Winter 2005-06 Natural Gas Prices
Communications Plan 
(8-24-05)

Background: 

With the winter heating season approaching, public and media interest in natural gas prices is increasing. Although natural gas prices have increased each year, the past two winters have been relatively mild in Aquila’s service areas, so customers have not felt the full impact of the higher prices. Natural gas prices are at record levels for this time of year, and with the potential for normal or colder-than-normal winter weather, natural gas bills could be dramatically higher than in the past. 

As a utility serving natural gas customers in a seven-state area, Aquila is committed to proactively addressing consumer issues and has developed the following communications plan to help educate customers about the price outlook, the company’s gas supply strategy, assistance programs and energy-efficiency measures.

Communications Objectives:
 
•	Educate and inform employees and external audiences about the following aspects of natural gas prices in winter 2005-06:
o	Outlook for gas supply costs
o	Aquila’s natural gas purchasing strategy
o	Aquila programs to help cushion customer impact
•	StreamLINE level-pay program
•	Payment arrangements
•	Aquila Cares program
•	State energy-efficiency/weatherization  programs (IA, MO, MN) 
o	Energy-efficiency measures

•	Prepare for and proactively respond to media and public inquiries regarding gas prices.

•	Establish Aquila as a knowledgeable information source so that calls from the media and other interest groups are directed to the company rather than to regulatory or legislative audiences.

Winter 2005-06 Gas Price Communications Plan
Page 2

Key Messages:

KEY MESSAGE #1:

Natural gas remains the best home-heating value, although prices are up.	KEY MESSAGE #2:

Aquila is committed to providing reliable natural gas supplies for customers at the best market prices available.	KEY MESSAGE #3:

Aquila has programs to help cushion the impact on our customers.	KEY MESSAGE #4:

Customers can take steps to manage their home-heating bills.	
Natural gas is the nation’s most popular home-heating fuel (52% of homes). Even though natural gas costs are rising, it remains the best home-heating value.	Aquila wants what our customers want: adequate supplies of natural gas at affordable prices.	Aquila cares about our customers and wants to work with them to manage their energy costs and help them find sources of assistance when needed.	Using energy wisely can make a big difference in how much natural gas you use and how much you spend on home heating. 	
SUPPORTING MESSAGES	SUPPORTING MESSAGES	SUPPORTING MESSAGES	SUPPORTING MESSAGES	
Federal energy forecasters said in August that all home-heating prices will rise this winter, and that each region is different. Nationwide:
Natural gas = +13.6%
Propane = +14.6%
Fuel oil = +28.5%
	After all, customers pay what Aquila has already paid for natural gas supplies – and not a penny more.

Aquila earns its profit from the distribution rates we charge for delivering natural gas. Distribution rates change only when state regulators approve a rate increase. 	Aquila helps customers make their natural gas bills more predictable with the StreamLINE level pay plan, which lets customers average their bills over a 12-month period.	Reducing air leaks could cut as much as 10% from an average household’s monthly energy bill.

Use caulk or weather-stripping to seal doors, windows, etc.	
Demand for natural gas, particularly for electric power generation, is rising faster than producers’ ability to get enough supply to market.	Aquila uses a portfolio approach in purchasing natural gas supplies to mitigate the potential adverse effect that gas price volatility would have on its customers. 	Aquila offers energy efficiency/weatherization programs in Missouri, Iowa and Minnesota. Programs vary from state to state and may offer energy audits, rebates, weatherization assistance.  See Aquila.com or call 1-800-303-0752.	Cut annual heating and cooling bills by as much as 10% per year by turning the thermostat back 10%-15% for 8 hours a day.	
U. S. gas storage levels were 30% above the 5-year average in March but are now only 6% above the 5-year average due to increased demand for gas for electric generation during the summer. Severe cold weather would increase gas demand and rapidly draw down storage levels and put upward pressure on gas prices.	To help avoid price spikes in customers’ winter gas bills, Aquila begins purchasing its normal winter gas requirements in late spring and obtains up to 80% of its natural gas supply from fixed price contracts, gas place in storage and options contracts.
	Aquila offers payment arrangements for customers who encounter financial hardships. To establish a payment arrangement, customers should contact us as soon as they become aware of potential problems. The number to call is 1-800-303-0752.		
	Have your furnace checked annually by a professional to be sure it is operating at top efficiency.	

Winter 2005-06 Gas Price Communications Plan
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Domestic natural gas production is not increasing as fast as demand. Although more rigs are drilling for gas this year, U.S. natural gas production is about the same as last year because producers are encountering smaller gas reserves. Hurricanes in offshore natural gas producing areas have created temporary production interruptions.	The remaining winter gas supply is purchased at the beginning or during each winter month at market prices.	The Aquila Cares program helps qualifying individuals pay utility bills or make repairs to vital heating or cooling equipment. Aquila contributes up to $100,000, at 50 cents on the dollar, for every contribution made by customers. The funds go directly to local agencies in the states where Aquila has utility operations.	Lower the water heater temperature a few degrees and use cold water whenever possible. 	
Higher worldwide oil prices are affecting natural gas costs as well as heating oil and gasoline prices. Fuel oil prices are currently higher than natural gas, causing many industrial customers to switch to natural gas, which further lowers supplies available for winter use.	On the average, gas commodity and pipeline transportation costs comprise about 70% of the customer’s utility bill. Aquila is not allowed to increase its revenues to cover operating costs outside of a rate case, so as gas costs increase, the gas commodity and transportation costs could rise to over 80% of a customer’s bill. The remaining portion of the customer’s bill is for distributing gas into local communities, and includes such services as meter reading and system maintenance.		Keep shades, blinds or drapes open during sunny days and closed at night.
	
A new federal law - the Energy Policy Act of 2005 - will help increase natural gas supplies and promote efficiency, but will not have an immediate impact on prices.	Transportation and distribution costs are regulated by state and federal regulatory agencies.		These and other efforts are working.

The average home uses 22% less natural gas than it did in 1980 – in part because appliances are more efficient and homes are built more tightly.	

Winter 2005-06 Gas Price Communications Plan
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Communications Tools:

Employee Talking Points and Q&A Guide – Information to help customer service associates and other employees understand the issue and prepare them to respond to customer inquiries.

Employee Pocket Card – Abbreviated key messages for quick reference.

Employee Meetings – Meetings conducted by state leaders and/or external affairs managers.  

Weekly Call Center CSA Update – Include information monthly to update CSAs on price issue.

Compass – Page with key messages and related links for CSA reference.

InfoNet – Periodic articles to update employees on prices.

News Releases/Media Visits – Direct communication to news media outlets informing them of the gas price outlook and company efforts and communication plans. Direct response to inquiries for public interest stories. Proactive media visits to educate and inform the media in an effort to utilize the critical communications channels.

Bill Messages – Brief, monthly update messages printed on customer statements.

Bill Inserts – Bill insert addressing gas prices in September and additional inserts as needed in following months. Other bill inserts on state Cold Weather Rules, Aquila Cares, and other energy assistance programs will also support the key messages.

Connected Newsletter – Articles in the quarterly customer newsletter inserted with bills in November and February.

Key Industrial Customer Contacts & Meetings – Customer Relations contacts and meetings with key customers regarding impact of higher prices. 

Brochure – Focused on the winter gas price outlook, historical pricing, Aquila’s purchasing strategy, energy-efficiency measures and assistance programs. Used for civic/community presentations, responding to customer inquiries for information, distribution at senior centers and other community locations. 

Aquila.com – Provide current communications materials and information on Aquila’s Web site. 

Public Official/Community Leader Letter – Letters to key public officials/legislators/ community leaders in gas communities.

Community Newsletters – Articles in Iowa, Nebraska and Minnesota community newsletters targeted at community leaders and public officials. 

Community Presentation – PowerPoint presentation for civic and community group meetings.

Winter 2005-06 Gas Price Communications Plan
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Utility Commission Briefings – Regulatory Services briefings with utility commission members, staffs and public advocates regarding Aquila’s gas price communications plan and programs to assist customers. 

Assistance Agency Communications – Letters to energy assistance agencies in Aquila states and agency meetings in selected locations.

Special Interest Group Contacts – External Affairs contacts with local special interest groups.

Advertising – Newspaper and radio ads focused on energy efficiency measures and Aquila programs that help customers. 

Winter 2005-06 Gas Price Communications Plan
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Communications Timeline: 

Communications materials will be developed and in place by September with ongoing timely updates provided as the winter heating season progresses. This approach will allow for Aquila to successfully implement the communications initiative prior to the winter heating season and to address consumer/public inquiries in a proactive manner.  

August 2005
•	Gas Price Communications Plan to ELT
•	Employee background/key messages/Q&As
•	Bill inserts:
o	Low-Income Energy Assistance Program (CO)
o	Commercial energy audits (IA)
o	Residential/commercial energy audits (MN)
•	Aquila.com pages

September 2005
•	Employee Talking Points and Q&As updated as appropriate
•	Employee meetings
•	CSA monthly update
•	Compass page
•	Bill messages:
o	Gas prices (all gas customers)
o	PGA (CO, MI)
•	Bill inserts:
o	Gas prices (all gas customers)
o	Cold Weather Rule (KS, MN)
o	The Heat & Warmth Fund (THAW) (MI)
o	Elderly registration (MO)
o	Third party notice (CO, NE)
o	Commercial energy audits (IA)
•	Public official letter (all gas communities/legislators)
•	News releases:
o	State-specific gas prices (all gas communities)
o	State-specific PGAs (CO, MI)
•	Key industrial customer contacts
•	Key industrial customer meeting in Wichita, KS
•	Special interest group contacts
•	Meetings with state regulatory commissions, staffs, consumer advocates 
•	Media visits (selected gas communities)
•	Assistance agency letters (all states)
•	Assistance agency meetings (selected locations)
•	Civic/community group presentations 
•	Energy efficiency ads
•	Brochures to senior centers, other community locations
•	Aquila.com pages updated as appropriate
Winter 2005-06 Gas Price Communications Plan
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October 2005
•	Employee Talking Points and Q&As updated as appropriate
•	CSA monthly update
•	Bill message (all gas customers)
•	Bill inserts:
o	Cold Weather Rule (IA, MI, MO, NE)
o	PGA (MO)
o	Gas price disclosure (CO)
o	Commercial energy audits (IA)
o	Residential/commercial energy audits (MN)
•	News releases:
o	State-specific Aquila Cares
o	State-specific PGA (MO)
•	Key industrial customer meetings in Dodge City & Great Bend, KS
•	Marketer meeting in Kansas
•	Media visits continued (selected gas communities)
•	Assistance agency meetings continued (selected locations)
•	Civic/community group presentations
•	Energy efficiency ads
•	Aquila.com pages updated as appropriate

November 2005
•	Employee Talking Points and Q&As updated as appropriate
•	CSA monthly update
•	Connected customer newsletter article (all customers)
•	Bill message (all gas customers)
•	Bill inserts:
o	Aquila Cares (all customers)
o	Low-income weatherization (IA)
o	Residential/commercial energy audits (MN)
o	Commercial rebates (MN)
o	Commercial energy audits (IA)
o	Residential rebates (IA)
•	News releases as appropriate
•	Civic/community group presentations
•	Energy efficiency ads
•	Aquila.com pages updated as appropriate

December 2005
•	Employee Talking Points and Q&As updated as appropriate
•	CSA monthly update
•	Bill message (all gas customers)
•	Civic/community group presentations
•	Energy efficiency ads
•	Aquila.com pages updated as appropriate

Winter 2005-06 Gas Price Communications Plan
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January 2006
•	Employee Talking Points and Q&As updated as appropriate
•	CSA monthly update
•	Bill message (all gas customers)
•	News release as appropriate
•	Update meetings with state regulatory commissions, staffs, consumer advocates 
•	Key industrial customer update contacts
•	Public official update letter (all gas communities/legislators)
•	Special interest group update contacts
•	Assistance agency update letters (all states)
•	Civic/community group presentations
•	Energy efficiency ads
•	Aquila.com pages updated as appropriate

February 2006
•	Employee Talking Points and Q&As updated as appropriate
•	CSA monthly update
•	Connected customer newsletter article (all customers)
•	Bill message (all gas customers)
•	Aquila Cares bill insert (all customers)
•	Civic/community group presentations
•	Energy efficiency ads
•	Aquila.com pages updated as appropriate

March 2006
•	Employee Talking Points and Q&As updated as appropriate
•	CSA monthly update
•	Bill message (all gas customers)
•	Civic/community group presentations
•	Aquila.com pages updated as appropriate