Topeka ? State regulators want Aquila Inc. to provide assurance that it will be able to continue service to its Kansas electricity and natural gas customers at fair prices in the face of its continuing financial problems.

An order filed Tuesday by the Kansas Corporation Commission demands information by April 10 on the financial condition of the company, based in Kansas City, Mo. Among other things, it wants to know how the company would seek to regain investment grade status on its bonds by January 2005. All three major credit rating agencies have dropped the company’s debt to junk status.

The state also wants to know what might cause Aquila to file for bankruptcy and what effects such a filing would have on its ability to provide utility service to about 165,000 Kansas customers, which includes Lawrence natural gas customers.

Regulators are concerned that Aquila’s plan to sell nonutility assets might be inadequate to pay the debt incurred by those businesses, which could mean the utilities would have to shoulder the burden.

“Kansas utility customers, who had no stake in the profits of the nonutility businesses, should not be expected to bear losses from those nonutility businesses,” the commission said in the order.

Regulators also want information by Wednesday about the company’s corporate structure and why the pledging of utility assets as collateral shouldn’t be delayed, pending the investigation.

Aquila said it would cooperate with the commission and its staff, and provide the information by the deadlines.

“We feel confident that once the commission reviews our financial plan, their concerns will be alleviated,” spokesman George Minter said.

Aquila, formerly known as Utili-Corp United, faces an April 12 deadline to extend a $650 million credit agreement or face the possibility of demands that it repay nearly $3 billion in debt.

Lenders have pressed Aquila to gain regulatory approval from the seven states in which it has utilities to allow the company to pledge those assets as collateral.

Aquila had said that in three states, including Kansas, it wouldn’t need such approval, but the KCC said Tuesday that its powers give it jurisdiction over any practices that affect the delivery of utility service at reasonable rates.

Among other things, regulators want Aquila to explain how using utility assets as collateral would be in the interest of the company’s utility customers.

The commission’s Aquila investigation will look at the company’s debt and cash flow. It also wants to know about the potential of any proceeds from stock it might issue.