Commission Approves Support For Topeka Mayor

The Manhttan City Commission approved a Resolution Establishing the Policy of the City of Manhattan Regarding KPL
Electric Rates and Efforts to Maintain Stable and Efficient Electric Rates

Electrical rates in Northeast Kansas will increase by up to 30% if rate paradie is ordered by the Federal Energy Commission
or the Kansas Corporation Commission.

This vote should help Topeka Mayor Joan Wagnon in her fight to save our rates. Her is a memo given to the City
Commission:

BACKGROUND

In 1992, Kansas Power & Light (KPL) and Kansas Gas & Energy (KGE) merged under Western Resources. As part of the
merger, KPL and KGE remain two separate operating companies with separate and distinct structures with Western
Resources serving as the parent company. Because of the extreme cost of the construction of Wolf Creek Nuclear Power
Plant (Wolf Creek), estimated at $3 billion, KGE was quite weakened as a profitable company which proved to be a factor
in the merger to create Western Resources. As part of the merger, it was agreed that KGE customers would be responsible
for all costs associated with Wolf Creek and that KPL customers would not be held responsible for Wolf Creek costs.
Currently, KGE customers pay approximately 25 percent more for electricity than do KPL customers.

The City of Wichita filed a case with the Federal Energy Regulatory Commission (FERC) in 1999 against Western
Resources alleging that KGE customers are being unfairly charged to cover the remaining costs associated with Wolf Creek.
In this case, Wichita is seeking parity in energy costs between KGE and KPL customers. Data based on 1998 Department
of Energy figures indicate that KPL customers pay an average of 5.15 cents per Kilowatt Hour while KGE customers pay on
average 6.62 cents per Kilowatt Hour. The statewide average at that time was 6.28 cents per Kilowatt Hour.

Wichita chose to take their case to the FERC because the Kansas Corporation Commission (KCC) had not fully addressed
the issue of rate parity in a timely enough manner for Wichita and KGE customers. It is important to understand that the
KCC and not the FERC is responsible for setting retail electric rates for Kansas utility companies. The FERC sets wholesale
rates for electricity only.

On August 8, 2000, the KCC and Western Resources agreed to settle a KCC complaint proceeding which would require
Western Resources to file a rate case no later than November 25, 2000. This case would recommend establishing
appropriate rates for retail electric service to KPL and KGE customers as well as provide for the appropriate notice and
public process.

Finally, a settlement conference has been scheduled by FERC for September 6, 2000. It is assumed by the Chief Judge
hearing the case that this will be the last settlement conference. Enclosed is a letter from Topeka Mayor Joan Wagnon
discussing the order calling all parties to the FERC settlement conference. All parties involved with the case are to be present
to negotiate and accept matters agreed upon. Mayor Wagnon will be present at this conference representing KPL customer
interests.