Illinois Power (IP) on Wednesday agreed to sell its high-voltage electric transmission system for $239 million to Trans-Elect Inc., an independent transmission company. Facilities to be sold include approximately 1,700 miles of 345,000-volt and 138,000-volt transmission lines, 20 transmission substations and the transmission assets within an additional 40 substations.

IP said the sale would “promote independence in the electric industry’s transmission sector, consistent with regulatory policy at both the state and federal level.” The Dynegy Inc. subsidiary will retain its ownership of 38,000 miles of overhead and underground lines and associated substations that comprise its distribution system throughout Central and Southern Illinois. The sale is expected to close in the first half of 2003.

Once the ownership transfer is completed, IP will contract for use of the transmission facilities on the same basis as other transmission customers. Trans-Elect also will participate in a FERC-approved regional transmission organization under the same conditions that would have applied to IP. Agreements between IP and Trans-Elect will provide for continued interconnection of the existing distribution and transmission systems, and for joint use of shared facilities, such as existing substations and poles that support both transmission and distribution equipment. IP also will provide services to operate and maintain the transmission system under contract to Trans-Elect for an initial period of five years.

Bundled-service customers now served by IP are expected to have no changes in their electric bills or the reliability of their electric service. Rates for the utility’s bundled-service residential customers have decreased by 20% under Illinois’ 1997 Customer Choice Law, and will remain frozen at their current levels for another four years, through the end of 2006, said the company.

Larry F. Altenbaumer, IP’s president, said the sale “demonstrates the company’s commitment to advancing competition in the electric industry and is in concert with Federal Energy Regulatory Commission policies,” which encourage the sale of transmission businesses to independents. IP, which is based in Decatur, now serves electricity and natural gas to more than 650,000 customers in a 15,000 square-mile territory across Illinois.

“This transaction affirms the strategic direction established by our company well over two years ago,” said Altenbaumer. “It represents an important milestone in the electric restructuring process in Illinois and nationwide, and strengthens Illinois Power’s focus as a model energy delivery company, committed to serving our customers with safe, reliable energy.”

Altenbaumer also said the sale is consistent with industry-leading steps IP has already taken to advance deregulation. In 1997, IP led the development of comprehensive legislation that restructured utility regulation in Illinois and assured benefits for the state’s consumers. Since early 2000, he said IP had “actively pursued strategies for developing a reliable and competitive transmission marketplace.”

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