Aquila Forms Partnership to Buy Storage Facility in California.

Business Editors

KANSAS CITY, Mo.--(BUSINESS WIRE)--Aug. 23, 2001

Aquila, Inc. (NYSE:ILA), one of the largest energy merchant companies in North America, has formed a partnership with ArcLight Energy Partners Fund I, L.P. to purchase a natural gas storage development company that owns a storage facility now under construction in energy-short Northern California.

The company, Western Hub Properties, L.L.C., a Houston-based natural gas storage development company, owns the Lodi Gas Storage facility, located about 35 miles south of Sacramento near the community of Lodi. Western Hub Properties, L.L.C. is owned by its management team and by Haddington Ventures, Haddington Energy Partners and JPMorgan Partners (formerly Chase Capital Partners). Total cost to purchase Western Hub Properties and complete construction of the Lodi facility is estimated at approximately $220 million. The acquisition is subject to the approval of the California Public Utilities Commission.

"In the past year it's been clearly demonstrated that California's need for more energy is growing," said Keith Stamm, Aquila's chief executive officer. "Demand for natural gas in this region is expected to increase dramatically as new gas turbine-driven power plants come on line in 2002 and 2003. The natural gas storage facility near Lodi should be an important asset that will help meet the gas needs of the California energy market."

"This is a great fit for both companies," said Tom Dill, chief executive officer of Western Hub Properties. "With the help of Haddington and JPMorgan Partners, we have taken this project from the development phase into the construction phase. By selling to Aquila/ArcLight, with their financial resources and expertise in storage development operations, the Lodi Project will be available to provide much-needed natural gas storage service for this winter."

The facility will have the high-performance, quick-cycle capabilities needed in today's volatile energy marketplace. It will store approximately 12 billion cubic feet of natural gas and a planned injection rate of 400 MMcf/d (a) and withdrawal rate of 500 MMcf/d will allow the facility to cycle its inventory up to six times a year. By comparison, most existing storage facilities located in California can cycle only one to two times annually.

"The Lodi Gas Storage facility is strategically located downstream of significant pipeline bottlenecks," said Ed Mills, president and chief operating officer of Aquila. "As a result, this facility will allow Aquila to be a strategic player in the California market, providing California customers very valuable services."

Based in Kansas City, Aquila is one of the top wholesalers of electricity and natural gas in North America and is a provider of risk management products and services. The company also owns and controls a diverse portfolio of merchant assets, including power plants and natural gas storage, pipeline and processing facilities. Outside North America, Aquila provides wholesale energy services in the United Kingdom, Scandinavia and Germany. Aquila is 80 percent-owned by UtiliCorp United (NYSE:UCU), an international energy company with more than 4 million customers in the United States, Canada, New Zealand and Australia. Additional information is available at www.aquila.com.

Western Hub Properties, L.L.C. is owned by its management team and by Haddington Ventures, Haddington Energy Partners, and JPMorgan Partners (formerly Chase Capital Partners). Haddington provides capital to the energy industry, including mid-stream oil and natural gas companies, emerging energy technologies, and electric generation, transmission, and distribution companies. Haddington's limited partners include affiliates of electric and gas utility holding companies Vectren Corporation (NYSE:VVC) and Unisource Energy Corporation (NYSE:UNS), and affiliates of financial groups Citigroup Inc. (NYSE:C) and The Prudential Insurance Company of America. Additional information on Haddington Ventures is available at www.hvllc.com. Haddington is affiliated with JPMorgan Partners, a global private equity organization with $25 billion under management. JPMorgan Partners' primary limited partner is J.P. Morgan Chase & Co., one of the largest financial institutions in the United States. Since its inception in 1984, JPMorgan Partners has closed more than 1,600 individual transactions in North America, Asia, and Latin America. Additional information is available at www.jpmorganpartners.com.

(a) mmcf/d = One million cubic feet of natural gas a day, enough natural gas to serve about 2,500 homes.

"Safe Harbor" Statement under the Private Securities Litigation Reform Act of 1995: The terms "expected," "should" and similar expressions identify forward-looking statements. Naturally, all forward-looking statements involve risk and uncertainty and actual results or events could be materially different. Although Aquila believes that its expectations are based on reasonable assumptions, it can give no assurance that its goals will be achieved. Important factors that could cause actual results to differ materially from those contemplated by the forward-looking statements include: changes in government regulations, consumer behavior and other actions that might decrease the demand for natural gas in California and an increase in other sources of natural gas provided to the California market.