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Illinova Continues Building Retail Operation

Illinova Continues Building Retail Operation

Illinova Energy Partners (IEP) purchased another niche retail marketing operation last week to bolster its presence in key deregulating markets. The company, which has added EMC Gas Transmission in Michigan and Equitable Resource Marketing in Indiana during the last six months, purchased Tempe, AZ-based Quality Energy Services (QES) to gain a foothold in the soon-to-be-deregulated Arizona energy market.

QES is a retail gas marketing company with about 30 large commercial and industrial gas customers primarily in Phoenix and Tuscon. The company handles about 20% of the gas transportation market on Southwest Gas' system, said QES President Wendell Johnson. He said IES brings solid financial support to an energy retail marketing operation that is likely to experience significant growth over the next few years with the potential opening of the electric market. The restructuring of Arizona's electric industry was delayed in January but is expected to gain momentum later this year.

"With Quality Energy Services as part of our family, we can immediately provide businesses in Arizona with a natural gas supply," said Laurie Q. McTavish, vice president of IEP. "We can also provide energy information management products and energy efficiency services-services that magnify the savings realized from gas transportation. And finally, when deregulation hits Arizona, we'll be able to provide electricity as well."

Through acquisitions such as QES, IEP has increased natural gas revenues more than three-fold since mid-1998, the company said. IEP is now serving eight times more customers than at the beginning of 1998. In conjunction with other planned acquisitions throughout the U.S. in 1999, IEP could see natural gas revenues grow to $90 million, an increase of $11 million from 1998. By the end of 1999, IEP said it should be serving about 5,000 industrial and large commercial facilities.

Illinova Energy Partners is a subsidiary of Illinova Corp., and an affiliate of Illinois Power. Illinova also splits ownership with Montana Power in Tenaska Marketing, a wholesale energy marketing company.

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