Power Engineering - Aquila expects 70 percent of 2002 operating earnings to come from regulated utilities and contract power sales

KANSAS CITY, Mo., May 31, 2002 -- Aquila Inc. on Friday estimated that 70 percent of its 2002 operating earnings and 75 percent of its 2003 operating earnings will come from the more traditional side of its business mix.

"More recently we've become known for our trading expertise in the merchant energy sector," said Robert K. Green, Aquila's president and chief executive officer, "but our roots run deep in the regulated utility networks business, where this company has 85 years of experience. During this period of turmoil in the merchant sector, investors need to keep in mind that we expect about 70 percent of our operating earnings before interest and taxes this year to come from our asset-based businesses like domestic and international utility operations and contracted generation sales."

The results in 2002 will include earnings from the United Kingdom electric network acquired by Aquila on May 8 as well as the independent power projects of Cogentrix, which Aquila expects to purchase in the third quarter of this year.

The U.K. network operation serves 2.3 million customers and Aquila receives 80 percent of its earnings. The Cogentrix acquisition will about double Aquila's non-regulated generation capacity in operation and under construction, and nearly all the power output of the Cogentrix plants will continue to be sold under long-term contracts, providing Aquila with more stable cash flow.

Green added that the there were no developments within Aquila in recent days that would explain the company's declining stock price over the past few days.

"The misguided actions of some of our peers are affecting the entire sector. We've repeatedly confirmed that Aquila has operated in accordance with FERC and other guidelines," he said. "We are also well into our plan, called 'Project BBB+/Baa1,' and have reduced expenses by $100 million and expect to sell between $500 million and $1 billion of assets, both of which strengthen our credit metrics to ensure that we retain and ultimately improve our investment grade credit ratings."

Based in Kansas City, Missouri, Aquila (formerly UtiliCorp United) 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. It is also one of the largest wholesalers of electricity and natural gas in North America, provides risk management products and services, provides wholesale energy services in the United Kingdom and has a presence in Germany and Scandinavia. At March 31, 2002, Aquila had total assets of $12.3 billion and 12-month sales of $37.3 billion. More information is available at www.aquila.com.

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