July 16, 2004 Keith Stamm Senior Vice President and Chief Operating Officer Aquila, Inc. 20 W. 9th Street Kansas City, MO 64105 Re: Reimbursement Agreement dated September 13, 2002 between Aquila Energy Marketing Corporation and St.Paul Fire and...

Exhibit 10.5

Xxxxxxxx Xxxxx Assistant Vice President
Group General Counsel
Telephone: (000) 000-0000 Facsimile: (000) 000-0000
xxxxxxxx.xxxxx@xxxxxx.xxx

July 16, 2004

Xxxxx Xxxxx
Senior Vice President and Chief Operating Officer
Aquila, Inc.
00 X. 0xx Xxxxxx
Xxxxxx Xxxx, XX 00000

   Re: Reimbursement Agreement dated September 13, 2002 between Aquila Energy Marketing Corporation and St.Xxxx Fire and Marine Insurance Company

Dear Xx. Xxxxx:

This letters confirms our understanding and agreement concerning termination of the payment obligations of Aquila Energy Marketing Corporation (“Aquila”) under the agreement referenced above (the “Reimbursement Agreement”). Xxxxxx entered into the Reimbursement Agreement in order to confirm its intentions to reimburse St. Xxxx Fire and Marine Insurance Company (“St. Xxxx”) for costs incurred by St. Xxxx as a result of National Indemnity Company (“NICO”) becoming the co-surety on Advance Payment Surety Bond number 400JS9376 issued to the Municipal Gas Authority of Mississippi as obligee and Advanced Payment Surety Bond number 400JY1330 issued to American Public Energy Agency as obligee (each individually being a “Surety Bond” and, collectively, the “Surety Bonds”). Those costs include an annual fee due on or about September 13^th of each year and a monthly fee representing the lost investment income on amounts that St. Xxxx is required by XXXX to maintain in a collateral account with Berkshire Hathaway Inc. (“Berkshire”). It is St. Paul’s intention to release Xxxxxx from these payment obligations when St. Paul’s corresponding obligations to XXXX are released.

The parties agree that in the event of termination or cancellation of any one or both of the Surety Bonds, St. Xxxx shall promptly notify NICO and Berkshire and provide any documentation required under the co-surety arrangement with XXXX. In addition, St. Xxxx shall request that Berkshire return the collateral concerning such terminated Surety Bond. The parties also agree that in such event they will cooperate in order to obtain the required written documentation from the American Public Energy Agency or the Municipal Gas Authority of Mississippi, whichever is applicable. Upon receipt of such written documentation, St Xxxx agrees that it will use its best efforts so that the collateral supporting such Surety Bond is returned to St Xxxx within five business days from the date of St. Paul’s request. Upon receipt by St. Xxxx of the collateral concerning the Surety Bond that has been terminated, Aquila shall be released from any future payment obligations under paragraph 2 (b) or paragraph 3(b) of the Reimbursement Agreement, whichever is applicable. Because the annual fee that St. Xxxx owes NICO for each Surety Bond is non-refundable, St. Xxxx shall not refund Aquila any portion of an annual fee previously paid under paragraphs 2(a) and 3(a) of the Reimbursement Agreement. However, if either or both of the Surety Bonds are terminated or cancelled on or before September 11^th of any given year, Aquila shall be released from its obligation to pay any future annual fees for such terminated Surety Bond. St. Xxxx agrees to keep Xxxxxx informed of its communications with XXXX and Berkshire with respect to the subject matter of this Reimbursement Agreement.

Please feel free to contact me if you have any questions.

Sincerely,

ST.     XXXX FIRE AND MARINE INSURANCE COMPANY

By:		/s/ Xxxxxxxx Xxxxx
		Xxxxxxxx Xxxxx
		Assistant Vice President
		Date: July 16, 2004

ACCEPTED AND AGREED:

AQUILA, INC.

By:		/s/ Xxxxx X. Xxxxx
		Xxxxx X. Xxxxx
		Senior Vice President and
		Chief Operating Officer
		Date: July 16, 2004