Aquila Finalizes Settlement Negotiations with American Public Energy Agency

Business Wire, August 16, 2004

KANSAS CITY, Mo. -- Aquila, Inc. (NYSE:ILA) announced today that it has reached an agreement with the American Public Energy Agency (APEA), a supplier of natural gas to communities principally in Nebraska, regarding the satisfaction of its claims upon the termination of two long-term natural gas supply contracts that will occur on September 30.

The contracts are between APEA and Aquila Merchant Services (AMS), an unregulated business that the company is exiting. As part of the settlement process, actual termination of the contracts will not occur until September 30, at which time APEA will receive a liquidated damages payment from the Chubb Group of Insurance Companies and a termination fee from AMS.

Last month Aquila announced that it had reached a final settlement with Chubb, which provided the surety bonds on these natural gas contracts. Also in July, the company announced that it had completed the termination of another long-term natural gas supply contract with the Municipal Gas Authority of Mississippi (MGAM). The two APEA contracts and the contract with MGAM represented 75 percent of Aquila's long-term prepaid natural gas supply contract exposure.

Based in Kansas City, Mo., Aquila operates electricity and natural gas distribution utilities serving customers in Colorado, Iowa, Kansas, Michigan, Minnesota, Missouri and Nebraska. More information is available at www.aquila.com.