0000049816-95-000015.txt : 19950809
0000049816-95-000015.hdr.sgml : 19950809
ACCESSION NUMBER: 0000049816-95-000015
CONFORMED SUBMISSION TYPE: 10-Q
PUBLIC DOCUMENT COUNT: 2
CONFORMED PERIOD OF REPORT: 19950630
FILED AS OF DATE: 19950808
SROS: CSE
SROS: NYSE
FILER:
COMPANY DATA:
COMPANY CONFORMED NAME: ILLINOIS POWER CO
CENTRAL INDEX KEY: 0000049816
STANDARD INDUSTRIAL CLASSIFICATION: ELECTRIC & OTHER SERVICES COMBINED [4931]
IRS NUMBER: 370344645
STATE OF INCORPORATION: IL
FISCAL YEAR END: 1231
FILING VALUES:
FORM TYPE: 10-Q
SEC ACT: 1934 Act
SEC FILE NUMBER: 001-03004
FILM NUMBER: 95559592
BUSINESS ADDRESS:
STREET 1: 500 S 27TH ST
STREET 2: C/O HARRIS TRUST & SAVINGS BANK
CITY: DECATUR
STATE: IL
ZIP: 62525-1805
BUSINESS PHONE: 2174246600
FORMER COMPANY:
FORMER CONFORMED NAME: ILLINOIS IOWA POWER CO
DATE OF NAME CHANGE: 19660822
10-Q
1
10-Q BASE DOCUMENT
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
Form 10-Q
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended JUNE 30, 1995
OR
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from __________to __________
Commission Registrants; State of Incorporation; IRS Employer
File Number Address; and Telephone Number 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
Indicate by check mark whether the registrants (1) have
filed all reports required to be filed by Section 13 or
15(d) of the Securities Exchange Act of 1934 during the
preceding 12 months (or for such shorter period that the
registrant was required to file such report), and (2) have
been subject to such filing requirements for the past 90
days.
Illinova Yes X No
Corporation ---- ----
Illinois Power Yes X No
Company ---- ----
Indicate the number of shares outstanding of each of
the issuers' classes of common stock, as of the latest
practicable date:
Illinova Corporation Common stock, no par value, 75,643,937
shares outstanding at July 31, 1995
Illinois Power Company Common stock, no par value,73,946,337
shares outstanding held by Illinova
Corporation at July 31, 1995
ILLINOVA CORPORATION
ILLINOIS POWER COMPANY
This combined Form 10-Q is separately filed by Illinova
Corporation and Illinois Power Company. Prior to the filing
of the combined 10-Q for the quarter ended June 30, 1994,
Illinova was not a reporting company for purposes of the
Securities Exchange Act of 1934, and Illinois Power Company
filed its own separate reports on Form 10-Q. Information
contained herein relating to Illinois Power Company is filed
by Illinova Corporation and separately by Illinois Power
Company on its own behalf. Illinois Power Company makes no
representation as to information relating to Illinova
Corporation or its subsidiaries, except as it may relate to
Illinois Power Company.
FORM 10-Q FOR THE QUARTER ENDED JUNE 30, 1995
INDEX
PAGE NO.
Part 1. FINANCIAL INFORMATION
Item 1. Financial Statements
Illinova Corporation
Consolidated Balance Sheets 3 - 4
Consolidated Statements of Income 5
Consolidated Statements of Cash Flows 6
Illinois Power Company
Consolidated Balance Sheets 7 - 8
Consolidated Statements of Income 9
Consolidated Statements of Cash Flows 10
Notes to Consolidated Financial Statements of
Illinova Corporation and
Illinois Power Company 11 - 12
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of
Operations for Illinova Corporation
and Illinois Power Company 13 - 17
Part II. OTHER INFORMATION
Item 1: Legal Proceedings 18
Item 6: Exhibits and Reports on Form 8-K 18
Signatures 19 - 20
Exhibit Index 21
PART I. FINANCIAL INFORMATION
ILLINOVA CORPORATION
CONSOLIDATED BALANCE SHEETS
(See accompanying Notes to Consolidated Financial
Statements)
JUNE 30, DECEMBER 31,
1995 1994
ASSETS (Unaudited)
(Millions of Dollars)
Utility Plant, at original cost
Electric (includes construction work
in progress of $201.2 million and
$202.8 million, respectively) $ 6,102.2 $ 6,023.1
Gas (includes construction work
in progress of $16.8 million and
$16.8 million, respectively) 614.5 606.1
---------- ----------
6,716.7 6,629.2
Less-Accumulated depreciation 2,178.9 2,102.7
---------- ----------
4,537.8 4,526.5
Nuclear fuel in process 5.9 6.2
Nuclear fuel under capital lease 109.3 111.5
---------- ----------
Total utility plant 4,653.0 4,644.2
---------- ----------
Investments and Other Assets 44.9 37.4
---------- ----------
Current Assets
Cash and cash equivalents 5.1 50.7
Accounts receivable (less allowance
for doubtful accounts of $3.0 million)
Service 105.7 110.4
Other 23.4 30.5
Accrued unbilled revenue 82.0 78.9
Material and supplies, at average cost 119.4 133.9
Prepayments and other 27.9 35.0
---------- ----------
Total current assets 363.5 439.4
---------- ----------
Deferred Charges
Deferred Clinton costs 109.1 110.8
Recoverable income taxes 147.2 147.3
Other 206.0 197.6
---------- ----------
Total deferred charges 462.3 455.7
---------- ----------
$ 5,523.7 $ 5,576.7
========== ==========
ILLINOVA CORPORATION
CONSOLIDATED BALANCE SHEETS
(See accompanying Notes to Consolidated Financial
Statements)
JUNE 30, DECEMBER 31,
1995 1994
CAPITAL AND LIABILITIES (Unaudited)
(Millions of Dollars)
Capitalization
Common stock -
No par value, 200,000,000 shares authorized;
75,643,937 shares outstanding,
stated at $ 1,424.6 $ 1,424.6
Less - Deferred compensation - ESOP 22.0 23.5
Retained earnings 79.8 58.8
Less - Capital stock expense 9.2 9.7
Preferred and preference stock of subsidiary 318.5 321.7
Mandatorily redeemable preferred stock
of subsidiary -- 36.0
Long-term debt of subsidiary 1,937.4 1,946.1
---------- ----------
Total capitalization 3,729.1 3,754.0
---------- ----------
Current Liabilities
Accounts payable 79.2 108.2
Notes payable 216.7 238.8
Long-term debt and lease obligations
maturing within one year 40.4 33.5
Other 134.3 149.9
---------- ----------
Total current liabilities 470.6 530.4
---------- ----------
Deferred Credits
Accumulated deferred income taxes 1,012.2 978.6
Accumulated deferred investment tax credits 227.5 230.9
Other 84.3 82.8
---------- ----------
Total deferred credits 1,324.0 1,292.3
---------- ----------
$ 5,523.7 $ 5,576.7
========== ==========
ILLINOVA CORPORATION
CONSOLIDATED STATEMENTS OF INCOME
(See accompanying Notes to Consolidated Financial Statements)
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
1995 1994 1995 1994
(Unaudited)
(Millions except per share)
Operating Revenues:
Electric $278.6 $270.2 $566.7 $549.7
Electric interchange 24.6 28.5 47.0 53.1
Gas 41.1 50.9 156.1 189.7
---------- ----------- ----------- ----------
Total 344.3 349.6 769.8 792.5
---------- ----------- ----------- ----------
Operating Expenses and
Taxes:
Fuel for electric 58.3 57.7 122.6 128.7
plants
Power purchased 15.1 16.7 29.1 26.7
Gas purchased for 14.6 18.8 79.2 116.4
resale
Other operating 63.5 63.2 127.7 129.3
expenses
Maintenance 28.7 23.6 56.8 43.7
Depreciation &
amortization 45.3 44.7 90.6 88.1
General taxes 31.1 28.6 69.3 67.2
Income taxes 20.6 24.1 49.1 48.9
---------- ----------- ----------- -----------
Total 277.2 277.4 624.4 649.0
---------- ----------- ----------- -----------
Operating Income 67.1 72.2 145.4 143.5
---------- ----------- ----------- -----------
Other Income and
Deductions:
Allowance for equity
funds used during 0.1 1.1 0.3 2.0
construction
Miscellaneous - net 1.5 (1.5) (0.9) (5.7)
---------- ----------- ----------- -----------
Total 1.6 (0.4) (0.6) (3.7)
---------- ----------- ----------- -----------
Income Before Interest 68.7 71.8 144.8 139.8
Charges ---------- ----------- ----------- -----------
Interest Charges:
Interest on long-term 33.3 35.5 67.8 70.2
debt
Other interest charges 3.9 2.3 7.8 4.0
Allowance for borrowed
funds used during (1.3) (1.5) (2.5) (3.1)
construction
Preferred dividend
requirements of 6.5 6.0 13.0 11.9
subsidiary ---------- ----------- ----------- -----------
Total 42.4 42.3 86.1 83.0
---------- ----------- ----------- -----------
Net Income $26.3 $29.5 $58.7 $56.8
========== =========== =========== ===========
Earnings per common share $0.35 $0.39 $0.78 $0.75
Cash dividends declared
per common share $0.25 $0.20 $0.50 $0.20
Cash dividends paid per
common share $0.25 $0.20 $0.50 $0.40
Weighted average number of
common shares outstanding
during period 75,643,937 75,643,937 75,643,937 75,643,937
ILLINOVA CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(See accompanying Notes to Consolidated Financial
Statements)
SIX MONTHS ENDED
JUNE 30,
1995 1994
(Unaudited)
(Millions of Dollars)
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income $ 58.7 $ 56.8
Items not requiring cash, net 118.0 108.2
Changes in assets and liabilities (21.5) (29.5)
-------- --------
Net cash provided by operating
activities 155.2 135.5
-------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Construction expenditures (93.3) (83.6)
Other investing activities (9.5) (3.0)
-------- --------
Net cash used in investing
activities (102.8) (86.6)
-------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Dividends on common stock (37.5) (30.3)
Redemptions -
Short-term debt (97.4) (99.5)
Long-term debt of subsidiary (0.2) (35.8)
Preferred stock of subsidiary (39.2) (12.0)
Issuances -
Short-term debt 75.3 123.6
Long-term debt of subsidiary -- 35.6
Other financing activities 1.0 (7.1)
--------- ---------
Net cash used in financing
activities (98.0) (25.5)
--------- ---------
NET CHANGE IN CASH AND
CASH EQUIVALENTS (45.6) 23.4
CASH AND CASH EQUIVALENTS
AT BEGINNING OF YEAR 50.7 9.9
--------- ---------
CASH AND CASH EQUIVALENTS
AT END OF PERIOD $ 5.1 $ 33.3
========= =========
ILLINOIS POWER COMPANY
CONSOLIDATED BALANCE SHEETS
(See accompanying Notes to Consolidated Financial
Statements)
JUNE 30, DECEMBER 31,
1995 1994
ASSETS (Unaudited)
(Millions of Dollars)
Utility Plant, at original cost
Electric (includes construction work
in progress of $201.2 million and
$202.8 million, respectively) $6,102.2 $6,023.1
Gas (includes construction work
in progress of $16.8 million and
$16.8 million, respectively) 614.5 606.1
------------ ------------
6,716.7 6,629.2
Less-Accumulated depreciation 2,178.9 2,102.7
------------ ------------
4,537.8 4,526.5
Nuclear fuel in process 5.9 6.2
Nuclear fuel under capital lease 109.3 111.5
------------ ------------
Total utility plant 4,653.0 4,644.2
------------ ------------
Investments and Other Assets 14.6 15.4
------------ ------------
Current Assets
Cash and cash equivalents 1.7 47.9
Accounts receivable (less allowance
for doubtful accounts of $3.0 million)
Service 105.7 110.4
Other 23.6 52.6
Accrued unbilled revenue 82.0 78.9
Material and supplies,
at average cost 119.4 133.9
Prepayments and other 27.9 34.9
------------ ------------
Total current assets 360.3 458.6
------------ ------------
Deferred Charges
Deferred Clinton costs 109.1 110.8
Recoverable income taxes 147.2 147.3
Other 224.0 219.5
------------ ------------
Total deferred charges 480.3 477.6
------------ ------------
$ 5,508.2 $ 5,595.8
============ ============
ILLINOIS POWER COMPANY
CONSOLIDATED BALANCE SHEETS
(See accompanying Notes to Consolidated Financial
Statements)
JUNE 30, DECEMBER 31,
1995 1994
CAPITAL AND LIABILITIES (Unaudited)
(Millions of Dollars)
Capitalization
Common stock -
No par value, 100,000,000 shares
authorized; 73,946,337 shares
outstanding, stated at $ 1,424.6 $ 1,424.6
Retained earnings 77.2 51.1
Less - Capital stock expense 9.2 9.7
Less - 1,697,600 shares of common stock in
treasury, at cost 39.1 --
Preferred and preference stock 318.5 321.7
Mandatorily redeemable
preferred stock -- 36.0
Long-term debt 1,937.4 1,946.1
------------ ------------
Total capitalization 3,709.4 3,769.8
------------ ------------
Current Liabilities
Accounts payable 79.2 108.7
Notes payable 216.7 238.8
Long-term debt and lease
obligations maturing
within one year 40.4 33.5
Other 134.3 149.9
------------ ------------
Total current liabilities 470.6 530.9
------------ ------------
Deferred Credits
Accumulated deferred income taxes 1,016.4 981.4
Accumulated deferred investment
tax credits 227.5 230.9
Other 84.3 82.8
------------ ------------
Total deferred credits 1,328.2 1,295.1
------------ ------------
$ 5,508.2 $ 5,595.8
============ ============
ILLINOIS POWER COMPANY
CONSOLIDATED STATEMENTS OF INCOME
(See accompanying Notes to Consolidated Financial Statements)
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
1995 1994 1995 1994
(Unaudited)
(Millions except per share)
Operating Revenues:
Electric $278.6 $270.2 $566.7 $549.7
Electric interchange 24.6 28.5 47.0 53.1
Gas 41.1 50.9 156.1 189.7
-------- ----------- ----------- -------
Total 344.3 349.6 769.8 792.5
-------- ----------- ----------- -------
Operating Expenses and
Taxes:
Fuel for electric 58.3 57.7 122.6 128.7
plants
Power purchased 15.1 16.7 29.1 26.7
Gas purchased for 14.6 18.8 79.2 116.4
resale
Other operating 63.5 63.2 127.7 129.3
expenses
Maintenance 28.7 23.6 56.8 43.7
Depreciation &
amortization 45.3 44.7 90.6 88.1
General taxes 31.1 28.6 69.3 67.2
Income taxes 20.6 24.1 49.1 48.9
---------- ----------- ----------- ---------
Total 277.2 277.4 624.4 649.0
---------- ----------- ----------- ---------
Operating Income 67.1 72.2 145.4 143.5
---------- ----------- ----------- ---------
Other Income and
Deductions:
Allowance for equity
funds used during 0.1 1.1 0.3 2.0
construction
Miscellaneous - net 3.1 0.7 3.6 (3.5)
---------- ----------- ----------- -----------
Total 3.2 1.8 3.9 (1.5)
---------- ----------- ----------- -----------
Income Before Interest 70.3 74.0 149.3 142.0
Charges ---------- ----------- ----------- -----------
Interest Charges and
Other:
Interest on long-term 33.3 35.5 67.8 70.2
debt
Other interest charges 3.9 2.3 7.8 4.0
Allowance for borrowed
funds used during (1.3) (1.5) (2.5) (3.1)
construction ----------- ----------- ----------- -----------
Total 35.9 36.3 73.1 71.1
---------- ----------- ----------- -----------
Net Income 34.4 37.7 76.2 70.9
Preferred dividend
requirements of
subsidiary 6.5 6.0 13.0 11.9
---------- ----------- ----------- -----------
Net Income applicable to
common stock $ 27.9 $ 31.7 $ 63.2 $ 59.0
========== =========== ========== ===========
ILLINOIS POWER COMPANY
CONSOLIDATED STATEMENTS OF CASH FLOWS
(See accompanying Notes to Consolidated Financial
Statements)
SIX MONTHS ENDED
June 30,
1995 1994
(Unaudited)
(Millions except per share)
CASH FLOWS FROM OPERATING
ACTIVITIES:
Net Income $76.2 $70.9
Items not requiring cash, 119.4 109.7
net
Changes in assets and 3.0 (28.6)
liabilities ------------- ------------
Net cash provided by 198.6 152.0
operating ------------- ------------
activities
CASH FLOWS FROM INVESTING
ACTIVITIES:
Construction expenditures (93.3) (83.6)
Other investing activities (1.2) (3.1)
------------- ------------
Net cash used in investing (94.5) (86.7)
activities ------------- ------------
CASH FLOWS FROM FINANCING
ACTIVITIES:
Dividends on preferred and (50.7) (57.5)
common stock
Repurchase of Common Stock (39.1) --
Redemptions -
Short-term debt (97.4) (99.5)
Long-term debt (0.2) (35.8)
Preferred Stock (39.2) (12.0)
Issuances
Short-term debt 75.3 122.5
Preferred stock -- 35.6
Other financing activities 1.0 (11.8)
------------- ------------
Net cash used in financing (150.3) (58.5)
activities ------------- ------------
NET CHANGE IN CASH AND CASH (46.2) 6.8
EQUIVALENTS
CASH AND CASH EQUIVALENTS AT 47.9 9.3
BEGINNING OF YEAR ------------- ------------
CASH AND CASH EQUIVALENTS AT $ 1.7 $16.1
END OF PERIOD ============= =============
ILLINOVA CORPORATION AND ILLINOIS POWER COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
GENERAL
Financial Statement note disclosures, normally included
in financial statements prepared in conformity with
generally accepted accounting principles, have been omitted
from this Form 10-Q pursuant to the Rules and Regulations of
the Securities and Exchange Commission. However, in the
opinion of Illinova Corporation (Illinova) and Illinois
Power Company (IP), the disclosures and information
contained in this Form 10-Q are adequate and not misleading.
See Illinova's 1994 Annual Report to Shareholders (included
in the Proxy Statement), IP's 1994 Annual Report to
Shareholders (included in the Information Statement), and
Illinova's and IP's 1994 Form 10-K filings to the Securities
and Exchange Commission, and Illinova's and IP's report on
Form 10-Q for the quarter ended March 31, 1995, for
information relevant to the consolidated financial
statements contained herein, including information as to
certain regulatory and environmental matters and as to the
significant accounting policies followed.
In the opinion of Illinova, the accompanying unaudited
consolidated financial statements for Illinova reflect all
adjustments necessary to present fairly the Consolidated
Balance Sheets as of June 30, 1995 and December 31, 1994,
the Consolidated Statements of Income for the three months
and six months ended June 30, 1995 and 1994, and the
Consolidated Statements of Cash Flows for the six months
ended June 30, 1995 and 1994. In addition, it is Illinova's
and IP's opinion that the accompanying unaudited
consolidated financial statements for IP reflect all
adjustments necessary to present fairly the Consolidated
Balance Sheets as of June 30, 1995 and December 31, 1994,
the Consolidated Statements of Income for the three months
and six months ended June 30, 1995 and 1994, and the
Consolidated Statements of Cash Flows for the six months
ended June 30, 1995 and 1994. Due to seasonal and other
factors which are characteristic of electric and gas utility
operations, interim period results are not necessarily
indicative of results to be expected for the year.
ACCOUNTING MATTERS
CONSOLIDATION
The consolidated financial statements of Illinova
include the accounts of Illinova, IP, Illinova Generating
Company and Illinova Power Marketing, Inc. All significant
intercompany balances and transactions have been eliminated
from the consolidated financial statements. All non-utility
operating transactions are included in the section titled
Other Income and Deductions, "Miscellaneous-net" in
Illinova's and IP's Consolidated Statements of Income.
Prior year amounts have been restated on a basis consistent
with the June 30, 1995 presentation.
IP's consolidated financial position and results of
operation are currently the principal factors affecting
Illinova's consolidated financial position and results of
operations.
REGULATORY AND LEGAL MATTERS
MANUFACTURED GAS PLANT SITES
IP is currently recovering Manufactured Gas Plant (MGP)
site cleanup costs from its customers through a tariff rider
approved by the Illinois Commerce Commision (ICC) in April
1993. In February 1994, an intervening consumer group
appealed the September 1992 ICC order and an affirming
December 1993 Appellate Court decision to the Illinois
Supreme Court, arguing that utilities should not be
permitted to recover MGP cleanup costs from customers or
should not be permitted to recover such costs through
riders. IP and other utilities also appealed to the
Illinois Supreme Court challenging the ICC's disallowance of
carrying costs on the unrecovered balance of cleanup costs.
The Illinois Supreme Court agreed to hear both appeals, and
briefing and oral arguments were held in September 1994.
On April 20, 1995, the Illinois Supreme Court issued
its ruling, upholding the ICC authorization of cost recovery
through tariff riders, and reversing the ICC's disallowance
of carrying costs. The Court has issued a mandate to the
ICC to reissue an order providing for full recovery of
prudently incurred MGP site cleanup costs, including
carrying costs.
TREASURY STOCK
On June 30, 1995, IP repurchased 350,000 shares of its
common stock from Illinova. Under Illinois law, such shares
may be held as treasury stock and treated as authorized but
unissued, or may be canceled by resolution of the Board of
Directors. Through June 30, 1995,IP has purchased 1,697,600
shares of its common stock, all of which are held as
treasury stock and are deducted from common equity at the
cost of the shares.
ILLINOVA CORPORATION AND ILLINOIS POWER COMPANY
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Reference is made to the Notes to the Consolidated
Financial Statements and Management's Discussion and
Analysis of Financial Condition and Results of Operations
presented in Illinova's 1994 Annual Report to Shareholders
(included in the Proxy Statement), IP's 1994 Annual Report
to Shareholders (included in the Information Statement),
Illinova's and IP's Form 10-K for the year ended December
31, 1994, and Illinova's and IP's Report on Form 10-Q for
the quarter ended March 31, 1995.
Illinova Subsidiaries
IP, the primary business and subsidiary of Illinova, is
engaged in the generation, transmission, distribution and
sale of electric energy and the distribution, transportation
and sale of natural gas in the State of Illinois.
Illinova Generating Company (IG) is Illinova's wholly
owned independent power subsidiary which invests in energy
supply projects throughout the world. IG's strategy is to
invest in and develop "greenfield" power plants, acquire
existing generation facilities and provide power plant O&M
services. Illinova has invested $29 million in IG as of
June 30, 1995.
Illinova Power Marketing, Inc. (IPM) is a wholly owned
subsidiary of Illinova formed in July 1994. IPM plans to
become active in the business of brokering and marketing
electric power and currently brokers gas to various
customers outside of IP's present service territory. In
August, IPM will begin buying and selling wholesale
electricity in the western United States.
LIQUIDITY AND CAPITAL RESOURCES
CAPITAL RESOURCES AND REQUIREMENTS
Cash flow from operations during the first six months
of 1995 provided sufficient working capital to meet ongoing
operating requirements, to service existing common and IP
preferred stock dividends and debt requirements and a
portion of construction requirements. Additionally,
Illinova expects current revenues will enable it to meet
future operating requirements and continue to service its
existing debt, IP preferred and Illinova common stock
dividends, IP sinking fund requirements and nearly all of
its anticipated construction requirements. IP repurchased
1,347,600 shares of its common stock from Illinova on March
31, 1995, and an additional 350,000 shares on June 30, 1995,
to provide Illinova cash for operations, in accordance with
authority granted by the ICC.
IP's capital requirements for construction were
approximately $93 million and $84 million during the six
months ended June 30, 1995 and 1994, respectively.
During the second quarter of 1995, IP increased its
lines of credit represented by bank commitments from $250
million to $350 million. Also during the second quarter of
1995, Illinova increased its lines of credit represented by
bank commitments from $43 million to $50 million. Illinois
Power Company mortgage bonds are currently rated Baa2 by
Moody's and BBB by Standard & Poor's. IP's preferred stock
is currently rated baa3 by Moody's and BBB- by Standard &
Poor's. Both Illinova and IP have adequate short- and
intermediate-term bank borrowing capacity.
IP has current ICC authorization to issue $12 million
of debt securities and $100 million of preferred stock. IP
has filed a petition with the ICC requesting authority to
issue an additional $300 million of debt and $100 million of
preferred stock for refinancing purposes. Additionally, IP
has petitioned the ICC for authority to sell up to $50
million of accounts receivable. IP expects to receive ICC
approval for these activities in the third quarter of 1995.
In February 1995, IP redeemed $12 million of 8.0%
mandatorily redeemable serial preferred stock. On May 1,
1995, IP redeemed the remaining $24 million of the 8.0%
mandatorily redeemable serial preferred stock.
REGULATORY MATTERS
OPEN ACCESS AND WHEELING
On March 29, 1995, the Federal Energy Regulatory
Commission (FERC) issued a Notice of Proposed Rulemaking
(NOPR) designed to encourage a more fully competitive
wholesale electric market through mandated open access to
public utility transmission facilities, at rates to be
determined, at the outset, by the FERC. Under the
Commission's proposal, all transmission-owning public
utilities would be required to file non-discriminatory open-
access transmission tariffs, available to all wholesale
sellers and buyers of electric energy; the utilities would
be required to take service under the tariffs for their own
wholesale sales and purchases of electric energy; and the
utilities would be allowed the opportunity under certain
circumstances to recover wholesale stranded costs.
On March 20, 1995, IP filed three transmission service
tariffs that offer eligible transmission customers the same
or comparable transmission service on terms comparable to
the service IP provides to itself. The FERC has recommended
that all transmission service tariffs filed prior to March
29, 1995 be accepted and set for hearing provided that the
proposed tariffs meet the FERC's pricing policies including
those set forth in the NOPR. The FERC accepted open-access
tariff filings for Illinova Power Marketing and for IP on
May 16, 1995.
On June 28, 1995, the FERC issued an order that
provides guidance and options for utilities that are either
contemplating filing open-access tariffs or have cases
pending. The order describes four categories of open-access
cases and the options available under each of those
categories. All tariffs that would be accepted for filing
without a hearing under the above options would be subject
to the substantive requirements of the NOPR final rule and
would have to be modified to ensure that they are consistent
with the requirements and contain certain basic non-
discriminatory provisions.
On July 26, 1995, IP notified the FERC and the
Administrative Law Judge (ALJ) that it intended to revise
its tariffs to be consistent with the FERC's proforma
tariffs with some slight modifications, and the ALJ
suspended the procedural schedule for the previously filed
tariffs. The FERC will notice the amended filing and
determine if any issues warrant further hearing. The FERC
has 60 days to act on the revised tariffs.
UFAC SUSPENSION
On June 26, 1995, IP filed a petition with the ICC for
authority to eliminate its Uniform Fuel Adjustment Clause
(UFAC), effective August 10, 1995, and to adjust its base
rate tariffs to a level that would recover its projected
fuel and purchased power costs for the twelve months ending
December 31, 1995. IP's petition was filed under a
procedure that allows the ICC to grant or deny the specific
proposal but not to suspend it for hearings or require that
it be modified. IP believes that continuation of the UFAC
creates disincentives to efficient decisions made on a total
cost basis; that the UFAC is inconsistent with a competitive
environment; and that the significance of fuel costs as a
component of total costs has diminished, thereby reducing
the need for a UFAC as a risk-reduction mechanism. Various
entities have filed comments with the ICC requesting the ICC
to deny IP's petition on the grounds that the UFAC should
not be eliminated without a hearing.
ENVIRONMENTAL MATTERS
GAS MANUFACTURING SITES
See "Manufactured Gas Plant Sites" under "Regulatory
and Legal Matters" of the Notes to Consolidated Financial
Statements on page 12.
RESULTS OF OPERATIONS
THREE MONTHS ENDED JUNE 30, 1995 AND 1994
Electric Operations - The current quarter increase of
$8.4 million in electric revenues is primarily due to a
combined increase in sales to the industrial and commercial
sectors. Total industrial and commercial sales combined
increased 1.6%. Improving national and regional economies
have led to the sales gains among these customer segments.
Total kilowatt-hour sales (excluding interchange and sales
to municipalities) increased 0.3% or 12 million kwh from the
second quarter 1994. Interchange revenues decreased $3.9
million due to decreased sales opportunities.
On Thursday, July 13, 1995, IP hit an all-time peak for
electric consumption when demand reached 4,055 megawatts.
Demand on both Wednesday, July 12, 1995, (3,897 megawatts)
and Friday, July 14, 1995, (4,000 megawatts) exceeded the
previous high of 3,775 megawatts set on August 16, 1988.
The current quarter cost of fuel for electric plants
increased $0.6 million and electric generation decreased
4.5%. The increase in fuel cost was attributable to
decreased generation at IP's Clinton Power Station
(Clinton), the cost of emission allowances which were added
to fuel cost beginning in 1995, and the impact of the UFAC.
The equivalent availability of Clinton was 54% and 86% for
the three months ended June 30, 1995 and 1994, respectively.
The lower equivalent availability for Clinton in 1995 was
due to a scheduled maintenance and refueling outage that
began March 12. Clinton returned to service on April 29,
after a station record 49-day refueling. The equivalent
availability for IP's coal-fired plants was 77% and 71% for
the three months ended June 30, 1995 and 1994, respectively.
Power purchased and interchanged for the current quarter
decreased $1.6 million due to decreased generation caused by
the Clinton refueling outage and fossil-unit maintenance
outages.
Gas Operations - Gas revenues decreased $9.8 million in
the second quarter of 1995 due to warmer weather in the
early part of the quarter and the effects of the Uniform Gas
Adjustment Clause. Therm sales increased 11.7% (8.5 million
therms) complimented by an increase in therms transported
for a combined increase in gas consumption of 15.1% (20
million therms). Residential sales decreased 7.7% (3
million therms), commercial sales and transport decreased
12.9% (2 million therms) and industrial sales and transport
increased 34.2% (25 million therms).
The cost of gas purchased for resale decreased $4.2
million in the second quarter. Lower prices reduced the
cost of gas by $10.0 million which was partially offset by
an increase in the quantity purchased.
Gas bypass (connection by the natural gas customer
directly to a pipeline, "bypassing" IP's sales and
transportation service) continues to be actively considered
or utilized by several of IP's large customers. IP is
aggressively competing with the bypass options available to
these customers in an attempt to minimize the potential loss
in earnings.
Operation and Maintenance Expense - The current quarter
increase of $5.4 million dollars is due primarily to
expenses from the 1995 Clinton refueling outage. Without
the refueling charges, operation and maintenance expenses
for the second quarter of 1995 would have been approximately
$4 million lower than the same period in 1994.
Miscellaneous - Net - The current quarter increase of
$3.0 million is primarily a result of a favorable ICC
decision, received in 1995, related to 1993 transportation
costs.
Other Interest Charges - The current quarter increase
of $1.6 million in other interest charges is due to
increased short-term borrowings at higher rates.
Earnings per Common Share - The earnings per common
share for Illinova during the second quarter of 1995 and
1994 resulted from the interaction of all other factors
discussed herein.
SIX MONTHS ENDED JUNE 30, 1995 AND 1994
Electric Operations - The current period increase of
$17.0 million in electric revenues is primarily due to
increased sales to the industrial and commercial sectors
combined. Improving national and regional economies have
led to the sales gains among these customer segments. Total
kilowatt-hour sales (excluding interchange and sales to
municipalities) increased 1% or 79 million kwh. This
resulted from a decrease in residential sales of 4.0% (88.7
million kwh), an increase in commercial sales of 5.3% (86.3
million kwh), and an increase in industrial sales of 1.4%
(63.1 million kwh). With cooling degree days at 33% less
than last year and 22% less than normal, weather had an
unfavorable impact in both the residential and commercial
sectors. Interchange revenues decreased $6.1 million due to
decreased sales opportunities.
The current period cost of fuel for electric plants
decreased $6.1 million and electric generation decreased
6.3%. The decrease in fuel cost was attributable to lower
cost of fuel at the fossil plants, partially offset by the
cost of emission allowances and the impact of the UFAC. The
equivalent availability of Clinton was 60% and 93% for the
six months ended June 30, 1995 and 1994, respectively. The
lower equivalent availability for Clinton in 1995 was due to
a scheduled maintenance and refueling outage that began
March 12 and ended on April 29. The equivalent availability
for IP's coal-fired plants was 78% and 71% for the six
months ended June 30, 1995 and 1994, respectively. Power
purchased and interchanged for the period increased $2.4
million due to increased purchases at lower-than-expected
prices.
Gas Operations - Gas revenues decreased $33.6 million
in the current period due to warmer weather during the
heating season and the effects of the Uniform Gas Adjustment
Clause, partially offset by the ICC's April 1994 order
granting IP its first natural gas base rate increase in 10
years. Therm sales decreased 6.9% (26.1 million therms),
partially offset by an increase in therms transported for a
combined decrease in gas consumption of 2.1% (11 million
therms). Residential sales decreased 9.9% (24 million
therms), commercial sales and transport decreased 10.6% (10
million therms) and industrial sales and transport increased
14.5% (23 million therms).
The cost of gas purchased for resale decreased $37.2
million for the period as a result of the effects of the
lower cost of gas and the Uniform Gas Adjustment Clause.
Operation and Maintenance Expense - The current period
increase of $11.5 million dollars is due primarily to
expenses from the 1995 Clinton refueling outage. Without
the refueling charges, operation and maintenance expenses
for the first six months of 1995 would have been
approximately $8 million less than the same period in 1994.
Miscellaneous - Net - The year-to-date decrease of $4.8
million is primarily a result of a favorable ICC decision,
received in 1995, related to 1993 transportation costs.
Other Interest Charges - The current period increase of
$3.8 million in other interest charges is due to increased
short-term borrowing at higher rates.
Earnings per Common Share - The earnings per common
share for Illinova during the six months ended June 30, 1995
and 1994 resulted from the interaction of all other factors
discussed herein.
PART II. OTHER INFORMATION
ITEM 1. Legal Proceedings
Uranium Fuel Contracts
In October 1993, IP filed suit in U.S. District Court,
Central District of Illinois, Danville, seeking a
declaration that IP's termination of the U.S. Energy
contract was permitted by the terms of the contract as they
related to rights of termination in the event of certain
receivership proceedings. Defendants in the lawsuit were
U.S. Energy Corporation, Crested Corporation, U.S.
Energy/Crested Corporation, Cycle Resources Investment
Corporation, Sheep Mountain Partners, Nulux Nukem Luxemburg
GMBH, and Dresdner Bank. The defendants are joint ventures,
partnerships, and domestic and foreign corporations who are
either original parties or parties by assignment to the
contract. IP purchased approximately half of its uranium
concentrates supply under this contract, which IP terminated
shortly before filing this action. On September 1, 1994,
the Court granted defendants' motions for summary judgment
and ruled that the termination constituted a breach of
contract. On March 7, 1995, IP filed a Motion under Federal
Rule 60 (b) for Reconsideration of the Court's September 1,
1994 ruling. That motion, and defendants' various motions
concerning their respective rights under the contract were
denied on March 15, 1995 and the matter set for trial on
damages October 23, 1995. In June 1995, the litigation was
settled, and all claims and counter-claims dismissed with
prejudice, on execution of an amendment to the contract
which reduces the quantity of uranium IP is obligated to
purchase and shortens the contract term by one year, in
return for an increase in the unit price. The resolution of
this litigation did not have a material adverse impact on
the financial position or results of operations.
See "Notes to Consolidated Financial Statements" in
Part I for a discussion of certain legal proceedings related
to manufactured gas plant sites.
ITEM 6. Exhibits and Reports on Form 8-K
(a) Exhibits
The Exhibits filed with this 10-Q are listed
on the Exhibit Index.
(b) Reports on Form 8-K since March 31, 1995:
None
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 and
Chief Financial Officer
on behalf of
Illinois Power Company
Date: August 08, 1995
EXHIBIT INDEX
PAGE NO. WITHIN
SEQUENTIAL NUMBERING
EXHIBIT DESCRIPTION SYSTEM
27 Financial Data Schedule UT
(filed herewith)
EX-27
2
FINANCIAL DATA SCHEDULE
UT
6-MOS
DEC-31-1995
JUN-30-1995
PER-BOOK
4653
15
360
480
0
5508
1376
0
77
1453
0
319
1869
69
0
148
0
0
69
40
1541
5508
770
49
575
624
145
4
149
73
76
13
63
38
68
199
0
0