Ratings on Aquila Inc. reflect the company's weak liquidity position, uncertainty associated with plans to restructure its gas prepay and tolling contracts, and insufficient cash flow from operations to offset a burdensome debt level, not quite mitigated by management's efforts to refocus on its traditional regulated utility business. Due to weak cash flow generation from operations, asset sales have been necessary for Aquila to reduce its debt levels and shore up its balance sheet. Management has executed more than $2.4 billion of asset sales over the past two years. Still, expected cash flow from the company's reconstituted business plan is currently insufficient to fully service Aquila's debt. Cash flows from Aquila's regulated utilities are likely to be stable; however, Aquila's
