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.
<PAGE>
Item 5. Other Materially Important Events
- --------------------------------------------------------------------------------
Attached is a summary of a communication provided to the media on July 6, 1998.
<PAGE>
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.
<PAGE>
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
