Aquila Files Natural Gas Rate Case to Recover Kansas System Improvement, Operating Costs

Business Wire, Nov 1, 2004

KANSAS CITY, Mo. -- Aquila, Inc. (NYSE:ILA) today filed a request for a natural gas rate increase with the Kansas Corporation Commission (KCC).

In its request, the company seeks to recover investments made during the past five years in its natural gas transmission and distribution operations that serve 100,000 gas customers in Kansas. The company is seeking a 5.5 percent, or $6.2 million, increase in annual revenues.

If the Commission approves the rate increase, a typical residential customer using 750 therms (one therm equals 100 cubic feet) of natural gas per year will have an increase of $4.25 per month, or approximately $51 annually. Business customers using 1,750 therms of natural gas a year would have an increase of $9 per month, or approximately $108 annually.

The rate request would affect Aquila's base rate in delivering gas supplies to its customers and is not related to the gas cost portion of customers' bills. Aquila provides gas to its customers at the same price it obtains gas supplies.

A major component of the rate filing is to recover the costs of natural gas system improvements, as well as increased maintenance and operations costs for Aquila's Kansas natural gas systems.

"Since our last rate case, we've made investments in our natural gas operations while concentrating on holding down costs," said Chuck Loomis, operating vice president of Aquila's gas networks in Kansas. "Although we would rather not request an increase in our customers' rates, it's important to recover system investment costs that were incurred in providing safe and reliable service."

System improvements in Aquila's Kansas gas operations during the past four years include: new gas main lines, individual gas service lines, gas pressure regulators and gas meters.

Loomis said it presently costs a typical residential customer an average of $2 per day for annual natural gas service. With the proposed increase, a residential customer would have a bill increase of approximately 14 cents per day.

As part of the filing the company also is proposing an energy-efficiency program that will help customers better control their energy usage. The company believes that such programs can help address the high cost of natural gas supplies and result in lower customer energy bills over the long term. Under its proposal the company would partner with area community action agencies to implement programs that could help low-income customers save between $136 and $218 per year.

If approved by the KCC, the new rates would go into effect in the early fall of 2005. The company's last rate increase for its Kansas gas customers went into effect in September 2000, a 7.15 percent, or $4.8 million in annual revenues.

Aquila's state gas headquarters 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.