5.11.06

Fixed gas rate option vs. M.U.D. budget plan

Aquila Gas Co. serves Elkhorn, Ralston, LaVista, Papillion, Blair, Plattsmouth, parts of Bellevue, Lincoln and Council Bluffs.

Aquila received authorization from the Nebraska Public Service Commission to offer an Annual Price Option to all of their customers in Nebraska.

The Annual Price Option will be for a one year -- November 1, 2006, through October 31, 2007. Aquila customers may sign up for this program in May, 2006.

This Annual Price Options allows customers to pay the same price per therm for natural gas every month for a year. The gas cost per therm will be the same, however the actual bill will depend on how much gas is consumed each month.

Since natural gas consumption is based on weather, actual consumption could be higher or lower than estimated.

For example, if the weather is colder than normal, Aquila will have to purchase additional gas supplies at prices that may be higher or lower than the price that was used to calculate the Annual Price Option.

The difference in gas costs (higher or lower) will be billed to the customer the following year whether they stay on this program or switch back to Aquila's traditional sales service.

This option does NOT guarantee customers lower gas bills. In fact, they may have higher bills by switching to this program.

Why M.U.D. Doesn't Offer Annual Price Option?

The best option for M.U.D. gas customers is our budget plan.

• Our budget plan gives customers a fixed payment they can budget for the upcoming year.
• The budget plan allows our customers to take advantage of the District's portfolio of gas purchases that includes monthly/daily market priced gas, fixed price purchases, gas storage, LNG and propane air peak shaving.
• Based on past history, our customers had lower gas bills over the long run (with the District's purchasing plan and the budget plan) versus using an annual price option.

Administrative/Advertising Costs for Aquila's Program

• There are costs associated with the administration, accounting and advertising/education. Aquila estimates it will spend $225,000/year in advertising expenses for the Annual Price Option program.
• The additional costs resulting from the Annual Price Option Program will be passed on to customers who do not enroll in the program.

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