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Westar Energy Announces Decline in Third Quarter Earnings

November 7, 2008

Westar Energy, Inc. (NYSE: WR) today announced earnings of $88.0 million, or $0.81 per share, for the third quarter 2008, compared with earnings of $91.5 million, or $0.99 per share, for the third quarter 2007. The lower results for the quarter were due primarily to a decrease in sales volumes as a result of cooler weather. The per share results reflect an increase in the number of shares outstanding as a result of the company having issued additional shares to fund its capital investments.

Earnings for the nine months ended Sept. 30, 2008, were $154.5 million, or $1.51 per share, compared with $153.9 million, or $1.71 per share, for the same period in 2007. A more complete discussion of the various items that contributed to the nine months ended results is provided later in the news release. The per share results reflect an increase in the number of shares outstanding as a result of the company having issued additional shares to fund its capital investments.

2008 Third Quarter Results Compared With 2007 Third Quarter Results

Westar Energy reported revenues of $574.9 million for the third quarter 2008, $26.4 million, or 5 percent, higher than the third quarter last year. Retail sales increased $25.8 million due principally to the recovery of higher fuel and purchased power costs through the prices it charged, which were offset in part by 7 percent lower sales volumes due largely to cooler weather. Wholesale sales increased $11.6 million due principally to higher average prices. Energy marketing decreased $5.8 million, or 40 percent, due principally to less favorable market conditions.

Total operating expenses for the quarter increased $32.7 million, or 8 percent. Fuel and purchased power expense increased $37.5 million, or 21 percent, due primarily to the amortization this year of previously deferred fuel and purchased power expense. Operating and maintenance expense decreased $13.5 million, or 11 percent, principally attributable to lower Southwest Power Pool network transmission costs and lower maintenance expense for the company’s power plants and electric distribution system.

Other income and expense was $5.3 million of income compared with $2.4 million of expense last year. The change between periods is due primarily to recording $5.7 million of corporate-owned life insurance proceeds and a $2.5 million increase in equity AFUDC. Interest expense increased $3.1 million, or 11 percent, due principally to interest on additional debt issued to fund the company’s capital investments.

2008 Nine-month Results Compared With 2007 Nine-month Results

Revenues for the nine months ended Sept. 30, 2008 were $1.4 billion, $98.9 million, or 7 percent, higher than the same period in 2007. Retail revenues increased $86.1 million, or 9 percent, due primarily to increased recovery in prices of fuel and purchased power costs, and offset in part by a 2 percent decrease in sales volumes, attributable primarily to cooler weather and the obligation to make refunds to customers. Wholesale sales increased $27.2 million due primarily to higher average prices. Energy marketing decreased $16.5 million, or 57 percent, due principally to the need to direct resources to meeting the needs of retail customers in light of the maintenance outages in the first half of the year, less favorable market conditions and a $3.2 million refund obligation to one of its energy management customers.

Total operating expenses increased $157.1 million, or 15 percent, with higher fuel and purchased power expense the primary change. Fuel and purchased power expense increased $140.5 million, or 34 percent, due to several factors. The cost of fuel used for generation increased $61.7 million which reflects the use of higher cost power plants during periods when the company’s lower cost base load plants were unavailable due to maintenance, and an increase in the cost of the fuel used at the company’s power plants. Purchased power expense increased $40.6 million. In addition, fuel and purchased power cost increased $32.9 million due primarily to the amortization this year of previously deferred fuel and purchased power expense. Depreciation expense increased $8.8 million, or 6 percent, from increased plant investment.

Other income and expense was $8.9 million of income compared with $2.7 million of expense last year. The change between periods is due primarily to recording $5.7 million of corporate-owned life insurance proceeds and an increase in equity AFUDC. Interest expense decreased $11.8 million, or 14 percent, due primarily to the reversal in the first quarter 2008 of $17.8 million of accrued interest related to the reversal of unrecognized income tax benefits. The decrease was partially offset by higher interest expense associated with additional debt issued to fund capital investments. Income taxes decreased $35.5 million due primarily to a $28.7 million reversal of unrecognized income tax benefits due to the completion of the federal income tax audit and lower income before income taxes.

2008 Earnings Guidance

Based on year-to-date results, Westar Energy affirmed its previously revised 2008 full-year earnings guidance of $1.35 to $1.45 per share, excluding the one-time tax benefit recorded in the first quarter.

Additional Earnings Information and Conference Call

In conjunction with the earnings release, Westar Energy has posted on its Web site an earnings package of supplemental financial information related to its third quarter and year-to-date performance. The materials are available under Presentations in the Investors section of the company Web site.

Westar Energy’s conference call with the investment community will be at 10 a.m. Eastern Standard Time (9 a.m. Central) on Nov. 7, 2008. Bill Moore, president and chief executive officer, will host the call. Investors, media and the public may listen to the conference call by dialing 888-679-8040, participant code 23149437. Listeners may access a live webcast of the conference call via the company’s Web site, www.WestarEnergy.com. A replay of the call will be available on the Web site. Members of the news media may direct follow-up questions to Karla Olsen.

Westar Energy, Inc. (NYSE: WR) is the largest electric utility in Kansas, providing electric service to more than 675,000 customers in the state. Westar Energy has about 6,500 megawatts of electric generation capacity and operates and coordinates approximately 33,000 miles of electric distribution and transmission lines.

For more information about Westar Energy, visit us on the Internet at http://www.WestarEnergy.com.

Forward-looking statements: Certain matters discussed in this news release 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 “believe,”"anticipate,”"target,”"expect,”"pro forma,”"estimate,”"intend,”"guidance” or words of similar meaning. Forward-looking statements describe future plans, objectives, expectations or goals. Although Westar Energy believes that its expectations are based on reasonable assumptions, all forward-looking statements involve risk and uncertainty. Therefore, actual results could vary materially from what we expect. Please review our Annual Report on Form 10-K for the period ended December 31, 2007 and our Quarterly Report on Form 10-Q for the period ended September 30, 2008 for important risk factors that could cause results to differ materially from those in any such forward-looking statements. Any forward-looking statement speaks only as of the date such statement was made, and the company does not undertake any obligation to update any forward-looking statement to reflect events or circumstances after the date on which such statement was made except as required by applicable laws or regulations.

                            WESTAR ENERGY, INC.                     CONSOLIDATED STATEMENTS OF INCOME                                 (UNAUDITED)                  (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)                  Three Months Ended               Nine Months Ended                     September 30,                   September 30,               2008      2007     Change      2008        2007      Change             --------- --------  --------  ----------- ----------  -------- Sales       $ 574,853 $548,496  $ 26,357  $ 1,432,899 $1,333,981  $ 98,918             --------- --------  --------  ----------- ----------  -------- Fuel and  purchased  power        220,140  182,686    37,454      557,944    417,442   140,502 Operating  and  maintenance  107,672  121,154   (13,482)     354,656    350,798     3,858 Depreciation  and  amortization  51,966   47,907     4,059      150,467    141,677     8,790 Selling,  general  and  administra-  tive          50,802   46,182     4,620      136,712    132,790     3,922             --------- --------  --------  ----------- ----------  --------   Total    Operating    Expenses   430,580  397,929    32,651    1,199,779  1,042,707   157,072             --------- --------  --------  ----------- ----------  --------   Income    from    Operations 144,273  150,567    (6,294)     233,120    291,274   (58,154) Other  income  (expense)      5,293   (2,376)    7,669        8,875     (2,693)   11,568 Interest  expense       31,920   28,864     3,056       72,920     84,728   (11,808) Income tax  expense       29,361   27,621     1,740       13,808     49,264   (35,456)             --------- --------  --------  ----------- ----------  --------   Net Income   88,285   91,706    (3,421)     155,267    154,589       678 Preferred  dividends        242      242         -          727        727         -             --------- --------  --------  ----------- ----------  --------   Earnings    Available    for    Common    Stock    $  88,043 $ 91,464  $ (3,421) $   154,540 $  153,862  $    678             ========= ========  ========  =========== ==========  ========   Basic    Earnings    Per    Share    $    0.81 $   0.99  $  (0.18) $      1.51 $     1.71  $  (0.20)             ========= ========  ========  =========== ==========  ======== Average  equivalent  common  shares  outstanding  108,715   91,941                102,312     89,905 

SOURCE: Westar Energy, Inc.




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