Kansas Corporation Commission Approves Rate Increase Settlement for Aq

    Business Editors/Energy Editors

    KANSAS CITY, Mo.--(BUSINESS WIRE)--May 2, 2005--Aquila, Inc. (NYSE: ILA) has received approval from the Kansas Corporation Commission for a 2.4 percent rate increase settlement to recover the costs of investments made in the company's natural gas transmission and distribution operations that serve 104,000 Kansas customers.
    This is Aquila's first increase in base natural gas rates in Kansas since 2000. The new rates are expected to be effective June 1, subject to the Commission's written order.
    The 2.4 percent increase equates to a $2.7 million increase in annual revenue for Aquila's Kansas natural gas operations. The increase applies to residential, commercial and industrial customers in the state. The company originally had filed in November 2004 for a 5.5 percent, or $6.2 million, increase in annual revenues.
    "We believe this settlement is a reasonable resolution of the rate proceedings," said Chuck Loomis, operating vice president for Aquila in Kansas. "The settlement was reached through a cooperative process between the Commission staff, Citizens' Utility Ratepayers Board, gas marketers, customers participating in the case and Aquila."
    As part of the settlement, a three-year surcharge of $243,600 per year will be reflected as a separate item on customers' bills. The surcharge is less than one cent per dekatherm of gas (one dekatherm equals 1,000 cubic feet) and will average about 71 cents annually for residential customers and $1.66 a year for small commercial customers. The surcharge is for accelerating a pipeline replacement project so construction can be handled more efficiently, and is in addition to the $2.7 million annual revenue increase.
    With the new rates and surcharge, a typical residential customer using 750 therms (one therm equals 100 cubic feet of gas) a year will have an increase of about $2.30 per month, or approximately 7.6 cents a day. Small commercial customers using 1,750 therms of gas a year would experience a decrease of $1.72 monthly, or about 5.7 cents a day.
    The new rates apply to the delivery of gas to Aquila customers and are not related to the gas cost portion of customers' bills. The gas cost portion typically comprises about 70 to 75 percent of a monthly bill. Aquila provides gas to its customers at the same price it obtains gas supplies.
    "Although we would prefer not to raise our customers' rates, it's important to recover system investments and operating cost increases since our last rate increase in 2000," Loomis said. "These costs were incurred in operating the gas system that provides safe and reliable service for our customers."
    In addition, as part of the rate settlement, the company will continue to work with the Commission and Citizens' Utility Ratepayers Board (CURB) in developing programs to help customers better control their energy usage. Aquila believes energy-efficiency programs can help address the high cost of natural gas supplies and result in lower customer energy bills.

    Aquila's natural gas headquarters for Kansas is in Lawrence. Based in Kansas City, Mo., the company provides electricity and natural gas service to 1.3 million customers in Missouri, Kansas, Colorado, Michigan, Minnesota, Iowa and Nebraska. More information is available at www.aquila.com.

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CONTACT: Aquila, Inc. Media Contacts: George Minter, 816-467-3772 or Larissa Long, 785-832-3918 or Aquila Media Line, 816-467-3000 or Investor Contact: Neala Clark, 816-467-3562

KEYWORD: MISSOURI KANSAS INDUSTRY KEYWORD: OIL/GAS ENERGY UTILITIES PRODUCT SOURCE: Aquila, Inc.

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