ILA Aquila

---

*

Less than $10,000 of perquisites in the aggregate, and, therefore, zero perquisites disclosed.



(a)

Perquisites include reimbursement of annual country club membership dues; an annual lump-sum perquisite allowance ($20,000); the premium associated with an extra 1x salary coverage under the group term life insurance and group

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accidental death and dismemberment ("AD&D") insurance plans provided by the Company to its employees; and, a portion of the cost of an executive physical that was not covered by insurance.

(b)

Perquisites include an annual lump-sum perquisite allowance; reimbursement of tax and financial planning services; and, the premium associated with an extra 1x salary coverage under the group term life insurance and group AD&D insurance plans provided by the Company to its employees.



(c)

Perquisites include an annual lump-sum perquisite allowance ($10,000); reimbursement of tax and financial planning services; and, the premium associated with an extra 1x salary coverage under the group term life insurance and group AD&D insurance plans provided by the Company to its employees.



(d)

Reflects tax gross-up payments associated with the reimbursement of annual country club membership dues and an annual lump-sum perquisite allowance ($15,367).



(e)

Reflects tax gross-up payment associated with an annual lump-sum perquisite allowance.



(f)

Reflects tax gross-up payments associated with an annual lump-sum perquisite allowance and tax and financial planning services.



(g)

Reflects tax gross-up payments associated with an annual lump-sum perquisite allowance, financial planning services, and severance-related outplacement services ($26,892).



(h)

Reflects (i) accrued vacation of $38,077 paid out upon termination of Mr. Stamm's employment, (ii) severance payments of $900,000, of which $294,231 was paid in 2007 and the balance of which will be paid through April 28, 2009, (iii) target market bonus of $450,000 paid in 2007 pursuant to Mr. Stamm's severance agreement, (iv) severance-related incidentals of $103,810 paid in 2007, and (v) an after-tax cash payment of $35,000 in lieu of certain outplacement services paid in 2007. The amount of outplacement services (or, in lieu thereof, cash) was grossed-up for tax purposes, and tax gross-up amount associated with these services or lump-sum payment is reflected in the "Tax Gross-Ups" column. For additional information, see the information described in "Severance and Release Agreement" beginning on page 34.

Stock Awards

        We awarded shares of restricted stock to certain named executive officers in 2007, as described below. The size of these awards was based on the 50 ^th  percentile market data provided by our compensation consultant and the seniority of our named executive officers. The performance metrics associated with these grants were selected in order to, among other things, (i) align the interests of these named executive officers with key metrics associated with improving our financial condition and delivering quality service to our utility customers and (ii) link part of the compensation of these named executive officers to the incentive compensation provided to other employees of the Company and to the completion of our pending merger with Great Plains Energy. Information regarding the number of restricted shares awarded to our named executive officers is provided in the Grants of Plan-Based Awards Table below.

Performance-Based Restricted Stock.

        The shares of performance-based restricted stock will vest on December 31, 2008, subject to verification by the Committee of the Company's attainment of certain performance standards, including (i) a ratio comparing the Company's 2007 earnings (excluding certain merger-related costs and other one-time events) before interest, taxes, depreciation and amortization ("Adjusted EBITDA") to the amount of the Company's average net utility plant investment, and (ii) four operating metrics relating to network reliability, meter reading accuracy, and response time for customer service calls.

        The named executive officers could have earned zero to 150% of the targeted number of shares, depending on whether the Company satisfied the 2007 Adjusted EBITDA to net utility plant investment ratio described above. The number of performance-based shares earned could have also been reduced if the Company failed to achieve one or more of the four operating metrics. If the Company failed to achieve one of the operating metrics, the shares of restricted stock would have decreased by 25%. If the Company failed to achieve two or three of the operating metrics, the shares would have been reduced by 50% or 75%, respectively. If the Company failed to achieve all four operating metrics, the shares of performance-based stock earned would have been reduced to zero.

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        On February 26, 2008, the Committee verified the actual results of the performance metrics and payout ratio applicable to the performance-based restricted stock awards, as set forth below, and determined based on those results the actual number of restricted shares to be issued to our named executive officers.

        In determining the 2007 actual results above, the Committee verified that the Company's non-GAAP 2007 Adjusted EBITDA was $265 million and the Company's 2007 average net utility plant investment was $1.9 billion. To compute 2007 Adjusted EBITDA, our actual 2007 EBITDA from continuing operations of $239.0 million was increased by excluding $26 million of merger-related and severance costs incurred last year.

        Because the 2007 actual performance for each operating metric exceeded target (as shown in the table above), none of the shares of performance-based restricted stock awarded to our named executive officers will be forfeited. As a result, the named executive officers earned 150% of the targeted number of shares of performance-based restricted stock granted. These shares will vest and the restrictions on these shares will lapse upon a change in control of the Company.

Time-Based Restricted Stock Awards

        The time-based restricted shares will vest in three years, and no restrictions on the sale of shares will apply thereafter. The time restriction will lapse upon a change in control of the Company before July 31, 2010.

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(1)

Represents the performance-based stock awards described in "Performance-Based Restricted Stock" above. The grant date fair value of these awards was calculated using the maximum number of shares.

(2)

Represents the time-based stock awards described in "Time-Based Restricted Stock" above.

(3)

The amount expensed by the Company in 2007 pursuant to SFAS No. 123R with respect to these grants is included in the 2007 compensation reported for our named executive officers in the Summary Compensation Table. See note 4 to the Summary Compensation Table.

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(1)

Awards held in trusts over which Mr. Green has voting and investment control.

(2)

Includes 132,026 shares that vested on March 15, 2008.

(3)

Includes the actual number of performance-based restricted shares earned by our named executive officers in 2007, which is reported in the "Maximum" column of the Grants of Plan-Based Awards Table with respect to the performance-based restricted stock.

(4)

Based on the market price of our common stock ($3.73 per share) on December 31, 2007.

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(1)

Former executive whose employment with the Company terminated in April 2007.

(2)

Amounts reflect the market value of the stock on the day the stock vested.

Retirement Benefits

Defined Benefit Pension Plans

        We maintain two defined benefit pension plans, a qualified pension plan (our "pension plan") and a non-qualified supplemental executive retirement plan ("SERP"). Employees and executives participate in our qualified pension plan. The SERP is an unfunded, deferred compensation arrangement that is generally designed to provide our executives with a pension benefit based on the portion of their compensation that is otherwise excluded by certain IRS rules and limits applicable to qualified plans.

        Pension Plan:     Under our pension plan, a participant retiring at normal retirement age is eligible to receive monthly benefit payments based on the greatest of three formulas:

        For purposes of the foregoing, the following key definitions apply:

"AMC" means the participant's average monthly compensation (excluding incentive pay for years prior to 2005) determined by averaging the four highest consecutive years of compensation during the 10 year period ending on December 31 of the year preceding the employee's year of termination.

"ECC", or excess covered compensation, means the excess of the participant's AMC or FAB, as applicable, over the 35-year average of the Social Security taxable wage base ending with the calendar year the member attains Social Security retirement age.

"FAB" means the participant's final average base compensation determined by averaging the four highest consecutive years of base compensation during the participant's service with us.

"NRA" means age 62 which is the plan's normal retirement age.

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"SVC" means the employee's period of service with the Company and certain predecessor companies. For purposes of Formula 2, SVC is limited to a maximum of 30 years.

        An active participant age 55 or older may elect to retire early by receiving a reduced monthly pension. If a participant terminates prior to age 55 and without five years of service, then his or her pension benefits will be forfeited. Special rules apply in the case of death or disability. Our pension plan allows participants to elect to receive payment of their benefits in periodic installments generally over the life of the participant and his or her spouse or other beneficiary. Lump sum payments are restricted to small benefits of $5,000 or less (although lump sums are also available for a certain group of participants based on pre-1989 years of service).

        SERP:     A participant's SERP benefit is equal to the sum of his or her Basic Benefit, Bonus Benefit and Supplemental Benefit. For these purposes, (i) "Basic Benefit" amount is generally equal to the pension plan Formula 2 benefit (determined without regard to the IRS limits on pay and including base compensation only) minus the participant's pension plan benefit; (ii) the "Bonus Benefit" amount is generally equal to the pension plan Formula 2 benefit (determined without regard to the IRS limits on pay and including both base and annual incentive compensation) minus the participant's pension plan benefit and the Basic Benefit amount; and (iii) the "Supplemental Benefit" amount is generally equal to the product of the supplemental percentage multiplied by the participant's supplemental earnings. The supplemental percentage is 0.40% per year for the first 10 years of service, 0.25% for the next ten years of service, and 0.10% for years in excess of 20 but not more than 30. A participant's supplemental earnings means the excess of his or her final average base and annual incentive compensation over the IRS compensation limit applicable to our pension plan for the year in which the participant separates from service.

        For purposes of computing each of these component benefits, a participant's final average compensation is determined by averaging the four highest consecutive years during the 10 year period ending on December 31 of the year preceding his or her year of termination.

        A participant will be vested in his or her Basic Benefit upon the completion of five years of service, or retirement on or after age 55. A participant will be vested in his or her Bonus and Supplemental Benefits upon the completion of ten years of service, or retirement on or after age 55. SERP benefits are generally paid at the same time and in the same form that the participant receives his or her pension plan benefits. However, SERP benefits attributable to 2005 and later years will be automatically paid in periodic monthly installments over the life of the participant.

Defined Contribution Plans

        We maintain two active defined contribution plans, a qualified 401(k)/profit sharing plan (the "Savings Plan") and a non-qualified deferred compensation plan (the "Capital Accumulation Plan" or "CAP"). The CAP is a non-qualified, deferred compensation arrangement that provides our executives with an opportunity to voluntarily defer a portion of their compensation that is otherwise limited by certain IRS rules and limits applicable to qualified plans. We also maintain a frozen non-qualified deferred income plan (the "DIP") which we assumed in our acquisition of Peoples Natural Gas. Each of these plans is described below.

        Savings Plan:     The Savings Plan permits employees to voluntarily contribute up to 50% of their compensation each year, subject to annual IRS dollar limitations. We match each participant's voluntary contributions, dollar for dollar, up to a maximum of 6% of compensation. We also contribute a discretionary profit sharing contribution equal to 2% of each participant's base compensation. An additional supplemental profit sharing contribution was made and allocated among certain eligible participants based on age and years of service. The aggregate contribution for 2007 was 3% of total base compensation. Participants direct the investment of their accounts among various mutual fund

30

alternatives as well as our common stock. A participant's benefit is generally paid in a single lump sum following termination of employment.

        CAP:     A CAP participant may elect to defer a portion of his or her base and bonus compensation under the plan. A participant's account is also credited with any matching or profit sharing amounts that could not be allocated to the Savings Plan due to the IRS limits applicable to the Savings Plan. All amounts credited to the CAP are fully vested at all times. Similar to the Savings Plan, participants direct the investment of their accounts among various mutual fund alternatives as well as our common stock, and benefits are typically paid following termination of employment. See page 35 for additional information.

        DIP:     We maintain the DIP, which is a non-qualified deferred compensation plan that we assumed as part of our Peoples Natural Gas acquisition, for Mr. Empson. He had deferred income into the DIP prior to the acquisition, but no future deferrals were credited after the acquisition. The investment gains allocated to Mr. Empson's account are determined based on 140% of the Moody's Seasoned Corporate Bond Yield Index published by Moody's Investors Services, Inc. for the month immediately preceding the plan year. His contributions and investment earnings will be paid as a lump sum or monthly annuity upon termination, death, disability or retirement.

(1)

Former executive who is no longer with the Company.

(2)

These amounts reflect the estimated value of an executive's pension benefits on a present value basis. To calculate these amounts, we assumed (a) a normal retirement age of 62, which is the normal retirement age under these defined benefit plans, (b) mortality rates according to the RP 2000 mortality table published by the Society of Actuaries, and (c) a discount rate of 6.51% per annum to determine the present value of the accumulated benefit at December 31, 2007. As of December 31, 2007, Mr. Empson and Mr. Morton were eligible for normal retirement benefits under these plans.

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(1)

Represents CAP and DIP earnings and aggregate balances.

(2)

Former executive who is no longer with the Company. The deferred compensation in Mr. Stamm's CAP account was paid out when his employment with the Company was terminated in April 2007. Mr. Stamm's 2007 compensation, as reported in the Summary Compensation Table, does not include the earnings or distribution amounts reflected in this table.

(3)

Includes $21,056 of above-market earnings under the DIP, which were included in the 2007 compensation reported for Mr. Empson in the Summary Compensation Table. See note 6 to the Summary Compensation Table.

Employment Agreement

        We have entered into an employment agreement with Mr. Green that renews automatically each year unless the Company gives him advance notice of non-renewal. The agreement provides that he will serve as our Chairman, CEO and President while employed by the Company. The agreement also provides that Mr. Green is entitled to participate in incentive compensation plans, retirement and welfare benefit plans, and fringe benefit programs on the same basis as our other senior executives, and that we are required to provide him with life insurance coverage of three times his annual base salary.

        Mr. Green may terminate his employment at any time, and we may terminate his employment for cause or without cause upon the affirmative vote of two-thirds of the members of our Board. Under the terms of his agreement, if Mr. Green is terminated without cause or if he quits for good reason, we will pay him an amount equal to 3.0 times his base pay plus 3.0 times his target bonus for the year in which he is terminated, in addition to a pro-rated target bonus for the year of termination. Mr. Green will also receive three years' additional credit toward his pension, the continued right to the benefit of unvested restricted stock and stock option awards, outplacement service, and certain other benefits (including insurance benefits consistent with what he would have received as an employee) for three years following his termination. These amounts and benefits will not be provided if he is terminated for cause. If Mr. Green's employment is terminated by reason of his death or disability, he would receive only his accrued but unpaid compensation and benefits. Mr. Green will also be subject to a confidentiality provision and a three-year non-compete and non-solicitation provision following the termination of his employment.

        For a quantitative disclosure regarding estimated payments and other benefits that would have been received by our named executive officers had a change in control occurred on December 31, 2007, see "Potential Payments Upon Termination Of Employment Or Change In Control" on page 35.

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Change In Control Agreements

        As indicated previously, we have entered into change in control agreements with each named executive officer other than Mr. Green. Mr. Green's employment agreement contains change in control provisions.

        Messrs. Morton, Empson and Reitz and Ms. Armstrong will receive a cash payment of two times their base pay and the average incentive payments for comparable positions among our peer companies if they are terminated without good cause or quit for good reason within two years after a change in control. Each of them will receive certain other insurance benefits for three years after the date of termination, three years additional credit toward his or her pension, outplacement services, the vesting of any outstanding equity compensation awards, and the payment of any compensation that had previously been deferred.

        Under the terms of Mr. Green's employment agreement, if he is terminated without cause or if he quits for good reason within 24 months following a change in control, the Company or its successor will pay him an amount equal to three times his base pay plus three times his target bonus for the year in which he is terminated. Mr. Green will also receive three years additional credit toward his pension, the continued right to the benefit of unvested restricted stock and stock option awards, outplacement service and certain other benefits consistent with what he would have received as an employee. These benefits will not be provided if he is terminated for cause.

        In addition, each of the named executives would be entitled to a "gross-up" reimbursement for any excise tax liability imposed by Section 4999 of the Internal Revenue Code. The named executives are entitled to this "gross-up" only if their payments on a change in control exceed 110% of the amount allowed under Section 4999 without imposition of the excise tax; otherwise, their payments will be reduced to $1 under the amount allowed.

        All outstanding stock options and restricted stock awards of our executives will vest upon a change in control.

        Under these change in control agreements and Mr. Green's employment agreement, a "change in control" generally occurs if (i) any person acquires 20% or more of the combined voting power of the Company's voting securities; (ii) during any period of 36 consecutive months, those persons who were Board members as of the beginning of the period, or any Board member approved by ² / 3 of those who were Board members as of the date of the agreement, cease to constitute a majority of the Board; (iii) a reorganization or merger of the Company is consummated unless (A) our shareholders immediately prior to the transaction continue to own at least 50% of the common stock and voting power of the Company, (B) no person acquires 20% or more of the combined voting power of the our voting securities in the transaction, and (C) at least a majority of the board of directors of the corporation resulting from the transaction were members of the Board at the time the initial agreement for the transaction was approved; or (iv) the shareholders of the Company approve the complete liquidation or dissolution of the Company or the disposition of more than 50% of our assets, other than to a related or successor corporation.

        Our proposed merger with Great Plains Energy, if completed, constitutes a change in control under these agreements.

        Under the change in control agreements, an executive generally would have the right to terminate his or her employment for "good reason" following a change in control if (i) there is a material reduction in the executive's position, duties, responsibilities and status, or a material reduction in his or titles or reporting relationships, (ii) the executive's base salary is reduced, (iii) there is a material reduction in the aggregate employee benefits made available to the executive, (iv) there is a reduction in the executive's incentive pay opportunity of more than ten percent or there is a material reduction in

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the executive's equity incentive opportunity, or (v) the executive is required to relocate more than 50 miles from his current location.

        Under Mr. Green's employment agreement, "good reason" means (i) a material, adverse reduction in the nature or scope of Mr. Green's office, position, duties, functions, responsibilities or authority from those offices, positions, duties, functions, responsibilities or authority he occupies and enjoys as of the effective date of his employment agreement, (ii) a material reduction of Mr. Green's annual base salary, incentive compensation opportunities or aggregate benefits unless such reduction is part of a policy, program or arrangement applicable to other senior executives, (iii) a relocation of more than 35 miles of the Company's principal offices, or (iv) the failure of a successor to assume, whether by operation of law or otherwise, the Company's obligations under the employment agreement.

        For a quantitative disclosure regarding estimated payments and other benefits that would have been received by our named executive officers had a change in control occurred on December 31, 2007, see "Potential Payments Upon Termination Of Employment Or Change In Control" on page 35.

Severance And Release Agreement

        Mr. Stamm's employment with the Company terminated on April 27, 2007. In connection with his separation, we entered into a severance, release, and waiver of claims agreement under which we agreed to pay to Mr. Stamm (i) severance totaling $900,000, which will be paid over a 24-month period; (ii) $450,000, which represents variable compensation equal to two times his 2007 market target bonus; and (iii) $103,810 for incidental severance items. We also paid $35,000 to Mr. Stamm last year in lieu of certain outplacement services that he was entitled to receive under his severance agreement.

        Mr. Stamm will continue to receive various benefits (e.g., medical and dental benefits) until March 31, 2008, subject to earlier termination if he becomes covered by another employer's benefits plan, and benefits calculated under our supplemental executive retirement plan will be calculated to include age and service through April 28, 2009. In addition, Mr. Stamm will also receive other benefits under our health and welfare plans and retirement plans that are generally offered to our salaried employees, such as accrued vacation being paid out upon termination, and he will remain eligible for our executive physical program in 2008.

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Potential Payments Upon Termination Of Employment Or Change In Control

        The table below provides an estimate of the payments and benefits that would be paid to our named executive officers, at December 31, 2007, upon voluntary or involuntary termination of employment. This table, however, does not reflect any payments or benefits that would be paid to our salaried employees generally, including for example:

•

Accrued salary and vacation pay;



•

Regular pension benefits under our qualified and non-qualified defined benefit plans;



•

Normal distribution of account balances under our qualified and non-qualified defined contribution plans; or



•

Normal retirement, death or disability benefits.

(1)

Estimate equal to (a) 3.0 times the sum of the executive's base salary ($990,000) and targeted bonus ($0), plus (b) his pro-rated target bonus for the year of termination ($0). This amount would be paid in a single lump sum.

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(2)

As noted earlier, our historical practice has been to negotiate individual severance agreements with senior executives which provide a severance benefit at least equal to the greater of (a) the severance amount which would be payable under our workforce transition plan and (b) six to 24 months of compensation depending upon the executive's level at the time of termination. For purposes of this table, we have assumed that the executive would receive a severance payment equal to 18 months of base salary. The actual negotiated severance amount could be greater than or less than the amount shown in this table. Severance payments are normally paid in bi-weekly installments.

(3)

Estimate equal to (a) 2.0 times the sum of the executive's base salary ($260,000) and the average (50 ^th  percentile) of the targeted annual incentive opportunity for the Company's peer group ($104,000), plus (b) the executive's pro-rated target bonus for the year of termination ($0). This amount would be paid in a single lump sum.

(4)

Estimate equal to (a) 2.0 times the sum of the executive's base salary ($360,000) and the average (50 ^th  percentile) of the targeted annual incentive opportunity for the Company's peer group ($180,000), plus (b) the executive's pro-rated target bonus for the year of termination ($0). This amount would be paid in a single lump sum.

(5)

Estimate equal to (a) 2.0 times the sum of the executive's base salary ($332,001) and the average (50 ^th  percentile) of the targeted annual incentive opportunity for the Company's peer group ($149,400), plus (b) the executive's pro-rated target bonus for the year of termination ($0). This amount would be paid in a single lump sum.

(6)

Estimated present value of three additional years of age and service under our defined benefit pension plans. The following standard actuarial assumptions were used to calculate each individual's incremental pension benefit: 6.51% discount rate and RP 2000 mortality table.

(7)

Estimated value per year of employer-provided coverage under our medical, dental and vision plans.

(8)

Estimated market value of 132,026 shares of restricted stock at a market price of $3.73 per share as of December 31, 2007.

(9)

Estimated market value of 46,000 shares of restricted stock at a market price of $3.73 per share as of December 31, 2007.

(10)

Estimated market value of 69,000 shares of restricted stock at a market price of $3.73 per share as of December 31, 2007.

(11)

Estimated market value of 69,000 shares of restricted stock at a market price of $3.73 per share as of December 31, 2007.

(12)

Estimated market value of 46,000 shares of restricted stock at a market price of $3.73 per share as of December 31, 2007.

(13)

Estimate comprises $50,000 for outplacement services and $25,000 for executive incidentals.

(14)

Estimate comprises $35,000 for outplacement services and $25,000 for executive incidentals.

(15)

Estimate comprises $35,000 for outplacement services and does not include $563,402 otherwise payable to Mr. Empson for tax gross up relating to excise taxes imposed under Section 4999 of the Internal Revenue Code.

(16)

Estimate comprises $35,000 for outplacement services.

(17)

Estimate comprises $35,000 for outplacement services and does not include $379,404 otherwise payable to Mr. Reitz for tax gross up relating to excise taxes imposed under Section 4999 of the Internal Revenue Code.

(18)

Excludes $563,402 for tax gross up relating to excise taxes imposed under Section 4999 of the Internal Revenue Code.

(19)

Excludes $379,404 for tax gross up relating to excise taxes imposed under Section 4999 of the Internal Revenue Code.

        Mr. Stamm is not shown in the table above because he was not a named executive officer at the end of 2007.