Minnesota Commission Approves Rate Increase for Aquila Natural Gas Customers.

Energy Editors/Business Editors

ROSEMOUNT, Minn.--(BUSINESS WIRE)--July 30, 2003

Aquila, Inc. (NYSE: ILA), formerly Peoples Natural Gas/Northern Minnesota Utilities, has received approval from the Minnesota Public Utilities Commission for a 3.58 percent rate increase to cover the cost of system improvements, a company official said today.

The rate increase is Aquila's first in Minnesota since 1992. It applies to residential, commercial and industrial customers of Aquila in the state.

Since Aquila's combined service area spans both the southern- and northern-most areas of Minnesota, and is a result of the separate operations of the former Peoples Natural Gas (PNG) and Northern Minnesota Utilities (NMU) companies, the rate increases vary by location based on the actual cost of doing business.

With the rate increase, a typical residential customer who would have been in the former PNG system, using approximately 1,030 therms (one therm equals approximately 100 cubic feet) of natural gas per year will have an increase of about $1.75 a month or $21 annually. A typical business customer using 7,070 therms of natural gas a year will have an increase of $10.58 a month or $127 annually.

A typical residential customer, who would have been in the former NMU system, using approximately 1,120 therms of natural gas per year will have an increase of approximately $2.25 a month or $27 annually. A typical business customer using 6,700 therms of natural gas a year will see an increase of $17 a month or $204 annually.

The rate increases are compared to the original rates that were in effect in September 2000 when the case was filed.

"We would have preferred to avoid raising our customers' rates. We have made great strides in controlling our costs, but our operational expenses have risen and investments in our systems have grown as we serve our communities," said Mary Boettcher, operating vice president for Aquila in Minnesota. "We've made significant investments to keep pace with market growth while maintaining the safety and reliability of our system."

The overall rate change equates to a $5.74 million, or 3.58 percent, increase in annual revenue for Aquila's network operations in Minnesota. The company had originally filed in August 2000 for a $9.85 million, or 7.26 percent, increase in annual revenue for its network operations in the state. The new rates are expected to become effective in September.

"We believe this settlement is an appropriate resolution of the rate proceedings," said Boettcher. "We are pleased that this was accomplished through an open and cooperative dialogue between the Commission, the Department of Commerce and Aquila."

In October 2000, the Commission granted Aquila an interim rate increase of 3.82 percent, or about $5.97 million, while the rate filing was being reviewed. As a result, Aquila will refund to qualifying customers the difference between the interim rates and the final approved rates. The refund, including interest, will vary among customers on both the former PNG and NMU systems. Boettcher said customers would be notified through information included on their bill if a refund is being applied to the customer's account.

Aquila provides natural gas service to approximately 190,000 customers in Minnesota. The company's state headquarters is in Rosemount. Based in Kansas City, Missouri, Aquila operates electricity and natural gas distribution networks serving 1.3 million customers in seven U.S. states, Canada, and the United Kingdom. More information is available at www.aquila.com.