Aquila Plans Offering of Common Stock and Mandatorily Convertible Senior Notes.

KANSAS CITY, Mo. -- Aquila, Inc. (NYSE:ILA) announced today that it has commenced a public offering of 40 million shares of its common stock, par value $1 per share, and 12 million of premium income equity securities ("PIES"). The PIES represent $300,000,000 aggregate principal amount of convertible senior notes, which will mandatorily convert into common stock no later than September 15, 2007. The company has granted the underwriters an option to purchase up to an additional 15% of the common stock and of the PIES to cover over-allotments, if any. Net proceeds from these offerings will be used to retire long-term debt and other liabilities, and strengthen the company's balance sheet.

Lehman Brothers Inc. is the sole book running manager for both offerings. Credit Suisse First Boston LLC is a joint-lead manager for both offerings. Citigroup Global Markets Inc. and Merrill Lynch, Pierce, Fenner & Smith Incorporated are co-managers for the common stock offering.

A registration statement relating to these securities has been filed with the Securities and Exchange Commission. Each of the offerings will only be made by means of a prospectus.

When available, a copy of the prospectus supplements and related base prospectus concerning the offerings may be obtained from Lehman Brothers Inc., c/o ADP Financial Services, Integrated Distribution Services, 1155 Long Island Avenue, Edgewood, N.Y. 11717, Phone: [phone].

Based in Kansas City, Mo., Aquila operates electricity and natural gas distribution utilities serving customers in Colorado, Iowa, Kansas, Michigan, Minnesota, Missouri and Nebraska. Additional information is available at www.aquila.com.