Aquila Says the Sale of Pulse, EdgeCap and Utili-Mode in Australia Has No Ongoing Impact On Its Earnings Per Share

Business Wire, July 2, 2002

Business Editors

Aquila, Inc. (NYSE:ILA) announced today that Australian-based United Energy, which is managed and 34 percent owned by Aquila, has reached an agreement with The Australian Gas Light Company (AGL) to sell its interests in Pulse, EdgeCap and Utili-Mode to AGL.

The sale of all three businesses will allow United Energy to focus on its core electricity network business. The three businesses being sold operate electricity retailing, natural gas marketing and utility back-office activities.

Through its 34 percent ownership in United Energy and 25.5 percent ownership in United Energy's MultiNet affiliate, the company has an approximately 15 percent ownership in Pulse. The Pulse sale will result in a one-time write-off of about $5 to $10 million for Aquila upon closing, currently expected in the third quarter, with no ongoing impact on earnings per share.

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, operates and contractually controls power generation, natural gas and coal processing assets. At March 31, 2002, Aquila had total assets of $12.3 billion. More information is available at www.aquila.com.

Forward-Looking Information

"Safe Harbor" Statement under the Private Securities Litigation Reform Act of 1995: The terms "being sold" "will result," "currently expected" and similar terms identify forward-looking information. 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 contained in the forward-looking statements include: unanticipated events that do not permit the company to sell its interest in the businesses; abnormal weather conditions; unanticipated financial market conditions, including changes in exchange rates, interest rates, and commodity prices; prices of natural gas, natural gas liquids, and electricity; the failure to successfully execute the restructuring of our trading operations; and adverse changes in our credit rating. In light of these risks, uncertainties, and assumptions, the forward-looking events discussed might not occur.

The following announcement was released on July 2 in Australia by United Energy (all dollar amounts below are in Australian dollars):

UNITED ENERGY ANNOUNCES SALE OF PULSE, EDGECAP AND UTILI-MODE TO AGL

United Energy Limited today announced the sale of Pulse Energy, EdgeCap and Utili-Mode to AGL for a total of $880 million. Pulse shareholders, United Energy, Energy Partnership, Shell Australia and Woodside Energy, and EdgeCap shareholders, United Energy, Shell Australia and Woodside Energy, will share the proceeds from the sale, which is expected to be completed by 31 July 2002.

United Energy will receive $83 million for its 25% interest in Pulse Energy and its 50% interest in EdgeCap, while receiving an additional $38 million for Utili-Mode, its wholly owned back-office business. These cash proceeds, less an estimated $5 million in transaction costs, will be used to reduce short-term debt.

In connection with this transaction, United Energy expects to record a one-off loss of $39 million after tax. This loss primarily relates to the sale of Utili-Mode for less than the written-down book value of the assets associated with this business.

Excluding the impacts of this one-off loss, United Energy now expects to record an increase in consolidated earnings per security (EPS) for the full year. The Company is now forecasting EPS of 21 to 23 cents for the year to 31 December 2002 rather than 20 to 22 cents per security as previously advised.

United Energy's Chief Executive Officer, Bob Holzwarth, said that the sale of the Pulse, EdgeCap and Utili-Mode businesses is an important part of United Energy's aim to focus on its core electricity network business.

"Our electricity network business will continue to provide strong cash flows and a predictable earnings stream."

"Our exit from Pulse and EdgeCap leaves us with no exposure to energy retailing or the energy merchant sector, which is vital to focusing on our core business. The sale will also provide for greater transparency of our business and a simplified financial structure," he said.

Mr Holzwarth reconfirmed United Energy's intention to meet its dividend forecast of 17.25 cents per stapled security for the financial year ended 31 December 2002.