SECURITIES AND EXCHANGE COMMISSION
                     Washington, D.C.  20549
                                
                                
                                
                               8-K
                                
                                
                                
                         CURRENT REPORT
                                
                                
                                
                                
             Pursuant to Section 13 or 15(d) of the
                                
                                
                 Securities Exchange Act of 1934
                                
                                
                                
        Date of Report (Date of earliest event reported)
                         September 13, 1996



Commission   Registrants; State of Incorporation;    IRS Employer
File Number    Address; and Telephone Company      Identification
No.

  1-11327           Illinova Corporation               37-1319890
                    (an Illinois Corporation)
                    500 S. 27th Street
                    Decatur, IL  62525
                    (217) 424-6600

   1-3004           Illinois Power Company             37-0344645
                    (an Illinois Corporation)
                    500 S. 27th Street
                    Decatur, IL  62525
                    (217) 424-6600



        Total number of sequentially numbered pages is 3.









Item 5.   Other Events
- --------------------------

Illinova Corporation (Illinova), parent of Illinois Power Company
(IP) and Illinova Power Marketing, Inc. (IPMI), announced an
agreement in principle with Soyland Power Cooperative (Soyland)
to replace the existing (Clinton) Ownership Participation
Agreement (OPA) and the Power Coordination Agreement (PCA)
between IP and Soyland, with a new agreement.  Under terms of the
yet to be finalized agreement, a subsidiary of Illinova
would acquire Soyland's 13% ownership share of IP's
Clinton Power Station (Clinton), a nuclear generation facility,
with no capital outlay.  Soyland's nuclear decommissioining 
trust also will be transferred to the Illinova subsidiary
acquiring Soyland's share of Clinton.  The acquiring subsidiary
would assume certain obligations related to Soyland's ownership
share of Clinton, including those related to decommissioning.

Under the agreement in principle, IPMI would become the exclusive
agent for all of Soyland's capacity and energy needs for a period
of ten to twenty years. Soyland's energy needs would be met under 
the terms of a full requirements power purchase agreement which 
would replace the energy currently acquired by Soyland from its 
share of Clinton's generation under the OPA and from IP's fossil fuel-based
generating capacity under the PCA.  Under the new agreement,
Soyland would be charged fixed fees designed to compensate
Illinova for Clinton costs currently recovered from Soyland
pursuant to the OPA.  Furthermore, the new agreement would replace
energy currently provided to Soyland by Central Illinois Public Service
Company under its Power Supply Agreement (PSA) when the PSA expires at
the end of 1999. 

During 1996, Soyland has developed and evaluated proposals to
reduce its debt to the Rural Utilities
Service (RUS).  Soyland's board of directors has approved a
bankruptcy filing if the situation cannot be resolved.  The RUS
has agreed to a debt reduction if Soyland obtains
financing for the stipulated debt restructuring and discontinues 
its nuclear ownership.

The new agreement is expected to avoid a Soyland bankruptcy
while providing incremental value to Illinova over a ten-year
time period.  Additionally, the agreement will establish IPMI as
a major power marketing presence in the Midwest.  


                           SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned thereunto duly authorized.

                              ILLINOVA CORPORATION
                              (Registrant)
                              
                              By/s/Larry F. Altenbaumer
                              ---------------------------
                              Larry F. Altenbaumer
                              Chief Financial Officer
                              Treasurer and Controller
                              on behalf of
                              Illinova Corporation


Date:     September 13, 1996




                           SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned thereunto duly authorized.

                              ILLINOIS POWER COMPANY
                              (Registrant)
                              
                              By/s/Larry F. Altenbaumer
                              -----------------------------
                              Larry F. Altenbaumer
                              Senior Vice President,
                              Chief Financial Officer and
                              Treasurer on behalf of
                              Illinois Power Company


Date:     September 13, 1996