Certain matters discussed in Management's Discussion and Analysis are "forward-looking statements." The Private Securities Litigation Reform Act of 1995 has established that these statements qualify for safe harbors from liability. Forward-looking statements may include words like we "believe," "anticipate," "target," "expect," "pro forma," "estimate," "intend" and words of similar meaning. Forward-looking statements describe our future plans, objectives, expectations or goals.

INTRODUCTION

We are the largest electric utility in Kansas. We produce, transmit and sell electricity at retail in Kansas and at wholesale in a multi-state region in the central United States under the regulation of the KCC and FERC.

In Management's Discussion and Analysis, we discuss our general financial condition, significant changes that occurred during 2009 and our operating results for the three and nine months ended September 30, 2009 and 2008. As you read Management's Discussion and Analysis, please refer to our condensed consolidated financial statements and the accompanying notes, which contain our operating results.

SUMMARY OF SIGNIFICANT ITEMS

Weather

The weather in our service territory during the third quarter of 2009 was the coolest in over 40 years. As measured by cooling degree days, the weather during this period was 14% cooler than the same period last year and 27% cooler than the 20-year average. The unusual third quarter weather also resulted in much cooler weather for the nine months ended September 30, 2009. During this nine month period, the weather was 4% cooler than the same period last year and 13% cooler than the 20-year average. The cooler weather was a key contributor to the decrease in residential and commercial megawatt hour (MWh) sales for both the three and nine months ended September 30, 2009.

Relationship between Revenues and Fuel and Purchased Power Expense

We adjust our retail prices to reflect changes in the costs of fuel and purchased power needed to serve our retail customers. Changes in fuel and purchased power costs are offset in revenues with a minimal impact on net income. As a result, when fuel and purchased power costs change, we are allowed to adjust our retail prices to reflect the change in costs.

Changes in Net Income

Net income for the three months ended September 30, 2009, decreased $7.1 million compared to the same period last year due primarily to lower MWh sales and lower average wholesale prices. Retail MWh sales were 7% lower than last year due principally to cooler weather and the effects of recessionary conditions particularly impacting our industrial MWh sales. Higher operating and maintenance and depreciation expense of $22.6 million and $12.6 million, respectively, also contributed to the decrease in net income for the three months ended September 30, 2009.

Net income for the nine months ended September 30, 2009, increased $8.4 million compared to the same period last year due primarily to higher retail revenues. Retail revenues increased $41.6 million for the nine months ended September 30, 2009, primarily as a result of price increases authorized by the KCC. Offsetting price increases were lower retail MWh sales. Retail MWh sales declined 5% for the nine months ended September 30, 2009, due primarily to the effects of recessionary conditions particularly impacting our industrial MWh sales and cooler weather. Higher expenses and significantly reduced wholesale revenues also served to offset partially the price increases.

In January 2009, we reached a settlement with the IRS for 2003 and 2004 associated with re-characterizing a portion of the loss we incurred on the sale of Protection One from a capital loss to an ordinary loss. This settlement resulted in a first quarter 2009 net earnings benefit from discontinued operations of approximately $33.0 million, net of the amounts due to Protection One pursuant to an agreement related to the sale transaction. We did not record a similar benefit from discontinued operations for the nine months ended September 30, 2008.

During the first quarter of 2008, we reached a settlement with the IRS for 1995 through 2002 regarding issues principally related to the method used to capitalize overheads to electric plant. This settlement resulted in a first quarter 2008 net earnings benefit from continuing operations of approximately $39.4 million, including interest. This settlement also reduced our assessment of uncertain income tax liabilities; therefore, we reversed $17.8 million of accrued interest related to uncertain income tax liabilities in the first quarter of 2008. Ultimately, this settlement resulted in a substantial income tax benefit that significantly reduced interest expense for the nine months ended September 30, 2008. We did not record a similar settlement in continuing operations during the same period this year, and, as a result, report much higher income tax and interest expense for the nine months ended September 30, 2009. Also contributing to the increase in interest expense for the three and nine months ended September 30, 2009, was interest on additional debt issued to fund capital investments.

Increases in Prices

On January 21, 2009, the KCC issued an order designed to increase our annual retail prices by $130.0 million. The new prices became effective on February 3, 2009.

On March 6, 2009, the KCC issued an order allowing us to adjust our prices to include updated transmission costs attributable to the retail portion of our transmission service. This change went into effect on March 13, 2009, and was designed to increase our annual retail revenues by $31.8 million.

On May 29, 2009, the KCC issued an order allowing us to adjust our prices to include costs associated with environmental investments made in 2008. This change went into effect on June 1, 2009, and was designed to increase our annual retail revenues by $32.5 million.

Reduction in Planned Capital Expenditures

Due to the continued volatility in the capital markets and higher capital costs generally, in particular the cost of equity, we have reduced our anticipated capital expenditures for 2010 and 2011 by $366.8 million and $134.1 million, respectively, from what we reported as our expectations in our 2008 Form 10-K. See "-Future Cash Requirements" below for additional information.

CURRENT TRENDS

Energy Marketing

Conditions in the wholesale energy markets have made it more difficult for us to produce energy marketing margins at levels to which we have been historically accustomed. We expect these conditions to persist. As a result, we anticipate lower energy marketing margins during the remainder of the year and beyond. Wholesale power market conditions include: low electricity prices relative to historical levels, lower natural gas prices, reduced demand for electricity in general and, due to an increase in the number of parties transacting through exchanges and power pools, fewer customers willing to enter into bilateral wholesale energy contracts.

CRITICAL ACCOUNTING ESTIMATES

Our discussion and analysis of financial condition and results of operations are based on our consolidated financial statements, which have been prepared in conformity with GAAP. Note 2 of the Notes to Condensed Consolidated Financial Statements, "Summary of Significant Accounting Policies," contains a summary of our significant accounting policies, many of which require the use of estimates and assumptions by management. The policies highlighted in our 2008 Form 10-K have an impact on our reported results that may be material due to the levels of judgment and subjectivity necessary to account for uncertain matters or their susceptibility to change.

In 2009, we recorded a $20.3 million increase in our ARO to reflect revisions to the estimated costs to decommission Wolf Creek. See Note 9 of the Notes to Condensed Consolidated Financial Statements, "Asset Retirement Obligations," for additional information.

From December 31, 2008 through September 30, 2009, we have not experienced any other significant changes in our critical accounting estimates. For additional information, see our 2008 Form 10-K.

OPERATING RESULTS

We evaluate operating results based on EPS. We have various classifications of revenues, defined as follows:

Retail: Sales of energy made to residential, commercial and industrial customers.

Other retail: Sales of energy for lighting public streets and highways, net of revenue subject to refund.

Wholesale: Sales of energy to electric cooperatives, municipalities and other electric utilities, the prices for which are generally either based on cost or based on prevailing market prices as prescribed by FERC authority. This category also includes changes in valuations of contracts for the sale of such energy that have yet to settle. Margins realized from these sales serve to lower our retail prices.

Energy marketing: Includes: (i) transactions based on market prices and volumes generally unrelated to the production of our generating assets; (ii) financially settled products and physical transactions sourced outside of our control area;
(iii) fees we earn for marketing services that we provide for third parties; and
(iv) changes in valuations of contracts related to such transactions that have yet to settle.

Transmission:Reflects transmission revenues, including those based on tariffs with the SPP.

Other: Miscellaneous electric revenues including ancillary service revenues and rent from electric property leased to others.

Electric utility revenues are significantly impacted by such things as rate regulation, customer conservation efforts, the economy of our service area and competitive forces. Changing weather also affects the amount of electricity customers use. Hot summer temperatures and cold winter temperatures prompt more demand, especially among our residential customers. Mild weather serves to reduce customer demand. Our wholesale revenues are impacted by, among other factors, demand, cost and availability of fuel and purchased power, price volatility, available generation capacity and transmission availability.

Three and Nine Months Ended September 30, 2009, Compared to Three and Nine
Months Ended September 30, 2008

Below we discuss our operating results for the three and nine months ended
September 30, 2009, compared to the results for the three and nine months ended
September 30, 2008. Significant changes in results of operations shown in the
table immediately below are further explained in the descriptions that follow.



                                                                        Three Months Ended September 30,                                       Nine Months Ended September 30,
                                                             2009                2008            Change         % Change           2009               2008             Change         % Change
                                                                (Dollars In Thousands, Except Per Share Amounts)                      (Dollars In Thousands, Except Per Share Amounts)
REVENUES:
Residential                                              $    179,012        $    183,344       $  (4,332 )         (2.4 )     $     447,970       $   414,919       $   33,051            8.0
Commercial                                                    156,509             156,265             244            0.2             410,031           382,010           28,021            7.3
Industrial                                                     81,936              89,643          (7,707 )         (8.6 )           223,422           230,025           (6,603 )         (2.9 )
Other retail                                                      (58 )            (6,938 )         6,880           99.2             (18,322 )          (5,476 )        (12,846 )       (234.6 )

Total Retail Revenues                                         417,399             422,314          (4,915 )         (1.2 )         1,063,101         1,021,478           41,623            4.1
Wholesale                                                      70,383             114,566         (44,183 )        (38.6 )           221,779           305,490          (83,711 )        (27.4 )
Energy marketing                                                2,013               8,845          (6,832 )        (77.2 )            15,720            12,539            3,181           25.4
Transmission (a)                                               32,833              22,946           9,887           43.1             100,902            74,710           26,192           35.1
Other                                                           5,906               6,182            (276 )         (4.5 )            16,611            18,682           (2,071 )        (11.1 )

Total Revenues                                                528,534             574,853         (46,319 )         (8.1 )         1,418,113         1,432,899          (14,786 )         (1.0 )

OPERATING EXPENSES:
Fuel and purchased power                                      141,470             220,140         (78,670 )        (35.7 )           402,622           557,944         (155,322 )        (27.8 )
Operating and maintenance                                     130,295             107,672          22,623           21.0             392,272           354,656           37,616           10.6
Depreciation and amortization                                  64,516              51,966          12,550           24.2             186,544           150,467           36,077           24.0
Selling, general and administrative                            41,920              50,802          (8,882 )        (17.5 )           143,540           136,712            6,828            5.0

Total Operating Expenses                                      378,201             430,580         (52,379 )        (12.2 )         1,124,978         1,199,779          (74,801 )         (6.2 )

INCOME FROM OPERATIONS                                        150,333             144,273           6,060            4.2             293,135           233,120           60,015           25.7

OTHER INCOME (EXPENSE):
Investment earnings (losses)                                    3,986              (2,986 )         6,972          233.5               8,516            (2,902 )         11,418          393.5
Other income                                                    1,217              12,796         (11,579 )        (90.5 )             5,627            22,956          (17,329 )        (75.5 )
Other expense                                                  (4,539 )            (4,517 )           (22 )         (0.5 )           (11,441 )         (11,179 )           (262 )         (2.3 )

Total Other Income                                                664               5,293          (4,629 )        (87.5 )             2,702             8,875           (6,173 )        (69.6 )

Interest expense                                               41,599              31,920           9,679           30.3             116,769            72,920           43,849           60.1

INCOME FROM CONTINUING OPERATIONS BEFORE INCOME TAXES         109,398             117,646          (8,248 )         (7.0 )           179,068           169,075            9,993            5.9
Income tax expense                                             28,256              29,361          (1,105 )         (3.8 )            48,354            13,808           34,546          250.2

INCOME FROM CONTINUING OPERATIONS                              81,142              88,285          (7,143 )         (8.1 )           130,714           155,267          (24,553 )        (15.8 )
Results of discontinued operations, net of tax                     -                   -               -              -               32,978                -            32,978             (b )

NET INCOME                                                     81,142              88,285          (7,143 )         (8.1 )           163,692           155,267            8,425            5.4
Preferred dividends                                               242                 242              -              -                  727               727               -              -

NET INCOME ATTRIBUTABLE TO COMMON STOCK                  $     80,900        $     88,043       $  (7,143 )         (8.1 )     $     162,965       $   154,540       $    8,425            5.5

BASIC EARNINGS PER SHARE                                 $       0.73        $       0.80       $   (0.07 )         (8.8 )     $        1.48       $      1.50       $    (0.02 )         (1.3 )

(a) Transmission: Reflects revenue derived from an SPP network transmission tariff. For the three months ended September 30, 2009, our SPP network transmission costs were $25.8 million. This amount, less $2.9 million retained by the SPP as administration cost, was returned to us as revenue. For the three months ended September 30, 2008, our SPP network transmission costs were $15.1 million. This amount, plus an additional $1.4 million, was returned to us as revenue. For the nine months ended September 30, 2009, our SPP network transmission costs were $79.3 million. This amount, less $10.5 million retained by the SPP as administration cost, was returned to us as revenue. For the nine months ended September 30, 2008, our SPP network transmission costs were $59.1 million with an administration cost of $4.3 million retained by the SPP.

(b) Change greater than 1000%.

                                           Three Months Ended September 30,                             Nine Months Ended September 30,
                                   2009           2008          Change       % Change         2009             2008           Change        % Change
                                          (Revenues in Thousands of Dollars,                          (Revenues in Thousands of Dollars,
                                             Volumes in Thousands of MWh)                                Volumes in Thousands of MWh)
Residential revenues             $ 179,012      $ 183,344      $ (4,332 )        (2.4 )    $   447,970      $   414,919      $  33,051           8.0
Residential sales volumes            1,869          2,027          (158 )        (7.8 )          4,944            5,073           (129 )        (2.5 )

Commercial revenues                156,509        156,265           244           0.2          410,031          382,010         28,021           7.3
Commercial sales volumes             2,007          2,063           (56 )        (2.7 )          5,522            5,617            (95 )        (1.7 )

Industrial revenues                 81,936         89,643        (7,707 )        (8.6 )        223,422          230,025         (6,603 )        (2.9 )
Industrial sales volumes             1,402          1,595          (193 )       (12.1 )          3,921            4,446           (525 )       (11.8 )

Other retail revenues                  (58 )       (6,938 )       6,880          99.2          (18,322 )         (5,476 )      (12,846 )      (234.6 )
Other retail sales volumes              22             22            -             -                66               66             -             -

Total retail revenues            $ 417,399      $ 422,314      $ (4,915 )        (1.2 )    $ 1,063,101      $ 1,021,478      $  41,623           4.1
Total retail sales volumes           5,300          5,707          (407 )        (7.1 )         14,453           15,202           (749 )        (4.9 )

Retail revenues decreased for the three months ended September 30, 2009, compared to the same period last year due primarily to our having included in our prices $45.8 million less for fuel costs and reduced retail MWh sales. Industrial MWh sales decreased due primarily to the effects of recessionary conditions, which served to reduce industrial demand for electricity. Residential and commercial MWh sales decreased due principally to cooler weather. Price increases during the past year served to offset the lower fuel costs included in our prices and decreases in MWh sales. In addition, the change in other retail revenues reflects our having had transmission refunds last year and a reduction in our refund obligation related to the recovery of fuel and purchased power costs in excess of actual costs.

Retail revenues increased for the nine months ended September 30, 2009, compared to the same period last year due primarily to increases in our prices that more than offset lower fuel costs included in our prices of $46.1 million and reduced retail MWh sales. Industrial MWh sales decreased due principally to the effects of recessionary conditions, which served to reduce industrial demand for electricity. The decreases in residential and commercial MWh sales were attributable primarily to cooler weather. Additionally, the change in other retail revenues reflects our refund obligation related to the recovery of fuel and purchased power costs in excess of actual costs partially offset by our having had transmission refunds last year.

                                       Three Months Ended September 30,                     Nine Months Ended September 30,
                                  2009       2008       Change        % Change        2009        2008       Change        % Change
                                                  (Revenues in Thousands of Dollars, Volumes in Thousands of MWh)
Wholesale revenues              $ 70,383   $ 114,566   $ (44,183 )       (38.6 )    $ 221,779   $ 305,490   $ (83,711 )       (27.4 )
Wholesale sales volumes            2,011       2,332        (321 )       (13.8 )        6,578       6,808        (230 )        (3.4 )

Wholesale revenues decreased for the three and nine months ended September 30, 2009, compared to the same periods last year due principally to 21% lower average market prices for each period. The lower average market prices were primarily a result of reduced demand for electricity in the wholesale markets and lower natural gas prices.

Three Months Ended September 30, Nine Months Ended September 30, 2009 2008 Change % Change 2009 2008 Change % Change

Energy marketing decreased for the three months ended September 30, 2009, compared to the same period last year due primarily to lower demand generally, lower market prices and more customers transacting through power pools and exchanges instead of entering into bilateral agreements.

Energy marketing increased for the nine months ended September 30, 2009, compared to the same period last year due primarily to our having settled forward contracts for the sale of electricity on favorable terms in the first quarter of 2009. See "-Other Information - Energy Marketing," below for our expectations regarding future energy marketing margins.

For the three and nine months ended September 30, 2009, fuel and purchased power expense decreased due principally to our having purchased less power and lower unit costs for both fuel and purchased power. During the nine month period last year, scheduled maintenance outages at some of our plants resulted in us having purchased more power from other sources. We purchased 17% and 38% less power during the three and nine months ended September 30, 2009, respectively, due primarily to reduced demand and Wolf Creek not having had a scheduled maintenance outage during the nine month period this year. This, in addition to decreases in the cost of purchased power of 33% and 45%, resulted in decreases in purchased power expense of $9.9 million and $79.6 million for the respective three and nine months ended September 30, 2009. Furthermore, the average cost of fuel used for generation decreased 19% and 16% for the three and nine months ended September 30, 2009, respectively. This decrease is due primarily to significantly lower costs for natural gas for both periods and Wolf Creek having produced more power during the nine month period this year. For the three and nine months ended September 30, 2009, the cost of natural gas used in our power plants decreased 53% and 56%, respectively. Another reason for lower fuel and purchased power expense during the three months ended September 30, 2009, was that we deferred $0.4 million of fuel and purchased power expense compared to recovering $21.8 million of previously deferred fuel expense during the same period the prior year resulting in a $22.2 million decrease in fuel and purchased power expense.

Three Months Ended September 30, Nine Months Ended September 30, 2009 2008 Change % Change 2009 2008 Change % Change

Operating and maintenance expense increased for the three and nine months ended September 30, 2009, compared to the same periods last year due primarily to increases in SPP network transmission costs of $10.7 million and $20.2 million, respectively. These increases were offset in large part by higher transmission revenues of $9.9 million and $26.2 million, respectively. Maintenance expense increased $7.8 million for the three months ended September 30, 2009, due principally to higher maintenance costs at our power plants, including our new generating facilities. The $8.3 million increase in maintenance expense for the nine months ended September 30, 2009, was due primarily to higher maintenance costs for our electrical distribution system and power plants, including our new generating facilities.

Three Months Ended September 30, Nine Months Ended September 30, 2009 2008 Change % Change 2009 2008 Change % Change

We completed a number of large construction projects in the past year. Consequently, depreciation and amortization expense increased for the three and nine months ended September 30, 2009, compared to the same periods last year primarily as a result of the addition of generating plant assets, emission control equipment, wind generation and transmission facilities.

. . .