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

Business Wire, May 2, 2005

DES MOINES, Iowa -- Aquila, Inc. (NYSE:ILA) today filed a request for a natural gas rate increase with the Iowa Utilities Board (IUB) to recover operating costs and system improvements made during the past three years.

In its request, the company is seeking a 2.7 percent, or $4.1 million, increase in annual revenues for Aquila's Iowa gas operations. The increase would affect the company's 147,000 residential, commercial and industrial customers in the state.

"Although we would rather not request an increase in our customers' rates, it's important that we recover the system improvement costs we've incurred in providing safe and reliable energy," said Ivan Vancas, operating vice president for Aquila in Iowa.

If the IUB approves the rate increase, an average residential customer using 875 therms (one therm equals 100 cubic feet) of natural gas per year will have an increase of $1.87 per month, or approximately $22.44 annually. The average commercial customer using 3,396 therms of natural gas a year would have an increase of $6.54 per month, or approximately $78.48 annually.

The rate request would affect Aquila's base rate in delivering natural gas supplies to its customers and is not related to the gas cost portion of customers' bills. The gas cost portion typically comprises about 80 percent of a monthly bill. Aquila provides gas to its customers at the same price it obtains gas supplies.

Aquila's last Iowa rate increase was for $4.25 million, or 2.58 percent, in annual revenues in 2003. Since that time, Aquila has constructed new gas main lines, individual gas service lines, and invested in related equipment to serve customer energy demand in the state.

Under Iowa regulations, Aquila is instituting new interim rates for customers beginning May 13. The interim rates are subject to customer refund based on the final rate increase approved by the IUB.

Under the interim rates, an average residential customer will have an average increase of 76 cents per month. An average commercial customer would have an increase of about $1.92 per month.

Aquila's Iowa gas headquarters is in West Des Moines. 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.