The ratings on Aquila Inc. (B-/Negative/--) reflect the company's onerous debt burden, nonregulated legacy operations that continue to drain cash flows, and a marginal, albeit improving, liquidity position. These risks outweigh the cash flow stability at the company's regulated utilities. Kansas City, Mo.-based Aquila is a diversified energy company with regulated and nonregulated businesses. The company operates regulated electric and natural gas distribution networks in seven Midcontinent states. It also operates several nonregulated electric generation assets in Illinois and Mississippi and also markets and trades natural gas and electricity. As of September 2004, the company had about $2.7 billion. The company has an aggressively leveraged capital structure. Adjusted debt to capital is well in excess of 70%. Aquila's debt burden
