Decision

Illinois Power Co. received unanimous approval last week fromthe Illinois Commerce Commission to transfer all its fossil-fueledgenerating stations and associated support staff to 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 fleetto 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.

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.

A Mexican government decision to eliminate a tariff on naturalgas imports July 1 was heralded as good news for U.S. pipelines andMexican consumers. Currently 4%, the tariff on U.S. gas imports,was to be eliminated in 2003 following annual reductions of 1%. Thetariff went into effect at 10% with the signing of the NorthAmerican Free Trade Agreement (NAFTA). The tariff’s elimination isintended to boost gas availability to Mexico’s northern region asthe country turns more and more to gas-fired power generation.

As a precursor to an expected mid-April Supreme Court decisionon the Southern Ute Indian Tribe vs. BP Amoco rights and royaltycase, the Williams Cos., one of the defendants represented by BPAmoco, announced a partial settlement with the Southern Ute tribeThursday. The settlement released the Williams subsidiary involvedin the trial, Williams Production Co., from all claims included inthe lawsuit, but did not address key ownership issues.

FERC yesterday upheld an administrative law judge’s partialinitial decision denying KN Interstate Gas’ (KNI) request to rollin the costs associated with the construction of its Pony ExpressLine and Kansas City Line.

On the heels of a decision showing that Canadian landowners canforce changes, the National Energy Board has called hearings on 38objections to the route of Alliance Pipeline Project.

In an interim decision on retail gas competition last week,Connecticut regulators bowed to pressure from marketers by loweringbalancing penalties, allowing imbalance trading and ordering thestate’s three LDCs to provide a monthly economic comparison ofvarious cash-out methodologies.

The California Public Utilities Commission has set a newschedule for hearings on gas industry restructuring, leading to aproposed policy decision in early 1999 and public hearings aroundthe state. The CPUC expects to adopt a final market structurepolicy no earlier than January 1, 2000 in keeping with alegislative mandate which prohibits the Commission making anychanges until the year 2000.

Marketers participating in the soon-to-be-unbundled Georgiamarket scored some key victories in a decision last week by theGeorgia Public Service Commission which will provide them withcomplete customer information from Atlanta Gas Light in electronicformat, allow them a chance to prove they can do their own meteringand allow free trading of daily imbalances.