EXECUTIVE SUMMARY

We operate our businesses as three segments: electric, gas and other. The Empire District Electric Company (EDE) is an operating public utility engaged in the generation, purchase, transmission, distribution and sale of electricity in parts of Missouri, Kansas, Oklahoma and Arkansas. As part of our electric segment, we also provide water service to three towns in Missouri. The Empire District Gas Company (EDG) is our wholly owned subsidiary. It provides natural gas distribution to customers in 44 communities in northwest, north central and west central Missouri. Our other segment consists of our non-regulated businesses, primarily a 100% interest in Empire District Industries, Inc., a subsidiary for our fiber optics business. During the twelve months ended September 30 2009, 86.5% of our gross operating revenues were provided from sales from our

electric segment (including 0.3% from the sale of water),12.6% from our gas segment and 0.9% from our other segment.

Earnings

During the third quarter of 2009, basic earnings per weighted average share of common stock were $0.43 as compared to $0.60 in the third quarter of 2008 and diluted earnings per weighted average share of common stock were $0.43 as compared to $0.59 for the third quarter of 2008. For the nine months ended September 30, 2009, basic and diluted earnings per weighted average share of common stock were $0.97 as compared to $0.95 for the nine months ended September 30, 2008. For the twelve months ended September 30, 2009, basic and diluted earnings per weighted average share of common stock were $1.20 as compared to $0.95 for the twelve months ended September 30, 2008.

Third quarter 2009 weather was the coolest summer in the past 30 years, which affected both customer demand and generation needs and was the primary driver for lower earnings in 2009 as compared to 2008. Mild weather, which reduced both on-system and off-system sales, and increased maintenance costs were the primary negative drivers for the nine month and twelve month periods. The primary positive drivers for all periods presented were decreased fuel and purchased power costs which resulted from the decreased customer demand, and rate changes, mainly due to our 2008 Missouri rate case.

The following reconciliation of basic earnings per share between the three months, nine months and twelve months ended September 30, 2008 versus September 30, 2009 is a non-GAAP presentation. We believe this information is useful in understanding the fluctuation in earnings per share between the prior and current years. The reconciliation presents the after tax impact of significant items and components of the statement of operations on a per share basis before the impact of additional stock issuances which is presented separately. Earnings per share for the three months, nine months and twelve months ended September 30, 2008 and 2009 shown in the reconciliation are presented on a GAAP basis and are the same as the amounts included in the statements of operations. This reconciliation may not be comparable to other companies or more useful than the GAAP presentation included in the statements of operations.

                                                Three Months      Nine Months      Twelve Months
                                                    Ended            Ended             Ended
Earnings Per Share - 2008                       $        0.60    $        0.95    $          0.95

Revenues
Electric on-system                              $       (0.08 )  $        0.09    $          0.27
Electric off-system and other                           (0.11 )          (0.28 )            (0.22 )
Gas                                                     (0.02 )          (0.03 )             0.06
Other                                                    0.00             0.01               0.01
Expenses
Electric fuel and purchased power                        0.06             0.37               0.45
Cost of natural gas sold and transported                 0.03             0.02              (0.08 )
Regulated - electric segment                            (0.01 )          (0.01 )             0.00
Regulated -gas segment                                   0.00             0.00               0.00
Other segment                                            0.00             0.00               0.00
Maintenance and repairs                                 (0.02 )          (0.11 )            (0.13 )
Depreciation and amortization                            0.01             0.05               0.07
Other taxes                                              0.00            (0.02 )            (0.01 )
Interest charges                                        (0.02 )          (0.07 )            (0.11 )
AFUDC                                                    0.00             0.03               0.06
Gain on sale of assets                                      -                -              (0.03 )
Change in effective income tax rates                     0.01            (0.01 )            (0.05 )
Gain on sale of land                                        -             0.01               0.01
Other income and deductions                             (0.01 )          (0.02 )            (0.02 )
Dilutive effect of additional shares issued             (0.01 )          (0.01 )            (0.03 )
Earnings Per Share - 2009                       $        0.43    $        0.97    $          1.20

Recent Activities

Regulatory Plan

On May 1, 2009, we began recording deferred carrying charges associated with environmental upgrades recently completed at our Iatan 1 facility in accordance with our regulatory plan. We deferred $0.8 million in the second quarter of 2009 and $0.9 million in the third quarter of 2009. Construction accounting, for purposes of the regulatory plan, allows us to defer certain charges as regulatory assets, including depreciation and carrying costs, related to operation of the facilities until the facilities are ultimately included in our rate base. The amounts deferred, which began at the in-service date for Iatan 1 and will also be deferred for Iatan 2 at its in-service date, will then be amortized over the life of the plants once they are in our rate base. The regulatory plan covers the 150 megawatt V84.3A2 combustion turbine (Unit 12) that began commercial operation on April 10, 2007 at our Riverton plant, the environmental upgrades at Asbury, which were completed in 2008, environmental upgrades at Iatan 1 and the construction of the Iatan 2 facilities. See Note 3 of "Notes to Consolidated Financial Statements (Unaudited)".

SLCC Generator Failure

On July 3, 2009, the generator on State Line Unit 2-1, one of the combustion turbines at SLCC, failed during operation. Unit 2-1 represents about 150 megawatts of the 500 megawatts rated output of SLCC, of which we are entitled to 60%, or 300 megawatts. The remainder of SLCC was undamaged and continued to operate as normal. The cost to replace the turbine was in excess of the $1.5 million insurance deductible on the unit. We expect to recover all the costs from insurance proceeds in excess of the $1.5 million deductible. The unplanned outage did not have a material financial impact. Unit 2-1 returned to service in October 2009.

Energy Center Engine Failure

On September 28, 2009, we experienced a failure on Energy Center Unit 3, Engine
A. We believe the cost will exceed our insurance deductible, which is $500,000. Engine B on this unit is operational and the unit is capable of about 50 percent of normal capability. We do not expect this unplanned outage to have a material financial impact.

2009 Storm Damage

A major wind storm caused substantial damage to our electric service territory on May 8, 2009. Approximately 83,000 of our electric customers were without power at the height of the storm. Incremental costs associated with the restoration effort due to the wind storm were approximately $6.0 million, of which $5.3 million was capitalized as additions to our utility plant and approximately $0.7 million was maintenance expense that was deferred as a regulatory asset as we believe it is probable that these costs will be recoverable in future electric rate cases.

Ozark Beach Plant

Our hydroelectric generating plant (FERC Project No. 2221), located on the White River at Ozark Beach, Missouri, has a generating capacity of 16 megawatts. We have a long-term license from FERC to operate this plant which forms Lake Taneycomo in southwestern Missouri. As part of the Energy and Water Development Appropriations Act of 2006 (the Appropriations Act), a new minimum flow was established with the intent of increasing minimum flows on recreational streams in Arkansas. To accomplish this, the level of Bull Shoals Lake will be increased an average of 5 feet. The increase at Bull Shoals will decrease the head waters available for generation at Ozark Beach by 5 feet and, thus, reduce our electrical output. We estimate the lost production to be up to 16% of our average annual energy production for this unit. The loss in this facility would require us to replace it with additional generation from our gas-fired and coal-fired units or with purchased power. The Appropriations Act has a provision for the Army Corp of Engineers to provide a one time payment to us for lost energy production. The Appropriations Act requires the Southwest Power

Administration (SWPA), in coordination with us and our relevant public service commissions, to determine our economic detriment.

The SWPA published its Final Determination Report on January 23, 2009 documenting the procedure they intended to use to calculate the present value of the future lifetime replacement cost of the electrical energy and capacity lost due to the White River Minimum Flows project at Ozark Beach. The actual hydropower compensation values were to be calculated using the method presented in the Final Determination and current values for the specified parameters based on the official implementation date. Assuming a January 1, 2011 date of implementation for the White River Minimum Flows project and November 2008 values for the specified parameters, the SWPA's determination at that time resulted in a present value for the estimated future lifetime replacement costs of the electrical energy and capacity at Ozark Beach of $41,319,400. On June 8, 2009, the SWPA published a draft addendum to its January 2009 Final Determination Report documenting proposed changes to the SWPA's methodology, including the inclusion of an additional discount rate source to be used by the SWPA in determination of the present value of the losses. Assuming a January 1, 2011 date of implementation for the White River Minimum Flows project and current values for the specified parameters, the SWPA's Draft Addendum to its Final Determination results in a present value of $22,340,800 for the estimated future lifetime replacement costs of the electrical energy and capacity at Ozark Beach. We and the MPSC have provided comments on the new methodology included in the draft addendum but cannot predict the final outcome. We expect that the Army Corp of Engineers will not implement the new minimum flow plan until at least January 2011, but, at this time, we cannot be sure of the timetable as it is dependent on Congress providing funding for the economic detriment.

Regulatory Matters

On November 4, 2009, we filed a request with the Kansas Corporation Commission (KCC) for an annual increase in base rates for our Kansas electric customers in the amount of $5.2 million, or 24.6%. This request is primarily to allow us to recover capital expenditures associated with environmental upgrades at Iatan 1 completed in 2009 and at our Asbury plant completed in 2008 and our investment in new generating units at Iatan 2, the Plum Point Generating Station and our Riverton 12 unit that went on line in 2007.

On October 29, 2009, we filed a request with the MPSC for an annual increase in base rates for our Missouri electric customers in the amount of $68.2 million, or 19.6%. This request is primarily to allow us to recover capital expenditures associated with environmental upgrades at Iatan 1 and our investment in new generating units at Iatan 2 and the Plum Point Generating Station. The Signatory Parties are currently in discussions about procedures to be used in this case, including the timing of the consideration and rate recovery of our investments in the three generating facilities and other expenditures.

On June 5, 2009, we filed a request with the MPSC for an annual increase in base rates for our Missouri gas customers in the amount of $2.9 million, or 4.9%. In this filing, we requested recovery of the ongoing cost of operating and maintaining our 1,200-mile gas distribution system and a return on equity of 11.3%. Results from this case would likely take effect in the second quarter of 2010.

All pending applications for rehearing in our 2006 Missouri electric rate case were denied by the MPSC on November 20, 2008. On December 15, 2008, the OPC filed a Petition for Writ of Review with the Cole County Circuit Court regarding the MPSC's decisions in our 2006 rate case. Praxair and Explorer Pipeline filed a Petition for Writ of Review on December 19, 2008. These actions were consolidated into one proceeding. Briefs were filed by all parties and oral argument took place on June 2, 2009.

On May 13, 2009, the OPC filed a petition in the Jasper County Circuit Court seeking refunds with regard to utility rates for electric service paid by our customers during the period of January 1, 2007 to December 13, 2007. During this period, we charged the rates set forth in the tariffs which were approved by, and are on file with, the MPSC. We filed a motion to dismiss, or, in the alternative, motion for more definitive statement. On September 3, 2009, the Jasper County Circuit Court dismissed the petition with prejudice. On October 7, 2009, the OPC appealed the Jasper County Circuit Court decision to the Missouri Court of Appeals - Southern District.

For additional information, see "Rate Matters" below.

Financings

During the third quarter of 2009, we issued and sold 1,542,682 shares of our common stock, pursuant to our equity distribution agreement with UBS Securities LLC (UBS), at an average price per share of $18.09, resulting in proceeds to us of approximately $26.7 million (after payment of approximately $1.2 million in commissions to the sales agent). Through October 5, 2009, in the aggregate, we have issued and sold 1,692,290 shares pursuant to the program, resulting in net proceeds to us of approximately $29.3 million.

Sales of the shares pursuant to the equity distribution agreement will be made at market prices or as otherwise agreed with UBS. Under the terms of the program agreement, we may also sell shares to UBS as principal for UBS' own account at a price agreed upon at the time of sale. On October 22, 2009 we amended the equity distribution agreement to increase the aggregate offering amount under the program from $60 million to $120 million.

On March 27, 2009, we issued $75 million principal amount of 7% first mortgage bonds due April 1, 2024. The net proceeds (after payment of expenses) of approximately $72.6 million, were used to repay short-term debt incurred, in part, to fund our current construction program.

On March 11, 2009, we entered into a $50 million unsecured credit agreement. This agreement provides for $50 million of revolving loans to be available to us for working capital, general corporate purposes and to back-up our use of commercial paper and terminates on July 15, 2010. This credit agreement is in addition to, and has substantially identical covenants and terms as (other than pricing), our Amended and Restated Unsecured Credit Agreement dated March 14, 2006. There were no borrowings under the new agreement at September 30, 2009.

Gas Storage Contract

We have signed an agreement with Southern Star to purchase one million Dths of firm gas storage service capacity for a period of five years beginning in April 2011. The reservation charge for this storage capacity is approximately $1.1 million annually. This storage capacity will enable us to better manage our natural gas commodity and transportation needs for our electric segment.

RESULTS OF OPERATIONS

The following discussion analyzes significant changes in the results of operations for the three-month, nine-month and twelve-month periods ended September 30, 2009, compared to the same periods ended September 30, 2008.

The following table represents our results of operations by operating segment for the applicable periods ended September 30 (in millions):

                           Quarter Ended       Nine Months Ended       Twelve Months Ended
                           2009      2008       2009        2008        2009          2008
Income from operations
Electric                 $   15.5   $ 21.1   $     32.4    $  30.6   $     39.2    $     29.0
Gas                          (1.0 )   (1.2 )       (0.0 )      0.6          1.1           1.5
Other                         0.3      0.3          1.0        0.8          0.8           1.1
Net income               $   14.8   $ 20.2   $     33.4    $  32.0   $     41.1    $     31.6

Electric Segment

Overview

Our electric segment income for the third quarter of 2009 was $15.5 million as compared to $21.1 million for the third quarter of 2008.

Electric operating revenues comprised approximately 95.2% of our total operating revenues during the third quarter of 2009. Of our total electric operating revenues during the third quarter of 2009, approximately 41.1% were from residential customers, 32.3% from commercial customers,

16.2% from industrial customers, 4.2% from wholesale on-system customers, 2.2% from wholesale off-system transactions, 2.8% from other electric revenues, primarily public authorities, and 1.2% from miscellaneous sources. The percentage of revenues provided from our wholesale off-system transactions decreased during the third quarter of 2009 as compared to the third quarter of 2008, primarily due to decreased market demand resulting from milder weather in the third quarter of 2009 and general economic conditions.

The amounts and percentage changes from the prior periods in kilowatt-hour ("kWh") sales and operating revenues by major customer class for on-system sales and for off-system sales for the applicable periods ended September 30, were as follows:

                                                                    kWh Sales
                                                                  (in millions)
                        3 Months   3 Months              9 Months   9 Months              12 Months   12 Months
                         Ended      Ended        %        Ended      Ended        %         Ended       Ended        %
Customer Class            2009       2008     Change*      2009       2008     Change*      2009        2008      Change*
Residential                471.0      503.6      (6.5 )%  1,409.1    1,478.7      (4.7 )%   1,883.3     1,917.4      (1.8 )%
Commercial                 408.3      446.4      (8.5 )   1,188.2    1,217.9      (2.4 )    1,592.4     1,613.1      (1.3 )
Industrial                 265.6      289.3      (8.2 )     757.9      820.9      (7.7 )    1,010.3     1,088.1      (7.1 )
Wholesale on-system         89.4       94.3      (5.2 )     252.9      263.4      (4.0 )      334.0       344.8      (3.1 )
Other**                     30.8       32.1      (3.8 )      92.8       94.1      (1.4 )      122.5       124.5      (0.2 )
Total on-system sales    1,265.1    1,365.7      (7.4 )   3,700.9    3,875.0      (4.5 )    4,942.5     5,087.9      (2.9 )
Off-system                 100.6      164.1     (38.7 )     346.3      473.8     (26.9 )      560.6       563.8      (0.6 )
Total KWh Sales          1,365.7    1,529.8     (10.7 )   4,047.2    4,348.8      (6.9 )    5,503.1     5,651.7      (2.6 )

**Other kWh sales include street lighting, other public authorities and interdepartmental usage.

                                                        Electric Segment Operating Revenues
                                                                  ($ in millions)
                    3 Months     3 Months                9 Months     9 Months                12 Months     12 Months
                     Ended        Ended         %         Ended        Ended         %          Ended         Ended         %
Customer Class        2009         2008      Change*       2009         2008      Change*       2009          2008       Change*
Residential        $     49.9   $     51.1      (2.2 )% $    138.0   $    136.1       1.4 %  $     181.2   $     173.8       4.3 %
Commercial               39.3         41.0      (4.1 )       104.2        100.5       3.6          136.5         130.0       5.0
Industrial               19.7         20.5      (4.1 )        51.3         51.9      (1.1 )         66.8          67.2      (0.6 )
Wholesale
on-system                 5.1          5.5      (7.5 )        14.1         15.0      (5.9 )         18.4          19.7      (6.7 )
Other**                   3.3          3.2       4.2           8.9          8.4       5.6           11.5          10.9       5.5
Total on-system
revenues           $    117.3   $    121.3      (3.3 )  $    316.5   $    311.9       1.5    $     414.4   $     401.6       3.2
Off-system                2.7          7.8     (65.7 )         9.3         22.6     (59.1 )         16.3          26.7     (38.9 )
Total revenues
from kWh sales          120.0        129.1      (7.0 )       325.8        334.5      (2.6 )        430.7         428.3       0.6
Miscellaneous
revenues***               1.5          1.8     (17.8 )         4.7          5.2      (8.0 )          6.5           6.7      (1.8 )
Total electric
operating
revenues           $    121.5   $    130.9      (7.2 )  $    330.5   $    339.7      (2.7 )  $     437.2   $     435.0       0.5
Water revenues            0.5          0.5      (2.1 )         1.3          1.4      (2.0 )          1.8           1.8      (3.3 )
Total Electric
Segment
Operating
Revenues           $    122.0   $    131.4      (7.2 )  $    331.8   $    341.1      (2.7 )  $     439.0   $     436.8       0.5

**Other operating revenues include street lighting, other public authorities and interdepartmental usage.

***Miscellaneous revenues include transmission service revenue, late payment fees, renewable energy credit sales, rent, etc.

Quarter Ended September 30, 2009 Compared to Quarter Ended September 30, 2008

On-System Operating Revenues and Kilowatt-Hour Sales

KWh sales and revenues for our on-system customers decreased during the third quarter of 2009 as compared to the third quarter of 2008 primarily due to the mild weather in the third quarter of 2009. Revenues for our on-system customers decreased approximately $3.9 million, or 3.3%. Weather and other related factors decreased revenues by an estimated $10.8 million compared to last year's third quarter. Total cooling degree days (the cumulative number of degrees that the average temperature for each day during that period was above 65† F) for the third quarter of 2009 were 23.6% less than the same period last year and 30.1% less than the 30-year average. Rate

changes contributed an estimated $6.8 million to revenues during the third quarter of 2009. Residential and commercial sales growth increased revenues an estimated $0.1 million. Our electric customer growth for the twelve months ended September 30, 2009 was 0.2%.

Residential and commercial kWh sales and revenues decreased during the third quarter of 2009 mainly due to the cooler temperatures in the third quarter of 2009.

Industrial kWh sales decreased 8.2% mainly due to a slowdown created by economic uncertainty while the associated revenues decreased 4.1% as the effects of the 2008 Missouri rate increase partially offset the economic conditions.

On-system wholesale kWh sales decreased during the third quarter of 2009 reflecting the general economic conditions and cooler weather discussed above. Revenues associated with these FERC-regulated sales decreased more than kWh sales as a result of the fuel adjustment clause applicable to such sales. This clause permits the distribution to customers of changes in fuel and purchased power costs.

Off-System Electric Transactions

In addition to sales to our own customers, we also sell power to other utilities as available, including through the Southwest Power Pool (SPP) energy imbalance services (EIS) market. See "Competition" below. The majority of our off-system sales margins are now included as a component of the fuel adjustment clause in our Missouri, Kansas and Oklahoma jurisdictions and generally adjust the fuel and purchased power expense. As a result, the off-system sales margin flows back to the customer and has no effect on net income. The following table sets forth information regarding these sales and related expenses for the quarters ended September 30:

(in millions)               2009    2008
EIS revenues                $ 1.4   $ 3.4
Other revenues                1.3     4.4
Total off-system revenues     2.7     7.8

EIS expenses                  1.1     2.5
Other expenses                1.2     2.9
Total off-system expenses     2.3     5.4

Net                         $ 0.4   $ 2.4

Revenues and related expenses were less during the third quarter of 2009 as compared to the third quarter of 2008 primarily due to decreased market demand and lower gas prices that made it more economical for utilities to generate their own power rather than purchase it. Total purchased power related expenses are included in our discussion of purchased power costs below.

Miscellaneous Revenues

Our miscellaneous revenues were $1.5 million for the third quarter of 2009 as compared to $1.8 million in the third quarter of 2008. These revenues are comprised mainly of transmission revenues, late payment fees and renewable energy credit sales.

Operating Revenue Deductions

During the third quarter of 2009, total electric segment operating expenses decreased approximately $4.8 million (4.7%) compared with the same period last year.

Total fuel and purchased power expenses decreased approximately $3.4 million . . .