ,0.2' Accrued interest 2.7 1.4 Cash dividends from subsidiaries 138.6 94.0,!v1 ,416.7 Other (7.8) 8.8 2.7 Net cash fromoperating activities 123.2 85.7 381.2 Cash FloAs from Investing Activities ... . . ......

Equity contributions to subsidiaries . (455.0). ,(200.0)*,

Intercompany lending (248.8) .

Net money pool lending (1.1) (0.9) -

GMo acquisition -  : '(5.0)

Purchases of nonutility property - ' 0.3)

Net cash from investing activities .... (249.9) . . (455.9) .,"".'., (205.3),

Cash Flows from Financing Activities ", -

Issuance of commqn stock -,... ' . , 219.9.. . .15.3 Issuance of long-term debt 249.9 287.5 Isgiiance fees " (3.2) (18.8) (10)

N'et change in short-term borrowings . (10.5) -(10.0) (12.0)

Dividends paid (114.2) .. (110.5) , (172.0),

Other financing activities . , - . .. , (7.3) ..... . (3.8) . .... (0.8)

Net cash from financing activities . 120.9. . 364.3, (170.5)

Net Change in Cash and Cash Equivalents (5.8) . _ (5.9) 5.4A.

Cash and Cash Equivalents at Beginning of Year 6.1 12.0 6.6.,,

Cash andCash Equivalents atEndofYear $ 0.3 . $ 6.1 $ 12.0 The accompanying Notes to Financial Statements of Parent Company are an integral part ofthese statements.,

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.

.163

GREAT PLAINS ENERGY INCORPORATED NOTES TO FINANCIAL STATEMENTS OF PARENT COMPANY The Great Plains Energy Incorporated Notes to, Consolidated FinahcialStatements in Part II, Item 8 should be read in conjunction with the Great Plains Energy Incorporated Parent Company Financial Statements.

Schedule II - Valuation and Qualifying Accounts and Reserves Great Plains Energy Incorporated.

Valuation and Qualifying Accounts Years EndedDecember 31, 2010, 2009 and2008 .

Additions.

Charged Balance At To Costs Charged Balance Beginning And To Other AtvEnd Description Of Period Expenses Accounts Deductions Of Period Year Ended December 31, 2010 - (millions)

Allowance for-uncollectible accounts $ 7.1 $ 9.7 $ 6.9 (a) $ 16.7 $ 7.0 Legalreserve's 5.1 7.0 - 1:9. ' 10.2 Environmental'lreserves 2.4 0.1 - - 2.5 Taxvaluafion allowance 29.8 0.2 3.4 26.6 Year Ended December 31, 2009 Allowance for uncollectible accounts $ 6.8 $ 8.7 $ 6.0 (a) $ 14.4 (b). $ 7.1 Iegalreserves 10.2 2.6 -77 (c)9 5.1 Environmental reserves 0.5 2.0 -.0.1 2A.4, Taxvaluation allowance 75.8 57.0 - 103.0 *) 29.8 Year Ended December 31, 2008 Allowance for uncollectible accounts $ 4.3 $ 7.6 $ 6.8 (a) $ 11.9 (b) $ 6.8 Legal reserves .. . 2.2 8.3 9.5 (e) 9.8 (c) .ib2'ý Environmental reserves 0.3 0.2. e) _ .0.5

.-Tax valuationallowance . 0.9 74.9 (e) _ 75.8 (a) Recoyeries. Charged to other accounts for the year ended December 31, 2008, includes the establishment of an allowance of $1.1 million and'a.$1.4 million increase due to the acquisition of GMO.0.

(b) Uncollectible accounts. charged off..

(c)' Payment of claims. .

(d) Reversal of tax valuation allowanice. . .

Acquisition-of.GMO. .. ,-., . ., .

164

Kans as City Pov!yr & Light Company Valuation and Qualifying Accounts Years EndedDecember 31, 2010, 2009 and2008 Additions Charged Balance At To Costs Charged 'Balan'ce' Beginning And To Other At End Description - Of Period Expenses Accounts Deductions Of Period Year Ended December 31, 2010 (millions)

Allowance for uncollectible accounts $ 1.7 $ 6.2 $ 4.3 (a $ .10.7 (b) $ 1.5 Legalreserves 2.3 1.9 -. 2 3.0 Environmental reserves 0.3. - - - 0.3 Year Ended December 31, 2009 Allowance for uncollectible accounts $ 1.2 $ 5.5 $ 3.9 (a) $ 8.9 (b) $ 1:7 Legal reserves 2.4 1.2 - 1.3 (c) 2.3 Environmental reserves 0.3 - 0.3 Year Ended December 31, 2008 .-

Allowance for uncollectible accounts $ .4.33 $ 5.9 3.3 (a) $ 12.3 .(b) 1$:2 Legal reserves 2.2 '-3:2 - 3.0 +/-2.4 Environmental reserves 0.3 - - 0.3 (a) Recoveries. .,. - -. ,

(b)

Uncollectible accounts charged off.

(c)

Payment of claims.

1.65

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.

UNI(A 1 rL-AdlN 3 MN I2KU 11 1N k-UNYVI¶J- I rLI)

Date: February 24, 2011 By: /s/Michael J. Chesser Michael J. Chesser

,..Chairman of the Board and Chief Executive Officer Pursuant to the re4uirements of the Securities Act of 1934,'this report has been signed below by the foll6vifig persons on behalf of the registrant and in the c apacities and on the dates indicated.

Signature Title .;. Date , "k.-, '

Is/Michael J. Chesser Chairman of the Board and Chief )° Michael J. Chesser Executive Officer )

(Principal Executive Officer)

Senior Vice President - Finance and )

/s/James C. Shay Strategic. Development and )

James C. Shay. Chief Financial Officer (Principal Financial Officer)

/s/Lori A. Wright Vice President and Controller Lori A. Wright (Principal Accounting Officer)

)

David L. Bodde* Director )

) Fbur 421

/s/William H. Downey Director )

William H. Downey )

)

Randall C. Ferguson, Jr.* Director )

)

Gary D. Forsee*. Director )

)

James A. Mitchell* Director )

William C. Nelson* Director )

)

John J. Sherman* Director )

)

Linda H. Talbott* Director )

)

Robert H. West* Director

• By /s/Michael J. Chesser Michael J. Chesser Attomey-in-Fact*

166

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.

KANSAS CITY POWER & LIGHT COMPANY Date: February 24, 2011 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 Chairman of the Board and Chief Michael J. Chesser Executive Officer (Principal Executive Officer)

/s/James C. Shay Senior Vice President - Finance and James C. Shay Strategic Development and Chief Financial Officer (Principal Financial Officer)

/s/Lori A. Wright Vice President and Controller Lori A. Wright (Principal Accounting Officer)

David L. Bodde* Director ... I February 24,2011

/s/ William H. Downey Director William H. Downey Randall C. Ferguson, Jr.* Director Gary D. Forsee* Director James A. Mitchell* Director

))

William C. Nelson* Director

)

John J. Sherman* Director )

)

Linda H. Talbott* Director )

)

• By /s/Michael J. Chesser Michael J. Chesser Attomey-in-Fact*

167

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1-Ol 11 1L'ilf011,60 1Oi 'H(,l I'll, ,1a I1NO ( t,\k ttýo d fc M or\ \.I P ol

DIRECTORS AND OFFICERS BOARD OF DIRECTORS WiLLIAM C NELSON WILLIAM Ii DOWNEY OFFICERS MICHAEL W (LINE Great Plains Energy Chairman, George K. Baum President and Chief KCP&L Vice President-Investor Asset Management, a leading Operating Officer Relations and Treasurer MICHAALL J (HESSER provider of investment lrHALL J, (HESSEIR Chairman of the Board and management services r' JAMES SIAY Chairman of the Board and F DANA CRAWFORD Chief Executive Officer Senior Vice President- Chief Executive Officer Vice President-Strategic JO HN I SHE-RMAN Finance and Strategic Initiatives WILLIAM 1 DOWNEY President and Chief Executive Development and WILLIAM H DOWNEY President and Chief Officer, Inergy, LP., a leading Chief Financial Officer President and Chief rELIN E FAIRCHILD Operating Officer retail and wholesale propane Operating Officer Vice President- Corporate supply, marketing and ,HARI E, A CAISLfY Secretary and Chief DR DAVID L 0DDI distribution business Vice President-Marketing FERRYBASSHAM Compliance Officer Senior Fellow and Professor, and Public Affairs Executive Vice President-Arthur M Spiro Institute for DR LiNDA H 1AvhOTI Utility Operations WILHAM P HERDFGIN II Entrepreneurial Leadership President and CEO, Talbott MiCHAE Vs (-LINE Vice President-T&D Operations at Clemson University & Associates, consultants Vice President- 'Al rC HAv in strategic planning, Investor Relations Senior Vice President- Finance HIAýHtsR A HLUMPyIRLY RANDAIL CAFEFRGUSON, JR philanthropic management and Treasurer and Strategic Development and Vice President-Human Former Senior Partner for and development Chief Financial Officer Resources and General Business Development, ELiLEN E FAIR(HilD Counsel Tshibanda & Associates, Rk)BlRr IH WEST Vice President-Corporate LI CHAFI I DECGND()R' LLC,a consulting and project Retired Chairman of the Secretary ard Chief Senior Vice President-Delivery MARIA R NrS management services firm Board, Butler Manufacturing Compliance Officer Vice President-Supply Chain Company, a supplier of SCOTT H HEIDIBRINK GARY D FORSEF non-residential building HEiATHER A HUMPHREY Senior Vice President-Supply MARVINL. ROLLISON Former President, University systems, specialty components Vice President-Human Vice President-Renewables of Missouri System, the state's and construction services Resources and General MD ALFIERIS and Gas Generation premier public institution of Counsel Vice President-Customer higher learning OFFICERS Service CIARLFS H1 rCKIrES Great Plains Energy rLOIA WREGH1 Vice President-information JAMES A MsCHELL Vice President and Controller KEVIN F BRYANLI Technology Executive Fellow, Leadership P4iCAlLi (-HESSER Vice President-Strategy and Center for Ethical Business Chairman of the Board and MARK G, ENGLISH Risk Management LORI A WRIGHT Cultures, a not-for profit Chief Executive Officer Assistant General Counsel Vice President and Controller organization assisting business and Assiotant Serretury CHARIES A CA1SL[Y leaders in creating ethical and Vice President-Marketing MARK G [NGLISH profitable cultures and Public Affairs Assistant General Counsel and Assistant Secretary SHAREHOLDER INFORMATION GREAT PLAINS ENERGY FORM 10-K CUMULATIVE PREFERRED STOCK DIVIDENDS Great Plains Energy's 2010 annual report on Form 10-K filed with the Securities and Quarterly dividends on preferred stock were declared in each quarter of 2010 and 2009 Exchange Commission can be found at mww.greatplainsenergy.com The 10-K is as follows available at no charge upon written request to:

AMO)UN I SERIES AMOUNL Corporate Secretary 3.80% $095 4,35% $1.0875 4.20%

Great Plains Energy Incorporated 1.05 450% 1125 PO Box 418679 Kansas City, MO 64141-9679 TWO-YEAR COMMON STOCK HISTORY 2009 MARKET INFORMATION QUARALi ER HIGH LOW HEIGH LOW Great Plains Energy's common stock is traded on the New York Stock Exchange under the First $19.60 $1743 $20.34 $1117 ticker symbol "GXP" We hod 22,047 shareholders of record as of February 22, 2011 Second 1963 1685 15.91 13,44 Third 1906 1695 1817 1481 INTERNET SITE Fourth 1963 1858 2016 16.93 We have a website on the Internet at www.greatplainsenergy.com Information available includes our SEC filings, news releases, stock quotes, customer account information, ANNUAL MEETING OF SHAREHOLDERS community and environmental efforts and information of general interest to investors Great Plains Energy's annual meeting of shareholders will be held at 10:00 a.m, and customers May 3, 2011, at the Albrecht-Kemper Museum of Art, 2818 Frederick Avenue, St. Joseph, MO 64506 Also located on the website are our Code of Business Conduct and Ethics, Corporate Governance Guidelines and the charters of the Audit Committee, Governance Committee REGISTERED SHAREHOLDER INQUIRIES and Compensation and Development Committee of the Board of Directors, which are For account information or assistance, including change of address, stock transfers, available at no charge upon written request to the Corporate Secretary dividend payments, duplicate accounts or to report a lost certificate, please contact Investor Relations at 800 245-5275 COMMON STOCK DIVIDEND 21009 FINANCIAL COMMUNITY TRANSFER AGENT AND First $0D2075 $02075 INQUIRIES STOCK REGISTRANT Second 0.2075 O02075 Securities analysts and investment Computershare Trust Company, N.A.

Third 0 2075 0,2075 professionals seeking information Investor Services Fourth 0 2075 0 2075 about Great Plains Energy may contact P 0 Box 43078 Ihvestoi Relations at 816 556 2312 Providence, RI02940-3078 Tel. 800 884 4225

Contents 0 Page Financial Statements Page 0

0 Organization and Resources ..................................... 1 Report of Independent Public Accountants ...... 13 0 Leadership Message .............................................. 2-3 Balance Sheets ................................................... 14-15 0 2010 Highlights ....................................................... 4-5 Statements of Margin ......................................... 16 0 0

KEPCo Trustees and Managers ............................. 6-9 Statements of Patronage Capital .......................... 16 0 KEPCo Member Area Map .................................... 9 Statements of Cash Flows ................................... 17 0 0

O perating Statistics ............................................ 10-11 Notes to Financial Statements ............................. 18-32 0

Generation Resources ....................................... 33 0

0 0

KEPCo Staff 0 0

Stephen Parr ........................ Executive Vice President Shari Koch ... Accounting, Payroll & Benefits Specialist 0

& Chief Executive Officer 0 Elizabeth Lesline ................... Administrative Assistant/

Les Evans .................................. Senior Vice President Receptionist 0

& Chief Operating Officer 0 Mark Barbee ................ Vice President of Engineering, Mitch Long ................. Sr. SCADA/Metering Technician 0 KSI Vice President of Engineering Michael Morris ........... Sr. SCADA/Metering Technician 0 0

J. Michael Peters ....... Vice President of Administration Erika Old ......................... Finance & Benefits Analyst 2

& General Counsel 0 Coleen Wells ......................................... Vice President Matt Ottm an ................................................ Engineer 3 0

& Chief Financial Officer John Payne ......................................... Senior Engineer 0

0 Laura Armstrong ..................... Administrative Assistant Robert Peterson ................ Sr. Engineering Technician 0 Mark DoIjac .................. Director of Rates & Regulation Rita Petty ....................................... Executive Assistant 0

& Manager of Office Services 0 Terry Deutscher ......... EMS/SCADA System Specialist Paul Stone ......................................... System Operator 0

Carol Gardner ................................. Operations Analyst 0 Shawn Geil ................ Director of Information Systems Phil Wages .................... Director of Member Services, Government Affairs & Business Development 0

0 Robert Hammersmith ................................ Sr. SCADA/

Metering Technician

0 0

• S Organization & Resources 0Kansas Electric Power Cooperative, Inc. (KEPCo), headquartered at Topeka, Kansas, was incorporated in

• 1975 as a not-for-profit generation and transmission cooperative (G&T). It is KEPCo's responsibility to procure 0 an adequate and reliable power supply for its nineteen distribution Rural Electric Cooperative Members at a S reasonable cost.

Through their combined resources, KEPCo Members support a wide range of other services such as rural economic development, marketing and diversification opportunities, power requirement and engineering stud-ies, rate design, etc.

0KEPCo is governed by a Board of Trustees representing each of its nineteen Members which collectively serve more than 120,000 electric meters in two-thirds of rural Kansas. The KEPCo Board of Trustees meets regularly to establish policies and act on issues that often include recommendations from working committees of the Board and KEPCo Staff. The Board also elects a seven-person Executive Committee which includes the President, Vice President, Secretary, Treasurer, and three additional Executive Committee members.

KEPCo was granted a limited certificate of convenience and authority by the Kansas Corporation Com-

• mission in 1980 to act as a G&T public utility. KEPCo's power supply resources consist of: 70 MW of owned

• generation from the Wolf Creek Generating Station; 30 MW of owned generation from the latan 2 Generating

• Unit; the 20 MW Sharpe Generating Station located in Coffey County; hydropower purchases of an equivalent 100 MW from the Southwestern Power Administration, and 14 MW from the Western Area Power Administra-tion; plus partial requirement power purchases from regional utilities.

KEPCo is a Touchstone Energy Cooperative. Touchstone Energy is a nationwide alliance of more than 650 cooperatives committed to promoting the core strengths of electric cooperatives - integrity, accountability, S innovation, personal service and a legacy of community commitment. The national program is anchored by the motto "The Power of Human Connections."

0 0

• Kansas Electric

• Power Cooperative, Inc.

• P.O. Box 4877 Topeka, KS 66604

• 600 SW Corporate View Topeka, KS 66615 (785) 273-7010 www.kepco.org 0

A Touchstone Energy Cooperative 4 0

0 0

0 0

0

0 2010 Message from Kirk Thompson KEPCo President Stephen E. Parr Executive Vice President

& Chief Executive Officer After 18 months of a stutter-step recovery, the economy seems to be gathering steam. Many companies 0 that survived the recession are lean and profitable, and 0 there's a good chance they'll begin hiring again in 2011.

However, to sustain the recovery, economic growth must 0 occur. Energy is the ultimate enabler of growth. Industrial expansion throughout the past two centuries has in every instance been based on increased energy consumption.

More specifically, industrialism has been inextricably tied 1W to the availability and consumption of low cost energy from fossil fuels. Electricity and fossil fuels are integral to economic development and trade and underpin agriculture, industry, transportation, and commercial enter-prises. Though energy is not sufficient on its own to achieve economic growth, it is a necessary prerequisite.

Economic growth that creates jobs and enhances incomes relies on the expanded use of energy.

However, the Environmental Protection Agency (EPA) has introduced a myriad of new regulations targeted at reducing greenhouse gas (GHG) emissions, primarily carbon dioxide, which may very well derail any chance of a sustained economic recovery. The regulations have been coined "the EPA train wreck," and it could ruin your budget. The phrase is shorthand for the maze of regulations the EPA wants to impose on coal-fired power plants over the next five years. It's a long, expensive list. The regulations will force many coal-fired 0 power plants to either be retrofitted with equipment that reduces GHG or be retired. The regulations will require utilities to incur billions and billions of dollars in costs, in which those costs are in turn, passed on to the end consumer. 0 0

Ultimately, the new EPA regulations will force consumers to pay more for energy as well as for all other goods and services. The increased regulations and subsequent high energy prices throw a monkey wrench into the production side of the economy. Contrary to claims of an economic boost from "green investment" and "green collar" job creation, more EPA regulation will reduce economic growth, GDP, and employment opportu-nities. Furthermore, because the economic effect of the proposed regulations will resemble the economic effect 0 of an energy tax, the increase in costs creates a correspondingly large loss of jobs and income. 0 0

Generally, the greater and more effective the investment, the greater the increase in future income.

2 20 0

0

Since income, as measured by GDP, drops as a result of new regulation, it is clear that more capital is de-a0 stroyed than created. Those who say we must not utilize our least expensive fuel sources are putting small OS and hypothetical risks ahead of better understood costs and benefits. While the other economic powers in O* the world, notably China and India, are ignoring GHG issues and strengthening their economies, the U.S. is O* moving to do just the opposite. Congress should block EPA from issuing short-sighted and poorly thought out greenhouse gas regulations for power plants and energy-related industries. Only new technology will allow us to grow our economy, while managing emissions.

O If there is a bright side to an impending train wreck, it is that KEPCo's exposure to the new EPA regula-O tions will be considerably less when compared to other utilities. KEPCo's partial ownership of the Wolf Creek 0I Nuclear Generating Station and O the federal hydropower allocations KEPCo receives account for over O* 50 percent of KEPCo's energy mix.

O The generation facilities that pro-duce this energy are not subject to GHG regulations from the EPA, since the facilities do not have any GHG emissions. As the utility in-O dustry begins to operate under the O0 new regulations, KEPCo's diverse 0 energy mix will save its Members O millions of dollars in avoided GHG 2010-11 KEPCo Executive Committee (seated):Dwane Kessinger; Kenneth regulation costs. Maginley; Larry Stevens; (standing)Stephen Parr,Executive Vice President&

CEO; Kirk Thompson, President;Scott Whittington, Vice President;Dale Short, 5 KEPCo is pleased to report Secretary; and Kevin Compton, Treasurer.

that construction of latan 2 was O0 completed in the third quarter of the year and became commercially operation on December 31st. KEPCo

• I owns a 30 MW share of latan 2, which will provide KEPCo's Members with approximately 12 percent of their 0 energy requirements. Final construction costs were less than $2,600 per kW, making latan 2 a very economical Ot new resource. latan 2 is a highly efficient, super-critical, coal-fired plant that utilizes state-of-the-art emission

• ! control systems which exceed the EPA's new regulations, thus mitigating additional costs associated with the new regulations.

O0 KEPCo's decision to participate in latan 2 was its first investment in base load generation in 30 years,

• when KEPCo invested in Wolf Creek. Adequate base load generation is essential for all utilities and latan 2 is an investment that will not only serve our current Member-Owners, but future ones as well. A modest increase in rates was implemented in 2010 in order to recover the costs associated with the construction of latan 2.

O* KEPCo partnered with the National Rural Utilities Cooperative Finance Corporation (CFC) to provide its long-

• i term financing needs for this project. Through this partnership, KEPCo successfully managed latan 2 loan funds and maximized savings through reduced interest payments during the period of construction.

• Continuedon page 12 0

0 0

0 2010 KEPCo Highlights Construction of the latan Unit 2 project was completed and placed into commercial operation. KEPCo owns a 30 MW or 3.53% share of the unit which will provide approxi-mately 12% of KEPCo's energy needs.

KEPCo obtained long-term, firm Network Integrated Transmission Service from the Southwest Power Pool for 0 Member's load in the Mid-Kansas Electric Company area. 0 This will allow the greatest flexibility to best utilize our generation resources to reliably and economically serve our Member load.

0 Sharpe Generating Station successfully completed a requiredSouthwest Power Pool capacity accreditation demonstrationtest. The station generated 20.2 MW KEPCo completed its Long-Range Financial Forecast and conducted a rate study for the Board of Trustees, which recognizes the addition of the latan 2 0 project in KEPCo's power supply.

KEPCo staff provided on-going technical consulta-tion to Members on renewable energy issues in areas such as generatorinterconnections,purchasepower agreements, metering, regulatoryandpolicy.

0 KEPCo continues to actively engage in developing transmission policy at the Southwest Power Pool through participation on key committees such as the Board of Directors/Members Committee, the Corporate Governance Committee, the Markets and Operation Policy 0 Committee, the Strategic Planning Committee, the Regional Tariff Working Group and the Transmission Work- 0 ing Group. 0 0

KEPCo, along with other preference power customers, worked with the Western Area PowerAdministra-tion to develop a program to recognize the environmentalattributes of electricity generatedfrom hydroelectric units and transferthe attributes to the customers purchasingthe electricity through Renewable Energy Credits (REC's.)

0 0

4 0 0

0

0

0) KEPCo continues to fund and assist Members in the promotion of an energy efficiency electric water heater

• I and heating/cooling system rebate program. Since inception, KEPCo has issued over 6,500 heating/cooling SI rebates and over 15,500 water heater rebates.

• KEPCo Staff continues to work

• diligently with KEC and Sunflower on legislative issues in Kansas and in Wash-

• ington, D.C. Staff testified on several bills

• in 2010 and tracked numerous pieces

• of legislation. In Washington, D.C., Staff

• participatedin the NRECA Legislative Conference.

SI KSI completed damage assessments

• and engineering reports directly resulting

• l in FEMA funding totaling over $35 million for 3 KSI clients (Bluestem, Rolling Hills Le

• 1 and Nemaha-Marshall) to permanently

• ! repair the damage associated with the severe winter storm of November 2009.

0 WF KSI worked with the KEC, Kansas Department of Emergency Management (KDEM) and FEMA to determine what level of environmental review is requiredfor "im-proved projects"associatedwith FEMA disasters.

S

• KSI assisted Rolling Hills, Flint Hills, and Bluestem with

• the development and submittal of applications to FEMA for

• more than $7 million in mitigation funds to make proactive

• iimprovements to their distribution facilities to reduce the likelihood of future damage due to severe ice storms.

S

• Staff continued to assist Members in deploying Auto-mated Meter Reading (AMR) by assistingin designing the data communications methods and allowing Mem-bers to add their equipment to KEPCo's existing communications system.

• ) KEPCo completed 2010 without a lost-time accident.

S O5

KEPCo Member Cooperatives S Trustees, Alternates and Managers Ark Valley Electric Cooperative Assn., Inc. 0 PO Box 1246, Hutchinson, KS 67504 620-662-6661 Trustee Rep. -- Joseph Seiwert O Alternate Trustee Rep. -- Bob Hall Manager -- Bob Hall Joseph Seiwert Bob Hall Bluestem Electric Cooperative, Inc.

PO Box 5, Wamego, KS 66547 785-456-2212 0 PO Box 513, Clay Center, KS 67432 785-632-3111 O Trustee Rep. -- Kenneth J. Maginley Alternate Trustee Rep. -- Robert M.Ohlde 0 Manager -- Kenneth J. Maginley O Kenneth Maginley Bob Ohlde 0

Brown-Atchison Electric Cooperative Assn., Inc.

PO Box 230, Horton, KS 66439 785-486-2117 Trustee Rep. -- Kevin D. Compton O Alternate Trustee Rep. -- Rodney V.Gerdes O Manager -- Rodney V. Gerdes Kevin Compton Rod Gerdes S 0

Butler Rural Electric Cooperative Assn., Inc. 0 PO Box 1242, El Dorado, KS 67042 316-321-9600 O Trustee Rep. -- Dale Short Alternate Trustee Rep. -- Richard Pearson Manager -- Dale Short O 0

Dale Short Richard Pearson Caney Valley Electric Cooperative Assn., Inc. 5 PO Box 308, Cedar Vale, KS 67024 620-758-2262 0 Trustee Rep. -- Dwane Kessinger O Alternate Trustee Rep. -- Allen A. Zadorozny Manager -- Allen A. Zadorozny Dwane Kessinger Allen Zadorozny 6i 0 0

• CMS Electric Cooperative, Inc.

e* PO Box 790, Meade, KS 67864 620-873-2184

• Trustee Rep. -- Kirk A. Thompson Alternate Trustee Rep. -- Clifford Friesen

• Manager -- Kirk A. Thompson

• Kirk Thompson Cliff Friesen DS&O Electric Cooperative, Inc.

• ! PO Box 286, Solomon, KS 67480 785-655-2011

• Trustee Rep. -- Harlow L. Haney

• I Alternate Trustee Rep. -- Donald E. Hellwig Manager -- Donald E. Hellwig

• Harlow Haney Don Hellwig Flint Hills Rural Electric Cooperative Assn., Inc.

• I PO Box B, Council Grove, KS 66846 620-767-5144

• Trustee Rep. -- Robert E. Reece Alternate Trustee Rep. -- Graeme Glaser Manager -- Robert E. Reece Bob Reece Graeme Glaser Heartland Rural Electric Cooperative, Inc.

• ) PO Box 40, Girard, KS 66743 620-724-8251 Trustee Rep. -- Dennis Peckman Alternate Trustee Rep. -- Dale Coomes Manager -- Dale Coomes Dennis Peckman Dale Coomes

• ULJEC PO Box 70, McLouth, KS 66054 913-796-6111

• Trustee Rep. -- Larry H. Stevens

• Alternate Trustee Rep. -- Steven Foss

• Manager -- Steven Foss

• Larry Stevens Steven Foss Lyon-Coffey Electric Cooperative, Inc.

• I PO Box 229, Burlington, KS 66839 620-364-2116 Trustee Rep. -- Scott Whittington Alternate Trustee Rep. -- Donna Williams

• Manager -- Scott Whittington 0

• Scott Whittington Donna Williams 07 0

0

KEPCo Member Cooperatives Trustees, Alternates and Managers Ninnescah Electric Cooperative Assn., Inc.

PO Box 967, Pratt, KS 67124 620-672-5538 0 Trustee Rep. -- Gordon Coulter Alternate Trustee Rep. -- Ed Wiltse Manager -- Ed Wiltse Gordon Coulter Ed Wiltse S 0

Prairie Land Electric Cooperative, Inc.

PO Box 360, Norton, KS 67654 785-877-3323 District Office, Bird City 785-734-2311 District Office, Concordia 785-243-1750 Trustee Rep. -- Gilbert Berland Alternate Trustee Rep. -- Allan J. Miller Gilbert Berland Manager -- Allan J. Miller Allan Miller 5 Radiant Electric Cooperative, Inc.

PO Box 390, Fredonia, KS 66736 620-378-2161 0 Trustee Rep. -- Dennis Duft Alternate Trustee Rep. -- Don Songer Administrative Manager -- Leah Tindle Operations Manager -- Dennis Duft 5 Dennis Duft Don Songer Leah Tindle S

Rolling Hills Electric Cooperative, Inc.

PO Box 307, Mankato, KS 66956 785-378-3151 District Offices, Belleville 785-527-2251 Ellsworth 785-472-4021 5 Trustee Rep. -- Melroy Kopsa Alternate Trustee Rep. -- Leon Eck Melroy Kopsa MeloyKosaLeon Manager -- Douglas J. Jackson Lo Eck Doug Jackson Sedgwick County Electric Cooperative Assn., Inc.

PO Box 220, Cheney, KS 67025 316-542-3131 Trustee Rep. -- Donald Metzen Alternate Trustee Rep. -- Alan L. Henning Manager -- Alan L. Henning S

Donald Metzen Alan Henning 8

8 5 0

S S

Sumner-Cowley Electric Cooperative, Inc.

PO Box 220, Wellington, KS 67152 620-326-3356 Trustee Rep. -- Charles Riggs Alternate Trustee Rep. -- Cletas Rains Manager -- Cletas Rains Cletas Rains 0 Twin Valley Electric Cooperative, Inc.

PO Box 368, Altamont, KS 67330 620-784-5500 0 Trustee Rep. -- Bryan W. Coover Alternate Trustee Rep. -- Ron Holsteen Manager -- Ron Holsteen 0

0 Bryan Coover Ron Holsteen 0

0 Victory Electric Cooperative Assn., Inc.

0 PO Box 1335, Dodge City, KS 67801 620-227-2139 Trustee Rep. -- Terry Janson Alternate Trustee Rep. -- Milam Jones Manager -- Terry Janson 0

Terry Janson Milam Jones 0

0 0 KEPCo Member Area Map 0

0 0

0 0

0 0

0 9

Operating Statistics 0 0

Operating Expenses 0 Wolf Creek O&M KEPCo O&M and A&G 4.4%

Depr. And Amort.

0 5.9%

Purchasod Power Interest-5.5%

7 0 0

4400 411 403 3F" Peak Demand 00 01 02 03 04 06 06 07 0 0 10 Yew.

10

r TO Rates 50 0 1 02 03 04 05 06 0? 06 09 10 0

0 Sunflower VP 16.0% 4.1%

0 0

Sources 0

S of Energy S IOUs 26.3%

39.8%

0 2,250.000 0

0 S

0 S1,75o,ooo Energy 0 Sales 1.22750000 4 I I I I I 00 01 02 03 0406 06 06 0 07 06 06 0 00 106 10 Yam I

11

2010 Message Continued from page 3 An extraordinarily warm and protracted summer led KEPCo to achieve an all-time record peak demand of 438 MW. This was a 9.2% increase over 2009, with accompanying energy sales of 2.1 million megawatt O hours, which also was an increase of 6.8% over 2009, and an all-time record high as well. KEPCo's Demand 0 Side Management program once again played a key role in reducing the financial impact of the record year to 0 KEPCo's Members, by shedding 49.7 MW of demand, resulting in a savings of nearly $4 million to KEPCo's 0 Member Cooperatives.

KEPCo's Energy Efficiency Rebate Program also set record numbers. The continued growth of this program is indicative of the emphasis that our Member Cooperatives have placed on energy efficiency and the receptiveness of employing energy efficiency measures from consumers.0 i

In December, after thirty-one years of dedicated service, Dr. Robert D. Bowser, Vice President of Tech-nical Services, retired from KEPCo. Dr. Bowser was an invaluable asset to KEPCo and was instrumental in many of KEPCo's milestones. Thank you, Bob, for a job well done.

Recognition and thanks needs to be extended to the KEPCo Board of Trustees, KEPCo Members, and KEPCo Staff for their hard work and dedication during the past year. These are challenging times and it is grati-fying to have so many willing to work on solutions for the future.

In closing, the United States has seen different trends for new electric generation technologies in the O last 50 years; coal in the 1950's to present, nuclear in the 1970s and 1980s, natural gas in the 1990s, and most recently, renewables. A new set of regulatory policies, public interest factors, technology advancements, and economic drivers make the future for new generation potentially very different than recent experience. The biggest challenges will be fashioning climate change policies that protect the environment and electricity cus-tomers without damaging the U.S. economy.

Developing and deploying all of the technologies needed to sharply reduce greenhouse gas (GHG) O emissions is a long-term proposition, and the price tag will be hefty. Electric companies will need to implement a variety of solutions to get the job done; changes in generation portfolios, transmission system improvements, and 'smart' delivery meters and grids that will involve consumers in the changes. All of these changes must occur while allowing utilities to continue to deliver an affordable and reliable supply of electricity to meet the na-tion's growing demand for power. A successful and sustainable national energy portfolio can only be achieved through a concerted and coordinated effort among traditional, alternative, and innovative sources while aligning political, regulatory, and financial opportunities and interests. Thankfully, KEPCo has assembled such a re-source portfolio through the vision and efforts of its Members. For our nation's economy to restore the millions of jobs needed for economic revitalization, environmental protection and economic growth must be considered 0 together. 0 Kirk A. Thompson Stephen E. Parr 12 0

0

O O

• Kansas Electric Power Cooperative, Inc.

Financial Statements O December 31, 2010 and 2009 I*I

• Mayer Hoffrn n 'iiIc*n - '

• An Independent CPA Firm 990 SW Fairtawn Road Topeka, Kansas 66606-2384 785.272-3176 ph 785 272-2SO3 N www.mhrnipc..com INDEPENDENT AUDITORS' REPORT To the Board of Directors Kansas Electric Power Cooperative, Inc.

Topeka, Kansas We have audited the accoompanying consolidated balance sheet of Kansas Electric Power Cooperative, Inc.

and subsidiary ("KEPCo") as of December 31, 2010, and the related consolidated statements of margin.

patronage capital, and cash flows for the years then ended. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these consolidated financial statements based on our audit. The financial statements of Kansas Electric Power Cooperative, Inc. as of December 31. 2009 were audited by other auditors whose opinion dated April 12. 2010 on those statements was qualified because of the departure from U.S generally accepted accounting principles described in the third paragraph We conducted our audit in accordance with US. generally accepted auditing standards Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements am free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the consolidated 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 audit povides a reasonable basis for our opinion.

O As explained in Note 3, certain depreciation and amortization methods have been used in the preparation of the 2010 and 2009 financial statements which, in our opinion, are not in accordance with accounting principles generally accepted in the United States of America. The effects on the financial statements of the aforementioned depaarture are explained in Note 3.

In our opinion, except for the effects of using the aforementioned depreciation and amortization methods as discussed in Note 3, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of KEPCo as of December 31 2010, and the results of its operations and its cash flows for the year then ended in conformity with accounting principles generaly accepted in the United O States of America.

In accordance with Government Auditing Standads we also have issued our report dated April 15, 2011 on our consideration of KEPCo's internal control over financial reporting and our tests of Its compliance wih certain provisions of laws, regulations, contracts, and grant agreements and other matters, The purpose of that report is to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing and not to provide an opinion on the intemal control over financial reporting or on compliance. That report Is an integral pan of an audit performed in accordance with Govemmerd Audiing Standards and should be considered in assessing the results of our audit.

Mayer Hoffman McCann P.C.

Topeka, Kansas April 15, 2011 0

O 13 O

O

0 Kansas Electric Power Cooperative, Inc. 0 Consolidated Balance Sheets 0 December 31, 2010 and 2009 0 Assets 2010 2009 0 Utility Plant 0 In-service $228,496,491 $227,090,041 0 Less allowances for depreciation (131,630,749) (127,860,384) 0 Net in-service 96,865,742 99,229,657 0 Construction work in progress 82,847,042 65,624,879 0 Nuclear fuel (less accumulated amortization of $16,370,363 0

and $13,928,208 for 2010 and 2009, respectively) 9,691,263 8,293,682 Total utility plant 189,404,047 173,148,218 0

0 Restricted Assets 0 Investments in the National Utilities Cooperative Finance Corporation 12,262,979 13,674,112 0 Bond fund reserve 4,405,495 4,411,168 0 Decommissioning fund 12,362,162 10,571,021 Investments in other associated organizations 210,423 0

181,191 Total restricted assets 29,241,059 28,837,492 0

0 Current Assets 0 Cash and cash equivalents 4,349,243 118,631 0 Member account receivables 12,192,815 11,539,149 Materials and supplies inventory 0

3,621,852 3,330,502 Other assets and prepaid expenses 502,719 638,516 0

Total current assets 20,666,629 15,626,798 0

0 Other Long-term Assets 0 Deferred charges 0

Wolf Creek disallowed costs (less accumulated amortization of

$14,149,391 and $13,392,227 for 2010 and 2009, respectively) 11,833,530 12,590,694 0

Wolf Creek deferred plants costs (less accumulated amortization of 0

$28,169,276 and $25,039,356 for 2010 and 2009, respectively) 18,779,517 21,909,438 0 Wolf Creek decommissioning regulatory asset 765,551 2,897,014 0 Deferred incremental outage costs 1,619,307 4,585,364 0 Other deferred charges (less accumulated amortization of 0

$8,284,362 and $7,817,223 for 2010 and 2009, respectively) 1,652,772 2,117,526 0 Unamortized debt issuance costs 407,673 510,359 0 Other 606,110 582,800 0 Total long-term assets 35,664,460 45,193,195 Total assets $274,976,195 $262,805,703 0

0 14 0

S 0

Kansas Electric Power Cooperative, Inc.

Consolidated Balance Sheets 0

December 31, 2010 and 2009 0 Liabilities and Patronage Capital 2010 2009 0 Patronage Capital Memberships $ 3,200 $ 3,200 S Patronage Capital 44,652,230 37,005,611 0 Accumulated other comprehensive loss (5,584,452) (4,968,938) 32,039,873 Total patronage capital 39,070,978 0 Long-term Debt 178,045,098 178,467,513 0

Other Long-term Liabilities 0 Wolf Creek decommissioning liability 15,356,672 15,761,591 Wolf Creek pension and postretirement benefit plans 8,382,247 7,433,971 0 Wolf Creek deferred compensation 905,124 826,871 0 Arbitrage rebate long-term liability 1,119,319 1,049,464 0 Other deferred credits 26,931 58,155 Total other long-term liabilities 25,790,293 25,130,052 0

0 Current Liabilities Current maturities of long-term debt 17,506,786 14,191,957 Accounts payable 12,070,924 10,963,824 0 Payroll and payroll-related liabilities 325,298 291,619 Accrued property taxes 1,400,290 1,387,991 Accrued income taxes 1,937 Accrued interest payable 764,591 332,874 Total current liabilities 32,069,826 27,168,265 Total patronage capital and liabilities $ 274,976,195 $ 262,805,703 15

Kansas Electric Power Cooperative, Inc. 0 Consolidated Statements of Margin December 31, 2010 and 2009 2010 2009 00 Operating Revenues Sale of electric energy $ 138,984,507 $ 122,744,59 0 Operating Expenses Power purchased 92,782,931 76,454,59 Nuclear fuel 3,597,201 2,510,65 Plant operations 10,438,661 10,205,30 18 Plant maintenance 4,484,561 3,688,57*42'2 Administrative and general 5,734,067 5,347,85 '0 Amortization of deferred charges 4,354,223 4,398,77 0 Depreciation and decommissioning 4,400,082 4,353,04 Total operating expenses 125,791,726 106,958,79 6 Net operating revenues 13,192,781 15,785,80 Interest and Other Deductions Interest on long-term debt 6,751,912 7,026,67 7 Amortization of debt issuance costs 102,685 109,27'5 Other deductions 71,103 66,0910 Total interest and other deductions 6,925,700 7,202,04*6 Operating income 6,267,081 8,583,76 Other Income/(Expense)

Interest income 1,035,619 599,47 0 Other income 358,181 155,05 *6 0 Income tax (14,262)

Total other income 1,379,538 754,52*5 Net margin $ 7,646,619 $ 9,338,29 0 Kansas Electric Power Cooperative, Inc.

Consolidated Statements of Patronage Capital December 31, 2010 and 2009 Accumulated Other Comprehensive Income (Loss) Memberships Patronage Capital Comprehensive Income (Loss) Total 0

Balance at December 31, 2008 $3,200 $27,667,321 $(5,684,416) $21,986,1C Net margin $ 9,338,290 9,338,290 9,338,29 0 Defined benefit pension plans:

Net gain arising during year 344.884 344,884 344.8E 14 Other 15,514 15,514 15,51 Less amortization of prior year service costs included in net periodic pension costs 355,080 355,080 355,08 0 )

Comprehensive income $10,053,768 Balance at December 31, 2009 3,200 37,005,611 (4,968,938) 32,039,878414 0 Net margin Defined benefit pension plans:

$7,646,619 7,646,619 - 7,646,61 8 90 Net loss arising during year Less amortization of prior year (503,640) (503,640) (503,64 0 service costs included in net periodic pension costs (111,874) (111,874) (111,87 Comprehensive income $7,031,105 Balance at December 31, 2010 $3,200 $44,652,230 $(5,584,452) $39,070,97 16

S 0

Kansas Electric Power Cooperative, Inc.

0 Consolidated Statements of Cash Flows December 31, 2010 and 2009 0 Cash Flow From Operating Activities 2010 2009 0 Net margin $ 7,646,619 $ 9,338,290 Adjustments to reconcile net margin to net cash flows from operating activities Depreciation and amortization 3,933,791 3,889,826 Decommissioning 1,726,544 1,833,811 Amortization of nuclear fuel 3,072,155 2,013,679 Amortization of deferred charges 4,354,224 4,348,006 Amortization or deferred incremental outage costs 3,946,016 4,099,003 Amortization of debt issuance costs 102,686 109,275 Changes in 0 Member accounts receivable (653,666) (951,170)

Materials and supplies (291,350) (84,641)

Other assets and prepaid expense 135,797 (304,548)

Accounts payable 1,107,100 2,049,237 Payroll and payroll-related liabilities 33,679 (22,116)

Accrued property tax 12,299 23,038 Accrued interest payable 431,717 11,087 Accrued income taxes 1,937 Other long-term liabilities 426,336 440,601 Net cash flows from operating activities 25,985,884 26,793,378 0 Cash Flows From Investing Activities Additions to electrical plant (18,792,039) (23,937,741) 0 Additions to nuclear fuel (4,469,736) (2,474,774)

Additions to deferred incremental outage costs (982,345) (5,331,381 )

0 Investments in decommissioning fund assets (1,791,141) (2,358,279) 0 Investments in National Rural Utilities Cooperative Finance Corporation 1,381 ,901 (6,781,554) 0 Investments in bond reserve assets 5,674 (89,996) 0 Net cash flows from investing activities (24,647,686) (40,973,725) 0 Cash Flows From Financing Activities 0 Net borrowing (payment) under line of credit agreement (13,178,203)

Principal payments on long-term debt (13,709,763) (13,209,153)

Proceeds from issuance of long-term debt 16,602,177 40,052,226 Net cash flows from financing activities 2,892,414 13,664,870 Net lncreasel(Decrease) in cash and cash equivalents 4,230,612 (515,477)

Cash and Cash Equivalents, Beginning of year 118,631 634,108 0 Cash and Cash Equivalents, End of Year $ 4,349,243 $ 118,631 17

0 Kansas Electric Power Cooperative, Inc.

Notes to Consolidated Financial Statements December 31, 2010 and 2009 (1) Nature of Operations and Summary of Significant Accounting Policies Nature of Operations - Kansas Electric Power Cooperative, Inc., and its subsidiary (KEPCo), headquar-tered in Topeka, Kansas, was incorporated in 1975 as a not-for-profit generation and transmission coopera-tive (G&T). KEPCo is under the jurisdiction of the Kansas Corporation Commission (KCC) and was granted 0 a limited certificate of convenience and authority in 1980 to act as a G&T public utility. It is KEPCo's respon-sibility to procure an adequate and reliable power supply for its 19 distribution rural electric cooperative mem-bers pursuant to all requirements of its power supply contracts. KEPCo is governed by a board of trustees 0 representing each of its 19 members, which collectively serve approximately 120,000 electric meters in rural Kansas.

System of Accounts - KEPCo maintains its accounting records substantially in accordance with the Ru-ral Utilities Service (RUS) Uniform Systems of Accounts and in accordance with accounting practices pre-scribed by the KCC.

Rates - Under a 2009 change in Kansas state law, KEPCo has elected to be exempt from KCC regulation for most purposes, including the setting of rates. Rates are set by action of the Board, subject only to statutory review by the KCC if demanded by four or more members. KEPCo's rates were last set by the KCC by an order effective September 1, 2008. KEPCo's rates now include an Energy Cost Adjustment (ECA) mecha-nism and an annual Demand Cost Adjustment (DCA) mechanism, allowing KEPCo to pass along increases in certain energy and demand costs to its member cooperatives.

Principles of Consolidation - The consolidated financial statements include the amounts of KEPCo and its wholly owned subsidiary, KEPCo Services, Inc. Undivided interests in jointly owned generation facilities are consolidated on a pro rata basis. All material intercompany accounts and transactions have been eliminated in consolidation.

Estimates - The preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assump- 0 tions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabili-ties at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

0 Utility Plant and Depreciation - Utility plant is stated at cost. Cost and additions to utility plant include con-tractual work, direct labor, materials and interest on funds used during construction. In 2010 and 2009, the amount of capitalized interest was approximately $3 million and $2.1 million, respectively. The cost of repairs and minor replacements are charged to operating expenses as appropriate. The original cost of utility plant retired and the cost of removal less salvage are charged to accumulated depreciation.

The composite depreciation rate for electric generation plant for the years ended December 31, 2010 and 2009 was 3.39% and 3.27%, respectively.

0 The provision for depreciation computed on a straight-line basis for electric and other components of utility plant is as follows:

Transportation and equipment 25-33 years Office furniture and fixtures 10-20 years 0 Leasehold improvements 20 years Transmission equipment (metering, communication and SCADA) 10 years 18 0

0 0

0 Kansas Electric Power Cooperative, Inc.

• Notes to Consolidated Financial Statements

• December 31, 2010 and 2009 Nuclear Fuel - The cost of nuclear fuel in the process of refinement, conversion, enrichment and fabrica-tion is recorded as a utility plant asset at original cost and is amortized to nuclear fuel expenses based upon the quantity of heat produced for the generation of electric power. The permanent disposal of spent fuel is

• the responsibility of the Department of Energy (DOE). KEPCo pays one dollar per net megawatt (MWh) of nuclear generation to the DOE for the future disposal service. These disposal costs are charged to nuclear fuel expense.

Decommissioning Fund Assets/Decommissioning Liability -As of December 31, 2010 and 2009, ap-proximately $12.4 million and $10.6 million, respectively, have been collected and are being retained in an interest-bearing trust fund to be used for the physical decommissioning of Wolf Creek Nuclear Generating

• t Station (Wolf Creek). The trustee invests the decommissioning funds primarily in mutual funds, which are carried at fair value. During 2003, the KCC extended the estimated useful life of Wolf Creek to 60 years from the original estimates of 40 years only for the determination of decommissioning costs to be recognized for rate making purposes. In 2008, Wolf Creek received a 20-year operating license extension from the Nuclear Regulatory Commission. In 2009, the KCC approved a 2008 decommissioning cost study, which decreased

• t the estimate of total decommissioning costs to $593.5 million in 2008 ($35.6 million is KEPCo's share). The 01 study assumes a 3.73% rate of inflation and 6.8% rate of return on decommissioning fund investments.

• I KEPCo recognizes and estimates the liability for its 6% share of the estimated cost to decommission Wolf

• 1 Creek based on the present value of the asset retirement obligation KEPCo incurred at the time Wolf Creek

• ! was placed into service in 1985. On January 1, 2003, KEPCo initially recognized an asset retirement obliga-tion of $11.7 million; utility plant in-service, net of accumulated depreciation, was increased by $2.9 million;

• 1 and KEPCo also established a regulatory asset for $3.9 million, which represents the amount of the Wolf Creek asset retirement obligation and accumulated depreciation not yet refunded.

• ! The decommissioning study in 2008 decreased the asset retirement obligation by approximately $4.8 million, utility plant in-service, net of accumulated depreciation by $0.5 million and the regulatory asset by $4.2 million in 2009. No study occurred during 2009 and 2010.

A reconciliation of the asset retirement obligation for the years ended December 31, 2010 and 2009, is as follows:

2010 2009 Balance at January 1 $15,761,591 $18,384,841

• Accretion 935,112 882,784

• Decrease from 2008 study (1,340,031) (3,506,034)

Balance at December 31 $15,356,672 $15,761,591 Any net margin effects are deferred in the Wolf Creek decommissioning regulatory asset and will be collected from members in future electric rates.

• I Cash and Cash Equivalents - All highly liquid investments purchased with an original maturity of three months or less are considered to be cash equivalents and are stated at cost, which approximates fair value.

Cash equivalents consisted primarily of repurchase agreements, money market account and certificates of

• 1 deposit.

Effective October 3, 2008, the FDIC's insurance limits increased to $250,000. The increase in federally in 19 0

0

0 S

Kansas Electric Power Cooperative, Inc.

Notes to Consolidated Financial Statements December 31, 2010 and 2009 0

sured limits is currently set to expire December 31, 2013. At December 31, 2010, the Cooperative's interest-bearing cash accounts were covered by FDIC insurance.

KEPCo's repurchase agreements have collateral pledged by a financial institution, which are securities that are backed by the federal government.

Accounts Receivable - Accounts receivable are stated at the amount billed to members and customers.

KEPCo provides allowances for doubtful accounts, which is based upon a review of outstanding receivables,  !

historical collection information and existing economic conditions.

Materials and Supplies Inventory - Materials and supplies inventory are valued at average cost.

Unamortized Debt Issuance Costs - Unamortized debt issue costs relate to the issuance of the floating/ 0 fixed rate pollution control revenue bonds, mortgage notes payable to the National Rural Utilities Coopera-tive Finance Corporation (CFC) trusts and fees for repricing the Federal Financing Bank (FFB) debt. These costs are being amortized using the effective interest method over the remaining life of the bonds and notes.

Cash Surrender Value of Life Insurance Contracts - The following amounts related to Wolf Creek Nuclear Operating Corporation (WCNOC) corporate-owned life insurance contracts, primarily with one highly rated major insurance company, are included in other long-term assets on the consolidated balance sheets. I 2010 2009 Cash surrender value of contracts $ 5,768,907 $ 5,473,452 Borrowings against contracts (5,554,114) (5,236,550)

$ 214,793 $ 236,902 Borrowings against contracts include a prepaid interest charge. KEPCo pays interest on these borrowings at a rate of 6.84% and 6.84% for the years ended December 31, 2010 and 2009, respectively.

Revenues - Revenues are recognized during the month the electricity is sold. Revenues from the sale of electricity are recorded based on usage by member cooperatives and customers and on contracts and scheduled power usages as appropriate.

Income Taxes - As a tax-exempt cooperative, KEPCo is exempt from income taxes under Section 501(c)

(12) of the Internal Revenue Code of 1986, as amended. Accordingly, provisions for income taxes have not been reflected in the accompanying consolidated financial statements. KEPCo is no longer subject to federal or state income tax examinations by taxing authorities for years prior to 2007. 0 KEPCo Services, Inc., a subsidiary of Kansas Electric Power Cooperative, Inc. is not exempt from income S taxes. The organization's present accounting policy for the evaluation of uncertain tax positions is to review those positions on an annual basis. A liability would be recorded in the financial statements during the period which, based on all available evidence, management believes it is more likely than not that the tax position would not be sustained upon examination by taxing authorities and the liability would be incurred by the or-ganization.

There has been no interest or penalties recognized neither in the statements of margin nor in the balance 5 sheets related to uncertain tax positions. In addition, no tax positions exist for which it is reasonably pos-sible that the total amounts of unrecognized tax benefits will significantly increase or decrease within the next twelve months. Tax years with open statutes of limitations are 2007 and forward.

20 0 S

S 0

0 Kansas Electric Power Cooperative, Inc.

• Notes to Consolidated Financial Statements

• December 31, 2010 and 2009 0Reclassifications - Certain reclassifications have been made to the 2009 financial statements to conform to the 2010 financial statement presentation. These reclassifications had no effect on net margin.

• I Subsequent Events - Subsequent events have been evaluated through April 15, 2011, which is the date the financial statements were available to be issued.

• (2) Factors That Could Affect Future Operating Results 01 KEPCo currently applies accounting standards that recognize the economic effects of rate regulation and, 0I accordingly, has recorded regulatory assets and liabilities related to its generation and transmission opera-tions in accordance with Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC) 980, Regulated Operations.In the event KEPCo determines that it no longer meets the criteria of ASC 980, the accounting impact could be a noncash charge to operations of an amount that would be material.

• t Criteria that could give rise to the discontinuance of ASC 980 include: 1) increasing competition that restricts KEPCo's ability to establish prices to recover specific costs and 2) a significant change in the manner in 0 which rates are set by regulators from a cost-based regulation to another form of regulation. KEPCo peri-

• ! odically reviews these criteria to ensure the continuing application of ASC 980 is appropriate. Any changes

• 1 that would require KEPCo to discontinue the application of ASC 980 due to increased competition, regula-tory changes or other events may significantly impact the valuation of KEPCo's investment in utility plant,

• 1 its investment in Wolf Creek and necessitate the write-off of regulatory assets. At this time, the effect of competition and the amount of regulatory assets that could be recovered in such an environment cannot be predicted. The 1992 Energy Policy Act began the process of restructuring the United States electric utility

• industry by permitting the Federal Energy Regulatory Commission to order electric utilities to allow third par-ties to sell electric power to wholesale customers over their transmission systems. KEPCo has elected to deregulate its rate making for sales to its members under recent statutory amendments. Subject to the pos-sibility of KCC review, KEPCo's member rates are now set by action of the Board. KEPCo's ability to timely recover its costs is enhanced by this change.

0 (3) Departures From Generally Accepted Accounting Principles Effective February 1, 1987, the KCC issued an order to KEPCo requiring the use of present worth (sinking fund) depreciation and amortization. As more fully described in Note 7, such depreciation and amortization

• I methods constituted phase-in plans that did not meet the requirements of ASC 980-340 Regulated Opera-

• tion, OtherAssets and Deferred Costs.

• I Effective February 1, 2002, the KCC issued an order that extended the depreciable life of Wolf Creek from 40 years to 60 years. This order also permitted recovery in rates of the $53.5 million cumulative difference between historical present worth (sinking fund) depreciation and amortization and straight-line depreciation 0and amortization of the Wolf Creek generation plant and disallowed costs over a 15-year period. Recovery 01 of these costs in rates is included in operating revenues, and the related amortization expense is included in deferred charges in the consolidated statements of margin.

0The effect of these departures from U.S. generally accepted accounting principles is to overstate (under-state) the following items in the consolidated financial statements by the following amounts:

2010 2009 Deferred charges $ 21,381,805 $ 24,945,439 Patronage capital $ 21,381,805 $ 24,945,439

• Net margin $ (3,563,634) $ (3,563,634) 0 21 0

0 0

0 Kansas Electric Power Cooperative, Inc. 0 Notes to Consolidated Financial Statements December 31, 2010 and 2009 (4) Wolf Creek Nuclear Operating Corporation KEPCo owns 6% of Wolf Creek Nuclear Operating Corporation (WCNOC), which is located near Burlington, 0

Kansas. The remainder is owned by the Kansas City Power & Light Company (KCPL) 47% and Kansas Gas 0

& Electric Company (KGE) 47%. KGE is a wholly owned subsidiary of Westar Energy, Inc. KCPL is a wholly 0 owned subsidiary of Great Plains Energy, Inc. KEPCo's undivided interest in WCNOC is consolidated on a 0 pro rata basis. Substantially all of KEPCo's utility plant consists of its pro rata share of WCNOC. KEPCo is entitled to a proportionate share of the capacity and energy from WCNOC, which is used to supplement a 0 portion of KEPCo's members' requirements. KEPCo is billed on a daily basis for 6% of the operations, main-tenance, administrative and general costs and cost of plant additions related to WCNOC.

WCNOC disposes of all classes of its low-level radioactive waste at existing third-party repositories. Should disposal capability become unavailable, WCNOC is able to store its low-level radioactive waste in an on-site facility for up to five years under current regulations.

WCNOC is currently working on a capacity upgrade and received a 20-year operating license extension from the Nuclear Regulatory Commission in 2008.

0 (5) Investments in Associated Organizations Investments in associated organizations are carried at cost. At December 31, 2010 and 2009, investments in associated organizations consisted of the following:

CC2010 2009 CFC 1 Memberships $ 1,000 $ 1,000 Capital term certificates 395,970 395,970 Subordinated term certificates - 2,205,000 Patronage capital certificates 336,346 175,343 Equity term certificates 9,029,663 8,396,799 0 Member capital certificates 2,500,000 2,500,000 12,262,979 13,674,112 Other 210,423 181,191

$ 12,473,402 $ 13,855,303 (6) Bond Fund Reserve KEPCo has entered into a bond covenant whereby KEPCo is required to maintain, with a trustee, a bond fund reserve of approximately $4.4 million. This stipulated amount is sufficient to satisfy certain future interest and principal obligations. The amount held in the bond fund reserve is invested by the trustee in tax-exempt 0 municipal securities, pursuant to the restrictions of the indenture agreement, which are carried at amortized cost.

0 (7) Deferred Charges Wolf Creek Disallowed Costs - Effective October 1, 1985, the KCC issued a rate order relating to KEPCo's investment in Wolf Creek, which disallowed $26.0 million of KEPCo's investment in Wolf Creek ($11.8 mil 0 22 0 0

0 0

Kansas Electric Power Cooperative, Inc.

• Notes to Consolidated Financial Statements

• December 31, 2010 and 2009 lion net of accumulated amortization as of December 31, 2010). A subsequent rate order, effective February

• 1, 1987, allows KEPCo to recover these disallowed costs and other costs related to the disallowed portion

• (recorded as deferred charges) for the period from September 3, 1985 through January 31, 1987, over a 27.736-year period starting February 1, 1987. Pursuant to a KCC rate order dated December 30, 1998, the

• 1 disallowed portion's recovery period was extended to a 30-year period. Through December 31, 2001, KEPCo

• 1 used the present worth (sinking fund) method to recover the disallowed costs, which enabled it to meet the times-interest-earned ratio and debt service requirements in the KCC rate order dated January 30, 1987. The method used by KEPCo through 2001 constituted a phase-in plan that did not meet the requirements of ASC

• l 980- 340, Regulated Operations, OtherAssets and Deferred Costs.

Effective February 1, 2002, the KCC issued an order permitting recovery in rates of the $6.5 million cumula-

• tive difference between historical present worth (sinking fund) and straight-line amortization of Wolf Creek disallowed costs over a 15-year period. Such depreciation practice does not constitute a phase-in plan that

• l meets the requirements of ASC 980-340.

Ifthe disallowed costs were recovered using a method in accordance with U.S. generally accepted account-ing principles, the costs would have been expensed in their entirety upon implementation of the KCC order, with a corresponding decrease in patronage capital.

• Wolf Creek Deferred Plant Costs - Effective February 1, 2002, the KCC issued an order permitting recovery in rates of the $46.9 million cumulative difference between historical present worth (sinking fund) deprecia-tion and straight-line depreciation of Wolf Creek generation plant over a 15-year period. Such depreciation

• ) practice does not constitute a phase-in plan that meets the requirements of ASC 980-340. In 2002, this cu-mulative difference was reclassified from utility plant allowance for depreciation to deferred charges on the consolidated balance sheets to reflect the amount as a regulatory asset.

• 1 Amortization of the Wolf Creek deferred plant costs is included in amortization of deferred charges and amounts to $3.1 million for each of the years ended December 31, 2010 and 2009.

Ifthe deferred plant costs were recovered using a method in accordance with U.S. generally accepted ac-counting principles, the costs would have been expensed in their entirety upon implementation of the KCC order, with a corresponding decrease in patronage capital.

• I Deferred Incremental Outage Costs - In 1991, the KCC issued an order that allowed KEPCo to defer its 6%

share of the incremental operating, maintenance and replacement power costs associated with the periodic refueling of Wolf Creek. Such costs are deferred during each refueling outage and are being amortized over

• the approximate 18-month operating cycle coinciding with the recognition of the related revenues. Additions to the deferred incremental outage costs were $1 million and $5.3 million in 2010 and 2009, respectively. The current year amortization of the deferred incremental outage costs was $3.9 million and $4.1 million in 2010

• and 2009, respectively.

Subsequent to year end, Wolf Creek generating facility was temporarily shut down for routine maintenance.

• Additional costs related to this shut down will be amortized over the next 18 months.

0 Other Deferred Charges - KEPCo includes in other deferred charges the early call premium resulting from refinancing. These early call premiums are amortized using the effective interest method over the remaining 0life of the new agreements.

0 23 0

0 0

0 Kansas Electric Power Cooperative, Inc.

Notes to Consolidated Financial Statements 0 December 31, 2010 and 2009 S (8) Line of Credit S As of December 31, 2010, KEPCo has a $20.0 million line of credit outstanding with the Cooperative Finance S Corporation. There were no funds borrowed against the line of credit at December 31, 2010. The line of credit requires the Cooperative to pay down the balance to zero annually. Interest rates vary and was 4.95% at De-S cember 31, 2010, and 4.25% at December 31, 2009. This line of credit expires in March 2011. Subsequent S to year end, the line was renewed for an additional three years.

(9) Long-Term Debt Long-term debt consists of mortgage notes payable to the United States of America acting through the Fed-eral Financing Board, the CFC and others. Substantially all of KEPCo's assets are pledged as collateral. The terms of the notes as of December 31 are as follows:

2010 2009 01 Mortgage notes payable to the FFB at fixed 0 rates varying from 3.22% to 9.21%, payable 513 S1 in quarterly installments through 2043 $59,995,747 $64,822,5 S

Mortgage notes payable to the Grantor Trust Series 1997 at a rate of 7.522%, payable S

semi-annually, principal payments commencing S in 1999 and continuing annually through 2017 31,440,000 34,940,(

000 Floating/fixed rate pollution control revenue bonds, City of Burlington, Kansas, Pooled Series 0 1985C, variable interest rate (ranging from 0 1.05% to 1.75% at December 31, 2010) payable annually through 2017 15,295,000 20,100,(

00 0 Mortgage notes payable, equity certificate loans S and member capital security notes to the CFC at fixed rates of 3.15% to 7.70%, payable quarterly S

through 2034. 88,821,137 72,796,9)57 195,551,884 192,659,4 170 S1 Less current maturities (17,506,786) (14,191M, )57) S

$178,045,098 $178,4 167,5r13 0 Aggregate maturities of long-term debt for the next five years and thereafter are as follows:

S 0

2011 $17,506,786 2012 18,616,573 S

2013 19,779,209 0 2014 2015 21,185,046 20,446,842 S

Thereafter 98,017,428 0

$195,551,884 S

S 24 0

S S

Kansas Electric Power Cooperative, Inc.

1 Notes to Consolidated Financial Statements

• December 31, 2010 and 2009 0 Restrictive covenants require KEPCo to design rates that would enable it to maintain a time-interest earned 0 ratio of at least 1.05 and debt-service coverage ratio of at least 1.0, on average, in the two best years out of 0the three most recent calendar years. The covenants also prohibit distribution of net patronage capital or margins until, after giving effect to any such distribution, total patronage capital equals or exceeds 20% of

• total assets, unless such distribution is approved by the Rural Utility Service. KEPCo was in compliance with 01 such restrictive covenants as of December 31, 2010 and 2009.

• In 1997, KEPCo refinanced its mortgage notes payable to the 1988 CFC Grantor Trust through the establish-

• ment of a new CFC Grantor Trust Series 1997 (the Series 1997 Trust) by CFC. This refinancing reduced the guaranteed interest rate payable on the mortgage notes to a fixed rate of 7.522%. The mortgage notes pay-

• I able are prepayable at any time with no prepayment penalties. The Trust holds certain rights the Coopera-tive assigned to the Trust under an interest rate swap agreement. The swap agreement was put into place

• in order to mitigate the interest rate risk inherent in the Trust, which holds a fixed rate asset with a variable rate obligation. The swap agreement terminates in 2017, but is subject to early termination upon the early 0l redemption of the debt. However, any termination costs relating to the termination of the assigned interest

• rate swaps is KEPCo's responsibility. At December 31, 2010, the termination obligation associated with the assigned swap agreement to early retire the mortgage notes payable is approximately $6.5 million.

This fair value estimate is based on information available at December 31, 2010, and is expected to fluctuate in the future based on changes in interest rates and outstanding principal balance.

KEPCo also is exposed to possible credit loss in the event of noncompliance by the counterparty to the swap agreement. However, KEPCo does not anticipate nonperformance by the counterparty.

Subsequent to year end, the notes payable to CFC has been refinanced with various maturity dates through

• 2032.

0 0 (10) Benefit Plans 0 National Rural Electric Cooperative Association (NRECA) Retirement and Security Program - KEPCo

• participates in the NRECA Retirement and Security Program for its employees. All employees are eligible to 0participate in this program after one year of service. In the master multiemployer plan, which is available to all members of NRECA, the accumulated benefits and plan assets are not determined or allocated by indi-S vidual employer members. KEPCo's expense under this program was approximately $0.5 and $0.3 million,

• respectively, for the years ended December 31, 2010 and 2009.

• NRECA Savings 401(k) Plan - All employees of KEPCo are eligible to participate in the NRECA Savings

• 401(k) Plan. Under the plan, KEPCo contributes an amount not to exceed 5%, dependent upon each em-0ployee's level of participation and completion of one year of service, of the respective employee's base pay to provide additional retirement benefits. KEPCo contributed approximately $0.1 million to the plan for each

• of the years ended December 31, 2010 and 2009.

WCNOC Pension and Postretirement Plans - KEPCo has an obligation to the WCNOC retirement, supple-mental retirement and postretirement medical plans for its 6% ownership interest in Wolf Creek. The plans provide for benefits upon retirement, normally at age 65. In accordance with the Employee Retirement In-come Security Act of 1974, KEPCo has satisfied its minimum funding requirements. Benefits under the plans reflect the employee's compensation, years of service and age at retirement.

0 25 0

0

0 Kansas Electric Power Cooperative, Inc. 0 0

Notes to Consolidated Financial Statements December 31, 2010 and 2009 0 0

WCNOC uses a measurement date of December 31 for its retirement plan, supplemental retirement plan and postretirement plan (collectively, the Plans). Information about KEPCo's 6% of the Plans' funded status follows: 0 Pension Benefits Postretirement Benefits 2010 2009 2010 2009 S Benefit obligation $(16,782,407) $(14,174,710) $(1,294,885) $(1,222,057) 0 Fair value of plan assets 9,713,045 7,980,796 0 Net liability $(7,069,362) $(6,193,914) $(1,294,885) $(1,222,057)

Amounts recognized in the consolidated balance sheets:

0 Other long-term liabilities 2010 2009 S

Wolf Creek pension and postretirement benefit plans $8,382,247 $7,433,971 0

Amounts recognized in accumulated other comprehensive income (loss) not yet recognized as components of net periodic benefit cost consist of:

Pension Benefits Postretirement Benefits 2010 2009 2010 2009 Net Loss $(5,072,546) $(4,449,829) $(484,559) $(473,458) 0 Prior service cost (5,962) (9,659)

Transition obligation (6,653) (13,910) (14,732) (22,082)

$(5,085,161) $(4,473,398) $(499,291) $(495,540)

Information for the pension plan with an accumulated benefit obligation in excess of plan assets:

0 Pension Benefits S

2010 2009 Projected benefit obligation $16,782,406 $14,174,710 0 Accumulated benefit obligation 13,619,284 11,509,454 Fair value of plan assets 9,713,045 7,980,796 Other significant balances and costs are: 0 Pension Benefits Postretirement Benefits 2010 2009 2010 2009 Employer Contributions $771,607 $933,171 $62,695 $91,029 Benefits paid 326,338 268,433 133,350 147,024 Benefits cost 1,066,284 983,742 131,771 132,912 The estimated net loss, prior service cost and transition obligation for the defined benefit pension plans that will be amortized from accumulated other comprehensive income (loss) into net periodic benefit cost over the next fiscal year are approximately $468,000, $2,000 and $7,000, respectively. The estimated net loss and transition obligation for the defined benefit postretirement plan that will be amortized from accumulated other comprehensive income (loss) into net periodic benefit cost over the next fiscal year are approximately

$36,000 and $7,000, respectively.

26

• Kansas Electric Power Cooperative, Inc.

• Notes to Consolidated Financial Statements

• December 31, 2010 and 2009 Significant assumptions used to determine benefit obligations include:

Pension Benefits Postretirement Benefits 2010 2009 2010 2009 Discount rate 5.45% 6.05% 4.90% 5.05%

• Annual salary increase rate 4.00% 4.00% N/A N/A Expected return on plan assets 8.00% 8.00% N/A N/A Assumed health care cost trend rate N/A N/A 8% decreasing 8% decreasing 0.4% per year 0.5% per year to 5.0% to 5.0%

In selecting the discount rate, fixed income security yield rates for corporate high-grade bond yields were considered.

0WCNOC uses an interest yield curve to make judgments. The yield curve is constructed based on yields

• 1 on over 500 high-quality, noncallable corporate bonds with maturities between 0 and 30 years. A theoretical spot rate curve constructed from this yield curve is then used to discount the annual benefit cash flows of WCNOC's pension plan and develop a single-point discount rate matching the plan's payout structure.

The expected long-term rate of return on plan assets is based on historical and projected rates of return for current and planned asset classes in the pension plan's investment portfolio. Assumed and projected rates 01 of return for each asset class were selected after analyzing long-term historical experienced future expecta-tions of the volatility of the various asset classes. Based on target asset allocation for each asset class, the overall expected rate of return for the portfolio was developed, adjusted for historical and expected experi-01 ence of active portfolio management results compared to benchmark returns and for the effect of expenses from plan assets.

0! The defined benefit pension plan assets are invested in insurance contracts, corporate bonds, equity securi-ties, United States government securities and short-term investments.

• 1 The asset allocation for the defined benefit pension plan at the end of 2010 and 2009 and the target alloca-

• tion for 2011 by asset category are as follows:

Target Pension Allocation for Plan Assets 2011 2010 2009

• t Asset category Equity securities 65% 66% 65%

Debt securities 25% 23% 24%

• Real estate 5% 4% 4%

Other 5% 7% 7%

100% 100% 100%

WCNOC's pension plan investment strategy supports the objective of the fund, which is to earn the highest possible return on plan assets consistent with a reasonable and prudent level of risk. Investments are di-versified across classes, sectors and manager style to minimize the risk of large losses. WCNOC delegates investment management to specialists in each asset class and, where appropriate, provides the investment manager with specific guidelines, which include allowable and/or prohibited investment types. Investment Q 27 0

0

0 Kansas Electric Power Cooperative, Inc. 0 0

Notes to Consolidated Financial Statements December 31, 2010 and 2009 0 risk is measured and monitored on an ongoing basis through quarterly investment portfolio reviews.

0 0

Following is a description of the valuation methodologies used for pension plan assets measured at fair value 0 on a recurring basis and recognized in the accompanying balance sheets, as well as the general classifica-tion of pension plan assets pursuant to the valuation hierarchy. S Where quoted market prices are available in an active market, plan assets are classified within Level 1 of the valuation hierarchy. Level 1 plan assets include cash equivalents, equity and debt investments. Ifquoted 0

market prices are not available, then fair values are estimated by using pricing models, quoted prices of plan 0 assets with similar characteristics or discounted cash flows. Level 2 investments include cash equivalents, equity, debt and commodity investments. In certain cases where Level 1 or Level 2 inputs are not available, plan assets are classified within Level 3 of the hierarchy and include certain real estate investments. Signifi-cant inputs and valuation techniques used in measuring Level 3 fair values include market discount rates, projected cash flows and the estimated value into perpetuity. 0 The fair values of WCNOC's pension plan assets at December 31, 2010, by asset category are as follows: 0 Fair Value Measurements Using Quoted Prices in Active Significant 0 Markets for Other SignificanIt Identical Observable Unobservalble 0 Assets Inputs Inputs 0 Fair Value (Level 1) (Level 2) (Level 3)

Cash equivalents $ 97,905 $ 62 $ 97,843 $ 0 Equity securities U.S. companies 4,020,249 4,020,250 International companies 2,378,678 1,153,492 1,225,186 Debt securities Core bonds 1,807,169 1,807,169 High-yield bonds 423,722 423,722 Commodities 581,895 581,895 Real estate 403,427 403,4ý!7 Total $ 9,713,045 $ 5,597,525 $ 3,712,093 $ 403,4ý27 The following table provides a reconciliation of KEPCo's 6% share of Wolf Creek's pension plan assets mea-sured at fair value using significant Level 3 inputs for the year ended December 31, 2010.

Fair value measurements using significant unobservable inputs (Level 3):

Real Estate Securities Balance at January 1, 2010 $ 308,426 Actual return on plan assets Relating to assets still held at the reporting date 50,148 Relating to assets sold during the year (299)

Purchases, sales and settlements 45,152 Balance at December 31, 2010 $ 403,427 28

Kansas Electric Power Cooperative, Inc.

• Notes to Consolidated Financial Statements

• December 31, 2010 and 2009 WCNOC does not utilize a separate investment trust for the purpose of funding other postretirement benefits as it does for its pension plan. Prohibited investments include investments in the equity or debt securities of the companies that collectively own Wolf Creek or companies that control such companies, which includes KEPCo and KGE securities. Wolf Creek has also established restrictions for certain classes of plan assets, 0I including that international equity securities should not exceed 25% of total plan assets, no more than 5% of the market value of the plan assets should be invested in the common stock of one corporation and the equity investment in any one corporation should not exceed 1% of its outstanding common stock.

The investments in both international and domestic equity securities include investments in large-, mid- and small-cap companies, private equity funds and investment funds with underlying investments similar to those previously mentioned. The investments in debt securities include core and high yield bonds. Core bonds in-clude funds invested in investment grade debt securities of corporate entities, obligations of U.S. and foreign

• I governments and their agencies and private debt securities. High yield bonds include a fund with underlying investments in non investment grade debt securities of corporate entities, private placements and bank debt.

Real estate securities include funds invested in commercial and residential real estate properties while com-modity investments include funds invested in commodity-related instruments.

• KEPCo estimates cash contributions of approximately $0.9 million will be made to the Plans in 2011.

• l Estimated future benefit payments as of December 31, 2010, for the Plans, which reflect expected future services, are as follows:

Pension Other Benefits Benefits 2011 $ 382,200 $ 87,840

• 2012 436,020 89,580 2013 499,740 93,540 2014 572,460 95,100 2015 658,020 97,380

• 2016-2020 4,970,640 532,080

• $ 7,519,080 $ 995,520 0

(11) Commitments and Contingencies Current Economic Environment - KEPCo considers the current economic conditions when planning for fu-ture power supply and liquidity needs. The current instability in the financial markets may have an impact on 0the Cooperative's members, which may impact the Cooperative's volume of future sales, which could have an adverse impact on the Cooperative's future operating results. The current economic climate may also af-fect the Cooperative's ability to obtain financing.

Given the volatility of the current economic conditions, the values of assets and liabilities recorded in the fi-nancial statements could change rapidly, resulting in material future adjustments that could negatively impact

• ! the Cooperative's ability to meet debt covenants or maintain sufficient liquidity. Currently under state statutes, the Cooperative's rate making is deregulated and, therefore, expects to be able to recover any economic losses through future rates.

• I Litigation - The Cooperative is subject to claims and lawsuits that arise primarily in the ordinary course of business. It is the opinion of management that the disposition or ultimate resolution of such claims and law-suits will not have an adverse effect on the consolidated financial position, results of operations and cash flows of the Cooperative. 29 0

0 0

0 Kansas Electric Power Cooperative, Inc.

Notes to Consolidated Financial Statements December 31, 2010 and 2009 There is a provision in the Wolf Creek operating agreement whereby the owners treat certain claims and loss-es arising out of the operations of Wolf Creek as a cost to be borne by the owners separately (but not jointly) in proportion to their ownership shares. Each of the owners has agreed to indemnify the others in such cases.

Nuclear Liability and Insurance - Pursuant to the Price-Anderson Act, which was reauthorized through December 31, 2025, by the Energy Policy Act of 2005, KEPCo is required to insure against public liability claims resulting from nuclear incidents to the full limit of public liability, which is currently approximately $12.5 billion. This limit of liability consists of the maximum available commercial insurance of $375 million, and the remaining $12.225 billion is provided through mandatory participation in an industry wide retrospective as-sessment program. Under this retrospective assessment program, owners are jointly and severally subject to an assessment of up to $117.5 million ($7.1 million - KEPCo's share) at any commercial reactor in the coun-try, payable at no more than $17.5 million ($1.1 million - KEPCo's share) per incident per year, per reactor.

This assessment is subject to an inflation adjustment based on the Consumer Price Index and applicable premium taxes. This assessment also applies in excess of the worker radiation claims insurance. The next scheduled inflation adjustment is scheduled for August 2013. In addition, Congress could impose additional revenue-raising measures to pay claims.

The owners of Wolf Creek carry decontamination liability, premature decommissioning liability and property damage insurance for Wolf Creek totaling approximately $2.8 billion ($168 million KEPCo's share). This insurance is provided by Nuclear Electric Insurance Limited (NEIL). In the event of an accident, insurance proceeds must first be used for reactor stabilization and site decontamination in accordance with a plan mandated by the Nuclear Regulatory Commission. KEPCo's share of any remaining proceeds can be used 0 to pay for property damage, decontamination expenses or, ifcertain requirements are met, including nuclear decommissioning the plant, toward a shortfall in the decommissioning trust fund.

The owners also carry additional insurance with NEIL to cover costs of replacement power and other extra expenses incurred during a prolonged outage resulting from accidental property damage at Wolf Creek. If significant losses were incurred at any of the nuclear plants insured under the NEIL policies, KEPCo may be 0 subject to retrospective assessments under the current policies of approximately $1.6 million.

Although KEPCo maintains various insurance policies to provide coverage for potential losses and liabilities resulting from an accident or an extended outage, KEPCo's insurance may not be adequate to cover the costs that could result from a catastrophic accident or extended outage at Wolf Creek. Any substantial losses not covered by insurance, to the extent not recoverable through rates, would have a material adverse effect 0 on KEPCo's financial condition and result of operations.

Decommissioning Insurances - KEPCo carries premature decommissioning insurance that has several re-strictions, one of which can only be used ifWolf Creek incurs an accident exceeding $500 million in expenses to safely stabilize the reactor, to decontaminate the reactor and reactor station site in accordance with a plan approved by the Nuclear Regulatory Commission (NRC) and to pay for on-site property damages. Once 0 the NRC property rule requiring insurance proceeds to be used first for stabilization and decontamination 0 has been complied with, the premature decommissioning coverage could pay for the decommissioning fund shortfall in the event an accident at Wolf Creek exceeds $500 million in covered damages and causes Wolf Creek to be prematurely decommissioned.

Nuclear Fuel Commitments - At December 31, 2010, KEPCo's share of WCNOC's nuclear fuel commit-ments was approximately $5.8 million for uranium concentrates expiring in 2016, $0.9 million for conversion expiring in 2016, $14.9 million for enrichment expiring at various times through 2024 and $5.7 million for fabrication through 2026.

30 0

0 0

• Kansas Electric Power Cooperative, Inc.

• Notes to Consolidated Financial Statements

• December 31, 2010 and 2009 Purchase Power Commitments - KEPCo has supply contracts with various utility companies to purchase S1 power to supplement generation in the given service areas. KEPCo has a contract with Westar Energy, Inc.,

• through December 2045. KEPCo has provided the Southwest Power Pool a letter of credit to help insure

• power is available if needed.

• 1 latan 2 Purchase Commitment - Effective June 2006, KEPCo entered into an agreement, subject to RUS approval, to purchase a 3.53% ownership in a coal-fired generation facility. KEPCo's estimated costs for the

• t project were $77 million at December 31, 2010. To date, the Cooperative has paid approximately $74 million

• I under the agreement. Financing is currently being provided by CFC. Subsequent to year end, the plant was

• placed in service as of January 1, 2011.

• (12) Fair Value of Assets and Liabilities 0ASC Topic 820, Fair Value Measurements, defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement

• date. ASC Topic 820 also establishes a fair value hierarchy which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. The standard 01 describes three levels of inputs that may be used to measure fair value:

Level 1 Quoted prices in active markets for identical assets or liabilities Level 2 Observable inputs other than Level 1 prices, such as quoted prices for similar assets or li-abilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities Level 3 Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities Following is a description of the valuation methodologies used for assets and liabilities measured at fair value on a recurring basis and recognized in the accompanying consolidated balance sheets, as well as the gen-eral classification of such assets and liabilities pursuant to the valuation hierarchy.

Decommissioning Fund - The decommissioning fund consists of various mutual funds where fair value is determined by quoted market prices in an active market and, as such, are classified within Level 1 of the

• valuation hierarchy.

The following table presents the fair value measurements of assets and liabilities recognized in the accompa-nying consolidated balance sheets measured at fair value on a recurring basis and the level within the ASC 820 fair value hierarchy in which the fair value measurements fall at December 31, 2010:

0

• • Fair Value Measurements Using Quoted Prices in Active Significant Markets for Other Significant Identical Observable Unobservable Fair Assets Inputs Inputs

• Value (Level 1) (Level 2) (Level 3)

• Decommissioning fund $ 12,362,162 $ 12,362,162 $ - $

31 S

S

S 0

Kansas Electric Power Cooperative, Inc.

Notes to Consolidated Financial Statements 0 December 31, 2010 and 2009 0

The following methods were used to estimate the fair value of all other financial instruments recognized in the accompanying consolidated balance sheets at amounts other than fair value.

Cash and Cash Equivalents - The carrying amount approximates fair value.

Investments in CFC and Other Associated Organizations - KEPCo considers CFC and other associated organizations certificates to be a condition of borrowing and patronage capital certificates to be directly re-lated to borrowing. As such, KEPCo management believes the fair value of these assets is not determinable 0 and they are reflected at their carrying amount.

Bond Fund Reserve - The bond fund reserve consists of various held-to-maturity securities where the fair 0 value is primarily based on quoted market prices.

Line of Credit and Long-Term Debt Variable-Rate Debt - The carrying amount approximates fair value because of the short-term variable rates 0 of those debt instruments.

Fixed-Rate Debt - The fair value of all fixed-rate debt is based on the sum of the estimated value of each issue, taking into consideration the current rate offered to KEPCo for debt of similar remaining maturities.

The following table presents estimated fair values of KEPCo's financial instruments at December 31, 2010 and 2009:

December 31, 2010 December 31, 2009 0 Carrying Fair Carrying Fair Financial assets Value Value Value Value 1 Cash and cash equivalents $ 4,349,243 $ 4,349,243 $ 118,631 $ 118,631 Bond fund reserve 4,405,495 4,595,268 4,411,168 4,688,924 Decommissioning fund $ 12,362,162 $ 12,362,162 $ 10,571,021 $ 10,571,021 Financial liabilities Long-term debt $ 195,551,884 $ 200,387,026 $192,659,470 $195,696,622 (13) Patronage Capital In accordance with KEPCo's bylaws, KEPCo's current margins are to be allocated to members. KEPCo's current policy is to allocate to the members based on revenues collected from the members as a percentage 0 of total revenues. If KEPCo's consolidated financial statements were adjusted to reflect accounting principles generally accepted in the United Stated of America, total patronage capital would be substantially less. As noted in the consolidated statements of changes in patronage capital, no patronage capital distributions were made to members in 2010 and 2009. 0 3

0 0

0 0

32 0 0

0 0

M

0 0

KEPCo Generation Resources 0 KEPCo power resources include the generation facilities pictured below, as well as long term power supply agree-ments with investor-owned utilities.

0 0

0 0

0 0

0 0

Wolf Creek Nuclear Generating Station latan 2 0 Nuclear Base Load Coal-Fired Base Load 0 Came On-Line in October, 1985 70 MW (6% Ownership)

Became Operational in December, 2010 30 MW (3.5% Ownership)

S 0

0 0

Participation in Federal Hydro Electric Power Projects Sharp Generation Station Southwest Power Administration, 100 MW Peaking Diesel Peaking Western Area Power Administration, 14 MW In Service, June, 2002 20 MW 33