The ratings on Aquila Inc. reflect its onerous debt burden, marginal funds from operations, and a significant dependence on debt for future capital projects. These risks outweigh the relative strength and stability of the company's regulated utilities. 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. In addition, the company operates several nonregulated electric generation assets in Illinois and Mississippi and also delivers gas and electricity under contracted and hedged legacy trading arrangements. As of June 2005, the company had about $2.35 billion in total debt. Aquila's plan to sell a subset of six regulated assets could improve the company's financial profile by providing
