UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 10-K
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
For the Fiscal Year Ended December 31, 1998
or
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
For the transition period from to
Registrant, State of
Incorporation, Address
Commission of Principal Executive I.R.S. Employer
File Number Offices and Telephone Number Identification No.
1-11327 ILLINOVA CORPORATION 37-1319890
(an Illinois Corporation)
500 S. 27th Street
Decatur, IL 62521-2200
(217) 424-6600
1-3004 ILLINOIS POWER COMPANY 37-0344645
(an Illinois Corporation)
500 S. 27th Street
Decatur, IL 62521-2200
(217) 424-6600
Securities registered pursuant to Section 12(b) of the Act:
Each of the following securities registered pursuant to Section 12(b) of the Act
are listed on the New York Stock Exchange.
Title of each class Registrant
- ------------------- ----------
Common Stock (a) Illinova Corporation
Preferred stock, cumulative, Illinois Power Company
$50 par value
4.08% Series 4.26% Series 4.70% Series
4.20% Series 4.42% Series
Mandatorily redeemable preferred securities of subsidiary
(Illinois Power Capital, L.P.)
9.45% Series
Trust originated preferred securities of subsidiary
(Illinois Power Financing 1)
8.00% Series
First mortgage bonds
7.95% Series due 2004
New mortgage bonds
6 1/8% Series due 2000 6 3/4% Series due 2005
5.625% Series due 2000 8% Series due 2023
6 1/2% Series due 2003 7 1/2% Series due 2025
6.25% Series due 2002 6.0% Series due 2003
(a) Illinova Common Stock is also listed on the Chicago Stock Exchange.
Indicate by check mark whether the registrants (1) have filed all
reports required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period that the
registrants were required to file such reports), and (2) have been subject to
such filing requirements for the past 90 days.
Illinova Corporation Yes [X] No
Illinois Power Company Yes [X] No
Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be contained,
to the best of registrants' knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K.
Illinova Corporation [X]
Illinois Power Company [X]
2
The aggregate market value of the common stock held by non-affiliates of
Illinova Corporation at February 28, 1999, was approximately $1.7 billion.
Illinova Corporation is the sole holder of the common stock of Illinois Power
Company. The aggregate market value of the voting preferred stock held by
non-affiliates of Illinois Power Company at February 28, 1999, was approximately
$46.6 million. The determination of stock ownership by non-affiliates was made
solely for the purpose of responding to this requirement and the registrants are
not bound by this determination for any other purpose.
The number of shares of Illinova Corporation Common Stock, without par
value, outstanding on February 28, 1999, was 69,919,287.
The number of shares of Illinois Power Company Common Stock, without par
value, outstanding on February 28, 1999, was 62,892,213, all of which is owned
by Illinova Corporation.
Documents Incorporated by Reference
1. Portions of the 1998 Annual Report to Shareholders of Illinova Corporation
in the appendix to the Illinova Corporation Proxy Statement.
(Parts I, II, III and IV of Form 10-K)
2. Portions of the 1998 Annual Report to Shareholders of Illinois Power
Company in the appendix to the Illinois Power Company Information
Statement.
(Parts I, II, III and IV of Form 10-K)
3. Portions of the Illinova 1998 Proxy Statement.
(Part III of Form 10-K)
4. Portions of the Illinois Power 1998 Information Statement.
(Part III of Form 10-K)
3
ILLINOVA CORPORATION
ILLINOIS POWER COMPANY
FORM 10-K
For the Fiscal Year Ended December 31, 1998
This combined Form 10-K is separately filed by Illinova Corporation and
Illinois Power Company. Information contained herein relating to Illinois Power
Company is filed by Illinova Corporation and separately by Illinois Power
Company on its own behalf. Illinois Power Company makes no representation as to
information relating to Illinova Corporation or its subsidiaries, except as it
may relate to Illinois Power Company.
TABLE OF CONTENTS
Part I Page
Item 1. Business 6
General 6
Dividends 7
Open Access and Competition 8
Customer and Revenue Data 10
IP Electric Business 10
Overview 10
Soyland Power Cooperative, Inc. 11
Clinton Power Station 12
General 12
Decommissioning Costs 12
Fuel Supply 13
Construction Program 16
Accounting Matters 16
IP Gas Business 17
Gas Supply 18
Diversified Business Activities 18
Environmental Matters 19
Air Quality 19
Clean Air Act 19
Global Warming 20
Manufactured-Gas Plant Sites 20
Water Quality 20
Other Issues 21
Electric and Magnetic Fields 21
Environmental Expenditures 21
Year 2000 Data Processing 21
Research and Development 21
Regulation 22
Important Information 22
Executive Officers of Illinova Corporation 25
Executive Officers of Illinois Power Company 26
Operating Statistics 27
Item 2. Properties 27
Item 3. Legal Proceedings 28
Item 4. Submission of Matters to a Vote of
Security Holders 28
4
TABLE OF CONTENTS (Continued)
Part II
Item 5. Market for Registrants' Common Equity
and Related Stockholder Matters 29
Item 6. Selected Financial Data 29
Item 7. Management's Discussion and Analysis
of Financial Condition and
Results of Operations 29
Item 7A. Quantitative and Qualitative
Disclosures About Market Risk 29
Item 8. Financial Statements and Supplementary
Data 29
Item 9. Changes in and Disagreements with
Accountants on Accounting and
Financial Disclosure 30
Part III
Item 10. Directors and Executive Officers of
the Registrants 31
Item 11. Executive Compensation 31
Item 12. Security Ownership of Certain
Beneficial Owners and Management 31
Item 13. Certain Relationships and Related
Transactions 31
Part IV
Item 14. Exhibits, Financial Statement
Schedules, and Reports on Form 8-K 32
Signatures 35
Exhibit Index 37
5
PART I
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ITEM 1. Business
- -------
General
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Illinois Power Company (IP) was incorporated under the laws of the
State of Illinois on May 25, 1923.
Illinova Corporation (Illinova) was incorporated under the laws of the
State of Illinois on May 27, 1994 and serves as the parent holding company of
five principal operating subsidiaries: IP, Illinova Generating Company (IGC),
Illinova Energy Partners, Inc. (IEP), Illinova Insurance Company (IIC), and
Illinova Business Enterprises, Inc. (IBE). IBE was incorporated in 1998. In May
1996, another Illinova subsidiary, Illinova Power Marketing, Inc. (IPMI),
consolidated its business activities with those of Illinova Energy Services and
with the non-regulated marketing activities of Illinova, in a new company named
IEP. On April 1, 1997, IEP and IPMI merged. In the merger, IPMI was the
surviving corporation and subsequently changed its name to IEP.
IP is engaged in the generation, transmission, distribution and sale of
electric energy and the distribution, transportation and sale of natural gas in
the state of Illinois. IP is affected by changes in the electric utility
industry driven by regulatory and legislative initiatives to introduce
competition and end monopoly franchises. One aspect of this change is "direct
access," meaning giving customers the freedom to purchase electricity from
suppliers they choose. In December 1997, electric regulatory restructuring
legislation was enacted by the Illinois General Assembly and was signed by the
Governor. For a more detailed discussion of these developments, refer to the
"Open Access and Competition" section of this item.
IP provides funds to Illinova for operations and investments. Illinova
accrues interest due to IP on any borrowed funds at a rate equal to the higher
of the rate that Illinova would have to pay if it used a currently outstanding
line of credit, or IP's actual cost of the funds provided. Quarterly during
1998, when needed, IP effected a common stock repurchase from Illinova by
accepting shares having a market value equivalent to the amount of funds
provided to Illinova during the quarter plus the accrued interest for the
quarter. During 1998, IP provided approximately $79 million in funds to Illinova
through these stock repurchases. IP also provided funds to Illinova in the form
of cash dividends payable on the common stock of IP. In 1998, approximately $105
million in such dividends were declared and paid. For further information on IP
common stock repurchases, see Item 7 "Management's Discussion and Analysis of
Financial Condition and Results of Operations" of this report. For more
information regarding cash dividend restrictions and stock repurchase
restrictions, see the "Dividends" section later in this item.
IGC is Illinova's wholly-owned independent power subsidiary. IGC
invests in energy supply projects throughout the world and competes in the
independent power market. For further discussion of IGC, see the "Diversified
Business Activities" section later in this item.
IEP is Illinova's wholly-owned subsidiary that engages in the brokering
and marketing of electric power and gas and the development and sale of
energy-related services to the unregulated energy market throughout the United
States and Canada. For further discussion of IEP, see the "Diversified Business
Activities" section later in this item.
6
IIC was licensed in August 1996 by the State of Vermont as a captive
insurance company. The primary business of IIC is to insure the risks of the
subsidiaries of Illinova and risks related to or associated with their business
enterprises.
IBE is Illinova's wholly-owned subsidiary which was incorporated in
1998. The primary business of IBE is to account for miscellaneous business
activities not regulated by the Illinois Commerce Commission (ICC) or the
Federal Energy Regulatory Commission (FERC) and not falling within the business
scope of other Illinova subsidiaries.
The Illinova consolidated financial statements include the accounts of
Illinova Corporation, a holding company; IP, a combination electric and gas
utility; IGC, a wholly-owned subsidiary that invests in energy supply projects
and competes in the independent power market; IEP, a wholly-owned subsidiary
that develops and markets energy-related services to the unregulated energy
market; IIC, a wholly-owned subsidiary whose primary business is to insure
certain risks of Illinova and its subsidiaries; and IBE, a wholly owned
subsidiary which was incorporated in 1998 to account for miscellaneous business
activities not regulated by the ICC or FERC and not falling within the business
scope of other subsidiaries.
All significant intercompany balances and transactions have been
eliminated from the consolidated financial statements. All transactions for
Illinova's unregulated subsidiaries are included in the sections titled
"Diversified Enterprises," "Interest Charges," "Income Taxes," and "Other Income
and Deductions," in Illinova's Consolidated Statements of Income.
The IP consolidated financial statements include the accounts of
Illinois Power Capital, L.P., a limited partnership in which IP serves as the
general partner; Illinois Power Financing I, a statutory business trust in which
IP serves as sponsor; Illinois Power Securitization Limited Liability Company
(LLC), a special purpose Delaware LLC whose sole member is IP; and Illinois
Power Special Purpose Trust, a special purpose Delaware business trust whose
sole owner is Illinois Power Securitization Limited Liability Company.
To the extent that information incorporated by reference herein appears
identically in both the 1998 Annual Report to Shareholders of Illinova
Corporation and the 1998 Annual Report to Shareholders of Illinois Power
Company, reference will be made herein only to the 1998 Annual Report to
Shareholders of Illinova Corporation, and such reference will be deemed to
include a reference to the 1998 Annual Report of Illinois Power Company.
Dividends
- ---------
On December 9, 1998, Illinova declared a quarterly common stock
dividend at $.31 per share payable February 1, 1999. On February 10, 1999,
Illinova declared a quarterly common stock dividend at $.31 per share payable
May 1, 1999.
The provisions of Supplemental Indentures to IP's General Mortgage
Indenture and Deed of Trust contain certain restrictions with respect to the
declaration and payment of dividends. IP was not limited by any of these
restrictions at December 31, 1998. Under the Restated Articles of Incorporation,
common stock dividends are subject to the preferential rights of the holders of
preferred and preference stock.
7
IP is also limited in its payment of dividends by the Illinois Public
Utilities Act, which requires retained earnings equal to or greater than the
amount of any proposed dividend declaration or payment. The Federal Power Act
precludes declaration or payment of dividends by electric utilities "out of
money stated in a capital account." At December 31, 1998, IP had a zero balance
in retained earnings and was thus unable to declare a dividend on its common or
preferred stock. Payment of preferred dividends on February 1, 1999, was made
out of a trust created in November 1998 for this purpose. IP's retained earnings
balance is expected to grow sufficiently during 1999 to support payment of IP
common stock and scheduled preferred dividends. Illinova will secure payment of
IP preferred dividends through 1999.
IP typically pays dividends on its common stock to provide Illinova
cash for operations. Contingent on IP meeting a free cash flow test, the ICC has
authorized IP to periodically repurchase its common stock from Illinova. IP did
not satisfy the test at year-end 1998 and does not anticipate satisfying the
test in 1999.
Illinova and IP periodically review their dividend policies based on
several factors, including their present and anticipated future use of cash,
level of retained earnings, and business strategy.
Open Access and Competition
- ---------------------------
Competition has become a dominant issue for the electric utility
industry. It has been promoted by federal legislation, starting with the Public
Utility Regulatory Policies Act of 1978, which facilitated the development of
co-generators and independent power producers. Federal promotion of competition
continued with enactment of the Energy Policy Act of 1992, which authorized the
FERC to mandate wholesale wheeling of electricity by utilities at the request of
certain authorized generating entities and electric service providers. Wheeling
is the transport of electricity generated by one entity over transmission and
distribution lines belonging to another entity.
Competition arises not only from co-generation or independent power
production, but also from municipalities seeking to extend their service
boundaries to include customers being served by utilities. The right of
municipalities to have power wheeled to them by utilities was established in
1973. IP has been obligated to wheel power for municipalities and cooperatives
in its territory since 1976.
Further competition may be introduced by state action, as has occurred
in Illinois, or by federal regulatory action, although the Energy Policy Act
currently precludes the FERC from mandating retail wheeling. Retail wheeling
involves the transport of electricity to end-use customers. It is a significant
departure from traditional regulation in which public utilities have a universal
obligation to serve the public in return for protected service territories and
regulated pricing designed to allow a reasonable return on prudent investment
and recovery of operating costs.
P.A. 90-561, Illinois electric utility restructuring legislation, was
enacted in December 1997. P.A. 90-561 gives IP's residential customers a 15
percent decrease in base electric rates beginning August 1, 1998, and an
additional 5 percent decrease effective on May 1, 2002. The rate decreases
resulted in revenue reductions of approximately $35 million in 1998, and
expected revenue reductions of approximately $70 million in each of the years
1999 through 2001, approximately $90 million in 2002, and approximately $100
million in 2003, based on current consumption.
8
Under P.A. 90-561, customers with demand greater than 4 MW at a single
site and customers with at least 10 sites which aggregate at least 9.5 MW in
total demand will be free to choose their electric generation suppliers ("direct
access") starting October 1999. Direct access for the remaining non-residential
customers will occur in two phases: customers representing one-third of the
remaining load in the non-residential class in October 1999 and customers
representing the entire remaining non-residential load on December 31, 2000.
Direct access will be available to all residential customers in May 2002. IP
remains obligated to serve all customers who continue to take service from IP at
tariff rates and remains obligated to provide delivery service to all at
regulated rates. In 1999, rates for delivery services for non-residential
customers will be established in proceedings mandated by P.A. 90-561. The
transition charges departing customers must pay to IP are not designed to hold
IP completely harmless from resulting revenue loss because of the mitigation
factor described below. IP will be able to estimate the revenue impact of
customer choice more accurately when its delivery service charges are
established.
Although the specified residential rate reductions and the introduction
of direct access will lead to lower electric service revenues, P.A. 90-561 is
designed to protect the financial integrity of electric utilities in three
principal ways:
1) Departing customers are obligated to pay transition charges, based on the
utility's lost revenue from that customer. The transition charges are
applicable through 2006 and can be extended two additional years by the
ICC. The transition charges are calculated by subtracting from a customer's
fully bundled rate an amount equal to: a) delivery charges the utility will
continue to receive from the customer, b) the market value of the freed-up
energy, and c) a mitigation factor, which is the higher of a fixed rate per
kwh or a percentage of the customer's bundled base rate. The mitigation
factor increases during the transition period and is designed to provide
incentive for management to continue cost reduction efforts and generate
new sources of revenue;
2) Utilities are provided the opportunity to lower their financing and capital
costs through the issuance of "securitized" bonds, also called transitional
funding instruments; and
3) Utilities are permitted to seek rate relief in the event that the change in
law leads to their return on equity falling below a specified minimum based
on a prescribed test. Utilities are also subject to an "over-earnings" test
which requires them, in effect, to share with customers earnings in excess
of specified levels. See "Note 5 - Commitments and Contingencies" on pages
a-32 to a-37 of the 1998 Annual Report to Shareholders in the appendix to
the Illinova Proxy Statement which is incorporated herein by reference.
The extent to which revenues are affected by P.A. 90-561 will depend on
a number of factors including future market prices for wholesale and retail
energy, and load growth and demand levels in the current IP service territory,
and success in marketing to customers outside IP's service territory. The impact
on net income will depend on, among other things, the amount of revenues earned
and the cost of doing business.
Competition creates both risks and opportunities. At this time, the
ultimate effect of competition on Illinova's consolidated financial position and
results of operations is uncertain.
9
Customer and Revenue Data
- -------------------------
In 1998, approximately 73 percent and 12 percent of Illinova's
operating revenues were derived from IP's sale of electricity and IP's sale and
transportation of natural gas, respectively. Approximately 15 percent of
Illinova's operating revenues came from its diversified enterprises in 1998. The
territory served by IP comprises substantial areas in northern, central and
southern Illinois, including nine cities with populations greater than 30,000
and twenty cities with a population of over 10,000 (1996 U.S. Census Bureau's
Estimated Populations). IP supplies electric service at retail to an estimated
aggregate population of 1,278,000 in 311 incorporated municipalities, adjacent
suburban and rural areas, and numerous unincorporated communities and retail
natural gas service to an estimated population of 962,000 in 266 incorporated
municipalities and adjacent areas. IP holds franchises in all of the 311
incorporated municipalities in which it furnishes retail electric service and in
all of the 266 incorporated municipalities in which it furnishes retail gas
service. At March 1, 1999, IP served 580,628 active electric customers (billable
meters) and 408,632 active gas customers (billable meters). These numbers do not
include non-metered customers such as street lights. Sales of electricity and
gas sales and transportation are affected by seasonal weather patterns, and,
therefore, operating revenues and associated operating expenses are not
distributed evenly during the year.
For more information, see "Note 14 - Segments of Business" on pages
a-45 through a-47 of the 1998 Annual Report to Shareholders in the appendix to
the Illinova Proxy Statement which is incorporated herein by reference.
IP Electric Business
--------------------
Overview
- --------
IP supplies electric service at retail to residential, commercial and
industrial consumers in substantial portions of northern, central and southern
Illinois. Electric service at wholesale is supplied to numerous utilities and
power marketing entities, as well as to the Illinois Municipal Electric Agency
(IMEA) as agent for 11 municipalities and to Soyland Power Cooperative, Inc.
(Soyland) for resale to its member cooperatives. For additional information
related to Soyland, see "Note 7 - Facilities Agreements" on page a-38 of the
1998 Annual Report to Shareholders in the appendix to the Illinova Proxy
Statement which is incorporated herein by reference. In 1998, IP provided
interchange power to 81 entities, including 69 power marketers.
IP's highest system peak hourly demand (native load) in 1998 was
3,694,000 kilowatts on July 21, 1998. This establishes a new IP record for peak
load.
IP owns and operates generating facilities with a total net summer
capability of 4,571,250 kilowatts. The generating capability comes from six
major steam generating plants and three peaking service combustion turbine
plants. See Item 2, "Properties" for further information.
IP is a participant, together with Ameren - Union Electric Company
(AmerenUE) and Ameren - Central Illinois Public Service Company (AmerenCIPS), in
the Illinois-Missouri Power Pool which was formed in 1952. The Pool operates
under an interconnection agreement which provides for the interconnection of
10
transmission lines. This agreement has no expiration date, but any party may
withdraw from the agreement by giving 36 months notice to the other parties.
IP has agreements with all major wholesale marketing and trading
entities operating in the Midwest. These agreements are used for the purchase
and sale of energy in the wholesale market.
IP, AmerenCIPS and AmerenUE have a contract with the Tennessee Valley
Authority (TVA) providing for the interconnection of the TVA system with those
of the three companies to exchange economy and emergency power and for other
working arrangements. This contract has no expiration date, but any party may
withdraw from the agreement by giving five years written notice to the other
parties.
IP also has interconnections with Indiana-Michigan Power Company,
Commonwealth Edison Company, Central Illinois Light Company, Mid-American Energy
Corporation, Louisville Gas & Electric, Southern Illinois Power Cooperative,
Electric Energy Inc. (EEI), Soyland, the City of Springfield, Illinois and the
TVA.
IP is a member of the Mid-America Interconnected Network, one of ten
regional reliability councils established to coordinate plans and operations of
member companies regionally and nationally.
In January 1998, IP, in conjunction with eight other
transmission-owning entities, filed with FERC for all approvals necessary to
create and implement the Midwest Independent Transmission System Operator, Inc.
(MISO). On September 16, 1998, FERC issued an order authorizing the creation of
a MISO. The MISO is governed by a seven-person independent board of directors.
The goals of the MISO are to: 1) put in place a tariff allowing easy and
nondiscriminatory access to transmission facilities in a multi-state region, 2)
enhance regional reliability and 3) establish an entity that operates
independent of any transmission owner(s) or other market participants thus
furthering competition in the wholesale generation market, consistent with the
objectives of the FERC's Transmission Open Access Notice of Proposed Rulemaking,
Order No. 888. Since January 1998, four other transmission-owning entities
joined the MISO. Participation in an ISO is a requirement of P.A. 90-561. The
MISO has stated a goal to begin limited operation in 1999 and to be fully
operational in 2000.
In 1996, IP transferred, through a dividend, its 20% ownership of the
capital stock of EEI to Illinova. Illinova's interest was transferred to IGC in
1996. EEI was organized to own and operate a steam electric generating station
and related transmission facilities near Joppa, Illinois to supply electric
energy to the U.S.
Department of Energy (DOE) for its project near Paducah, Kentucky.
Soyland Power Cooperative, Inc.
- -------------------------------
For discussion of the transfer to IP of Soyland's share of Clinton
Power Station (Clinton) and the amended Power Coordination Agreement between
Soyland and IP, see "Note 7 - Facilities Agreements" on page a-38 of the 1998
Annual Report to Shareholders in the appendix to the Illinova Proxy Statement
which is incorporated herein by reference.
11
Clinton Power Station
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General
-------
In March 1997, the NRC issued an order approving transfer to IP of the
Clinton operating license related to Soyland's 13.2% ownership interest in
Clinton in connection with the transfer from Soyland to IP of all of Soyland's
interest in Clinton. Soyland's title to the plant and directly related assets
such as nuclear fuel were transferred to IP in May 1997. Soyland's nuclear
decommissioning trust assets were transferred to IP in May 1997, consistent with
IP's assumption of all of Soyland's ownership obligations including those
related to decommissioning.
Clinton was placed in service in 1987 and represents approximately 20%
of IP's installed generation capacity. For more information on the Clinton Power
Station, see "Note 4 - Clinton Power Station" on page a-31 of the 1998 Annual
Report to Shareholders in the appendix to the Illinova Proxy Statement which is
incorporated herein by reference.
Due to uncertainties of deregulated generation pricing in Illinois and
due to various operation and management factors, Illinova's and IP's Boards of
Directors voted in December 1998 to sell or close Clinton. The decision resulted
in an impairment of Clinton-related assets and accrual of exit-related costs.
The impairment and accrual of related charges resulted in a $1,327.2 million,
net of income taxes, charge against earnings.
IP has entered into discussions with parties interested in purchasing
Clinton. Principal concerns of interested parties are plant restart, funding of
the decommissioning liability, terms of any purchase agreement for power
generated by Clinton, including the length of any agreement and the price of
electricity in any agreement, market price projections for electricity in the
region, property tax obligations of the purchaser, and income tax issues. These
concerns create substantial uncertainty with regard to the ability to convert
any tentative agreement into an executable transaction. Therefore, IP has
accounted for the Clinton exit based on the expectation of plant closure as of
August 31, 1999. An August 31, 1999, closure allows IP to pursue opportunities
to sell Clinton, which has the potential economic benefit of reducing IP's
financial exposure to decommissioning. An August 31, 1999, closure also allows
IP to refine its plans to close and decommission Clinton if a tentative
agreement cannot be converted into an executable transaction. In addition,
Clinton would be available for the summer cooling season. The estimated Clinton
other operating and maintenance expense, including expensed capital
expenditures, is $151 million for January through August 1999.
See "Note 2 - Clinton Impairment and Quasi-Reorganization" on pages
a-27 through a-29 of the 1998 Annual Report to Shareholders in the appendix to
the Illinova Proxy Statement which is incorporated herein by reference.
Decommissioning Costs
---------------------
IP is responsible for the costs of decommissioning Clinton and for
spent nuclear fuel disposal costs. In May 1997, consistent with IP's assumption
of all of Soyland's ownership obligations of Clinton, Soyland's nuclear
decommissioning trust assets of approximately $6 million were transferred to IP.
P.A. 90-561 provides for the continued recovery of decommissioning costs through
rates charged to IP's delivery service customers. An ICC approved site-specific
12
decommissioning study projected a cost of $538 million in 1996 dollars for
decommissioning based on the assumption of the DECON method (prompt removal and
dismantlement of Clinton), which results in material expenditures in the early
years of decommissioning Clinton. The projected cost estimate in 2026 dollars,
assuming a 2 percent annual inflation factor, is $988 million. This estimate
continues as the basis for assessing decommissioning costs to IP's customers.
On December 9, 1998, Illinova's and IP's Boards of Directors decided
that IP would exit the nuclear business. The ultimate disposition of Clinton, as
well as the decommissioning method chosen, could have a material impact on the
total decommissioning liability. For more information on the decommissioning
costs related to Clinton, see "Decommissioning and Nuclear Fuel Disposal" in
"Note 5 - Commitments and Contingencies" on page a-34 of the 1998 Annual Report
to Shareholders in the appendix to the Illinova Proxy Statement which is
incorporated herein by reference.
Fuel Supply
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Coal was used to generate approximately 97% of the electricity produced
by IP during 1998, with other fuels generating the remaining 3%. For 1999, after
Clinton returns to service, the percentages of generation attributable to
nuclear fuel is projected to increase while projected generation from coal will
decline. As explained in "Note 2 - Clinton Impairment and Quasi-Reorganization"
on pages a-27 through a-29 of the 1998 Annual Report to Shareholders in the
appendix to the Illinova Proxy Statement, which is incorporated herein by
reference, Illinova's and IP's Boards of Directors voted to exit nuclear
operations. See this note for further information.
On March 6, 1998, IP initiated an ICC proceeding for elimination of the
UFAC. This established a new base fuel cost recoverable under IP's electric
tariffs which includes a component for recovery of fuel costs, but not a direct
pass-through of such costs. Elimination of the UFAC exposes IP to the risks and
opportunities of market price volatility and operating efficiencies. By
eliminating the UFAC, IP eliminated exposure for potential disallowed fuel and
purchased power costs for the periods after December 31, 1996. Whether electric
energy production costs will continue to be recovered depends on a number of
factors, including the number of customers served, demand for electric service,
and changes in fuel cost components. Furthermore, IP's base electric rates to
residential customers were reduced beginning in August 1998 and certain
customers will be free to choose their electric generation suppliers beginning
in October 1999. These variables will be influenced, in turn, by market
conditions, availability of generating capacity, future regulatory proceedings,
and environmental protection costs, among other things. IP's electric customers
are receiving refunds totaling $15.1 million during the first quarter of 1999
related to fuel cost disallowances as the final phase of the elimination of the
UFAC. These refunds close the ICC review process related to the UFAC cost
pass-through for the years 1989, 1994, 1995, and 1996.
For additional information, see the information under the sub-captions
"Revenue and Energy Cost" of "Note 1 - Summary of Significant Accounting
Policies" on pages a-25 and a-26 and "Fuel Cost Recovery" of "Note 5 Commitments
and Contingencies" on page a-32 of the 1998 Annual Report to Shareholders in the
appendix to the Illinova Proxy Statement which is incorporated herein by
reference.
COAL - Coal is expected to be the primary source of fuel for future generation.
Through both long-term and short-term contracts, IP has obtained commitments for
a major portion of its future coal requirements. IP announced in November 1998
13
that it will comply with Phase II of the Clean Air Act Amendments that become
effective January 1, 2000, by switching to low sulfur Powder River Basin coal at
its Baldwin and Hennepin Power Stations. IP will continue to comply during 1999,
the final year of Phase I of the Clean Air Act, with Illinois high sulfur coal
and emission allowances. IP renegotiated one contract in 1998 that will provide
Powder River Basin coal through 2010. IP also has short-term contracts with two
suppliers which last through 2000 and a third contract which lasts through 2002.
Spot purchases of coal in 1998 represented less than 5% of IP's total
coal purchases. Given the above-mentioned commitments, IP believes that it will
be able to obtain sufficient coal to meet its future generating requirements.
However, IP is unable to predict the extent to which coal availability and price
may fluctuate in the future. Coal inventories on hand at December 31, 1998,
represented a 43-day supply based on IP's average daily burn projections for
1999.
NUCLEAR - IP leases nuclear fuel from Illinois Power Fuel Company (Fuel
Company). The Fuel Company, which is 50% owned by IP, was formed in 1981 for the
purpose of leasing nuclear fuel to IP for Clinton. Lease payments are equal to
the Fuel Company's cost of fuel as consumed (including related financing and
administrative costs). IP is obligated to make subordinated loans to the Fuel
Company at any time the obligations of the Fuel Company which are due and
payable exceed the funds available to the Fuel Company. At December 31, 1998, IP
had outstanding loans to the Fuel Company of approximately $1.96 million. This
amount was repaid in January 1999. Lease terms stipulate that, in the event
Clinton is out of service for 24 consecutive months, IP is obligated to purchase
Clinton's in-core nuclear fuel from the Fuel Company. In accordance with this
provision, IP purchased $62.1 million of fuel in the first quarter of 1999. IP
has an obligation for nuclear fuel disposal costs of leased nuclear fuel. For
additional information relating to the nuclear fuel lease, see "Note 9 - Capital
Leases" on page a-39 of the 1998 Annual Report to Shareholders in the appendix
to the Illinova Proxy Statement which is incorporated herein by reference. At
December 31, 1998, IP's net investment in nuclear fuel was $20.4 million.
IP has one long-term contract for the supply of uranium concentrates
with Cameco, a Canadian corporation. The Cameco contract was renegotiated in
1994 to lower the price and provide 55% to 65% of Clinton's estimated fuel
requirements approximately through 2000. The decision to utilize Cameco for the
additional 10% of Clinton's fuel requirements is made the year before each
delivery and depends on the estimated price and availability from the spot
market versus the estimated contract price. The contract with Cameco is stated
in terms of U.S. dollars. It is expected that this contract will be terminated
in 1999 as a result of the decision to exit Clinton operations.
Accordingly, termination fees were accrued at December 31, 1998.
Conversion services for the period 1991-2005 are contracted with
Sequoyah Fuels. Sequoyah Fuels closed its Oklahoma conversion plant in 1992 and
joined with Allied Chemical Company to form a marketing company named CoverDyn.
All conversion services will be performed at Allied's Metropolis, Illinois
facility, but Sequoyah Fuels retains the contract with IP. It is expected that
this contract will be terminated in 1999 as a result of the decision to exit
Clinton operations. Accordingly, termination fees were accrued at December 31,
1998.
IP has a utility services contract for uranium enrichment requirements
with the DOE which provides 70% of the enrichment requirements of Clinton
through 1999. The remaining 30% has been contracted with the DOE through an
amendment to its incentive pricing plan through 1999. This amendment allows IP
14
to either purchase the enrichment services at the DOE's incentive price or
provide electricity at DOE's Paducah, Kentucky enrichment plant at an agreed
exchange rate.
A contract with General Electric Company provides fuel fabrication
requirements for the initial core and 11 reloads, or approximately through 2011.
The contract was renegotiated in 1998 to lower the price and reduce the duration
from approximately 19 reloads. It is expected that this contract will be
terminated in 1999 as a result of the decision to exit Clinton operations.
Accordingly, termination fees were accrued at December 31, 1998.
Under the Nuclear Waste Policy Act (NWPA), the DOE is responsible for
the permanent storage and disposal of spent nuclear fuel. The DOE currently
charges one mill ($0.001) per net kwh (one dollar per MWH) generated and sold
for future disposal of spent fuel. IP is recovering these charges through rates.
In 1996, at the request of nuclear-owning utilities and state regulatory
agencies, the District of Columbia (D.C.) Circuit Court of Appeals issued an
order confirming DOE's unconditional obligation to take responsibility for spent
nuclear fuel commencing in 1998. The DOE argued that it had no such obligation
because of its inability to site and license a permanent repository.
Notwithstanding this decision, which the DOE did not appeal, the DOE has
indicated to all nuclear utilities that it will experience delay in performance.
The impact of any such delay on IP will depend on many factors, including the
duration of such delay and the cost and feasibility of interim, on-site storage.
Nuclear plant owners and others are pursuing litigation against DOE at the D.C.
Circuit Court of Appeals, the Federal Court of Claims, federal district court,
and in administrative proceedings. These lawsuits are focused on establishing
DOE liability for damages caused by its failure to perform, the scope of those
damages, and other remedies. IP is participating in such litigation before the
D.C. Circuit Court of Appeals. To date, the unconditional nature of DOE's
obligation has been upheld but no court has yet quantified damages or ordered
specific performance. The outcome of these lawsuits is uncertain.
Currently, commercial reprocessing of spent nuclear fuel is not allowed
in the United States. The NWPA was enacted to establish a government policy on
disposal of spent nuclear fuel and/or high-level radioactive waste. Although the
DOE has failed to comply with its obligation under the NWPA to provide spent
nuclear fuel retrieval and storage by 1998, IP has on-site underwater storage
capacity that will accommodate its spent fuel storage needs for approximately 10
years. IP is currently an equity partner with seven other utilities in an effort
to develop a private temporary repository. A spent fuel storage license was
filed with the NRC in 1997, initiating a process which will take the NRC up to
three years to complete. Safe, dry, on-site storage is technologically feasible,
but is subject to licensing and local permitting requirements, for which there
may be effective opposition.
Under the Energy Policy Act of 1992, IP is responsible for a portion of
the cost to decontaminate and decommission the DOE's uranium enrichment
facilities. Each utility is assessed an annual fee for a period of fifteen years
based on quantities purchased from the DOE facilities prior to passage of the
Act. At December 31, 1998, IP has a remaining liability of $5.9 million
representing future assessments. IP had been recovering these costs, as
amortized, through its UFAC subject to UFAC limitations discussed under the
heading "Fuel Supply" previously in this item.
OIL and GAS - IP used natural gas and oil to generate 1.8% of the electricity
produced in 1998. IP has not experienced difficulty in obtaining adequate
supplies of these resources. However, IP is unable to predict the extent to
which oil and gas availability and price may fluctuate in the future.
15
Reference is made to the section "Environmental Matters" hereunder for
information regarding pollution control matters relating to IP's fuel supply.
Construction Program
- --------------------
To meet anticipated needs, Illinova and IP have used internally
generated funds and external financings. The timing and amount of external
financings depend primarily on economic and financial market conditions, cash
needs and capitalization ratio objectives.
For more information on Illinova's construction program and liquidity,
see "Note 5 - Commitments and Contingencies" on page a-32 of the 1998 Annual
Report to Shareholders in the appendix to the Illinova Proxy Statement which is
incorporated herein by reference; "Note 6 - Lines of Credit and Short-Term
Loans" on page a-37 of the 1998 Annual Report to Shareholders in the appendix to
the Illinova Proxy Statement which is incorporated herein by reference; and
"Liquidity and Capital Resources" in "Management's Discussion and Analysis" on
pages a-12 through a-15 of the 1998 Annual Report to Shareholders in the
appendix to the Illinova Proxy Statement which is incorporated herein by
reference.
For more information on IP's construction program and liquidity, see
"Note 4 - Commitments and Contingencies" on pages a-28 and a-33 of the 1998
Annual Report to Shareholders in the appendix to the Illinois Power Information
Statement which is incorporated herein by reference; "Note 5 - Lines of Credit
and Short-Term Loans" on page a-33 of the 1998 Annual Report to Shareholders in
the appendix to the Illinois Power Information Statement which is incorporated
herein by reference; and "Liquidity and Capital Resources" in "Management's
Discussion and Analysis" on pages a-10 through a-14 of the 1998 Annual Report to
Shareholders in the appendix to the Illinois Power Information Statement which
is incorporated herein by reference.
Accounting Matters
- ------------------
Prior to the enactment of P.A. 90-561, IP prepared its consolidated financial
statements in accordance with Statement of Financial Accounting Standards (FAS)
71, "Accounting for the Effects of Certain Types of Regulation." Reporting under
FAS 71 allows companies whose service obligations and prices are regulated to
maintain assets on their balance sheets representing costs they expect to
recover from customers, through inclusion of such costs in their future rates.
In July 1997, the Emerging Issues Task Force of the Financial Accounting
Standards Board (EITF) concluded that application of FAS 71 accounting should be
discontinued at the date of enactment of deregulation legislation for business
segments for which a plan of deregulation has been established. The EITF further
concluded that regulatory assets and liabilities that originated in the portion
of the business being deregulated should be written off unless their recovery is
specifically provided for through future cash flows from the regulated portion
of the business.
Because P.A. 90-561 provides for market-based pricing of electric
generation services, IP discontinued application of FAS 71 for its generating
segment as of December 1997. IP evaluated its regulatory assets and liabilities
associated with its generation segment and determined that recovery of these
costs was not probable through rates charged to transmission and distribution
customers, the regulated portion of the business.
In December 1997, IP wrote off generation-related regulatory assets and
liabilities of approximately $195 million (net of income taxes). These net
16
assets related to previously incurred costs that had been expected to be
collected through future revenues, including deferred Clinton post construction
costs, unamortized gains and losses on reacquired debt, recoverable income taxes
and other generation-related regulatory assets. At December 31, 1998, IP's net
investment in non-nuclear generation facilities was $2.9 billion.
As discussed above, Illinova's and IP's Boards of Directors decided to
exit the nuclear portion of the business, by either sale or shutdown of Clinton.
FAS 121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived
Assets to be Disposed of," requires that all long-lived assets for which
management has committed to a plan of disposal be reported at the lower of
carrying amount or fair value less cost to sell. Consequently, IP wrote off the
value of Clinton and accrued Clinton-related exit costs, which resulted in an
accumulated deficit in Illinova's retained earnings of $1,419.5 million.
Illinova's and IP's Boards of Directors also approved in December 1998,
quasi-reorganization accounting for Illinova and IP. The SEC provided
concurrence with this accounting in November 1998. A quasi-reorganization is an
accounting procedure that eliminates an accumulated deficit in retained earnings
and permits the company to proceed on much the same basis as if it had been
legally reorganized. A quasi-reorganization involves restating a company's
assets and liabilities to their fair values, with the net amount of these
adjustments added to or deducted from the deficit. Any balance in the retained
earnings account is then eliminated by a transfer from other paid-in capital,
giving the company a "fresh start" with a zero balance in retained earnings. For
additional information see "Note 2 - Clinton Impairment and
Quasi-Reorganization" on pages a-27 through a-29 of the 1998 Annual Report to
Shareholders in the appendix to the Illinova Proxy Statement which is
incorporated herein by reference.
IP Gas Business
---------------
IP supplies retail natural gas service to an estimated aggregate
population of 962,000 in 266 incorporated municipalities, adjacent suburban
areas and numerous unincorporated communities. IP does not sell gas for resale.
IP's rate schedules contain provisions for passing through to its gas
customers increases or decreases in the cost of purchased gas. For information
on revenue and energy costs, see the sub-caption "Revenue and Energy Cost" of
"Note 1 - Summary of Significant Accounting Policies" on pages a-25 and a-26 of
the 1998 Annual Report to Shareholders in the appendix to the Illinova Proxy
Statement that is incorporated herein by reference.
IP has eight underground gas storage fields having a total capacity of
approximately 15.2 million MMBtu and a total deliverability on a peak day of
about 347,000 MMBtu. In addition to the capacity of the eight underground
storage fields, IP has contracts with various natural gas suppliers and
producers for 9.9 million MMBtu of underground storage capacity and a total
deliverability on a peak day of 160,000 MMBtu. Operation of underground storage
permits IP to increase deliverability to its customers during peak load periods
by taking gas into storage during the off-peak months.
IP owns one active liquefied petroleum gas plant having an aggregate
peak-day deliverability of about 20,000 MMBtu for peak-shaving purposes. Gas
properties include approximately 8,000 miles of mains.
17
IP experienced its 1998 peak-day send out of 572,067 MMBtu of natural
gas on December 30, 1998. This compares with IP's record peak-day send out of
857,324 MMBtu of natural gas on January 10, 1982.
Gas Supply
- ----------
IP has contracts with six interstate pipeline companies for firm
transportation and storage services. These contracts have varying expiration
dates ranging from 1999 to 2004. IP also enters into contracts for the
acquisition of natural gas supply. Those contracts range in duration from one to
five months.
Diversified Business Activities
-------------------------------
IGC, a wholly-owned subsidiary of Illinova, invests in energy supply
projects throughout the world. IGC is an equity partner with Tenaska, Inc. in
four natural gas-fired generation plants, of which three plants totaling
approximately 700 megawatts (MW) are in operation and one 830 MW plant is under
construction. Tenaska, Inc. is an Omaha, Nebraska-based developer of independent
power projects throughout the United States. IGC also owns 100 percent of the
North American Energy Services Company (NAES). NAES supplies a broad range of
operations, maintenance and support services to the world-wide independent power
generation industry and operates the Tenaska generation plants in which IGC has
an equity interest. IGC is an equity partner in the Indeck North American Power
Fund (Fund). The Fund has generation projects in Long Beach, California, and
Pepperell, Massachusetts. In addition to these ventures, IGC is involved in
generation projects in Teesside, England; Puerto Cortez, Honduras; Zhejiang
Province and Hunan Province, People's Republic of China; Aguaytia, Peru;
Tilaran, Costa Rica; Old Harbour, Jamaica; Barranquilla, Columbia; and
Balochistan, Pakistan. In August 1996, Illinois Power's interest in the 1000 MW
coal-fired plant in Joppa, Illinois was transferred to IGC.
IEP is Illinova's wholly-owned subsidiary that engages in the brokering
and marketing of electric power and gas, and the development and sale of
energy-related products and services to the unregulated energy market throughout
the United States and Canada. In May 1995, IEP obtained approval from the FERC
to conduct business as a marketer of electric power and gas to various customers
outside of IP's present service territory. In September 1995, IEP began buying
and selling wholesale electricity in the Western United States. IEP owns 50
percent of Tenaska Marketing Ventures (TMV). TMV focuses on natural gas
marketing in the Midwestern United States. IEP and TMV have formed Tenaska
Marketing Canada to market natural gas in Canada. In July 1996, IP received FERC
approval to sell electricity to IEP without prior transaction approval from
FERC. In October 1998, IEP acquired a 51% ownership interest in EMC Gas
Transmission Company, a retail gas marketer in Michigan. IEP consolidates the
accounts of EMC Gas Transmission Company.
For more information on the activities of the Illinova's diversified
enterprises, see "Note 3 - Illinova Subsidiaries" on page a-30 of the 1998
Annual Report to Shareholders in the appendix to the Illinova Proxy Statement
which is incorporated herein by reference.
18
Environmental Matters
---------------------
IP is subject to regulation by certain federal and Illinois authorities
with respect to environmental matters and may in the future become subject to
additional regulation by such authorities or by other federal, state and local
governmental bodies. Existing regulations affecting IP are principally related
to air and water quality, hazardous wastes and toxic substances.
Air Quality
- -----------
Pursuant to the Federal Clean Air Act (Act), the United States
Environmental Protection Agency (USEPA) has established ambient air quality
standards for air pollutants which, in its judgment, have an adverse effect on
public health or welfare. The Act requires each state to adopt laws and
regulations, subject to USEPA approval, designed to achieve such standards.
Pursuant to the Illinois Environmental Protection Act, the Illinois Pollution
Control Board (Board) adopted and, along with the Illinois Environmental
Protection Agency (IEPA), is enforcing a comprehensive set of air pollution
control regulations which include emission limitations, permit issuances,
monitoring and reporting requirements.
The air pollution regulations of the Board impose limitations on
emissions of particulate, sulfur dioxide, carbon monoxide, nitrogen oxides and
various other pollutants. Enforcement of emission limitations is accomplished in
part through the regulatory permitting process. IP's practice is to obtain an
operating permit for each source of regulated emissions. Presently, it has a
total of approximately 100 permits for emission sources at its power stations
and other facilities, expiring at various times. In addition to having the
requisite operating permits, each source of regulated emissions must be operated
within the regulatory limitations on emissions. Verification of such compliance
is usually accomplished by reports to regulatory authorities and inspections by
such authorities.
In accordance with the requirements of the Illinois Clean Air Act
Permit Program (CAAPP), IP submitted new air permit applications for each of its
generating facilities in 1995. The IEPA will review these applications and is
expected to issue CAAPP permits in 1999.
In addition to the sulfur dioxide emission limitations for existing
facilities, both the USEPA and the State of Illinois adopted New Source
Performance Standards (NSPS) applicable to coal-fired generating units limiting
emissions to 1.2 pounds of sulfur dioxide per million Btu of heat input. This
standard is applicable to IP's Unit 6 at the Havana Power Station. The federal
NSPS also limit nitrogen oxides, opacity and particulate emissions and imposes
certain monitoring requirements. In 1977 and 1990, the Act was amended and, as a
result, USEPA has adopted more stringent emission standards for new sources.
These standards would apply to any new plant constructed by IP.
Clean Air Act
- -------------
For information on the impacts of the Clean Air Act Amendments of 1990,
see "Environmental Matters" in "Note 5 - Commitments and Contingencies" on pages
a-35 and a-36 of the 1998 Annual Report to Shareholders in the appendix to the
Illinova Proxy Statement which is incorporated herein by reference.
19
Global Warming
- --------------
For information on the impacts of the international negotiations to
reduce greenhouse gas emissions and the Kyoto Protocol, see "Environmental
Matters" in "Note 5 - Commitments and Contingencies" on page a-36 of the 1998
Annual Report to Shareholders in the appendix to the Illinova Proxy Statement
which is incorporated herein by reference.
Manufactured-Gas Plant Sites
- ----------------------------
IP's estimated liability for MGP site remediation is $61 million. This
amount represents IP's current best estimate of the costs that it will incur to
remediate the 24 MGP sites for which it is responsible. Because of the unknown
and unique characteristics at each site, IP cannot presently determine its
ultimate liability for remediation of the sites.
In October 1995, to offset the burden imposed on its customers, IP
initiated litigation against a number of insurance carriers claiming that
insurance coverage should apply to a portion of the cleanup costs. As of June
1998, settlements or settlements in principle have been negotiated with all 30
of the carriers. Settlement proceeds recovered from the carriers will offset a
significant portion of MGP remediation costs and will be credited to IP's
customers through the tariff rider mechanism which the ICC previously approved.
Cleanup costs in excess of insurance proceeds will be fully recovered from IP's
transmission and distribution customers.
Water Quality
- -------------
The Federal Water Pollution Control Act Amendments of 1972 require that
National Pollutant Discharge Elimination System (NPDES) permits be obtained from
USEPA (or, when delegated, from individual state pollution control agencies) for
any discharge into navigable waters. Such discharges are required to conform
with the standards, including thermal, established by USEPA and also with
applicable state standards.
Enforcement of discharge limitations is accomplished in part through
the regulatory permitting process similar to that described previously under
"Air Quality." Presently, IP has approximately two dozen permits for discharges
at its power stations and other facilities, which must be periodically renewed.
In addition to obtaining such permits, each source of regulated
discharges must be operated within the limitations prescribed by applicable
regulations. Verification of such compliance is usually accomplished by
monitoring results reported to regulatory authorities and inspections by such
authorities.
The Clinton permit was reissued in the third quarter of 1995. The
Havana Power Station permit was reissued in the first quarter of 1996. The
Hennepin Power Station permit application for reissuance was submitted in the
fourth quarter of 1996. The permit is not expected until the third or fourth
quarter of 1999. The Vermilion Power Station permit was reissued in the fourth
quarter of 1996. The Wood River Power Station permit was reissued in the first
quarter of 1996. The Baldwin Power Station permit was reissued in the first
quarter of 1998.
20
Other Issues
- ------------
Hazardous and non-hazardous wastes generated by IP must be managed in
accordance with federal regulations under the Toxic Substances Control Act
(TSCA), the Comprehensive Environmental Response, Compensation and Liability Act
and the Resource Conservation and Recovery Act (RCRA) and additional state
regulations promulgated under both RCRA and state law. Regulations promulgated
in 1988 under RCRA govern IP's use of underground storage tanks. The use,
storage, and disposal of certain toxic substances, such as polychlorinated
biphenyls (PCBs) in electrical equipment, are regulated under the TSCA.
Hazardous substances used by IP are subject to reporting requirements under the
Emergency Planning and Community-Right-To-Know Act. The State of Illinois has
been delegated authority for enforcement of these regulations under the Illinois
Environmental Protection Act and state statutes. These requirements impose
certain monitoring, recordkeeping, reporting and operational requirements which
IP has implemented or is implementing to assure compliance. IP does not
anticipate that compliance will have a material adverse impact on its financial
position or results of operations.
Electric and Magnetic Fields
- ----------------------------
For information on Electric and Magnetic Fields, see "Electric and
Magnetic Fields" in "Note 5 Commitments and Contingencies" on page a-36 of the
1998 Annual Report to Shareholders in the appendix to the Illinova Proxy
Statement which is incorporated herein by reference.
Environmental Expenditures
- --------------------------
Operating expenses for environmentally-related activities were $53
million in 1998 (including the incremental costs of alternative fuels to meet
environmental requirements). IP's net capital expenditures (including AFUDC and
capitalized interest) for environmental protection programs were approximately
$28.4 million in 1998. Accumulated net capital expenditures since 1969 have
reached approximately $822 million.
Year 2000 Data Processing
-------------------------
For information on Year 2000 Data Processing, see "Year 2000" in
"Management's Discussion and Analysis" on pages a-5 through a-8 of the 1998
Annual Report to Shareholders in the appendix to the Illinova Proxy Statement
which is incorporated herein by reference.
Research and Development
------------------------
Illinova's research and development expenditures for 1998 were
comprised entirely of IP expenditures of approximately $5.1 million. In 1997,
Illinova's research and development expenditures were approximately $5.4 million
for IP and $2.0 million for Illinova. Illinova's research and development
expenditures for 1996 consisted entirely of IP expenditures of $5.4 million.
21
Regulation
----------
The Illinois Public Utilities Act was significantly modified in 1997 by
P.A. 90-561, but the ICC continues to have broad powers of supervision and
regulation with respect to the rates and charges of IP, its services and
facilities, extensions or abandonment of service, classification of accounts,
valuation and depreciation of property, issuance of securities and various other
matters. Before a significant plant addition may be included in IP's rate base,
the ICC must determine that the addition is reasonable in cost, prudent and used
and useful in providing utility service to customers. IP must continue to
provide bundled retail electric service to all who choose to continue to take
service at tariff rates, and IP must provide unbundled electric distribution
services to all eligible customers as defined by P.A. 90-561 at rates to be
determined by the ICC as early as September 1, 1999. During 1998, pursuant to
authority granted in P.A. 90-561, the ICC issued rules associated with (i)
transactions between the utility and its affiliates; (ii) service reliability;
(iii) environmental disclosure; and (iv) alternative retail electric supplier
certification criteria and procedures. During 1999, it is expected that the ICC
will rule on (i) the rates and terms associated with the provision of delivery
services for commercial and industrial customers; (ii) establishing the neutral
fact finder price utilized in (a) calculating competitive transition costs and
(b) IP's power purchase tariff; (iii) the competitive transition cost
methodology; and (iv) guidelines regarding standards of conduct and functional
separation. Additionally, the ICC has initiated a proceeding to investigate the
further unbundling of the utility's delivery services and expects to rule on the
issue in early 1999.
Illinova and IP are exempt from all the provisions of the Public
Utility Holding Company Act of 1935 except Section 9(a)(2) thereof. That section
requires approval of the Securities and Exchange Commission prior to certain
acquisitions of any securities of other public utility companies or public
utility holding companies.
IP is subject to regulation under the Federal Power Act by the FERC as
to rates and charges in connection with the transmission of electric energy in
interstate commerce and the sale of such energy at wholesale in interstate
commerce, the issuance of debt securities maturing in not more than 12 months,
accounting and depreciation policies, interaction with affiliates, and certain
other matters. The FERC has declared IP exempt from the Natural Gas Act and
related FERC orders, rules and regulations.
IP is subject to the jurisdiction of the NRC with respect to Clinton.
NRC regulations control the granting of permits and licenses for the
construction and operation of nuclear power stations and subject such stations
to continuing review and regulation. Additionally, the NRC review and regulatory
process covers decommissioning, radioactive waste, environmental and
radiological aspects of such stations.
IP is subject to the jurisdiction of the Illinois Department of Nuclear
Safety (IDNS) with respect to Clinton. IDNS and the NRC entered a memorandum of
understanding which allows IDNS to review and regulate nuclear safety matters at
state nuclear facilities. The IDNS review and regulatory process covers
radiation safety, environmental safety, non-nuclear pressure vessels, emergency
preparedness and emergency response.
Important Information
---------------------
Certain of the statements contained in this report, including those in
Management's Discussion and Analysis are forward-looking. Other statements,
22
particularly those using words like "expect," "intend," "predict," "estimate,"
and "believe," also are forward-looking. Although Illinova and IP believe these
statements are accurate, its businesses are dependent on various regulatory
issues, general economic conditions and future trends, and these factors can
cause actual results to differ materially from the forward-looking statements
that have been made. In particular:
Illinova's activities, particularly the utility activities of IP, are
heavily regulated by both the federal government and the State of
Illinois. This regulation has changed substantially over the past
several years. The impacts of these changes include reductions in rates
pursuant to P.A. 90-561 and a phasing in of the opportunity for an
increasing number of customers to choose alternative energy suppliers.
In addition, future regulatory changes are certain to occur and their
nature and impact cannot be predicted.
IP is likely to face increased competition in the future. Deregulation
of certain aspects of IP's business at both the state and federal
levels is occurring, the primary results of which so far are that
competing generators of electricity will increasingly have the ability
to sell electricity to IP's customers and to require IP to transmit and
distribute that electricity. In addition, alternative sources of
electricity, such as co-generation facilities, are becoming
increasingly popular. When customers elect suppliers other than IP for
their electricity, IP can avoid certain costs and can gain revenue from
transmitting and distributing that electricity; however, the net effect
of these elections generally is a decrease in IP's revenue and
operating income. Illinois transition law is designed to protect
utilities in three principal ways:
1. Departing customers are obligated to pay transition charges based on
the utility's lost revenue from that customer;
2. Utilities are provided the opportunity to lower their financing and
capital costs through the issuance of "securitized" bonds; and
3. Utilities are permitted to seek rate relief in the event the change
in law leads to their ROE falling below a specified minimum based on
a prescribed test.
Illinova is exploring various strategies to best respond to its
changing business and regulatory environment. These strategies include
acquisitions, focused growth of unregulated businesses, and other
options. Although Illinova would only plan to undertake transactions
that it believes are in the best interests of its shareholders, there
can be no certainty that any transaction will fulfill these
expectations.
To meet IP customers' electricity requirements, IP produces electricity
in Company-owned generation plants. Although IP has in place programs
designed to match its supplies with its needs, many circumstances can
occur which upset this balance. Specifically, generation facilities may
experience unplanned outages forcing the Company to acquire additional
supplies in the electricity marketplace. The availability and price of
these additional supplies are uncertain and at times highly volatile.
Such situations can lead to less profitable or even unprofitable
outcomes.
Clinton is a nuclear-fueled generation facility. Although IP believes
that it operates this facility in accordance with all regulatory
guidelines and in a safe manner, accidents can occur. Liabilities and
23
costs from such accidents could exceed insurance provisions established
for the Company and have a significantly negative effect on IP.
There are various financial risks attendant to selling or shutting down
Clinton. These risks include the possibility that IP has underestimated
the costs necessary to effect a particular exit strategy. No nuclear
facility sale has been completed and relatively little financial
information regarding these transactions is available. Although the
amounts used in IP's analyses and in recording year-end accounting
results represent estimates based on guidance from industry experts,
actual results may be materially different from the estimates. In
addition, the Company continues to have ongoing nuclear operational
exposures until the plant is sold or shut down.
Illinova does not currently foresee any inability to obtain necessary
financing on reasonably favorable terms. However, events can occur in
the Company's business operations or in general economic conditions
that could negatively impact the Company's financial flexibility. In
addition, restructuring activities, such as the formation of an
unregulated generation subsidiary, can introduce other factors that
could impact the Company's financial flexibility. Further, the sale or
shutdown of Clinton will substantially reduce the Company's ability to
issue indebtedness under its existing mortgages. While the Company does
not foresee any of these events resulting in significant difficulties
in obtaining future financing on reasonably favorable terms, there can
be no assurances that difficulties will not occur.
The impact of environmental regulations on utilities is significant;
and the expectation is that more stringent requirements will be
introduced over time. Although Illinova believes it is in substantial
compliance with all current regulations, Illinova cannot predict the
future impact of environmental compliance. However, if more stringent
requirements are introduced they are likely to have a negative
financial effect.
IGC has interest in foreign facilities and is likely to purchase
additional foreign interest in the future. The risks of doing business
in foreign countries are different from those attendant to doing
business in the United States. These include business risks such as
currency fluctuations, cyclical and sustained economic downturns, and
political risks. The adverse impact of these risks could be
significant.
Illinova, through IEP and IP, actively purchases and sells electricity
and natural gas futures and similar contracts with respect thereto.
While Illinova has adopted various risk management practices intended
to minimize the risk of significant loss, trading in assets of these
types is inherently risky and these risk management practices cannot
guarantee that losses will not occur.
Although Illinova believes that it will complete its Year 2000
preparation in a timely fashion, there can be no assurances that it
will, or that unforeseen problems will not arise. The consequences of
Year 2000 problems are so varied that Illinova cannot predict this
ultimate impact, if any.
All forward-looking statements in this report are based on information
that currently is available. Illinova disclaims any obligation to update any
forward-looking statement.
24
Executive Officers of Illinova Corporation
------------------------------------------
Name of Officer Age Position
Charles E. Bayless 56 Chairman, President and Chief
Executive Officer
Larry F. Altenbaumer 51 Chief Financial Officer, Treasurer
and Controller
Alec G. Dreyer 41 Senior Vice President
George W. Miraben 57 Senior Vice President and Chief
Administrative Officer
Leah Manning Stetzner 50 General Counsel and Corporate
Secretary
Mr. Bayless joined Illinova as President and Chief Executive Officer in
July of 1998 and was elected chairman in August 1998. Prior to joining Illinova,
Mr. Bayless was Chairman, President, and Chief Executive Officer of Tucson
Electric Power Company.
Mr. Altenbaumer was elected Chief Financial Officer, Treasurer and
Controller in June 1994.
Mr. Dreyer was elected Senior Vice President in February 1999 in addition
to his position as President of IGC, a subsidiary of Illinova, which he has held
since September 1995. Prior to being elected President of IGC, Mr. Dreyer was
Treasurer and Controller of IP since December 1994 and Controller since June
1992.
Mr. Miraben joined Illinova in January 1999 and was elected Senior Vice
President in February 1999. Prior to joining Illinova, Mr. Miraben was Senior
Vice President of UniSource Energy Corporation and Executive Vice President of
Tucson Electric Power Company, a subsidiary of UniSource.
Ms. Stetzner was elected General Counsel and Corporate Secretary in June
1994.
The executive officers are elected annually by the Board of Directors at
the first meeting of the Board held after the annual meeting of shareholders,
and hold office until their successors are duly elected or until their death,
resignation or removal by the Board.
For Illinova, the information under the caption "Board of Directors" on
pages 3 through 7 of Illinova's Proxy Statement for its 1999 Annual Meeting of
Stockholders is incorporated herein by reference.
25
Executive Officers of Illinois Power Company
--------------------------------------------
Name of Officer Age Position
Charles E. Bayless 56 Chairman, President and Chief
Executive Officer
Larry F. Altenbaumer 51 Senior Vice President and Chief
Financial Officer
David W. Butts 44 Senior Vice President
Alec G. Dreyer 41 Senior Vice President
Paul L. Lang 58 Senior Vice President
George W. Miraben 57 Senior Vice President and Chief
Administrative Officer
Richard W. Eimer, Jr. 50 Vice President
Kim B. Leftwich 51 Vice President
Robert D. Reynolds 42 Vice President
Robert A. Schultz 58 Vice President
Leah Manning Stetzner 50 Vice President, General Counsel
and Corporate Secretary
Cynthia G. Steward 41 Controller
Eric B. Weekes 47 Treasurer
John P. McElwain 48 Chief Nuclear Officer
Mr. Bayless joined IP as President and Chief Executive Officer in July 1998
and was elected Chairman in August 1998. Prior to joining Illinova, Mr. Bayless
was Chairman, President and Chief Executive Officer of Tucson Electric Power
Company.
Mr. Altenbaumer was elected Senior Vice President and Chief Financial
Officer in June 1992. Prior to being elected Senior Vice President he was
previously Vice President, Chief Financial Officer, and Controller.
Mr. Butts was elected Senior Vice President in February 1999 in addition
to his position as President of IEP, a subsidiary of Illinova, which he has held
since February 1998. Prior to being elected President of IEP, Mr. Butts was a
Senior Vice President at Illinois Power Company. From November 1993 through
August 1995, he was President of IGC, an Illinova subsidiary.
Mr. Dreyer was elected Senior Vice President in February 1999 in
addition to his position as President of IGC, a subsidiary of Illinova, which he
has held since September 1995. Prior to being elected President of IGC, Mr.
Dreyer was Treasurer and Controller of IP from December 1994.
Mr. Lang was elected Senior Vice President in June 1992. He joined IP as
Vice President in July 1986.
Mr. Miraben joined IP in January 1999 and was elected Senior Vice
President and Chief Administrative Officer in February 1999. Prior to joining
IP, Mr. Miraben was Senior Vice President of UniSource Energy Corporation and
Executive Vice President of Tucson Electric Power Company, a subsidiary of
UniSource.
Mr. Eimer was elected Vice President in December 1995. He previously held
the positions of Assistant to the Vice President and Manager of Marketing.
Mr. Leftwich was elected Vice President in February 1998. He previously
held the positions of Managing Director - Customer Management Processes and
Manager of Marketing.
26
Mr. Reynolds was elected Vice President in May 1996. Prior to his election
to Vice President, Mr. Reynolds
served as Director of Pricing and Manager of Electric Supply.
Mr. Schultz was elected Vice President in February 1998. He previously held
the positions of President of IEP, President of Illinova Power Marketing and
Treasurer of IP.
Ms. Stetzner was elected Vice President, General Counsel and Corporate
Secretary in February 1993. She joined IP as General Counsel and Corporate
Secretary in October 1989.
Ms. Steward was elected Controller in September 1995. She previously held
the positions of Manager of Employee Services and Director of Accounting.
Mr. Weekes joined IP as Treasurer in January 1997. He previously served as
Senior Financial Manager with a unit of Kraft Foods.
Mr. McElwain was contracted from PECO Energy Company in Philadelphia in
December 1998 and appointed Chief Nuclear Officer in January 1999. Prior to
joining IP, as a contractor from PECO, Mr. McElwain held the positions of Vice
President, Nuclear Projects and Director of Outage Management for PECO.
The present term of office of each of the above executive officers
extends to the first meeting of Illinova's and IP's Boards of Directors after
the Annual Election of Directors. There are no family relationships among any of
the executive officers and directors of Illinova and IP.
For IP, the information under the caption "Board of Directors" on pages
3 through 7 of IP's Information Statement for its 1999 Annual Meeting of
Stockholders is incorporated herein by reference.
Operating Statistics
---------------------
For Illinova the information under the caption "Selected Illinois Power
Company Statistics" on page a-53 of the 1998 Annual Report to Shareholders in
the appendix to the Illinova Proxy Statement is incorporated herein by
reference.
For IP the information under the caption "Selected Illinois Power
Company Statistics" on page a-49 of the 1998 Annual Report to Shareholders in
the appendix to the IP Information Statement is incorporated herein by
reference.
Item 2. Properties
- -------
IP owns and operates six steam generating stations with composite net
summer capacity of 4,421,000 kilowatts. In addition, IP owns nine quick start
combustion turbine peaking units at three locations with a combined net summer
capacity of 147,000 kilowatts. All of IP's generating stations are in the State
of Illinois, including IP's only nuclear generating station, Clinton. IP owns
50% of three combustion turbine units, located in Bloomington, Illinois, with
combined net capacity of 5,250 kilowatts. State Farm Insurance Company owns the
other 50% of these units. The total IP available net summer capability is
4,571,250 kilowatts.
The major coal-fired units at Baldwin, Havana, Hennepin, Vermilion and
Wood River make up 3,491,000 kilowatts of summer capacity. Three natural
27
gas-fired units at Wood River were reactivated in 1997. These units have a
combined net summer capacity of 139,000 kilowatts. Five oil-fired units at
Havana were reactivated in 1998. These units have a combined net summer capacity
of 238,500 kilowatts.
IP owns an interconnected electric transmission system of approximately
2,800 circuit miles, operating from 69,000 to 345,000 volts and a distribution
system which includes about 36,000 circuit miles of overhead and underground
lines.
All outstanding First Mortgage Bonds issued under the Mortgage and Deed
of Trust dated November 1, 1943 are secured by a first mortgage lien on
substantially all of the fixed property, franchises and rights of IP with
certain exceptions expressly provided in the mortgage securing the bonds. All
outstanding New Mortgage Bonds issued under the General Mortgage and Deed of
Trust dated November 1, 1992, are secured by a lien on IP's properties used in
the generation, purchase, transmission, distribution and sale of electricity and
gas. In December of 1997, the Mortgage and Deed of Trust dated November 1, 1943,
was amended to generally conform with the General Mortgage and Deed of Trust
dated November 1, 1992, following a bondholder vote and approval of the IP Board
of Directors.
Item 3. Legal Proceedings
- -------
See discussion of legal proceedings in "Manufactured-Gas Plant" in
"Note 5 - Commitments and Contingencies" on page a-36 of the 1998 Annual Report
to Shareholders in the appendix to the Illinova Proxy Statement which is
incorporated herein by reference.
See "Environmental Matters" reported under Item 1 of this report for
information regarding legal proceedings concerning environmental matters.
See "Fuel Supply" reported under Item 1 of this report for information
regarding legal proceedings concerning nuclear fuel disposal.
Item 4. Submission of Matters to a Vote of Security Holders
- -------
None.
28
PART II
- -------------------------------------------------------------------------------
Item 5. Market for Registrants' Common Equity and Related
- ------- Stockholder Matters
For Illinova, the information under the caption "Note 17 - Quarterly
Consolidated Financial Information and Common Stock Data (Unaudited)" on page
a-51 of the 1998 Annual Report to Shareholders in the appendix to the Illinova
Proxy Statement is incorporated herein by reference.
For IP the information under the caption "Note 16 - Quarterly
Consolidated Financial Information and Common Stock Data (Unaudited)" on page
a-47 of the 1998 Annual Report to Shareholders in the appendix to the IP
Information Statement is incorporated herein by reference.
Item 6. Selected Financial Data
- -------
For Illinova, the information under the caption "Selected Consolidated
Financial Data" on page a-52 of the 1998 Annual Report to Shareholders in the
appendix to the Illinova Proxy Statement is incorporated herein by reference.
For IP the information under the caption "Selected Consolidated
Financial Data" on page a-48 of the 1998 Annual Report to Shareholders in the
appendix to the IP Information Statement is incorporated herein by reference.
Item 7. Management's Discussion and Analysis of Financial
- ------- Condition and Results of Operations
For Illinova, the information under the caption "Management's Discussion
and Analysis" on pages a-2 through a-18 of the 1998 Annual Report to
Shareholders in the appendix to the Illinova Proxy Statement is incorporated
herein by reference.
For IP the information under the caption "Management's Discussion and
Analysis" on pages a-2 through a-16 of the 1998 Annual Report to Shareholders in
the appendix to the IP Information Statement is incorporated herein by
reference.
Item 7A. Quantitative and Qualitative Disclosures About Market Risk.
For information on Quantitative and Qualitative Disclosures About Market
Risk, see "Market Risk" in "Management's Discussion and Analysis" on pages a-16
through a-17 of the 1998 Annual Report to Shareholders in the appendix to the
Illinova Proxy Statement which is incorporated herein by reference.
Item 8. Financial Statements and Supplementary Data
- -------
For Illinova, the consolidated financial statements and related notes
on pages a-21 through a-51 and Report of Independent Accountants on page a-20 of
the 1998 Annual Report to Shareholders in the appendix to the Illinova Proxy
Statement are incorporated herein by reference. With the exception of the
aforementioned information and the information incorporated in Items 1, 3, 5, 6
and 7, the 1998 Annual Report to Shareholders in the appendix to the Illinova
Proxy Statement is not to be deemed filed as part of this Form 10-K Annual
Report.
29
For IP the consolidated financial statements and related notes on pages
a-19 through a-47 and Report of Independent Accountants on page a-18 of the 1998
Annual Report to Shareholders in the appendix to the IP Information Statement
are incorporated herein by reference. With the exception of the aforementioned
information and the information incorporated in Items 1, 3, 5, 6 and 7, the 1998
Annual Report to Shareholders in the appendix to the IP Information Statement is
not to be deemed filed as part of this form 10-K Annual Report.
Item 9. Changes in and Disagreements With Accountants on
- ------- Accounting and Financial Disclosure
None.
30
PART III
- -------------------------------------------------------------------------------
Item 10. Directors and Executive Officers of the Registrants
- --------
For Illinova, the information under the caption "Board of Directors" on
pages 3 through 7 of Illinova's Proxy Statement for its 1999 Annual Meeting of
Stockholders is incorporated herein by reference. The information relating to
Illinova's executive officers is set forth in Part I of this Annual Report on
Form 10-K.
For IP the information under the caption "Board of Directors" on pages 3
through 7 of IP's Information Statement for its 1999 Annual Meeting of
Stockholders is incorporated herein by reference. The information relating to
Illinois Power Company's executive officers is set forth in Part I of this
Annual Report on Form 10-K.
Item 11. Executive Compensation
- --------
For Illinova, the information under the caption "Executive
Compensation" on pages 8 through 13 of Illinova's Proxy Statement for its 1999
Annual Meeting of Stockholders is incorporated herein by reference.
For IP the information under the caption "Executive Compensation" on
pages 8 through 13 of IP's Information Statement for its 1999 Annual Meeting of
Stockholders is incorporated herein by reference.
Item 12. Security Ownership of Certain Beneficial Owners and Management
- --------
For Illinova, the information under the caption "Security Ownership of
Management and Certain Beneficial Owners" on page 7 and the information
regarding securities owned by certain officers and directors under the caption
"Board of Directors" on pages 3 through 7 of Illinova's Proxy Statement for its
1999 Annual Meeting of Stockholders is incorporated herein by reference.
For IP the information under the caption "Security Ownership of
Management and Certain Beneficial Owners" on page 7 and the information
regarding securities owned by certain officers and directors under the caption
"Board of Directors" on pages 3 through 7 of IP's Information Statement for its
1999 Annual Meeting of Stockholders is incorporated herein by reference.
Item 13. Certain Relationships and Related Transactions
- --------
None.
31
PART IV
- --------------------------------------------------------------------------------
Item 14. Exhibits, Financial Statement Schedules, and Reports on
- -------- Form 8-K
(a) Documents filed as part of this report.
(1a) Financial Statements:
Page in 1998
Annual Report
to Shareholders
in the appendix
to the Illinova
Proxy Statement*
----------------
Report of Independent Accountants a-20
Consolidated Statements of Income for the
three years ended December 31, 1998,
1997, 1996 a-21
Consolidated Balance Sheets at
December 31, 1998 and 1997 a-22
Consolidated Statements of Cash Flows for
the three years ended December 31, 1998,
1997, 1996 a-23
Consolidated Statements of Retained
Earnings for the three years
ended December 31, 1998, 1997, 1996 a-23
Notes to Consolidated Financial Statements a-24 - a-51
* Incorporated by reference from the indicated pages of the 1998 Annual
Report to Shareholders in the appendix to the Illinova Proxy Statement.
(1b) Financial Statements:
Page in 1998
Annual Report
to Shareholders
in the appendix
to the IP
Information
Statement**
---------------
Report of Independent Accountants a-18
Consolidated Statements of Income for the
three years ended December 31, 1998,
1997, 1996 a-19
Consolidated Balance Sheets at
December 31, 1998 and 1997 a-20
Consolidated Statements of Cash Flows for
the three years ended December 31, 1998,
1997, 1996 a-21
Consolidated Statements of Retained
Earnings for the three years
ended December 31, 1998, 1997, 1996 a-21
Notes to Consolidated Financial Statements a-22 - a-47
** Incorporated by reference from the indicated pages of the 1998 Annual
Report to Shareholders in the appendix to the IP Information Statement
32
Item 14. Exhibits, Financial Statement Schedules, and Reports on
- -------- Form 8-K (Continued)
(2) Financial Statement Schedules:
All Financial Statement Schedules are omitted because they are not applicable
or the required information is shown in the financial statements or notes
thereto.
(3) Exhibits
The exhibits filed with this Form 10-K are listed in the Exhibit Index
located elsewhere herein. All management contracts and compensatory
plans or arrangements set forth in such list are marked with a ~.
(b) Reports on Form 8-K since September 30, 1998:
Report filed on Form 8-K on October 20, 1998
Other Events: Illinova releases results of
third-quarter earnings and Board of Directors
approval of common stock repurchase. IP
announces status of progress made to restart
Clinton Power Station, new restart date, and new
estimation of costs to return Clinton to
operation.
Report filed on Form 8-K on November 25, 1998
Other Events: IP announces SEC acceptance of quasi-
reorganization accounting procedures if
the company decides to exit the nuclear
business.
Report filed on Form 8-K on December 14, 1998
Other Events: Illinova announces it will exit the
nuclear business and proceed with a
quasi-reorganization to position itself as a
competitive leader in new energy markets.
Report filed on Form 8-K on December 22, 1998
Other Events: Illinois Power Special Purpose Trust
offers transitional funding trust notes
on Form S-3
Financial
Statements,
Pro Forma
Financial
Information
and Exhibits: Exhibits
33
Report filed on Form 8-K on January 13, 1999
Other Events: Illinois Power Securitization Limited
Liability company files a corrected copy of Form
T-1, Statement of Eligibility Under the Trust
Indenture
Act of 1939.
Financial
Statements,
Pro Forma
Financial
Information
and Exhibits: Exhibits
Report filed on Form 8-K on February 12, 1999
Other Events: Illinois Power announces potential
impact of quasi on financial reorganization
entries and discusses progress in restoring
Clinton to service and status of the company in
exiting the nuclear business.
Report filed on Form 8-K on March 3, 1999
Other Events: Illinova releases 1998 earnings
and discusses impact of the Clinton
Power Station impairment and
quasi-reorganization
34
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.
ILLINOIS POWER COMPANY
(REGISTRANT)
By/s/Charles E. Bayless
Charles E. Bayless, Chairman, President
and Chief Executive Officer
Date: March 29, 1999
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
registrant and in the capacities on the dates indicated.
Signature Title Date
/s/Charles E. Bayless Chairman, President, Chief
Charles E. Bayless Executive Officer and Director
(Principal Executive Officer)
/s/Larry F. Altenbaumer Senior Vice President and
Larry F. Altenbaumer Chief Financial Officer
(Principal Financial Officer)
/s/Cynthia G. Steward Controller
Cynthia G. Steward
(Principal Accounting Officer)
/s/J. Joe Adorjan
J. Joe Adorjan
/s/C. Steven McMillan
C. Steven McMillan
/s/Robert M. Powers
Robert M. Powers
/s/Sheli Z. Rosenberg
Sheli Z. Rosenberg Director March 29, 1999
/s/Walter D. Scott
Walter D. Scott
/s/Joe J. Stewart
Joe J. Stewart
/s/Ronald L. Thompson
Ronald L. Thompson
/s/Walter M. Vannoy
Walter M. Vannoy
/s/Marilou von Ferstel
Marilou von Ferstel
/s/John D. Zeglis
John D. Zeglis
35
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.
ILLINOVA CORPORATION
(REGISTRANT)
By /s/Charles E. Bayless
Charles E. Bayless, Chairman, President
and Chief Executive Officer
Date: March 29, 1999
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
registrant and in the capacities on the dates indicated.
Signature Title Date
/s/Charles E. Bayless Chairman, President, Chief
Charles E. Bayless Executive Officer and Director
(Principal Executive Officer)
/s/Larry F. Altenbaumer Chief Financial Officer,
Larry F. Altenbaumer Treasurer and Controller
(Principal Financial
and Accounting Officer)
/s/J. Joe Adorjan
J. Joe Adorjan
/s/C. Steven McMillan
C. Steven McMillan
/s/Robert M. Powers
Robert M. Powers
/s/Sheli Z. Rosenberg
Sheli Z. Rosenberg
/s/Walter D. Scott
Walter D. Scott Director March 29, 1999
/s/Joe J. Steward
Joe J. Stewart
/s/Ronald L. Thompson
Ronald L. Thompson
/s/Walter M. Vannoy
Walter M. Vannoy
/s/Marilou von Ferstel
Marilou von Ferstel
/s/John D. Zeglis
John D. Zeglis
36
Exhibit Index
Exhibit Description
- ------- -----------
(3)(i) Articles of Incorporation
Illinova Corporation
(a)(1) Articles of Amendment to the Articles of
Incorporation of Illinova Corporation, filed as
of October 31, 1994. Filed as Exhibit 3(a) to
the Quarterly Report on Form 10-Q under the
Securities Exchange Act of 1934 for the quarter
ended September 30, 1994 (File No. 1-11327). *
(a)(2) Statement of Correction to the Articles of
Incorporation of Illinova Corporation, filed as
of October 31, 1994. Filed as Exhibit 3(b) to
the Quarterly Report on Form 10-Q under the
Securities Exchange Act of 1934 for the quarter
ended September 30, 1994 (File No. 1-11327). *
Illinois Power Company
(b)(1) Amended and Restated Articles of Incorporation
of Illinois Power Company, dated September 7, 1994.
Filed as Exhibit 3(a) to the Current Report on
Form 8-K dated September 7, 1994 (File No. 1-3004). *
(3)(ii) By-Laws
(a) By-laws of Illinova Corporation, as amended,
April 8, 1998. Filed as Exhibit 3(a)(1) to the
Annual Report on Form 10-K under the Securities
and Exchange Act of 1934 for the year ended
December 31, 1998.
(b) By-laws of Illinova Corporation, as amended
December 14, 1994. Filed as Exhibit 3(b)(2)
to the Annual Report on Form 10-K under
the Securities Exchange Act of 1934 for the
year ended December 31, 1994 (File No. 1-11327). *
(c) By-laws of Illinois Power Company, as amended
December 14, 1994. Filed as Exhibit 3(b)(1)
to the Annual Report on Form 10-K under
the Securities Exchange Act of 1934 for the
year ended December 31, 1994 (File No. 1-3004). *
(4) Instruments Defining Rights of Security Holders,
Including Indentures
37
Exhibit Index (Continued)
Exhibit Description
- ------- -----------
Illinova Corporation
(a)(1) See (4)(b) below for instruments defining the rights
of holders of long-term debt of Illinois Power Company.
(a)(2) Indenture dated February 1, 1997, between Illinova
Corporation and The First National Bank of Chicago,
as trustee. Filed as Exhibit (4)(a)(2) to the Annual
Report on Form 10-K under the Securities Exchange Act
of 1934 for the year ended December 31, 1996.
(File No. 1-11327) *
(a)(3) Distribution Agreement dated January 16, 1998, and
Officers' Certificate and Issuer Order of Illinova
Corporation, dated January 16, 1998 (with forms of
Fixed Rate Note and Floating Rate Note attached),
delivered pursuant to the terms of the Indenture
dated as of February 1, 1997, between Illinova
Corporation and The First National Bank of Chicago.
Filed as Exhibit (1) and (4) of Form 8-K under the
Securities Exchange Act of 1934 dated January 21,
1998. (File No. 1-11327) *
Illinois Power Company
(b)(1) Mortgage and Deed of Trust dated November 1, 1943.
Filed as Exhibit 2(b) Registration No. 2-14066. *
(b)(2) Supplemental Indenture dated July 1, 1991, providing
for $84,710,000 principal amount of 7 3/8% First
Mortgage Bonds due July 1, 2021. Filed as Exhibit
4(mm) to the Annual Report on Form 10-K under the
Securities Exchange Act of 1934 for the year ended
December 31, 1991 (File No. 1-3004). *
(b)(3) Supplemental Indenture No. 1 dated June 1, 1992.
Filed as Exhibit 4(nn) to the Quarterly Report
on Form 10-Q for the quarter ended June 30, 1992
(File No. 1-3004). *
(b)(4) Supplemental Indenture No. 2 dated June 1, 1992.
Filed as Exhibit 4(oo) to the Quarterly Report
on Form 10-Q for the quarter ended June 30, 1992
(File No. 1-3004). *
(b)(5) Supplemental Indenture No. 1 dated July 1, 1992.
Filed as Exhibit 4(pp) to the Quarterly Report
on Form 10-Q for the quarter ended June 30, 1992
(File No. 1-3004). *
(b)(6) Supplemental Indenture No. 2 dated July 1, 1992.
Filed as Exhibit 4(qq) to the Quarterly Report
on Form 10-Q for the quarter ended June 30, 1992
(File No. 1-3004). *
38
Exhibit Index (Continued)
Exhibit Description
- ------- -----------
(b)(7) Supplemental Indenture dated September 1, 1992,
providing for $72,000,000 principal amount of 6 1/2%
First Mortgage Bonds due September 1, 1999. Filed
as Exhibit 4(rr) to the Quarterly Report on Form
10-Q for the quarter ended September 30, 1992
(File No. 1-3004). *
(b)(8) General Mortgage Indenture and Deed of Trust dated
as of November 1, 1992. Filed as Exhibit 4(cc) to
the Annual Report on Form 10-K under the Securities
Exchange Act of 1934 for the year ended December
31, 1992 (File No. 1-3004). *
(b)(9) Supplemental Indenture dated February 15, 1993, to
Mortgage and Deed of Trust dated November 1, 1943.
Filed as Exhibit 4(dd) to the Annual Report on Form
10-K under the Securities Exchange Act of 1934 for
the year ended December 31, 1992 (File No. 1-3004). *
(b)(10) Supplemental Indenture dated February 15, 1993, to
General Mortgage Indenture and Deed of Trust dated as
of November 1, 1992. Filed as Exhibit 4(ee) to the
Annual Report on Form 10-K under the Securities
Exchange Act of 1934 for the year ended December 31,
1992 (File No. 1-3004). *
(b)(11) Supplemental Indenture No. 1 dated March 15, 1993,
to Mortgage and Deed of Trust dated November 1, 1943.
Filed as Exhibit 4(ff) to the Annual Report on Form
10-K under the Securities Exchange Act of 1934 for
the year ended December 31, 1992 (File No. 1-3004). *
(b)(12) Supplemental Indenture No. 1 dated March 15, 1993,
to General Mortgage Indenture and Deed of Trust
dated as of November 1, 1992. Filed as Exhibit
4(gg) to the Annual Report on Form 10-K under the
Securities Exchange Act of 1934 for the year ended
December 31, 1992 (File No. 1-3004). *
(b)(13) Supplemental Indenture No. 2 dated March 15, 1993,
to Mortgage and Deed of Trust dated November 1, 1943.
Filed as Exhibit 4(hh) to the Annual Report on Form
10-K under the Securities Exchange Act of 1934 for
the year ended December 31, 1992 (File No. 1-3004). *
(b)(14) Supplemental Indenture No. 2 dated March 15, 1993,
to General Mortgage Indenture and Deed of Trust
dated as of November 1, 1992. Filed as Exhibit
4(ii) to the Annual Report on Form 10-K under the
Securities Exchange Act of 1934 for the year ended
December 31, 1992 (File No. 1-3004). *
39
Exhibit Index (Continued)
Exhibit Description
- ------- -----------
(b)(15) Supplemental Indenture dated July 15, 1993, to
Mortgage and Deed of Trust dated November 1, 1943.
Filed as Exhibit 4(jj) to the Quarterly Report on
Form 10-Q for the quarter ended June 30, 1993
(File No. 1-3004). *
(b)(16) Supplemental Indenture dated July 15, 1993, to
General Mortgage Indenture and Deed of Trust
dated as of November 1, 1992. Filed as Exhibit
4(kk)to the Quarterly Report on Form 10-Q for
the quarter ended June 30, 1993 (File No. 1-3004). *
(b)(17) Supplemental Indenture dated August 1, 1993, to
Mortgage and Deed of Trust dated November 1, 1943.
Filed as Exhibit 4(ll) to the Quarterly Report on
Form 10-Q for the quarter ended June 30, 1993
(File No. 1-3004). *
(b)(18) Supplemental Indenture dated August 1, 1993, to
General Mortgage Indenture and Deed of Trust
dated as of November 1, 1992. Filed as Exhibit
4(mm) to the Quarterly Report on Form 10-Q for
the quarter ended June 30, 1993 (File No. 1-3004). *
(b)(19) Supplemental Indenture dated October 15, 1993, to
Mortgage and Deed of Trust dated November 1, 1943.
Filed as Exhibit 4(nn) to the Quarterly Report on
Form 10-Q for the quarter ended September 30, 1993
(File No. 1-3004). *
(b)(20) Supplemental Indenture dated October 15, 1993, to
General Mortgage Indenture and Deed of Trust dated
as of November 1, 1992. Filed as Exhibit 4(oo) to
the Quarterly Report on Form 10-Q for the quarter
ended September 30, 1993 (File No. 1-3004). *
(b)(21) Supplemental Indenture dated November 1, 1993, to
Mortgage and Deed of Trust dated November 1, 1943.
Filed as Exhibit 4(pp) to the Quarterly Report on
Form 10-Q for the quarter ended September 30, 1993
(File No. 1-3004). *
(b)(22) Supplemental Indenture dated November 1, 1993, to
General Mortgage Indenture and Deed of Trust dated
as of November 1, 1992. Filed as Exhibit 4(qq) to
the Quarterly Report on Form 10-Q for the quarter
ended September 30, 1993 (File No. 1-3004). *
(b)(23) Supplemental Indenture dated February 1, 1994, to
Mortgage and Deed of Trust dated November 1, 1943.
Filed as Exhibit 4(hh) to the Annual Report on
Form 10-K under the Securities Exchange Act of 1934
for the year ended December 31, 1993
(File No. 1-3004). *
40
Exhibit Index (Continued)
Exhibit Description
- ------- -----------
(b)(24) Indenture dated October 1, 1994 between Illinois
Power Company and the First National Bank of
Chicago. Filed as Exhibit 4(a) to the Quarterly
Report on Form 10-Q for the quarter ended
September 30, 1994 (File No. 1-3004). *
(b)(25) Supplemental Indenture dated October 1, 1994, to
Indenture dated as of October 1, 1994. Filed as
Exhibit 4(b) to the Quarterly Report on Form
10-Q for the quarter ended September 30, 1994
(File No. 1-3004). *
(b)(26) Indenture dated January 1, 1996 between Illinois
Power Company and Wilmington Trust Company. Filed
as Exhibit 4(b)(36) to the Annual Report on Form
10-K under the Securities Exchange Act of 1934 for
the year ended December 31, 1995 (File No. 1-3004). *
(b)(27) First Supplemental Indenture dated January 1, 1996,
between Illinois Power Company and Wilmington Trust
Company. Filed as Exhibit 4(b)(37) to the Annual
Report on Form 10-K under the Securities Exchange
Act of 1934 for the year ended December 31, 1995
(File No. 1-3004). *
(b)(28) Supplemental Indenture dated April 1, 1997, to
Mortgage and Deed of Trust dated November 1, 1943
Filed as Exhibit 4(a) to the Quarterly Report on
Form 10-Q for the quarter ended March 31, 1997.
(File No. 1-3004) *
(b)(29) Supplemental Indenture dated April 1, 1997 to General
Mortgage Indenture and Deed of Trust dated November 1,
1992. Filed as Exhibit 4(b) to the Quarterly Report
on Form 10-Q for the quarter ended March 31, 1997.
(File No. 1-3004) *
(b)(30) Supplemental Indenture dated December 1, 1997 to
Mortgage and Deed of Trust dated November 1, 1943. *
(b)(31) Supplemental Indenture dated as of March 1, 1998 to
General Mortgage Indenture and Deed of Trust dated
as of November 1, 1992 providing for the issuance of
$18,700,000 principal amount of 5.40% pollution
control bonds. Filed as Exhibit 4.41 to the
Registration Statement on Form S-3, filed January
22, 1999. (File No. 333-71061)
(b)(32) Supplemental Indenture dated as of March 1, 1998
to Mortgage and Deed of Trust dated November 1, 1943
providing for the issuance of $18,700,000 principal
amount of pollution control bonds. Filed as Exhibit
4.39 to the Registration Statement on Form S-3, filed
January 22, 1999. (File No. 333-71061)
41
Exhibit Index (Continued)
Exhibit Description
- ------- -----------
(b)(33) Supplemental Indenture dated as of March 1, 1998 to
General Mortgage Indenture and Deed of Trust dated
as of November 1, 1992 providing for the issuance
of $33,755,000 principal amount of pollution control
bonds. Filed as Exhibit 4.42 to the Registration
Statement on Form S-3, filed January 22, 1999.
(File No. 333-71061)
(b)(34) Supplemental Indenture dated as of March 1, 1998 to
Mortgage and Deed of Trust dated November 1, 1943
providing for the issuance of $33,755,000 principal
amount of pollution control bonds. Filed as Exhibit
4.40 to the Registration Statement on Form S-3,
filed January 22, 1999. (File No. 333-71061)
(b)(35) Supplemental Indenture dated as of July 15, 1998
to General Mortgage Indenture and Deed of Trust
dated as of November 1, 1992 providing for the
issuance of $100,000,000 principal amount of 6.25%
New Mortgage Bonds. Filed as Exhibit 4.44 to the
Registration Statement on Form S-3, filed January
22, 1999. (File No. 333-71061)
(b)(36) Supplemental Indenture dated as of July 15, 1998 to
Mortgage and Deed of Trust dated November 1, 1943
providing for the issuance of $100,000,000 principal
amount of 6.25% First Mortgage Bonds. Filed as Exhibit
4.43 to the Registration Statement on Form S-3, filed
January 22, 1999. (File No. 333-71061)
(b)(37) Supplemental Indenture dated as of September 15, 1998
to General Mortgage Indenture and Deed of Trust dated
as of November 1, 1992 providing for the issuance of
$100,000,000 principal amount of 6.00% New Mortgage
Bonds. Filed as Exhibit 4.46 to the Registration
Statement on Form S-3, filed January 22, 1999.
(File No. 333-71061)
(b)(38) Supplemental Indenture dated as of September 15,
1998 to Mortgage and Deed of Trust dated November 1,
1943 providing for the issuance of $100,000,000
principal amount of 6.00% First Mortgage Bonds.
Filed as Exhibit 4.45 to the Registration Statement
on Form S-3, filed January 22, 1999.
(File No. 333-71061)
(b)(39) Supplemental Indenture dated as of October 1, 1998
to General Mortgage Indenture and Deed of Trust dated
as of November 1, 1992 providing for the transfer of
Letter of Credit providers on three series of pollution
control bonds totaling $111,770,000. Filed as Exhibit
4.47 to the Registration Statement on Form S-3, filed
January 22, 1999. (File No. 333-71061).
42
Exhibit Index (Continued)
Exhibit Description
- ------- -----------
(10) Material Contracts
Illinova Corporation
(a)(1) Illinova Corporation Deferred Compensation Plan
for Certain Directors, as amended April 10, 1991.
Filed as Exhibit 10(b) to the Annual Report on
Form 10-K under the Securities Exchange Act of
1934 for the year ended December 31, 1991
(File No. 1-3004). ~ *
(a)(2) Illinova Corporation Director Emeritus Plan for
Outside Directors. Filed as Exhibit 10(e) to
the Annual Report on Form 10-K under the
Securities Exchange Act of 1934 for the year
ended December 31, 1989 (File No. 1-3004). ~ *
(a)(3) Illinova Corporation Stock Plan for Outside
Directors as amended and restated by the Board of
Directors on April 9, 1992 and as further amended
April 14, 1993. Filed as Exhibit 10(h) to the
Annual Report on Form 10-K under the Securities
Exchange Act of 1934 for the year ended December
31, 1993 (File No. 1-3004).~ *
(a)(4) Illinova Corporation Retirement Plan for Outside
Directors, as amended through December 11, 1991.
Filed as Exhibit 10(j) to the Annual Report on Form
10-K under the Securities Exchange Act of 1934 for
the year ended December 31, 1991 (File No. 1-3004).~ *
(a)(5) Illinova Corporation 1992 Long-Term Incentive
Compensation Plan. Filed as Exhibit 10(k) to the
Quarterly Report on Form 10-Q for the quarter ended
March 31, 1992 (File No. 1-3004).~ *
(a)(6) Illinova Corporation Comprehensive Deferred Stock
Plan for Outside Directors, as approved by the Board
of Directors on February 7, 1996. Filed as Exhibit 10
(a)(6) to the Annual Report on Form 10-K under the
Securities Exchange Act of 1934 for the year ended
December 31, 1995 (File No. 1-11327).~ *
(a)(7) Form of Employee Retention Agreement in place between
Illinova Corporation and its elected officers,
Illinois Power Company's elected officers, and the
Presidents of Illinova Corporation's subsidiaries.
Filed as Exhibit 10(g) to the Annual Report on Form
10-K under the Securities Exchange Act of 1934 for
the year ended December 31, 1989 (File no. 1-3004).~ *
(a)(8) Illinova Corporation Leadership Incentive Program,
effective January 1, 1996.~ *
43
Exhibit Index (Continued)
Exhibit Description
- ------- -----------
(a)(9) Illinova Corporation Retirement Plan for Outside
Directors, as amended by resolutions adopted by the
Board of Directors on February 7, 1996.~ *
(a)(10) Illinova Corporation Employee Retention Agreement,
as amended by resolutions adopted by the Board of
Directors on February 7, 1996.~ *
(a)(11) Illinova Corporation Deferred Compensation Plan for
Certain Directors as amended October 9, 1996, effective
January 1, 1997.~ *
(a)(12) Illinova Corporation Employee Retention Agreement,
as amended by resolutions adopted by the Board of
Directors on June 10-11, 1997.~ *
(a)(13) Illinova Corporation Deferred Compensation Plan for
Certain Directors, as amended by resolutions adopted
by the Board of Directors on June 10-11, 1997.~ *
(a)(14) Employment Agreement entered into as of August 13,
1998 between Illinova Corporation and Charles E.
Bayless. ~ *
(a)(15) Employment Agreement entered into as of January 18,
1999 between Illinova Corporation and George W.
Miraben. ~
Illinois Power Company
(b)(1) Group Insurance Benefits for Managerial Employees
of Illinois Power Company as amended January 1, 1983.
Filed as Exhibit 10(a) to the Annual Report on Form
10-K under the Securities Exchange Act of 1934 for
the year ended December 31, 1983 (File No. 1-3004).~ *
(b)(2) Illinois Power Company Incentive Savings Trust and
Illinois Power Company Incentive Savings Plan and
Amendment I thereto. Filed as Exhibit 10(d) to the
Annual Report on Form 10-K under the Securities
Exchange Act of 1934 for the year ended December 31,
1984 (File No. 1-3004).~ *
(b)(3) Illinois Power Company's Executive Incentive
Compensation Plan. Filed as Exhibit 10(f) to the
Annual Report on Form 10-K under the Securities
Exchange Act of 1934 for the year ended December 31,
1989 (File No. 1-3004).~ *
44
Exhibit Index (Continued)
Exhibit Description
- ------- -----------
(b)(4) Illinois Power Company Incentive Savings Plan, as
amended and restated effective January 1, 1991.
Filed as Exhibit 10(h) to the Annual Report on
Form 10-K under the Securities Exchange Act of
1934 for the year ended December 31, 1990
(File No. 1-3004).~ *
(b)(5) Illinois Power Company Executive Deferred
Compensation Plan. Filed as Exhibit 10(l) to
the Annual Report on Form 10-K under the
Securities Exchange Act of 1934 for the year
ended December 31, 1993. (File No. 1-3004)~ *
(b)(6) Illinois Power Company Retirement Income Plan for
salaried employees as amended and restated effective
January 1, 1989, as further amended through January
1, 1994. Filed as Exhibit 10(m) to the Annual Report
on Form 10-K under the Securities Exchange Act of
1934 for the year ended December 31, 1994
(File No. 1-3004).~ *
(b)(7) Illinois Power Company Retirement Income Plan for
employees covered under a collective bargaining
agreement as amended and restated effective as of
January 1, 1994. Filed as Exhibit 10(n) to the Annual
Report on Form 10-K under the Securities Exchange Act
of 1934 for the year ended December 31, 1994
(File No. 1-3004).~ *
(b)(8) Illinois Power Company Incentive Savings Plan as
amended and restated effective January 1, 1991 and
as further amended through amendments adopted
December 28, 1994. Filed as Exhibit 10(o)to the
Annual Report on Form 10-K under the Securities
Exchange Act of 1934 for the year ended December
31, 1994 (File No. 1-3004).~ *
(b)(9) Illinois Power Company Incentive Savings Plan for
employees covered under a collective bargaining
agreement as amended and restated effective January
1, 1991 and as further amended through amendments
adopted December 28, 1994. Filed as Exhibit 10(p)
to the Annual Report on Form 10-K under the
Securities Exchange Act of 1934 for the year ended
December 31, 1994 (File No. 1-3004).~ *
(b)(10) Illinois Power Company Executive Incentive Compensation
Plan, as amended, effective January 1, 1997. ~ *
(b)(11) Illinois Power Company Executive Deferred
Compensation Plan as amended by resolutions adopted
by the Board of Directors on June 10-11, 1997.~ *
45
Exhibit Index (Continued)
Exhibit Description
- ------- -----------
(b)(12) Illinois Power Company Supplemental Retirement
Income Plan for Salaried Employees of Illinois
Power Company as amended by resolutions adopted
by the Board of Directors on June 10-11, 1997.~ *
(b)(13) Retirement and Consulting Agreement entered into
as of June 30, 1997 between Illinois Power Company
and Wilfred Connell.~ *
(12) Statement Re Computation of Ratios
(a) Computation of ratio of earnings to fixed
charges for Illinova Corporation.
(b) Computation of ratio of earnings to fixed
charges for Illinois Power Company.
(13) Annual Reports to Shareholders
(a) Illinova Corporation Proxy Statement and 1998
Annual Report to Shareholders.
(b) Illinois Power Company Information Statement
and 1998 Annual Report to Shareholders.
(21) Subsidiaries of Registrants
(a) Subsidiaries of Illinova Corporation and Illinois
Power Company.
(23) Consents of Experts
Consent of Independent Accountants for Illinova
Corporation.
(27) Financial Data Schedules
(a) Illinova Corporation
(b) Illinois Power Company
- --------------------------------------
* Incorporated herein by reference.
~ Management contract and compensatory plans or arrangements.
46