Aquila Seeks State Regulatory Approval to Secure Obligations Supporting Utility Working Capital Requirements.

Business Editors

KANSAS CITY, Mo.--(BUSINESS WIRE)--April 30, 2003

Aquila, Inc. (NYSE: ILA) today filed applications with five state regulatory commissions requesting approval to use state utility assets as collateral for the working capital requirements of its utility operations.

The company is requesting permission to add these assets initially to an existing pool of regulated and non-regulated assets currently securing a $430 million three-year term loan, the majority of which is supporting Aquila's utility working capital requirements. However, Aquila has stated in its application that regulated assets only will be used to secure debt necessary to support the regulated utility operations.

Formal regulatory approval for Aquila's request is required in Colorado, Iowa, Minnesota, Kansas and Missouri. Prior to the filings, Aquila officials conducted meetings in all of the company's jurisdictions to ensure state officials were fully informed of the plans and gain an understanding of potential concerns that Aquila could address in the applications.

"We have moved cautiously to ensure that we could respond to the questions raised by the Commissions," said Jon Empson, Aquila's senior vice president of Regulatory, Legislative and Gas Supply Services. "Our objective is to provide the states with a full explanation of our plans to restore financial stability. Aquila is committed to maintaining our focus on excellent service to our utility customers and ensuring that steps to restore Aquila's financial stability will not have any adverse impact on the utility business or its customers."

Securing debt with utility assets was a common practice in the late 1980s and early 1990s. During the economic boom of the mid to late 1990s the practice faded when the cost differential between secured and non-secured debt was insignificant. Aquila has stated in its applications that both investment and non-investment grade utilities have issued and continue to issue secured debt. Until the latter part of the 1980s, Aquila primarily issued secured debt to support its utility operations.

The debt secured by Aquila's utility assets will be used to meet traditional working capital needs of a utility, including the purchase of natural gas and electricity supplies, upgrade of its distribution systems and maintenance of power plants, and other activities that enhance Aquila's ability to provide safe, reliable energy service.

Based in Kansas City, Missouri, Aquila operates electricity and natural gas distribution networks serving customers in seven states and in Canada, the United Kingdom and Australia. The company also owns and operates power generation assets. More information is available at www.aquila.com.