- - - 3 -
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, 1994
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 62526-1805
(217) 424-6600
1-3004 Illinois Power Company 37-0344645
(an Illinois Corporation)
500 S. 27th Street
Decatur, IL 62526-1805
(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 Corporation Yes No X (subject
to filing requirements of the
Securities Exchange Act of 1934 as of
May 27, 1994)
Illinois Power Company Yes X No
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, 1994
Illinois Power Company Common stock, no par value,75,643,937
shares outstanding held by
Illinova Corporation at July 31,1994
Total number of sequentially numbered pages is 18
ILLINOVA CORPORATION
ILLINOIS POWER COMPANY
This combined Form 10-Q is separately filed by Illinova
Corporation and Illinois Power Company. Prior to this
filing, 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, 1994
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
Balance Sheets 7 - 8
Statements of Income 9
Statements of Cash Flows 10
Notes to Consolidated Financial Statements
Illinova Corporation and Illinois Power
Company 11
Item 2. Management's Discussion and Analysis of
Financial
Condition and Results of Operations
Illinova Corporation and Illinois Power
Company 12 - 15
Part II. OTHER INFORMATION
Item 1: Legal Proceedings 16
Item 6: Exhibits and Reports on Form 8-K 16
Signatures
17 - 18
PART I. FINANCIAL INFORMATION
ILLINOVA CORPORATION
CONSOLIDATED BALANCE SHEETS
(See accompanying Notes to Financial Statements)
June 30, December 31,
1994 1993
ASSETS (Unaudited)
(Millions of Dollars)
Utility Plant, at original cost
Electric (includes construction work in progress
of $234.6 million and $218.7 million,
respectively) $ 5,950.1 $ 5,889.4
Gas (includes construction work in progress
of $14.5 million and $18.8 million,
respectively) 596.9 589.9
6,547.0 6,479.3
Less-Accumulated depreciation 2,039.0 1,974.6
4,508.0 4,504.7
Nuclear fuel in process 6.9 6.6
Nuclear fuel under capital lease 110.3 128.5
Total utility plant 4,625.2 4,639.8
Investments and Other Assets 20.6 20.1
Current Assets
Cash and cash equivalents 33.3 9.9
Accounts receivable (less allowance for doubtful
accounts of $4.0 million)
Service 89.3 85.2
Other 36.5 37.5
Accrued unbilled revenue 41.4 49.0
Material and supplies, at average cost 131.1 131.6
Prepayments and other 41.5 31.8
Total current assets 373.1 345.0
Deferred Charges
Deferred Clinton costs 112.6 114.3
Recoverable income taxes 119.8 108.0
Other 196.4 196.3
Total deferred charges 428.8 418.6
$ 5,447.7 $ 5,423.5
ILLINOVA CORPORATION
CONSOLIDATED BALANCE SHEETS
(See accompanying Notes to Financial Statements)
June 30, December 31,
1994 1993
CAPITAL AND LIABILITIES (Unaudited)
(Millions of Dollars)
Capitalization
Common stock -
No par value, 100,000,000 shares authorized;
75,643,937 shares outstanding, stated
at $ 1,424.6 $ 1,424.6
Less - Deferred compensation - ESOP 26.7 28.2
Retained earnings (deficit) (9.2) (64.6)
Less - Capital stock expense 10.6 10.8
Preferred and preference stock of
subsidiary 303.7 303.7
Mandatorily redeemable preferred stock
of subsidiary 36.0 48.0
Long-term debt 1,943.6 1,926.3
Total capitalization 3,661.4 3,599.0
Current Liabilities
Accounts payable 100.1 128.8
Notes payable 116.4 92.3
Long-term debt and lease obligations
maturing within one year 145.1 187.7
Other 155.9 197.9
Total current liabilities 517.5 606.7
Deferred Credits
Accumulated deferred income taxes 954.2 906.4
Accumulated deferred investment tax
credits 226.4 230.5
Other 88.2 80.9
Total deferred credits 1,268.8 1,217.8
$ 5,447.7 $ 5,423.5
ILLINOVA CORPORATION
CONSOLIDATED STATEMENTS OF INCOME
(See accompanying Notes to Financial Statements)
Three Months EndedSix Months E
nded
June 30, June 30,
1994 1993 1994 1993
(Unaudited)
(Millions except per share)
Operating Revenues:
Electric $ 270.2$ 265.1$ 549.7$ 514.5
Electric interchange 28.5 25.3 53.1 45.4
Gas 50.9 60.1 189.7 185.7
Total 349.6 350.5 792.5 745.6
Operating Expenses and Taxes:
Fuel for electric plants 57.7 54.8 128.7 111.4
Power purchased 16.7 13.1 26.7 17.1
Gas purchased for resale 18.8 28.6 116.4 111.8
Other operating expenses 63.2 65.0 129.3 128.0
Maintenance 23.6 25.0 43.7 47.2
Depreciation 43.8 42.2 87.7 83.6
Amortization of excess unprotected
deferred taxes - (1.4) (1.4) (2.8)
General taxes 28.6 31.6 67.2 66.4
Deferred Clinton costs 0.9 2.8 1.8 5.6
Income Taxes 24.1 20.9 48.9 41.0
Total 277.4 282.6 649.0 609.3
Operating Income 72.2 67.9 143.5 136.3
Other Income and Deductions:
Allowance for equity funds used
during construction 1.1 0.5 2.0 1.0
Miscellaneous - net (1.5) (0.2) (5.7) (0.3)
Total (0.4) 0.3 (3.7) 0.7
Income Before Interest Charges
& Other 71.8 68.2 139.8 137.0
Interest Charges & Other:
Interest on long-term debt 35.5 37.9 70.2 78.1
Other interest charges 2.3 1.8 4.0 3.6
Allowance for borrowed funds used
during construction (1.5) (0.8) (3.1) (2.0)
Preferred dividend requirements of
subsidiary 6.0 6.8 11.9 13.8
Total 42.3 45.7 83.0 93.5
Net Income $ 29.5$ 22.5 $ 56.8 $ 43.5
Net Earnings per common share $ 0.39 $ 0.30 $ 0.75 $ 0.57
Cash dividends declared per
common share $ 0.20 $0.20 $ 0.20 $ 0.40
Cash dividends paid per
common share $ 0.20 $ 0.20 $ 0.40 $ 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 Financial Statements)
Six Months Ended
June 30,
1994 1993
(Unaudited)
(Millions of Dollars)
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income $ 56.8 $ 43.5
Items not requiring cash, net 108.2 110.1
Changes in assets and liabilities (29.5) 13.5
Net cash provided by operating
activities 135.5 167.1
CASH FLOWS FROM INVESTING ACTIVITIES:
Construction expenditures (83.6) (91.9)
Other investing activities (3.0) (6.0)
Net cash used in investing activities (86.6) (97.9)
CASH FLOWS FROM FINANCING ACTIVITIES:
Dividends on common stock (30.3) (30.3)
Redemptions -
Short-term debt (99.5) (102.1)
Long-term debt (35.8) (360.2)
Preferred stock of subsidiary (12.0) (22.0)
Issuances -
Short-term debt 123.6 134.5
Long-term debt 35.6 345.0
Preferred stock of subsidiary -- 43.5
Other financing activities (7.1) (20.5)
Net cash used in financing activities (25.5) (12.1)
NET CHANGE IN CASH AND CASH EQUIVALENTS 23.4 57.1
CASH AND CASH EQUIVALENTS AT BEGINNING
OF YEAR 9.9 8.7
CASH AND CASH EQUIVALENTS AT END OF PERIOD$ 33.3 $ 65.8
ILLINOIS POWER COMPANY
BALANCE SHEETS
(See accompanying Notes to Financial Statements)
June 30, December 31,
1994 1993
ASSETS (Unaudited)
(Millions of Dollars)
Utility Plant, at original cost
Electric (includes construction work in progress
of $234.6 million and $218.7 million,
respectively) $ 5,950.1 $ 5,889.4
Gas (includes construction work in progress
of $14.5 million and $18.8 million,
respectively) 596.9 589.9
6,547.0 6,479.3
Less-Accumulated depreciation 2,039.0 1,974.6
4,508.0 4,504.7
Nuclear fuel in process 6.9 6.6
Nuclear fuel under capital lease 110.3 128.5
Total utility plant 4,625.2 4,639.8
Investments and Other Assets 16.1 15.4
Current Assets
Cash and cash equivalents 16.1 9.3
Accounts receivable (less allowance for doubtful
accounts of $4.0 million)
Service 89.3 85.2
Other 37.9 37.5
Accrued unbilled revenue 41.4 49.0
Material and supplies, at average cost 131.1 131.6
Prepayments and other 41.3 31.7
Total current assets 357.1 344.3
Deferred Charges
Deferred Clinton costs 112.6 114.3
Recoverable income taxes 119.8 108.0
Other 193.4 195.1
Total deferred charges 425.8 417.4
$ 5,424.2 $ 5,416.9
ILLINOIS POWER COMPANY
BALANCE SHEETS
(See accompanying Notes to Financial Statements)
June 30, December 31,
1994 1993
CAPITAL AND LIABILITIES (Unaudited)
(Millions of Dollars)
Capitalization
Common stock -
No par value, 100,000,000 shares authorized;
75,643,937 shares outstanding, stated at$ 1,424.6$ 1,424.6
Less - Deferred compensation - ESOP 26.7 28.2
Retained earnings (deficit) (18.4) (71.0)
Less - Capital stock expense 10.6 10.8
Preferred and preference stock 303.7 303.7
Mandatorily redeemable preferred stock 36.0 48.0
Long-term debt 1,943.6 1,926.3
Total capitalization 3,652.2 3,592.6
Current Liabilities
Accounts payable 100.2 128.4
Notes payable 115.3 92.3
Long-term debt and lease obligations maturing
within one year 145.1 187.7
Other 140.7 197.9
Total current liabilities 501.3 606.3
Deferred Credits
Accumulated deferred income taxes 956.1 906.6
Accumulated deferred investment tax credits226.4 230.5
Other 88.2 80.9
Total deferred credits 1,270.7 1,218.0
$ 5,424.2 $ 5,416.9
ILLINOIS POWER COMPANY
STATEMENTS OF INCOME
(See accompanying Notes to Financial Statements)
Three Months EndedSix Months E
nded
June 30, June 30,
1994 1993 1994 1993
(Unaudited)
(Millions except per share)
Operating Revenues:
Electric $ 270.2$ 265.1 $ 549.7$ 514.5
Electric interchange 28.5 25.3 53.1 45.4
Gas 50.9 60.1 189.7 185.7
Total 349.6 350.5 792.5 745.6
Operating Expenses and Taxes:
Fuel for electric plants 57.7 54.8 128.7 111.4
Power purchased 16.7 13.1 26.7 17.1
Gas purchased for resale 18.8 28.6 116.4 111.8
Other operating expenses 63.2 65.0 129.3 128.0
Maintenance 23.6 25.0 43.7 47.2
Depreciation 43.8 42.2 87.7 83.6
Amortization of excess unprotected
deferred taxes - (1.4) (1.4) (2.8)
General taxes 28.6 31.6 67.2 66.4
Deferred Clinton costs 0.9 2.8 1.8 5.6
Income Taxes 24.1 20.9 48.9 41.0
Total 277.4 282.6 649.0 609.3
Operating Income 72.2 67.9 143.5 136.3
Other Income and Deductions:
Allowance for equity funds used
during construction 1.1 0.5 2.0 1.0
Miscellaneous - net 0.7 (0.2) (3.5) (0.3)
Total 1.8 0.3 (1.5) 0.7
Income Before Interest Charges74.0 68.2 142.0 137.0
Interest Charges:
Interest on long-term debt 35.5 37.9 70.2 78.1
Other interest charges 2.3 1.8 4.0 3.6
Allowance for borrowed funds used
during construction (1.5) (0.8) (3.1) (2.0)
Total 36.3 38.9 71.1 79.7
Net Income 37.7 29.3 70.9 57.3
Preferred dividend requirements 6.0 6.8 11.9 13.8
Net Income applicable to
common stock $ 31.7$ 22.5 $ 59.0$ 43.5
Net Earnings per common share $ 0.42 $ 0.30$ 0.78 $ 0.57
Cash dividends declared per common
share $ 0.20 $ 0.20$ 0.20 $ 0.40
Cash dividends paid per common
share $ 0.40 $ 0.20$ 0.60 $ 0.40
Weighted average number of common
shares outstanding during period75,643,937 75,643,937 75,643,937 75,643,937
ILLINOIS POWER COMPANY
STATEMENTS OF CASH FLOWS
(See accompanying Notes to Financial Statements)
Six Months Ended
June 30,
1994 1993
(Unaudited)
(Millions of Dollars)
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income $ 70.9 $ 57.3
Items not requiring cash, net 109.7 110.1
Changes in assets and liabilities (28.6) 13.5
Net cash provided by operating activities 152.0 180.9
CASH FLOWS FROM INVESTING ACTIVITIES:
Construction expenditures (83.6) (91.9)
Other investing activities (8.0) (6.0)
Net cash used in investing activities (91.6) (97.9)
CASH FLOWS FROM FINANCING ACTIVITIES:
Dividends on preferred and common stock(57.5) (44.5)
Redemptions -
Short-term debt (99.5) (102.1)
Long-term debt (35.8) (360.2)
Preferred Stock (12.0) (22.0)
Issuances -
Short-term debt 122.5 134.5
Long-term debt 35.6 345.0
Preferred stock -- 43.5
Other financing activities (6.9) (20.1)
Net cash used in financing activities (53.6) (25.9)
NET CHANGE IN CASH AND CASH EQUIVALENTS 6.8 57.1
CASH AND CASH EQUIVALENTS AT BEGINNING
OF YEAR 9.3 8.7
CASH AND CASH EQUIVALENTS AT END OF PERIOD$ 16.1 $ 65.8
ILLINOVA CORPORATION AND ILLINOIS POWER COMPANY
NOTES TO FINANCIAL STATEMENTS
General
On May 27, 1994, Illinova Corporation (Illinova), a
holding company, became the parent of Illinois Power Company
(IP) pursuant to a share-for-share conversion of Illinois
Power Company common stock into Illinova common stock. On
June 8, 1994, Illinova Generating Company (formerly IP
Group, Inc.), a subsidiary of Illinois Power Company, was
transferred as a dividend in the amount of $9.2 million from
Illinois Power Company to Illinova, effectively establishing
Illinova Generating Company as a subsidiary of Illinova.
Financial Statement note disclosures, normally included
in financial statements prepared in conformity with
generally accepted accounting principles, have been omitted
in this Form 10-Q pursuant to the Rules and Regulations of
the Securities and Exchange Commission. However, in the
opinion of Illinova Corporation, the disclosures and
information contained in this Form 10-Q are adequate and not
misleading. See IP's Form 10-K for the year ended December
31, 1993 and the "Notes to Financial Statements" in IP's
1993 Annual Report incorporated by reference in IP's Form 10-
K for the year ended December 31, 1993, and IP's report on
Form 10-Q for the quarter ended March 31, 1994, for
information relevant to the financial statements contained
herein, including information as to certain regulatory and
environmental matters involving IP and as to the significant
accounting policies followed by IP.
In the opinion of Illinova, the accompanying unaudited
financial statements reflect all adjustments necessary to
present fairly the Consolidated Balance Sheets as of June
30, 1994 and December 31, 1993, the Consolidated Statements
of Income for the three months and six months ended June 30,
1994 and 1993, and the Consolidated Statements of Cash Flows
for the six months ended June 30, 1994 and 1993. In
addition, it is Illinova's opinion that the accompanying
unaudited financial statements for IP reflect all
adjustments necessary to present fairly the Balance Sheets
as of June 30, 1994 and December 31, 1993, the Statements of
Income for the three months and six months ended June 30,
1994 and 1993, and the Statements of Cash Flows for the six
months ended June 30, 1994 and 1993. 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 include the
accounts of Illinova, IP and Illinova Generating.
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 the
Consolidated Statements of Income. Prior year amounts have
been reclassified on a basis consistent with the June 30,
1994, presentation.
IP's financial condition and results of operation are
currently the principal factors affecting Illinova's
financial condition and results of operations.
Regulatory Matters
Decommissioning
See "Decommissioning" under "Management's Discussion and
Analysis of Financial Condition and Results of Operations"
on Page 13 and in IP's Report on Form 10-Q for the quarter
ended March 31, 1994, for further discussion.
ILLINOVA CORPORATION AND ILLINOIS POWER COMPANY
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Reference is made to Notes to Financial Statements and
Management's Discussion and Analysis of Financial Condition
and Results of Operations presented in IP's 1993 Annual
Report incorporated by reference in IP's Form 10-K for the
year ended December 31, 1993, and IP's Report on Form 10-Q
for the quarter ended March 31, 1994. Important factors
affecting financial condition and results of operations
between the periods indicated are as follows:
Formation of Holding Company
The Federal Energy Regulatory Commission (FERC) issued
an order approving the Company's proposed formation of a
holding company structure. IP received approval from the
Securities and Exchange Commission (SEC) to allow the
proposed holding company to operate exempt from SEC
regulation under the Public Utility Holding Company Act of
1935. On May 27, the holding company (Illinova Corporation)
was officially formed with the filing of documents with the
Illinois Secretary of State, establishing IP as a subsidiary
thereof. On June 8, Illinova Generating Company (formerly
IP Group Inc.) was transferred from IP to Illinova and
became Illinova's second subsidiary. On that same day, the
Board of Directors of Illinova formally approved the
corporation's third subsidiary, Illinova Power Marketing,
Inc.
IP, the primary business subsidiary, 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 invests in energy supply projects throughout the
world. Illinova Power Marketing plans to become active in
the business of brokering electric power to various
customers. On July 20, Illinova Power Marketing filed a
request for FERC approval to buy electricity from producers
and sell at market rates to wholesale customers (i.e.,
utilities, electric cooperatives, municipalities) which are
at least two systems away from IP. Eventually, the
subsidiary intends to sell electricity directly to
industrial and commercial customers. Illinova Power
Marketing is one of many companies seeking authorization
from FERC to sell power at market-based prices.
Liquidity and Capital Resources
Dividends
On March 23, 1994, the Illinois Commerce Commission
(ICC) granted IP permission to declare and pay common and
preferred dividends for the third and fourth quarters of
1994, with dividends on common stock not to exceed 20 cents
per share per quarter, in the event of a negative retained
earnings balance, contingent on satisfaction of certain net
income, cash flow and capitalization requirements as set
forth in the ICC order. On June 8, 1994, the Board of
Directors of Illinova and IP declared common stock dividends
for the third quarter of 1994. IP declared and paid its
common dividend to Illinova in order to fund the eventual
dividend payment by Illinova to its common shareholders. In
addition, IP declared preferred stock dividends for the
third quarter of 1994.
Decommissioning
The SEC staff has questioned certain current accounting
practices of the electric utility industry regarding the
recognition, measurement and classification of
decommissioning costs for nuclear generating stations in
financial statements. In response to these questions, the
Edison Electric Institute, on behalf of the electric utility
industry, requested the Financial Accounting Standards Board
(FASB) to review the accounting for removal costs of nuclear
generating stations, including decommissioning. In June
1994, the FASB added a project to its agenda that would
address the accounting for decommissioning for nuclear power
plants. The objective of the project is to determine if and
when a liability for nuclear decommissioning should be
recognized, and if so, how the liability should be measured
and whether a corresponding asset should be created.
Although it is too early to determine whether any changes to
current electric utility industry accounting practices for
decommissioning will be adopted, IP believes, based on
current information, that any changes, if required, would
not have an adverse effect on results of operations due to
its current and anticipated future ability to recover
decommissioning costs through rates. The FASB's
decommissioning project is expected to begin in the third
quarter of 1994.
Capital Resources and Requirements
Cash flow from operations during the first six months
of 1994 provided sufficient working capital to meet ongoing
operating and construction requirements and to service
existing preferred and common stock dividends and debt
requirements for Illinova and its subsidiaries.
Additionally, Illinova and its subsidiaries believe internal
and external sources of capital will be available to meet
future operating requirements and continue to service
existing debt, preferred stock and common stock dividends,
sinking fund requirements and all or nearly all anticipated
construction requirements.
IP's capital requirements for construction were
approximately $84 million and $92 million during the six
months ended June 30, 1994 and 1993, respectively.
Illinois Power Company mortgage bonds are currently
rated BBB by Duff & Phelps, Baa2 by Moody's and BBB by
Standard & Poor's. IP's preferred stock is currently rated
BBB by Duff & Phelps, baa3 by Moody's and BBB- by Standard &
Poor's. As a result of the September 1993 write-off
relating to deferred Clinton post-construction costs, based
upon the most restrictive earnings test contained in IP's
First Mortgage and Deed of Trust, IP anticipates that it
will be prohibited from issuing additional first mortgage
bonds for other than refunding purposes until September,
1994. IP's ability to issue additional first mortgage bonds
for refunding purposes is similarly limited by this earnings
test in cases where the bonds to be redeemed are not within
two years of maturity. Both Illinova and IP have adequate
short- and intermediate-term bank borrowing capacity.
IP has current Board of Directors authorization to issue up
to $255 million of debt securities and $156 million of
preferred stock. Currently, IP has received ICC
authorization to issue $117 million of debt securities and
$56 million of preferred stock. However, ICC authorization
to issue $5 million of debt securities and $56 million of
preferred stock will expire in October of this year.
Regulatory Matters
See "1993 Gas Rate Case" under "Regulatory Matters" in
"Management's Discussion and Analysis of Financial Condition
and Results of Operations" in IP's Report on Form 10-Q for
the quarter ended March 31, 1994, for a discussion of the
financial impacts of the ICC rate order issued on April 6,
1994.
Results of Operations
Three Months Ended June 30, 1994 and 1993
Electric Operations - The current quarter increase of
$5.1 million in electric revenues is primarily due to
increased sales to the industrial sector. Total kilowatt-
hour sales (excluding interchange and sales to
municipalities) increased 5.5% or 212 million kwh from the
second quarter 1993. The primary reason for this result was
an increase in industrial sales of 10.7% (218 million kwh)
due to the improving economic conditions throughout IP's
territory. Interchange revenues increased $3.2 million due
to increased sales opportunities.
The current quarter cost of fuel for electric plants
increased $2.9 million and electric generation increased
6.4%. The increase in fuel cost was attributable to
increased generation and the impact of the Uniform Fuel
Adjustment Clause. The equivalent availability of Clinton
was 86% and 99% for the three months ended June 30, 1994
and 1993, respectively. Clinton's decrease in equivalent
availability stems from a scheduled outage in April 1994.
The equivalent availability for IP's coal-fired plants was
71% and 76% for the three months ended June 30, 1994 and
1993, respectively. Power purchased and interchanged for
the current quarter increased $3.6 million due to increased
sales opportunities.
Gas Operations - Gas revenues decreased $9.2 million in
the second quarter of 1994 due to milder temperatures in the
latter part of the heating season and the effects of the
Uniform Gas Adjustment Clause. Therm sales decreased 20.0%
(18 million therms) but was partially offset by an increase
in therms transported which resulted in only a 0.8% decrease
in gas consumption. Residential sales decreased 14.3% (7
million therms), commercial sales and transport decreased
27.3% (5 million therms) and industrial sales and transport
increased 19.7% (12 million therms).
The cost of gas purchased for resale decreased $9.8
million in the second quarter as a result of the effects of
the Uniform Gas Adjustment Clause, lower costs of gas and
decreased sales.
Gas bypass (i.e., connection by the natural gas
customer directly to a pipeline, "bypassing" IP's
transportation service) continues to be actively considered
and 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.
Interest on Long-Term Debt - The current quarter
decrease of $2.4 million (6.3%) in interest on long-term
debt is due to IP's 1993 refinancing of higher-cost debt
with lower-cost debt.
Earnings per Common Share - The earnings per common
share during the second quarter of 1994 and 1993 resulted
from the interaction of all other factors discussed herein
and lower dividend requirements due to the redemption of
preferred stock in 1994 and 1993.
Six Months Ended June 30, 1994 and 1993
Electric Operations - The current period increase of
$35.2 million in electric revenues is primarily due to
increased sales across all classes of customers. Total
kilowatt-hour sales (excluding interchange and sales to
municipalities) increased 8.3% or 640 million kwh. With
heating degree days being 3 percent less than last year and
6 percent less than normal, weather had little impact on the
increases in both residential sales of 5.0% (104 million
kwh) and commercial sales of 3.6% (57 million kwh) and can
largely be attributed to the reviving economy in IP's
territory. The improving economy also contributed to an
increase in sales for the industrial sector of 11.6% (454
million kwh). Interchange revenues increased $7.7 million
mainly due to increased sales opportunities.
The current period cost of fuel for electric plants
increased $17.3 million with electric generation increasing
4.8%. The increase in fuel cost is a result of an increase
in higher-cost fossil generation and a decrease in lower-
cost nuclear generation coupled with the effects of the
Uniform Fuel Adjustment Clause. The equivalent availability
of Clinton was 93% and 99% for the six months ended June 30,
1994 and 1993, respectively. The equivalent availability of
IP's coal-fired plants was 71% and 78% for the six months
ended June 30, 1994 and 1993, respectively. Power purchased
and interchanged for the period increased $9.6 million due
to increased purchases and increased sales opportunities.
Gas Operations - Gas revenues increased $4.0 million in
the current period due mainly to the effects of the Uniform
Gas Adjustment Clause. Therm sales increased 0.8% (3
million therms) and therms transported increased 20.3% (21
million therms) for a combined increase in gas consumption
of 5.2% (24 million therms). Therm sales to residential
customers increased 3.5% (8 million therms), commercial
sales and transport increased 3.2% (2 million therms) and
industrial therm sales and transport increased 9.4% (14
million therms).
Cost of gas purchased for resale increased $4.6 million
for the period. Increased gas storage service costs due to
increased gas injections and the effects of the Uniform Gas
Adjustment Clause account for the increased costs.
Miscellaneous - net - The year-to-date increase of $5.4
million is primarily a result of increased coal
transportation costs related to the 1993 United Mine
Workers' strike and the flooding in the Midwest.
Earnings per Common Share - The earnings per common
share during the six months ended June 30, 1994 and 1993
resulted from the interaction of all other factors discussed
and lower dividend requirements due to the redemptions of
preferred stock in 1994 and 1993.
Item 1. Legal Proceedings
On June 20, 1994, Illinois Power Company and 13 other
utilities filed an action in the U.S. Court of Appeals
for the District of Columbia circuit asking the court
to rule that the U.S. Department of Energy (DOE) is
obligated to take responsibility for spent nuclear
fuel by January 31, 1998.
The Nuclear Waste Policy Act of 1982 obligated the DOE
to accept spent nuclear fuel by 1998. Illinois Power
Company and the other utilities believe the DOE is
reneged on that commitment, and the utilities are
asking the court to confirm the DOE's commitment and
to order the DOE to develop and monitor a program with
appropriate deadlines. Illinois Power based its
decision to build Clinton, in part, on the assurance
that a federal repository would be built and operated
by the DOE. Under the same Act, the DOE has been
collecting money from Illinois Power to pay for such a
repository. The utilities have asked for relief from
the ongoing funding requirements or to have an escrow
account established for future funds paid to DOE.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
None
(b) Reports on Form 8-K since March 31, 1994:
An IP Current Report on Form 8-K, dated May
27, 1994, was filed reporting under Item 5, Other
Events.
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 10, 1994
