EXECUTIVE SUMMARY

Electric Segment

As a traditional, vertically integrated regulated utility, the primary drivers of our electric operating revenues in any period are: (1) rates we can charge our customers, (2) weather, (3) customer growth and usage and (4) general economic conditions. The utility commissions in the states in which we operate, as well as the Federal Energy Regulatory Commission (FERC), set the rates which we can charge our customers. In order to offset expenses, we depend on our ability to receive adequate and timely recovery of our costs (primarily fuel and purchased power) and/or rate relief. We assess the need for rate relief in all of the jurisdictions we serve and file for such relief when necessary. The effects of timing of rate relief are discussed in detail in Note 3 of "Notes to the Consolidated Financial Statements" under Item 8. Of the

factors driving revenues, weather has the greatest short-term effect on the demand for electricity for our regulated business. Very hot summers and very cold winters increase electric demand, while mild weather reduces demand. Residential and commercial sales are impacted more by weather than industrial sales, which are mostly affected by business needs for electricity and by general economic conditions.

Customer growth, which is the growth in the number of customers, contributes to the demand for electricity. Our annual customer growth is calculated by comparing the number of customers at the end of a year to the number of customers at the end of the prior year. Due to the devastating EF-5 tornado that hit the Joplin, Missouri area on May 22, 2011, damaging or destroying thousands of homes and businesses (discussed below), our system-wide customer count was down by approximately 400 customers as of December 31, 2012 as compared to the customer count levels prior to the May 2011 tornado. We expect an average annual customer growth range of approximately 0.7% to 1.2% over the next several years. We expect the corresponding weather normalized sales growth to be approximately 1.5% in the near term as the Joplin area rebuilding activity continues. We then expect sales growth to flatten to a range of 0.4% to 0.9% over the next several years. We define electric sales growth to be growth in kWh sales period over period excluding the impact of weather. The primary drivers of electric sales growth are customer growth, customer usage and general economic conditions.

The primary drivers of our electric operating expenses in any period are:
(1) fuel and purchased power expense, (2) operating maintenance and repairs expense, including repairs following severe weather and plant outages, (3) taxes and (4) non-cash items such as depreciation and amortization expense. We have a fuel cost recovery mechanism in all of our jurisdictions, which significantly reduces the impact of fluctuating fuel and purchased power costs on our net income.

Gas Segment

The primary drivers of our gas operating revenues in any period are:
(1) rates we can charge our customers, (2) weather, (3) customer growth and usage, (4) the cost of natural gas and interstate pipeline transportation charges and (5) general economic conditions. The MPSC sets the rates which we can charge our customers. In order to offset expenses, we depend on our ability to receive adequate and timely recovery of our costs (primarily commodity natural gas) and/or rate relief. We assess the need for rate relief and file for such relief when necessary. A Purchased Gas Adjustment (PGA) clause is included in our gas rates, which allows us to recover our actual cost of natural gas from customers through rate changes, which are made periodically (up to four times) throughout the year in response to weather conditions, natural gas costs and supply demands. Weather affects the demand for natural gas. Very cold winters increase demand for gas, while mild weather reduces demand. Due to the seasonal nature of the gas business, revenues and earnings are typically concentrated in the November through March period, which generally corresponds with the heating season. Customer growth, which is the growth in the number of customers, contributes to the demand for gas. Our annual customer growth is calculated by comparing the number of customers at the end of a year to the number of customers at the end of the prior year. Our gas segment customer contraction for the year ended December 31, 2012 was 0.2%, which we believe was due to depressed economic conditions. We expect gas customer growth to be flat during the next several years. We define gas sales growth to be growth in mcf sales excluding the impact of weather. The primary drivers of gas sales growth are customer growth and general economic conditions.

The primary driver of our gas operating expense in any period is the price of natural gas. However, because gas purchase costs for our gas utility operations are normally recovered from our customers, any change in gas prices does not have a corresponding impact on income unless such costs are deemed imprudent or cause customers to reduce usage.

Earnings

For the year ended December 31, 2012, basic and diluted earnings per weighted average share of common stock were $1.32 on $55.7 million of net income compared to $1.31 on $54.9 million of net income for the year ended December 31, 2011. Increased electric gross margins (defined as electric revenues less fuel and purchased power costs) positively impacted net income for the twelve months ended December 31, 2012 as compared to the same period in 2011, reflecting a decrease in revenues of approximately $13.6 million and a decrease in electric fuel and purchased power expenses of approximately $21.4 million compared to 2011. Decreased depreciation, reflecting a decrease in regulatory amortization expense due to the termination of construction accounting as of June 15, 2011 also positively impacted net income for the twelve months ended December 31, 2012. Other operating and maintenance expenses increased during 2012, negatively impacting net income.

The table below sets forth a reconciliation of basic and diluted earnings per share between 2011 and 2012, which is a non-GAAP presentation. The economic substance behind our non-GAAP earnings per share (EPS) measure is to present the after tax impact of significant items and components of the statement of income on a per share basis before the impact of additional stock issuances.

We believe this presentation is useful to investors because the statement of income does not readily show the EPS impact of the various components, including the effect of new stock issuances. This could limit the readers' understanding of the reasons for the EPS change from previous years. This information is useful to management, and we believe this information is useful to investors, to better understand the reasons for the fluctuation in EPS between the prior and current years on a per share basis.

This reconciliation may not be comparable to other companies or more useful than the GAAP presentation included in the statements of income. We also note that this presentation does not purport to be an alternative to earnings per share determined in accordance with GAAP as a measure of operating performance or any other measure of financial performance presented in accordance with GAAP. Management compensates for the limitations of using non-GAAP financial measures by using them to supplement GAAP results to provide a more complete understanding of the factors and trends affecting the business than GAAP results alone. The dilutive effect of additional shares issued included in the table reflects the estimated impact of all shares issued during the period.

              Earnings Per Share - 2011                     $  1.31
              Revenues
              Electric segment                              $ (0.20 )
              Gas segment                                     (0.10 )
              Other segment                                    0.01

              Total Revenue                                   (0.29 )
              Electric fuel and purchased power                0.31
              Cost of natural gas sold and transported         0.06

              Margin                                           0.08
              Operating - electric segment                    (0.13 )
              Operating - gas segment                          0.00
              Operating - other segment                       (0.01 )
              Maintenance and repairs                          0.01
              Depreciation and amortization                    0.05
              Other taxes                                     (0.01 )
              Interest charges                                 0.00
              AFUDC                                            0.02
              Change in effective income tax rates             0.01
              Dilutive effect of additional shares issued     (0.01 )
              Other income and deductions                      0.00

              Earnings Per Share - 2012                     $  1.32

Fourth Quarter Results

Earnings for the fourth quarter of 2012 were $9.6 million, or $0.23 per share, as compared to $8.7 million, or $0.21 per share, in the fourth quarter of 2011. Electric segment gross margins grew slightly during the quarter ending December 31, 2012 compared to the 2011 quarter, reflecting decreased revenues of approximately $3.9 million and a decrease in fuel and purchased power costs of approximately $4.4 million. The impact of milder weather experienced during the fourth quarter of 2012 was offset by improving electric customer counts. Depreciation and amortization expense increased approximately $0.8 million and other regulated operating expenses increased $0.8 million in the fourth quarter of 2012, primarily related to increased employee health care expense. These increases were offset by a $1.8 million decrease in maintenance and repairs expense.

2012 Activities

Financings

During the year we took advantage of lower interest rates.

On October 30, 2012, we entered into a Bond Purchase Agreement for a private placement of $30.0 million of 3.73% First Mortgage Bonds due 2033 and $120.0 million of 4.32% First Mortgage Bonds due 2043. The delayed settlement is anticipated to occur on or about May 30, 2013, subject to customary closing conditions. We expect to use the proceeds from the sale of the bonds to redeem all $98.0 million aggregate principal amount of our Senior Notes, 4.50% Series due June 15, 2013 with the remaining proceeds to be used for general corporate purposes. The bonds will be issued under the EDE Mortgage.

On April 1, 2012, we redeemed all $74.8 million aggregate principal amount of our First Mortgage Bonds, 7.00% Series due 2024. All $5.2 million of our First Mortgage Bonds, 5.20% Pollution Control Series due 2013 and all $8.0 million of our First Mortgage Bonds, 5.30% Pollution Control Series due 2013 were also redeemed with payment made to the trustee prior to March 31, 2012. To replace this financing, on April 2, 2012, we entered into a Bond Purchase Agreement for a private placement of $88.0 million

aggregate principal amount of 3.58% First Mortgage Bonds due April 2, 2027. The first settlement of $38.0 million occurred on April 2, 2012 and the second settlement of $50.0 million occurred on June 1, 2012. All bonds of this new series will mature on April 2, 2027.

For additional information, see Note 7 of "Notes to Consolidated Financial Statements" under Item 8.

Compliance Plan

Our environmental Compliance Plan, discussed in Note 11 of "Notes to Consolidated Financial Statements" under Item 8, continues on schedule. Construction is proceeding on the installation of a scrubber, fabric filter, and powder activated carbon injection system at our Asbury plant. Initial construction costs through December 31, 2012 were $29.0 million for 2012 and $30.3 million for the project to date, excluding AFUDC. This project is expected to be completed in early 2015 at a cost ranging from $112.0 million to $130.0 million, excluding AFUDC. The addition of this air quality control equipment will require the retirement of Asbury Unit 2, an 18 megawatt steam turbine that is currently used for peaking purposes.

In September 2012, as part of the Compliance Plan, we completed the transition of our Riverton Units 7 and 8 from operation on coal to full operation on natural gas. These units, along with Riverton Unit 9, will be retired upon conversion of Riverton Unit 12, a simple cycle combustion turbine, to a combined cycle unit, with scheduled completion in 2016.

Regulatory Matters

On July 6, 2012, we filed a rate increase with the Missouri Public Service Commission (MPSC) for changes in rates for our Missouri electric customers. We are seeking an annual increase in base rate revenues of approximately $30.7 million, or 7.56%. On February 15, 2013, the MPSC issued an order to delay the procedural schedule, indicating we reached an agreement in principle with the parties to our case. The order also indicated a joint stipulation is anticipated to be filed with the MPSC as early as February 22, 2013, and is still subject to final approval by the MPSC. Details of the stipulation are confidential until it is filed with the MPSC. We do not anticipate the outcome to have a materially negative impact on our financial statements.

On May 21, 2012, we filed a rate increase request with the MPSC for an annual increase in revenues for our Missouri water customers in the amount of approximately $516,400, or 29.6%. On October 18, 2012, we, the MPSC staff and the Office of the Public Counsel filed a unanimous agreement with the MPSC for an increase of $450,000. The MPSC issued an order approving the agreement on October 31, 2012, with rates effective November 23, 2012.

On May 18, 2012, we filed with the Federal Energy Regulatory Commission (FERC) proposed revisions to our Open Access Transmission Tariff to implement a cost-based transmission formula rate to be effective August 1, 2012. On July 31, 2012, the FERC suspended the rate for five months and set the filing for hearing and settlement procedures.

For additional information on all these cases, see Note 3 of "Notes to Consolidated Financial Statements" under Item 8 for information regarding regulatory matters.

Tornado Recovery and Activity

As of December 31, 2012, our system-wide customer count was down by approximately 400 as compared to the customer count levels prior to the May 2011 tornado. Joplin, Missouri continues to recover from the May 2011 tornado. During 2012, the city of Joplin approved an $800 million Master Development Plan, which includes several municipal and commercial projects, as well as 1,400 new homes in and around the area impacted by the May 2011 EF-5 tornado. These projects are expected to be funded

through grants, tax credits, tax revenue (including such revenues from a city-approved Tax Increment Financing district encompassing over 3,000 acres within the city), and other private lending. Projects are expected to be completed by 2019. All our transmission lines and structures damaged in the storm have been repaired and the distribution system has been rebuilt to all customers able to receive power. We continue to extend services to customers as they rebuild. Our substation destroyed in the tornado has been rebuilt and is again providing service to our customers. We anticipate insurance proceeds of approximately $6.5 million will cover most of the cost of the substation rebuild. Total storm restoration costs were approximately $27.3 million as of December 31, 2012. The majority of these costs have been capitalized. We expect the loss of electric load and corresponding revenues to abate as customers rebuild.

RESULTS OF OPERATIONS

The following discussion analyzes significant changes in the results of operations for the years 2012, 2011 and 2010.

The following table represents our results of operations by operating segment for the applicable years ended December 31 (in millions):

                                       2012     2011     2010
                         Electric     $ 52.6   $ 50.6   $ 43.2
                         Gas             1.3      2.7      2.6
                         Other           1.8      1.6      1.6

                         Net income   $ 55.7   $ 54.9   $ 47.4

Electric Segment

Overview

    Our electric segment income for 2012 was $52.6 million as compared to
$50.6 million for 2011.

    Electric operating revenues comprised approximately 91.3% of our total
operating revenues during 2012. Electric operating revenues for 2012, 2011, and
2010 were comprised of the following:

                                              2012     2011     2010
                   Residential                 42.2 %   42.4 %   42.4 %
                   Commercial                  31.2     30.1     30.3
                   Industrial                  15.5     15.1     14.4
                   Wholesale on-system          3.6      3.7      4.0
                   Wholesale off-system         3.1      4.5      4.7
                   Miscellaneous sources*       2.7      2.6      2.6
                   Other electric revenues      1.7      1.6      1.6


--------------------------------------------------------------------------------
   º *

Gross Margin

As shown in the table below, electric segment gross margin, defined as electric revenues less fuel and purchased power costs, increased approximately $7.8 million during 2012 as compared to 2011, reflecting a decrease in revenues of approximately $13.6 million and a decrease in electric fuel and purchased power expenses of approximately $21.4 million compared to 2011. Decreased sales demand, resulting from mild winter weather in the first quarter of 2012 and less favorable weather in the third quarter of 2012 as compared to the same period last year, negatively impacted revenues and margins. This negative impact was partially offset by a full year of electric customer rate increases for our Missouri customers and improving electric customer counts as customers continued to return to the system following the May 2011 tornado. A change in our unbilled revenue estimate in the third quarter of 2012 also positively impacted gross margin. Decreases in non-volume fuel expenses also increased margin by approximately $4.3 million over last year.

The electric gross margin increased approximately $38.6 million during 2011 as compared to 2010 mainly due to the September 2010 Missouri rate increase, the July 2010 Kansas rate increase, the September 2010 and March 2011 Oklahoma rate increases and the April 2011 Arkansas rate increase.

The table below represents our electric gross margins for the years ended December 31 (in millions).

                                                        2012      2011      2010
      Electric segment revenues                        $ 510.7   $ 524.3   $ 484.7
      Fuel and purchased power                           178.9     200.3     199.3

      Electric segment gross margins                   $ 331.8   $ 324.0   $ 285.4

      Margin as % of total electric segment revenues      65.0 %    61.8 %    58.9 %

Although a non-GAAP presentation, we believe the presentation of gross margin is useful to investors and others in understanding and analyzing changes in our electric operating performance from one period to the next, and have included the analysis as a complement to the financial information we provide in accordance with GAAP. However, these margins may not be comparable to other companies' presentations or more useful than the GAAP information we provide elsewhere in this report.

Sales and Revenues

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

                                                   kWh Sales
                                                 (in millions)
Customer Class     2012        2011       % Change(1)       2011        2010       % Change(1)
Residential        1,850.8     1,982.7            (6.7 )%   1,982.7     2,060.4            (3.8 )%
Commercial         1,558.3     1,576.3            (1.1 )    1,576.3     1,644.9            (4.2 )
Industrial         1,028.4     1,022.8             0.6      1,022.8     1,007.0             1.6
Wholesale
on-system            353.1       364.9            (3.2 )      364.9       355.8             2.5
Other(2)             124.2       128.7            (3.5 )      128.7       126.5             1.8

Total
on-system
sales              4,914.8     5,075.4            (3.2 )    5,075.4     5,194.6            (2.3 )
Off-system           704.0       740.0            (4.9 )      740.0       798.1            (7.3 )

Total KWh
Sales              5,618.8     5,815.4            (3.4 )    5,815.4     5,992.7            (3.0 )


--------------------------------------------------------------------------------
   º (1)

º (2)
º Other kWh sales include street lighting, other public authorities and interdepartmental usage.

KWh sales for our on-system customers decreased approximately 3.2% during 2012 as compared to 2011 primarily due to decreased demand due to milder temperatures in 2012 as compared to 2011 and a trend toward more efficient utilization of electric power by our customers. Residential and commercial kWh sales decreased primarily due to these weather impacts and efficient utilization of electric power. Industrial sales increased slightly during 2012 as compared to 2011. On-system wholesale kWh sales decreased during 2012 as compared to 2011 reflecting the milder weather in 2012. Total cooling degree days (the cumulative number of degrees that the average temperature for each day during that period was above 65° F) for 2012 were 2.8% less than 2011 although they were 29.3% more than the 30-year average, mainly due to unseasonably hot weather in June and July of 2012. Total heating degree days (the sum of the number of degrees that the daily average temperature for each day during that period was below 65°
F) for 2012 were 20.3% less than 2011 and 20.6% less than the 30-year average.

KWh sales for our on-system customers decreased approximately 2.3% during 2011 as compared to 2010 primarily due to the loss of customers due to damaged or destroyed structures resulting from the May 22, 2011 tornado, although some of the effect was offset by temporary housing units. Residential and commercial kWh sales decreased in 2011 primarily due to the loss of residences and businesses in the May 22, 2011 tornado. Industrial kWh sales increased 1.6% in 2011 as compared to 2010 when there was a slowdown created by economic uncertainty. On-system wholesale kWh sales increased during 2011 as compared to 2010 reflecting the warmer weather in the third quarter of 2011.

The amounts and percentage changes from the prior period's electric segment operating revenues by major customer class for on-system and off-system sales were as follows:

                                           Electric Segment Operating Revenues
                                                     ($ in millions)
Customer Class             2012      2011      % Change(1)      2011      2010      % Change(1)
Residential               $ 214.5   $ 221.7            (3.2 )% $ 221.7   $ 204.9             8.2 %
Commercial                  158.8     157.4             0.9      157.4     146.3             7.6
Industrial                   78.8      78.9            (0.2 )     78.9      69.7            13.3
Wholesale on-system          18.6      19.1            (3.1 )     19.1      19.2            (0.6 )
Other(2)                     14.0      13.9             0.7       13.9      12.3            12.7

Total on-system
revenues                    484.7     491.0            (1.3 )    491.0     452.4             8.5
Off-system                   15.7      23.3           (32.6 )     23.3      22.9             1.7

Total revenues from KWh
sales                       500.4     514.3            (2.7 )    514.3     475.3             8.2
Miscellaneous
revenues(3)                   8.5       8.2             4.0        8.2       7.6             8.2

Total electric
operating revenues        $ 508.9   $ 522.5            (2.6 )  $ 522.5   $ 482.9             8.2
Water revenues                1.8       1.8             1.2        1.8       1.8            (1.9 )

Total Electric Segment
Operating Revenues        $ 510.7   $ 524.3            (2.6 )  $ 524.3   $ 484.7             8.2


--------------------------------------------------------------------------------
   º (1)

º (2)
º Other operating revenues include street lighting, other public authorities and interdepartmental usage.

º (3)
º Miscellaneous revenues include transmission service revenues, late payment fees, renewable energy credit sales, rent, etc.

Revenues for our on-system customers decreased approximately $6.4 million (1.3%) during 2012 as compared to 2011. Weather and other related factors decreased revenues an estimated $25.6 million in 2012 as compared to 2011, primarily due to mild weather in the first quarter of 2012 and less favorable weather in the third quarter of 2012 as compared to the same period last year. Rate changes, primarily the June 2011 Missouri rate increase, the March 2011 Oklahoma rate increase, the January 2012 Kansas rate increase and the April 2011 Arkansas rate increase, contributed an estimated $12.0 million to revenues. Improved customer counts increased revenues an estimated $4.2 million. Additionally, a change in our estimate of unbilled revenues during the third quarter of 2012 contributed $3.0 million to revenues.

Residential revenues decreased during 2012 due to the milder weather and efficient utilization of electric power. Commercial revenues increased primarily due to the Missouri, Kansas, Oklahoma and Arkansas rate increases. Industrial revenues decreased slightly.

Revenues for our on-system customers increased approximately $38.6 million (8.5%) during 2011 as compared to 2010. Rate changes, primarily the September 2010 Missouri rate increase, the July 2010 Kansas rate increase, the September 2010 and March 2011 Oklahoma rate increases and the April 2011 Arkansas rate increase, contributed an estimated $49.2 million to revenues. We estimate the impact of the