Illinois Power Switches to Alliance RTO

Illinois Power, now a subsidiary of leading marketer Dynegy Corp., is changing its game plan, telling regulators it wants to drop out of the more conservative Midwest Independent System Operator (MISO) to join the Alliance Regional Transmission Operator (Alliance RTO).

An important consideration in the company's decision is the fact that many members of the Alliance RTO operate in states that have electric choice, unlike most MISO members.

"This fact alone makes the Alliance RTO a better tool to help promote competition in Illinois," said Kathy L. Patton, Illinois Power vice president and general counsel. "Our decision was also influenced by other benefits provided by the Alliance RTO, including price certainty and the elimination of stacked or 'pancaked' rates. Furthermore, as a for-profit entity, the Alliance RTO has the incentive to move power economically, efficiently and effectively."

Members of the Alliance RTO include FirstEnergy Corp., American Electric Power, Consumers Energy, Detroit Edison, and Dominion Virginia Power. Alliance RTO members now will serve customers within 139,000 square miles in 10 contiguous states.

Illinois Power, which was one of the original members of MISO, must get approval for the switch from the necessary regulatory bodies, including the Federal Energy Regulatory Commission.

The MISO charter provides for withdrawal by members if ownership of the transmission assets changes. The February 2000 merger between Illinois Power's former parent company Illinova Corp. and Dynegy Inc. constituted such a change in asset ownership. If approved, Illinois Power's withdrawal from MISO would be effective no later than December 2001.

Patton said the move to join the Alliance RTO provides a better transmission operation platform for IP and its customers, and is "consistent with the movement of the marketplace toward real competition."

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