Great Plains Energy, Inc. (ticker: GXP, exchange: New York Stock Exchange (.N))
News Release -
Aquila Obtains Approval from Colorado Public Utilities Commission to Collateralize Utility Assets
KANSAS CITY, Mo.--(BUSINESS WIRE)--July 11, 2003--Aquila, Inc.
(NYSE:ILA) today announced that it has received approval from the
Colorado Public Utilities Commission to pledge its utility assets in
the state as collateral for the working capital requirements of
Aquila's utility operations.
The company requested permission on May 1 to add the assets of its
Colorado operations to an existing pool of regulated and non-regulated
assets currently securing a $430 million loan, the majority of which
is supporting Aquila's utility operations.
Colorado's Commission Trial Staff and Aquila entered into a
settlement agreement on June 6. An administrative law judge conducted
a hearing on the settlement and issued a recommended order approving
the settlement on June 20. The recommended decision became final
The decision allows Aquila to use debt secured by its assets to
meet the traditional working capital needs of a utility, including the
purchase of natural gas and electricity supplies, upgrade of its
distribution systems, maintenance of power plants, and other
activities that enhance Aquila's ability to provide safe, reliable
"We're pleased with the outcome and with the mutual agreement that
we were able to reach with the Commission Trial Staff, which was
approved by the Colorado Public Utilities Commission," said Jon
Empson, Aquila's senior vice president of Regulatory, Legislative and
Gas Supply Services. "The settlement is in the best interests of our
customers and Aquila, and creates a win-win situation that helps us
deliver on our ongoing commitment to provide safe, reliable and
competitively priced service to our customers."
As required by its loan agreements, Aquila also has requested
approval to use its utility assets in other states to provide
additional collateral for its $430 million loan. Requests are pending
in Iowa, Minnesota, Kansas and Missouri.
Securing debt with utility assets was a common practice in the
1980s and early 1990s. During the economic boom of the mid- to
late-1990s, the practice faded when the cost differential between
secured and non-secured debt was insignificant. Until the latter part
of the 1980s, Aquila primarily issued secured debt to support its
Stipulations in the final Commission order include Aquila's
-- Use a predetermined hypothetical capital structure for future
electric or natural gas rate filings that rely on a test year
containing all or part of 2003, 2004 and 2005.
-- Apply proceeds from the actions described in Aquila's
financial plan to reduce debt and other financial obligations
for both its non-regulated and non-domestic utility
operations, subject to cash for working capital needs.
-- Not start any new non-regulated business ventures through
-- Defer its request to extend the pledge of Colorado utility
assets to secure future replacement of long-term debt until
after it finalizes similar applications in Iowa, Kansas,
Minnesota and Missouri.
-- Comply with various reporting requirements designed to
determine Aquila's progress in implementing its financial plan
and provide notice of material deviations from its plan.
-- Comply with various reporting requirements relating to quality
of service for the company's natural gas and electric
"Our objective was to provide the states with a full and detailed
explanation of Aquila's plans to restore financial stability while
ensuring that these steps would not have any adverse impact on our
utility customers," said Empson. "The agreement we were able to reach
with the Commission accomplishes that."
Based in Kansas City, Missouri, Aquila operates electricity and
natural gas distribution networks serving customers in seven states
and in Canada, the United Kingdom and Australia. The company also owns
and operates power generation assets. More information is available at
CONTACT: Aquila, Inc.
Carl Petz, 816-467-3323
Media Relations, 816-467-3000
Neala Clark, 816-467-3562
SOURCE: Aquila, Inc.