Aquila and FirstEnergy Complete Sale of Midlands Electricity to Powergen.

Business Editors/Energy Writers

KANSAS CITY, Mo.--(BUSINESS WIRE)--Jan. 16, 2004

Aquila, Inc. (NYSE:ILA) announced today that Aquila and FirstEnergy Corp. (NYSE:FE) have completed the sale of Aquila Sterling Limited (ASL), the parent company of Avon Energy Partners Holdings (AEPH) and Midlands Electricity plc., to a subsidiary of Powergen UK plc., for GBP 36 million (approximately $66.5 million).

ASL is held by a joint venture company that is owned 79.9 percent by Aquila and 20.1 percent by FirstEnergy. The transaction includes payments of GBP 36 million to ASL's shareholders, Aquila and FirstEnergy, and approximately GBP 626 million to AEPH bondholders, as well as the assumption by the buyer of approximately GBP 484 million in debt. Under an agreement with Aquila and FirstEnergy, gross proceeds payable at closing to Aquila before payments of transaction fees and costs are estimated at $57.4 million.

Midlands is the fourth-largest electric utility in the United Kingdom, serving 2.4 million network customers through a 38,000-mile distribution network. Midlands also owns indirectly a combined 884 megawatts of net generation capacity in the United Kingdom, Turkey, and Pakistan.

"We are very focused on our core domestic utility business. Closing this transaction was an important step for us in the execution of our restructuring plan," said Keith Stamm, Aquila's chief operations officer.

Credit Suisse First Boston LLC acted as financial advisor to Aquila for this transaction.

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