For release:                                         Dec. 9, 1998, 4 p.m. CST



                    TRANSACTIONS TO GIVE ILLINOVA FRESH START

            Utility takes aggressive moves to exit nuclear business,
               reposition itself as growth-oriented energy company

     DECATUR, Ill. (Dec. 9, 1998) -- Illinova Corp. today announced it will exit
its nuclear business, proceed with an accounting restructuring, and pursue other
strategic  opportunities for positioning  itself as a competitive  leader in new
energy markets.
        
     The decisions  came at the  company's  board of directors  meeting  earlier
today in Chicago.  The  company has not yet  determined  the  specific  path for
exiting the Clinton Power Station, its 950-megawatt nuclear generating facility.
The most likely alternatives are selling the plant or shutting it down. To date,
a number of companies have expressed interest in purchasing the plant.
         
     Illinova Chairman,  President and CEO Charles E. Bayless said today's board
actions are "watershed decisions.
         
     "We've set in motion processes that will give Illinova a fresh start,  both
financially and from a business strategy perspective," he said.
        
     "I am excited about the opportunities  we've identified,  but I continue to
be frustrated by the diversion of attention and resources to the Clinton plant,"
Bayless said. "Mitigating the risks of being a single-unit nuclear operator is a
first  step that will  clear the way for us to pursue  forward-looking  business
strategies.  But  before we can move  ahead,  we must  permanently  resolve  the
Clinton issues and get them behind us quickly."






ILLINOVA
Dec. 9, 1998
Page 2


Accounting restructuring, securitized debt permit fresh start
         
     In conjunction with today's decision to dispose of its nuclear assets,  the
board also moved to effect a  quasi-reorganization,  whereby a company  restates
the value of all its  assets  and  liabilities  to  current  market  value.  The
Securities and Exchange  Commission  last month confirmed for Illinova that such
an  accounting  procedure  would be  acceptable  if the company were to exit the
nuclear business.
         
     The company  will write down to market  value the Clinton  Station -- whose
current book value, net of tax, is  approximately  $1.6 billion but whose market
value is far less -- and write up to market value its fossil generating stations
- -- older assets that have been depreciated to a book value of approximately $500
million but whose market value is considerably  greater.  New valuations will be
reflected  in the  company's  year-end  balance  sheet.  The  write-down  of the
company's  nuclear  assets  will  result  in a  charge  to  earnings  and thus a
substantial  per-share  loss for 1998.  The  write-up  of fossil  assets will be
recorded  as a direct  increase  to  equity,  but does not affect  reported  net
income.  At the end of the  quasi-reorganization  process,  Illinova's  retained
earnings balance will be $0.
         
     Another element of the company's "fresh start" is Illinois Power's issuance
later  this  week  of  $864  million  of  securitized  debt,  an  initiative  to
significantly  reduce  its cost of  capital.  The new debt  issue is the  single
largest financing in the company's history. Illinois Power will use the proceeds
to refinance its outstanding debt, retire preferred equity, and






ILLINOVA
Dec. 9, 1998
Page 3

repurchase  common equity. In October the Board approved the repurchase of up to
12 million shares of Illinova common stock in conjunction  with Illinois Power's
upcoming issuance of securitized debt.

Board will pursue strategies for growth
        
     The board today affirmed its strategy of continuing  investments for growth
and  development  in  its  unregulated  subsidiaries,  Illinova  Generating  and
Illinova Energy Partners.
         
     "Our decisions today will allow Illinova to be more nimble as we reposition
ourselves for growth in the quickly changing energy market," Bayless said.
        
     In other action,  the Illinova board today declared a common stock dividend
of 31 cents per share, payable Feb. 1, 1999, to shareholders of record Jan. 11.
        
     Illinova  Corp.,  headquartered  in Decatur,  Ill.,  is an energy  services
company with annual revenues of $2.5 billion.  Its subsidiaries include Illinois
Power, an electric and natural gas utility;  Illinova Generating,  which invests
in, develops and operates  independent  power projects  worldwide;  and Illinova
Energy Partners,  which markets energy and energy-related services in the United
States and Canada.