Illinois Power Co. received unanimous approval yesterday fromthe Illinois Commerce Commission to transfer all its fossil-fueledgenerating stations and associated support staff into a newsubsidiary of parent company Illinova Corp. The move still requiresFERC approval. If completed it would be the first time an electricutility was allowed to transfer its entire fossil generating fleetinto a separate unregulated affiliated company, Illinova said. Thespin-down was one of the requirements set out in a merger agreementsigned last month by Illinova and Dynegy. That merger is expectedto be completed early next year.

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

Illinois Power will continue to serve its customers withelectricity from the power plants under a power purchase agreementwith the new subsidiary that extends through 2004, with options forannual renewal. Rate reductions, choice options and other customerbenefits provided by Illinois’ 1997 utility deregulation law areunaffected. The power purchase agreement between Illinois Power andthe new subsidiary is also being reviewed by FERC, which could acton the company’s request this fall.

Upon approval, Illinois Power will transfer assets associatedwith five fossil-fueled power stations (Baldwin, Hennepin, WoodRiver, Havana and Vermilion) and natural gas-fired turbines atthree sites (Tilton, Oglesby and Stallings). Power plant supportstaff in Swansea, Decatur and Bloomington plus Illinois Power’swholesale power marketing and trading operations will be part ofthe new subsidiary as well. In total, 500 Illinois Power employeeswill move to the new subsidiary.

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