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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