UNITED STATES
                       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)
                                  July 6, 1998



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 5.











Item 5.  Other Materially Important Events
- --------------------------------------------------------------------------------

Attached is a summary of a communication provided to the media on July 6, 1998.




Note:  Illinova's  management  is taking  advantage  of safe  harbor  disclosure
provisions  by issuing this report which  contains  estimates,  projections  and
other  forward-looking  statements that involve risks and uncertainties.  Actual
results  or  outcomes  could  differ  materially  from  those  provided  in  the
forward-looking statements as a result of such important factors as: the outcome
of state and federal regulatory  proceedings  affecting the restructuring of the
electric  and gas utility  industries;  the impacts of new laws and  regulations
relating to restructuring, environmental, and other matters have on Illinova and
its  subsidiaries;   the  effects  of  increased   competition  on  the  utility
businesses;  risks of owning and operating a nuclear facility; changes in prices
and cost of fuel; factors affecting non-utility investments, such as the risk of
doing  business in foreign  countries;  construction  and operation  risks;  and
increases in financing  costs.  All  forward-looking  statements  are based upon
information  presently  available,  and Illinova assumes no obligation to update
any forward-looking statements.


      REPLACEMENT POWER, CLINTON RESTART COSTS NEGATE EARNINGS EXPECTATIONS

         After  experiencing  unprecedented  and  unexpected  prices  for  power
purchases  during  the last week of June,  Illinova  Corp.  said today that 1998
projected  replacement power costs for Illinois Power will significantly  exceed
previous projections. Illinova now expects modest, if any, earnings for the year
due to higher purchase prices for replacement  power and greater than previously
projected expenditures for recovery efforts at Clinton Power Station.

         The company also bases these  projections  on an  uncertain  and highly
volatile  electric  power  market,  which  could cause  material  changes to its
outlook as the year progresses. Illinova will see a significant loss for the six
months ended June 30, 1998.

         Due to hot weather during late June,  demand for  electricity  exceeded
forecasts.  With electric  supplies tight throughout the entire Midwest,  market
prices for  replacement  power climbed to  unprecedented  levels during the late
June heat wave.  Illinois  Power saw  purchase  prices soar to $4 and higher per
kilowatt-hour,  a unit of energy the company  sells to retail  customers  for no
more than 10 cents.

         On June 30,  Illinois Power  petitioned  the Federal Energy  Regulatory
Commission  for an emergency  rule  limiting the cost of  emergency  power.  The
company also will consider  other actions to reverse the costs  incurred to date
and to establish a more  reasonable  and certain cost basis for the remainder of
the summer.

         The  company  will  carefully  review its uses of cash,  including  the
future  declaration  of common  dividends  during the remainder of the year. The
common  dividend  payable in August was  declared in June and will be paid.  The
next  dividend  declaration  is scheduled for August,  for dividends  payable in
November.

         Good progress is being made toward restarting the Clinton Power Station
prior to year end 1998, but increased expenses are needed to support the overall
recovery  process.  The company now projects that Clinton  expenditures for 1998
will be approximately $45 million higher than previously expected.

         The issues impacting  1998's financial  results should not be a problem
when Clinton is returned to service.  The company  will  continue its efforts to
achieve the prospect of significantly  enhanced  shareholder  value and customer
service.














                                   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/Leah Manning Stetzner
                                                     ---------------------------
                                                     Leah Manning Stetzner
                                                     General Counsel and
                                                     Corporate Secretary
                                                     on behalf of
                                                     Illinova Corporation



Date:    July 6, 1998



                                   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/Leah Manning Stetzner
                                                     ---------------------------
                                                     Leah Manning Stetzner
                                                     Vice President, General
                                                     Counsel, and Corporate
                                                     Secretary on behalf of
                                                     Illinois Power Company



Date:    July 6, 1998