Aquila's Board Meets to Review ``Project BBB+/Baa1'' Progress, Initiates Review of Dividend Policy; Company is Cooperating With SEC Informal Inquiry.

Business Editors

KANSAS CITY, Mo.--(BUSINESS WIRE)--June 13, 2002

Aquila, Inc. (NYSE: ILA) today announced that its board of directors met today for an update regarding management's progress on "Project BBB+/Baa1," its initiative to reduce costs and divest non-core assets.

The board also initiated a review of the company's dividend payout ratio in light of changes in the current business environment. Factors that will be considered in this review include increasing capital and liquidity demands and the impact of those demands on the company's credit ratings, balance sheet, earnings, risk profile and dividend policy.

For the past six weeks, Aquila has aggressively focused its efforts on reducing costs and pursuing the sale of non-strategic assets as part of its "Project BBB+/Baa1," which is a program begun early this year to improve its credit rating and strengthen its balance sheet and now also to meet Moody's and Standard & Poor's credit metrics requirements.

The board's deliberations today denote that, for the first time, the company is considering a modification of its dividend policy as a possible means of addressing concerns relating to its credit ratings. "Now that we have greater clarity on what the rating agencies are looking for, we must continue to take the appropriate steps to balance our objectives of maximizing shareholder value while improving our credit ratings," said Robert K. Green, president and chief executive officer.

To date more than $101 million in cost savings have been identified and the company has announced plans to sell $500 million to $1 billion in non-strategic assets by the end of this year to reduce debt and operating costs. This week Aquila initiated a sale process for New Zealand-based UnitedNetworks, the largest distribution company in New Zealand, 55 percent owned by Aquila.

The company also announced that it had received an informal data request from the Securities and Exchange Commission (SEC) regarding potential round-trip trades of electricity and natural gas. Similar requests have gone to many other companies in the wholesale energy industry over the past two weeks. Aquila intends to cooperate fully with the SEC's request to voluntarily submit documents pertaining to its trading activity for the period January 2000 through the present.

Aquila has already responded to various requests by the Federal Energy Regulatory Commission (FERC) by stating that it did not engage in round-trip trades and that all its trades were conducted for legitimate business purposes. Moreover, the company has repeatedly stated that its trading practices are proper and in full compliance with FERC regulations and standards. None of its trades have been conducted for the purpose of increasing volumes or revenues, impacting market prices, or for any other improper business purposes.

Based in Kansas City, Missouri, Aquila operates electricity and natural gas distribution networks serving more than six million customers in seven states and in Canada, the United Kingdom, New Zealand and Australia. It is also one of the largest wholesalers of electricity and natural gas in North America, provides risk management products and services, provides wholesale energy services in the United Kingdom and has a presence in Germany and Scandinavia. At March 31, 2002, Aquila had total assets of $12.3 billion. More information is available at www.aquila.com.