News Release

May 2, 2005

KCC Approves Agreement Granting a $2.7 million Natural Gas Service Rate Increase for Aquila

The Kansas Corporation Commission (KCC) today approved a stipulated settlement agreement granting Aquila, Inc. (Aquila) a $2.7 million natural gas rate increase, which is an overall increase of approximately 8.3 percent. The settlement was agreed to by all parties to the case; KCC Staff, Aquila, Citizens' Utility Ratepayer Board (CURB), Sierra Club, Cornerstone Energy, United School District 480 Liberal, Seward County Community College and Southwest Medical Center.

Brian Moline, KCC Chair, commended all the parties for their hard work in reaching a settlement. "The KCC's job," he said, "is to balance the competing interests in these cases and reach a fair and just settlement. When, as here, parties with competing interests, represented by able and zealous counsel, are able to reach a compromise, it’s usually as close to an ideal resolution as we are likely to set."

Under the agreement, residential customers will experience a rate decrease in the volumetric charge from $.195 per therm (unit of gas) to $.151 per therm, while the fixed monthly customer charge will increase from $7.00 to $12.00 per month. Small commercial customers will also experience a rate decrease in the volumetric charge from $.205 per therm to $.151 per therm, with the fixed monthly customer charge increasing from $11.00 to $17.00 per month.

In addition, the KCC approved a monthly surcharge of approximately $.0015 per therm to cover the cost of replacing the gas main that runs the entire length of 13th Street in Wichita. The approximate cost of $730,810 will be collected from all customers through the monthly surcharge over a three-year period. The surcharge enables the company to replace the entire main at one time, making it less costly to all ratepayers and less disruptive to the citizens of Wichita.

The rate increase does not involve the cost of the gas commodity, which is reflected on the customer bill under Purchased Gas Adjustment (PGA). The cost of gas is not regulated and is subject to market forces such as supply and demand, storage volumes, and weather. The company is not allowed to make a profit on the gas. The gas cost is a direct pass through charge on the bill - the price per unit paid by Aquila, is the price per unit Aquila charges the customer.

On November 1, 2004, Aquila filed an application requesting a $6.2 million increase for natural gas service. The company's last rate increase of $3.2 million was approved in 2000. Aquila provides natural gas service to approximately 103,740 customers in Lawrence, and the south central and southwestern areas of Kansas.

Docket No. 05-AQLG-367-RTS