Aquila and ScottishPower's PacifiCorp Power Marketing, Inc. Sign $180 Million Agreement On Sale of Texas Gas Storage Assets

Business Wire, August 8, 2002

Business Editors

KANSAS CITY, Mo.--(BUSINESS WIRE)--Aug. 8, 2002

Aquila, Inc. (NYSE:ILA) has signed an agreement to sell its Texas natural gas storage operations for $180 million in cash to PacifiCorp Power Marketing, Inc. (PPM), ScottishPower's (NYSE:SPI)(London Stock Exchange: SPW) Oregon-based competitive U.S. energy business.

The transaction is subject to regulatory review under the Hart-Scott-Rodino Act, which is expected to be completed within 60 days and to other pre-conditions to closing. The purchase price is subject to adjustment upon the occurrence of certain events prior to closing, such as a material casualty loss to the asset.

Aquila's Texas natural gas storage operations include the Katy storage facility near Houston, one of the largest operating storage facilities in the Southwest, two storage development opportunities and two other storage facilities in North Texas. The Katy facility has a working capacity of 21 billion cubic feet (Bcf) and has connections with 13 different pipelines. Katy currently has 16 Bcf of the 21 Bcf of working gas capacity under firm contract.

The two storage development opportunities, one planned for 4.5 Bcf and the other 12 Bcf, are at the Waha natural gas hub in the Permian Basin and the gas marketing area between the Houston Ship Channel and Beaumont. The two other Texas storage facilities are near Wichita Falls, Texas and Hamilton City, Texas.

Credit Suisse First Boston acted as Aquila's exclusive financial advisor in this transaction.

"This announcement is part of our goal to sell $1 billion in non-strategic assets," said Robert K. Green, Aquila president and chief executive officer. "While we are selling our Texas storage operations, we still remain committed to continuing the development of our western gas storage properties, which include Lodi in California and Red Lake in Arizona."

Aquila is actively working toward the sale of a number of its merchant assets, including its natural gas gathering and processing assets, as well as other pipeline and processing facilities in Texas and Oklahoma. In addition, it has announced the sale of its 16.58 percent interest in the Lockport Energy facility for $37.5 million in cash and that a short list of bidders has been selected for the sale of New Zealand-based UnitedNetworks, 55.5 percent-owned by Aquila. UnitedNetworks is the largest energy distribution company in New Zealand.

Based in Kansas City, Missouri, Aquila operates electricity and natural gas distribution networks serving more than six million customers in seven states and in Canada, the United Kingdom, New Zealand and Australia. The company also owns and operates power generation and mid-stream natural gas assets. At June 30, 2002, Aquila had total assets of $11.9 billion. More information is available at www.aquila.com.

PPM is ScottishPower's competitive US energy business and its strategic priorities are to: grow its renewable/thermal energy portfolio and gas storage/hub services; and to optimise returns through the integration of assets, trading and commercial activities. In addition to its gas storage business, the company manages a portfolio of contracts and jointly developed the 484-megwatt Klamath Falls Cogeneration Plant with the City of Klamath Falls, Oregon. PPM also markets the entire output of the 263-megawatt Stateline Wind Energy Center near Walla Walla, Washington.

ScottishPower serves five million homes and businesses in the western US and across the UK. It provides electricity generation, transmission, distribution and supply services in both countries. The company's US activities extend to coal mining and in the UK, ScottishPower also supplies gas, including gas storage operations.

"Safe Harbor" Statement under the Private Securities Litigation Reform Act of 1995:

The terms "expects," "goals" and similar expressions identify forward-looking statements. Naturally, all forward-looking statements involve risk and uncertainty and actual results or events could be materially different. Although Aquila believes that its expectations are based on reasonable assumptions, it can give no assurance that its goals will be achieved. Important factors that could cause actual results to differ materially from those contemplated by the forward-looking statements include: unanticipated events that do not permit us to sell assets as planned; financial market conditions; our ability to execute our strategic plan and maintain our credit rating; the failure to satisfy closing conditions, including the failure to receive regulatory approvals on favorable terms or at all; the failure to reach an agreement for the sale of certain assets on commercially acceptable terms; and other factors discussed in reports Aquila files with the Securities and Exchange Commission (including Aquila's Forms 8-K, 10-Q and 10-K).