Aquila Files Interim Electric Rate Increase Request to Recover Kansas System Improvement, Operating Costs.

Energy Editors/Business Editors

KANSAS CITY, Mo.--(BUSINESS WIRE)--June 9, 2004

Aquila, Inc. (NYSE:ILA) today filed an interim electric rate increase request to recover system improvement and operating costs while the Kansas Corporation Commission reviews the company's rate case filing submitted on June 2.

The rate filing is to recover investment and operating costs incurred during the past four years in power generation, transmission and distribution systems that serve Aquila's 69,000 electric customers in Kansas.

In its interim rate filing today, the company is seeking a 6.8 percent, or $10 million, increase. In its June 2 filing, Aquila requested a 13 percent, or $19 million, increase.

If approved, the interim rates would be in effect from July 1, 2004, through January 31, 2005, or until the Commission issues its decision on Aquila's original rate request.

If the Commission approves the interim rate increase, a typical residential customer using 761 kilowatt-hours (kwh) of electricity a month would see an increase of $5.83, or 7.9 percent, a month. The cost to individual customers will vary based on actual electric usage.

In its interim rate filing, Aquila stated that it is requesting interim rate relief because the company's Kansas electric operations currently are experiencing an annual operating loss of about $2.2 million.

"Aquila has made significant investments in its Kansas electric operations to ensure safe and reliable service, and it's important that we begin to recover those costs at this time," said Steve Ferry, operating vice president of Aquila's electric networks in Kansas. "In addition, higher fuel costs associated with two long-term electric contracts are having a major impact on the financial condition of our Kansas operations."

System improvements in Aquila's Kansas electric operations include: new substation construction, power plant upgrades, and electric transmission and distribution line expansion. In addition, 17 employees were added to the electric operations, including apprentice linemen and power plant personnel

The long-term contracts are with two large industrial customers. Although the contracts had provided a long-term benefit in lowering rates for other ratepayers in Kansas, the current contracts' fuel costs have escalated rapidly. The primary fuel increase is associated with the higher costs of natural gas used to generate electricity.

The company's last rate increase for its Kansas electric customers was $3.9 million in August 2001. This was the first rate increase since 1983. In January 2000, there was a $8.3 million rate decrease.

Aquila's state electric headquarters is in Great Bend. Based in Kansas City, Mo., the company provides electricity and natural gas service to 1.3 million customers in Missouri, Kansas, Colorado, Michigan, Minnesota, Iowa and Nebraska. More information is available at www.aquila.com.