Aquila and FirstEnergy Sign Agreement to Sell Midlands Electricity to Powergen.

Energy Editors/Business Editors

KANSAS CITY, Mo.--(BUSINESS WIRE)--Oct. 21, 2003

Aquila, Inc. (NYSE:ILA) today announced that it and FirstEnergy Corp. (NYSE:FE) have signed an agreement to sell Aquila Sterling Limited ("ASL"), the parent company of Avon Energy Partners Holdings ("AEPH") and Midlands Electricity plc ("Midlands"), to a subsidiary of Powergen UK plc ("Powergen") for GBP 36 million (approximately $60.1 million). This represents an enterprise value of approximately GBP 1.146 billion for ASL.

ASL is held by a joint venture company that is owned 79.9 percent by Aquila and 20.1 percent by FirstEnergy. Gross proceeds payable at closing to Aquila before payments of transaction fees and costs are estimated at $51.9 million.

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

The closing of the sale is subject to conditions, including: (i) the holders of outstanding bonds issued by AEPH becoming bound to sell their bonds to an affiliate of Powergen for 95.8% of their nominal value (less fees payable to the advisors of the ad-hoc committee of Bondholders) plus accrued interest; (ii) approval from the European Commission; and (iii) approval of Aquila's participation in the transaction by the Kansas Corporation Commission. Powergen has already received commitments from holders of approximately half of the outstanding AEPH bonds to accept the terms of the bond offer.

Powergen, the UK subsidiary of E.ON of Germany, presently owns the neighboring East Midlands electricity network. Aquila had previously announced the termination of an agreement to sell Midlands to a subsidiary of Scottish & Southern Energy plc.

"The completion of the transaction to sell Midlands to Powergen will be another milestone in Aquila's restructuring efforts, allowing management to focus more of its attention on Aquila's core businesses," said Keith Stamm, Aquila's chief operating 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 and the United Kingdom. The company also owns and operates power generation assets. More information is available at www.aquila.com.

Forward-Looking Statements

Important factors that could cause the actual closing date to be materially different than targeted or not to occur at all include the failure of the closing conditions to be satisfied, or material changes or breaches of the agreement that will allow any party's performance to be excused or delayed.