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Illinova Wins Key Decision on Plant Spin Down

Illinova Wins Key Decision on Plant Spin Down

Illinois Power Co. received unanimous approval yesterday from the Illinois Commerce Commission to transfer all its fossil-fueled generating stations and associated support staff into a new subsidiary of parent company Illinova Corp. The move still requires FERC approval. If completed it would be the first time an electric utility was allowed to transfer its entire fossil generating fleet into a separate unregulated affiliated company, Illinova said. The spin-down was one of the requirements set out in a merger agreement signed last month by Illinova and Dynegy. That merger is expected to be completed early next year.

"This new subsidiary will provide the flexibility we need to be competitive in the rapidly changing energy industry," said Alec G. Dreyer, president of Illinova Generating.

Illinois Power will continue to serve its customers with electricity from the power plants under a power purchase agreement with the new subsidiary that extends through 2004, with options for annual renewal. Rate reductions, choice options and other customer benefits provided by Illinois' 1997 utility deregulation law are unaffected. The power purchase agreement between Illinois Power and the new subsidiary is also being reviewed by FERC, which could act on the company's request this fall.

Upon approval, Illinois Power will transfer assets associated with five fossil-fueled power stations (Baldwin, Hennepin, Wood River, Havana and Vermilion) and natural gas-fired turbines at three sites (Tilton, Oglesby and Stallings). Power plant support staff in Swansea, Decatur and Bloomington plus Illinois Power's wholesale power marketing and trading operations will be part of the new subsidiary as well. In total, 500 Illinois Power employees will move to the new subsidiary.

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